Credit Scores

Credit Report Accuracy

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.

Teaching Suggestions

  • 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.

Discussion Questions

  1. Why is it important for consumers to check their credit reports at least once a year?
  2. What can consumers do to ensure that their credit reports are free from errors?
Categories: Chapter 5, Credit Scores | Tags: | Leave a comment

Free Credit Scores

“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.

Discussion Questions

  1. What can you do if you become victim of a deceptive marketing practice?
  2. Where can you get your free credit report at least once every year?

Teaching Suggestions

  1. Ask students to obtain their credit reports from Experian, TransUnion, and Equifax.
  2. Ask students to search the Internet for “free credit scores” and summarize their findings.
Categories: Chapter 5, Credit Scores, Frauds and Scams | Tags: | Leave a comment

Prescreened Credit and Insurance Offers

Many companies that solicit new credit card accounts and insurance policies use prescreening to identify potential customers for the products they offer.  Prescreened offers–sometimes called “preapproved” offers–are based on information in your credit report that indicates you meet criteria set by the company.  Usually, you receive prescreened solicitations via mail, but you may also get them in a phone call or in an email.

For additional information, go to

http://www.consumer.ftc.gov/articles/0148-prescreened-credit-and-insurance-offers

Teaching Suggestions

You may want to use the information in this article to discuss

  • Why some people prefer not to receive prescreened offers in the mail, especially if they are not in the market for a new credit card or insurance policy?
  • What might be some advantages of receiving prescreened offers?
  • Ask how many students have received prescreened offers and what did they do with them.

Discussion Questions

  1. Can prescreening hurt your credit report or credit score?
  2. How can you reduce the number of unsolicited credit and insurance offers you receive?
Categories: Chapter 5, Credit Cards, Credit Scores | Tags: , | Leave a comment

The Credit Card Mistake That’s Costing Millenials

“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

Protect Your Personal Information and Money

Recent reports about thieves gaining access to sensitive personal information that can be used to commit fraud or steal money, sometimes involving major security breaches at large retailers such as Target stores.  While federal laws and industry practices generally limit losses for unauthorized transactions involving bank accounts, debit and credit cards, it pays to be proactive.

Be careful when you use social networking sites.  Scammers use social networking sites to gather details about individuals, such as their place or date of birth, a pet’s name, their mother’s maiden name, and other information that can help them figure out passwords–or how to reset them.  Even small amount of information can help them steal your identity, such as by answering security questions that control access to accounts.  According to Michael Benardo, Chief of the FDIC’s Cyber Fraud and Financial Crimes Section, “Don’t share your ‘page’ or access with anyone you don’t know and trust.  Criminals may pretend to be your ‘friend’  or relative to convince you to send money or divulge personal information.”

For additional information and tips on avoiding fraud at social media sites, go to the Internet Crime Complaint Center at

http://www.ic3.gov/media/2009/091001.aspx and http://www.fdic.gov/consumers/consumer/news/cnfall13/socialmedia.html

Discussion Questions

1.  What can you do to guard against scams involving fraudulent requests to wire money or send a prepaid card?

2.  Why should you be suspicious about unsolicited emails or text messages asking you to click on a link or open an attachment?

Teaching Suggestions

You may want to use the information in this blog and the websites to

*  Discuss the importance of regularly reviewing your transactions in your credit card and bank statements.

*  Carefully choose user IDs and passwords for your computers, mobile devices, and online accounts.

*  Periodically review your credit reports to make sure someone else has not obtained a credit card or a loan in your name.

Categories: Chapter 5, Credit Scores, Identity Theft | Tags: , | Leave a comment

Choosing a Credit Card? Ensure that Your Credit Report is Accurate

Correcting inaccuracies in your credit report may help you improve your credit history and credit score, which credit card issuers consider when deciding whether to offer you a card and how they will determine your interest rate and credit limit. You also can find out if an identity thief has opened credit cards or other accounts in your name.

By federal law, you are entitled to one free copy of your credit report every twelve months from each of the three major nationwide consumer reporting agencies (also called “credit bureaus”)—Equifax, Experian and TransUnion. Each company issues its own report, and because some lender do not provide information to all three of them, it’s useful to request your report from each one in order to get a comprehensive view of you credit history.

For additional information, go to

http://www.AnnualCreditReport.com; http://www.equifax.com; http://www.experian.com; http://www.transunion.com

Discussion Questions

1. Why is it important to check your credit reports every year?

2. Why should you request a credit report from each one of the three credit bureaus?

 

Teaching Suggestions

You may want to use the information in this blog and the above websites to discuss

* What should students do if they find inaccuracies in their credit reports?

* Have students draft a letter to the credit bureau to correct the errors in their credit report.

Categories: Chapter 5, Credit Mistakes, Credit Scores | Tags: , | Leave a comment

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