Quizzle’s Credit Reports & Scores Basics

Quizzle’s Credit Reports & ScoresGuidebook

Table of Contents...

1. Your Credit Reports & Scores2. How to Build Credit3. Managing and Protecting Credit4. Credit Score Facts, Fictions, and Secrets

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1. Your Credit Reports & Scores

Understanding Credit Reports

Credit scores are determined by several factors:

1. Payment History: this shows if you pay on time, or if you’ve been delinquent; also shows bankruptcies and foreclosures

2. Amounts Currently Owed: if you owe a lot of money on multiple accounts, you’ll be considered a higher risk

3. Length of Credit History: a longer credit history is typically better than a shorter history

4. New Accounts: opening new lines of credit in a short time can damage your scores

5. Types of Credit in Use: your scores benefit from diverse lines of credit      

Debunking 10 Credit Myths MYTH #1: Pulling your own credit report will

hurt your score.

MYTH #2: Your income factors into your credit score.

MYTH #3: Closing a credit card account will help your credit score.     

MYTH #4: You only have one credit score creditors and lenders use to judge credit- worthiness.

MYTH #5: If you pay bills on time, there’s no need to check your credit report.

Debunking 10 Credit Myths (cont…)

MYTH #6: Paying off a past-due account will remove that item from your credit report.

MYTH #7: Your checking, savings and investment accounts impact your credit score.

MYTH #8: Paying cash for everything and having no credit card debt ensures a good credit score.      

MYTH #9: Small debts like unpaid parking tickets and utility bills don’t affect your credit

score.

MYTH #10: Debit cards and pre-paid credit cards can help you build credit.

Disputing Items on Credit Reports

Credit report errors happen frequently. So, how do you find and fix them?

1. Inspect, Line-by-Line: Review credit reports and make note of what you think is wrong. Try to verify suspect items.

2. Follow the Directions: Read credit bureau dispute policies. Dispute by phone, fax, mail or online. Document it in writing; assign reasons for each disputed item (i.e., identity theft).

3. Follow Up:  Creditors have 30 days to respond to disputes. Credit agencies act as liaisons between you and creditors. Once the creditor responds, agencies will notify you of findings.   

Facts About Credit Report Freezes

Victimized by fraud or identity theft? Here’s how credit freezes and fraud alerts work:

1. A credit freeze can be requested from credit bureaus, essentially padlocking your credit report, making it inaccessible.

• A fraud alert requires creditors to verify identity before issuing credit. Freezes deny access.

1. It costs $3 to $10 to freeze reports. ID theft victims can apply for a no-cost freeze.

2. A freeze blocks unauthorized access to credit and doesn’t hurt your score, but it can also block YOU from access, so use it carefully.  

How Do Credit Inquiries Affect Your Scores?

The 2 types of Credit Inquiries are “Hard” and “Soft”:

1. ‘Hard’ Credit Pull: These hurt credit scores. ‘Hard’ inquiries are when credit is pulled for new credit or loans, such as credit cards. The exceptions to hard pulls are inquiries made specifically for home or car loans. 

2. ‘Soft’ Credit Pull: Unlike hard pulls, “soft” pulls will NOT affect your scores. This is when you go to a credit bureau or credit-related site like Quizzle to pull reports for your own use. Inquiries may show up on reports, but won’t factor into scores.  

Beware Phony “Free” Credit Report & Score Sites! The Federal Trade Commission (FTC) cracked down on so

– called “free” credit report sites using false advertising andquestionable practices.

The 2009 CARD Act aimed to reduce confusion in the free credit report market. That confusion is used by shady

companiesto hawk “free” reports that aren’t free, while charging consumers for products and services they didn’t want.

In response, many of these sites now offer “free” scores in place of “free” reports, (the law applies only to the

reports!) Sobeware: deceptive practices continue, like offering “free” scores…after a sign-up for other services like credit

monitoring.

.  

2. How to Build Credit

How to Build Credit in 6 Easy Steps

Building your credit history from scratch? Follow these 6 Easy Steps:

1. Get a Secured Credit Card

2. Only charge what you can afford to pay off in full

3. Pay--on time--every month

4. Avoid applying for numerous accounts

5. Check your progress by checking your credit reports and scores

6. After a year, apply for an unsecured credit card

.  

5 Ways to Build Credit from Scratch 1. Open a credit card account: Keep balance low

enough so you can pay it off each month.

2. Pay bills on time every month: This may seem obvious,

but on-time payments are crucial to building scores.

3. Be patient: It may take about 6 months after you’ve opened your first credit account before there’s enough information to tabulate a score.

4. Check progress every 6 months: Monitor your scores regularly. Only Quizzle offers both free reports and scores - no strings attached.

5. Only apply for credit you actually need.

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3 Quick Credit Tips for Young People

1. BEWARE FEES: Most credit card fees hit young people. Those fees pay for the perks enjoyed by older card holders.

2. STUDENT LOANS CAN HURT: Education’s great, but loans are loans. PayPal co-founder Peter Thiel even likened college administrators to subprime mortgage brokers, selling student loans as ‘investments’ when they’re a big expense (so take your studying seriously!)

