What Happens When You Submit a Credit Report Dispute

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Finding a mistake on your credit report can be frustrating. Unfortunately, according to a Credit.com survey of credit report awareness, one in five consumers (21%) who have seen their credit reports say they found inaccurate information on their reports.

Not only is that a lot of frustration, but the error may also have a negative impact on your credit score. Submitting a credit dispute is the first step in the process of correcting inaccurate information and improving your score.

But what comes next? How do credit bureaus fix the error? What effect does a dispute have on your credit score? Here’s the whole story on what happens when you submit a credit report dispute.

How to Dispute an Error on Your Credit Report

There are two ways to dispute an inaccuracy on your credit report.

  1. Go directly to the furnisher to dispute the error: You can contact the furnisher (the creditor furnishing the data to the credit bureau) directly to dispute the incorrect data on your credit report. If the furnisher finds the information to be inaccurate, it will correct the error and notify all three Credit Reporting Agencies (CRAs) of the discrepancy. If there is no resolution and you still feel there is a mistake on your report, the furnisher will inform the CRAs that the account is in dispute.
  2. Dispute the error with the credit reporting agency: You can also file a dispute through the CRA that has the inaccuracy on its report. Each one—Experian, Equifax, and TransUnion—has its own submission process for disputes. Once a dispute is submitted to a CRA, an investigation process starts.

Filing Disputes with the Credit Bureaus

If you include enough documentation when you submit a dispute through a CRA, the agency will resolve the error on your report. If additional information is needed, the agency you submitted the dispute to is required to initiate an investigation (unless your dispute is considered “frivolous”).

When the CRA investigates, the agency forwards relevant information about your dispute to the creditor. Under the Fair Credit Reporting Act (FCRA), the creditor must then investigate the claim and report its results back to the credit reporting agency. If the information is found to be inaccurate, the furnisher must submit corrections to all three credit reporting agencies.

Confirm with the CRA to find out if you need to continue making payments while in the dispute process. Each CRA has its own policies and procedures for investigations.

While disputed information is being reviewed by a credit bureau, it is not typically labeled as “disputed” on your credit report.

  1. Experian Disputes
    When you file a credit dispute with Experian, the agency reaches out to the furnisher and gives it 30 days from the date you submitted your request to respond back. For Maine residents, the time frame is 21 days. When the agency receives a response, Experian will notify you of the results of the investigation. If it does not get a response in the allotted time, Experian will correct the disputed information as you requested or delete the disputed information. During the investigation process, Experian does not add a comment, note, or any other indication of a dispute on your credit report. 
  2. TransUnion Disputes
    TransUnion usually finishes an investigation and provides you the results about 30 days from the receipt of your dispute—but the company recommends preparing for up to 45 days. When a customer contacts the agency directly, it does not add an “in dispute” comment to their credit report.
  3. Equifax Disputes
    Once your dispute request is submitted, Equifax notifies you of the results within 30 days. On average, disputes are resolved within 10 days. Unlike the other two CRAs, Equifax makes an indication of a consumer dispute on your credit report during the investigation. On Equifax reports, the item will be “noted as ‘Consumer Disputes—Reinvestigation in Process” says Meredith Griffanti, senior director of public relations for Equifax, noting in her email, “If the consumer applies for credit during this time, the potential creditor will see this comment.”

Credit Disputes with Creditors

It is your right to dispute information that you believe to be inaccurate on your credit report. The overall process for disputing inaccurate information with creditors is similar to that of disputing information with the CRAs, but with one important difference: if you dispute an item directly with the furnisher, it will very likely be noted as “disputed” on your credit report for potential lenders to see.

Once you submit a dispute, the creditor has a duty to investigate your claim, according to the FCRA. In most cases, the creditor is expected to respond to your claim within 30 to 45 days and to inform you of the results of its investigation within five business days.

The creditor must notify the credit reporting agencies that you have disputed information, and, if it finds that the information is indeed incorrect, it must promptly provide accurate information to the reporting agencies. If you have received notice that the creditor agrees with your dispute, send a copy of that documentation to the CRAs that reported the information to ensure it gets updated. 

Why Credit Disputes Matter

Negative information on your credit report brings down your credit score. But whether an account is listed as “disputed” or not could also have an effect on your credit score.

When an account is documented as disputed, “it is temporarily excluded from consideration by the VantageScore model,” explains Jeff Richardson, spokesperson with VantageScore. Similarly, “the FICO Score algorithm excludes account activity that is in dispute,” says FICO spokesperson Jeffrey Scott.

VantageScore excludes entire accounts in dispute from the model that calculates your score. FICO, on the other hand, excludes only the disputed information such as an account balance and late payments—not the entire account—from its calculations of your score. “The dispute doesn’t include the age, type, or other non-controversial aspects,” Scott says. “It includes things directly impacted by the dispute—e.g., account balance or late payment.”

There are times when the VantageScore model could be a plus. For example, Richardson says, “If there was a missed payment on the disputed account, the consumer’s credit score can increase because the missed payment will be ignored.”

Unfortunately, the dispute process has been abused. Consumers will sometimes dispute an item that is negative but accurate, then quickly apply for credit, hoping the application will be approved while that information is under dispute and not recognized by the credit scoring model. If you’re thinking of trying that approach, be careful: It could backfire.

The Downsides of Disputing an Error on Your Report

Disputing inaccurate credit report items sounds like it would always be a positive thing, but it is important to recognize that there can be downsides to disputing an item—especially while you are trying to get a loan.

  • Positive information can also be affected: “A consumer could possibly see a decline in his or her score because they would also not receive the positive impact of the account’s age, history, credit availability, or on-time payments,” Richardson points out.
  • You may not be able to get a mortgage: Challenging a mistake while you are trying to get a home loan can hold up your loan. Lenders often will not close a mortgage until the dispute notation is removed. It may be best to wait to dispute incorrect data until after you close a mortgage.

The good news is that most disputes are processed quickly—in less than two weeks, says Griffin—and once the investigation is complete, the item should no longer be listed as disputed. If it’s not, the consumer can request the “under dispute” notation be removed. “If the credit report indicates the dispute has been resolved and/or closed, the account activity will be treated just like all other account activity,” Scott says.

If you have disputed information that is found to be accurate, time is the only thing that can remove that negative information from your credit report. In most cases, negative information stays on your report for 7 to 10 years.

