Don’t Get Blamed For What You Didn’t Do

September 09, 2016

Lately, I’ve become addicted to podcasts. It seems like I always have my headphones on or my Bluetooth speaker going (when no one else is at home) and there’s either a crime, financial or MMA podcast playing. It all started with Serial Podcast and continued with Undisclosed and then Serial Dynasty (later re-named “Truth and Justice”). All of those podcasts started with the Adnan Syed case, when he was convicted of murdering his ex-girlfriend, Hae Min Lee, in Baltimore back in 1999.

As a Baltimore resident, I ever so vaguely recalled that case, but the podcasts took the listeners deep into the details of every aspect of the crime, the trial and everything that’s happened since. The latest news is that Adnan is getting a new trial because it appears to me and the legions of listeners that he did not commit the crime. And one of the major players (Rabia Chaudry) has written a book, and I’m taking my daughter to her book signing in a few days!

All of the podcasts have moved on to other cases, and I’m still listening to all of them in Season 2 or 3 now. The fact that it started with a local case made me dig into all the details a bit more than I might have otherwise. Most of the podcasts deal with someone who is wrongfully imprisoned…or thought to be wrongly imprisoned. I can’t imagine spending 15 or 20 years in prison for a crime I didn’t commit like some of the people profiled in these podcasts. I’m not sure how one finds the strength to carry on with life and not just wallow in despair in situations like these.

While it may not be as dramatic as being in prison for a crime you didn’t commit, there is a serious chance that something in your credit history will be from a situation where you weren’t even remotely involved. This could be something as simple as an address being on your credit report for a place you’ve never lived or as sinister as a full scale premeditated identity theft.  Regardless of where it is on that scale, there are some things you can do on a regular basis to either prevent or minimize the impact of incorrect data impacting your credit report, credit score or quality of life.

Check your credit reports on a regular basis. Through annualcreditreport.com, you can get one free copy of your credit report from Experian, Equifax and TransUnion. If you order Experian in January, Equifax in May and TransUnion in September, you’ll never be more than 4 months away from your next new credit report. When you get your credit report, make sure that all addresses listed are accurate and all accounts and any other names are actually yours. With my name, I almost ALWAYS have 3 or 4 “other Michael Smith” data on my reports so I have to correct my credit report a few times per year.

Stay on top of your credit score. Two great sites that I use, each with an app for smartphones, are Credit Karma and Credit Sesame. Each service (and both are free) will alert you when your credit score changes or if information on your credit report changes.

Recently, I applied for a mortgage in the morning, and I got an alert from Credit Sesame in the afternoon. It was lightning fast! Imagine if someone, not me, had applied for a mortgage in my name in a premeditated identity theft. I would have known well before the theft was fully in place and devastating to my life.

Shred your personal data! When you get a new debit card/credit card, shred the old one. When you get bank or 401(k) statements in the mail, either store them for a few years or scan into a PDF file and shred them. It’s an indictment on where we are are a society that we have to think about stuff like this today, but it’s where we are. Anything that would help a hacker hurt you should be shredded and destroyed before anyone can use it against you.

So if you find yourself in jail for a crime you didn’t commit, start a podcast, and I’ll listen. But if you happen to find yourself not incarcerated wrongfully, protect your identity! As they say, you’re better safe than sorry.

 

 

 

How To Improve and Protect Your Credit

September 08, 2016

One common question I get on our financial helpline is how to increase your credit score. After all, your credit report can impact the interest rates you pay on loans (or whether you can even get a loan at all), your insurance premiums, and even your ability to get a new job. Whether you’re just starting to build a credit history or are rebuilding one, here are some things you can do:

Make sure there are no errors on your credit report. It’s been estimated that about 70% of credit reports have errors on them. It’s bad enough to be penalized for your mistakes. You certainly don’t want to be penalized for someone else’s.

You can get a free copy of each your three credit reports (Experian, Equifax, and Transunion) at AnnualCreditReport.com. (Don’t be fooled by copycat sites that require you to supply a credit card number for the “free” credit report.) Then report any errors you may find that may be hurting your score. Some people even report any negative information since it’ll be removed if the creditor doesn’t respond in time.

Reduce your debt balances. Try not to use more than 30% of the credit available to you on your credit cards. If you’re already above that, try to pay it down.

There is one exception though. If you have an old debt, you might not want to pay it off and just let it fall off your credit report after 7 years. However, just because it’s not on your credit report, doesn’t mean you don’t owe. Unless you’re also past your state’s statute of limitations, the creditor can sue. In addition, be aware that if you make any partial payments or even acknowledge the debt, it can restart that clock for your state.

