Credit Report vs. Credit Score

Credit Report Vs. Credit Score

One common misunderstanding is differentiating your credit report and your credit score. Lenders use the numbers from both to determine the likelihood that you will make payments as agreed in your contract. Lenders that use your credit report and your credit score include credit card companies, apartments, car loans, and mortgage. Your credit report holds information on all your past credit history. The data that gets collected is used to determine your credit score.

Your credit score is a three-digit number that lenders, such as those mentioned above, use to determine how safe or how much of a risk you may be as a customer. The range is typically between 300 and 850. Credit scores are determined based on how much debt you owe, history of repayment, if you have any marks for being late, and how long you have had your credit accounts. It is common for your scores to fluctuate based on your account activity.  There are different scoring models used to determine your score. Some even use your income to calculate your credit score.

Here is a general look at credit score ranges:

• 300-579: Poor

• 580-669: Fair

• 670-739: Good

• 740-799: Very good

• 800-850: Excellent

It is important to strive for a higher score because you will receive more favorable credit terms such as lower interest and lower payments. Credit scores will vary depending on what model was used. Not all creditors report to all three bureaus (Experian, TransUnion, and Equifax). Some creditors may only report to two or none at all. They may also calculate your medium score from all three major credit bureaus.

  Your credit report is a statement that provides information about your lines of credit and your payment history but does not contain your credit score. Your credit report is compiled by the three major credit reporting companies (Experian, TransUnion, and Equifax). These are also known as bureaus or consumer reporting agencies. Lenders will use these reports to determine if they want to loan you money and it helps them determine the interest rate you will receive. Other businesses that use credit reports are renters, insurance agencies, and utility services. Your employer may also run a credit report to make employment decisions about you.

Credit reports will contain:

 Personal Information:

• ·         Name

• ·         Address

• ·         Social Security Number

• ·         Date of Birth

• ·         Phone Numbers.

Credit Accounts:

• Current Accounts and Accounts History

• Credit Limit/ Amount

•  Account Balance

Collections

Public Records

•    Foreclosure

•   Civil Suits

• ·Bankruptcies

Reports can sometimes have errors. It is important to check your credit report. If you find any mistakes, it is imperative that you report these errors right away. Everyone is entitled to a free credit report once a year. Find your free credit report at

https://www.nerdwallet.com/blog/finance/credit-score-vs-credit-report-whats-difference/

Credit Lock vs. Credit Freeze

Credit Lock vs. Credit Freeze

A credit freeze and credit lock are often confused as being the same thing. Both can block creditors and others from accessing your credit file and opening an account in your name. Both a freeze and a lock can help protect you from identity theft. Typically, freezing your account is free but locks come with a fee.

A credit freeze lets you restrict access to your credit file. This makes it harder for someone trying to steal your identity to open a new account in your name. A lender needs your credit report to determine if you are qualified to receive a new line of credit. When you have a credit freeze in place, your credit report cannot be pulled up and the lender is unable to approve a loan or credit card.

Freezes are free and a bit harder to undo. Freezes are required by law to be free. A credit freeze cannot affect your credit score, prevent you from: opening a new account, obtaining your free credit report, or from theft. If you want to lift a freeze, then you required to have a PIN to unlock it online or you may have to request the PIN in writing.

 Locks aren’t always free and can be easier to open and reapply. It is likely to come with a monthly fee. It will block access to your credit file, like a freeze, so that a new account cannot be opened in your name. To place a lock or a freeze on your credit file, you must first contact the three credit bureaus. A credit lock has no legal protection in place, so credit bureaus are not responsible if a new account has been opened in your name. When you want to lift your lock, you are able to do so instantly online.

 When should you use a lock or freeze? If your credit report and/or other personal information has been wrongly used or exposed, you should use a credit freeze. A credit lock is used more as preventative measures, before anything was to happen. To freeze or lock your credit file, you will first need to contact all three credit bureaus. The first step in knowing if you need to lock or freeze your credit file is to check and monitor your credit score. A jump in your score could be fraud. Check out freecreditreport.com

Mistaken For Dead

Mistakenly Placed on Death Master File

Each year more than thousands of people are wrongly placed on the Death Master File. The Death Master File is a document that accounts for every American that has died since the year 1936. People usually do not realize that they have been placed on the Death Master File until they are informed by their bank or are trying to apply for credit. One woman from Philadelphia received an email from American Express in January of 2019 stating that they express their condolences on her passing. She was immediately set into full panic but thought that this was a minor mistake. She was wrong. She soon realized that she was financially powerless. Her AMEX was closed, and her bank account were frozen. (See next blog for the difference between frozen and locked accounts) Her job was not even able to deposit any of her pay into her account. This would eventually ruin or paralyze her insurance as well as her 401k.

