Find Out Which Bills Affect Your Credit Score

A high credit score helps you in many ways, including by potentially lowering your monthly bills.

Here’s the truth about your credit score: what you don’t know can hurt it, and there’s some confusion about exactly what can cause the pain.

A 2015 TransUnion survey asked consumers whether they believed a few common bills are regularly reported to the major credit reporting agencies. The data came from a survey of 1,001 US renters ages 18 to 64. The results of the study revealed that people often don’t understand which monthly bills can affect your credit score.

So out of these common bills, what happens if you don’t pay them?

  • Rent payments
  • Utility bills
  • Cable and internet bills
  • Cellphone bills
  • Insurance payments
  • Car payments
  • Mortgage payments
  • Student loan payments

Do Rent Payments Affect Your Credit Score?

If you thought paying your rent bill on time helped your credit standing, you’re not alone—48% of those who responded to TransUnion Interactive’s online survey said they thought rent payments got reported to credit bureaus.

Generally, rent collectors don’t report payments to credit bureaus, so you don’t get “good credit” for making those payments on time. Still, neglecting to pay rent several times might end up hurting your credit because the company you owe money to may send the bill to a debt collector.

So paying rent on time may not put you on a sure path to a high credit score, but you should still make it a priority to avoid late fees and debt collector trouble. Plus, landlords often check your credit before agreeing to accept you as a renter, so you should avoid letting late rent bills go to collections.

Do Utility Bills Affect Your Credit Score?

Of the TransUnion respondents, 54% thought their utility payments are reported, which indicates another misunderstanding. Like rent payments, credit bureaus do not receive information about power, cable, and other utility bills—unless you forgo paying altogether and the bills wind up with debt collectors.

Stay current with your utility bills to keep your home in good working condition, but don’t expect it to make much of an impact on your credit score.

Do Cable and Internet Bills Affect Your Credit Score?

More than half of those surveyed thought cable and internet payments show up for the credit bureaus to see. Once again, that’s not true. Only those bills that remain unpaid and are sent to collections will ding your credit.

Of course, if you want to keep watching or streaming your favorite TV shows and movies or playing online games, pay your cable and internet bills on time.

Do Cellphone Bills Affect Your Credit Score?

Turns out, credit bureaus do not have a record of your cellphone payments, although 52% thought that was the case. You may experience phone service shutoffs if you don’t pay your bill every month, but missing payments won’t affect your credit score. That is, unless you leave them unpaid for a long time.

Do Insurance Payments Affect Your Credit Score?

Most adults have to pay auto insurance payments every month, and many also pay out of pocket for health insurance. Although many insurance payments are high, these bills aren’t regularly reported to credit bureaus either. Insurance companies may charge fees or higher rates if you neglect to pay on time, however.

Do Car Payments Affect Your Credit Score?

If monthly bills like rent, utility, and cellphone bills aren’t regularly reported to the credit bureaus, which bills do show up? One type of bill that can affect your credit score is any payment you make to auto lenders.

Once a bank extends you a loan or lease for a car, the bank will start reporting your payments to credit bureaus. If you miss even one payment by several days, you could see some damage to your credit score. What’s more, having bad credit or no credit can make it tough to get approved for a car loan in the first place.

Do Mortgage Payments Affect Your Credit score?

Even though the TransUnion respondents were renting their homes, it’s surprising that only 29% knew mortgage payments wind up with credit bureaus—and as a result, these payments have a significant impact on credit scores.

Like banks that offer auto loans, mortgage lenders track your monthly payments and send information about late bills to credit reporting agencies. Any late payments will negatively impact your credit scores. If you don’t make mortgage payments for several months, you risk foreclosure, which has lasting effects to your credit.

Do Student Loan Payments Affect Your Credit Score?

The last monthly bill on this list, student loans can affect your credit score too. Student loan lenders report each monthly payment to credit bureaus and whether it was paid on time. The upside: Staying up-to-date on your student loan payments can help you build credit and improve your scores.

The Bottom Line: Many Monthly Bills Do Affect Your Credit Score

Plenty of regular bill payments are regularly reported to the major credit bureaus. Any time a bank or lender extends you a loan or line of credit, the lender reports your account payment history. Credit card bills, student loan payments, mortgage payments, and auto loan payments all fit this description.

No one type of credit payment hurts more than another—a mortgage payment that’s more than 30 days past due is just as bad for your credit score as a credit card bill that’s 30-plus days late. (But if your mortgage goes unpaid for a long time, prepare for much bigger headaches.)

If you fail to pay any bill—including those that aren’t regularly reported to credit bureaus—your credit score may be jeopardized. Collection accounts have a negative impact on your credit standing for a long time. Even after you pay the debt, your credit will continue to suffer for months or even years.

However, the damage from collection accounts may be short-lived if the incident is an outlier on your credit report. Making on-time cellphone or utility bill payments won’t directly improve your credit standing, but you should still do the right thing and pay these bills to avoid further trouble.

If you’re looking to improve your credit, you have plenty of strategies to consider. First, it’s a good idea to track your progress by getting your free credit report card on Credit.com. You’ll get a personalized snapshot of your current credit situation so you can see if anything, including a late payment, has affected your scores.

What Else Should You Know about Credit Scores?

