How a Credit Freeze Can Prevent Identity Theft

credit freeze

It seems like every time you turn on the news or log on to your Facebook account these days, there is chatter about yet another massive data breach. In today’s increasingly digitized world, our personal information has never been more at risk of becoming compromised. Identity theft is a very real threat to your valuable identifiable data, your credit score and your overall financial security. While it can seem like identity theft is out of your control, you actually do have the power to defend yourself. One of the best ways to do this is with a credit freeze.

What Is a Credit Freeze?

A credit freeze puts an immediate lock down on your credit information and prevents potential cyber thieves from stealing any of your identifying information in order to open an account (anywhere) and start racking up debt in your name. A freeze will disallow anyone who is not actually you from gaining access to your credit file. Since creditors like banks and credit card companies need to see your credit report before they will open a new line of credit for you, they will be unable to do so unless you specifically lift the credit freeze.

When you initiate a credit freeze, the only people who will have unlimited access to your credit report are you and any current creditors and debt collectors you may have. Employers and some government agencies will have limited access to your credit report.


IMPORTANT NOTE: A credit freeze does not impact your credit score and is totally free.


When Is a Credit Freeze Called For?

A lot of people freeze their credit after they have experienced an information breach or have otherwise had all or part of their personal data stolen. The challenge most commonly encountered when freezing your credit report after an incident is the race against time. Who will “get to” your credit report (and all of the personal information contained therein) first – you, or the criminal?

Because of the aforementioned “race against time,” preventative measures, like freezing your credit before an incident occurs, are much more likely to be effective. With a credit freeze, even if your Social Security number somehow becomes compromised, the rest of your data and accounts will be protected. It is also a great idea to freeze your child’s credit report now in order to protect their future.

How Do I Freeze My Credit?

While freezing your credit is free, it does require you to jump through a few hoops. You will need to contact all three major credit bureaus and freeze your account individually. While this is time consuming, it will be worth it when your credit report and score remain safe if (when) another cyber attack materializes.

Each credit bureau will present a slightly different process to freeze your credit, but you will definitely need to provide them with: your Social Security number, birth date, last two addresses, a clear copy of a government-issued ID card, and a copy of a bill or bank statement with proof of your current address. You can request a freeze via phone, e-mail, or through the good old-fashioned Postal Service.

Once you apply for a credit freeze, the credit bureaus will give you a PIN with which to manage your credit freeze. You will need to keep this number in a safe place because you will also need it in order to unfreeze your information when the time comes to open a new line of credit. Your credit freeze will be activated one business day after you make the request via phone or online, with mail requests taking three business days.

What Happens When I Need to “Unfreeze” My Credit?

To unfreeze your credit, you will need to provide the same credentials with which you initiated the freeze, to the credit bureaus. Per federal law, the freeze should be lifted within an hour if you make the request via phone or email. Mail requests to unfreeze your credit will take three business days.

You can also request to have the freeze lifted temporarily, so a potential employer or landlord can do a quick check before your credit goes back into freeze mode.


PRO TIP: Ask which credit bureau they will be contacting and only unfreeze your data at that bureau.


Is There a Down Side to Freezing My Credit?

There are some cons to credit freezes. The process of requesting and managing a credit freeze with three different credit bureaus can be a lot to juggle. You will also have to go through the extra step of unfreezing your information anytime you apply for a new line of credit. Additionally, putting a credit freeze into effect now won’t protect any of your existing accounts from fraudulent activity.

Regardless of any negatives, in today’s increasingly digital world, protecting yourself from a cyber attack with a frozen credit report is a fantastic—and free—way to keep your personal information private.

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Why You Shouldn’t Panic Every Time Your Credit Score Changes

With the internet almost constantly at the tip of your fingers, keeping tracking of your credit score has never been easier. Banks, credit card issuers, and free online credit monitoring companies all offer their services to help you stay virtually right on top of your credit score. But if you find yourself panicking every time you get an email from Credit Karma, it might be time to reevaluate your relationship to credit monitoring. Small month-to-month changes in your credit score don’t really matter*, and here’s why.

