quizzle's credit reports & scores basics

Download Quizzle's credit reports & scores basics

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  • 1. Quizzles Credit Reports & ScoresBasics

2. Quizzles Credit Reports & ScoresGuidebook Table ofContents... 1. Your Credit Reports & Scores 2. How to Build Credit 3. Managing and Protecting Credit 4. Credit Score Facts, Fictions, and SecretsGET THIS GUIDEBOOK! 3. 1. Your Credit Reports & Scores 4. Understanding Credit ReportsCredit scores are determined by several factors:1. Payment History: this shows if you pay on time, or if youve been delinquent; also shows bankruptcies and foreclosures2. Amounts Currently Owed: if you owe a lot of money on multiple accounts, youll be considered a higher risk3. Length of Credit History: a longer credit history is typically better than a shorter history4. New Accounts: opening new lines of credit in a short time can damage your scores5. Types of Credit in Use: your scores benefit from diverse lines of credit 5. Debunking 10 Credit MythsMYTH #1:Pulling your own credit report willhurt 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 creditorsand lenders use to judge credit-worthiness.MYTH #5:If you pay bills on time, theres no need to check your credit report. 6. 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 ticketsand utility bills dont affect your creditscore.MYTH #10: Debit cards and pre-paid credit cards can help you build credit. 7. Disputing Items on CreditReportsCredit 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. 8. Facts About Credit ReportFreezes Victimized by fraud or identity theft?Heres how credit freezes and fraud alerts work:1. Acredit freezecan be requested from credit bureaus, essentially padlocking your credit report, making it inaccessible. A fraud alert requires creditors to verify identitybefore 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 doesnt hurt your score, but it can also block YOU from access, so use it carefully. 9. How Do Credit Inquiries Affect YourScores?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 Quizzleto pull reports for your own use. Inquiries may show up on reports, but wont factor into scores. 10. Beware Phony Free Credit Report & ScoreSites!The Federal Trade Commission (FTC) cracked down on so calledfree credit report sites using false advertising andquestionable practices.The 2009 CARD Act aimed to reduce confusion in the freecredit report market. That confusion is used by shady companiesto hawk free reports that arent free, while chargingconsumers for products and services they didnt want.In response, many of these sites now offer free scores inplace of free reports, (the law applies only to the reports!) Sobeware: deceptive practices continue, like offering freescoresafter a sign-up for other services like credit monitoring.. 11. 2. How to Build Credit 12. How to Build Credit in 6 Easy Steps Building your credit history from scratch?Follow these 6 Easy Steps:1. Get a Secured Credit Card2. Only charge what you can afford to pay off in full3. Pay--on time--every month4. Avoid applying for numerous accounts5. Check your progress by checking your credit reports and scores6. After a year, apply for an unsecured credit card. 13. 5 Ways to Build Credit fromScratch1. 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 youve opened your first credit account before theres 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. 14. 3 Quick Credit Tips for YoungPeople1. 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: Educations great, but loans are loans. PayPal co-founder Peter Thiel even likened college administrators to subprime mortgage brokers, selling student loans as investments when theyre a big expense (so take your studying seriously!)3. RESTRAIN YOUTHFUL OPTIMISM: 85% of young adults think their finances will improve in the next yearjust 35% of those 65+ years agree. This can lead young people to reckless spending and long-term hardships. 15. Authorized User StatusIts called piggybacking: a formerly common way of boostingcredit by getting added as an authorized user to accounts heldby those with better credit histories. Families used this methodfor years.But credit repair services prompted FICO to change scoringmethods and cards to adopt new standardssome stricterthan others. So now, the utility of the practicewell, dependson the card.American Express, with monthly payback safeguards, is moreforgiving. Bank of America, however, often rejects non-immediate family members. So examine each companyspolicies before adding or being added to an existent account. 16. Help Your Kids Establish Credit1. Instill the work ethic early. A first job should bestandard 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 throughdepartment stores build confidence and history.5. Co-sign for student loan. Its only good debt if you pay on-time. Make sure theyre readyand pay on timeor your score will take a hit too! 17. A 5-Step Method to Build Credit1. Get a secured Credit Card2. Charge only what you can pay-Good credit means provingyou pay what you owe. Start by charging only what you canpay off in full monthly.3. Pay on time each month-Most important for good credit is topay bills and debt on time.4. Dont apply for numerous accounts-Each time you apply forcards or a loan, your score takes a hit.5. Check reports and scores-After 6 mos., check your credit.Pay attention to your reportnot just your score! 18. 3. Managing & Protecting Credit 19. 5 Ways to Prevent Identity Theft1. SHRED SENSITIVE DOCUMENTS Thieves often stealpersonal information from the trash.2. KEEP SOCIAL SECURITY # SAFE Dont carry yourcard with you and give out your number only when absolutely necessary.3. MONITOR CREDIT REPORTS If you cant avoid IDtheft,detect it early to limit damage.4. BEWARE UNSOLICITED EMAIL Dont give out info in response to mail that may only look official.5. USE SOLID PASSWORDS Pick combinations of upperand 20. 7 Tips to Protect Credit atHolidays1. 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. Dont get distracted and fail to keep up with your bill-paying duties!7. As always, spend only what you can actually afford. 21. Financial Disaster During aDivorce1. Make a realistic budget and learn to adjust to a new standardof living.2. Close joint bank and credit accounts before divorce and opennew, separate ones.3. Check your credit report thoroughly before the divorce.4. Sell your house or valuable property if it is prudent andlogical to do so.5. Be fair and matureagreement is less costly than argumentsand huge lawyer fees. 22. Credit Might Be Your Best Choice Your credit score displays your risk as a borrower tobanks and other lenders. Applying for new credit lines often is interpreted ashigh-risk behavior. More credit applications appears as though yourehaving 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 hitstake a toll on your score. 23. 4. Credit Facts, Fictions, andSecrets 24. 10 Quick Fictions About Credit1. 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 isnt generally reported to the bureaus,skipping payments wont hurt.10. Disputing true info keeps it off your reports. 25. 4 Key Secrets of the 800+Credit Score Crowd1. NEVER MISS PAYMENTS Payment history accountsfor roughly a third of your credit rating.2. KEEP LOW BALANCES, HIGH LIMITS Try to onlyuse40% or less of your available limit.3. MI