Credit check; May be required!

When you think of a credit check, chances are your thoughts jump to loan transactions. After all, the point of a credit history is to provide context for your past credit transactions as a way to predict the default risk you pose to a current lender. The reality, though, is that your credit profile is used for other financial transactions.

Just because you aren’t borrowing money, it doesn’t mean that your credit information isn’t being used to make judgments about your level of financial responsibility. Here are five non-loan financial transactions that may require a credit check:

1. Cell phone service

Many carriers want to make sure you’re going to pay your bill as agreed. Others worry about letting you walk out of the store with a phone that will be paid for in the service contract.

Poor credit means that you may be limited in account choices. You may only have access to an account with strict data usage and calling limits if you have a poor score. Additionally, if you want to upgrade your phone later, your carrier might make you pay for the upgraded phone up front, rather than letting you make installment payments.

Some Internet service providers and cable/satellite TV companies also run credit checks before opening accounts for new customers. If you expect to access entertainment in this way, you need to be aware of the possibility that your credit history will be accessed and used to judge you.
                                   

2. Insurance premiums

Many auto insurers review credit scores when setting rates. Poor scores are highly correlated with future claims insurance. You may pay more for car insurance if you have a poor score.

Some states ban insurers from using credit scores to make these decisions, but there is still the chance that you could pay thousands of rupees extra a year on your auto policy as a result of your credit situation. Some homeowners insurance rates are set based, in part, on the results of a credit check.

3. Renting an apartment or a home

Even though you aren’t borrowing when you rent an apartment or a home, the reality is that you are still expected to make regular payments. For some landlords, a poor credit rating could be a red flag that you will be difficult to collect from.

You might also need to get a cosigner for your lease if your situation isn’t up to scratch. In some cases, you will be approved to move into the rental, but you might need to make a larger security deposit. This can be difficult if you are short on ready cash.

4. Applying for a job

Even your ability to earn an income can be impacted by your credit history. Employers aren’t supposed to check your credit score, but that doesn’t mean that some won’t look at your credit report to identify possible risks. This occurs most frequently for jobs where people handle money or other valuable items. Someone with a bad credit report might be considered a risk of embezzlement or bribes. You may lose a good job opportunity if you have poor credit.

5. Finding true love

Finding the right life partner is supposed to be about love and compatibility. It’s supposed to be romantic. However, there are also money components involved with identifying a life partner. Many single people now exchange credit reports and scores before becoming serious in a relationship.

Even if your partner is willing to overlook your past financial indiscretions, he or she might be unwilling to combine finances with you until you get your credit score in shape. Even though marriage doesn’t have to mean that you share a credit profile, many partners are wary that your situation could affect them.

In the end, you need to be aware of the fact that a credit check isn’t just for loan-related financial transactions. Attempts to include other information in credit reports and scores are under way, since utility payments and rental payments can also be indicators of your level of financial responsibility. However, for now your credit profile is still one of the main ways that others — even non-lenders — decide whether or not you are an acceptable risk.

Source: Secondary

Medical debt affect your credit score in these ways!

Even when you have health insurance, medical costs can add up, forcing you to borrow in order to pay your bill. While it would be nice to think that the debt you incur for health care costs won’t ruin your credit, the reality is that, like any debt, can impact your credit score.

Medical debt that appears on your credit report normally hurts your credit score, no matter the reason for how it got there. Medical debt can be reported by the providers, collection agencies, and through public records if the creditor files suit in court.
                             

Medical debt and your credit score

How medical debt impacts your credit score also depends on the scoring model being used to determine your score.  Medical debt that has been sent to collections will have a smaller impact on your score than non-medical collection accounts.

However, Not every lender uses the most current version of credit scoring models. This means that your medical debt might still count against you, depending on how it is reported, and which scoring model and version of that scoring model are used. In general, though, it’s safe to assume that your medical debt is likely to have some impact on your credit score, especially if you have missed payments. Any debt account that isn’t kept up to date will drag on your credit score.

How to reduce the impact of medical debt

“The best way to keep medical debt from dragging down your score is to keep it off your consumer report,” says Haney. In many models, paying off your medical debt can also prevent it from having a big impact on your score. The good news is that medical debt is in a class by itself when it comes to your credit report and your score.

