Showing posts with label credit history. Show all posts
Showing posts with label credit history. Show all posts

DIY Credit History Monitoring Tips

Here are some helpful tips and facts for DIY credit monitoring.

You know that monitoring your credit is important, but you may not know where to start.

If you don't know the difference between credit reports and credit scores or if you are confused by other terms like credit history, you need a quick DIY guide. To help you, PrivacyGuard has created this starter guide for do-it-yourself credit monitoring.

Understanding the basics of credit reporting:

There are several terms that you will hear when discussing and researching credit monitoring. Below are the three terms that you should be familiar with.

Credit history: This is a financial profile that lists how you utilize credit. It includes open and closed (within seven to eleven years) accounts from creditors, including mortgage lenders, auto financing companies, credit card companies, utilities, and any other organization that acts as a lender to you.

Credit report: Your credit report is a compilation of your credit history and your personal information (e.g. name, address, Social Security number, etc.). This report is produced by the three main independent credit bureaus: Equifax, Experian and TransUnion.

Credit score: Your credit score is a numerical representation of the information in your credit report. Credit scores generally range from 300 to 850, with under 400 being quite low and 700+ putting you in the healthy range.

Read the full story here.


5 Weird Ways You Could Hurt Your Credit Score

Applying for too many loans, having a high debt ratio or making late payments; these are all common ways that consumers know they could be hurting their credit scores. However, there are other, inadvertent things you could be doing that may also be having an impact.

Here's a list of five weird ways you could be hurting your credit score:

1. Paying old debts. While paying off your debts is generally a good thing, in the short run, it could hurt your score. For instance, if you pay off an old debt that was not on your credit report, the debt will show back up in your credit history once you start making payments again. 

2. Having only one type of account. While it may seem convenient or even responsible to have only one credit card or one loan, 10 percent of your credit score is based on the types of credit you have. So, when you can, you should consider mixing up your debt portfolio.

3. Applying for a new cell phone plan. Some mobile phone companies conduct hard inquires on their customers, just like a bank or lender. This means if you're jumping around from provider to provider, you could be bringing down your score.

4. Buying a motorcycle. Thinking of buying a motorcycle as a fun weekend getaway vehicle? Think again because the effects on your credit score might not be so fun.  Taking out a loan for a motorcycle is sometimes submitted as revolving credit, which makes it look similar to credit card debt. And, with debt making up 30 percent of your score, this could be a huge hit to your credit score.

5. Disputing errors on your credit report. Under the Fair Credit Reporting Act, consumers have the right to dispute any errors in their credit report. However, while the disputed item is being evaluated, the account is not included in your score. This means if you're applying for new credit, your credit utilization ratio could be impacted. 

With your credit score constantly fluctuating, it can be difficult to keep track of what is causing changes to it. The only way to really know what is going on is to monitor your credit history on a regular basis.

How Long Will Information Stay On My Credit Report?

If you’re human, chances are you have made a credit mistake or two. You may be wondering how long that mistake will haunt you. While it may seem like it will never go away, rest assured that it eventually will.

Credit scores are very important; lenders use your score along with the information they find in your credit report to assess your risk as a borrower (in other words, to help them decide whether or not to loan you money and what kind of rates to give you, among other things). Understanding credit reports and what is in them (including how long information stays on them) is key to being an educated borrower. 

Your lenders send information (good and bad) about your credit activity to the three major national credit reporting agencies (Experian, TransUnion and Equifax). Lenders send information such as accounts paid off, late payments, judgments and inquiries, all of which will impact your credit history and credit score. If you’re worried about some of your information (like a late payment), you can rest easy knowing that not all of your credit information will stay on your report forever. 

Different information remains on your credit report for different lengths of time. Positive information, such as an account paid off (like a mortgage or auto loan) may stay for up to 10 years since the account’s last activity date. A revolving credit account (including a credit card) that has been paid as agreed to (meeting minimum payment amounts and making payments on time) may also stay on your credit report for as long as it’s open or for 10 years from the date of last activity. 

Most negative information is reported for seven years. This includes late payments, foreclosures and accounts in collections. Judgments may also remain for seven years from the filing date. A paid tax lien will typically stay on your report for seven years from the date paid and unpaid tax liens will remain on your credit report for 15 years. 

A public record of bankruptcy will stay for 10 years, though individual accounts may start falling off after seven and a half years. Inquiries stay for one to two years. Promotional inquiries (like pre-approved credit card offers) and existing account monitoring or review inquiries stay for 12 months, but do not impact your credit score. Personal inquiries stay for 24 months, but do not impact your credit score either. Hard inquiries (credit checks from a potential lender or credit card company) may remain for 24 months, and too many hard inquiries in a short time period could negatively impact your credit score. 