The most important thing to understand is that you don’t have just one credit score—you actually have many, and they are all calculated using different formulas. The most well-known credit score is your FICO score, which is calculated and monitored by three different bureaus: Equifax, Experian, and TransUnion. All three institutions have different levels of access to your information at different times and are constantly updating your files with every piece of information they receive.

What’s more, each credit rating category covers a wide range of scores. “Good” credit falls in the 670 to 739 range. Unless you are teetering on the edge between categories, a couple of points difference isn’t going to impact your credit worthiness too greatly. There are a myriad of reasons why your score will go up or down in any given month, and none of them truly reflect your overall credit health. Delayed credit bureau reporting, hard inquiries, balance increases, or opening a new account can all cause temporary, insignificant shifts in your credit score.

Fixating on small credit fluctuations is stressful and unnecessary. As long as you are not currently in the process of applying for a new loan or a new line of credit, a less than stellar score will have little impact on your every day life. The good news is that even if your credit score has recently taken a small dip, most lenders will look at the big picture, taking your credit history into consideration, not just your current three-digit score. It’s the big swings that you need to watch out for.

A major change in your credit score can alert you to unauthorized activity on your accounts or tip you off to the long-term impact of carrying high balances and paying your bills late. It is important to pay attention to these changes to make sure they reflect your financial activity. If your monitoring service reports a change you don’t recognize or understand, look into it. Whether it is the result of fraudulent activity or just poor financial habits, it is important to investigate why your credit score is changing so dramatically.

If you are concerned about your credit score and it isn’t exactly where you want it to be, don’t panic. At Veitengruber Law, we can give you real facts about credit and debt. Our legal team can provide real life solutions to improving your credit and your overall financial health. With patience, time, and dedication, it is possible to repair your credit. Using credit monitoring services is a great first step in the right direction. Just remember not to take every small monthly fluctuation to heart and stay focused on your overall credit goals.

*If your score takes a significant plunge, drops into a lower category, or is on a consistently downward trend, reach out to us. If something is amiss, it IS better to address it sooner rather than later.

What the Equifax Breach Means for Consumers and How to Take Action

The Federal Trade Commission recently reached a settlement with Equifax over a data breach that has impacted around 147 million Americans. The popular credit monitoring agency admitted to a leak that included social security numbers, addresses, birth dates, driver’s license numbers, and credit card information. Nearly half of all adults in the United States have been affected and are therefore eligible to file a claim in the settlement to receive compensation from Equifax.

What does the Equifax breach mean for you?

The first thing you should do is check to see if your information has been impacted by this breach. On the official Equifax Data Breach Settlement website, you can enter your last name and the last six digits of your social security number to see if your data was part of the breach. Make sure you are using the official, government approved website before entering any personal information. If you determine that your data was indeed breached, you have a few things to consider. The settlement includes three options for compensation:

– A one-time payment of up to $125

– 10 years of free credit monitoring services

– A one-time payment of up to $20,000 if you can prove you spent time or money on identity theft services due to the data breach

In order to receive any of the above compensations, you must fill out the application on the website by January 22, 2020. You can also choose to opt out of the settlement. In order to officially opt out, you must formally exclude yourself by November 19 of this year.

It is important to consider how this breach could impact you before you decide on a settlement option. Despite the low payout amount, consumers should not take this data breach lightly. Once your private, identifying information has been leaked, it can spread indefinitely. Data hackers can sell and re-sell your information forever. If your information is actively being used, $125 is not even close to enough money to cover the cost it will take to repair and protect your finances. Equifax has allotted $425 million for financial compensation—meaning actual, per person payments will likely be much less than the $125 listed. Early applicants will have a better chance of getting the full amount.

Because of this, financial advisors are suggesting that consumers opt for the free credit monitoring or exclude themselves from the settlement all together. Credit monitoring and identity theft services could serve you much better than $125 in the unfortunate event that your information is being sold on the dark web. Opting out of the settlement would allow you to sue Equifax as an individual, giving you more legal power to recuperate your financial losses in the event of a significant identity theft situation. Additionally, if your information has been seriously compromised and you have experienced significant financial loss due to identity theft, it is important to speak with a NJ lawyer who has experience with identity theft.

The one thing you can and should do right away in response to the Equifax data breach is to start practicing better cyber hygiene. Hackers look for more than just social security numbers and credit card information. Oversharing other personal information can be just as costly online. To protect yourself from identity theft online, these three steps can help keep your information secure:

1. Social Media: Make sure all of your social media accounts (Facebook, Instagram, Twitter, LinkedIn, etc.) are private so the only people who can see your information are those you choose to connect with. Even if your account is private, carefully consider what you share. Hackers can use your hometown, your birthday, your employment history, and other pieces of information commonly shared on social media platforms to acquire your private data.

2. Data Check: Google your name and city and see what pops up. If your full name, address, e-mail, or other personal information appears, this should make you wary about sharing additional information online. The more free information a hacker has access to, the easier it is for them to assume your identity to gather critical data about you, such as your social security or credit card number(s.)

3. Passwords: Get into the habit of changing all of your online passwords regularly and never use the same password twice. If a hacker is able to breach one account, they will try the same password over and over again. This can be disastrous for those who use the same password repeatedly.

With the global transition to online platforms, the way we protect our personal information and financial data has to change. Unfortunately, events like the Equifax data breach are becoming more and more common. Learning how to protect yourself and your personal information from hackers could save you a lot of time, money, and emotional distress. Minimizing the amount of personal information available online can be your first defense against cyber hackers.

 

 

FICO Score vs. VantageScore: What’s the Difference?

fico score

Your credit score is one of the most important aspects of your overall financial profile. Potential lenders and creditors will use your credit score to determine what kind of risk they are taking by giving you a loan or a line of credit. Essentially, your credit score is your entire credit and financial history all boiled down to one number. Consequently, you may be surprised to know that there are actually many different ways to calculate a credit score. The two most popular ways to estimate your credit score are using the FICO scale and the VantageScore scale. Below, we will discuss the differences between them and how they can impact your credit score.

Details of your debt and financial history are reported to three major credit bureaus: TransUnion, Experian, and Equifax. These institutions will compile your payment history, total debt, amount of unused credit, the diversity of your credit lines, and other financial data to create your credit report. That data is then run through an algorithm which will provide the three-digit number that is your credit score. These three bureaus compile data and store your information differently, which can mean your credit report—and therefore your credit score—will look different depending on the scoring system used.

The FICO Score credit scoring model ranges from 300 (very poor credit) to 850 (EXCELLENT credit). This is the most well-known scoring method, and over 90% of big lenders in the country use the FICO credit scoring method. While there are many different versions of the FICO method, FICO8 is used most often by lenders today. While FICO doesn’t like to give out a lot of information on how they compile data, the rough breakdown of your FICO8 credit score is: 35% payment history, 30% amounts owed, 15% length of credit history, 10% new credit, and 10% credit diversity.

In 2006, the credit bureaus created the VantageScore as an alternative to the FICO Score. Vantage is similar to FICO. It still ranges from 300 (poor credit) to 850 (incredible credit) and there are multiple versions of the VantageScore method. The current industry standard is VantageScore 3.0. The biggest difference between VantageScore and FICO is that VantageScore doesn’t value the length of your credit history. While FICO requires you to have 6 months of data, VantageScore has zero time requirements. The components of the VantageScore system are also different: 40% payment history, 21% depth of credit, 20% credit utilization, 11% balances, 5% recent credit, and 3% available credit.

There are several ways to access your FICO Score and your VantageScore. Some big banks and issuers will offer their customers their credit scores on their monthly statements. Chase Bank, Capital One, and OneMain Financial use VantageScore while Bank of America, Discover, and Citibank prefer FICO. Experian also offers free access to your FICO Score and VantageScore. Keep in mind, though, that your FICO Score and VantageScore can vary from credit bureau to credit bureau, so Experian may provide a different score than TransUnion or Equifax even if they are using the same scoring method.

If there is one big takeaway from comparing these two credit scoring models, it’s that payment history is the most important factor that goes into determining your credit score, regardless of the model used for calculation. Despite their similarities, however, the differences in methods can result in some deviations where your credit score is concerned. This is why it doesn’t hurt to know what your credit score is under both scoring methods. Regardless of differences, as long as you keep up with at least one model, you should have a good idea of your financial standing in the eyes of creditors.