Haney suggests working with your health care provider. The information on your credit report appears there because it has been reported by a creditor or service provider. This means that if you can work out a payment plan with your provider, and you stick to the terms, there is a good chance that it won’t be reported to the credit bureaus. Most providers will not report medical debt when consumers are actively communicating, and making an earnest effort to resolve open claims issues with insurers, and paying down the balance.

Many hospitals and other health care service providers offer payment plans for expensive procedures. Additionally, you can usually find reasonable payment terms if you have a high deductible. The problems come in when you stop making payments as agreed and the provider feels like the account needs to be turned over to a collection agency. Most providers do not have systems to report but collection agencies do.

Also, be aware of the difference between organizing a non-loan payment plan with your provider and the “payment plans” offered as loans through third parties. These types of plans are commonly offered by dentist offices and vision specialists. You are referred to a payment plan, but this plan is actually set up through a third-party and is a special financing arrangement. In some cases, these arrangements are reported as the loans they are, and appear on your credit report. Understand the distinction before you agree to a payment plan.

Paying off your medical debt can also reduce the impact on your credit score. Increasingly, there is pressure for credit scoring models to stop “counting” medical debt — even collection agency medical debt — once it has been discharged. Make an effort to pay off your medical debt, and you can reduce its impact on your credit score.

Watch out for identity theft

Finally, be on the alert for fraudulent medical debt. Medical ID fraud is a growing problem. Someone might use your information to receive health care, and then skip on the bill. This results in medical debt in your name. Check your credit report regularly for these types of fraudulent accounts. If you notice billing for a medical procedure that you didn’t have, follow up and dispute the account. You will likely need to prove to the health care provider that you weren’t the one who received the treatment. This can be difficult to clear up, and it’s even harder the longer the account sits, so make sure to check your credit report regularly for errors and fraud.  Your best defense is to keep on top of the situation, and try to avoid falling behind.
Source: Secondary

Check, Recheck your Credit Score on Daily Basis!

You’ve probably heard that you should check your credit regularly. But why is that advice given? Before you decide that you don’t really need to check your credit report, here are few reasons to take a look on a regular basis:

Prepare for a major purchase or life change

One of the biggest reasons that you should check your credit is in preparation for a major purchase. When you buy a home using a mortgage, the lender wants to verify that you are likely to make your payments. Another major purchase that requires a credit check is a car.

You might even need to prepare your credit ahead of moving into a rental. Many landlords want to see if there are potential red flags that could result in missed payments. Checking your credit ahead of time can be one way to prepare for what’s next.

It also makes sense to prepare for major life changes by checking your credit since there has been a movement toward including non-credit information, like utilities and rent payments, on credit reports. While such measure might be slow in coming, they could still impact you down the road. Pay attention to what is happening with credit reporting in the news so that you know what actions are likely to cause problems.

                               

Identify and fix errors

You don’t want to be one of those whose credit reporting errors costs more money in the long run. Checking your credit report can help you catch mistakes and have them fixed. Credit reporting agencies are required by law to fix mistakes in a “timely” manner. While credit bureaus don’t have to remove negative and accurate information from your profile, they are supposed to update inaccurate information to provide a better picture of your behavior.

Check your credit report regularly and dispute inaccurate information. This should be done before you apply for credit so that you can avoid a nasty surprise while you’re sitting with the loan officer.

Look for signs of identity fraud

Monitor your credit report for fraudulent accounts, which could be a clue that someone is using your name to open new lines of credit. You should also backup your efforts by checking your monthly account statements and checking your online banking for indications that your credit card numbers are being used to make fraudulent purchases.

By checking your credit report regularly, you can catch identity theft early and take steps to head off further problems. The longer identity fraud goes on, the harder it can be to reverse the impacts and avoid future issues.

Better understand your financial situation

Your credit report can also provide you with clues about your current financial situation.  This can help you make better decisions about your finances moving forward so that you have the ability to improve your credit situation.

Checking your credit report can also help you understand how those in the financial industry view you. Try looking at your credit report as if you were a lender trying to decide whether or not you are a good risk. Understanding your credit report from that standpoint can provide you with ideas for an action plan to look better for financial industry decision makers.

When to check your credit?

The good news is that you can check your credit anytime, and it won’t impact your credit score or the information on your credit report. You are entitled to a free credit report every year from each of the three major credit bureaus.  These resources can provide you with the ability to get a general idea of what to expect when you apply for credit, as well as stay on top of your situation. In some cases, consumer credit sites can also alert you to actions you can take to improve your situation and even save money.

While checking your credit report regularly won’t guarantee that you won’t have problems, the reality is that it is a good way to monitor your situation. At the very least, you can prepare for the most important purchases you plan to make ahead of time.

Source: Secondary

Is your physical health included in your credit offer?

When we talk about credit, we are often referring to financial health. Fair or not, your credit history is considered a very real peek at your financial health. If you have poor credit, you are assumed to also have poor financial health.

But what if your credit history provided more than just a look at your financial health? What if your credit was also an indicator of your physical health? 

Attitudes and actions that lead to poor health — and credit

One of the reasons that there appears to be a correlation between poor credit and poor health has to do with the attitudes and actions that lead to these issues. According to the study, which used data from more than 1,000 people followed over the course of 40 years, self-control, cognitive ability, and educational attainment are factors that influence both cardiovascular health and credit history.

                                  

The bottom line? If you practice poor impulse control, and if you engage in habits that are likely to damage your health, or even just avoid actions that are good for your health, there is a pretty good chance that you aren’t very observant of good basic behaviors in your financial life, either. And that can lead to credit problems.

According to the study, the human capital factors that predicted both credit scores and risk for cardiovascular disease accounted for about 45 percent of the correlation between credit scores and cardiovascular risk. While it’s not exactly a huge endorsement of the link between health and credit, it’s still a pretty big deal. It indicates that your health habits and your money habits are probably more connected than you thought.

Source: Secondary

Are these Hindering Your Credit Score?

When you think of your credit score, it’s natural for your thoughts to jump immediately to loans. After all, it’s a credit score. It’s supposed to be all about what goes on when you borrow money. However, even so, there are times when your non-credit actions can lead to problems with your credit score.

Increasingly, all of your financial decisions are connected. If you aren’t careful, some of your non-credit indiscretions could end up on your credit report — and drag down your score.
                                  

Unpaid Library Fines

You might not think it’s a big deal to avoid paying your library fines. It’s not a loan, and you probably will return the book…eventually. However, this might not always be the case. Increasingly, libraries are turning unpaid fines over to collections agencies. Looking for sources of revenue, these libraries are looking to collect on outstanding accounts.

So, not only will you be unable to check out a book next time you go to the library, but you might also end up with your account in collections, which makes it visible on your credit report.

Improperly Cancelled Gym Membership

Read the fine print when you sign a gym contract. Chances are that you are required to physically come into the gym, and fill out paperwork, when you want to cancel. If you don’t cancel properly, the gym still has the right to keep asking for your money each month. Many consumers just stop paying their membership fees, or they direct automatic billing agreements to end. The problem is that the gym keeps charging and sees the non-payment as a problem. All of those non-payments are added up and then turned over to collections, and listed on your credit report.

Missed Utilities Payments

The non-credit service providers can turn your account over to collections. At that point, it becomes a problem that can impact your credit score. Want to find out where your credit score stands?
 Visit: www.cibilconsultants.com
Source: Secondary

Know about your child’s credit report

You know that you need to teach your child about finances early on. But while you teaching your child the importance of budgeting and saving up for goals, chances are that your child’s credit report doesn’t come up.

However, you could be making a big mistake by not keeping tabs on your minor child’s credit history. Children’s IDs are attractive to criminals because they know that most children have no credit. They are working with a blank slate when applying for credit.

If you don’t watch out for your child’s credit history, there is a good chance that he or she could enter adulthood with negative credit, thanks to unpaid debts racked up by criminals looking to cash in.
                                            

Why your child’s credit is vulnerable?

Today, much of the credit process is handled electronically and automatically. You can apply for a credit card online, have it sent to your address, and never see a person face-to-face. It’s even possible to use a minor’s Social Security number to apply for credit offline. When you give a number in a store, looking for a financing offer, what you give is run through electronically, and many associates only see whether or not you are approved, and what kind of financing deal you can receive. 

This makes it relatively easy for scammers to steal your child’s ID and do a great deal of damage. After all, most of us don’t even check our credit until we apply for our first credit card. Your child might not even realize something is amiss until his or her early 20s. 

