Security freezes, also known as credit freezes, restrict access to your credit file, making it harder for identity thieves to open new accounts in your name. Starting September 21, 2018, you can freeze and unfreeze your credit file for free. You also can get a free freeze for your children who are under 16. And if you are someone’s guardian, conservator or have a valid power of attorney, you can get a free freeze for that person, too.
How will these freezes work? Contact all three of the nationwide credit reporting agencies – Equifax, Experian, and TransUnion. If you request a freeze online or by phone, the agency must place the freeze within one business day. If you request a lift of the freeze, the agency must lift it within one hour. If you make your request by mail, the agency must place or lift the freeze within three business days after it gets your request. You also can lift the freeze temporarily without a fee.
Don’t confuse freezes with locks. They work in a similar way, but locks may have monthly fees. If you want a free freeze guaranteed by federal law, then opt for a freeze, not a lock.
For more information, click here.
- Ask students if anyone has already placed a credit freeze or a fraud alert. If so, what has been their experience?
- Encourage students to place a credit freeze since it is now free to freeze or unfreeze their credit file.
- What might be the advantages or disadvantages of placing a credit freeze?
- What can you do if a credit reporting agency is not placing a credit freeze or fraud alert properly?
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:
- 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)
- Accounts with an incorrect current balance
- Accounts with an incorrect credit limit
For more information, click here.
- 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?
- When you notify the credit bureau that you dispute the accuracy of its information, what must the credit bureau do to rectify mistakes?
- What are your legal remedies if a consumer reporting agency fails to comply with the provisions of the Fair Credit Reporting Act?
Ring, ring. “This is Equifax calling to verify your account information.” Stop. Don’t tell them anything. They’re not from Equifax. It’s a scam. Equifax will not call you out of the blue.
That’s just one scam you might see after Equifax’s recent data breach. Other calls might try to trick you into giving your personal information. Here are some tips for recognizing and preventing phone scams and imposter scams:
- Don’t give personal information. Don’t provide any personal or financial information unless you’ve initiated the call and it’s to a phone number you know is correct.
- Don’t trust caller ID. Scammers can spoof their numbers so it looks like they are calling from a particular company, even when they’re not.
- If you get a robocall, hang up. Don’t press 1 to speak to a live operator or any other key to take your number off the list. If you respond by pressing any number, it will probably just lead to more robocalls.
For more information about the Equifax breach, go to Equifax’s website.
- Ask students if they know someone who has received such a call. If so, how the victim responded to the imposter?
- What advice can you provide to a victim of a scam?
- What should you do, if you have already received a call that you think is fake?
- What must you do if you gave personal information to an imposter?
- What can you do to protect yourself from such scams?
The Credit Repair Organization Act (CROA) makes it illegal for credit repair companies to lie about what they can do for you, and to charge you before they’ve performed their services. The CROA is enforced by the Federal Trade Commission and requires credit repair companies to explain:
- your legal rights in a written contract that also details the services they’ll perform,
- your three day right to cancel without with any charge,
- how long will it take to get results,
- the total cost you will pay, and
- any guarantees.
What if a credit repair company you hired doesn’t live up to its promises? You have some options. You can:
- sue them in federal court for your actual losses or for what you paid them, whichever is more,
- seek punitive damages—money to punish the company for violating the law,
- join other people in a class action lawsuit against the company, and if you win, the company has to pay your attorney’s fees.
For more information, click here.
- Ask students to make a list of major provisions of the Credit Repair Organization Act.
- Ask students if there is a time limit on reporting negative information about criminal convictions.
- Where and how can you report credit repair frauds?
- Can the FTC resolve individual credit disputes? If not, why should you file the complaint with the FTC?
Credit reports, produced by credit bureaus, detail your financial history, and are used to develop credit scores. Under federal law, you can get at least one free report from each of the nationwide credit bureaus every 12 months. If you find an error, contact the credit bureau directly and correct the record.
If you cannot qualify for a regular credit card, consider a no-fee or low-fee secured credit card. This is a credit card for which you would keep money (as collateral) in a deposit account at the financial institution issuing the card. For example, if you want a card with $1,000 limit, you might deposit that amount into a savings account at the bank offering you the card. The lender would report how you manage the card to one or more of the credit bureaus, and often it will provide you the opportunity to obtain an unsecured credit card after a certain period of on-time payments. Secured cards may have fees attached to them and may have a higher interest rate, so be sure to do your homework before signing up.
To order your free annual report from the three major credit bureaus—Equifax, Experian, and TransUnion visit www.AnnualCreditReport.com or call toll free 1-877-322-8228.
You have the right to see and correct reports from “specialty” credit bureaus that, for example, track a person’s history of handling a checking account.