Being aware of how long information (both good and bad) stays on your credit report can make you a savvier consumer. To access your 3 bureau credit reports and scores, visit the PrivacyGuard website.

Is My Credit Score High Enough To Buy A House?

What credit score number do you need to buy a house? Everyone wants to know the magic answer to this question. Home buyers are concerned about their credit score because they know that their score carries a lot of weight when it comes to getting approved for a mortgage for a new home. The problem is that the complicated scoring system can make credit scores confusing, and the more you try to research scores, the more confused you can get.

Here’s what you really need to know. Your credit score is a numerical representation of the information in your credit report, which shows how you have borrowed and repaid money going back up to 10 years. Scores take into account five main financial factors:

1. Your payment history on loans and credit cards
2. The total amount you currently owe on all of your accounts
3. The length of your credit history (how long you have been borrowing)
4. Any new, recently opened accounts
5. The mix of credit you use (credit cards, auto loans, etc.).

Scores can vary depending on which bureau they’re coming from. There are three main bureaus: Experian, TransUnion and Equifax. Mortgage lenders can use data about a home buyer from any of the bureaus, along with proprietary formulas and other factors (like debt to income ratio) to assess risk- or in other words, to determine an applicant’s likelihood of paying back a loan.

Applicants with lower credit scores have a statistically higher probability of defaulting on their loans, and may be viewed as a higher risk to lenders. Those with higher credit scores may be viewed as lower risk to a lender. Their high score shows that they have been responsible with paying off their bills in the past. Applicants with lower scores may have a harder time getting approved for mortgages, but if they do get approved with their low score, they may end up paying more in interest. In a search for a home, it can pay to have good credit. Borrowers with better credit scores tend to pay lower interest rates.

There is no across-the-board requirement of a credit score for mortgage approval. Lenders each have their own formulas; some set the bar higher than others, and some are willing to work with buyers with lower scores.

Late payments can seriously lower a home buyer’s credit score, so it is important to make your payments on time. Overuse of credit cards (the amount of credit you use compared to the amount of credit available to you) can also lower one’s score. If your credit cards are maxed out, this may be seen as a higher risk to lenders. Consider checking your credit report at the onset of your home search to know where you stand in the eyes of a lender.

Check Your Credit Report - Credit Report Inquiries Explained

There seems to be a great deal of confusion when it comes to credit inquiries on credit reports. Many people erroneously believe that all inquiries that are made into their credit reports are universally reported, and have a detrimental effect on their credit scores. Luckily, this is not the case and we’re going to shed some light on this important subject. This subject is one that has kept many people from checking their own credit reports for fear of hurting their credit scores.

The Q&A on Credit Report Inquiries:

What Is A Credit Inquiry?

A credit inquiry is a record of a request to view your credit file. Any time your credit file is accessed, whether by a creditor looking to extend credit to you or by an insurance company or employer looking into your financial record for business purposes, an inquiry is recorded. However, not all of these inquiries are treated in the same way, nor are they all visible to any party that pulls a copy of your credit report.

Who Can Make An Inquiry Into My Credit Report?

According to the Fair Credit Reporting Act, only businesses with a “permissible purpose” may view your credit report. Other than individuals or businesses that fit into this general definition, only you and those that you have given written permission may pull your credit report. These may include employers, landlords, government agencies and other businesses that may need to check your credit report for internal purposes, licensing, and legal issues.

Are All Inquiries Reported In The Same Way?

Not all inquiries are reported in the same way.

 There are two types of inquiries that are recorded by the credit reporting bureaus:

1. Hard Inquiries –These are inquiries that are made into your credit report as a result of your application for credit for things such as auto loans, credit cards, mortgages, personal loans or other types of credit extensions. These inquiries are recorded on your credit report and remain there for two years. These can be viewed by any other party that pulls your credit report within that time frame.

2. Soft Inquiries –These are inquiries that are made into your credit report by you, or another party to whom you have given permission, as part of an information gathering process or for reasons other than extension of credit. These are inquiries done by you, a prospective employer, insurance company, landlord or government agency or any other non-creditor. These types of inquiries are visible only to you, and are not reported to those who pull your credit report as part of a credit application process.

How Do These Inquiries Affect My Credit Score?

Soft credit inquiries have no effect on your credit score. Several hard credit inquiries in a short period of time may adversely affect your credit score. This is due to the way that scoring models work along with the presumption that consumers who apply for a great deal of credit within a small time-frame may be in a less than optimal financial position. There are exceptions to this rule, mainly in the case of shopping for mortgage rates where a high number of credit inquiries that fall within a short date window. This usually happens up to 45 days, and these are recorded as a single inquiry on a credit report, so as not to penalize a consumer for “shopping around for the best rate”.

Does Credit Monitoring Affect My Credit Score?

