7 Ways Millennials can boost their Credit Scores

Millennials may be aware of the harmful effects of bad credit. Their difficulty is in determining ways to change habits and establish financial discipline that will improve their financial outlook and their credit scores.  The following steps may show useful ways to carve a path to a brighter financial future.

1. Use Your Student Loans to Build Credit History

Establish a payment plan with your loan provider that works within your budget. Designate a specific portion of your weekly income for your monthly student loan payment.  Stick to your plan and make your monthly payments in full and on time.

2. Get that First Credit Card

You have to have credit to build credit. Often, obtaining approval for a credit card may be difficult for young people.  Credit issuers usually require a strong credit payment history and a good credit score.  Without the track record, millennials may consider building their credit through a secured credit card which requires a deposit, generally equal to or less than the card’s credit limit. Payments must be made by the due date, as full regular payments factor in to most credit scores.  Secured credit card issuers may “graduate” card holders with good payment histories to unsecured cards.

3. Check for Mistakes on Your Credit Report

If you’ve never checked your credit report before, now is the time. Consumers may obtain one free credit report from Transunion, Experian and Equifax every twelve months. You may notice a debt or payment was misreported or you’ve been a victim of fraud; either of which can be damaging to your score. By checking your report for mistakes, you can take the proper action to correct them.

4. Become an Authorized User

You may have the privilege of becoming  an authorized user on a family member or friend’s card. However, the privilege has consequences. You must remember to make your payments in full and on time.  If payments are not made timely, the credit card may be jeopardized, as well as the card holder’s credit reports and score.

5. Improve Your Credit Utilization Ratio

Lenders evaluate loan applications by an applicant’s credit utilization ratio.  A major risk indicator for lenders is where credit card balances are compared to credit card limits.  When balances reach the card limit, lenders perceive risk. To lower your utilization you may increase your available credit by paying down debt, getting another credit card or raising your current card’s limit; all of which improve the ratio between how much is available to you verses how much you’re actually using.

6. Don’t Close Old Credit Accounts

If you have an old credit card you no longer use or have already paid off, don’t be too quick to close the account. As long as it doesn’t have an annual fee, your unused credit line can help lower your credit utilization ratio and lengthen your credit history. Even just the smallest amount of activity can strengthen your credit as long as you remember to make the payments in full and on time.

7. Set Up Automatic Bill Pay Whether it’s for utility bills, insurance payments or a store credit card, sign up for automatic bill pay to ensure you’re making all payments by their due dates. You should still keep an eye on your accounts to ensure that payments have been applied timely and accurately.

If you have questions about your credit score, or errors on your credit reports, contact us to learn more about steps you need to take.

Who Can See Your Credit Report?

Your credit report contains quite a bit of information about your financial history. It includes personal information, all of your open credit accounts and whether or not they are in good standing, and any negative marks, such as accounts in default or vehicle repossessions. Due to the sensitive nature of this information, not just anyone can see a copy of your credit report.

The Fair Credit Reporting Act

Accuracy

Congress passed the Fair Credit Reporting Act to protect consumers from unauthorized access to credit reports and incorrect or incomplete information. If you find an error on your credit report, you have the right to dispute the information with the credit bureau and have it corrected.

Privacy

The FCRA sets clear laws on who can access your credit report and what they can use it for. Common individuals and businesses that can access your report include landlords, current or prospective employers, lenders, and utility companies. Although they are allowed to access your report, there are certain requirements and guidelines that must be followed when they do so. Most important, the consumer must provide written permission for someone to access reports from the credit bureaus.

If you think your rights were violated

If you believe an unauthorized person or business pulled your credit report, or the circumstance in which they did so was inappropriate, you may be able to take legal action. Often the consumer may be misled in to believing that someone, or a company, has the right to obtain their private, personal information.

Contact a qualified consumer rights attorney with expertise in credit report law for review of potential violation of your rights.

Get to Know Your Credit Report

Checking your credit report regularly helps you understand where you stand when it comes to your finances. Many organizations, especially lenders, use credit reports as a way to get to know a consumer’s spending habits. They can be used to determine whether or not to approve someone for a new line of credit, a home loan, or a rental property. Although credit reports do include a significant amount of information about you, there are certain things that will not be included.

What’s On Your Report

Credit reports contain the following information:

  1. Identifying information, including your name, address, social security number, employment information, and birthdate.
  2. All credit accounts you’ve opened, such as credit cards and loans. This section includes both open and closed accounts and provides details on each account, such as the type of account, date it was opened, credit limit, account balance, and all past payments made.
  3. All inquiries regarding your report from the past two years. Inquiries often come from lenders checking your credit before approving you for a loan or line of credit.
  4. Negative information, such as late payments, car repossessions, foreclosures, defaults, tax liens, collection accounts, judgments and bankruptcies.

What’s Not On Your Report

While credit reports have a majority of your financial information included, there are certain items that will not appear.

For example, credit reports list your employers but do not contain further information regarding your employment status or salary.

While information regarding lines of credit are listed, bank account balances, retirement accounts, 401k, and investment or brokerage account information is not included.

Also, your credit report will not be affected by marriage. After you’re married, your credit report and credit score remains independent of your spouse’s. Marriage will only affect your credit for accounts you and your spouse open together.

How to Obtain Your Credit Report

The three credit bureaus (Equifax, Experian, and TransUnion) are each required to provide one free credit report to consumers every 12 months. In order to obtain these reports, write a letter to the bureaus and request your report. Be sure to include two forms of identification, such as a current driver’s license and utility bill, with your letter.  You should receive your report within approximately two weeks.

Monitor Your Report Regularly

Credit reports are an effective way to determine if you’ve been a victim of fraud or if any mistakes have been made regarding your credit history. You should carefully review your credit file and report any suspicious listings. If you believe that you are a victim of identity theft, you should take steps by notifying the police, the credit bureaus and the creditors. If you have disputed errors and the credit bureau has not corrected your report, you can contact an attorney to discuss whether your consumer rights have been violated. Checking your report regularly is a good idea so that you can dispute errors as soon as possible.

Why It Matters

Credit reports are essentially a compilation of your credit activity. They allow lenders and other organizations to get to know you. When you learn how to read and interpret your credit reports, you will become confident to dispute any inaccuracies, and handle the errors in a timely fashion.  Viewing your reports regularly, helps to eliminate any surprises when you apply for loans or other lines of credit, apply for a job, or attempt to rent an apartment.

Want a Better Credit Score? Check Your Credit Reports

Why You Should Check Your Credit Reports

Credit reports don’t just exist to provide lenders with an overview of your credit history. They also provide a means for you to assess your own financial health and determine where you can make improvements. Finances can be a significant contributor to stress if you don’t know how to manage them, and knowing what’s on your credit report is the first step to staying on track.

Your credit report will list all of your open accounts and show you where they stand – whether you are up to date with payments or if you’ve fallen behind. Late payments will hurt your credit while consistent, on time payments will help you.

Credit reports also aren’t always accurate. According to the Federal Trade Commission, one in five people have flawed credit reports. There are a number of factors that can contribute to errors, such as fraud, someone else’s information on your report, or inaccurate reporting of accounts. Regardless of the cause, errors can sometimes negatively affect your credit. You should always review your report for inaccurate information and dispute any errors with the reporting bureau. Review your personal information and make sure you recognize all of the open accounts. Checking your report regularly is a great way to make sure you aren’t a victim of identity theft or fraud.

Learn how to check and understand your credit report to get started.

Set Goals to Improve

When you check your reports regularly, you gain insight into some of your financial habits. If you regularly max out credit cards, it’s a sign that you need to create stricter budgets to avoid overspending. If you’re forgetful when it comes to making timely bill payments, look into automatic payments or set reminders to keep you on track. Knowing exactly what’s on your credit report allows you to set responsible goals to improve your financial health.

Be Patient

Good things come to those who wait. Unfortunately, your credit score won’t skyrocket overnight once you start taking steps to improve it. The amount of time it takes to improve your score will depend on the factors that are bringing it down.

Negative listings, such as a loan default or car repossession, remain on your report for up to seven years. Improving your report after events like these will require some patience and discipline.