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FICO vs. VantageScore: 5 Differences You Should Understand

new-fico-score

When you think credit score, you probably think FICO. Since the Fair Isaac Corporation introduced its FICO scoring system in 1989, “What is my FICO score?” has become a common question. FICO scores have burrowed their way into all kinds of lending decisions, most notably mortgages, credit cards, and rentals.

But over the last decade or so, FICO’s market dominance has been challenged by a newcomer called VantageScore. As the result of a collaboration between the three major credit reporting agencies (CRAs)—Experian, Equifax, and TransUnion—VantageScore uses similar scoring methods to FICO but with slightly different results.

So what are the differences, and more importantly, do they really matter to you, the consumer? The short answer: usually no. But you might want to look at different scores for different needs or goals.

In this article, we’ll cover the five main differences between FICO and VantageScore and tell you which one to watch.

1. Difference in Scoring Models

FICO and VantageScore aren’t the only scoring models on the market. Lenders use a multitude of scoring methods to determine your creditworthiness and make financial decisions. But despite the numerous options, FICO and VantageScore are likely the only scores you’ll ever personally see.

How do FICO and VantageScore rate you? Both use the same basic criteria:

  1. Payment history
  2. Length of credit
  3. Types of credit
  4. Credit usage
  5. Recent inquiries

Although both FICO and VantageScore consider much of the same information, they gather their data in different ways.

FICO bases its scoring model on credit reports from millions of consumers at once. They gather these reports from the three major credit bureaus and analyze the reports’ anonymous consumer data to generate an accurate scoring model.

Alternatively, VantageScore uses a combined set of consumer credit files, also obtained from those same three credit bureaus, to come up with a single formula.

Both FICO and VantageScore issue scores ranging from 300 to 850. In the past, VantageScore has used a range of 501 to 990, but the range was adjusted when VantageScore 3.0 was issued in 2013. VantageScore’s numerical rankings now match FICO’s, which makes it easier for consumers and lenders to implement the VantageScore model—plus, it’s less confusing for consumers who check both their FICO score and VantageScore.

2. Variance in Scoring Requirements

If you don’t have a long history of credit, VantageScore is the score you want to monitor. Before it’s able to establish your credit score, FICO requires at least six months of credit history and at least one account reported to a CRA within the last six months. VantageScore only requires one month of history and one account reported within the past two years.

Because VantageScore allows a shorter credit history and a long period for reported accounts, it’s able to issue credit ratings to millions of consumers who wouldn’t qualify for FICO scores. Considering how everyone from employers to landlords want to see your credit score these days, if you’re new to credit or haven’t been using it recently, VantageScore might be able to prove your trustworthiness before FICO has enough data to issue a rating.

3. Significance of Late Payments

A history of late payments will impact both your FICO score and your VantageScore. Both models consider these factors:

  1. How recently the last late payment occurred
  2. How many of your accounts have had late payments
  3. How many payments you’ve missed on an account

However, while FICO treats all late payments the same, VantageScore judges them differently—it penalizes late mortgage payments more harshly than other types of credit.

If you’ve had late payments on your credit cards, they will have about the same impact on both your FICO and your VantageScore. But if you’ve had late payments on your mortgage, you might find you have a higher FICO score than VantageScore.

4. Impact of Credit Inquiries

You’ve probably heard you shouldn’t open too many credit cards in a short period of time. One reason for this is every time you apply for a credit card, the lender does a “hard inquiry” to check your creditworthiness.

VantageScore and FICO both penalize consumers who have multiple hard inquiries in a short period of time, and they both do “deduplication.” Deduplication is important for things like auto loans, where your application may be sent to multiple lenders, thereby resulting in multiple inquiries. Both FICO and VantageScore don’t count each of these inquiries separately—they deduplicate them, or consider them one inquiry.  However, the timespan they use for deduplication differs.

FICO uses a 45-day span to deduplicate your credit inquiries. VantageScore limits its focus to only a 14-day range. VantageScore also looks at multiple hard inquiries for all types of credit, including credit cards. FICO considers only mortgages, auto loans, and student loans.

Inquiries aren’t your biggest concern when it comes to your credit score, but they do have an impact. If you want to buy a house or a car, restrict hard inquiries as much as possible to avoid lowering your credit score.

5. Influence of Low-Balance Collections

VantageScore and FICO both have penalties for accounts sent to collection agencies. However, FICO might give you a bit more of a break when it comes to low-amount collection accounts.

FICO ignores all collections where the original balance was under $100. It also doesn’t count collection accounts you’ve paid off. VantageScore, on the other hand, ignores only paid collection accounts, regardless of the original balance amount.

Keep Your Credit High

Regardless of the differences between FICO and VantageScore, the essential advice for keeping your credit score high remains the same:

  • Avoid late payments. Pay your bills, and pay them on time.
  • Keep your credit balances low. Don’t max out your credit cards, and try to keep your cumulative balance to less than 30%—the lower the better.
  • Apply for new credit only when you have to. Don’t open a bunch of new cards in a short period of time, and don’t close old accounts without good reason.

Check Your VantageScore Monthly

You can get a free VantageScore 3.0 credit score, updated monthly, from Credit.com. You can also see how your score compares to others and get a custom action plan for your credit. Remember, every point counts when it comes to getting the best interest rates and lending terms.