Another woman in the state of Utah realized that something was wrong when her credit card was denied on a date night with her husband at a restaurant. She contacted her bank as soon as she returned home, and her credit card company informed her that she has been dead for two years. Since her accounts have been unfrozen, the Social Security Administration is trying to recoup 2 years of payments of tens of thousands of dollars that they believe should not have been paid out.

Funeral directors are the largest source for reporting deaths to the Social Security Administration. There has only recently been a change to switch from paper to electronically filed records. It is an easy mistake to mistype or write a social security number incorrectly. Even one number off can cause serious issues. The Electronic Death or EDR allows states to automatically verify the accuracy of a persons Social Security Number before it is sent to the SSA. Even with this system implemented, it is far from perfect.

The Social Security Administration has estimated that around 12,000 people are wrongfully marked as dead in their system each year. Once a person is in the Death Master File, it is not an easy fix, especially once the credit agencies have the death in their files. If you have become aware of being placed on the Death Master File, it is recommended that you immediately visit your local SSA office and to make sure to bring at least one current form of ID such as a driver’s license and/or passport. If they still have not removed the file, seek a lawyer to see what else you can do to make this right and possible receive compensation.

http://cancelthesefunerals.com/

Problems persist with Credit Bureaus

Problems persist with Credit Bureaus

Have you experienced issues with credit bureau’s? It seems to be a running theme. The three major credit-reporting bureau’s – Equifax, Experian, and TransUnion, have had the most complaints for four consecutive years. These complaints involve inaccurate information on credit reports. Fighting with these bureaus can be a hassle because the bureaus have more power than the consumer.

            Lawmakers have only begun to pay attention since the enormous data breach from Equifax just two years ago. This led to being able to freeze your reports for no fee but didn’t provide any new ways to protect the consumer. There have been a few reforms in the past few years, such as bureaus being required to inform the other bureaus when a credit file is found to be mixed with another person and that a report can no longer include debts outside of an agreement or contract. For example, The reports are not allowed to include medical records that are 180 days old or less or medical debts that have been paid by an insurer.

            Problems have been persistent, and it seems that reform is not happening fast enough. The disputes are converted into codes that summarize the complaints for the data furnishers, which can be thought of as computers talking to computers. This can be frustrating when you have a dispute that is more complex and you need to talk to a real person.

            During the data breach of 2017, Equifax had a settlement of $700 million, which is comparable to a parking ticket in their eyes. It is just the cost of doing business and easier than changing their business practices to be fair and partial to consumers. It is imperative as a consumer to check your credit report regularly, or you may find yourself unexpectedly rejected for credit when it is most crucial. annualcreditreport.com is a site where you can check your credit report for free annually. As a consumer, it is your job to identify that your accounts are in good standing and have all the correct information. If your personal information is wrong, it could potentially be a mixed file or identity theft. It isn’t uncommon for a credit file to be mixed with someone who has similarities to your identifying information. It is most likely to happen if you have a common first and last name or if you have a family member with a similar or the same name. Credit bureaus may even consider only 7 of the 9 digits of your social security number when matching your information. You have the right to dispute these errors and have them corrected and/or deleted. An error in your file could prevent you from getting credit, renting a home, or getting a job.

            If you come across an error, you should take action from both sides. You should contact the furnisher that provided data to the bureaus and to contact the bureau(s) reporting the error. It may even be best to write a formal letter by mail so that a person and not a computer will receive the information. It also provides you with a paper trail if you were to make a claim.  Being persistent is key, it is not easy to get a furnisher to immediately admit their wrongs. Filing a dispute with the credit bureaus as you communicate with the furnisher will help preserve your right to make a legal claim if the error fails to be corrected. You can find dispute information and mailing addresses through these links: equifax.com/disputes, experian.com/disputes and transunion.com/disputes Contact us today with any questions you may have regarding your credit report.

