Nationwide Credit Clearing

The Credit Cardholder’s Bill of Rights

admin — Fri, 11 Jun 2010 21:33:36 +0000

The new credit card reform enacted by President Obama last May, officially called the Credit Card Accountability Responsibility and Disclosure Act of 2009, went into effect this February. The legislation includes a Credit Cardholder’s Bill of Rights, and among other things, protects consumers against arbitrary interest rates, excessive fees, due date gimmicks, and misleading contract terms.

The legislation also requires credit card companies to include a minimum payment explanation in their credit card statements, which discloses how long it will take the cardholder to pay off their debt by making only the minimum monthly payments. According to a poll of 2,000 people conducted by the National Foundation for Credit Counseling (cited by the Baltimore Sun), this particular measure motivated a quarter of the respondents to pay more than the minimum. To learn more about your rights as a credit cardholder, you can read the Consumer Union’s report here.

New Rules On Credit Disputes Go Into Effect This Summer

admin — Fri, 07 May 2010 16:55:34 +0000

Starting this July, new rules go into effect that will allow consumers to dispute their credit report accuracy, or lack thereof, directly to the companies that furnish the data. Previously, the information providers that issued credit data to the bureaus had no formal obligations to investigate accuracy complaints from consumers, so the only real option was to file a dispute with the credit bureaus.

The new rules place stricter guidelines on the type of information data furnishers must report to the bureaus, such as requiring that they include a consumer’s credit limit. The rules are meant to help promote integrity and accuracy in the credit reporting process.

New Credit Score Laws Introduced to Congress

admin — Mon, 03 May 2010 18:16:26 +0000

A bi-partisan bill was introduced in the Senate last week that would grant consumers free access to their credit scores. Currently consumers are allowed one free annual credit report from each of the three major credit bureaus, but still have to pay fees in order to obtain their credit scores (the numeric value that is calculated from the information on their credit report). This new legislation would allow consumers to obtain one free annual credit score from each of the bureaus, though not necessarily their FICO score, which is the most widely used credit score. What score to give consumers would be left to the bureaus’ discretion. You can read more about it here.

Free Credit Reports No Longer Free

admin — Fri, 23 Apr 2010 16:17:25 +0000

After years of offering “free” credit reports through its catchy, T.V. jingle, freecreditreport.com is now charging $1 for a report. Experian, the company that owns the site, instituted the change in response to recent legislative and regulatory crackdowns. New F.T.C. rules that went into effect on April 2 require sites to prominently disclose on top of each web page that the only authorized source for free credit reports is annualcreditreport.com, and Experian’s new $1 charge serves to work around this for now.

Apparently, the fine print attached to the company’s free credit report offer had come under federal scrutiny. In order to receive freecreditreport.com’s free report, the site required a user to enroll in a program called “Triple Advantage,” a monthly credit monitoring service that automatically billed those who failed to cancel after the free trial period. Read more at the New York Times.

Employment Credit Checks Put Into Question

admin — Fri, 23 Apr 2010 15:54:41 +0000

We all know that in some cases, your credit score can affect your ability to get a job. Many employers use credit checks to screen potential employees, under the assumption that an individual’s credit history helps to indicate whether they will be a responsible or trustworthy employee. But as the New York Times recently reported, there is no evidence that people with poor credit are more likely to be a bad employee.

In light of the economic recession, legislators in over a dozen states are taking steps toward limiting the use of credit checks as hiring factors. Lawmakers say that the lack of proof that bad credit indicates a risky employee and the fact that credit checks unfairly target those who have suffered credit damage from layoffs, medical bills, and other uncontrollable factors, are good reasons to prohibit employers from using credit checks to discriminate in hiring.

Canceling Credit Cards

admin — Fri, 19 Feb 2010 04:36:48 +0000

Before canceling a credit card account, there are some important things to consider.

Canceling Credit Cards Can Hurt Your Credit Score
Credit scoring models take into account the ratio between the balances of your revolving accounts and your total available credit. When you close a line of credit, it is no longer factored into this ratio, which can hurt your score. In general, always try to keep your debt below 30% of your available credit. Also, having a long history of credit boosts your credit score, so it’s not a good idea to cancel an account just because it is old and unused.

Buyers Beware
If you’re planning on buying a house or car, do not close any accounts. Closing lines of credit may hurt your FICO score and thus effect your chances of qualifying for a good loan.