Review Your Credit Report for Inaccuracies

Either way, to dispute a mistake on your credit report, you have to know there is one. You can get your credit reports for free at Credit.com and find out how the information they contain affects your credit by checking your credit scores. You can get your credit scores, which are updated monthly, for free on Credit.com.

If you discover your credit report contains erroneous information, dispute it—but give yourself plenty of time to get the item(s) corrected and the dispute resolved before you apply for a mortgage, car loan, or credit card.

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The post What Happens When You Submit a Credit Report Dispute appeared first on Credit.com.

How Long Does Negative Info Stay on Your Credit Report

business woman credit report

Your credit report offers valuable insight into your financial history and affects most of your financial future: everything from whether you get approved for a mortgage or other loan to what your credit card interest rate will be.

Negative information on your credit report can be detrimental for years, but it’s not always clear how long those inquiries and other negative information will stay on your credit report—and affect your score. The length and severity vary, but here are four common types of inquiries and how long they affect your credit score.

1. How Long Do Hard Inquiries Stay on My Credit Report?

What is a hard inquiry?

Hard inquiries are created every time your credit report is accessed by a business when you apply for a line of credit. For example, your credit would receive a hard inquiry when you apply for a car loan, mortgage, student loan, or credit card.

How long will hard inquiries stay on your report?

Inquiries remain on your credit reports for two years (24 months). However, hard inquiries impact your score for only the first 12 months. After that, they have no impact on your score.

How much do hard inquiries affect your credit?

New credit—including inquiries and any new credit accounts—make up just 10% of your FICO score, and a single inquiry will likely drop your credit score by only three to five points. As long as you apply for credit only when you need it, this is one of the lesser hits to worry about

2. How Long Do Credit Accounts Stay on My Credit Report?

What is a credit account?Credit accounts refer to all of the accounts for which you hold credit, including credit cards, mortgages, and car loans. Credit scoring models like to see a healthy balance to the types of credit accounts (or “credit mix”) you have and can manage effectively. Negative information on a credit account includes late or missing payments.

How long will negative credit account information stay on your report?

Negative account information stays on your credit report for seven years from the date it was first reported as late. If you close the account, the entire account will be removed from your report after seven years. If the account remains open, the negative information will be removed after seven years, while the rest of the account information stays on your report.

Positive information, on the other hand, remains on your credit report indefinitely. If you close the account, positive information typically stays on your report for 10 years past the closing date.

How much do credit accounts affect your credit?

Your credit mix accounts for 10% of your credit score: a healthy mix means more points. If you don’t have many credit accounts or if you close your accounts, it could negatively affect your credit score.

Payment history accounts for 35% of your credit score, and making payments on time is the most important factor in determining your credit score: a single 30-day-late payment can drop a good score by 90 to 110 points.

Most lenders don’t report missed payments until accounts are more than 30 days past due, so if you can catch the missing payment in enough time, you might not notice a hit at all. Other lenders will let one late payment slide, especially if you’ve been a loyal customer for many years and have a good excuse for why you missed it.

3. How Long Do Collection Accounts Stay on My Credit Report?

What is a collection account?When you fall behind on making payments on an account, your debt could end up in the collection’s department of that particular company. That creditor may then sell your debt to a collection agency, which also reports it as a collection account. At this point, the original creditor that sold the debt should not continue to report a balance owed, but you should watch out for duplicate collection accounts.

How long will collection accounts stay on your report?

Collection accounts remain open for seven years plus 180 days from the date the account was delinquent leading up to when it was placed for collection. After that time, it must be removed regardless of when it was paid or when it was placed for collection.

How much do collection accounts affect your credit?

Understanding how collection accounts can affect your credit score is tricky. The most important factor that will affect your credit score when it comes to collections is how recently the collections occurred—the more recent the collection, the lower the score. Multiple collection accounts or lawsuits resulting in judgments can also lower your score. Unfortunately, settling or removing a collection may not impact your score positively.

While there’s no way to tell exactly how much a collection account will affect your credit score, it is one of the higher penalties, so the best course of action is to avoid having accounts sent to collection in the first place.

4. How Long Do Public Records Stay on My Credit Report?

What are public records?

Public records include any of your personal information that becomes public knowledge, including bankruptcies, tax liens, and judgments.

How long will public records stay on your report?

The type of public record will determine how long the information stays on your credit report.

Chapter 7, 11, and 12 bankruptcies stay on your credit report for 10 years from the date filed. Completed Chapter 13 bankruptcies are usually removed after seven years from the filing date.

Tax liens remain on your credit report for seven years from the date filed if they are paid, or indefinitely if they are not. If you qualify for the IRS Fresh Start program, you can request a paid or satisfied tax lien be removed from your reports.

Paid judgments remain on your credit report for seven years from the date filed, and unpaid judgments remain for seven years or the governing statute of limitations, whichever is longer. Since unpaid judgments can usually be renewed, these may remain on credit reports for a long time.

How much do public records affect your credit?

There is no way to know exactly how many points your credit score might drop with a public record on file, but the effect of public records on your credit report could be severe.

The best way to keep track of your credit reports throughout the year and to stay on top of any erroneous information is to monitor your credit regularly with Credit.com’s free Credit Report Card.

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Freaked Out by the Equifax Hack? Here’s What You Need to Know

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About 143 million consumers’ sensitive information has been compromised in what was one of the worst data breaches to date in size and potential impact on consumers. Credit reporting agency Equifax announced the breach Thursday, more than a month after detecting the intrusion.

Equifax is one of the three national credit reporting agencies (the others being TransUnion and Experian) and collects a wide variety of consumers’ sensitive and personally identifiable information (PII). The information on credit reports determines credit scores and is used in lending decisions, among other things.

What happened

The breach exposed the names, Social Security numbers, birth dates, addresses, and, in some instances, driver’s license numbers of about 44 percent of the current American population. Hackers also took the credit card numbers for about 209,000 U.S. consumers and dispute documents for 182,000 U.S. consumers.

In its announcement, Equifax said “criminals exploited a U.S. website application vulnerability to gain access” to the files. In addition to the millions of U.S. consumers affected, the company says the criminals had access to limited personal information of some U.K. and Canadian residents.