How will my Spouse’s Debt Affect me?

When you meet someone new, finding out their credit score is typically not your go-to first date conversation starter. In the whirlwind of new romance, money matters tend to remain ignored. It is often much later in the relationship—after a couple has already become financially entwined through marriage or the sharing household bills—that financial issues come to the surface. You may be surprised to find out your spouse has accrued a substantial debt that you had no idea about. When facing this startling new information, it may be difficult to know how to move forward with your partner. Here are some tips to dealing with a spouse who has debt.

1. Hold Off On Making Judgements

In situations like this, emotions can run high. You may feel lied to or betrayed by your partner for concealing their debt. Breathe through your initial reaction. When people feel attacked they tend to shut down or become defensive. Keeping an honest, open space for communication with your spouse will allow you to move forward to fix this problem together. This also goes for making judgements about their current financial choices. If you see your spouse making consistent efforts towards paying off a debt, don’t chide them for their purchase of a new pair of shoes. Paying off debt is a process that you cannot expect your spouse to complete overnight.

Keep in mind that debt accumulates for many reasons and a past debt does not necessarily mean your partner cannot be financially responsible now. Maybe they were overzealous with their first credit card or are struggling with student loan debt. Unemployment, divorce, and medical expenses can also add up quickly. Don’t judge too harshly until you have the full picture of your spouse’s debt.

2. Get the Details

The amount of debt your spouse has makes a difference, so it is important to know the exact number they are currently working to pay off. How your partner is paying off the debt matters, too.  Is the repayment situation short term (over a year or two) or long term (5-20 years)? If it is a long term repayment plan, you can expect this debt to impact your life together for years to come. This is also the time to check your spouse’s credit report with them. This will give you the full picture of any late payments, high balances, legal judgements, or bankruptcy filings they may have.

3. Know When You’re Liable

Many people assume that once you get married, you automatically take on your spouse’s past debt. This is not true. Your credit histories will remain separate for any debts or financial troubles that occurred before your marriage. New Jersey is a common law state, meaning that even after marriage you’re only responsible for debt accrued in your name.

This changes once you open joint accounts, apply for joint credit, cosign on loans, or include your spouse on an account as an authorized user. These actions will show up on your credit report and you will be responsible for the debt. If at any point your spouse cannot make payments, even if it is on debt they personally accrued (after the date of your marriage), you will be responsible for the full payment of the debt.

4. Decide How You’ll Make Purchases Going Forward

Your spouse’s debt, and its impact on their credit score, may make it difficult for you to make big purchases together for the duration of the repayment period. Depending on how much debt they have and how low their credit score is, you may be looking at taking on the full weight of big purchases for awhile. You may be hesitant to apply for joint credit, cosign, or add them as an authorized user on your accounts. Have an honest conversation about how you will make big purchases together going forward.

At Veitengruber Law, we know the stress of large debt can create a lasting impact on marriages and families. Our experienced legal team can help you sort through the debts and create a future path that looks bright. Our comprehensive approach to resolving debt problems can help relieve the stress on you and your spouse.

 

 

5 Mistakes to Avoid After NJ Bankruptcy

NJ bankruptcy

After your NJ bankruptcy, a common concern is how to re-establish your credit score. The real challenge is creating new financial habits so you don’t find yourself back in the same hole all over again. At Veitengruber Law, our holistic approach to financial health means our job doesn’t end after the bankruptcy is closed. We work with you to repair your credit and create healthier financial habits.

 

Top Mistakes to Avoid After a Bankruptcy Discharge:

 

1 – Ignoring your credit report

When rebuilding your credit subsequent to a bankruptcy discharge or reorganization, you will want to be very attentive to your credit report. Your creditors are supposed to report any discharged debts included in the bankruptcy to the credit bureaus. These reports should show a zero balance and include a note indicating the debt has been discharged. It is crucial to follow-up on this and ensure that all creditors are reporting to credit bureaus correctly. If discharged debt is being wrongly reported—as either a charge-off or an open account—late or missed payments can continue to show up on your credit. This can further damage your score and make it more difficult for you to get new credit.

2 – Applying for multiple new credit lines

It can be tempting after bankruptcy to rush out and apply for a gaggle of credit cards or loans in an attempt to quickly repair credit. However, it is important to give your credit score time to rebound before applying for new credit. The impact of a bankruptcy is strongest in the first year after filing, although it can stay on (and affect) your credit report for up to ten years. Instead of rushing into opening several credit lines at once, be patient and take the time to research your best options.

3 – Failing to read the fine print

When you do start applying for credit cards, it is important to remember that not all credit cards are created equally. Some credit cards will be more helpful to those rebuilding post-bankruptcy. A secured card, for instance, allows you to deposit cash as collateral up front to create a line of credit. That way, you are not able to charge more than your initial deposit. With any card you choose, it is important to read the fine print of your terms to make sure the card will work in your favor.

4 – Falling for credit repair scams

Many unethical “credit repair companies” make big promises about performing miracles to improve credit scores, but they rarely ever deliver the results promised. These companies rely on misinformation to scam those that don’t know much about how credit works. Some of their tactics may even be illegal. Keep in mind that if something seems too good to be true, it probably is.

5 – Making things too complicated

Ultimately, when it comes to rebuilding your credit after bankruptcy, you need to go back to the basics. What bad habits caused you to file for bankruptcy in the first place? An unflinching assessment of your spending habits will help you determine which factors led to the bankruptcy and determine where you need to make changes. Figure out what your credit-bingeing triggers are and work toward setting spending limits for yourself. Simple things like making on time payments, keeping debt to a minimum, and sticking to a healthy budget are excellent foundations of any financial strategy and will get you on the road to financial health quickly.

You’ve been through the hard-fought financial battle of bankruptcy and come out victorious on the other side. Now is the time to think positively about your financial future. Rebuilding your credit after bankruptcy takes time and patience, but you can use the knowledge and financial savvy you’ve learned along the way to move forward to a brighter future. Veitengruber Law is here to help. We are skilled in advising clients and creating easy-to-follow strategies to rebuild credit. Call for your free consultation today.

10 Easy Ways to Improve Your Finances

improve your finances

  1. Start saving
    It seems obvious, but many times it also seems impossible. By the time you pay your bills and have some spending money, every paycheck seems to fly out the window. The easiest way to save is to make sure you never have the chance to spend those funds in the first place. Most people have direct deposit these days; set up an automatic transfer of 10% of your net pay into a separate savings account each pay period. You won’t miss it, and it builds up pretty fast. When you get a raise, try redirecting the entire difference in your net pay over to savings. Your net pay will seem unaffected on your end, but your nest egg will grow that much quicker. You will be prepared for an unforeseen expense like an emergency car repair or for a “rainy day” when you want to take a long weekend out of town with friends.

 

  1. Make a budget – and be realistic
    Determine your starting point by keeping track of every dollar spent in a month. Now separate each expenditure into a category: utilities, housing, food (groceries), eating out, entertainment (movies, clubs, golf, etc.), childcare, transportation, car payment, and so on.Where are most of your discretionary funds going? See if there is anything you can cut back on or cut out altogether. If you have a wicked Starbucks habit, you might decide you can do without that daily grande latte after seeing that you are spending over $80 a month on coffee. Don’t want to quit your Starbucks habit cold turkey? How about only getting that latte once a week (say only on Fridays or Mondays) instead? Your $80 a month expense just went down to $16. You can’t decide to live on canned soup five days a week – you know it’s not going to happen, so don’t set yourself up for failure. Look at where your money has been going versus where you want it to go.

 

  1. Little changes can make a big difference
    As you saw, coffee can be a bigger expense than you realize. There are a lot of those little things that can suck money out of your wallet. Limit your dinners out each month. Make the transition less painful by allowing yourself one or two fancy dinners out, but eat at home the rest of the time. Pack your lunch. Join a carpool. Use a filtering pitcher, such as Brita ™, instead of buying bottled water. Feed a meter instead of using valet parking. Shop for clothes at consignment and second hand stores; you might even find higher quality items than in a big box store! Cigarette smokers spend hundreds of dollars a month on a product that they literally set on fire. That type of savings might make a lifestyle change a real incentive. It all adds up.

