The Credit Challenge

Identity theft has been a real epidemic as of late, and it can happen without you knowing about it. According to the FTC, 10% of people that have suffered identity theft said that the thieves managed to accumulate over $6,000 from them, and 5% said that the thieves were able to acquire over $13,000. As you can see, identity theft can cause many financial damages, and also completely destroy your credit.

In order to help protect you from this happening, here is a list of steps to take to protect yourself from identity theft and a shattered credit history.

1. Be cautious about disclosing your personal information and account numbers over the phone, online, or by mail. Be sure that you are dealing with a reputable company.
2. Carry only the ID or credit card that you will be using and keep the other ones in a safe place at home. This will minimize the damages and your time to report everything that is missing.
3. When you receive a new card, sign and activate it immediately. You can even sign on the back with ASK FOR ID rather than your signature.
4. Don’t carry your social security card around with you, leave it at home.
5. Shred your mail, especially those with account information, or even preapproved applications. Tearing them apart isn’t always enough.
6. Keep a detailed list of all your account information with account numbers and phone numbers in a safe place. If you happen to lose your wallet or purse, you have a way to contact them immediately and deactivate your cards.
7. Regularly check your credit report. This is most important because you get to see what credit activity you’ve had.

Make sure that you follow these 7 steps to make sure that you are protected.  Who knows, you may end up thanking me later.

If you take identity theft seriously, and your financial privacy even more serious, then I recommend LifeLock.  It is an identity theft prevention service, and it is so safe, the CEO posts his own social security number all over the place.  Find out more about LifeLock, but only if you take your credit and identity seriously.

When is the last time you reviewed your credit?  This is an important thing to consider, because millions of people are suffering from a low credit score due only to errors in their credit report.

Think about it, people are paying Credit Repair companies thousands each and every day to fix their credit score, but have never taken the time to check it themselves.  Chances are, you may have some errors on your credit that are keeping you from having the top credit score that you want and need.

So, what is it worth to check you credit score?  Considering that you can get your credit report for free once every 12 months at www.AnnualCreditReport.com, it would do you well to start there.  This will not give you a credit score however, but the most important part is to check all the information on your credit.

Some of things errors can range from paid accounts that still show a balance, to collections that don’t belong to you, as well as accounts that were included in a bankruptcy that still show active and open with a balance.

As you can see, simply taking a few minutes to get your credit and check for errors will save you tons of money.  Often, those people that are paying for credit repair services could have avoided it all together by simply checking their credit themselves for free.

Recently, I was on a forum pertaining to credit and I came across someone who had their credit score dramatically decrease.  Can you believe that his score dropped 100 points in about a months time?

Like many people, he was trying to pay off his derogatory accounts in preparation to buy his home, and he wanted to do everything possible to increase his credit score.  He went ahead and paid off his old accounts, and then wondered why his score dropped.  Well, here’s what I told him, and I hope that you use this advice yourself:

“The reason that your credit score dropped can quite possibly be because of your car loan being paid off early or the target account reporting while you have a maxed out balance, but those aren’t the biggest factors.

The biggest factor is that when paying old derogatory accounts, you always, always always have to be conscious of the last time they reported to your credit report.

Here’s an example. Suppose you have a collection that was from 3 years ago. You definitely owe on it, however, since it reported two years ago or more, it doesn’t do anything for your credit score to have it there, neither good nor bad.

So, in an effort to get it off your credit, you contact them and pay them off. OOPS, you now have new recent activity on your credit from these derogatory accounts that weren’t hurting your score anymore, and your score drops, because it is very recent.

So, where your credit score was rated without that collection, now immediately it is rated with this old collection that is now current.”

So, in reflection to that answer, the main thing is that it isn’t always a good idea to just go ahead an pay accounts off.  Your credit score may in fact go down.  I hope you can see the importance of seeing when the last activity date is on your credit accounts, because it can give you huge consequences!

On my last post yesterday giving you some credit repair tips by knowing about credit inquiries, I mentioned to you about credit ’scare tactics’ that some lender use.

Why do I call it credit scare tactics?  Well, here’s how you may have experienced what I’m talking about.

You go to your local car dealer to buy a car.  You find a car that you like, so you sit down with the sales person to work out the numbers.  They ask you for your personal info to access your credit, just to make sure you can actually buy the car. 

So, here’s what happens next.  They come to you and tell you about your credit, but say to you “We are giving you a great offer, so buy this car now.” 

You say, “Well, I want to see my other options”

They say, we don’t suggest that because your credit score may drop and you will lose out on the offer we are giving you for this “special financing.”

All of a sudden, you are caught in surprise, and feel desperate pressure to buy now, because you don’t really want to lose out.  So, you forfeit the right that you have to shop around so that you don’t lose this great opportunity.

This often happens when getting a car loan or a home loan. 

So, is there any truth to this?  Absolutely NOT!!!!

You have a right to shop around and the credit agencies permit it as well.  Like I mentioned on my last post, auto loans and mortgage inquiries are allowed within a 14 day window from the first inquiry.

So, if you are looking to get a car (really, a car loan), you can literally check out one dealer, get your credit run, find out that they are offering you, and then go to another place that same day, or the next day, or any day within the next 14 days, and you will not be penalized for pulling your credit multiple times.

(If you didn’t read the last post, click here: Credit Repair Tips)

So, now you know that you do have the right to shop around, but just remember that you only have a 14 day window, so make sure you use your time wisely.

The next time someone tells you not to leave without buying because shopping around damages your score, leave immediately, because there is no truth to that, unless you take more than 14 days.  Shop around for the best for you, not them!!!