The Atlanta-based reporting agency said the thieves had access to the data from mid-May through July 2017, but it didn’t discover the breach until July 29. Equifax announced the breach more than a month after discovering it and hiring a cybersecurity firm to investigate.

The company says it’s also working with law enforcement authorities and that its investigation will be complete soon. Equifax has not said who they believe attacked their database.

What the breach means for consumers

The breach isn’t the largest to date, but it’s close. In 2016, Yahoo announced an attack that affected 500 million users. Another breach, announced just a few months later, involved 1 billion users. In those breaches, hackers stole users’ phone numbers and passwords.

The Equifax breach could be worse in impact, given the sensitive nature of the consumer data the company has on file. In its release, Equifax said it had found “no evidence of unauthorized activity on Equifax’s core consumer or commercial credit reporting databases.” That doesn’t necessarily mean the information hasn’t been misused or that it won’t be misused, as signs of identity theft may not immediately show up on a credit report.

“If you were going to rate this breach from one to 10, this is a 10. The amount of sensitive info that is contained in the Equifax database is staggering,” says Adam Levin, founder of CyberScout and author of “Swiped,” a book on how and why consumers can protect themselves from identity theft.

When this level of information has been compromised, it “opens up the door for thieves to commit many different other types of identity theft. Not just financial, but criminal, government, medical theft as well,” says Eva Velasquez,the president of Identity Theft Resource Center.

Levin adds, when Social Security numbers are part of a database that’s been exposed, all of the individuals who have their numbers in that database will need to be “looking over their shoulders for the rest of their lives.” The Social Security Administration rarely changes someone’s Social Security number.

What to do now

First, don’t panic.

“People really feel violated when things like this happen,” says Velasquez. “Direct your energy from being angry or upset and feeling powerless to actually doing something and taking some steps to feel more empowered.”

Levin says the breach may add to “breach fatigue” — how the drastic rise in security breach causes consumers to believe breaches are inevitable and react to them apathetically instead of with urgency.

“But it shouldn’t,” Levin says. “It should be a clarion call. Unfortunately, as consumers we have to think of this as as if we’re alone. The government has failed us. The financial industry has failed us, and frankly we have failed ourselves. It’s important that we develop a culture of privacy and security.”

Find out if you are one of the impacted
Given the increasing threat and frequency of data breaches, everyone should be proactive in detecting identity theft. For this breach in particular, Equifax set up a website to see if you’re one of the people affected and how to enroll in the free year of credit monitoring it’s offering victims.

Visit equifaxsecurity2017.com and click on “Potential Impact.”

You’ll see a page with a large, rectangular button that says “Check Potential Impact” and a few lines of text.

Source: Equifax

The text explains that if you click on the link that says “Check Potential Impact,” you’ll be taken to a form that asks you to provide your last name and the last six digits of your Social Security number.

Based on that information, you’ll then be shown a message that says whether your personal information may have been impacted by the breach.

Source: Equifax

Regardless of the message you see, Equifax will give you the option to enroll in a credit monitoring service from TrustedID Premier. Beware: if you enroll, you’ll have to agree to waive some of your rights to sue Equifax. The arbitration clause is written in all caps in the company’s terms of service, but consumers may miss the language. The Washington Post reports Equifax on Friday updated its terms to incorporate a way out of the arbitration clause.

Consumers can be excluded if they let Equifax know within 30 days in writing they would like to be excluded from the arbitration clause, but must first accept the agreement.

If you choose to enroll, you’ll be given an enrollment date. There’s quite a backlog of people enrolling, so you have to take it upon yourself to return to the site on your enrollment date. In short: You have to take your protection into your own hands. Equifax isn’t doing it for you.

Source: Equifax

Sign up for credit monitoring

Equifax is offering one year of free credit monitoring through TrustedID Premier to all U.S. consumers, regardless of whether they were affected by the data breach. There are five services under the program:

  • Get a free copy of your Equifax credit report.
  • Sign up for credit monitoring and automated alerts to be notified of key changes to your credit report on any of the major big three reporting agencies.
  • Put a freeze on your Equifax credit report.
  • Scan suspicious sites for use of your Social Security number.
  • Get up to $1 million of identity theft insurance to help you pay for any costs you may incur if someone commits identity fraud against you.

Even if you don’t want to enroll in Equifax’s service, you should enroll in a credit monitoring service, like free options offered through Credit Karma, Discover, Mint, Wells Fargo, and Capital One® — there are lots of ways to keep tabs on your credit.

Some identity theft protection services like the ones offered through myFICO, charge a monthly fee to monitor your credit year-round and provide identity theft insurance.

Regularly review your credit reports

You’re entitled to a free annual credit report from each of the major credit bureaus, which you can get through annualcreditreport.com. Carefully check your credit report for any accounts or recent activity you don’t recognize.

Make a plan to respond to identity theft

Detecting identity theft as soon as possible is crucial to minimizing the damage and stress it can cause — that’s where credit monitoring and reviewing your credit reports comes in. But the next step is just as important: Know what to do when it happens.

You can dispute errors on your credit report, file a police report documenting the identity theft, and do the legwork of resolving any problems it causes. You can also pay for identity theft insurance or identity theft resolution services (some employers offer this as a benefit, so check with your human resources department). Here’s a guide on identity theft resolution, so you know what to do in case you see anything suspicious. Even if you don’t see anything out of the ordinary, you should continue to remain vigilant in monitoring your credit activity.

Freeze your credit report

Velasquez says a credit security freeze is an option impacted consumers should look at. It prevents any application for new credit without first verifying your identity. If you want to apply for new credit, you’ll have to “thaw” your credit reports. The credit bureaus charge a fee, which varies by state, every time you freeze and thaw your credit report.

“While that does create some added inconvenience, the level of protection is worth it,” says Velasquez.

Be alert for unusual activity

Now is the time to practice what Velasquez calls good “identity hygiene.”

“Being vigilant about your identity is just a part of the world that we live in,” says Velasquez. “ If being involved in a data breach is the catalyst that brings that to the top of your mind, then we can see that as a positive.”

Velasquez recommends consumers act proactively and remain cognizant of anything that may involve using or verifying their identity. For example, if you receive a notice from a government agency about benefits or some weird explanation of benefits, pay attention to it.

