Category Archives: Credit

A Quick Look at Credit Reports

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Did you know that your financial history has a report card?  Your credit report is a detailed snapshot of your financial history, painting a picture of your creditworthiness to potential lenders, landlords, and employers. What your credit report says can significantly impact your financial opportunities and overall well-being.

There are three major credit bureaus – Equifax, Experian, and TransUnion – that maintain credit reports for individuals in the United States. These bureaus collect information from various sources, including lenders, credit card companies, and public records, to compile a comprehensive overview of your credit history.

Your credit report contains tons of information, including:

  • Personal Information: Your name, Social Security number, birth date, and current and past addresses
  • Credit Accounts: Details about your credit card accounts, installment loans, and other credit-related accounts, including balances, payment history, and credit limits
  • Public Records: Information on bankruptcies, tax liens, and judgments
  • Credit Inquiries: Records of when someone has checked your credit report for lending, employment, or other purposes

By law, you are entitled to a free copy of your credit report from each of the three major credit bureaus once a year.  Thanks to a pandemic change that was made permanent, however, you can now get a free copy of your credit report once a week (though that may be overkill for most people).  You can access your free reports through AnnualCreditReport.com, the official website authorized by the federal government.

Regularly reviewing your credit reports is important to check for accuracy and identify potential errors or fraudulent activity. If you find any discrepancies, you should contact the respective credit bureau to initiate a dispute.  Credit report errors happen more often than anyone would like.

Your credit score is a numerical representation of your credit history.  It is derived from the information in your credit report. It typically ranges from 300 to 850, with a higher score indicating better creditworthiness. Lenders and other entities use your credit score to assess your risk as a borrower or tenant.  Your credit score itself will not appear on your credit report.

A lot of factors go into the calculation of a credit score.  Those with good credit make their payments on time.  It’s a good idea to keep your credit utilization to a maximum of 30% of your available credit.  Applying for credit multiple times in a short period can lower your credit score.  And a longer credit history helps to build a higher credit score, so building strong credit is a bigger challenge for younger people.

Your credit report is basically the report card of your financial habits. You should take a look at it and see how you are doing.  If your credit needs work, you should do that sooner rather than later.  The worst time to find out there is a problem on your credit report is when you actually need credit.  Take a look.  It’s worth it.

Chasing Rewards

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I have a lot of credit cards.  I use a lot of credit cards.  And I just applied for another credit card.  For a lot of people this is a recipe for disaster.  But for me it’s a money-saving technique.  Which I know sounds crazy.  But there is a method to my madness.

I am a credit card reward chaser.  I use the cards for convenience and for rewards.  And I pay them off in full every month to avoid paying interest.  Not everybody has this kind of control.  And if that’s you, just stop reading now.  But if you have the self-control to know that you will be able to pay the balance in full every month, keep reading.  Rewards are awesome!  And I have a system of using certain cards for certain things to leverage those rewards to my advantage.

I have a few cards that I keep for single purposes.  My Sheetz Visa, when combined with the My Sheetz card saves me 8 cents per gallon when I fill my gas tank at the gas station/convenience store that is pervasive throughout central Pennsylvania (and several other states).  So when I’m not in the neighborhood of the Bellefonte Rutters that seems to undercut everyone in the area on the price of gas, I use my Sheetz Visa.  And that’s the only thing I use it for.

I have another Visa that is tied to my favorite hotel chain.  I actually pay an annual fee for that card, but in exchange for that I get a certificate good for one night that year in the hotel chain.  I always come out ahead on that deal as I chase my favorite bluegrass bands around the east coast.  And I only ever use that card for hotel stays (where I earn extra rewards for more free nights) and for travel and meal expenses for business travel (to keep that all separate from my personal life expenses).  This card has been sitting very quietly for the time that the pandemic has raged through the world, but it’s ready to come back out sometime in the future.

I have yet another Visa tied to my favorite online retailer.  This card gives me 5% in store credit on every purchase I make.  Especially since the pandemic started, online shopping is a go-to for me, so this credit adds up pretty quickly.  It just makes sense for me.

And I just applied for a card branded by my cell phone provider.  This one is going to reduce my cell phone bill by $10 per line per month by tying my auto-billing to it.  And it’s also going to give me cell bill credit for using it in other places—the big one is 4% back on groceries.  That adds up quickly!