If an error is negatively affecting your credit, you’ll likely see an improvement to your score once it’s resolved.

Take Action Now

The bottom line is, you shouldn’t avoid checking your credit reports. You may request one free report from each bureau every twelve months. It is important for you to see that the information on your report is accurate. And if it’s not, take steps to correct it.

Service Members: Strengthen Your Credit

Military life is one of frequent transitions. Each deployment, promotion, and change in duty status brings the need to make money-related decisions. These financial decisions can have long-term effects on family life, mission readiness, and security clearance.

Service members often run into trouble because of the irregularities in their daily life. They may tend to overspend and receive contact from debt collectors, fall for financial scams and become victims of identity theft, be denied loans because of credit report errors, or have a vehicle repossessed. Learning more about consumer credit and how to build a strong credit history can help veterans improve their financial health.

Take Advantage of Free Credit Reports

Under the Fair Credit Reporting Act, you’re allowed one free credit report within a twelve month period from Transunion, Experian, and Equifax. Send a letter to one of the bureaus and request your reports. Review them carefully to ensure that there are no errors and that you recognize all of the listed accounts. 

Credit Accuracy

Credit reports include personal information, credit history, credit inquiries, and public records. Your credit cards, mortgage, and any loans you have are all listed along with their payment status. If you fall behind on payments or default on a loan, your credit report will list this negatively. Negative entries may make it more difficult for you to open a new line of credit, be approved for a new loan, or receive a promotion or security clearance. It may also mean higher interest rates on loans where you have been approved. 

Credit Privacy

Regular credit report checks help you monitor your accounts and determine whether someone has accessed your credit report without your permission or opened accounts in your name. If you notice suspicious activity, information that does not belong to you, or believe you have become a victim of identity theft, follow these steps:
  -Contact the Bank or Creditor
  -File a Police Report
  -File a Fraud Alert
  -Request your current credit reports
  -File an Identity Theft Affidavit with the Federal Trade Commission
  -Keep an organized file with all correspondence and records
  -Protect your personal information.  Keep it private.

Know How Much You Spend

A budget helps you see where you can cut back on spending and create a workable plan to pay off debt.Take the time to set a budget. Divide your regular expenses into categories and determine how much you can afford to spend on each category every month. Use a spreadsheet or online tool to keep track of all of your accounts and expenses. 

Be Aware of Scams

Follow your gut. If it sounds too good to be true, it usually is. Unfortunately, service members are frequent targets for various scams. Companies or organizations could call and claim to belong to a veterans group or another legitimate sounding organization. Be sure to research the organization; find out where they’re located, see if there is a complaint board online, and investigate whether the company is reputable. 

Be cautious. Do not provide any personal identifying information, such as your social security number or date of birth, or access to bank accounts or credit and debit cards.  

Financial Guidance for Service Members

Remember, you’re not alone. There are many services offered through the Department of Defense and veterans organizations to help service members keep their finances on track. Do your research and make a financial plan that is right for you.

Navigating the Military Financial Lifecycle

Key Financial Issues that Affect Military Consumers

Achieving Financial Security

 

What To Do After a Data Breach

Data breaches often lead to panic among consumers. They expose personal information, and it can be unclear exactly how much data was compromised. If your personal information was hacked, you can’t be sure what hackers intend to use it for. Fortunately, there are ways to protect yourself after a data breach to avoid the costly effects that a hack can cause.

Freeze Your Credit

If you know your information has been compromised, you can freeze your credit. This restricts who can access your credit report. Credit reports are often referenced by banks or lenders when approving a new line of credit or a loan, actions that thieves often try to take. Therefore, if a thief tries to use your identity to open a new line of credit and the bank or lender is not able to access your credit report, the thief will not be able to do so. Note that with a credit freeze on your account, you will also be blocked when trying to open a new line of credit. You’ll need to thaw your credit before being able to do so.

It’s important to be aware that there are three main credit bureaus: Equifax, Experian, and TransUnion. With credit freezes, you may need to notify all three bureaus that you would like to take this action on your account. Unfortunately, the fee for a credit freeze, which can range from $5 – $10, is per credit bureau.