Even after you do things like enroll in credit monitoring and freeze your credit, continue to do your best to watch out for signs of abuse. Don’t wait until you start receiving strange calls from government agencies and debt collectors.

When tax season rolls around, file your return as soon as possible. Identity thieves frequently use Social Security numbers to get fraudulent refunds, and if they file before you do, it will further complicate your tax-filing process.

At the least, go through your financial statements regularly (the more often, the better) to look for anything out of the ordinary. While protection is top of mind, sign up for any alerts you can set up on your mobile banking app to receive transaction notifications.

The post Freaked Out by the Equifax Hack? Here’s What You Need to Know appeared first on MagnifyMoney.

How to Choose Your First Credit Card

Picking your first credit card can seem overwhelming, but by keeping in mind a few key tips, you'll be able to make the right decision with confidence.

Whether you’re a teenager without credit history or an adult who’s familiar with loans and debit cards, choosing your first credit card can be tough. The prospect of finding a card may seem overwhelming, but with the right knowledge, you’ll be able to choose the right card and begin building your credit. Here are several things to consider when choosing your first credit card.

1. Do Your Research

Be aware of what getting a credit card entails, especially because credit mistakes can negatively affect your life and financial standings for a long time. Whether you’re scouring the Internet, speaking with a credit expert or reading our site, it’s important to learn as much as you can before taking the plunge. Being well-versed in the process of applying for and using credit cards will benefit you in the long run. Don’t skimp on research.

2. Ensure You Have Steady Income

Credit card issuers typically require a verifiable income when someone is looking to apply for their first credit card. After all, being able to repay your balance is the key to getting approved for a credit card. Lenders need to know that you’ll pay them back and that they can trust you. Federal law requires that adults under age 21 have income before they can be approved for a credit card without a cosigner. So if you’re a young adult, consider getting a part-time job so you don’t have to find someone to cosign.

3. Choose Wisely

There are plenty of credit cards to choose from. It can be overwhelming to sort the possibilities. While searching, focus on your main concerns and struggles. Are you worried about paying bills on time? Consider a card with a low annual percentage rate. Aren’t sure you’ll have enough self-control for a credit card? A secured credit card could be a great option. There’s a credit card that works for everyone. Don’t choose a credit card because of a cool design or dreamy rewards without checking all of the details.

4. Read the Fine Print

Before you choose your first credit card, make sure you’ve read the terms and checked the fees, rewards and interest rates. A bad combination of card features could come back to bite you if you aren’t careful when signing up for a card. 

5. Consider a Secured Credit Card

Speaking of secured cards, they’re a great option for your first card for several reasons. (Not sure what a secured card is? This article explains it all.) As long as you pay responsibly, your score goes up, and you can switch to an unsecured, card. Some secured cards give you cash back, or offer no annual fees. Your deposit acts as your credit limit, so if you can only pay a security deposit of $200, you’ll have a $200 limit. Having a lower limit shouldn’t be an issue, though, because you’re just starting out with credit. 

Barry Paperno, a credit expert who writes for Speaking of Credit, says a secured card is the way to go for first-time credit card owners. “You can build a really good credit score with just a secured card,” Paperno said. “Plus, because of the security deposit, you won’t have an unpaid charge-off at the end.”

6. Avoid Cards That Require Excellent Credit

Being denied credit doesn’t affect your credit score, but your score is still affected by lenders looking into your credit history. If you apply for your first credit card and it’s out of reach, you’ll end up stuck in a loop of hard inquiries and rejections. “Most card lenders won’t even give you an unsecured card if you have no history,” Paperno said. If you’re not sure where your credit stands, check out your free credit report snapshot on Credit.com.

7. Use Loans to Your Advantage

Essentially, a positive loan history can show card issuers that you’re low risk and are capable of paying them back on time. Loans count as credit, so if you pay them back responsibly that positive information will remain on your credit report for 10 years after being closed. Conversely, a negative loan history will stay on your report for seven years. A loan that’s closed won’t help generate a credit score, but it still looks good to lenders on your report. (For more on loans and their connection to credit, visit our Loan Learning Center.)

8. Become an Authorized User 

A great way to get your first credit card while limiting the responsibility and pressure is by becoming an authorized user. Paperno recommends this as a simple way to build your credit score. This way, you can have a credit score without actually having your own credit card. If you eventually want your own card, being an authorized user makes your score and report look significantly better to lenders.

But remember — if the person whose card you’re becoming an authorized user on falls behind on payments your credit will be impacted as well. Choose someone you trust with a good credit history.

Ultimately, choosing your first credit card is a big decision but an important one. Remember to take the time to research and find which option is best for you when opening your first credit card and every card that follows.

Image: PeopleImages

The post How to Choose Your First Credit Card appeared first on Credit.com.

8 Common Credit Card Mistakes You Might Be Making

Credit cards are a super convenient financial tool, but they can often be confusing.

Do you have a credit card in your wallet? Chances are, you do. And if you’re one of these plastic carriers, you probably want to be using that card the best possible way, right? Well, you may be making some mistakes without even realizing it. To help, we’ve rounded up eight common mistakes to help you discover if you have one of these habits and ultimately correct it.

1. Paying Your Bills Late

“What can do you the most harm is paying late, or not paying at all,” credit score expert Barry Paperno said.

Late payments affect your credit score, plus the late fees and interest quickly add up. Besides all of the effects that hit you right away, Paperno said it can take years to recover from numerous late payments. And if you let it go too long, you could be hit with a charge-off (the point, usually after six months without payment, at which the lender writes your account off as a loss), which stays on your credit report for seven years.

2. Closing a Card You Don’t Really Use

Despite the fact that you never use a particular credit card, closing that card isn’t necessarily the answer. When you close cards, you affect your credit history, usually negatively.

“Don’t make the mistake of closing cards,” Paperno said. “Especially if you think it will help your score, because that will never raise your score.”

When you decrease the amount of credit available to you, you end up increasing your credit utilization ratio, which can hurt your credit. Instead of closing a card, consider simply using it every so often and keep the account active. There are times when closing the card may make sense, like if it carries an annual fee that is hurting your budget, but you’ll want to think about it carefully before making a decision.

3. Not Requesting Changes to Your Terms

While card issuers might seem intimidating, you could be making a mistake by not attempting to change your terms. You could potentially negotiate a lower interest rate or annual fee, helping out your budget in the process. If you’re trying to rid yourself of a balance quickly, call your credit card company. They may help you get a lower interest rate if you just ask.