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7 Steps to Help You Get Out of Your Rental Lease

security deposit

Whether you’re renting an apartment, house, or duplex, your home ought to feel like a safe place—one that’s comfortable and secure. But what happens if something alters that safe space? Can you break your lease? And what happens if you do—is your credit doomed?

To help you navigate these troubling waters, we’ll cover common reasons tenants want to break their lease and what you should do if you’re ready to break yours.

Common Reasons Tenants Break a Lease

There are a variety of reasons people want to terminate their lease early—but here are just a few that could apply to you.

  1. The rental unit is uninhabitable. A landlord is obligated to perform general property maintenance and ensure the property adheres to health and safety codes. Circumstances that could make a property uninhabitable include the presence of black mold, a lack of running water, or a lack of proper waste disposal.
  2. The landlord illegally entered your rental space. Landlords must provide legitimate reasoning as to why they are entering your home.
  3. You are on active military duty.
  4. You are a victim of domestic violence.
  5. The rental space falls into foreclosure or is illegally rented to you.

What to Do If You Need to Break Your Lease

If you need to get out of your lease, here are seven essential steps.

1. Read Your Lease and Document Everything

Before you take action, be sure to look over your lease. “Read it three times!” says Joel S. Winston, a litigation lawyer at Winston Law Firm, LLC. Your lease should spell out the procedures and penalties for canceling early.

“The lease that you signed and that no one reads—that’s going to control how difficult and expensive it will be to break a lease,” Winston says.

Just don’t make up problems with the property that don’t exist to get out of your current lease. “Try to be open and honest and approach your landlord in a nice and friendly manner,” Winston recommends.

However, if there are problems and you feel the landlord isn’t adequately fixing them, put the complaints and problems in writing. Just make sure you keep a copy of the document for your records. And if push comes to shove, carefully look over your lease for details that cover what happens if you terminate the lease early, including whether you will be held responsible for the entire remaining term of the lease or a lesser amount.

In many states, landlords can’t use the fact that you left early as a windfall. However, if they can only rent the unit at a lower rate than you were paying for the remainder of your lease, you may be required to make up the cost difference. You may also have to pay for the advertising costs to find a replacement tenant.

2. Communicate Thoroughly

Let your landlord know what you want to do and why you want to terminate the lease. Some may be more flexible than others. A large property management company might be unsympathetic to your financial woes, but an individual owner might be more compassionate.

Also, as difficult as it may be, try to think of the circumstances from a landlord’s perspective.

Terminating a lease early may put an owner-landlord into a financial bind, especially if they have to spend time and money securing a new tenant. It’s not out of the question to assist your landlord in finding an adequate replacement, but it’s ultimately their decision.

3. Get Confirmations in Writing

Make sure you get written confirmation of any changes to the lease. If your landlord says you can move out early with a small penalty or no penalty, get that in writing. Never rely on a verbal agreement—otherwise it will be your word against theirs. You may be tempted to keep things cordial and light, but a handshake isn’t going to help you pay off a creditor or debt collector.

Store these written confirmations in a safe place you’ll remember. It won’t do you any good if you can’t find that information when a collection agency contacts you.  And should you end up in collections or in court, the written terms in the lease will likely prevail.

If the landlord won’t budge, won’t put anything in writing, or won’t compromise, you can still create your own paper trail by communicating in writing and keeping a record of the letters you sent.

4. Don’t Forget the Walk-Through

No matter how anxious or excited you are to move out, protect yourself from unexpected charges by doing a walk-through with your landlord and getting a written record of the results. We wouldn’t recommend leaving your rental until you’re able to do this. Should your landlord refuse to do a walk-through, take detailed pictures—or better yet, video—of the property’s status the day you leave.

5. Don’t Make Assumptions

When it comes to breaking your lease, avoid assumptions. Specifically, don’t assume your security deposit will take care of any remaining balance or fees you owe.

“When you are breaching the contract, it doesn’t always entitle the landlord to scoop up your security deposit. For example, in New York, the landlord has to go to the housing court to file a complaint in order to take that.” Winston says.

Similarly, if you live with a roommate and you pay your portion of the rent but your roommate does not, this missing payment has financial repercussions. If you both signed the lease, you are both fully responsible for the entire rent check, regardless of what the two of you have worked out between yourselves. But if your name is the only one on the lease, you may be the one stuck holding the bag.

6. Know That There Are Exceptions to the Rules

You may have legitimate reasons for breaking a lease that aren’t spelled out in the actual lease, like a safety or health reason directly connected to the property.

“Essentially, the ‘warranty of habitability’ is a landlord-tenant legal doctrine requiring landlords to maintain rental real estate in reasonable conditions that are fit for tenants to live safely,” explains Winston.

Winston goes on to say, “The warranty of habitability is accepted law in most every jurisdiction in America. In some states, the warranty has been established by decades of case law (i.e., Implied Warranty). But in other states, the warranty has been expressly established by legislation.”

There may be state-specific laws that allow you to break a lease early. For example, in Washington, one legitimate reason for terminating a lease is the landlord failing to make certain types of repairs within a specific period of time—as long as mold isn’t part of the problem.

7. Get Help

Landlord-tenant laws are state-specific. So it’s a good idea to research your rights as a tenant before signing your name on the dotted line. If you believe a landlord’s actions are illegal, you may be able to get help from legal aid programs, a local housing agency, or a consumer protection attorney in your state.