Set Up Fraud Alerts

Fraud alerts provide less protection than a freeze but are still a valuable option. Rather than completely blocking companies from seeing your credit report, fraud alerts require identity verification before any further action can occur. Alerts typically expire after 90 days but are free and can be renewed. To request a fraud alert, write to the credit bureaus stating the reason for your request.

Monitor Your Statements

It’s also a good idea to monitor your account statements for any suspicious charges. Make it a habit to check your monthly statements when they’re issued each month. Go line by line with each charge and ensure you recognize each transaction and that the amounts are accurate. If something looks off, contact your credit card company promptly to dispute the charge.

Check Your Credit Report Every 12 Months

You’re entitled to one free credit report from each of the three credit bureaus every 12 months. We recommend that you write a letter to request your reports. Just as you would monitor your monthly statements, look over your credit report carefully and dispute any findings that are incorrect with the credit bureaus.

Avoid Scams

Identity thieves can be tricky, so learn how to recognize scams. Scammers often use tax season to target victims. If your information has been compromised, identity thieves can file taxes under your name and claim your refund before you have a chance to. To avoid this, file your taxes as early as possible.

Also, be aware of phishing attempts. Thieves can take advantage of security breaches by pretending to be members of the compromised organization. Be cautious who you give your information to following a data breach, even if the person claims to be trustworthy or knows your personal information.  Request that they provide you with written documentation showing who they are, the company they work for, and details that support their request.

Sign Up for Notifications

As a preventative measure, you can set up text and/or email notifications so that you’re aware when purchases are made on your account. Use these alerts to ensure that you’ve authorized all charges. If a suspicious charge arises, contact your bank or credit card company to report the charge.

Change Passwords

Make sure to change your login information on the breached site and any sites using the same information. It’s never a good idea to use the same password on multiple sites in case one is compromised. If you’ve done so, change all information to prevent hackers from having easy access or hacking into another account.

Address the Situation

When it comes to debt collectors, it can be hard to tell the difference between a scam and a legitimate collector. If someone has stolen your identity, you may receive collection calls or letters. You should request the collector provide a validation and itemization of the debt that is claimed. Most importantly, address the situation and let them know that the debt is not yours. If you’re unsure if the caller is legitimate, ask for verification. You can use these steps to address debt collector calls.

Anyone can be the victim of a data breach or identity theft. If you find yourself in this situation, remember that there are ways to protect your information from being compromised further. Be on the lookout for changes to listings your credit reports, charges to your credit cards, “Welcome” letters sent by creditors, and any changes to your credit profile.

How to Monitor Your Credit

Most people don’t think about their credit until they need it. You likely already know that your credit history plays an important role in your ability to get approved for new lines of credit, whether it’s a new credit card, a personal loan, or another type of borrowing agreement. It also affects your ability to rent an apartment and is sometimes used by prospective employers when you’re looking for a new job.

But it’s not a good idea to wait until a creditor is about to pull your information to check in on your credit. If you’re not aware of what’s listed on your credit report, you could get denied for a new loan or line of credit based on inaccurate information. And each time a creditor pulls your information, it’s considered a hard inquiry. Hard inquiries have a temporary negative effect on your credit.

You should always have a general idea of where you stand. Staying on top of your credit ensures that your report doesn’t have any false or inaccurate information, and also gives you an idea of which areas you can improve. Each of the three credit bureaus offers one free credit report every 12 months so that you can regularly verify the information that’s in your history. You’re also entitled to a free credit report if you are a victim of identity theft, on public assistance, or are unemployed and seeking employment within the next 60 days.

What Are Negative Items on Credit Reports

Your credit report plays a critical role in your overall financial health. The information that it contains will affect your ability to get new lines of credit, rent an apartment, and sometimes even get a job or promotion. It’s important to understand all of the information on your report and what types of negative listings it might include.