And of course, for all other purchases I have my go-to card which is a 2% cash back card I have through my credit union.  It’s a lot of cards.  With a lot of different purposes.  And I pay them all off in full every month.  The rewards are significant—by using my assorted cards for just about everything I buy, it adds up to quite a bit of money. BUT I PAY THEM ALL OFF IN FULL EVERY MONTH!  That’s the only way this works.  Otherwise you lose all of the benefit to interest.

Do you chase rewards?  If you are the kind of person who has the control to use credit cards for convenience rather than for credit, maybe you should.

 

Taking a Look at your Credit

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I celebrated my birthday recently.  I’m one year closer to the life of leisure and adventure that I have planned for my retirement!  And aside from a lovely day of doing my favorite things, I like to use my birthday as a reminder for things that should be done once a year.

One of the things people should do once a year is look at their credit report.  Your credit report is basically a history of all the things (both good and bad) that have been happening in your financial life.  It will show you all of your loans and where you stand in repayment.  It will show you all of your open lines of credit.  It will show you a history of closed lines of credit.  It will even show you who has been looking at your credit.  And just like with everything, it’s not always going to be correct.  That’s why it is important to look at it once in a while.

The federal government has set it up so you have access to a free copy of your credit report once a year, from each of the three major credit bureaus (Experian, Equifax, and TransUnion).  And while the pandemic continues you actually have access to a free report once per week.  But there is a lot of confusion about how to access this information for free.  There are a lot of places where they are happy to charge you a fee for this information…or even worse, set you up on a recurring subscription.  All to get information you have the right to see for free.

To request your free reports, you should visit http://annualcreditreport.com.  This is the site set up by the government to allow you this free access.   The site will ask for your Social Security number and ask you questions about your credit accounts to verify your identity (so no one else should be able to access your information).  And then, you’ll have all of the information you want about your credit history.  All of your accounts.  Whether you have a history of late payments.  How much you owe.  It’s all laid out for you.

Once I looked at my credit report and found an error.  A big error.  A mortgage that had been paid off in a refinance was showing as open.  It looked like I had about $80,000 in debt more than I actually did.  And I had to jump through some hoops and fax a bunch of documents to get it corrected.  And that’s why it’s important to look at this stuff from time to time.  It’s absolutely better to find credit report errors on your own rather than be surprised when a loan request is denied.

Whether or not you are celebrating your birthday, you should probably take a few minutes and review your credit report.  The best gift of all is peace of mind.

A Legend Lost

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I never met her.  But I worshipped her from afar.  And she changed my life forever.  She was diminutive in size, but a giant in the legal world.  Ruth Bader Ginsberg (RBG) was the kind of hero who made an impression on everyone (regardless of political party).

She attended Harvard Law at a time when few women were allowed to do so, paving the way for the much more equal gender split found in law schools today.  She taught at a law school at a time when even fewer women were given that opportunity.  She felt firsthand the discrimination against women who bucked against traditional gender roles, and she aimed to change that for all.

As a practicing attorney she fought for men to receive caregiver deductions and widower Social Security benefits—because a woman can be the primary breadwinner in a couple too!  She fought for jury duty to be required of women as well as men—prior to that women were easily able to opt out.  How can a fair jury be seated without having a fair shot at seating women?

On the Supreme Court she helped women earn the right to attend the Virginia Military Institute.  She helped women extend the window of time within which they can file a pay discrimination case to be based on the date the woman learns she learns she is being paid less than her male counterparts rather than the date of hire (because how can she file before she knows of the issue?!).  She also wrote the majority opinion that ruled that mental illness is a disability, and deserving of the protections of the Americans with Disabilities Act.

RBG was pervasive across many legal issues.  But her biggest influence on my life came in the Equal Credit Opportunity Act of 1974.  Prior to this legislation it was very difficult for women to establish credit in their own names because they could be discriminated against based on gender or marital status (or race, or religion, or age).  RBG’s early work as an attorney laid the groundwork for this important law.

I am a middle-aged woman.  I spent my 30’s unmarried.  During that time I opened credit cards.  I purchased cars.  I purchased real estate.  All in my own name, without difficulty.  Since I married in my 40’s, I’ve been able to provide health insurance for my husband through my employer.  And I’ve been able to open credit cards and purchase cars and purchase real estate, without being required to include my husband in the credit process.

I never met her.  But she profoundly affected my life as I know it.  Thank you, Justice Ginsberg.  Your legacy will live on forever.

Lost: One Credit Card

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I lost my credit card two weeks ago.  I had it in my pocket while I was at a music festival.  And then next day I couldn’t find it.  I checked my purse.  I checked all the pockets.  I dug through my camper (that we were staying in at the festival).  I just can’t locate it.  And at the end of the day, this is really no big deal.

