Identity theft has gotten to be such a insidious problem that many consumers are requesting that they have their credit records frozen in order to keep thieves from opening up accounts in their names, thereby possibly destroying their credit. 45 states and the District of Columbia have enacted legislation to protect consumers with only Ohio, Michigan, Iowa, Missouri, and Alabama having yet to pass what many consider to be a vital consumer protection law.

A security freeze works by giving consumers the choice to freeze or lock access to their credit file against anyone trying to open up a new account or to get new credit in their name.

All three credit reporting bureaus — Experian, TransUnion, and Equifax — are notified when a credit freeze is put into place, a move which keeps creditors from checking the credit file. If a consumer needs to apply for credit, they will have access to a personal identification number which they can use to temporarily lift the restriction long enough for a known creditor to access personal information.

State By State Control Over Credit Freeze Laws

Each state sets the parameters of applying for credit freeze for their residents, with most states requiring that consumers pay a fee (usually $10) to have their credit locked. In some cases, states allow consumers with a police report proving identity theft to lock their credit for no charge and more often than not the credit freeze is permanent until the consumer asks that it be lifted. Usually, fees are incurred for the temporary or permanent lifting of the freeze.

Voluntary Participation Helps Other Consumers Too

The three credit reporting bureaus are offering credit freeze protection to those states without legislation on their books protecting consumers as well as for residents of Arkansas, Kansas, Mississippi, and South Dakota, where state law only protects victims of identity theft.  In those states consumers must contact all three credit reporting bureaus directly to be included.

Of course, if you make regular changes to your credit including changing cell phone providers, seeking new employment, making government and other payments, or do a myriad number of other transactions in any given month, you could find that putting a freeze on your credit is more of a hassle than anything.

If this rings true for you, then buying a credit watch service could be the better choice, one that will alert you every time an account is opened up in your name.

Check with each of the three credit reporting bureaus to learn more about these types of programs.

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Tags: credit freeze, Equifax, Experian, identity theft, TransUnion

TransUnion, who along with Experian and Equifax comprise the three major credit reporting agencies, has agreed to a legal settlement whereby the company must provide free credit-report monitoring to more than 150 million American consumers. The settlement comes nearly one decade after the class-action suit was filed in a Chicago federal court, a case where consumer advocates charged that TransUnion had sold private information to businesses for their own marketing schemes.

Consumers affected include anyone who had a credit card, mortgage, auto loan, student loan, or other open credit card or account from 1987 to May 28, 2008. TransUnion, while insisting that they haven’t done anything wrong, has agreed to provide consumers with two immediate options of compensation or wait for two years for a possible cash settlement from the $75 million fund TransUnion established to settle the case.

The two immediate options are:

• Get six months of TransUnion’s credit-monitoring service for free, which would allow consumers to access their credit reports and scores for unlimited number of times during that timeframe. This service is valued at $59.75.

• Get nine months of TransUnion’s credit-monitoring service for free, gain access to the credit scores used in insurance decisions, and TransUnion’s mortgage simulator service, the latter which can help consumers see how their credit scores impact their mortgage rate. This service is valued at $115.50.

If you choose the first option, you forfeit your right to participate in a class-action suit against TransUnion, but you do retain the right to sue the company yourself. For the second choice, you loose the right to bring any future claims against the company.

The settlement is still awaiting court approval, but not all consumer advocates are happy with the settlement. By law, consumers can already receive one free copy of their credit report annually from the three credit reporting agencies — TransUnion would only have to supply extra copies of the report and provide credit scores, the latter which does carry a fee.

(Source: MSN Money)

Tags: consumer credit, credit report, credit score, Equifax, Experian, TransUnion

One of the keys to having a strong credit record is your credit score, the number the three major consumer credit reporting agencies develop to help lenders decide whether you will receive credit, for how long (your term), and the interest rate that you will pay. The higher your score, the more likely you’ll be approved for a loan and at a competitive rate.

Experian, TransUnion, and Equifax are the three private agencies who track your credit and each one “scores” you based on the financial information that they have about you. Thus, each one will likely return numbers that are different from the other two, but their scores should be in the same ballpark.

Your credit score is also called your FICO score which stands for Fair Isaac Corporation score, a formula developed by Fair Isaac and used by all three credit reporting agencies.

If you are looking to buy a home and are seeking to finance it for 30 years, taking out a $300,000 loan then the most recent FICO numbers would give you the following loan details:

FICO® score	APR [?]	Monthly payment *
760-850	5.647%	$1,731
700-759	5.869%	$1,773
660-699	6.153%	$1,828
620-659	6.963%	$1,988
580-619	9.312%	$2,482
500-579	10.276%	$2,694

These are national averages, so your loan will look slightly different where you live. As you can see, the $950 per month premium for the person with a score in the low 500s, would add more than $10,000 annually to the loan, that is if they can get approved in the first place.

So, what can you do to raise your score? It can’t be changed overnight, but if your score is too low you can do the following which should yield decent results within 3-4 months time:

Clean up your credit report — that’s right, if there are errors on your report your score could be artificially low. Start off by checking your report first for accuracy before proceeding.

Pay on time — late payments can weigh you down, therefore make sure that you pay every bill on time.

Pay down debt — you don’t have to pay off all of your debt, but if your percentage of debt as related to credit line is over 35%, then that will lower your score.

Clean up an old mess — that unpaid and uncollected money you owe from long ago could be biting you in the backside. Contact creditors and offer to pay at least a portion of what you owe to settle your debt once and for all.

As always, check your credit regularly by ordering a credit report and your credit scores to see where you stand. Obtaining both is a small investment which can pay near instant dividends.

Tags: credit report, credit score, Equifax, Experian, FICO, free credit report, TransUnion