After you’ve paid off debt, you may not want to close the credit cards since that will reduce your credit available and hence the percentage of your total credit you’re using if you have any balances (even if you pay them off each month). Instead, just shred the card if you’re afraid of using it and keep the account open. If you want to keep using it but don’t like the rewards, you can also convert it to another card with the same bank.

Build a positive credit history. This is the most important step but the one that takes the longest. The main thing is to have credit and make all your payments on time. If you can’t qualify for a regular credit card, see if your bank will let you open a secured credit card that’s backed by a bank deposit. For any credit you do have, set up automatic payments to make sure you don’t miss any payments.

Set up credit monitoring. No matter how many precautions you take, things happen. For example, I once missed a medical bill because they had my address down wrong in their system. Fortunately, my credit monitoring was able to catch it, and I was able to pay it before it hurt my credit. A lot of companies charge for this, but you can get free credit monitoring from sites like Credit Karma and Credit Sesame.

Consider a security freeze. A security freeze can prevent someone from opening credit in your name. Each state has different rules, but you generally just have to pay a one-time nominal fee for each credit bureau. Just know that you’ll need to un-freeze your credit if you want to apply for new credit and then pay to re-freeze it again.

Want more info on this or other financial topics? If you have a question you’d like answered on this blog, feel free to email me  directly. You can also receive my future posts by following me on Twitter and/or subscribing to my posts on the blog home page.

What Really Matters to Your Credit Score

June 15, 2016

Do you know what elements make up your credit score? First, it’s important to know the difference between your credit score and your credit report, which are often confused. Your credit score is based on the items found on your credit report, kind of like how your grades are based on how you did on your homework and class assignments.

In order to get a better grade, you need to improve your homework and assignments. So before you freak out because your score is lower than you think it should be, you need to know how it’s calculated. Here are five things that you might think matter – but don’t – and five that really do.

What Doesn’t Matter

  • Employment history. Even though the amount of credit card offers I receive skyrocketed when I re-entered the workforce after being self-employed back in the day, credit agencies do not track your employment, nor does it affect your credit score. Whether or not you have a job may affect your ability to obtain credit (such as a loan or credit card), but that information does not go into your credit history.
  • Interest rates on debt. The lower your rates, the quicker you’ll pay off debt, which matters. But having higher rates does not affect your score.
  • Savings account balance. Your credit score is based solely on your credit history. Your bank account balance is not a part of your credit history. Rich people can have bad credit too.
  • Your age. Your date of birth might be on your credit report, but it does not play into the calculation of your credit score.
  • Where you live. Sorry, but that swank ZIP code won’t do diddley for your credit score if you’re not paying your bills on time!

What Does Matter

  • Paying on time. Whenever anyone asks me how to increase their credit score, my automatic response is, “Pay all your bills on time. Every time.” One late payment can wreak havoc on your score. You’d be surprised how many wealthy people struggle with this one!
  • Your credit utilization. The balance of your accounts relative to your credit limits definitely makes a difference on your credit report. The closer you are to maxing out, the worse the effect.
  • How long you’ve had credit. It’s called a credit history for a reason. The whole purpose is to help a creditor decide if they should lend you money. The further back you can demonstrate that you regularly pay your debts back, the better your score will be. This is where the advice about keeping a zero balance card open comes into play – just to show how long you’ve had it.
  • New accounts and credit checks. Opening a slew of new accounts (or attempting to) in a short period of time is a red flag to a lender. It can indicate that you’re planning a spending spree or that you are expecting to lose your job. If you’re planning to apply for a mortgage or other loan where your interest rate is determined by your credit score, try to avoid applying for any new credit cards at the same time.
  • The number and type of accounts. There are such things as “good debts” and “bad debts.” Having a mortgage, student loan or car loan looks better (as long as you don’t have late payments on your record), because it implies that you’re responsible enough to maintain a home, go to school and take care of a car. Plus the things that credit bought tend to last longer than the loan, making it good debt. Credit card debt isn’t as flattering – especially a bunch of store cards that are maxed out. Hello, shopaholic!

Finally, make sure you’re checking your credit report annually and cleaning up any errors. (The ONLY official place to get your federally mandated free reports is at www.annualcreditreport.com.) After all, one more thing that can matter to your credit but shouldn’t is someone else’s mistakes.

 

Why Everyone Needs to Check Their Credit Report

April 05, 2016

I try to practice what I preach but I do not always succeed. I was recently talking to a group of people about the importance of checking their credit reports at least once a year to make sure that it is accurate.  After I was done talking to them, I started thinking about the last time I reviewed my credit report.