Inquiries made by a credit monitoring service are treated in the same way as your own inquiries into your credit report. They have no effect on your credit score. This is a good reason to consider using a credit monitoring service to check your credit file for any changes or to alert you to a high number of inquiries in a short period of time. This is a very good early indicator of identity theft as any party that has stolen your information may attempt to open many credit accounts in your name.

How Your Friends List Can Impact Your Ability To Get Credit

Have you ever thought who you choose as a Twitter or Facebook friend could have an impact on your ability to get a loan for a home or new car? Well, it might.

Lenders are testing the waters on using social networks and other data you may have never even considered to determine whether or not to loan someone money. Lenders traditionally use your credit information along with income information (verification of income from W2's and pay stubs), savings information (like checking and savings account statements) and tax returns to determine an applicant’s risk. 


But, one lending institution in Germany has found that social network connections can play a part in indicating one’s credit worthiness.   

These companies believe that humans are pretty good at determining how trustworthy a person is. Assessing peoples’ social network connections can give the company insight into whether or not that person will pay their own bills on time. What does that mean? If you’re friends with someone who owes that lender money, you may have a harder time getting a loan yourself (especially if that person is someone you interact with frequently). 

In addition to your social networks, one company in Germany is also pulling data from applicants’ accounts and from the manner in which a customer completes an online loan application. For example, the amount of time spent reading information about the loan and whether or not you complete the application from your work or home computer. Or whether you use all capitalized letters (or all lowercase letters) are all taken into account to paint a more complete picture of an applicant. 

One lender that makes cash advances to small businesses takes into account the business’ presence on social media sites on the principle that a business that pays attention to Facebook and Twitter as a way to handle customer service is more likely to be responsible in other areas of their business, including accounting. 

While these types of screening activities may be less frequent at this time (the vast majority of lenders are not yet checking up on you on Facebook when you apply for a loan), it may represent the future of lending requirements.  Lenders may start looking at data outside of your credit report to assess your creditworthiness. This could be good news for people with no credit or with low credit scores because of a short credit history

The downside of course is that our social networking activities are not entirely indicative of our behavior as consumers or borrowers. We may all be punished by being Facebook friends with friends or family members who aren't financially responsible (we all have friends and family who aren't always at the top of their financial game).  People could also easily clean up their friend lists to appear more clean-cut, but may have a hard time doing the same to their credit score

Either way, this can also serve as a good reminder to be careful about what you post on your social networks. Your online activities are already being watched by potential employers-- it wouldn't be much of a stretch for lenders to start doing the same in the near future. 

3 Credit Checking Benefits

Many people never bother to check their credit history regularly. They may only discover problems with their credit report when they’re denied a major loan by a lending company or if their application for a credit card is rejected by a bank.

Performing accurate and regular credit checks may help you avoid such headaches and may be beneficial to your overall financial health in the long run.

Here are some of the benefits:

1. Better credit score: As you may already know, lenders or creditors look at factors like income and credit score to determine an individual’s creditworthiness. It helps them decide whether they should extend credit to a particular person or not. The higher a person’s credit score, the better their chances of getting extended credit are. Credit scores can be dependent on several things including the age of the credit report, the types of inquiries made by institutions about the report, and the diversity of credit accounts on the report. 

Keeping pace with your credit report can have a considerable effect on your financial stability. By ensuring that you have a good credit score, you can take advantage of many credit services including home mortgages, car loans, and low-interest credit cards — financial options which may not be easily available to you if you have a bad credit history.

2. Discovering errors in your credit report: Because credit reporting agencies handle numerous reports each year, clerical errors and glitches in computer systems may happen. These inaccuracies could harm your credit rating, so it’s better to discover them early so that you can have them rectified by the agency concerned.

3. Detecting identity theft: Identity theft can happen when a criminal opens accounts in your name and accumulates balances over time, leaving you to deal with debt collectors’ demanding payment for loans you never owed. Checking your credit report regularly can help you detect these fraudulent activities arising from identity theft. If you suspect identity theft, you can ask your agency to flag your report with a fraud alert.

Credit reports are easily available from credit reporting agencies. Some of them allow consumers to see the reports directly from their official websites, while others sell copies for a reasonable cost.

Preventing Child Identity Theft

Carelessness with personal information may hurt a child’s chances of having a healthy credit history.

Taking necessary measures to protect one’s own identity is extremely important—but it’s just as important to protect a child’s. Parents can be busy filling out documentation relating to school enrollment and for participation in clubs or other extracurricular activities throughout the school year. Personal information is dispensed that identity thieves can use to sign up for a credit card or secure a loan. A study established that 2.5% of households with children (18 years and younger) have experienced child identity theft. 