3. RESTRAIN YOUTHFUL OPTIMISM: 85% of young adults think their finances will improve in the next year—just 35% of those 65+ years agree. This can lead young people to reckless spending and long-term hardships.  

‘Authorized User’ Status It’s called ‘piggybacking’: a formerly common way of boosting credit by getting added as an ‘authorized user’ to accounts held by those with better credit histories. Families used this method for years.

But “credit repair” services prompted FICO to change scoring methods and cards to adopt new standards—some stricter than others. So now, the utility of the practice…well, depends on the card.

American Express, with monthly payback safeguards, is more forgiving. Bank of America, however, often rejects non-immediate family members. So examine each company’s policies before adding or being added to an existent account.

Help Your Kids Establish Credit

1. Instill the work ethic early. A first job should be standard at an appropriate age.

2. Open checking/savings account in their name. Explain

how credit is built on financial responsibility. 

3. Put small bills/utilities in their name. Paying gas, electric or phone bills builds credit/discipline.

4. Get a secured card. Small credit lines through department stores build confidence and history.

5. Co-sign for student loan. It’s only “good debt” if you pay on-time. Make sure they’re ready…and pay on time—or your score will take a hit too!

A 5-Step Method to Build Credit 1. Get a secured Credit Card

2. Charge only what you can pay-Good credit means proving you pay what you owe. Start by charging only what you can pay off in full monthly.

3. Pay on time each month-Most important for good credit is to pay bills and debt on time.

4. Don’t apply for numerous accounts-Each time you apply for cards or a loan, your score takes a hit.

5. Check reports and scores-After 6 mos., check your credit. Pay attention to your report—not just your score!

3. Managing & Protecting Credit

5 Ways to Prevent Identity Theft 1. SHRED SENSITIVE DOCUMENTS – Thieves often

steal personal information from the trash.

2. KEEP SOCIAL SECURITY # SAFE – Don’t carry your card with you and give out your number only when absolutely necessary.

3. MONITOR CREDIT REPORTS – If you can’t avoid ID theft, detect it early to limit damage. 4. BEWARE UNSOLICITED EMAIL – Don’t give out info in response to mail that may only look official.

5. USE SOLID PASSWORDS – Pick combinations of upper and lower case letters and numbers.

7 Tips to Protect Credit at Holidays

1. Check credit report before the holidays.

2. Resist retail credit card offers at checkout.

3. Keep your credit usage low; know your limits! 4. Check your interest rates before you shop.

5. Remain vigilant against identity theft.

6. Don’t get distracted and fail to keep up with your bill- paying duties!

7. As always, spend only what you can actually afford.

5 Ways to Avoid Financial Disaster During a

Divorce 1. Make a realistic budget and learn to adjust to a new standard of living.

2. Close joint bank and credit accounts before divorce and open new, separate ones.

3. Check your credit report thoroughly before the divorce. 4. Sell your house or valuable property if it is prudent and logical to do so.

5. Be fair and mature—agreement is less costly than arguments and huge lawyer fees.

Why Not Applying for New Credit Might Be Your Best

Choice • Your credit score displays your risk as a borrower to banks and other lenders.

• Applying for new credit lines often is interpreted as high-risk behavior. • More credit applications appears as though you’re

having difficulty getting a loan or are overextended.

• Each time your credit is pulled, it is documented.

• Pulling your score is called a ‘hard hit’, and hard hits take a toll on your score.

4. Credit Facts, Fictions, and Secrets

10 Quick Fictions About Credit

1. Making more money improves my credit score.

2. When I pay a debt, it drops off my credit report.

3. The credit bureaus never make mistakes.

4. Only paying in cash will help my credit score.

5. All credit reports and scores are identical.6. Being good with bank accounts improves scores.

7. Closing credit card accounts will help scores.

8. Pulling your own credit reports will hurt scores.9. If a bill isn’t generally reported to the bureaus, skipping payments won’t hurt.

10. Disputing true info keeps it off your reports.

4 Key Secrets of the 800+ Credit Score Crowd 1. NEVER MISS PAYMENTS – Payment history

accounts for roughly a third of your credit rating.

2. KEEP LOW BALANCES, HIGH LIMITS – Try to only use 40% or less of your available limit.

3. MIX IT UP! – Diversify credit lines with revolving credit (cards), installment credit (car, student loans), and, if you can, possibly a home loan.

4. DON’T APPLY FOR NEEDLESS CREDIT – But if you already have unnecessary cards—don’t close them. That will hurt your score!

10 Credit Report Fictions 1. Fiction: Pulling your own report hurts your score.

• Fiction: Your income is factored into your score.

• Fiction: Closing credit lines can help your score.

• Fiction: You only have one credit report/score.1. Fiction: If you pay your bills, there’s no need to check your score.2. Fiction: Paying off an old debt removes it from your report right away.

3. Fiction: Your bank account affects your score.

4. Fiction: Paying in cash helps your credit rating.5. Fiction: Small debts (library fines, tickets) don’t affect your score.

• Fiction: Debit & pre-paid cards can build credit.