When I could not come up with a date, I realized that I needed to start checking the credit report for me and my husband. I went to Annual Credit Report.com website to get our credit reports from Transunion, Equifax and Experian for free. I thought it would be a short review and then I could pat myself on the back for doing what I encourage everyone to do. Unfortunately, that was not the case.

If you have read any of my blog posts, you probably think my family is on a first name basis with the emergency room. Between my husband’s health issues and my recent car accident, I can probably get to the emergency room blindfolded. An ambulance bill we were unaware of popped up on my husband’s credit report from over a year ago.

I called and it turned out it was an old unpaid bill that we never received. It was sent to the wrong address and it was never sent to our healthcare provider. We contacted my husband’s health insurance company, sent them the emails verifying we were unaware of the bill and surprisingly, they paid the bill.

After a few months, we noticed that the delinquency was still on his record. We first contacted the creditor to ask for the information to be removed. After all, they got the address wrong and the bill was paid by the healthcare provider. They basically told us that there was nothing they could do.

We then disputed the bill online, providing supporting documentation (it took about 5 minutes) with all three credit reporting agencies. Credit reporting agencies must investigate disputed items, typically within 30 days. After about 30 days, I received an email stating that the information will be removed from our report. After another 30 days, the information dropped from our credit report.

Do not assume just because you pay your bills on time that your credit report is fine. Once a year, use a  checklist like the one on the Nolo website as a guide to reviewing your credit report. Review each section of your credit report for the following:

Personal information section: Make sure your name, address, social security number, birth date and phone numbers are correct, especially if you have a name shared by other people (John Smith, etc).

Public records section: Check for incorrect information or information that should no longer be reported  such as bankruptcies over 10 years old, tax liens you paid more than seven years ago, and criminal arrest record more than 7 years old.

Credit account section: Check to make sure that the credit history reported is actually your credit history and not mixed with someone with a similar name. Ensure that all of the accounts listed status is current. For instance, an account that should be closed is still listed as opened. Also check for adverse information over 7 years old.

Inquiry section: Review this section to make sure that the credit inquiries were done with your permission.

If your find inaccurate information, first contact the creditor, if possible, to dispute the item. If that does not work, then dispute the items with each credit reporting agency.  The credit reporting agencies are required to investigate. Taking these steps will go a long way to preventing any unpleasant surprises on your credit report, especially during critical times like a house or auto purchase.

 

 

The Kids (Credit Scores) Are All Right

August 06, 2015

Which generation has the lowest average credit score? According to this article, it’s the Millennials, who have a 625 VantageScore vs 650 for Generation X and 709 for Baby Boomers. This is unfortunate since Millennials are the most likely to look for a new job or buy a home, which are two of the situations when having good credit can be most important. Continue reading “The Kids (Credit Scores) Are All Right”

What Really Matters To Your Credit

July 21, 2015

One of the most common questions I get is how do I improve my credit score. There is so much information on the Internet that people cannot make heads or tails of it. I was talking to my buddy, Kelley, a fellow CFP(R) professional and CPA, and she offered great insight as to what really matters vs. what does not matter to your credit score. Below are her thoughts: Continue reading “What Really Matters To Your Credit”

DIY Credit Repair

July 07, 2015

One of my cousins came to see me excited over a meeting she recently had. If you know my cousin, she gets excited over air so I always have to proceed with caution every time she has wide eyes and a high pitched voice and looks like she is about to do a cartwheel. She was excited because she had just met with a credit repair company that promised that they can get all of her negative credit taken off her credit report and can get her score high enough so she could buy a home. Continue reading “DIY Credit Repair”

Don’t Pay For Free Stuff

April 24, 2015

I was walking down a long pier with my kids not too long ago and there was a big splash off to our left.I jokingly yelled “Free Willy” and my kids looked at me like I was having some type of out-of-body experience. They had no idea what I was talking about since the movie was made well before any of them were born, and while they’ve seen nearly every Disney and Pixar movie made since their birth, I guess they missed some of the older ones. They know way more about “Finding Nemo” than “Free Willy.”  Continue reading “Don’t Pay For Free Stuff”

5 Things You Need To Know About Auto Insurance

April 13, 2015

If you own a vehicle, maintaining sufficient auto insurance coverage is a necessity. Unfortunately, this area of our financial lives can become easy to neglect over the years. This is why an annual review of our insurance policies should be part of the financial planning process and those auto insurance policies need more than just a passing glance. If for no other reason, a refresher on the basics of auto insurance can help save you money while providing reassurance that you are protected for those “life happens” moments that can occur while behind the wheel of an automobile. Here are 5 things to know about auto insurance: Continue reading “5 Things You Need To Know About Auto Insurance”

The Price of Inattenton

January 02, 2015

As we look back at the previous year, I have started thinking about people I’ve talked to this year who have left an impression on me. One of the more memorable people that I was able to have conversations with started with a story that was disturbing on a few levels, but has come to a relatively happy conclusion. The fun part for me was getting updates on her progress and seeing the change in her voice, posture and energy level as things got better.  Continue reading “The Price of Inattenton”

How to Recover From a Credit Disaster

November 21, 2014

During one of my recent conversations with an employee, he was very disturbed by how much a bad credit score has impacted his life.He said that his credit score has caused his car insurance premiums to increase, he thinks it is hindering his job search (he may have a point because it is something that employers consider) and his girlfriend does not want to become his fiancée or wife until he shows significant progress in this area. So, he was very happy to have some ideas on how to make progress on repairing what was a very broken part of his financial life.  Continue reading “How to Recover From a Credit Disaster”

Cyber-Thieves Strike Again: What To Do If You Are a Victim

September 17, 2014

Well, it’s happened again. Another national retailer has had its payment systems hacked. This and similar cyber attacks against corporations appear to be on the rise so as a consumer you will want to be especially diligent in watching your accounts for unauthorized use. The Consumer Financial Protection Bureau (CFPB) offers four steps you should take when you suspect that your debit or credit card information has been compromised: Continue reading “Cyber-Thieves Strike Again: What To Do If You Are a Victim”

8 Steps to Improve Your Credit Score

July 17, 2014

Have you had a rough patch in your financial life? Or maybe you’re trying to position yourself to get the lowest possible rate on a mortgage or even a new job. For whatever reason, you may be like one of the many people I speak to on our Financial Helpline and Ask a Planner sessions who are trying to improve their credit. If so, here are some steps you can take: Continue reading “8 Steps to Improve Your Credit Score”

Is Your Financial Life a Thriller?

June 13, 2014

I have heard a lot of people say jokingly that they wish they had the financial resources of a random famous person. Take Michael Jackson. Houses, cars, amusement parks in his backyard, animals galore…he seemingly had it all from a financial wherewithal standpoint.  Continue reading “Is Your Financial Life a Thriller?”

Clean Up More Than Your House This Spring

April 14, 2014

As of this spring, it has been exactly two years since our family moved into our home after a cross-town move to be closer to our children’s school and their GiGi and PopPop. It’s amazing how fast time flies but it’s also disturbing how much junk we have accumulated in that short amount of time. (For the most part, when I say junk. I am referring to toys and gadgets for the kids and our dog.) Continue reading “Clean Up More Than Your House This Spring”

Personal Finance Tool Review: CreditKarma

February 17, 2014

Do we place too much emphasis on credit scores in America? Probably, but most of us aren’t completely debt-free. I’ve mentioned before that credit scores are not the “be all and end all” of your financial situation – but your credit score can help you lower the cost of borrowing money.  A higher credit score could save you thousands of dollars if you are in the market for a new home or refinancing because scores over 760 typically help you qualify for more competitive interest rates for a mortgage.  It is also important to note that routinely checking your credit report can help identify potential risks related to identify theft. It can even be difficult to obtain a job in some careers without a good credit report. Continue reading “Personal Finance Tool Review: CreditKarma”

Credit Score Myths That Drive Me Crazy

January 18, 2013

When I meet with people who are dealing with building credit for the first time or rebuilding/repairing their credit after some financial misadventures, we often talk about the components of their credit score and how they can make an impact on that score.  Fairly often, someone will say “I have heard…” and then tell me something they’ve heard about credit scores.   After hearing the same “I have heard” items or myths repeatedly, I thought it might be a great time to address a few of them so that you can start the new year with a few facts instead of myths. Continue reading “Credit Score Myths That Drive Me Crazy”

5 New Year’s Resolutions You May Not Have Thought Of

January 10, 2013

With 2013 officially upon us, it’s time to put on your thinking cap and create some quality resolutions. The national economy might be unstable, but you can still have a banner year. Strive to improve your finances as much as possible and you’ll be off to a good start. Continue reading “5 New Year’s Resolutions You May Not Have Thought Of”

How to Prepare for an Impending Divorce

November 28, 2012

Marriage is not easy.  (Can I get an AMEN?)  Marriage takes a lot of work, a lot of sacrifice, and a lot of compromise.  Couples must find a way to bring two separate worlds together, and that means finding common ground on everything from having children, to where you spend Thanksgiving.  Continue reading “How to Prepare for an Impending Divorce”