Boost Your Credit IQ and Protect Your Scores

March is National Credit Education Month – and one thing we all know is that lenders have a tough grading scale. We know if we don’t pay our bills on time and our credit scores fall short, we may not pass the approval process, or if we do secure financing, we’ll pay dearly for it in higher interest charges every month.  But to protect your credit, your identity and your financial future in today’s environment, there’s so much more you need to know.

Here are some lesser-known facts to help boost your Credit IQ:

CREDIT SCORES

Lowering credit card limits can lower scores

While asking for a lower credit card limit can help you cap your spending, it could also increase your credit utilization percentage and lower your scores.

Rushing to build credit could backfire

If you are a new credit user, rapid account buildup can look risky to lenders and hurt your credit scores.

You are more than just one number

You have a credit score from each of the three major credit bureaus (TransUnion, Equifax and Experian) that constantly changes as information is reported by your creditors. Not all creditors report to all bureaus – and you won’t know which bureau a lender will use to evaluate your creditworthiness.

Lenders use different scoring models to determine your credit risk

There are scoring models for auto, mortgage, bankcard and personal loans. All use your credit report information but assess different levels of risk associated with the type of loan you are seeking. Your credit scores from TransUnion, Equifax and Experian are indicators of how you should fare.

Doing your credit homework early pays off

If you’re thinking about taking on a mortgage, auto loan or line of credit, your credit scores can literally save you, or cost you, thousands of dollars.  Make sure your scores are at their best and you won’t have any regrets.

CREDIT REPORTS

Many consumers are flying credit-blind

Sixty percent of U.S. adults have not reviewed their credit reports in the last year.

Tooting your own horn ensures accuracy

Make sure your payment history on all your credit accounts is reported to all three bureaus: TransUnion, Equifax and Experian.

Approximately 45 million Americans have a “thin” credit file or none at all

This means the credit bureaus do not have enough credit data to generate credit scores. If you’re just starting out and need to “fatten” your file, consider applying for a credit card, gas card or retail credit card.

CREDIT ERRORS & DISPUTES

Credit report errors is the #1 consumer complaint against credit bureaus

Complaints received by the Consumer Financial Protection Bureau about the conduct of credit bureaus almost doubled in 2017 – and the highest percentage was about errors on credit reports.

It can pay to dispute reporting errors

Twenty percent of consumers who disputed errors on their credit reports saw their scores increase

Credit bureaus must respond to a dispute within 30 days

About 70 percent of disputes are acted upon within 14 days, according to the Consumer Data Industry Association (CDIA). However, if the dispute is resolved in your favor, it can take up to 30 days for your credit reports to reflect the removal of the error. Follow up on your disputes and check your reports for updates.

CREDIT MONITORING

Your credit profile follows you to work

At least 47 percent of employers check an applicant’s credit history before making employment decisions. Also, employers can request your consent to do periodic credit checks even after you’ve been hired.

Unauthorized credit inquiries can spell trouble

Even one hard inquiry on your credit reports can knock a few points off your credit scores, and multiple inquiries could reduce your scores even more. There are exceptions – when you’re rate shopping for a mortgage or auto loan.

Negative information has an expiration date

Late payments, paid tax liens and accounts in collection should drop off your reports in seven years, and bankruptcies in 10 years. Unpaid tax liens can remain indefinitely. If negative information that should be removed remains on your reports for lenders to review, it could raise questions in the loan approval process.

Data breaches lead to fraud victims

Approximately one in four people who receive a data breach notification letter from a retailer later become fraud victims, especially when payment card information is exposed.

IDENTITY PROTECTION

Identity thieves target taxes over credit cards

Tax- or wage-related ID theft makes up 45 percent of reported incidents – credit card fraud is 16 percent.

Millennials are most likely to fall for an IRS scam

Millennials are six times more likely than older generations to give the scammer their credit card numbers, and twice as likely to share their social security numbers.

Criminals target seniors’ finances

Financial scams targeting seniors are so prevalent, they’re now considered “the crime of the 21st century.”

Approximately 1.3 million kids have their identities stolen annually

At least 50 percent are younger than six years old, and parents may not even know they’ve been exploited.

Use National Credit Education Month to learn what’s driving your credit scores, which actions may be helping or hurting – and why.

And if you’re not already actively monitoring your credit, start now !

Monitoring enables you to regularly review your credit reports and scores, dispute any errors or inaccurate information you find – and get alerts about changes or suspicious activity that may pose a threat to your credit or your identity.

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