Understand that even if you do everything right, problems can come up. For example, an unknown balance can wind up in collections and you may not hear about it until the damage to your credit score is done. Or if you terminated your lease early, the leftover balance may be reported to specialty credit reporting agencies used by landlords—and these reports could catch you by surprise the next time you try to rent.

Whatever the reason, keep detailed and legible records of what transpired long after you think you’ll need them—seven years is usually safe. Also, frequently review your credit report and credit scores to make sure you’re aware of any significant changes. You can get two free credit scores updated monthly at Credit.com.
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Thinking of Freezing Your Credit? Learn How and When to Talk to a Credit Bureau

credit bureau

Calling a credit bureau can be daunting. First, you have to hunt down the credit bureau’s contact information, then you have to make it through the dreaded automated customer service purgatory to reach an actual person—if it’s even possible to get a live person at all.

“A lot of people are afraid to call credit bureaus because they don’t want to get bogged down in bureaucracy or be on hold for hours,” says Zara Mohidin, co-founder of Fig Loans.

In addition, there’s often confusion about what answers credit bureaus can provide and when it’s important to call a bureau.

To help you wade through all of the uncertainty, we asked finance industry and credit experts to provide some insight on these topics.

Contact Information: Equifax, TransUnion, and Experian

To begin with, it’s important to understand that there are three major credit bureaus, and each is required by law to provide consumers with a toll-free number that’s staffed during regular business hours. The phone numbers for each of the credit bureaus are below:

When to Call a Credit Bureau

It’s a good idea to contact a credit bureau whenever you notice any administrative inaccuracies on your credit report, such as misspelled names, incorrect address information, or erroneous employment information.

Further, if there are credit cards, collections, missed payments, or anything else on your report that you don’t recognize, contacting the credit bureaus is critical.

“Always call the bureaus if you notice a sign of fraud on your credit report,” urges Mohidin, who says one in four consumers have an error on their report that could be pulling their credit score down. “And getting your identifying information correct is important so that you are rewarded for on-time credit payments.”

Under the Fair Credit Reporting Act, credit bureaus must investigate any items you dispute and correct the information if it cannot be verified.

“If you disagree with the results of a credit bureau’s investigation, you can ask the bureau to include a consumer statement (to that effect) in your file and your future reports,” explains Freddie Huynh, vice president of credit risk analytics at Freedom Financial Network. These statements allow you to offer extra explanation, such as why you missed a payment.

Additional Reasons to Call

Keep in mind that correcting inaccuracies with one of the bureaus does not mean it will automatically be corrected by the others. It’s important to review the individual reports of all three credit agencies.

Huynh, who was previously the lead data scientist at FICO, stresses that though information is largely similar across all the credit reporting agencies, there can be variations between the reports.

In addition, when disputing something on your report, the burden of proof is on you, says Greg Oray, president of Oray King Wealth Advisors.

“Gather any documents that may help your case and have them available,” says Oray. “If you’re having trouble working with a representative or the reporting bureau to resolve your case, consider hiring a legal service that specializes in these matters.”

If you’d like to freeze your credit, you’ll have no choice but to speak to a credit bureau.

How to Freeze Your Credit

Understanding what it means to freeze your credit is critical, particularly in light of the recent Equifax security breach that exposed the personal information of millions of consumers. 

A credit freeze, also called a credit lock, is a tool that restricts access to your credit report. Taking this step makes it far more challenging for identity thieves to open new accounts in your name.

“Placing a credit freeze is similar to putting your credit cards in a bowl of water in the freezer—no one can use the credit until you ‘thaw’ it,” explains Andrew Housser, CEO of Freedom Financial Network. “With a credit freeze, creditors cannot see your credit history. If a scammer tries to open credit in your name, the creditor is unlikely to issue credit without knowing the history attached to your name and Social Security number.”

However, it’s important to note that freezing credit requires contacting each of the three credit bureaus separately.

Freezing Credit with Equifax

Equifax provides detailed instructions about how to place, temporarily lift, or entirely remove a freeze on its site.

Consumers may also request a freeze in writing or over the phone. You can request a security freeze by calling 1-800-685-1111 (NY residents call 1-800-349-9960) or submit your request in writing to the following address:

Equifax Security Freeze
PO Box 105788
Atlanta, GA 30348

Putting a freeze on your account, or lifting one, requires some personal information, including your Social Security number, address, and more.

It’s also important to note that as part of initiating an Equifax freeze, you will be provided with a PIN during the process. This PIN will not be emailed to you, so make sure you write it down.

Freezing Credit with TransUnion

You can freeze your credit with TransUnion via its website. TransUnion offers two different services on this front—locking your credit and freezing your credit.

Locking your credit via TransUnion is a process controlled by you, and there is no fee. You have instant, independent control over who accesses your credit information. This approach also means you have online, real-time ability to lock and unlock your account as often as you want.

Freezing your credit file with TransUnion means the credit agency controls who has access to your information. There are fees associated with both freezing and unfreezing your credit with TransUnion. In addition, there is a waiting period for a freeze to be either placed or lifted via this approach.

Freezing Credit with Experian

Experian provides an online form to initiate a credit freeze on its website. You can also freeze your credit by calling Experian at 1-888-397-3742 or sending certified or overnight mail to this address:

Experian Security Freeze
PO Box 9554
Allen, TX 75013

While this bureau doesn’t charge victims of identity theft who’d like to initiate a freeze, there are fees for others seeking to take this step with their credit. The fees vary by state of residence and range from about $3 to $10.

