- Social Security Number or birthdate
Also, according to the Consumer Data Industry Association, at least every 90 days, companies must get recently filed and updated public records from the courthouse.
This change is noteworthy because these are significant items, and erroneous credit report information is actually quite common. In fact, the CDIA notes that almost half of tax lien data may not meet the new requirements.
However, not everyone is excited about the changes. “Before you go having a party about your higher score, realize that this will only affect about 6% of the population, or about 12 million people,” says Joseph Roseman, managing partner of Charlotte, NC-based wealth management firm O’Dell, Winkfield, Roseman and Shipp. “But, if you have a tax-lien, civil judgment or you don’t know if you do because you haven’t looked at your report in a while, listen up,” Roseman tells GoodCall®. “This will affect you – if these criteria are not met, then an old lien would come off or a new lien could not be filed.”
Why your credit score is important
While the removal of erroneous data could increase the credit scores of a limited number of individuals, a good credit score should be a priority among all consumers. Oliver Lee, financial planner and investment adviser at The Strategic Planning Group in Lake Orion, tells GoodCall® that an increase in credit scores can result in better interest rates. “However, credit scores not only impact the interest rate, but could also determine the length of the loan for which you’re applying.” Lee says that consumers could save thousands as the result of a lower interest rate and a shorter loan period.
And, he says it’s a mistake to think that only loan officers are looking at a consumer’s credit score. Job candidates who may have been careful to avoid job search blunders may get tripped up by information unrelated to their resume or application materials. “Your employer or potential future employer can look at your credit through employment screening (in some states this may be prohibited).” By having some of the negative items removed, Lee explains that an applicant’s chances of getting hired could increase.
Roseman agrees and adds, “One of my friends had a lien on his report that he did not know was there.” Roseman says the individual applied for a job and was hired. “However, the compliance department ending up rejecting him because he had not disclosed the lien that he did not know was on his report.”
But there are even more instances in which a good credit score is important. Neal Stern, CPA, and member of the American Institute of CPAs National CPA Financial Literacy Commission, tells GoodCall® when consumers want to rent an apartment, the landlord usually checks their credit score to see if they would be dependable tenants. He says that utility companies typically ask for deposits when consumers have may a low credit score.
“Also, if you want to lease a car, the monthly amount you will pay is likely to be higher if your credit score is lower,” Stern explains. “The lease rates you see on car company ads are usually based on the best credit scores, and those who score lower pay more.”
In addition, he says some insurance companies charge a higher premium for car insurance when consumers have a sketchy credit history. “Also, cellphone companies look at your credit score and if it’s too low, it may affect the payment plans you qualify for or lead to security deposit requirements,” Stern explains.
Checking your report
Our three experts each offer tips for checking your credit report and maintaining a good credit score:
- Get a copy of your credit report from all three agencies. You should be doing this every year anyway. But if you have not done it in a while the agencies, by law, are required to give you an annual free copy of your report. Go to their websites to do this.
- Be careful when you do this. They will all attempt to sign you up for a monthly service. I’m not saying this is bad, just be aware if you want to see the reports every month there will be a charge.
- Now that you have the report, look it over. Each of the Big 3 has an online method to dispute any information that you do not think belongs there. If you look at your report and see a lien, judgment or improperly reported payment history, you have the right and ability to dispute it. Dispute it! It does not cost you a dime and may save you dollars in lower future interest rates.
- Mistakes are made on the reports. Think of the millions of transactions that occur at banks, lending institutions, insurance companies. Sometimes the information sent to the credit reporting firm is just plain wrong. You have the right to have the correct information.
- You need to be sure you are your biggest advocate when it comes to getting and keeping a high credit score.
- If a good score is important to you, make sure that you’re always paying your bills on time, including credit cards, rent and/or mortgage.
- Try not to max out your credit cards, as this may hurt you in building a higher score. Sometimes it’s better to have a few cards with low balances.
- If you have negative items on your credit, you can consider a “credit repair company.” I had a family come into my office that wanted to purchase a new home and had some bad items on their report. They worked with a credit repair company and after a few months were able to get the items removed and now they own a beautiful home.
- Don’t be too anxious to close old credit card accounts – when they are removed from your record, part of your bill paying history goes away, and this can reduce your credit score.
- Don’t have too much debt – if the overall amount you owe increases, your credit score will likely suffer.
- Don’t open credit cards you don’t really need. There are many solicitations to open new cards, ranging from the store clerk offering a percentage off the day’s purchases to enticing frequent flyer points – but new credit applications ding your credit score and new credit cards, when issued, ding it even more.
- Don’t run up high credit in relation to the maximums on your cards. The credit bureaus tune in on this, and it’s a red flag that can reduce your score.