Don’t Risk Your Credit Score In Retirement – WBRC FOX6 News – Birmingham, AL

Cancelling infrequently used credit cards may seem like a good strategy, but your credit score may be adversely affected. Adam Carroll, Founder and Chief Education Officer of National Financial Educators, explains: “When you have a long-standing trade line, which is what a credit card is considered on your credit report, and you cancel that card for whatever reason, your score will actually go down as a result because one of the main impacts on your credit score is the length of credit history.” A shorter credit history translates to higher risk in the eyes of lenders.

Sean McQuay, Credit and Banking Expert at NerdWallet, agrees but includes another reason to keep older cards, noting that closing a card account results in “decreasing your overall credit line, which basically signals that a bank trusts you less.”

In addition to decreasing your overall credit line, closing an infrequently used account raises your credit utilization your total credit in use compared to your cumulative credit line. High credit utilization suggests a greater chance of falling behind on payments and/or defaulting on debts.

To avoid these pitfalls, make periodic small purchases on all your open credit cards to keep them active and pay the balances in full at the end of each billing period. By keeping credit spending low, you can still address debts while getting the full benefits of your credit account.

It’s okay to concentrate most of your credit spending in one account to maximize rewards. Just use alternate accounts often enough to keep them from being closed for lack of activity.

Source: Don’t Risk Your Credit Score In Retirement – WBRC FOX6 News – Birmingham, AL

Medical Collections/Credit Reports 2023 Changes

Good news for everyone who has unpaid medical debt. During the first half of 2023, Equifax, Experian, and TransUnion will no longer include medical debt in collections under $500 on credit reports.

Full article: https://www.cnbc.com/amp/select/medical-debt-credit-report/

Financially Speaking™ James Spray RMLO, CNE, FICO Pro | CO LMO 100008715 | NMLS 257365 | 12.30.2022

Notice: The information on this blog is opinion and information. While I have made every effort to link accurate and complete information, I cannot guarantee it is correct. Please seek legal assistance to make certain your legal interpretation and decisions are correct. This information is not legal advice and is for guidance only. You may use this information in whole and not in part providing you give full attribution to James Spray.

Free Credit Freeze & Free Credit Thaw – Children, Too

I have frozen my credit. Have you?

Updated credit report law allows consumers to freeze and thaw their credit reports. It is now free for consumers to freeze their credit and they can lift that freeze for free, too.

Beginning today, September 21, 2018, the Federal Trade Commission (FTC) has enabled a new credit file protection layer — one the consumer controls.

Credit fraud experts say the new option is better than an alert, plus it covers the entire family.

It makes it harder for identity thieves to open new credit accounts under a consumer’s name.

This new act offers a bonus for parents concerned about their under-age 16 children who might be easily become victims of ID Theft. Children are also eligible to have their credit files frozen.

If a consumer asks for a freeze online or by phone, the credit reporting agency (CRA) must put the freeze in place no later than the next business day. You can place the freeze on-line immediately.

When the consumer needs to lift the freeze – for example, to finance a new phone, vehicle or, get a mortgage – the freeze must be lifted within an hour.

You must notify each of the three CRAs separately to freeze your credit on each of the three CRAs. Below are links to each of the three CRAs. Remember, you must notify each CRA to implement a freeze. Same with temporarily lifting a freeze when you apply for new credit.

You can also call each agency (Equifax, 800-349-9960; Experian, 888-397-3742; TransUnion, 888-909-8872) to place the freeze.

Image credit: AARP Blog

Financially Speaking™ James Spray MLO, CNE, FICO Pro | CO LMO 100008715 | NMLS 257365 | Posted 9/21/2018 | Updated 7/20/2021

Notice: The information on this blog is opinion and information. While I have made every effort to link accurate and complete information, I cannot guarantee it is correct. Please seek legal assistance to make certain your legal interpretation and decisions are correct for your situation. This information is not legal advice and is for guidance only. You may reproduce this information in whole and not in part, providing you give full attribution to James Spray.

TransUnion “unwilling or incapable” of operating lawfully, feds say

“TransUnion is an out-of-control repeat offender that believes it is above the law,” CFPB Director Rohit Chopra said in the statement. “I am concerned that TransUnion’s leadership is either unwilling or incapable of operating its businesses lawfully.”

Source: TransUnion “unwilling or incapable” of operating lawfully, feds say

Medical Debt Collection and Consumer Reporting Requirements in Connection with the No Surprises Act

“The Bureau of Consumer Financial Protection is issuing this compliance bulletin and policy guidance to remind debt collectors of their obligation to comply with the Fair Debt Collection Practices Act’s prohibition on false, deceptive, or misleading representations and unfair or unconscionable practices, and to remind consumer reporting agencies and information furnishers to comply with the Fair Credit Reporting Act’s accuracy and dispute resolution requirements, including when collecting, furnishing information about, and reporting medical debts covered by the No Surprises Act.” CFPB BULLETIN 2022-01

Happy Credit

Financial wellness, including higher credit scores have been linked to better wellbeing, as shown in a study published by Harvard Business School. The paper, published in 2018, is titled: Good Credit and the Good Life: Credit Scores Predict Subjective Well-Being. The study was conducted in both England and the United States with the cooperation of the banks and their customers who participated in the survey.

