The Confusing Language of Credit

Although the laws are changing, there was a time when the only thing consumers were entitled to for free was a copy of their credit report once each year from each of the three major credit reporting agencies. However, as reported by Bloomberg Business Week, now recent legislation is making it possible for consumers to get a free copy of their credit score if they have been denied credit based on that score. As laws continue to change, one thing remains constant and that is our inability to understand just how we are graded in terms of creditworthiness.

Credit Bureaus

One of the first things that confront us is in understanding just what a credit bureau is. There are local credit bureaus that call us whenever we become delinquent in payments but there are also the national credit bureaus (Equifax, Experian and TransUnion) that keep tabs on anything and everything related to what we have and what we owe. Sometimes these credit bureaus are referred to as credit reporting agencies, which is actually a much better name for them. They are not the folks who call us when we are in arrears on payments but they are the ones who tell potential lenders, landlords and employers whether or not we deserve whatever it is we are applying for.

Credit Score, Credit History & Credit Report

Another area which is oftentimes confusing to the average consumer is the difference between a credit score, a credit report and a credit history. Actually, they are all related but a simple way of looking at it is that the credit report details your credit history. Think of it like a report card when you were in school. Your history is all the tests you took, the assignments you handed in and whether or not you were absent or late on any given days. That is all tallied up to give you a ‘report card’ which is your credit report. Based on the history detailed in your credit report, each of the three reporting agencies have some fairly complex mathematical formulas to come up with your credit score. This would be like your final grade at the end of the year.

Benefit of Checking Your Credit Report

Unlike your report card in school, at least you have the option to dispute any errors or fraudulent entries on your credit report. Students usually don’t question the grades their teachers give them. They may complain, but rarely dispute those grades. However, you are given the legal right to dispute any entries on your credit report if you feel they were made in error or that it could be a case of identity theft. In fact, you are encouraged to get a free copy of your credit report from each of the three reporting agencies once a year for just this purpose. If something is not right you can take steps to have it corrected.

The language of credit may be confusing but there are plenty of resources out there to help you have a better understanding of what it all means. Whether you are looking at ways to improve your credit score or are simply looking at how to correct an erroneous entry, help is available. Understanding your credit score may be another matter altogether as each agency calculates your score a bit differently. Even so, if you find a way to keep your payments current, don’t spend more than you make and can show that you use the money you earn wisely, your credit score should not be a problem. The real problem is understanding the language, but have no fear – there are plenty of interpreters out there who are willing to help!

 

Mortgage Refinancing: Look before You Leap

Anyone who spends any amount of time at all on the internet has probably seen a million and one ads and telling them that they can save thousands of dollars each and every year by refinancing their homes. Be careful since this may or may not be the case.

So many times we take what we are told as gospel truth, but in reality it is just a sales ploy to drum up business for lenders. In a recent Wall Street Journal article posted on Yahoo! Finance, it was made clear that many of those ads are posted by lead generating brokers who make it their business to match lenders with potential borrowers. As a result, it is not uncommon to find information on their websites that is either erroneous or incomplete.

For example, when you plug your data into their ‘calculators’ to get a rough estimate on what you would be saving by refinancing, there are several key factors which aren’t taken into consideration. First of all, there are origination fees, closing costs, title searches and a myriad of other oftentimes hidden upfront fees that can significantly reduce the amount of savings you would realize.

Then, of course, there is your credit history and credit score. Most consumers have absolutely no idea what the exact status is of their personal credit rating which is why those calculators often only ask you very broad questions. You won’t typically be asked for your exact score; rather, you will be asked if your credit is excellent, good, fair or poor. This tells them nothing and has no effect on the rate you will be expected to pay! Remember, even those with less than perfect credit can qualify for a mortgage loan but they often pay double (and sometimes more!) the interest than someone with a great credit score.

As a rule of thumb, refinancing your home can cost you anywhere from 3% of your unpaid balance to 6% or more. The point is, you will not be told that after paying these refinance charges you are saving little, if anything. In fact, there have been cases where refinancing actually cost borrowers rather than providing a savings. The ‘rule’ many people go by is called the 1% rule or the 2% rule. You will be told that if the interest rate you are being charged is at least 1% less than what you are currently paying you will save money. Beware! This is not always the case.

Again, the bottom line is your credit score and credit history which combined will be analyzed by a lender to predict your creditworthiness. Also, keep in mind that every time a lender runs your credit history it will automatically result in losing a few points on your credit score. It would be far wiser to get a free annual credit report from each of the three credit bureaus in order to know exactly where you stand. Actually, you can go one step further as there are credit monitoring companies that will also keep you informed of any changes as they occur. This helps to prevent identity theft as well as giving you the heads-up that there may be an error which has been entered to your history.