4. Spending Money Just to Get Rewards

If you find yourself using your credit card unnecessarily to earn rewards, it could be costing you. Rewards are fantastic, but altering your spending habits just to get free stuff isn’t going to be as beneficial as it may sound. If you overspend and carry a balance, you’ll likely lose all those rewards to interest charges.

5. Not Knowing Your Credit Score

If you don’t check your credit score regularly, you’re not educating yourself as much as you could be. Your credit is considered in a lot of situations, from when you apply for a mortgage or car loan to a version of your credit reports being reviewed by a potential employer as part of the application process. Haven’t checked yours in a while? You can see your free credit report snapshot on Credit.com.

6. Only Paying the Minimum Balance

If you only pay your minimum balance each month, you’ll likely end up having to pay more interest down the line. While it might seem like a quick fix to save your money and pay the minimum, in reality you’re dragging out how long it’ll take to pay your entire balance. Keep avoiding those late fees, but if you can, you’ll want to pay more than the minimum.

7. Applying for Out-of-Reach Credit Cards

“Another common credit card mistake is probably applying for too many cards, the wrong cards, or both,” Paperno said.

By applying for a card you aren’t qualified for, you end up without a card and with a “hard inquiry on your report for the next two years,” he added.

While your credit score isn’t directly affected by being denied credit, the more hard inquiries on your credit report, the more dings you’ll see to your scores. Make sure you are a good candidate before applying for any type of credit card.

8. Spending More Money Than You Actually Have

Having a credit card often allows people to make the mistake of overspending. It’s a mistake to charge your credit cards close to their limit, Paperno said. Just as closing a card will raise your credit utilization, so will coming close to your credit limit. Either move can hurt your credit score.

Making Positive Credit Choices

To avoid these eight mistakes from the start, make sure you educate yourself. You don’t have to know everything, but you should be aware of how to be responsible with your credit cards. When a car, house or student loan is on the line, you should be knowledgeable and ready, not hurting from your previous credit card mistakes.

“If you pay on time, keep your balances low and apply for new credit only when you need it,” you’ll be in good shape, Paperno said.

Image: Peopleimages

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What to Do Before You Start Your Home Search

The process of buying a home can be nerve-wracking for some who have not been through it before, but with a little bit of preparation, you can help minimize some surprises along the way.

One important thing you can do as soon as you start thinking about buying a home is checking your credit report. Ideally, this should be done at least six months before purchasing a home in order to give yourself time to dispute information, if needed. It is important to know how your payment history is being reported by your creditors. And if you see any unfamiliar information, it’s important to know how to take action.

Consumers are entitled to a free copy of their credit report, from each of the nationwide consumer reporting agencies, once a year by visiting annualcreditreport.com.

What should you look for? Any information that might be inaccurate or incomplete. In the personal information section of your credit report, is your name (and any former names, such as a maiden name) listed accurately? Is your address up to date? Are there any addresses you don’t recognize? In the account information portion of your credit report, are all of the accounts listed complete and accurate? Are there any accounts that you don’t recognize? Do the balances appear accurate?

If you find information that appears inaccurate or incomplete, contact the lender or creditor associated with the account. You can also contact the nationwide consumer reporting agency that issued the credit report. If necessary, take steps to change some of your credit-based behaviors.

Here are some other items to include on your checklist as you prepare to buy a home:

— Gather any required documents you may need to apply for a mortgage. Tax returns, pay stubs and bank statements are among the ones you’ll need.

— Figure out how much home you can afford. There are a number of online mortgage calculators that can help. Remember a home’s purchase price is only part of the picture; you may also be responsible for a down payment, closing costs, taxes, insurance and other expenses. Learn your debt-to-income ratio and familiarize yourself with the requirements for loan qualification.

Buying a home is one of the most important – and largest – financial decisions you may make, and you owe it to yourself to prepare for it thoroughly and thoughtfully and hopefully smooth out any bumps in the road to home ownership.

How Your Credit Report Can Help You Manage Student Loans

Handling your student loan payments may not be easy, but here's where you can start to take control.

More than 1.8 million students graduate from college in 2017. While it’s a momentous achievement, many graduates will walk away with significant student loan debt. Though keeping up with monthly payments can be difficult, knowing how to budget for them can be an even bigger obstacle.

If you’re feeling overwhelmed and don’t know how to begin managing your loans, your credit report can be an essential tool. Here’s how your credit report can help you take control of your debt.

What’s in Your Credit Report?

Your credit report is a complete picture of your financial history. It contains information about your bills, loans and what credit cards you have open.

Lenders use your credit report to make decisions on your reliability and financial stability. They look at your report to evaluate whether to offer you a car loan, mortgage or a new credit card. However, your credit report is an invaluable source of information for you too, especially if you have student loans.

2 Ways Your Credit Report Can Help You Manage Your Loans

When you’re in school and take out federal or private student loans, it’s easy to lose track of who your lenders are or how much you borrowed — especially if you don’t have to start repaying them yet.

To make things more difficult, your debt can sometimes transfer to a new loan servicer. If that happens, you’ll have to make payments on a different website and you’ll have a new account. That’s where your credit report comes in handy. You can use it to locate your loans and their current status in the following ways:

  1. Identify your loan servicer: If you aren’t sure who your loan servicer is, use your credit report to identify who manages your loans. Your credit report will list all the institutions behind your debt. Once you have the name of your servicer, you can use that information to sign into your account and begin making payments.
  2. Find out your current balance: Thanks to interest, your loan balance could grow while you’re in school. If you’re unsure what amount you owe, your credit report will list the current balance on your loans.

Where to Get Your Free Credit Report

There are many services that will send your credit report for a fee. However, paying for your credit report is unnecessary. You can get a free credit report from each of the three credit bureaus — Equifax, Experian, and TransUnion — once a year from AnnualCreditReport.com.

It’s a good idea to stagger your credit reports throughout the year. For example, you could review one credit report from each agency every four months. That way, you can continually review your credit report for issues, rather than waiting a full 12 months. Catching problems early can save you money and protect your credit.

You can also check your credit scores for free on Credit.com. They’re updated regularly and can help you spot changes in your credit reports if they go up or down unexpectedly.