What You Need to Know about Credit Freezes

When initiating a freeze, keep in mind that lenders need credit reports to determine if you’re eligible for credit. After your credit is frozen, no one can pull your credit report. That means it won’t be possible to get approved for a loan or credit card in your name.

Credit freezes, however, do not affect your overall credit score in any way and they will not prevent you from accessing an annual credit report.

While a credit freeze can keep identity thieves from opening new accounts in your name, it does not prevent thieves from using your existing accounts. So it’s important to keep monitoring your credit and accounts.

 The Downsides to Calling Credit Bureaus

Not all experts think calling a credit bureau is the best approach. Don Petersen, an attorney, recommends calling a bureau for only basic administrative questions—such as updating an address or asking if you’re affected by a recent data breach.

For most other issues, Petersen advises his clients to write to credit bureaus or submit disputes online.

“The consumer will not have a record of what was said when they called,” explains Petersen. “Most consumers struggle to understand the system and would be much better served by taking the time to memorialize their dispute in writing and, obviously, save a copy of their letter.”

If you do prefer to call a credit bureau to get to the bottom of a question or concern more quickly, Petersen urges consumers to follow up in writing after the telephone conversation. Include the name of the representative you spoke with in the letter as well as details of what transpired in your conversation.

And finally, send the letter via certified mail with a return receipt requested, Petersen instructs.

“Call with very simple questions,” Petersen says. “But if you’re trying to initiate a dispute, it’s best to do it in writing so that you have a record.”

Keep an Eye on Your Credit

Every now and then, pull your credit report and review it carefully—you can obtain your free credit report at Credit.com. Look for any inaccuracies or other issues in the report, and if you spot something unusual, make a few calls to the credit bureaus. Always investigate suspicious activity on your credit report, and if you’re worried about identity theft, mitigate the issue with a well-placed credit freeze.

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What Happens When You Submit a Credit Report Dispute

paid-judgement-on-credit-report

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.

Image: istock

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

5 Ways to Get Your Finances in Shape Before the Year Ends

Everyone has those New Year’s resolutions that, even with the best intentions, seem to fall by the wayside. While it might be too late for some, there’s still plenty of time left in 2017 to fulfill your financial goals.

Courtney Lindwall, 24, an editor in New York City, says she set out at the beginning of this year to spend less money eating out. While she’s been better lately, she says she didn’t start working toward the goal right away.

“Around March, I was finally like, ‘Enough,’ and have been a little stricter about it,” she says.

In fact, mid-year is the perfect time to re-evaluate your financial situation and find new motivation for saving, says Catalina Franco-Cicero, director of financial wellness and a financial coach at Fiscal Fitness Clubs of America.

“We could all say that we get really excited at the beginning of the year,” Franco-Cicero says. “Then come summertime, we think, ‘Holy cow, I didn’t do anything. I really want to get remotivated.’”

Bruce McClary, vice president of communications for the National Foundation for Credit Counseling, says he also recommends reassessing financial goals mid-year. Making financial resolutions at the new year almost seems to “curse” them, he says, and there are many events to plan for financially in the second half of the year, such as back-to-school season and the holidays.

Here are five areas to evaluate to help you become more fiscally fit in the last half of 2017.

1. Put together a status report

You need to understand your financial situation in order to set goals for improving it. Finding the money to save or pay off debt can seem doubly daunting if you don’t know how you’re spending your money each day.

Evaluate the last six months’ worth of your expenses and income so you can plan for the rest of the year. McClary suggests reviewing the following things:

  • Your budget: Determine how much you’re spending each month on your home, car, food, and other living expenses.
  • Your debts: Make a list of all your debts, how much you owe on each one, the interest rates, and any pay schedules.
  • Your savings: Take stock of your savings accounts, including retirement accounts and emergency fund. Also think of things you would like to save for.
  • Your credit score. (If you’re not sure how, you can check out our guide to getting your free credit score.)

“Really give yourself a full picture of your financial situation so you can then go in and identify your best ways to save,” McClary says.

2. Dig into your spending habits

Once you have a high-level view of your finances, take a closer look at how you’re spending your money.

Franco-Cicero says she uses Mint, a money management tool, with her clients to help them categorize their transactions — a process people can easily turn into a habit.

Then, evaluate your discretionary spending to see what’s not necessary or where you can cut back. For example, consider reducing the amount you spend on subscription services or dining out and use the savings to pay off debt or to boost a savings account.

One thing to remember is seasonal expenses, like heating and cooling, McClary says.

“You want to make sure you’re making adjustments to your budget, while at the same time, being mindful of the expense categories that can change on a seasonal basis,” he says.

3. Reassess your credit card situation

A key step in reassessing your debt is taking a look at how much of a balance you carry on credit cards each month, how much you’re paying off each month, and how long it will take you to become debt free at that rate. You can figure this out with a credit card payoff calculator.

“Say [to yourself], ‘Hey, if I continue at the rate that I am going, will I ever be debt free?’” Franco-Cicero says.

Then create a plan to pay off your debt. McClary says the most important thing is to craft it around what motivates you the most. For example, if paying off the credit card with the highest interest rate motivates you, focus on that. If paying off the card with the lowest balance motivates you more, check that off first.