The Harvard study stated that “credit scores predicted life satisfaction even after controlling for a range of financial covariates, including income, spending, savings, debt, and home-ownership. Respondents with higher credit scores felt more optimistic about their future, promoting happiness. Further, the relationship between credit scores and wellbeing was moderated by participants’ prior awareness of their score. Together, these results suggest that creditworthiness can plausibly increase well-being, either directly or indirectly, meaning that interventions to improve creditworthiness could improve consumer welfare.”

Credit where due, I excerpted the above paragraph from an article published on October 5, 2021 by Benefits Pro

The referenced study is reminiscent of a study done by the Federal Reserve and about which I wrote in 2016 titled: Romance and Credit Scores.

Image attribution: Google Images

Financially Speaking™ James Spray RMLO, CNE, FICO Pro | CO LMO 100008715 | NMLS 257365 | October 7, 2021

Notice: The information on this blog is opinion and information. While I have made every effort to link accurate and complete information, I cannot guarantee it is correct. Please seek legal assistance to make certain your legal interpretation and decisions are correct. This information is not legal advice and is for guidance only. You may use this information in whole and not in part providing you give full attribution to James Spray.

Wells Fargo Ends Personal Lines of Credit: What It Means for Consumers

“How your credit score could be affected

The effect of a Wells Fargo line of credit depends on your unique credit profile, said Tommy Lee, principal scientist for the FICO data and credit scoring company, in an emailed statement.

Several factors affect your credit score, and your available credit compared to credit used has a big influence. If you have multiple open credit cards with high limits and low balances, then the impact should be low. But if your other accounts have low limits and high balances, it could hurt.

“When a line of credit is closed, some of your available credit is off the table,” Lee said. ”The lower your ratio of balances to your total credit limits, the better with respect to your FICO score.”

Closing an account also reduces your average age of accounts and your number of accounts, both of which have a smaller influence on your score…” See complete article from Waco Tribune-Herald

OUCH! This triple whammy will hurt many, many folks FICO Scores.

Does Settling Credit Card Debt Affect Your Credit Score?

The following article from US News and World Reports is factual although overly dramatic in the damage to your credit caused by bankruptcy. The words of caution on debt settlement, on the other hand, are a little mild. Debt settlement almost always fails.

“…Even worse for the credit card company, you might file for bankruptcy, making it highly unlikely that the company will recoup any of the money you owe,” Latham says.

However, the option of debt settlement isn’t available to just anyone. There needs to be evidence that you realistically can’t afford to pay your debt. “Typically, they will only do this if you default on your credit card debt, meaning you have missed your payments six months in a row,” says Katie Ross, executive vice president of American Consumer Credit Counseling.

Settling a debt might sound like a Get Out of Jail Free card, but there are consequences if you go this route. Namely, your credit will take a major hit.

How Debt Settlement Affects Your Credit…”

If you are considering debt settlement vs bankruptcy you’ll wish to read this article.

Financially Speaking™ James Spray, CNE, FICO Pro | CO LMO 100008715 | NMLS 257365 | June 19, 2021

Notice: The information on this blog is opinion and information. While I have made every effort to link accurate and complete information, I cannot guarantee it is correct. Please seek legal assistance to make certain your legal interpretation and decisions are correct. This information is not legal advice and is for guidance only. You may use this information in whole and not in part providing you give full attribution to James Spray.

8 things you should know about credit

Diana Billstrom wanted to rebuild her credit score, but she wasn’t sure where to start.

Though she knew the basics, Billstrom wanted to learn more.

“I think we all need financial education, no matter our age or neighborhood,” she said.

When she heard that Walnut Way Conservation Corp. was offering a webinar in February on credit scores called “Keeping Score: Everything You Never Knew About Credit,” she signed up.

Jackie Carter, the director of economic empowerment at YWCA Southeast Wisconsin, led the workshop, which was made possible through a grant from the Zilber Family Foundation.

Source: 8 things you should know about credit | Milwaukee Neighborhood News Service

How to Make Sense of Your (Dozens of) Credit Scores – Consumer Reports

“Focusing On the Scores That Matter

Given these various brands and scoring formulas, it’s unlikely that a consumer will ever see the exact same score that the lender is using to make a credit decision.

“Even if you both are looking at the same formula and brand, your credit data is likely to vary from day to day, producing a different score,” says Rod Griffin, senior director of consumer education and advocacy at Experian.

Some of the biggest differences may crop up when comparing your base FICO 8 score to a FICO mortgage score. Mortgage lenders use older FICO formulas, which are required for mortgages sold to Fannie Mae and Freddie Mac, the government-sponsored entities that purchase most residential home mortgage loans.

These older FICO scores used in mortgage lending will weigh some factors more heavily or lightly than the newer scores. For example, if you have debt collection accounts with zero balances, they won’t be counted by more recent scoring formulas. But under the mortgage score formulas, they will be considered…”

Source: How to Make Sense of Your (Dozens of) Credit Scores – Consumer Reports

Consumer complaints continue to hit all-time highs at the CFPB

“You can generally see your credit report for free, especially during the pandemic. You’ll need to file disputes with both the credit bureau(s) at fault and the company that made the alleged mistake,” Mierzwinski told ConsumerAffairs.

“If you also file a complaint with the CFPB, you’ll have a better chance of getting action to resolve your problem. The CFPB doesn’t take over your complaint, but it requires followup by both the credit bureau(s) and the company, and that means you’ve gotten their attention.”

Source: Consumer complaints continue to hit all-time highs at the CFPB