Every person’s credit report has the following:

  • Personal information. This includes information like your name, current and previous addresses, social security number, date of birth, and possibly current and previous employers.
  • Credit accounts. All of your current and previous credit accounts are also listed along with details like status (if you have overdue payments), credit limit, monthly payment, and current balance. Auto loans, student loans, credit cards, and any other type of credit accounts in your name will be listed.
  • Inquiries. When a lender pulls your credit file, generally when you apply for a new line of credit, it’s called a hard inquiry. Hard inquiries stay on your report for up to two years and may lower your credit score by a small amount. People with many hard inquiries on their report might be seen as higher risks. When a lender or business requests your credit file for another purpose than new credit, like to promote a special offer or rate on a product, this is a soft inquiry. Soft inquiries don’t have an affect on your credit.
  • Negative listings and public records. Late payments, debt, accounts in collection, repossessions, accounts in default, bankruptcies, foreclosures, and judgments are all listed on your credit report. Negative information can stay on your report for up to seven years and it will lower your credit score. It may make it more difficult to get approved for new credit, or could result in higher interest rates on any loans or credit that you are approved for.

What you can do about negative listings

Negative listings that bring your credit down are frustrating, especially if you’re making an effort to improve your financial situation. If you have late payments listed on your credit report and you have since caught up on your payments for the account, try writing a goodwill letter to the creditor. A goodwill letter explains why you missed the payments and asks the creditor to remove them from your report. These letters don’t always work, but it’s worth trying if you want the listing removed.

You can also try to negotiate with the creditor. See if they’re willing to remove the negative marks if you offer a payment or enter a repayment plan.

If you can’t get negative listings removed, you’ll have to wait. Focus on paying your bills in full and on time moving forward, and using less than thirty percent of your available credit. Work to pay down debt over time. These positive actions will help improve your credit and show that you’re on the right track, even while the negative listings remain.

How to Get a Job When You Have Poor Credit

Finding a new job can feel like a full time job in itself. You’ve done the obvious things like narrow down your list of companies and positions, and prepare your resume and cover letters. But did you know that your credit may also play an important role in an employer’s decision to hire you?

Employers might check credit reports during the hiring process in order to learn more about candidates. They may do so as a means to gauge how responsible you are with finances or to get an idea of how organized you are.

Not all employers check credit reports during their employment screening process, and those that do may only check reports for certain positions. Often, credit checks are more likely for jobs that involve a security clearance or access to money, sensitive customer data or confidential company information.

They also don’t see the same information that a creditor would see when they pull your report. An employment screening report only includes your payment record, how much you owe, and your available credit. Potential employers can’t see your credit score either.

If your credit isn’t the best, don’t get discouraged. It doesn’t mean that you won’t be able to find a new job. Follow these steps to prepare your credit ahead of time, before an employer requests your report.

Get your own copy of your report

When you start looking for a new job, get a copy of your credit report. You can get a free report every 12 months from each of the three credit bureaus.

Review your report and make sure everything is accurate and up to date. If you see any wrong information, dispute it directly with the reporting bureau. If you have negative listings like a car repossession or defaulted account, these should only stay on your report for seven years.

Requesting your report ahead of time will help you know what to expect if the potential employer gets a copy of your report. You’ll also be prepared to discuss what’s in your report if you choose to do so.

Ask the HR department about credit checks

If you have negative credit listings and you’re concerned about the role they’ll play in your job search, contact the companies you’re applying to anonymously and ask if they check credit as part of their candidate screening process. If you think it will be an issue, you might choose not to spend time on applications for the companies that ask for your credit history and instead focus on those that don’t.

Know what your rights are

Although it is legal for potential employers to ask for your credit report, there are certain guidelines they must follow. They’re required to get your written permission before they request your report, and they also have to inform you that the information will be used in the decision-making process.

Employment screening report companies also have to tell you when they report negative information to an employer. You’re entitled to a copy of the report if it’s used as reason not to hire you.

Work on a long-term fix

The best way to prepare for future job searches is to prioritize improving your credit now. Keep track of your accounts and always make bill payments in full and on time. Do your best to use less than thirty percent of the credit that’s available to you. Make sure negative listings are removed from your report when they should be. Your job search will be easier in the future if you don’t have to worry about how your credit might affect your eligibility.