And even if it seems impossible to pay it off, he says there are benefits to chipping away at your credit card balance: Your minimum payments could go down, and using less of your credit line can help your credit score.

4. Start saving for something

We all know that we should be saving, whether it is for an emergency, retirement, or vacation. However, 23% of Americans don’t save any of their income, and only 38% report making good progress toward their savings needs, according to a 2017 survey from the Consumer Federation of America.

One of the best ways to become fiscally fit is to start saving for something that motivates you. You’re more likely to stick with saving toward a goal that you set for yourself, Franco-Cicero says.

If you don’t know where to start, she recommends a so-called “curveball” account.

“Curveball” accounts are similar to emergency funds in that they can help you cover unexpected expenses. The difference is that your “curveball” account would be used for things like replacing the worn-out tires on your car versus using your emergency fund to repair a blown transmission.

Now is also a good time to focus on saving for a house, McClary says, because you’ll have six to eight months to save before the next home-buying season. You can plan how much you need to save by looking at your existing savings, the cost of buying in your desired neighborhood, your debt-to-income ratio, and your credit standing.

No matter what you’re saving toward, McClary says an ambitious goal would be to save 20% of your monthly income between now and December.

If you make $2,000 a month after taxes, that means you would put about $400 toward savings each month. If you start in August, you could save $2,000 toward your goal by the end of the year.

5. Stick to your plan

Establishing where you are and where you want to be is only half of the battle when it comes to being fiscally fit by the end of 2017. Sticking with your action plan, as with all resolutions, can be the toughest part.

To be successful, Franco-Cicero suggests automating everything you can, from paying your bills each month to putting money into your savings account. This way, you don’t have to think about making sure a portion of your paycheck goes toward savings — your bank account will do it for you.

Franco-Cicero also says you should find a “money buddy” who knows your goals and can help you stay on track. Be sure to find someone who also has a financial goal and who will stick to a schedule so you can check in with each other. It’s a good idea to pick someone with whom you feel comfortable talking about money, not someone who you feel passes judgment on your purchases.

“We can be very lenient with ourselves, so you’ve got to find somebody who will hold you accountable,” she says.

Lindwall has had success following a similar approach. She says cooking more at home with her boyfriend has helped her stay on track toward her goal of eating out less.

“The biggest thing is getting someone else on board to do less expensive things with you,” she says.

The post 5 Ways to Get Your Finances in Shape Before the Year Ends appeared first on MagnifyMoney.

Big Changes Coming to Millions of Credit Reports in a Few Days

Millions of people could see their credit scores rise July 1.

Up to 7% of people with credit scores could see them rise beginning July 1 when credit reporting agencies will start excluding most civil judgments and about half of all tax lien data from credit reports.

As announced in March, the three major credit reporting agencies, Equifax, Experian and TransUnion, will start holding public data to new standards. After July 1, any public record data must include a consumer’s name and address, as well as their Social Security number or date of birth, to appear on their credit file, according to the Consumer Data Industry Association.

Who Is Affected?

Most people should see little impact on their credit scores, according to an analysis conducted in March by FICO, the most common provider of credit scores. About 7% of people with FICO scores, or about 15 million of the 220 million Americans with scores, will see a judgment or tax lien removed from their credit files, the analysis said.

Public records like bankruptcies, tax liens and civil judgments typically stay on credit reports for seven years, so those who see these items removed get a long-lasting weight removed from their credit scores.

However, most of the people who have items removed will experience score increases of less than 20 points, FICO said. The reason the increase isn’t greater is because 92% of people who will have tax liens or judgments removed have other negative information on their credit files. To see if the change affects you, you can check two of your credit scores free on Credit.com.

In addition to culling the public record data, the agencies also plan to update their public record information at least every 90 days.

While the credit score increase is relatively modest, it may still be enough to allow people to qualify for loans or credit reports that may have been out of reach before. Most of the people impacted had a median credit score of 565 before the change.

Twenty points above that median puts people in range of a Federal Housing Administration loan with only a 3.5% down payment. The minimum FICO score required for such a loan is 580.

The National Consumer Action Plan

Equifax, Experian and TransUnion are making the changes as part of a 2015 settlement with 31 state attorneys general who were investigating the agencies over the accuracy of credit reports. In response, the agencies launched the National Consumer Action Plan, which aims to make credit information more transparent for consumers.

In addition to the public record data, the plan also prohibits the agencies from including medical debts on credit reports until after 180 days to allow insurance payments to go through. The plan also calls for the bureaus to hire specially trained employees to deal with credit disputes and allow consumers to obtain an additional free credit report if they find an error on their free annual credit report.

Image: jacoblund

The post Big Changes Coming to Millions of Credit Reports in a Few Days appeared first on Credit.com.

5 Tips for Splitting Bills With Roommates

Roommates can be great. Or a nightmare. Here's how to keep your experience as positive as possible on the financial front.

There are many benefits that come with roommates: the ability to rent a larger space, share cleaning duties, and easily find friends to watch a movie with. On the other hand, sharing a space with a roommate – or roommates – is not always easy and can bring on some challenges, especially when it comes to money.

Here are some tips to help you split the bills and keep the peace.

1. Establish Ground Rules & Guidelines

Just as your lease spells out every detail, consider working together with your roommates to create some ground rules or guidelines. This is a good time to discuss exactly which expenses you will be sharing and which you will be paying for individually.