For more information, go to:
Building a better credit report
Specialty consumer reports
- Ask students to visit several websites that may provide current information about credit files.
- Bring to class examples of credit related problems of individuals or families. Suggest ways in which these problems may be solved.
- Ask students to talk to a person who has discovered an error on his or her credit report. What was their experience to get it corrected?
- What steps can you take to improve your credit score?
- Which federal laws protect your rights if your credit application is denied?
Your credit scores are prepared by FICO and other companies and are mainly based on your history of managing debts, such as whether you tend to make payments on time. Your scores play a significant role in your everyday life because the next time you apply for a loan or credit card—or perhaps a new apartment or insurance—your scores could affect the final decision, including your costs.
For many consumers with damaged credit scores and those with no credit record, here are some ways to improve your credit scores.
- Consider consulting with a reputable credit counseling service.
- Understand what information is most likely to influence your credit scores.
- Obtain and review a copy of your free credit report.
For more information, click here.
- Ask students if they know how to obtain their free credit reports from credit bureaus. If they already have received their credit report(s), did they find any errors?
- What can you do if your credit report contains erroneous data or records of someone with a name similar to yours?
- Why it is important to review your credit files every year even if you are not planning to apply for a big loan?
- What are your legal remedies if a credit reporting agency engages in unfair reporting practices?
Your credit score, which is mainly based on your history of repaying loans, can determine your ability to borrow money and how much you will pay for it. Here is good news for some consumers: Your score may improve as a result of changes in how credit reports and scores are compiled.
FICO, a company that provides software used to produce many consumer credit scores, announced that unpaid medical debt will not have as big an impact on the new version of its most popular credit score. And the Consumer Financial Protection Bureau (CFPB) announced that it will require the major consumer reporting agencies to provide regular accuracy reports to the Bureau on how disputes from consumers are being handled. The CFPB said medical debt in particular is a source of numerous complaints because billing process can be complicated and confusing to consumers. The CFPB noted that the accuracy reports will help it hold credit reporting companies accountable for ensuring that erroneous information does not damage your credit score.
These changes may help raise some consumers’ credit scores and reduce their borrowing costs. In general, though, to build or maintain a good credit score, consumers need to manage their money carefully, and that includes using caution when taking on additional debt.
For more information, click here.
- Ask students if they have requested copies of their credit reports and if the information was correct?
- Have you applied for new credit recently, and it so, what was the outcome?
- What is the best strategy to maintain or improve your credit score?
- What are the legal steps to take to improve your credit report?
- If you apply for too many new credit cards, how it might affect your credit score?
Credit Report Accuracy
In late January 2015, The Federal Trade Commission issued a follow-up study of credit report accuracy and found that most consumers who previously reported an unresolved error on one of their three major credit reports believe that at least one piece of disputed information on their report is still inaccurate.
The study found that one if five consumers had an error that was corrected by a credit reporting agency after it was disputed on at least one of their three credit reports. The study also found that about 20 percent of consumers who identified errors on one of their three major credit reports experienced an increase in their credit score that resulted in a decrease in their risk tier, making them more likely to be offered a lower auto loan interest rate.
For more information, Click Here.
- Ask students what are their legal remedies if a credit reporting agency engages in unfair reporting practices.
- Bring to class examples of credit-related problems of individuals and families. Suggest ways in which these problems might be solved.
- Why is it important for consumers to check their credit reports at least once a year?
- What can consumers do to ensure that their credit reports are free from errors?
“Free credit scores” sounds good, right? But what if you signed up for “free credit scores,” then found out you were enrolled in a credit monitoring program that costs $29.95 per month? Not so good. That’s what the FTC says happened with a company called One Technologies, Inc. Now the company has agreed to settle the FTC’s charges that it misled consumers by advertising “free credit scores” but failing to tell them that they would be enrolled in a credit monitoring program for a monthly fee.
One Technologies, Inc. offered people “free” online access to their credit scores through at least fifty websites, including freescore360.com, freescoreonline.com , and scorescense.com. But according to the FTC, the company didn’t clearly inform people that once they got their score, they would pay $29.95 per month for a credit monitoring program. You could only get out of that monthly fee by calling to cancel. Some people had to call multiple times. Others were denied refunds. One Technologies, Inc. will pay $22 million to compensate its customers and must get their consent before billing them. Also, it must provide the customers with an easy way to cancel.
For additional information, click here.
- What can you do if you become victim of a deceptive marketing practice?
- Where can you get your free credit report at least once every year?
- Ask students to obtain their credit reports from Experian, TransUnion, and Equifax.
- Ask students to search the Internet for “free credit scores” and summarize their findings.