Credit Mistakes

Your Credit History Explained

Posted on July 12, 2025 by Melissa Hart

What’s my credit history?

Your credit history describes how you use money. It shows things like:

  • how many loans and credit cards you have
  • how much money you owe
  • how long you’ve had credit
  • if you pay your bills on time

The three nationwide credit bureaus — Equifax, Experian, and TransUnion — collect this information and put it in your credit report.

Read Checking Your Credit Report to learn how to order your report for free.

Why is my credit history important?

Your credit history tells businesses how you handle money and pay your bills. Your credit history can affect whether you get a job, can rent an apartment, or get a credit card or loan. It also affects how much you’ll have to pay in interest to borrow money.

Positive information helps your credit. Positive information includes things like paying your bills on time and having low credit card balances. Negative information, like paying bills late, hurts your credit.

What if I don’t have a credit history?

You might not have a credit history if:

  • you’ve never had a credit card
  • you’ve never gotten a loan from a bank or credit union

Without a credit history, it can be harder to get a job, an apartment, or even a credit card.

What’s a credit score?

A credit score is a number that’s based on your credit history. Each nationwide credit bureau creates a different score. Your credit score will usually range between 300 and 850.

It costs money to find out your credit score. Sometimes a company might say the score is free. But you might find that you signed up for a service that checks your credit for you. Those services charge you every month. Some credit card companies, such as Discover Card, provide free credit score with your monthly statement.  

Before you pay any money, ask yourself if you need to see your credit score. You might not since if you know your credit history is good, your score will be good.

For more information, go to:

Your Credit History Explained | consumer.gov

Teaching Suggestions

  • Ask students if they have a credit history.  If so, have they checked what information does it contain?
  • What actions can be taken to build your credit history?

Discussion Questions

  1. What is credit history?  What does if describe?
  2. Why is it important to know about your credit history?
  3. What might be the consequences if you don’t have a credit history?
  4. What can you do to build and maintain your credit rating?
Categories: Chapter 5, Credit Cards, Credit Mistakes | Tags: | Leave a comment

Payday Loans and Cash Advances Explained

Posted on June 14, 2025 by Melissa Hart

Payday loans are loans for a small amount of money for a short time. They’re also called cash advances. Payday loans can be very expensive. Before you get a payday loan, look for other ways to borrow money.

How does a payday loan work?

  • Step 1: You give the lender a check for the money you want to borrow — plus the lender’s fees. OR you give the lender permission to take the loan amount and fees out of your bank, credit union, or prepaid card account.
  • Step 2: The lender gives you cash — minus the fees.
  • Step 3: You have to pay the lender back — usually two or four weeks later. If you don’t, the lender can cash the check or withdraw the money from your account.

Lenders have to tell you the cost of the loan in writing before you sign the loan agreement.

Make sure you understand how much the loan really costs in finance charges and annual percentage rate, or APR. The finance charge shows the cost of the loan in dollars. The APR shows how much it costs you to borrow the money for one year.

If you can, borrow only what you can pay back with your next paycheck.

What happens if I can’t pay the lender back?

It could cost you a lot more money.

If you can’t pay the lender back when the loan is due, they might let you borrow the money for two or four more weeks. This is called a rollover.

But to roll over the loan, you have to pay the fee that’s due, plus a new fee to extend the due date.

If you roll over the loan a few times, you could end up paying hundreds of dollars in fees. And you’ll still owe the original money you borrowed.

What other options do I have?

Before you decide to get a payday loan:

  • Ask for more time to pay your bills.
  • Try borrowing money from family or friends, a bank or credit union, or your credit card.
  • Talk to a credit counselor to get help.

For more information, click here.

Teaching Suggestions

  • If you need to borrow money, should you borrow from a relative or a friend?  Or, from a payday Lender?
  • Make a list of sources where you can get inexpensive and medium-priced loans.