 

  1. Lower your existing monthly bills
    If you’ve always made payments on time, call your credit card company and see if they are willing to lower your interest rate. If you haven’t reviewed your cell phone plan in a year or more, it’s time to compare new deals and potentially cut your costs in half. Consider whether you really use that gym membership. If you barely go, it’s time to cancel it. Consider workout alternatives like YouTube videos or running groups. If a brick and mortar gym is where it’s at for you consider this; membership deals are generally better in the summer when everyone else would rather exercise outside. You could get those initiation fees waived or get a lower monthly rate.Shop for cheaper car insurance. Lower your electricity bill by using timers and power strips, and your water bill by checking for leaking faucets or toilets. Look into local weatherization programs that can troubleshoot conditions in your home to prevent wasting money on heating and air conditioning. Many times these programs are run by your utility company or local government and are free.

 

  1. Set goals
    Hard decisions are easier when you see the payoff at the end. Want to take vacation? Set up a retirement portfolio? Send your kid to college? Keep that in mind when you’re setting up your budget, or deciding if it’s really worth it to go to Olive Garden tonight, or if you really need yet another pair of black shoes.

 

  1. Check your credit reports
    The three major credit reporting agencies are Experian, TransUnion and Equifax. You are entitled to a free report annually or whenever you are denied credit directly from all three agencies. Look for mistakes and dispute them! This is even more important if you have a common name or share a name with someone else in your family. Check your credit report for bills you forgot about or never received. Maybe there’s an old bill from a dentist that got lost in the mail or never got forwarded when you moved. Even a small bill that went to collections stays on your report for 7 years after it is paid off. A low or lower credit score can mean increased interest rates or outright denial of credit when you need it most.

 

  1. Don’t pay full price – for anything
    Clip coupons; look for online deals, shop sales. Get discount codes from places like ebates.com, retailmenot.com, or slickdeals.net. Look for Deals of the Day on Amazon. Utilize discounts for services or experiences by using Groupon and Living Social.

 

  1. Change where you bank
    Many banks are rife with fees. Fees for less than a minimum balance. Fees for ATM use. Fees per check. Shop around, find a bank that values your business and doesn’t drain your account when you want to use your money. Veterans and business owners can often get even more perks, such as free certified checks or safety deposit boxes.

 

  1. Utilize employment benefits
    Your benefits package at work can offer a lot more than you think. Does your employer offer matching incentives for retirement account deposits? Flexible spending accounts? Free counseling or other wellness support programs? Take advantage of everything you can.

 

  1. Make sure you are financially informed
    Understanding basic concepts when it comes to investing, spending, saving, interest rates, etc. will benefit you (and your bank account) in the long run. Find out if your employer offers programs on these subjects, or seek them out yourself through online videos or books by consummate professionals in the field. If you have a personal accountant or financial planner, ask questions and ask for advice and heed it! You can’t make good choices if you don’t have the background information needed to make them.

How Identity Theft Affects Your Credit Score

NJ credit repair

What (all-too common) crime can happen to you without your knowledge, making virtually everything in life more difficult? Two dreadful words: Identity Theft. Unlike some medical diseases, identity theft doesn’t discriminate; it can strike anyone at any time. The worst part about being a victim of identity theft is that it can have a seriously negative impact on your credit score and it can prove to be difficult to fix.

More people than you realize have been severely impacted by identity theft. When an impostor uses another person’s identity to make a purchase and fails to pay the bill, a storm cloud rolls in. The scammer has zero intent to ever pay the debts they accrue under your name; therefore, you’re left to clean up the aftermath. You may not even realize that your identity has been stolen until a credit agency contacts you. By this point, your credit has likely already taken a major hit.