If You Do Cancel A Credit Account
If having lots of credit cards tempts you to spend, or if you have more than 7 revolving debt accounts (which can hurt your credit score), then it may be beneficial for you to cancel. If you do decide to cancel, make sure to consider the age of the account, the rates and fees, and the rewards when choosing which account to shed. When you call to cancel, your creditor may offer you reduced rates or fees – be sure to take these into consideration as well.

What’s In Your Credit Report?

admin — Fri, 19 Feb 2010 04:34:41 +0000

Consumer reporting companies collect four basic types of information that appear in your credit report:

-Identification and Employment Information: such as your name, date of birth, social security number, employment history, home ownership income, previous address, spouse’s name, etc.

-Inquiries: this includes any individuals or businesses that have asked for your credit history for employment purposes in the past two years, and any creditors who have asked for your credit history in the past year

-Financial History: this includes your credit accounts, amount of credit issued, amounts repaid, late payments, any overdue accounts that have been referred to collection agencies

-Public Records: such as bankruptcies, foreclosures, and tax liens

Credit Score and Mortgage Rates

admin — Fri, 19 Feb 2010 04:20:15 +0000

How Credit Score Effects Your Mortgage Rate
When applying for a home loan, your FICO score will help determine what mortgage rate you receive. Lower FICO scores generally mean higher interest rates, while top tier scores will receive better interest rates. The minimum FICO score needed to qualify for a mortgage can vary.

I Have Bad Credit, Can I Qualify?
Don’t count yourself out of a home loan just because you have poor credit. Your credit score is not the only factor in determining whether you qualify. Cash reserves, a large down payment, or a low debt-to-income ratio can help offset a poor credit score.

What Can I Do To Improve My Rate?
There are a few things you can do to improve your mortgage rate if you have poor credit. Paying down outstanding balances on credit cards can help improve your FICO score. Start with the ones that are closest to their credit limits and have the highest interest rates. Also, make sure there are no errors in your credit report – it’s good to do this at least 6 months before applying for a loan. Finally, make sure not to close any lines of credit while in the process of applying for a loan, as this could hurt your score.

What is a FICO score?

admin — Tue, 19 Jan 2010 13:39:55 +0000

If you are serious about repairing your score, it is important to know and understand the FICO score. A FICO score ranges from 300 to 850, with 700 to 850 being best scores.

A few FICO score factors

The FICO score is affected by different factors; your payment history, length of credit history, amount of credits, available credit, type of credits in use, and new credit.

Your FICO score is not just a report card that shows your credit performance. Aside from assessing your credit information, it is also supposed to predict if you are or will be responsible in your financial obligations. This way lenders and banks can make sure that you will continue to borrow money and you will pay on time.

Making inquiries and applying for loans

If you make inquiries about your credit score, it can impact your credit score. For example, when you get a new credit card, open a new account, or apply for a new loan, the bank makes an inquiry. Even though you personally did not make the inquiry, FICO will lower your credit score by five points. This is because FICO sees your action of applying for a new loan or credit card as a potential budget threat or risk.

But do not worry. Once you pay your credit card bills and loans on time your score will increase.

High vs. low balances

If you have a high balance in your account and you do not frequently apply for loans your credit score might be lower than you think. FICO interprets this as not being a risky time for lenders to lend you money. However, if you have a low balance FICO will increase your score and will encourage lenders to approve your loans.

Inactive accounts

Inactive accounts and accounts with zero balances will automatically give you a low credit score. It is best to frequently use your credit card or bank account and make regular payments, but keep a low balance to maintain a good FICO score.

Identity Theft and Your Credit

admin — Tue, 19 Jan 2010 13:32:23 +0000

Identity theft is a booming industry for hackers. There are countless ways that identities are stolen and it is very important to know how to protect your credit.

Here are a few ways to protect yourself from identity theft.

1 Keep your PIN numbers and account numbers in a safe place. And it is preferable to change your PIN numbers once in a while, if you have the option. Just make sure you do not forget them.
2. Be careful with your credit, debit, and ATM cards.
3. Be careful when shopping on the internet. Many shoppers have had their identities stolen by “phishing” sites. You can lose a lot of money if you are not careful with your credit card number and account number.
4. Keep a list of banks and companies that issued your cards. Make sure that you have their phone numbers. This way if someone attempts to use your identity to extend credit you can notify the issuing bank or company immediately.
5. Subscribe to a credit monitoring service. A credit monitoring service is an online tool that monitors your credit report. If the service alerts you about something unusual with your credit report you will know it immediately, and then you can report it to the bank or company.

Use common sense and be careful. Protecting your credit is vital to maintaining your credit.