Credit: Credit Score, Identity Theft and Credit Report

Your Credit Score

There’s a lot of hype these days regarding knowing your score and identity fraud, like the catchy commercial to get your “free credit score” by signing up for a credit monitoring service.  Do your wallet a favor and don’t.

Most of your credit is made up of:  what types of credit (for example, mortgages, car loans etc.), how much available credit you have vs. how much of credit is being used and paying your bills on time.  These are all things over which you have control.  Only use the real (FICO or Fair Isaac) score.  Scores from Experian and Trans Union (Beacon scores) tend to be incorrect.

For a good overall explanation on credit scores, check out www.myfico.com.

For those who rent or who are trying to establish credit, often you can get your utility company, landlord or other entity that you regularly pay to report that you pay your bills on time.  Ask, as it will help your score go up.  And get a credit card or a secured card that will let you graduate to a real credit card.  You don’t have to use it and go on a spree.  Instead, use it every month and charge a tank of gas or buy some groceries.  Pay your bill in full.  You will boost your credit score by doing this.

Your Credit and Identity Theft

Most identity theft is committed by family members or acquaintances.  If you really want to shut down identity theft, then “freeze” your credit.  It will cost $10 per credit bureau and you will have to “thaw” your credit whenever you are ready to use it.  However, this will eliminate the need to pay a monitoring service.

For more information on this, check out each of the 3 credit bureaus:  www.experian.com, www.equifax.com and www.transunion.com.  They have forms for each bureau and will explain what you need to do.  You can also check out: http://www.consumersunion.org/campaigns/learn_more/003484indiv.html for a link to your state.

Your Credit Report

You can order a free credit report once per year from www.annualcreditreport.com.  I recommend that you order one report from one credit bureau every 4 months, unless you the victim of identity fraud or are buying a house, taking out a car loan or engaging in some other activity which will involve the extension of credit to you.  If you are a victim, immediately place a security freeze or fraud alert on your report.  It will expire after 90 days unless you have a police report, in which case it will last longer, 5 to 7 years.  See what is on your credit report.  If there is a strange account, write to the company as well as the credit bureau.  Do not call – calling does not work and you want to create a paper trail if there is ever a problem.  So write and send the letter via certified mail, return receipt requested, so that you can prove that the letter was sent and received.  If it is not your account, ask them to send you a fraud affidavit.  Tell the credit bureau and creditor to note that you dispute the debt on your report.  If it is not really your account after investigation by the creditor and your completion of a fraud affidavit, then make sure the disputed account is removed.

If you are looking to obtain credit, start reviewing your report six months out.  It will eliminate any surprises at the car dealership or mortgage closing table.

Rachel Hunter is an attorney who practices law in Cary, North Carolina.