Child identity theft often goes undetected.
Adults have numerous ways to detect identity theft because there’s a paper trail to follow and examine: bills, statements and notifications that arrive at regular intervals. Unusual activity, unauthorized payments and other evidence of identity theft will usually show up, as long as we take the time to look over this documentation. Many people also guard against identity theft by monitoring their credit scores. A sudden change in a credit score can indicate unauthorized use of your credit card, bank account, or personal data. 

Because children don’t have a credit history, parents wouldn't be checking their child’s credit information to check for identity theft.  Child identity theft can happen when the thief uses a child’s social security number to secure a credit card or a loan. Armed only with a child’s name and social security number, the thief can use a false birth date to create what’s known as a “synthetic identity.”  A “synthetic identity” can be created when the thief combines a social security number with a different birth date.

Preventing child identity theft involves awareness and action.
A small measure of diligence can go a long way toward protecting against child identity theft. For starters, it’s wise to discuss identity theft with your children, stressing the strategies that can be used to thwart this illegal activity. Never give out a child’s social security number unless it’s absolutely necessary and you feel confident that it will be secure. If possible, put paperwork with identity information through a shredder rather than simply tossing papers intact into the trash. 

Urge children to keep passwords confidential, whether it’s for a computer or for access to websites and online accounts. For children, computer identity theft may not result in financial losses. However, there’s definitely potential for emotional damage though social network postings. 

Establishing the relationship between identity theft and credit scores.
Most financial advisors encourage parents to help their children start building a credit history before they go to college. Discussions about identity theft could provide a good opportunity for parents to explain the importance of good credit and how identity theft can harm your credit score. Those first steps towards adulthood –getting a job, opening a bank account, getting a credit card—can also be the beginning of a good credit history. 

Credit Reports vs. Credit Scores: Part 2

Credit Reports vs. Credit Scores: Part 2

 What’s The Difference?

Continued from Credit Reports vs. Credit Scores: Part 1, this section focuses on a few common misunderstandings about credit scores.

The most common misunderstandings about credit scores involve (but are not limited to) the following:

Your credit score is a single number: In the US, there are three major credit bureaus that collect and maintain credit information: Experian, TransUnion and Equifax. Each bureau has its own specified and customized formula to determine your final credit rating. Banks, lenders and insurance companies also have their own models for computing their clients’ credit scores; therefore, your credit standing can vary from one evaluator to another. There are also a number of consumer scoring services available that utilize similar, though different algorithms to calculate your credit scores.

More money means a higher credit score: Income is not included when looking at your credit scores. The scores reflect how well you manage your credit regardless of your income.

Credit scores go down when checked: There are two types of inquiries – soft and hard. A soft inquiry is when you check your own scores through a third party service. You can check your own scores as often as you like, without negatively impacting your credit standing. A hard inquiry on the other hand happens when a third-party source checks your credit information. For example, if you’re securing a loan to buy a new car, the car dealer may check your credit information at one or more of the three major credit bureaus. This would reflect on your credit reports at one or more of the bureaus. Too many hard inquiries in a short amount of time could adversely impact your credit rating and scores. 

Keep a close eye on your credit reports from each of the bureaus and be mindful of the elements listed above. All in all, it can take a bit of patience and vigilance, but you’ll be rewarded with peace of mind and possibly a stronger credit standing.

Credit Reports vs. Credit Scores: Part 1

Credit Reports vs. Credit Scores: Part 1

What's The Difference?

What’s the difference between a credit report and a credit score? Some people think that credit reports and credit scores are one in the same. That’s not true. A credit report is an in-depth record of your credit history, while a score is an algorithmic rating based on your credit information. 

Your credit reporting includes a wide range of information about your credit standing and history, such as:

Who you are: This includes your name, social security number, date of birth, and in some cases, employment information.
Your credit: This is composed of your credit card accounts, mortgages, car loans, school and other loans, how much credit you have paid, and your payment history.
Your public record: This contains information about court proceedings and decisions for or against you, tax incentive grants or tax liens, or bankruptcies.
Inquiries: This simply contains a list of all the companies and people who recently requested a copy of your credit report. These are also known as “hard inquiries”. 


A credit score on the other hand, is a numerical assessment of your credit standing  based on the information in your credit report. Determinants of your credit scoring generally include the following:

Type and duration of accounts: Examples of these are your loans, mortgages and credit cards, and how long you've had them for.
Bill payment history: Late payment history could adversely impact your scores. Payment history is one of the more important determinants of your credit scoring. 
Available credit: Your credit utilization ratio – based on your reported credit limits and how much of that credit has been used – can also impact your scores. Higher utilization rates can adversely impact your credit score. This is why you may want to consider keeping older credit cards that may have extra balance capacity (which can offset utilization rate).
Outstanding debt: This includes all other loans and credits granted to you other than those previously mentioned. Too much debt, or numerous debt/credit lines opened in a short amount of time, could adversely impact your credit scores.

Be sure to check out Part 2 on common misunderstandings about credit scores.