Really Awesome Credit Bureau Changes You Should Know About

I just wrote an article about credit card myths, and right afterwards, big news broke about some credit bureau changes happening in 31 states in the near future. A lot of the changes will be very helpful to consumers 🙂

Now that you’re in your thirties, make sure you’re keeping your credit report in extra good shape by checking it at least once a year. You can easily check it on a site like http://www.annualcreditreport.com  Errors pop up in credit reports all the time and you want to catch them early before they damage your score. The new rules getting put in place among the credit bureaus should help stop these accidents from happening. Here they are:

  • If there’s an error on your file with one of the three agencies, that agency must notify the others
  • It will now take 180 days for medical debt to appear on your credit report. So if you have medical debt because your insurance is supposed to take care of a bill and things are still processing, the issue will get squared away before doing any credit damage.
  • The bureaus will closely track data furnishers who most often supply disputed info- so if an organization or debt collection agency is being disputed all the time by everyone, credit bureaus will get way more suspicious.
  • The bureaus have to educate consumers on getting access to free credit reports as opposed to paying for promoted credit reports.
  • You’ll get an additional free credit report provided to you if you’ve recently disputed a claim.

Thanks so much! Hope this all gets put into place! 🙂

credit_report_australia_law_change_2014-860x312_c

Credit Card Myths You May Still Believe In Your Thirties

I feel like getting and keeping good credit is something that should be taught in schools. Otherwise you really have to dig to learn the ins and outs of the mysterious FICO score.

Then again, there are many financial topics that should be taught in schools but aren’t.

Sadness.

Just because I’m in my thirties doesn’t mean I was necessarily taught anything about the ins and outs of FICO. Most of my answers have been self taught.

So I’m here with some common credit card myths that I used to believe in the past. The only way to counter the misinformation that abounds about FICO scores is to provide some solid facts. Hope they’re helpful!

1. Applying for Credit Cards majorly damages your credit score

FALSE – Actually, applying for new Credit Cards will likely help your score in the long run because it will lower your debt-to-credit (or credit utilization) ratio and will increase your credit history. Applying for new cards temporarily lowers your credit score- but way less than you may think. The dip will usually be around 5 points. The long term gains you see will likely be much more than that.

2. You must carry a balance on your credit cards to build credit history and increase your score

FALSE- I really used to believe this one and used to wonder what the magic number was- should you carry a 5% balance? 1%? The answer is that you can pay off your cards in full every month and your score will only increase because of your better debt-to credit ratio.

3. Canceling your credit cards is good for your credit score

FALSE – If you’re an out of control spender, financial gurus such as Suze Orman recommend that you cut up your credit cards- but don’t cancel them. Canceling them will lower your all important debt-to-credit ratio, and will likely end up lowering your score. The only time you should cancel a card is when it has an annual fee that you don’t feel is worth paying anymore. It’ll still lower your score a bit, but it may be worth it.

4. Once you have a bad credit score, you can never fix it

FALSE- This is very untrue. Credit scores don’t really reflect how things are today- they’re a collection of happenings over the years. Missed and late payments and other score damagers will actually fall off your report in 7 years! So there’s likely very good FICO news in your future if you got off-track but now are back on.

5. Checking your credit report hurts your score

FALSE- I believed this one forever. But it’s just not true. If you check your own credit, it’s known as a soft inquiry, and doesn’t have ANY effect on your credit score. If someone else (a credit card issuer, lender, etc) checks your credit score, it’s called a hard inquiry, and that affects your credit score. But not by as much as you think (see Myth #1 above).

Hope this was helpful! These are the simplest myths, but I’ll be back with a part 2 very soon 🙂

3d rendering of a credit card cut into pieces

%d bloggers like this: