Quizzle’s Credit Reports & Scores Guidebook Table of Contents... 1. Your Credit Reports & Scores 2. How to Build Credit 3. Managing and Protecting Credit 4. Credit Score Facts, Fictions, and Secrets GET THIS GUIDEBOOK!
1. Your Credit Reports & Scores
Understanding Credit ReportsCredit 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 foreclosures2. Amounts Currently Owed: if you owe a lot of money on multiple accounts, you’ll 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
Debunking 10 Credit MythsMYTH #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 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 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 & ScoreSites!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 freecredit report market. That confusion is used by shady companiesto hawk “free” reports that aren’t free, while chargingconsumers for products and services they didn’t 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 “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 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.
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 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.
3 Quick Credit Tips for Young People1. 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’ StatusIt’s 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 standards—some stricterthan others. So now, the utility of the practice…well, dependson the card.American Express, with monthly payback safeguards, is moreforgiving. Bank of America, however, often rejects non-immediate family members. So examine each company’spolicies before adding or being added to an existent account.
Help Your Kids Establish Credit1. 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 Credit1. Get a secured Credit Card2. 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 Theft1. SHRED SENSITIVE DOCUMENTS – Thieves often steal personal information from the trash.2. KEEP SOCIAL SECURITY # SAFE – Don’t carry yourcard with you and give out your number only when absolutely necessary.3. MONITOR CREDIT REPORTS – If you can’t avoid IDtheft, 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 upperand
7 Tips to Protect Credit at Holidays1. 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.
Financial Disaster During a Divorce1. 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.
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 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 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 Crowd1. NEVER MISS PAYMENTS – Payment history accountsfor roughly a third of your credit rating.2. KEEP LOW BALANCES, HIGH LIMITS – Try to onlyuse 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 Fictions1. 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.