A major key for keeping the peace is making sure bills are organized. Figure out when and how bills will be collected and split each month, how they will be payed, and who is responsible for paying what amount. While this may sound obvious, too many times roommates will wait until the last minute, causing stress, tension, and possibly late bills.

2. Make a Cost Spreadsheet

Once ground rules and guidelines are created for paying the bills, make a spreadsheet outlining each expense you and your roommates will need to pay. Each expense should show details such as due dates, the amounts owed, and the person responsible for paying. It may be wise to have a monthly meeting to discuss the bills and this spreadsheet. This will make sure everyone is on the same page and no one is surprised by a bill when it’s time to pay.

3. Use Apps

There’s always an app for that! When you have large expenses, such as rent or utilities, consider using an app that can help with the math and the payments. Gone is the excuse that a roommate “doesn’t have cash” on them as Venmo can easily solve that issue. This free app lets you send money from a debit account to friends. The app also lets you request money letting your roommates know that money is due.

Another great app is Splitwise. This app lets roommates track bills, tally who paid, and send reminders so you’re never late. If a cost spreadsheet is too old-school for you, consider using an app to make paying bills easier among you and your roommates.

4. Keep Some Purchases Separate

Unless you and your roommates plan on selling everything when the time comes to move out, consider buying furniture separately. While it may sound logical to split furniture costs that you both will be using, what happens when your lease is up? Deciding who gets to keep what can be stressful and problematic. Consider making a list of furniture and electronics necessary for your place and figure out who will be responsible for each item while keeping your overall costs even.

Like furniture, groceries are another item which roommates should consider buying separately. If you love to eat fresh foods while another roommate loves frozen pizzas, splitting the costs won’t exactly be even. This also creates controversy when your roommate decides they want fresh food that day and indulges in your groceries.

5. Choose Your Roommates Wisely

Obviously you won’t want to live with someone who you’re going to constantly clean up after. You also won’t want to live with someone who will never pay their share of the bills. Doing so could end up hurting your credit, especially if they skip out and you can’t afford the rent on your own. You may want to request that they check their credit scores and you can do the same. That way you’ll know what their history of paying bills is like (you can get your credit scores for free on Credit.com).

While it may be hard to know your possible future roommate’s habits, at the very least, consider meeting with them beforehand so you can feel them out. You won’t want to be stuck in a lease with someone you’re going to regret living with.

Image: martinedoucet

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How to Fix the Big Things You Hate About Your Credit Cards

reasons-people-hate-credit-cards

Credit cards may be in the wallets of most Americans, but not everyone is happy with their travel companion.

The Consumer Financial Protection Bureau (CFPB) released its monthly snapshot of consumer complaints in the financial services industry this week. The report, which regularly focuses on a different financial product to highlight consumer complaint trends, focused on credit cards and what irks consumers about their plastic friends (or foes, depending on how you view it).

Credit cards represent only about 10% of total complaints to the CFPB, a small amount considering how prevalent the cards are in Americans’ daily routine. That puts them in fourth for the most complained-about financial products, behind debt collection, credit reporting and mortgages.

Here are four of the major credit card complaints that surfaced in the bureau’s review.

1. Disputes Over Fraudulent Charges

Billing disputes were number one on the CFPB’s top credit card complaint list. Of the nearly 100,000 complaints the CFPB analyzed, 17% were over billing disputes. Credit cards often offer purchase protections and chargebacks — tools consumers can use to combat faulty merchandise or high prices — and these tools are rarely offered by debit cards and never offered by cash. But fraud seems to be the source of most complaints, as consumers finding fraudulent charges cite trouble removing or getting re-billed for them.

How to Avoid It: The best way to keep yourself from having to dispute fraudulent charges is to keep your credit card information as safe as possible from fraudsters. Never share your credit card with shady sites that don’t have a “lock” symbol or https:// when taking your data. And even though it’s convenient, avoid letting shopping websites “remember” your credit card info for next time. While some of those sites have excellent security, data breaches are becoming more and more common and credit card info is a literal gold mine for a hacker. (To keep an eye out for signs of identity theft, you can view your free credit report summary on Credit.com.)

2. Rewards Program Murkiness

If you’ve ever owned a rewards credit card, you know that to make the most of your card’s program, you need to read up on all the details (and those details do change). The CFPB found that confusion over how a credit card rewards program works was sometimes attributed to differences between what consumers encountered online and what they were told by customer service representatives over the phone.

How to Avoid It: The CARD Act of 2009 did a lot to make credit cards more consumer-friendly, but little regulation pertained to rewards programs specifically and business credit cards were not included at all in the act’s purview. That means you need to be a careful shopper, as you should be with all financial products — mortgages, business loans, you name it. Before you sign up for a rewards credit card, read the rewards terms carefully — they are often in a separate piece of paperwork from the APR and fee disclosures.

3. Being a Victim of Fraud/Identity Theft

Identity theft/fraud/embezzlement as a category came in third on the CFPB’s list at 10% of all credit card complaints. Many complaints pertained to account activity that the cardholder didn’t initiate, the report said. It points back to that top complaint of fraudulent charges as well — fraud is a problem for consumers as well as credit card issuers too.