What to Know About FCRA Compliance

What to Know About FCRA Compliance

The Fair Credit Reporting Act, or the FCRA, is a federal law that was enacted in 1971. It was originally designed for consumers to receive help resolving inaccuracies in their credit reports.

        The range of the FCRA was expanded in 1996 to include: background checks for employment screening. It is mandatory for an employer using a third party to conduct background checks under the FCRA compliance.

        The FCRA compliance was made to protect the consumer. Employers that use background reports and Consumer Reporting Agencies, also known as background screening companies are regulated by the FCRA. The FCRA is relevant when an employer obtains a background check for employment from a third party. Background checks include things such as: criminal history, employment verification, education verification, reports on motor vehicles, health care sanctions and professional licenses. The employer and background screening company must have compliance with the FCRA.

        It is highly important that an employer must disclose that they will be doing a background check and they must have written authorization. There are strict adverse action procedures that they must follow if they make an employment decision based on negative information in the report. According to the Consumer Reporting Agency, they must have compliance in procedures that make sure reports are as accurate as possible, while following all state and federal reporting guidelines.

     Here are terms to know to understand more about the FCRA:

The Consumer Report. This is a background report aka a background check that contains factual information of dates of employment, criminal records, and driving history.

The Investigative Consumer Report. This is a background report that includes information obtained through personal interviews that discuss employment performance such as a  personal and/or professional reference check.

The Consumer Reporting Agency, (CRA),  which is where the background screening company prepares the background report.

The Consumer – Which is the person who is the subject of the report.

The User – The person who is requesting and using the background report.

Disclosure – The document used to inform the consumer that they may be subject to a background report.

Authorization – The document signed by the consumer in which they authorize preparation of the background report.

Adverse Action – The process followed by an employer when considering a negative employment decision based on the background report.

Shaw v. Experian - 9th Circuit Oral Argument

Here is a link to our recent oral argument in the Shaw v. Experian class action:

Shaw Oral Argument

The Shaw case concerns the accuracy of Experian's reporting of short sales. Following the great recession, there was a dramatic increase in short sales. To help consumers, the nation’s largest mortgage underwriters created a new, 2- year waiting period for consumers who want to re-enter the conventional mortgage market after completing a short sale. This rule contrasts sharply with the 7-year waiting period applicable to foreclosures and makes it imperative that consumer reports identify short sales with maximum possible accuracy. Experian’s consumer reports fail that standard because they can, at best, only imply a possible short sale while simultaneously implying other events, including a possible foreclosure.

While Experian now insists it accurately and precisely reports short sales, that is not what it told Fannie Mae in May 2010. At that time, when Fannie Mae asked how it could identify short sales in Experian’s data, Experian admitted:

There are no specific codes that will specifically identify a Short Sale condition. The data reporting guidelines instruct the client to report the account as Settled-Special Comment AU. So the presence of this comment on a Mortgage loan ‘could’ imply short sale.

This single piece of evidence undermines Experian’s current contention that any particular set of codes can be relied on to identify short sales with the precision and certainty demanded by the mortgage industry. Experian expressly told Fannie Mae that is not true. And, the record shows the reason it is not true is because Experian requires furnishers to report short sales using the exact same codes they use to report other events that are not short sales. Accordingly, Experian’s data is inherently vague, imprecise and uncertain.

Experian materially compounds this uncertainty by displaying an ambiguous, catchall code 9 in the payment history grid of its consumer reports. The code 9 is not reported by furnishers and can infer numerous derogatory events, including a potential foreclosure. Experian’s reports therefore portray inconsistent and conflicting information that caused the rejection of new mortgage applications for scores of consumers, including Plaintiffs. Experian’s reports are inaccurate because they are so imprecise, incomplete, misleading and unreliable they are not only expected to, but did in fact, adversely affect credit decisions.

Trans Union Fails to Stop Cento Law

Yesterday the Seventh Circuit Court of Appeals ruled in our favor and against Trans Union's efforts to block us from representing a consumer in a mixed file credit reporting case. Here is a link to the full opinion in Watkins v. Trans Union. In the coming days, we will be posting additional information about that opinion and the six year long saga which lead to this moment. For now, we are very pleased with the majority opinion.