Nevertheless, there also may be times when refinancing your mortgage could indeed save you a bit of money each year. The point is, talk to a disinterested third party such as a consumer advocacy group prior to finalizing a new mortgage. If you will realize a savings even after all those hidden refinancing charges, then this may actually be a great plan. Just make sure to look before you leap.

 

Invitation Only Credit Cards for the Elite

Most of us are struggling just to make ends meet and to keep current on bills as they come in each month. We worry that if we don’t keep a decent credit score we may not be able to borrow money in case of an emergency and we worry that we won’t get a good job, a good apartment or will not be able to arrange medical payments ‘on time’ if we can’t maintain a decent credit history. Not so for the super affluent as they are invited to carry a credit card that is by invitation only.

What Is an Invitation Only Credit Card?

According to Yahoo! Finance, most of the major credit card companies and several banks such as Chase have their own versions of an invitation only credit card. Unfortunately, little is known about these cards as they are cloaked in secrecy. Only those members who have been privileged with an invitation actually know why someone would want one. What we do know is that many of them come with an extremely high initiation fee, sometimes as much as $5,000, and that they may carry high annual rates as well. It is known that the American Express Black Centurion is one of those cards that carries a $5k initiation fee and the annual fee is $2,500. Oddly, most of us would like to have a credit score worthy enough to have a $5,000 credit limit on a basic card!

What Do You Get For All That Money?

Besides the prestige of having an invitation only credit card that is offered to the wealthiest card holders (or at least those who have probably charged hundreds of thousands of dollars in a single year), there are reputed to be some pretty nice perks along the way. Among the ‘known’ benefits are travel perks above and beyond those frequent flyer type miles such as extra special service at hotels around the world. These cards hold private discounts and as mentioned, free upgrades for all sorts of travel arrangements and accommodations. Some of credit card companies also hold dinners for invitation only cardholders at which they are given a ‘bag of personalized loot.’

Achieving a Happy Medium

While most consumers could never hope to be a member of such a select few who would qualify for such a swank invitation only credit card, we can work towards achieving a happy medium. By keeping tabs on our credit score we can work our way up the credit card ladder in order to perhaps qualify for a credit card with low annual fees and perhaps even a fairly high credit limit. Unless you have a bank account with perhaps $20+ million which would qualify you for one of those ritzy bank invitation only credit cards that is about the most you can hope for – a credit card which has low rates and a high limit.

Take the time to get your free annual credit report to keep tabs on what could be affecting your credit. If there are any errors, contact the credit reporting agency (Experian, Equifax or TransUnion) that reported erroneous information. Make sure that you are not the victim of identity theft and then look at how your creditors have been ‘grading’ you. Have you been paying bills on time and in full? Did a creditor report that you had paid off a loan? These are the types of things you should be looking for that will affect your credit score and future credit. You may never qualify for an invitation only credit card, but why would anyone want one? Don’t you think they could purchase so much more than they are getting with that $2,500 annual fee? I guess we’ll never know.

 

Free Instant Credit Report

Although it is possible to actually purchase your credit report, there are a number of ways in which to get a free instant credit report. Most people are aware of the fact that once they are denied credit they are eligible to request a report at no charge if they request it within 60 days of being turned down. Also, the government has mandated that all three credit bureaus are to provide a credit report each year to any consumer who requests a copy of their own.
Whether you want to contact TransUnion, Experian or Equifax (or all three!) all you need to do is go to their website, fill out some information and you will have a free instant credit report. Also, most reputable credit monitoring services will provide you will a credit report as part of a trial subscription to their services. The point is, you can get your credit report to keep track of what has been reported and the best part is that you won’t have to pay for it if you only ask for one a year.

Although it is possible to actually purchase your credit report, there are a number of ways in which to get a free instant credit report. Most people are aware of the fact that once they are denied credit they are eligible to request a report at no charge if they request it within 60 days of being turned down. Also, the government has mandated that all three credit bureaus are to provide a credit report each year to any consumer who requests a copy of their own.

Whether you want to contact TransUnion, Experian or Equifax (or all three!) all you need to do is go to their website, fill out some information and you will have a free instant credit report. Also, most reputable credit monitoring services will provide you will a credit report as part of a trial subscription to their services. The point is, you can get your credit report to keep track of what has been reported and the best part is that you won’t have to pay for it if you only ask for one a year.

100% Free Credit Report

Since it is vital to know what is affecting your credit at any given moment it is important to always get your 100% free credit report that you may have heard advertised from time to time. Actually, you can get a copy of your credit report each year from all three credit bureaus because the U.S. government legislated that you are entitled to know what is on it.
All three credit bureaus will provide a copy of your credit report if you request it online, by fax or by United States mail. Information on how and where to contact them is on their websites. However, many people find that it is more convenient to get a 100% free credit report from a professional credit monitoring service since they only need to contact one site in order to get a copy of all three reports. Whether you contact each company individually or consult with a credit monitoring service, remember that knowing what is on your credit report is vital if you want to establish or rebuild good credit.