Your credit score is your representation as a responsible individual regarding money matters. Unpaid bills can have a lasting, damaging impact on your credit report, which can then snowball to affect other areas of your life (obtaining housing, buying a car, getting a decent job). Because payment history makes up about 35% of your credit score, late or nonexistent payments have a momentous effect on your “credit worthiness.” In addition to unpaid bills, identity theft can leave other negative marks on your credit report. Here are five ways that identity theft packs a punch:

1.      New Accounts

Adding a new account to your credit report or getting a new loan shouldn’t affect your credit score as long as you aren’t adding a plethora of new accounts all at once and you’re making regular payments. However, when an impostor opens a new account in your name and fails to make any payments, your credit score will slowly begin to tank. Every month that passes without payment received will lower your credit score further.

2.      Inquiries

If an identity thief is applying for new credit with your personal information, the lender is going to check your credit report. These are known as credit checks, or “hard inquiries” – each of which show up on your credit report. Each inquiry will affect your credit score by dropping it a couple of points. Your score will drop because credit scoring models regard “hard inquiries” as a sign that the consumer is shopping for credit.

3.      Collections Accounts

After no action occurs for 6-12 months on an unpaid debt, the lender will turn it over to a collection agency. This causes a “second action” to be taken, and a collection account will appear on your credit report. Unfortunately, this will have an extremely harmful effect on your credit score. Often, medical identity theft leads to the appearance of a collection account. This occurs when an impostor uses your identity to obtain medical services or treatment, but has no intention of paying the bill(s).

4.      Greater credit utilization ratio

Another significant piece that counts toward your credit score is the amount of debt you carry. When the scammer “goes shopping” and adds charges to your account (unnoticed), your overall amount of debt rises. Even if the scammer opens a phone plan or house utility but doesn’t pay the bill, the provider will report it to the credit bureau. A negative ding will appear on your report, damaging your credit score. A continuously increasing amount of debt will continuously drop your credit score. The higher your credit utilization ratio, or the amount of your available credit that you use, the lower your credit score will fall.

5.      Higher Auto Insurance Rates

In every state except California and Massachusetts, auto insurers utilize your credit score to set rates. A low credit score can cause a 20 to 50% increase in auto insurance premiums. Even if you have a depressed credit score, an insurer can’t reject you, but they do have the ability to hike up your premiums without an explanation.

Nobody wants to find out that their identity was stolen, but it can and does happen. Being knowledgeable and prepared as to how it can affect you is crucial. If you’ve been the victim of an identity thief, Veitengruber Law can help you deal with the emotional and mental frustration as well as the financial damage that has been done. No matter how low your credit score has gotten – we will guide you through getting it back to a respectable number again.

6 Steps to Repairing Your Credit

nj credit repair

In today’s economy, it is imperative to maintain a decent credit score. There are many reasons why you simply must work to repair your credit if it is currently less than fair (below 560-580.) A higher credit score will allow you to obtain a higher credit line. Also, if you have an excellent credit score, you will receive offers for credit balances with lower interest. A better credit score will also empower you with more buying power, so you can purchase a house, car, or make other large purchases. There are a multitude of things you can do to improve a low credit score. Six of the most important steps are detailed below.

 

  1. Pay your bills on time. While this may seem like an obvious course of action, it is extremely beneficial to improving your credit score. Conversely, if you do not pay your bills on time, your credit score will take a significant hit. Some people falsely believe that making late payments will not affect their credit score as long as they aren’t MISSING payments. It’s important to realize that late payments will incrementally drop your score.

 

  1. Maintain an appropriate debt-to-credit ratio. This is a way for creditors and lenders to see that you are able to use your credit responsibly. Your debt-to-credit ratio is essentially how much money you owe creditors compared with your overall available credit. For example: If your overall debt (money you owe creditors) is $10,000, and your total available credit is $20,000, your debt-to-credit ratio is 50%. A low debt-to-credit ratio indicates that you are not overspending. It also shows that you are closer to being able to pay off your debt than if you owed a higher percentage of your available credit line.

 

  1. Pay more than the minimum balance due each month. This shows that your income is steady and you have more purchasing power. Plus, when you make more than the minimum payment each month, you will be able to pay more on the principle amount due as opposed to simply paying off interest.

 

  1. Avoid opening too many accounts in a short amount of time. The rationale for this step is that more inquiries indicates to creditors that you may be in serious financial trouble. Even if you aren’t approved for every account you apply for, there will be credit inquiries made each time you apply that will ding your credit report.

 

  1. Pay off your balance instead of transferring debt to other credit cards. Not only do most balance transfers typically involve a fee, but this can lead creditors to view you as a volatile debtor who simply shifts debt around rather than actually paying it down.

 

  1. Keep a keen eye on your credit report. If you discover any errors, you should immediately report the issues to the reporting agencies and have them rectified right away. This should be completed at least once per year. If you find errors on your credit report that the agency(ies) refuse to remove, take legal action in order to prevent false information from dragging your score down unnecessarily.

 

Following these steps to repairing your credit score are excellent ways to start planning for the future. Knowing that you have financial security will improve your overall health and well-being. While there are many other steps you can take to improve your credit score, this list is a basic overview of the most trusted ways to achieve your goals.

How to Raise Your Credit Score: Hire a Trusted NJ Attorney

NJ attorney

When hear the word ‘credit’, a number of images may pass through your mind. Maybe you think of a situation in which someone owes you money or perhaps you picture a bank. You may consider your education and the credit you received for each assignment or even a situation at work where you deserved credit for your hard work or a good deed. If you’re involved in the financial world, your mind might immediately jump to credit scores: good credit, bad credit, and everything in between.

No matter what you envision when the conversation turns to ‘credit,’ toss in a bit of everything mentioned above and you’re on your way to completing the puzzle of what’s known as a ‘credit score.’ A credit score is a three-digit number that is computed using an algorithm and is based on information gathered from your credit report. Its purpose is to predict risk. Ultimately, your credit score represents the likelihood that you will neglect your credit obligations in the next 24 months.

Though there are a multitude of credit-scoring models that are utilized, the most well-known is the FICO credit score. According to myFICO.com, 90 percent of all financial institutions throughout the United States use FICO credit scores when making a number of important decisions. The three-digit number ranges anywhere from 350 to 800, with the lower number representing a less-desirable credit score.

How do you avoid ending up with a low credit score? What factors play into the algorithm? There are five categories that influence a credit score. The percentages represent the weight of each factor in determining the score.

·        Payment history (35%): Paying your bills on time is crucial. By not paying your bills by the deadlines, you will cause your credit score to decrease. Also involved in this category are any delinquencies or public records.

·        Amounts owed (30%): The amount that you owe on each of your credit accounts heavily affects your credit score. Also, the amount of possible credit that you have on accounts is strongly considered.

·        Length of credit history (15%): The amount of time and number of accounts you have open will boost your credit score, as long as you’re paying the dues on time.

·        Types of credit used (10%): Having a variety of types of accounts will help you out. Two examples are revolving and installment.

·        New Credit (10%): How often you pursue opening new accounts and new credit, including inquiries (whether you’re approved or not), will have an impact on your score.

Now that you know what goes into a credit score, you realize how malleable it really is. If you don’t give the three-digit number a little bit of TLC, it can quickly bottom out on you. On the other hand, if you are careful with your finances, you shouldn’t have a real issue keeping your credit score in line.

We know that establishing or reestablishing good credit is key to a secure financial future and we want to help you move toward that goal. As you read before, many financial institutions use credit scores and reports to make decisions, manage risk, and increase profits. On the downside, they don’t have any interest in looking out for your personal credit score and overall financial health. That is where Veitengruber Law steps in. Our holistic approach to building credit is at the center of everything that we do. The guidance we provide doesn’t end with a negotiated debt solution or court case. Instead, our goal is to set you up to be a successful financial consumer with well-rounded money smarts.

When your credit score drops following a short sale, a bout with bankruptcy, settlement, or other issue(s), we will walk with you to educate and counsel you. A sturdy financial foundation will give you the power to develop and maintain financial health.

The only way that you will mature in your knowledge of money is to work with experienced professionals. Credit scores and financial health is nothing to mess around with. Your confidence will rest in how well the professional counsels you along this path. With years of experience working successfully within a multitude of situations, we know that we can help you no matter what kind of financial “mess” you may have landed in.