As soon as I realized the card was missing in action, I logged into my account on line to check for recent activity.  I found there were no charges that I hadn’t made.  Then I put the account on “pause,” which allows regularly recurring charges to continue but any other charges will be blocked.  This has given me some time to continue looking for the missing card, in case it is just misplaced and not really gone.  The idea of cancelling the card and changing the number everyplace that I have recurring charges is less than appealing, so I want to give my camper one more good overhaul in case it’s hiding in the mattress somewhere.

In the meantime, I’ve been really glad that I have another card that I’ve been able to use instead.  Without a backup card I would have been in a bad place (adulting really seems to require plastic payment these days!).  I’m thinking it’s probably a good idea just in general to have more than one credit card.  Not just because of situations like mine, but because not all places take all cards.  Some merchants will accept MasterCard, but not Visa.  Some will take MasterCard and Visa, but not American Express.  And so on and so on.  I like to be prepared for just about any situation, and having multiple payment options helps with that.

My plan for tonight is to pull everything out of the camper and really search for the card one more time.  If I don’t find it, I’ll cancel it and get it reissued this week.  But luckily, if it really is gone, it’s no big deal.

The Attention It Deserves

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Shhhhhh!!  Leave me alone!  It’s exam time!  I’m trying to study!

It’s definitely that time of the semester.  Everyone is hunkered in their own preferred way…cramming in last minute knowledge (and coffee and chocolate) for the dreaded law school exams.  You give it that much attention because it’s simply that important.  It seems like your entire future rides on every single exam question.

Your money deserves that same level of attention.  Because your entire future really does ride on how you manage your finances.  If you are lazy and sloppy with your money, you will end up paying a price.  Late payments, overextended credit cards, overdrawn bank accounts, and bounced checks are more than just an embarrassment.  These things can hurt your credit score.  And a bad credit score comes with consequences.  If you have bad credit, you may have trouble getting a Grad PLUS Loan or a private educational loan to help you pay your living expenses while you are in school.  When it’s time to buy a car, you may not be able to secure a loan.  You may not be able to rent an apartment without getting someone to co-sign for you.  You may pay more for car insurance.  You may have to pay a deposit in order to have utilities connected.  You’ll pay much higher interest rates on credit cards, private educational loans, car loans, and home mortgages…if, in fact, you are able to get approved for them at all.  And worst of all, if your credit history is challenging enough, you may run into trouble with the character and fitness portion of the bar exam application.  That’s a lot of scary consequences for simply not giving your money the attention it deserves.

Think of managing your money as an extra class you are taking.  Give it a certain amount of time each week.  Use a spreadsheet or some other program to manage your budget.  Write down when your bills are due so you don’t miss any deadlines.  Read your mail and email—it could actually be something important.  Check your accounts online regularly so you aren’t facing any surprises.  Something as important as the funding that makes your life work deserves the same attention you would give an exam or a paper.

Shhhhhh!  Leave me alone!  I just got paid!  I have to work on my budget and my bills!

The Equifax Data Breach and You

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The giant financial story in the news the last couple of weeks is one that should concern you.  Equifax, one of the major credit bureaus suffered a significant data hack.  Why is this a big deal?  In addition to having all of your credit account numbers, Equifax also has your personal information.  Your address.  Your driver’s license number.  Your Social Security number.  Basically, the hackers may have access to everything they need to apply for credit in your name.  And Equifax isn’t something you needed to opt into to potentially be victimized.  If you’ve ever applied for credit of any sort—including utility accounts and student loans—you likely have a credit record with Equifax.  And you should definitely check to see if you may have been included in the hacked data.

Equifax has set up a site here where you can enter your information and find out if your data was included in the breach.  If it was, you can get a year of free credit monitoring by signing up with Trusted ID Premiere through the Equifax-provided link.  But I’ll be honest with you…I signed up a week ago and haven’t received any confirmation that this went through.  The reality is that Equifax is overwhelmed and can’t keep up with the requests.  And I’m not sure that I want to depend on Equifax, the company that leaked my data, to turn around and protect that same data.  I’m actually considering signing up for a paid credit monitoring service for myself.  Somehow it seems worthwhile at this point to have the equivalent of an insurance policy on my credit.

There are some things you can do on your own to secure your data.  The free credit monitoring offered by Equifax is one option.  But you can also add a credit freeze to your credit reports.  The freeze would make it so no requests for credit for you can go through without your unlocking the freeze with that credit bureau.  And it’s also a good idea for you to check your credit reports at least once a year.  You can get a free copy from each of the three major credit bureaus (Equifax, Experian, and TransUnion) once a year at http://www.annualcreditreport.com.