What to Do If There’s an Error

An essential part of checking your credit report is reviewing it for errors. Sometimes loans are reported incorrectly or, in cases of identity theft, fraudulent accounts can be put under your name.

If you find an issue, whether it’s a simple mistake or a more serious issue of theft or fraud, it’s important to take action right away. If the accounts in error become delinquent, those late payments can cause your credit report and score to plummet. That will make it more difficult for you to get a loan, a new credit card or get approved for a new apartment. The longer you wait to act, the longer it could take to correct.

To report a problem, write a letter disputing the errors and send it in the mail to the following:

  • Equifax: Equifax Information Services, LLC., P.O. Box 740256, Atlanta, GA, 30348
  • Experian: Experian, P.O. Box 4500, Allen, TX 75013
  • TransUnion: TransUnion LLC, P.O. Box 2000, Chester, PA, 19016

You should also notify the bank or financial institution that reported the error. Include copies of any supporting evidence you may have to prove your case.

To ensure you have a record of contacting the organizations, it’s a good idea to send the letter as certified mail as proof.

If you report the error and the credit bureaus and financial institutions do not fix the issue, you can escalate the problem to the Consumer Financial Protection Bureau.

Managing Your Credit

Graduating from college is a huge milestone, but it’s easy to get overwhelmed managing your student loans. From figuring out who your loan servicer is to learning how much your loans grew, the process can be complex.

Getting your credit report and credit scores and reviewing them thoroughly can help you keep track of your loans and stay current on your payments.

Image: g-stockstudio

The post How Your Credit Report Can Help You Manage Student Loans appeared first on Credit.com.

The One Thing Job Seekers Forget Employers Look At

Brush up your resume. Update your references. Clean up social media accounts and ...

There are some steps even first-time job seekers know to take ahead of formally seeking out new employment opportunities: Brush up your resume. Update your references. Flesh out your LinkedIn profile. Clean up your other social media accounts. Network.

It’s all fairly straightforward, but there’s something else very important new graduates and beyond will want to add to do their pre-employment search to-do list: Check your credit reports.

Why Should I Check My Credit Before a Job Search?

Some employers will pull a version of your credit report as part of their application process. And patterns of money mismanagement — like a bunch of missed payments or multiple collection accounts — could wind up hurting your odds of scoring a position, particularly if that gig involves handling cash, access to sensitive financial information, company accounting or government work. That’s why it’s a good idea to review your credit reports ahead of your job search.

You can pull a copy of your credit reports from each major credit bureau — Equifax, Experian and TransUnion — for free every 12 months via AnnualCreditReport.com. You can also view your free credit report summary, along with two free credit scores, updated every month, on Credit.com.

Financial Fact: Some states, including California, Hawaii and Washington, have banned employers from screening an applicant’s credit in certain circumstances. And, in all states, employers can only look at your credit report, not your actual credit score. Plus, they can’t pull your credit reports without your permission, so if a credit check is part of their application process, you’ll at least have a heads up. (There will be a form you’ll be asked to sign.)

What Am I Checking For?

First, you’ll want to make sure there aren’t any errors on your file that could needlessly cost you a prime position. These errors are more common than you think: a Federal Trade Commission study from 2012 found that one in five Americans had an error on their credit reports. If you find one, be sure to dispute it with the creditor and the credit bureau in question. You can learn more about disputing errors on your credit reports here. Keep in mind, credit bureaus have 30 to 45 days to investigate a credit report dispute, so won’t necessarily see that error disappear right away. Hence the reason you’ll want to do check your reports before your job hunt kicks into full gear.

Second, if you discover legitimate blemishes, you’ll want to determine if anything can be done to fix them. For instance, you might want to shore up unpaid collection accounts or pay off high credit card balances. Keep in mind, many missteps will stick around for awhile as most negative information stays on your credit file for up to 7 years. (Certain bankruptcies can even take up to 13 years to age off your reports.) Still, even if you can’t undo a troublesome line item, you’ll at least know that one is there — and will be able to address any issues upfront with prospective employers.

Finally, work on improving your credit overall so you won’t have to worry so much about a dreaded credit pull the next time you’re looking for new employment opportunities. You can rebuild bad credit by using a starter credit card to establish a new and improved payment history, keeping credit card balances below at least 30% and ideally 10% of your total available credit limit(s) and adding a mix of credit accounts organically as your score and/or finances rebound.

Not sure how to fully prepare for a job hunt? No worries. Recent or soon-to-be college graduates in need of some help can find a full 50 things to do to score their first job right here

Image: Mikolette

The post The One Thing Job Seekers Forget Employers Look At appeared first on Credit.com.

50 Things Recent Grads Can Do to Score Their First Job

Consider this a crash course on getting a job after graduation.

If you’re a college senior and are nearing the time when you’re going to walk across the stage, you’re probably filled with a lot of excitement. And maybe even some panic, especially if you don’t have your next step lined up.

According to the Accenture Strategy 2016 U.S. College Graduate Employment study, four out of five graduates thought about how many jobs were available in the industry they were considering before choosing their major. But even with that foresight, only 21% of the class of 2016 had accepted a job before graduating.

So if you’re about ready to throw your cap in the air and don’t have your first job lined up yet, here are 50 things you can do to help make that happen.

1. Remember, It’s Your First Job

Yes, you have the education, but now you need real-world experience. The first job you get right out of school probably won’t be your dream job, so adjust your view and think of it as another step in getting you there.

2. Start With an Internship

It may seem like something you stop doing after graduation, but having an internship means you’ll “have something on [your] resume, learn some real-world work skills and possibly have another reference for [your] ongoing job hunt,” Dr. Crystal I. Lee, a licensed psychologist and owner of LA Concierge Psychologist, said. And this role could ultimately land you a full-time, permanent position.

3. Fill in the Gaps

Take a look at your industry and see what skills you may need that you didn’t gain in your formal education. “There are lots of relatively short programs, many of them at universities themselves, to teach these kind of ‘last-mile’ skills,” Andrew Overby of Yonderwork, an international community experience for remote workers, said. “It can only help.”

4. Expand Your Network

“Go out there and get coffee meetings with people you respect and look up to,” said Phi Pham, co-founder of Building Beats, an education startup in New York City. “Find a way to provide value to them and the dividends will pay off in job connections.”