It is not very common to have any credit protection as a minor, so the theft will go undetected for a longer time. 

Another issue is the fact that many kids are online with their lives. 

From gaming to social media, children are online, and interacting with others. And, because kids are often much less guarded than adults, it’s relatively easy to get information from them that can be useful, even if it isn’t a Social Security number.

“Parents now must worry what their children are doing online, and what others may be doing to them online. Parents must start protecting their children from these crimes.

How to protect your child’s credit?

Most parents don’t think to check their children’s credit reports; many parents don’t even check their own credit regularly. This is a big mistake that needs to be remedies. The best way to detect child Identity theft is to have their credit monitored, just like an adult’s. 

Additionally, watch for suspicious signs that your child’s credit might be compromised. There have been stories in the news about children who receive credit card offers — and who have even been approved for credit cards. And, even after the passage of the Credit CARD Act, there are still stories of minors receiving credit card offers. Receiving these offers might be a sign that someone has used your child’s identity to obtain credit.

Also, it’s possible that your child has a credit report for less nefarious reasons. If someone sends your child a gift, ordered online and sent directly to him or her, the name might be on a marketing list that could then be sold to creditors looking for potential customers.

Once you start monitoring your child’s credit report, you have a better idea of what is going on with it. You can request to have a freeze placed on the report, so that it’s more difficult for new credit to be opened in your child’s name. With a freeze on the credit report, you should be contacted for verification before new credit is issued.

Monitor as much as possible so you can catch problems right away. Once you have found a discrepancy on the report, handle it with the company and the credit reporting company.

Visit: www.cibilconsultants.com
Source: Secondary

Need 850 credit score? See what's holding you back!

As you already know, your credit score is an extremely important three digit number (an 850 credit score equals a perfect score). It sets the stage on whether you will get approved for a loan, and the interest rate you’ll pay on a new home loan, refinance or credit card.

So, what if I told you there’s a tool out there that can show you what’s holding you back from having a higher credit score. 

With Score Analysis, you’ll find out the top four reasons why YOUR score isn’t higher and see what you can do to fix the issues over time.

 Understanding these categories can help you make better financial decisions in the future and may even help you improve your credit.
                              

Here’s a closer look at what influences your credit score.

Payment History – The most influential category when it comes to your credit score. Your payment history is a record of your payments over time. Lenders and creditors look to this as a sign on whether you will make late payments or miss them altogether.

Age & Type of Credit – Each account on your credit report has a “date opened” field. This is the age of your account or how long it has been open. As for type of credit, the different kinds of credit you have impact your report and score. For example, credit card, mortgage, and auto loans.

% of Credit Limit Used – This is otherwise known as utilization and it evaluates the overall usage of your available credit. Experts suggest keeping your utilization under 30% on each of your accounts.

Total Balances/Debt – This is the total amount of money you owe to each of your lenders.

Recent Credit Behavior – Opening new accounts and the credit inquiries for a mortgage or credit card, all fall under this category.

Available Credit – Your available credit is the amount of credit that’s available to you at any given time. It’s also tied to your percentage of credit limit used, or utilization.

Source: Secondary

Credit and Cost of Living.

You know that where you live matters when it comes to your disposable income. Cost of living makes a big difference in your budget. But can it also impact your credit? You might be surprised at how your cost of living might also matter when it comes to your credit. When you have a high cost of living, your income might not keep up with your expenses, and for many people that means debt. If your debt becomes unmanageable, that can, in turn, affect your credit.
                      

Borrowing to make ends meet

Do you live an area that requires you to borrow to make ends meet? If you are borrowing to make ends meet, that can eventually affect your credit. It’s going to depend on the cost structure of things, in terms of where you live, and your wants and desires.

If you live in a high rent district, it’s going to be far more difficult to buy a home or keep up with the expenses, if you’re on a fixed income. It’s easy to spend a large portion of your income just on day-to-day living expenses like housing costs, utilities, and transportation. 

In some cases, regular living expenses can be high enough that borrowing is part of how consumers make ends meet. You might think that you are just borrowing a little bit for now, but the reality is that if you can’t make ends meet this month, it’s going to be even harder next month when you have a debt payment as well as your regular expenses. Pretty soon, you find that you are just paying the minimum payments on your credit cards since it’s more affordable than paying off the balance — or even half the balance.

Over time, your balances rise. This impacts the credit utilization portion of your credit score, bringing your score lower. At some point, though, your balances and your minimum payments will reach a point at which you can no longer make the payments with ease, and you might start paying late, or even missing payments altogether. Since payment history is the biggest factor in determining your credit score, once you get to the point where you can no longer afford your debt payments on top of your living expenses, the damage to your score can be surprisingly swift.

Living in an area with a high cost of living means that you might have to compromise, looking for ways to reduce your expenses so that you don’t exceed your income. If you live where things are cheap, you may not have to compromise. Where you live changes the way you approach your finances. Your situation changes, either how you compromise on your wants and desires or your credit score. You choose how it’s going to go.

Applying for credit

The process of applying for credit is the same, no matter where you live. However, the cost of living in your area can impact the type of loans you qualify for, and the rates you receive. If your income doesn’t quite provide you with enough leeway when it comes to your cost of living, some lenders might disqualify you based on your income. You might be forced to apply for credit at lenders willing to take on more risk, but you will need to pay a higher interest rate. 

Additionally, if you have been borrowing to make ends meet, and you’ve already racked up debts that are impacting your credit score, it can make it harder to get approved. Where you live cannot so much change the way you apply for credit, but your need for it may vary if costs are higher.

In areas with a high cost of living, you might also have to limit what types of loans you choose to take on. High-cost areas tend to have very expensive homes. Buying might not make sense in these areas due to prohibitive costs. If you can’t truly afford to make home payments, risking your future credit to a foreclosure might not make sense. 

You might also decide to avoid buying a car in an area with a high cost of living. Several consumers living in major metropolitan areas that don’t bother with cars. Car loans are expensive, and cars come with maintenance and repair costs, as well as insurance costs. Taking public transportation costs less than owning a car in many major cities with high living costs. 

Choices you make about what types of credit you apply for can help you avoid getting in over your head with debt and ruining your credit in the long-term.

Manage your cost of living for the benefit of your credit 

Even if you live in an expensive place, you can find less expensive options or alternatives within that place. Some of the suggestions for reducing your cost of living in an expensive area include:

• Buy a certified used car rather than a new car
• Buy items off-season
• Use coupons
• Shop sales
• Buy used and at thrift shops
• Share living quarters when applicable

Managing your cost of living can help you avoid the need for debt to finance your lifestyle. If you can’t or won’t move to an area with a lower cost of living, you’ll have to make adjustments to your spending to avoid getting into a situation where your cost of living destroys your good credit. Generally speaking, do not finance things for daily living. You must plan ahead and be a smart consumer.

Source: Secondary

Financial concerns to be aware of when traveling abroad!

Traveling to a different country raises financial concerns that don’t apply when traveling domestically. Here are some things to keep in mind if you’re planning a trip abroad:

Tracking exchange rates is easy. Thanks to the internet, it’s easier than ever to figure out the exchange rate for foreign currencies. Google has a simple converter that’s easy to use.

Get some foreign currency before you go. When you arrive in a foreign country, it’s a good idea to already have some local currency on hand to pay for expenses like transportation and meals. You can order foreign currency online through some banks and services, and most large chain branches can get you foreign currency if you give them advance notice. The rate they exchange your money for will be lower than what you see online, so you may want to shop around for the best rate.

Know how you’ll get additional cash while abroad. Check with your bank to see if your ATM card can be used at your destination to obtain additional cash, and ascertain what types of fees you’ll be responsible for. If the fees will be high, you may want to take as much cash with you as possible, but if fees are reasonable, you might want to wait to see if you actually need additional cash while you’re there.

Be aware of credit card conversion fees. You can likely use your credit card while abroad, but before you go on your trip, find out if you will have to pay any foreign currency conversion fees, or a fee for letting you make charges in a foreign currency. There are cards that don’t charge any conversion fees, so if your card issuer does impose a fee, you might want to get a new credit card before your trip. Alternatively, you can try to limit your card use while you’re abroad to locations that will charge you in dollars, rather than the local currency.

Carry a chip and PIN credit card. In other countries, merchants may only accept credit cards with chip and PIN technology because such cards are generally considered to be more secure (the card’s information is stored on the chip, rather than in a magnetic strip). If you intend to use a credit card while abroad, be sure to check which type of card is more common at your destination.

Consider the safety of your destination before departing. Some destinations, like Japan, are generally very safe for tourists, and many of the locals carry large amounts of cash without hesitation. In other countries, however, pickpockets are common, and tourists are a popular target of crime. Before you depart, check to see what kind of precautions are recommended for your destination. You may want to purchase certain types of gear, such as a money belt, to protect your valuables.

Travel with adequate insurance. Before you go abroad, check with your insurance providers – including your health insurance and driving insurance providers if you plan to drive – to make sure you’ll be covered. If your coverage is insufficient, purchase travel insurance for your trip. You hopefully won’t need it, but you’ll be happy you have it if you do.

Research the customs of your destination. Customs vary dramatically by country, so be sure to do your research before you leave home. Find out if tipping is common at your destination, and if so, is it normally added to your bill or are you supposed to calculate it yourself? How much is customary? Do merchants at your destination haggle, and if so, what’s the best practice for foreigners? If you know these types of issues before you arrive, you can avoid unpleasant surprises!

Declare your acquisitions when you return. When you return to the your country, you’ll have to fill out a customs declaration form and list what you acquired while abroad. Therefore, it can be extremely helpful to keep a list of your acquisitions as you make them, and to keep receipts for your purchases.

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Source- Secondary

Weird reasons: Credit score is low!

It can be frustrating to find yourself with a low credit score. If you’ve been using credit responsibly, it can be quite shocking to look at your score one day and see that it’s not as good as hoped.

This happened to my husband and me once. We were applying for our mortgage several years ago, and we were surprised when my husband’s score was about 20 points lower than expected. After going through a three-bureau report with the mortgage lender, we discovered that the culprit was the fact that he had several duplicate accounts reported on his reports, some of them with inaccurate balance information.

We were able to clean up my husband’s credit report, and he enjoyed a bump in his score. Not all issues are quite as straightforward, though. Here are some of the weird reasons that your credit score might be lower than you expected:

1. Your credit limit is missing a zero

At first glance everything seems fine. There might be no derogatory information reported, but the score is high.

For some reason, the credit utilization was high.

Small errors like that can make a big difference. Check your credit report for inaccuracies so you can catch them, and keep them from dragging your score lower. 

2. Frequent moves

Moving too frequently can have an impact on your credit score.

It’s not that moving itself is the problem, but rather the fact that it’s easier for things to fall through the cracks when you change location frequently. If you move, and forget to change your address, or let your creditors go, you might miss a bill or two, and that can lower your credit score.

Another difficult situation is if you regularly break your lease when you move. If you don’t pay what you agreed to, the landlord might decide to turn your account over to collections, resulting in a negative mark on your credit report. 

Also, realize that moving internationally can also take its toll. Your credit report doesn’t always follow you around. Different countries have their own reporting agencies, and you may have to start fresh.

3. Duplicate names

If you have the same name as your dad, that could result in credit score issues. It’s possible that some of your dad’s bad habits are attributed to you. There are numerous instances in which the credit sins of a parent are visited on a child due to confusion over names in a credit report.

This is also a possibility when it comes to other duplicate names. Someone with a common name, might have a number of random bad credit items attributed through confusion. In these cases, you usually have to show documentation, and the credit reporting agency has to verify your identity with the help of your Social Security number.

4. Marriage

In general, getting married shouldn’t impact your credit score. However, you have to make sure you follow the right procedures to ensure that your name change is recorded, and associated with your existing credit report. If you aren’t careful with the change, Haney says that marrying the person of your dreams can bring down your score.

However, you still need to be on top of the situation, and check for inaccuracies, since this transition can lead to misreported items.

The good news is that your new spouse’s credit problems shouldn’t affect your credit score. However, if you get a joint loan together, a low score for your spouse could mean that you end up paying a higher interest rate. 

Bottom line

You might think that you have a good credit score because you pay your bills on time and keep your debt levels low. However, there are some small quirks that can impact your credit unexpectedly, usually through some inaccuracy on your credit report.

If you want to avoid surprises down the road, it makes sense to check your credit when you can. 
Source: Secondary