But please be aware that checking up on your credit is not a “once and done” kind of thing.  In data breach situations like this, the hackers are likely to sit on your data for a few years before actually using it to their benefit (and your detriment).  So now is the time for you to make a habit of looking at your credit with some regularity.  I’m sure this data breach will not be the last.  And it seems each one is more horrifying than the previous one.  Take care of your financial health.  Watch (or insure) your credit!

 

Credit Card Benefits: Beyond Rewards

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It’s no secret that I’m a fan of chasing credit card rewards.  But there are other ways to get extra bang for your buck by using your credit card.  In addition to rewards, your card might also offer extra benefits.  It’s not cash back or travel points, but other little perks that your card offers as incentive to use their card.  Common benefits include rental car insurance, travel insurance, or extended warranties on purchases made with the card.  I’ve made good use of a benefit offered by both my Citibank MasterCard and my American Express Card:  pre-sale concert tickets.  (It’s always helpful to have one of each of these cards if you are an avid music fan!).  And another benefit that I had never even heard of until recently just made me change which card my cell phone is billed to.  There are a couple of credit cards (including the Wells Fargo Visa I already happened to have) that offer cell phone insurance if you auto-pay your cell phone bill with that card.

cell phone insurance

I’ve never purchased cell phone insurance.  I’m careful with my phone and keep it in a case, so I’ve never seen the need to protect it with insurance that will cost me a monthly fee to my cell phone provider each month.  But if the insurance is free?  I see no reason not to take advantage of that.  Simply by switching the card I auto-bill to, I was able to pick up $600 worth of protection against damage or theft (but not loss), subject to a $25 deductible.  Do I think I’ll ever need to take advantage of that?  Probably not.  But it doesn’t cost me anything and it does offer me a layer of protection I didn’t have before.

I’m not saying that you should go out and apply for a bunch of different credit cards in order to get these benefits (as a matter of fact…please don’t!).  But if you already have some credit cards (and most people do), it’s a good idea to do a little research into what benefits those cards may offer.  You may find that you have options you didn’t even know about.

The Ongoing IRS Phone Scam

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IRS-Phone-Scam

We’re in the heart of income tax season, and the scam artists are all over it.  It happens every year.  Scammers contact taxpayers by telephone, posing as the IRS, telling the tale that the taxpayer owes a back income tax debt of several thousand dollars.  They will threaten things like arrest, deportation, or driver’s license revocation if the tax bill is not paid immediately.  And they will insist that this bill be paid by credit card.

You can see where this is going.  The victim gives the credit card number to the phony IRS agent on the phone and then the fraudulent charges happen.  This leaves the victim with a huge mess to clean up.

So here’s what you need to know.  If you are surprised that the IRS is contacting you, then it’s more than likely NOT the IRS contacting you.  The IRS will never call you to collect a tax debt without having first sent a paper bill by US Mail.  The IRS will never ask for a credit card number over the phone.  If you think you may owe a tax debt, you should contact the IRS directly at their phone number, 1-800-829-1040.  If you happen to hear from one of these scammers…hang up.  Do not return their calls.  And if you feel ambitious….report them to the authorities.  You can learn more here.

Chip and PIN Credit Cards

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Credit cards (and the way we use them) are undergoing a transformation.  By now, any cards you have should have been replaced by a new card with “chip and PIN” technology.  You’ll notice a little square chip on the front side of the card:

chip and pin card

In the future, that chip will always be used instead of the magnetic strip on the back to transfer your card information to the merchant. You insert the card into the bottom of the card reader and hold it there, and the card reader takes your info from the chip.  This is significantly more secure than the old swipe the magnetic strip method.  And eventually, the old procedure of signing for purchase will be replaced by the entering of a PIN number.

And while the card providers have done a good job of issuing the new cards to move toward this technology, the merchants are slow to catch up.  Most places I shop are still using the old swipe and sign method.  And those merchants who do have the new “dip the chip” technology in place (so far I’ve only found it at Wal-Mart and Target) are still using signature rather than PIN….and that isn’t expected to change any time soon.  If you happen to travel to Europe, however, make sure you know the PIN for your credit card.  They’ve been using chip and PIN for years.

The U.S. is a bit slow to catch on to this technology, but in the future it should be helpful in reducing fraudulent card use.  And this ultimately protects you.  Change is hard.  But most times it is worth it.