Since it is vital to know what is affecting your credit at any given moment it is important to always get your 100% free credit report that you may have heard advertised from time to time. Actually, you can get a copy of your credit report each year from all three credit bureaus because the U.S. government legislated that you are entitled to know what is on it.

All three credit bureaus will provide a copy of your credit report if you request it online, by fax or by United States mail. Information on how and where to contact them is on their websites. However, many people find that it is more convenient to get a 100% free credit report from a professional credit monitoring service since they only need to contact one site in order to get a copy of all three reports. Whether you contact each company individually or consult with a credit monitoring service, remember that knowing what is on your credit report is vital if you want to establish or rebuild good credit.

AnnualCreditReport.com Website

Although there are a number of websites that can provide an annual credit report, there is one site that offers reports from all three of the major credit bureaus. However, make absolutely certain that you pay careful intention when typing in the annualcreditreport.com website URL. A slight deviation could result in being led to a competitor’s site that is not as reliable or as ethical.

Of course there are a number of other methods to employ in seeking your annual credit reports that the government says you are entitled to for free each year. Some people apply directly to the three credit reporting agencies while others apply for a line of credit in order to get their free report when denied. However, the most reliable way is to utilize the services of a site like the annualcreditreport.com website because all three reports will be provided. Because they are able to also provide credit repair counseling, you will find that it is easier to learn how to begin your road to financial recovery.

One Time Credit Report

So many times consumers are reluctant to pursue getting a free one time credit report simply because they are unaware of just how easy it is to do. Actually, there is no need to apply for credit which they know will be denied in order to get that free credit report. Consumers are actually entitled, by law, to apply to any or all of the three major credit reporting agencies for a free credit report each and every year.

In fact, there several ways in which to get a credit report. Not only can the consumer apply directly to Experian, TransUnion or Equifax once a year but it is also possible to obtain a 3 in 1 report that contains data from all three agencies. However, many people find that joining a credit monitoring service is better than a one time credit report as they will be notified every time there is a change affecting their credit.

Totally Free Credit Report

Since it was the United States government that established the Fair Credit Reporting Act that entitles consumers to a free credit report once a year, many people look at it as if it is a totally free credit report (free annual credit report from government) Actually, the government is only responsible for mandating that it is the right of consumers to know what is on that report but they are not the ones who provide it.
Of course if you are really sincere in seeking a totally free credit report (free annual credit report from government) then it is imperative to contact only reputable credit repair or credit monitoring websites. Be careful that there is not some hidden catch since there are only a handful of sites that are trustworthy. However, if you do find that your report has some issues keeping you with a low credit score you can then begin the task of repairing your creditworthiness.

Since it was the United States government that established the Fair Credit Reporting Act that entitles consumers to a free credit report once a year, many people look at it as if it is a totally free credit report (free annual credit report from government) Actually, the government is only responsible for mandating that it is the right of consumers to know what is on that report but they are not the ones who provide it.

Of course if you are really sincere in seeking a totally free credit report (free annual credit report from government) then it is imperative to contact only reputable credit repair or credit monitoring websites. Be careful that there is not some hidden catch since there are only a handful of sites that are trustworthy. However, if you do find that your report has some issues keeping you with a low credit score you can then begin the task of repairing your creditworthiness.

Get a Free Credit Report from the Government

If you are looking for a way to get a free credit report from the government you probably need to understand that it really isn’t the government that will be providing that document. There does seem to be some amount of misunderstanding in this regard since there is a lot of misleading advertising out there. The fact is, the United States government mandated that each of the three credit reporting agencies (TransUnion, Equifax and Experian) should provide a free annual report to consumers who request a copy.

Since it is extremely important to know what is on your credit report in order to prevent fraud or administrative errors, take advantage of your free credit reports each year. The next time you see it advertised that you can get a free credit report from the government you will know that you either need to contact each of those credit bureaus independently or get your report from a credit monitoring service and not from the United States government.

Free Instant Credit Report

Unfortunately, there isn’t much we can do anymore without a decent credit score which is why it is important to know what’s affecting it. If you are concerned that you won’t qualify for a job you are applying for or an apartment you would like to rent, then the best course of action would be to get a copy of your free instant credit report online. It only takes a few moments to access your credit report by filling out a short form.

Most credit repair or monitoring websites have access to all three of the major credit reporting agencies which include reports from TransUnion, Experian and Equifax. Once you have your free instant credit report you can analyze what is causing your score to be low in order to take steps to repair your credit. If you are at a loss on how to proceed, professional consultants are available to guide you.