Discussion Questions

  1. How does a payday loan work?
  2. Why is it important to explore other financing options before taking out a payday loan?
  3. What happens if you can’t pay the lender back on time?
Categories: Chapter 5, Credit Mistakes | Tags: | Leave a comment

Managing your credit report

Posted on June 5, 2021 by Melissa Hart

The three nationwide consumer reporting agencies–Equifax, TransUnion, and Experian–will provide one free credit report every 12 months if you request it. As a result of a 2019 settlement, all U.S. consumers may also request up to six free copies of their Equifax credit report during any twelve-month period through December 31, 2026. These free copies will be provided to you in addition to any free reports to which you are entitled under federal law.

If you run into difficulty getting your free Equifax, TransUnion, or Experian annual credit report(s) from AnnualCreditReport.com or its toll-free phone number, try contacting the respective institution(s) directly for help:

  • Equifax, (866) 349-5191 (Option 3)
  • TransUnion, (800) 680-7289 (Option 1)
  • Experian, (888) 397-3742 (Option 2 followed by Option1)

Freeze your report

Each of these companies offers you the option to freeze your report with them if you request it. By law each must freeze and unfreeze your credit file for free if you request it. You also can get a free freeze for your children who are under 16. If you are someone’s guardian, conservator or have a valid power of attorney, you can get a free freeze for that person, too.

Free Credit Monitoring for Military

Equifax, TransUnion, and Experian provide free credit monitoring services to active duty service members and to National Guard members, by visiting the active military web pages of each company.

For more information, click here.

Teaching Suggestions

  • Ask students if they or their families have requested their credit report(s) recently.  If so, what was their experience?
  • Ask the students to make a list of circumstances that will lead them to freeze their credit reports.  When should they consider unfreezing reports?

Discussion Questions

  1. When might it be necessary to freeze or unfreeze credit reports for children who are under 16 years of age?
  2. Should federal government require nation’s credit reporting agencies to provide free credit reports to consumers?   Explain your answer.
Categories: Chapter 5, Credit Mistakes, Credit Scores, Identity Theft, Uncategorized | Tags: , , | Leave a comment

Weighed down by debt? How to ease the load

Posted on January 5, 2019 by Melissa Hart

If you’re overwhelmed by debt, it’s crucial to find a solution.

FDIC Consumer News offers a few tips.

  • Contact your lender immediately if you think you won’t be able to make a loan payment.
  • Reputable credit counseling organizations can help you develop a personalized plan to solve a variety of money problems. 
  • Be very careful of “debt settlement” companies that claim they can reduce what you owe for a fee.
  • Avoid scams.
  • Remember that you have rights when it comes to debt collection.

For more information, click here.

Teaching Suggestions

  • Ask students if they know anyone who has had financial difficulties and how they resolved their problem.
  • Ask students to review the main provisions of the federal Fair Debt Collection Practices Act and how the law protects consumers from unfair debt collectors.

 Discussion Questions

  1. Why is it critical to contact your mortgage lender immediately if you think you can’t make a loan payment on time?
  2. In what ways reputable credit counseling organizations can help you develop a personalized plan to solve financial problems?
  3. What are the warning signs of possible fraud by a debt settlement company or credit counselor?
Categories: Chapter 5, Consumer Complaints, Credit Mistakes, Debt, Frauds and Scams | Tags: , | Leave a comment

Common Credit Report Errors

Posted on February 24, 2018 by Melissa Hart

What are common credit report errors that you should look for on your credit report?  When reviewing your credit report, check that it contains items about you.  Be sure to look for information that is inaccurate or incomplete.

Some common errors in credit reports are:

Identity errors

  • Errors made to your identity information (wrong name, phone number, address)
  • Accounts belonging to another person with the same name or similar name as yours (this mixing of two consumer’s information in a single file is called mixed file)
  • Incorrect accounts resulting from Identity theft

Incorrect reporting of account status

  • Closed accounts reported as open
  • You are reported as the owner of the account, when you are actually just an authorized user
  • Accounts that are incorrectly reported as late or delinquent
  • Incorrect date of last payment, date opened, or date of first delinquency
  • Same debt listed more than once (possibly with different names)

Data management errors

  • Reinsertion of incorrect information after it was corrected
  • Accounts that appear multiple times with different creditors listed (especially in the case of delinquent accounts or accounts in collection)

Balance Errors

  • Accounts with an incorrect current balance
  • Accounts with an incorrect credit limit

For more information, click here.

Teaching Suggestions

  • Why is important to check your credit reports every year?
  • Credit bureaus are required to follow reasonable procedures to ensure that your credit report is accurate, then why mistakes may occur?
  • Ask students if they have ever been contacted a credit bureau to dispute the accuracy of its information. What was the outcome?

Discussion Questions

  1. When you notify the credit bureau that you dispute the accuracy of its information, what must the credit bureau do to rectify mistakes?
  2. What are your legal remedies if a consumer reporting agency fails to comply with the provisions of the Fair Credit Reporting Act?
Categories: Chapter 5, Credit Mistakes, Credit Scores | Tags: , , | Leave a comment

Disputing an Error in Your Credit Report

Posted on April 29, 2015 by Melissa Hart

If you find an error in a report from a credit reporting agency, you may submit a dispute not only to the credit reporting agency, but also directly to the company that is the source of the information. If the company corrects your information as a result of your dispute, it must notify all of the credit reporting agencies to which it provided the inaccurate information, so they can update their reports with the correct information.

If you submit a dispute by mail, your dispute letter should include your complete name, address, telephone number, your confirmation number (if available), and the account number.  Clearly identify each mistake, state the facts, explain why you are disputing the information, and request that it be removed or corrected.

You may want to enclose a copy of the portion of your credit report that contains the disputed items and circle or highlight the disputed items.  You should include copies (not originals) of documents that support your position.  Send your letter by certified mail and ask for a return receipt, so that you will have a record that you letter was received.

For more information, click here.

Teaching Suggestions

  • Ask students to request their own credit report and check for any errors.
  • Ask students to draft a letter of complaint if they find any errors in their credit report.

Discussion Questions

  1. Where else can consumers submit a credit reporting complaint?
  2. If you suspect that error in your credit report as a result of an identity theft, what steps can you take to protect yourself?
Categories: Chapter 5, Credit Mistakes | Tags: | Leave a comment

Caution: Car Title Loans Can Leave You Stranded

Posted on April 8, 2015 by Melissa Hart

Have you seen a sign offering a car title loan—also known as a pink-slip loan, title pledge or title pawn?  These loans are use your paid-off car as collateral, and you get a small, short-term loan with a high interest rate.  You usually have to repay the loan in 15 or 30 days, and the annual percentage rate (APR) is often more than 100 percent.  If you don’t pay back the loan, the company can repossess your car—and then you’re worse off than you were before.  It’s a very expensive way to get money.

Before you decide to take out a car title loan, weigh some options.

  • Can you get a small loan from your bank, credit union or a small loan company? Even a cash advance on a credit card might cost less than a car title loan.
  • Shop for the offer with the lowest cost. Compare the APR and the finance charges, and borrow only what you can repay in time.

For additional information, click here.

Teaching Suggestions:

  • Ask students how they can avoid costly loans like car title loans?
  • Why car title loans are considered risky and undesirable?

Discussion Questions

  1. What can consumers do if car title lenders fail to disclose all the qualifying terms associated with obtaining a loan at its advertised rate?
  2. What can government agencies do to protect consumers in the short-term lending and auto marketplaces?
Categories: Chapter 5, Credit Mistakes | Tags: , | Leave a comment

The Credit Card Mistake That’s Costing Millenials

Posted on September 17, 2014 by Melissa Hart

“A new survey from BMO Harris Bank shows consumers are confused on how credit card balances affect credit scores. . .”

While using a credit card is one of the easiest ways to build credit, there are plenty of misconceptions about how best to do that.  According to this survey

  • 39 percent of Millennials—people between ages 18 to 34—believe carrying a balance increases their credit scores. In fact, carrying a balance does not improve credit scores and can actually hurt scores.
  • 23 percent of those surveyed indicated that a person’s educational level affects his or her credit score. In fact, a credit score is based only on the information in your credit report, and educational level is not included in your credit report.
  • 27 percent of those surveyed thought checking their credit scores would lower their credit score. In fact, the opposite is true:  If you regularly check your credit scores, it’s likely you’ll make financial decisions that will improve your credit score.

For more information go to http://finance.yahoo.com/news/credit-card-mistake-thats-costing-103040745.html

Teaching Suggestions

You may want to use the information in this blog post and the original article to

  • Discuss why a credit score is important.
  • Stress the importance of “managing” credit card debt.

Discussion Questions

  1. What affect will your credit score have on the finance charges you pay for credit purchases?
  2. How can your credit score affect your ability to purchase a home or an automobile?
  3. Assume you have a low credit score and have been turned down for a home mortgage. What steps can you take to increase your credit score?
Categories: Chapter 2, Chapter 5, Chapter_11, Credit Cards, Credit Mistakes, Credit Scores | Tags: , , , | Leave a comment

Is Your Credit Card Denied By Mistake?

Posted on August 9, 2014 by Melissa Hart

When your credit card issuer suspects fraudulent activity on your credit card, it triggers a red flag to deny the charge.  Generally, it is a great protection.  But if you are making the purchase and not a thief, it can be frustrating.  Some purchase patterns that could cause your purchase to be denied include:

  • A purchase for a small dollar amount, followed by a large purchase. Credit card thieves sometimes make a small dollar “test purchase” followed by big ticket items, so this raises a red flag.
  • Multiple purchases back-to-back in a short span of time.
  • Making purchases in a new city, in a different part of town, or in stores where you do not normally shop.

Though inconvenient, these protections are to keep you from being a victim of fraud.  Take these steps to prevent or deal with a credit card purchase being denied by mistake:

  • Inform your credit card company if you will be using your card out of town (especially internationally).
  • Update your billing address if you move, so that the company recognizes the new pattern of purchases as a new normal.
  • Make sure the company has your cell phone number so that it can contact you faster to verify or authorize a purchase.
  • Contact your credit company immediately if your purchase is denied.

For more information go to http://www.usa.gov/topics/consumer/consumer-action-handbook.pdf

Teaching Suggestions

  • Ask students if their credit card was ever denied in error.
  • If the transaction was denied, how did they resolve the problem.

Discussion Questions

  1. What are a few reasons that your credit card purchase might be denied?
  2. What can you do to avoid such an embarrassment at the check-out counter?
Categories: Chapter 5, Credit Cards, Credit Mistakes | Tags: , | Leave a comment

Learning about High-Cost Financial Services

Posted on July 12, 2014 by Melissa Hart

Brian Page, a teacher in Reading Ohio, wants his students to understand the drawbacks of check-cashing services, pawnshops, rent-to-own stores, payday loans, and other shadow banking services.  As a result, he scheduled a field trip for his students to visit these sources of high-cost financial services in their community, which are used by many unbanked consumers.

At LoanMax, they observed people getting loans with their auto titles serving as collateral.  One missed payment could lead to repossession of the vehicle. Next, at CheckSmart, students learned about payday lending and tax refund anticipation loans.

At CashAmerica people were making loan payments on money borrowed, which used jewelry, electronics, and sports memorabilia as collateral. Finally, the visit to the Rent-A-Center store demonstrated the exorbitant costs of furniture, appliances, and electronics when using a rent-to-own payment program.

For additional information on teaching about high-cost financial services, go to:

http://www.nytimes.com/2014/05/24/your-money/a-high-school-field-trip-to-a-pawn-shop.html?src=me

Teaching Suggestions

  • Have students talk with someone who has used one of these high-cost financial services. Obtain information about their experiences.
  • If appropriate, have students visit a high-cost financial service provider to obtain information about their services and fees.
  • Have students create a video presentation with suggestions on how to avoid using costly sources of financial services.

Discussion Questions 

  1. Why are an increasing number of people using high-cost financial services such as pawnshop loans, payday loans, and rent-to-own programs?
  2. What alternatives might used by consumers instead of these high-cost financial services?
  3. What actions might a person take to avoid these high-cost financial services?
Categories: Chapter 4, Chapter 5, Credit Mistakes, Financial Services | Tags: , , , | Leave a comment

Blog at WordPress.com.