How to Avoid It: In addition to keeping your credit card information safe (see tip #1), keep your identifying information safe. To open a new credit card in your name, a fraudster would need to have access to your Social Security number, name, address and other details. Protect that info and you limit your chance of getting got. And because “embezzlement” is included in this category as well, business owners should be sure to have a policy in place if they’re extending a company credit card to an employee. The rules should be clear so you don’t have to go through the painful process of disputing charges with your issuer.

4. Trouble Closing/Canceling an Account

Even though closing a credit card can do some credit score damage, it doesn’t stop consumers who want to avoid the temptation of spending too much or just have too many cards to manage. Roughly 7% of the CFPB’s credit card complaints pertained to consumers struggling to close accounts.

How to Avoid It: Call your issuer directly (you normally have a number on the back of your credit card) and ask to close the account. Be ready though — you’ll most likely be transferred to a department that is specifically going to try to keep you as a customer, perhaps offering a lower APR or a waived annual fee for that year. (Some consumers use this as a tactic to get a better credit card, in fact.) If you’re adamant on closing the card, just stick with your plan and make sure to monitor your email or mail for your last statement. You don’t want to miss the last payment on your card and put a black mark on your credit report just because you thought the card was closed. A credit card with a positive payment history, even though it’s closed, can still help your credit score. But missing a payment will definitely hurt it, and if you have a business credit card, it could impact not just your personal credit, but your business credit scores as well. You can find a full explainer on canceling credit cards right here.

Image: Anchiy

The post How to Fix the Big Things You Hate About Your Credit Cards appeared first on Credit.com.

9 Signs You’re on Your Way to a Perfect Credit Score

Because we get it: Sometimes you just have to have that A-plus.

Hey, there, overachiever. Are you really trying to attain a perfect credit score? Here’s the thing: You don’t need to. Any score over 760 will pretty much net you a lender’s best rates and terms. Plus, even if you do score that elusive 850, you probably won’t keep it for long. Credit scores are mercurial: They change as new information hits your credit report or, most notably, as your loan balances go up and down. (Translation: Perfection is fleeting.)

But we get it. Sometimes you need that A-plus. So, in the interest of indulging your financial dreams, here are nine signs you could one day see a perfect credit score.

1. You’ve Never Missed a Loan or Credit Card Payment …

Payment history is the most important factor of credit scores, accounting for 35% of most popular scoring models. Plus, one little slip can do big damage once it hits your credit report — and it can stay on record for up to seven years. In other words: Don’t expect to see the highest score ever if you’ve missed a payment (or two) in that time frame.

2. … Or Any Other Bill’s Due Date for That Matter

Sure, utility companies, doctors, gyms and other service providers don’t routinely report missed payments to the credit bureaus, but collection agencies do. And, if you leave any old bill unattended long enough, that’s where the debt might end up, with a credit score fall to follow.

3. Your Debt Levels Are Virtually Non-Existent

The rule you commonly hear involves keeping the amount of debt you owe below at least 30% and ideally 10% of your total credit limit(s), particularly when we’re talking credit cards. If you’re trying to achieve credit perfection, you’ll want to focus on the ideal part.

Expert Intel: It’s a bit of a misnomer that you need to carry debt to build credit — you simply need to have credit accounts on the books that are being managed responsibly. So, for instance, someone could conceivably build a good credit score with a single credit card they pay off in full each month. People with 850s tend to have more than one loan on the books (more on this in a minute), but you’ll be best served in the long run by adding financing as you truly need (and can afford) it.

4. You’ve Had Good Credit for a While …

There’s a reason older demographics tend to have higher credit scores: Credit history, or the length of time you’ve been responsibly using credit, accounts for 15% of most scores. Technically, though, this category doesn’t have anything to do with your age. Instead, your credit history “starts” when you open your first credit account.

5. … But Haven’t Applied for Any New Loans Recently

That’ll boost your credit history, which also factors in the average age of your credit accounts. Plus, loan applications generate credit inquiries, which can ding your score for up to one year and hang out on your credit report for up to two. (More on how long stuff stays on your credit report here.)

6. You’ve Got a Mix of Credit Accounts on the Books

Credit scores give you maximum points for responsibly managing different types of credit. That’s why having, say, a mortgage, an auto loan and a credit card (or two) — all in good standing — tends to be a common characteristic of people in the 850 club. In technical terms, this means you have revolving lines of credit, like a credit card, and an installment loan, like that mortgage, on the books.

7. Your Public Record Is Clean

Judgments and liens can wind up on your credit file, though there are indications that will soon be changing. For now, though, a matter of public record could wind up hurting your credit score.

8. Your Credit Report Is Error-Free

Credit report errors can happen for a number of reasons and most misinformation will needlessly harm your credit. To achieve perfection, your file needs to be pristine — which you can help to ensure by diligently pulling your free annual credit reports from each major credit reporting agency and disputing any error you see.

9. You Keep a Compulsive Eye on Your Standing

You know the old adage “if a tree falls in a forest and no one’s around to hear it, does it make a sound?” Well, the same can be said about an 850 credit score. You’ve got to play all your credit cards right, and then you’ve got to be lucky enough to check your score at the precise moment perfection strikes. (Like we said earlier, that 850 probably isn’t going to stick around for long.) Fortunately, you can view two of your free credit scores, updated every 14 days, on Credit.com.

Image: m-imagephotography

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