5. Volunteer

“Reach out to a local nonprofit and see how you can put your skills to work [during] your job search,” Pham said. Plus, the people you meet when doing this can build up your network.

6. Start a Side Project

Having something you’re doing while you’re looking for full-time work “shows that you spend your time learning and figuring out how to make something meaningful for the world,” Pham said.

7. Adjust Your View

Try not to limit your applications based on pre-conceived notions about the working world. “You may think you want to work for a large corporation, bu find yourself interning or working for a small business and you feel satisfaction in knowing you are part of a team and making a valuable contribution,” Candace Dennig, director of student services at the Art Institute of Washington, said.

8. Ask for Advice

“Talk to instructors, friends and fellow students and ask for advice — are there any companies that they suggest reaching out to in hopes of securing employment?” Dennig said.

9. Take a Look at Your Credit Reports

It may seem strange, but knowing what’s showing up on your credit reports may be insightful. After all, many employers review a version of these reports as part of the vetting process. You can see a free snapshot of your credit reports on Credit.com.

10. Think About Relocating

“You sometimes do need to be living in the city in which you want to work before getting a job because it makes it easier for you to get in for interviews on short notice and network in the community,” Erin Lowry, millennial finance expert and author, said. Not sure which city may be the place to go? Check out this list of the best (and worst) cities for new graduates seeking work.

11. Visit Your Childhood Bedroom … 

Going home to stay with your parents may not be feasible for everyone, but if it’s an option, it could save you some rent money until you land a job. See if your parents will offer you a discount on rent in exchange for doing work around the house. This will offer you some flexibility in terms of not having to worry about breaking a lease if you get a job out of town, plus you won’t be racking up as many bills while you look for work.

12. … But Don’t Get Too Comfortable

Yes, there are many perks that can come with staying with your parents, but don’t let that put you in a rut. Use this time to your advantage — put money in savings for all the things you’ll need when a job comes your way. This includes things like paying rent, student loans and all your other bills.

13. Set Aside Time to Apply

From finals to social events, your schedule is probably pretty packed. But it’s important to set aside blocks of time to research jobs and apply for the ones that fit your skillset. This will help make sure you aren’t rushing and making mistakes on the applications.

14. Polish Your Resume …

You may not have a robust resume, but padding it won’t help get your foot in the door. Marc Cenedella, the founder and CEO of Ladders, a career site, offers these tips: “Keep to a one-page resume, remove references to high school and focus on highlighting your education, leadership skills and accolades achieved while in college.”

15. … & Then Have a Professional Review It

Once you feel you have your resume in a good place, it’s time to get a second opinion. “Having all your documents updated and formatted professionally is key when you go to networking events or start applying to positions,” said Valerie Streif, senior adviser with The Mentat, a San Francisco-based career service.

16. Customize Your Resume to the Role

Once you have a basic template for your resume, consider fine tuning it to each application. Sure, it may take a little more time but this way you can highlight to each employer what makes you right for that particular role. (And make sure you’re avoiding these big resume mistakes.)

17. Show You Can Do More Than One Thing

If you’re looking to join a startup, they’re likely looking for people who can take on more than one role. Show them they’ll be getting a jack of all trades (or at least someone with multiple skills) when hiring you.

18. Don’t Forget About the Cover Letter

Yes, that resume is important but so is your cover letter. This is the chance you have to say things about yourself your resume doesn’t. Make sure what you write is clear, targeted to the job and proofread for spelling errors and grammar mistakes.

19. Visit Your Career Center

Most colleges and universities offer career services. They may not have all the answers, but they have insights and may even have a listing of jobs, internships, freelance work and other opportunities.

20. Attend Career Fairs

“It can be easy to delete emails with notifications of upcoming job fairs on campus and instead go to the bars or spend time with their college friends — but making the effort to actually go to these events can bring incredible opportunities,” Streif said.

21. Attend Conferences

This is a great way to network with professionals in your given industry. Many of these are free or may offer a discounted rate for students.

22. Join a Professional Association

Do some research and find a professional organization in your industry that you find interesting. Participate in their meetings and other events and build that network.

23. Get Business Cards

You likely won’t always have a resume on hand and you never know who you may meet. Include contact information and a link to your website or portfolio on your cards.

24. Find a Mentor

Find someone you admire and who has a similar career to one you’d like and pick their brain. They can give you insights into what you may need to do and think about as you search for your first post-grad job.

25. Meet With Alumni

Your alumni network may be a good place to start when searching for a mentor. But beyond that, there’s partial truth when people say, “it’s not what you know, it’s who you know” and you already have a tie with this group of people. They may even be able to open some doors for you. Check with your school to see if they have alumni events or a database of alumni you can talk with.

26. Ask Younger Students

It may seem like it’s backwards to ask students younger than you about jobs, but they may know about companies you haven’t even heard of yet. Ask around and see where they’re interning or working for the summer for more ideas of where to apply. And maybe see if they can pass along your resume if you find an opportunity you’re interested in.

27. Refresh Your Online Presence

Recruiters and human resources departments often check your online profiles as part of your application. So, freshen up your social profiles (especially LinkedIn) and do a quick search of your name to see what comes up. You may consider setting up professional accounts in addition to your personal ones.

28. Get a Professional Email

If you don’t already have one, it’s time to get an email address you can use specifically for professional reasons.

29. Create Your Website

A website with your resume and examples of your work can act like a digital portfolio. Plus, if you start it now, you can build on it as you advance in your career. If you already have one, make sure it’s up to date with your graduation date.

30. Branch Out on Application Methods

“Taking many different approaches to the job hunt is the best way to ensure quick success,” Streif said.

31. Contact a Recruiting Firm

These agencies can help get you placed in an entry-level position, some of which don’t have public listings online.

32. See What Others Did

Take a look at people who are a step or two ahead of you in your industry and see what they’ve done to get ideas for where your path could start. Browse their websites or LinkedIn profiles to get started.

33. Pick Up a Book

Odds are, leaders in your industry have written a book about how they got to be where they are today. Reading these books may not land you a job, but they could give you ideas. And, if nothing else, they can give you some talking points for any interviews you go on.

34. Post Your Resume Online

While you’re out there searching for jobs, know that employers are searching for candidates. Many job boards allow you to post your resume for potential employers to review and doing this may be to your advantage.

35. Go Where Others Won’t

Maybe you’re dreaming of working in a big city but so are countless other people. Starting in a smaller market may increase your chances so don’t cut these locales off your list.

36. Take Initiative

Is there a company you really like but no job openings that you qualify for? Take some initiative and call their recruiter and HR department and pitch them on hiring you. The answer may still be no, but the opportunity won’t be there if you don’t at least try. (Also, see point two — perhaps there’s an internship available to help you get your foot in the door.)

37. Remember: Odds Are in Numbers

You probably didn’t apply to one college so why apply to just one job? According to Adecco, an online staffing agency, recent graduates apply to an average of 12 jobs before getting offered their first job.

38. Think About What’s Important to You

Yes, you want a paycheck and benefits. Yes, you want to build up your resume. But there are other things involved in a job, so think about what you want. Perhaps a place you can advance or a job with a flexible schedule is important to you? Whatever it is, make note of these things so you can include them in your search (and ask about them in interviews).

39. Find a Way to Stand Out

Whether that’s bringing a hard copy of your portfolio or showing your design skills on your resume, whatever you can do to make yourself a bit different from the rest of the applicants, do it. (Just don’t go overboard. You don’t want to end up using tactics that get your application noticed for the wrong reasons..)

40. Try Your Hand at Freelancing

“Getting a freelance job could supplement your income and allow you to take a lower wage job to get your feet in the door,” said Linda Murray Bullard, a business strategist at LSMB Business Solutions LLC. Check out these 15 best companies for freelancers this year.

41. Start as a Temp

Temporary agencies may be a good way to break into your chosen industry, offering you some income while you wait for a full-time job. Some of these jobs might have the potential to turn into a permanent role.

42. Consider Teaching Opportunities

Irnande Altema, founder of FirstGenRise, suggests graduates “look into their public school systems and check the requirements to become a substitute teacher in middle or high school. … Also, another option is working for a summer camp where you are teaching a subject like science, math or history.”

43. Research the Company …

Once you get a face-to-face interview, it’s important to know details about the company and what they do. It will help you make a good impression.

44. … & Maybe Even the Interviewer

Whether you read their bio on the company website or read over their LinkedIn profile, finding common interests or details to break the ice can be helpful. Plus, it can give you more insights into what to prepare for.

45. Think About Interview Questions

Going into an interview without preparation can make it harder to think on your feet. After all, your nerves will probably be on overdrive while you’re there. Having someone do a mock interview with you — like people from your career center — ahead of time may really help you be on your “A” game. (Feel like the interview went well? Check out these five signs you may be getting hired.)

46. Follow up After Interviews

You’ll be surprised at what a difference this can make. Write a thank you note to everyone who took part in your interview process, and reiterate your interest in the position. It not only underlines your interest, it shows you have good manners and appreciate the time the interviewer(s) gave you.

47. Have References Ready

Be prepared by asking three or four people if you can list them as references. This way, when you get an interview and they ask for references, you’ll be ahead of the curve.

48. Find Out What You’re Worth

You’re just starting out, so you probably won’t be raking in the top salaries out there, but what’s fair? Take a look at sites like Glassdoor to find out what people in your industry, at your level and in the area you’re living are making. Information is power, after all.

49. Learn How to Negotiate

Once that job offer finally comes in, taking the seemingly big salary without thinking about it may be tempting. Find out what the job will entail and make sure you’re being paid fairly and negotiate accordingly. It’s highly unlikely they’re going to rescind your offer if you ask for more money. Don’t forget to factor in benefits, too. Just a week of vacation offered? If they won’t offer you more money, they may be willing to give you more vacation.

50. Consider Starting Your Own Business

Sure, it may be costly, but if you’ve always wanted to execute an idea you had for a company, now may be the time. Just make sure you crunch the numbers to see if this is feasible — after all, those student loan payments will kick in soon.

Image: sturti

The post 50 Things Recent Grads Can Do to Score Their First Job appeared first on Credit.com.

Financial Literacy: Are you at the head of the class?

How would you grade yourself when it comes to financial literacy and credit? If you haven’t given it much thought, April is the perfect time to do so, as it is National Financial Literacy Month.

 

In a recent survey conducted by Equifax, most consumers do not place themselves at the head of the class when it comes to financial literacy. According to the findings, one-third of the respondents grade themselves a “C” when looking at their financial literacy knowledge.

 

Additionally, one in five surveyed consumers said they know more about national politics than their own credit histories. Thirteen percent said they knew more about their favorite sports teams, 7 percent said they knew more about this season of their favorite TV series, and 6 percent knew more about the latest fashion trends.

 

The good news is, most consumers are taking steps to educate themselves when it comes to financial literacy. When asked to select the steps they’ve taken to improve their financial literacy within the last year, 45 percent of the consumers said they read news articles on financial websites, while 28 percent sought guidance from family and friends.

 

While parents were the most popular source of information, the second most common source was a personal finance course during high school or college. Ninety percent of survey respondents saw value in teaching personal finance, saying they thought it should be a required course to graduate high school.

 

The survey also found:

 

  • Most surveyed consumers correctly selected the factors that can impact credits scores. Specifically, 87 percent knew paying bills on time is one factor that impacts a credit score.
  • Additionally, 42 percent of surveyed consumers knew that most types of negative information can stay on a credit report for seven years. This is up slightly from the 40 percent of surveyed consumers who knew this same information in 2016.
  • A majority of surveyed consumers felt confident about their short- and long-term financial futures. Sixty-one percent indicated they were confident or extremely confident about their short-term financial futures, and 54 percent indicated they were confident or extremely confident about their long-term financial futures.
  • Respondents 60 years of age and older were most confident about their financial futures, while respondents aged 45 through 59 were least confident.

 

If you, too, would give yourself a “C,” here are some things to consider doing to turn those Cs into better grades:

 

  • Pay your bills on time every time – no matter what;
  • Create and stick to your budget;
  • Check your credit report at least once a year. You can get a free copy of your credit report from each of the three nationwide consumer credit reporting agencies every 12 months by going to www.annualcreditreport.com. You won’t be able to see a credit score, but you’ll be able to check your information and even might spot signs of identity theft; and
  • Pay attention to your credit card balances, and always understand the commitments you’re making.