Category: Credit Score

Last year, millions of people in the US were victims of identity theft.   Identity theft is when a thief uses your personal information to open bank accounts or other financial accounts, take out loans, file tax returns, or even make fake medical claims. The repercussions can be far-reaching and long-lasting. Once your credit has been laid to waste by identity theft, it’s more difficult to save for retirement, buy a house, expand your family, and much more.  A related problem requiring the same kind of follow-up is when criminals scam people into making fake transactions or giving them personal information.  If you’re concerned that you may be at risk of identity theft, read the following. Know the signs of identity theft There is no red warning light or alarm bell, but some signs of identity theft include: Receiving emails or letters about accounts with which you are unfamiliar Receiving bills for items you did not buy Getting calls from debt collectors about accounts you never opened Being denied for loans you expected to be no problem  Take these steps if your identity is stolen 1. Notify relevant companies If you notice fraudulent transactions or accounts, report the discrepancy to the company in question right away.  In some cases, the thieves might only have your account number rather than all of your personal information. If so, simply canceling and reopening the account with a different number may resolve the problem. However, if someone is using your social security number and opening accounts in your name, things become much more complicated. You would need to move on to the next steps. 2. File a report with the Federal Trade Commission (FTC) The FTC compiles information about identity theft cases. The Federal Bureau of Investigation and other agencies then use this information to pursue identity thieves.  It’s easy to file an online identity theft report with the FTC. The site will also give you helpful information and even forms you can use to file police reports and dispute fraudulent transactions.  3. File a claim with identity theft insurance If you have identity theft insurance, now’s the time to file a claim. Policies vary, so you may speak with a financial advisor in LaCrosse about whether or not an identity theft insurance policy is right for you. You may have identity theft insurance and not even know it. Your insurance company may have included it as part of a broader policy or your employer may provide one. Check to make sure. 4. Contact local law enforcement You may want to file a local police report if: You know who the identity thief is The thief used your name in an interaction with the police A creditor or other involved company requires you to provide a police report You are concerned the thief may commit a crime using your identity  5. Contact credit reporting agencies Contact the big three credit agencies, Equifax, Experian, and Transunion, and ask them to institute a fraud alert.  Normally, a fraud alert lasts for a year unless you choose an extended alert for seven years. What this will do is keep the thief from opening new accounts in your name. It will not stop you from opening an account, but you will need to go through a verification process. You should also freeze your credit until you want to use it. A credit freeze prevents the bureaus from sharing your credit reports. So, if someone tries to take out a loan, they’ll be denied because the credit bureau will not release credit reports to the lenders.  However, if you want to take out a loan, you can lift the credit freeze any time you like. You will need to contact each credit agency to request a credit freeze, but at least it’s free.  6. Contact the Department of Motor Vehicles (DMV)  An identity thief may use your personal information to get identification such as a driver’s license. This is an arrestable offense. Contact the Wisconsin Department of Motor Vehicles (or the state where you otherwise got your license) and alert them to the identity thief issue.  7. Contact the Internal Revenue Service (IRS) Once a thief has stolen your identity, they may use your information to attempt to get a tax refund.  If this has already occurred or you believe you’re at risk, you can submit Form 14039 Identity Theft Affidavit. Make sure to check the IRS website for the most up-to-date affidavit.  8. Notify your health insurance It’s amazing the ways that thieves use stolen identities. They even use them to obtain medical care and treatments. If you know your identity has been stolen, it’s wise to contact your health insurance company in case someone tries to use your name and policy number for this purpose.   9. Get credit monitoring Rather than waiting to see if someone has made purchases or opened accounts in your name, consider subscribing to a credit monitoring service. They’ll monitor your credit reports for sketchy activity and alert you.  Don’t fall victim to identity theft Identity thieves are getting more sophisticated and aggressive. Contact us now to discuss ways to protect your identity and your future.  Our Eau Claire financial advisors can be reached at (715) 834-9512, and our Green Bay financial advisors are available at (920) 434-2192. Advisors Management Group, Inc. is a registered investment adviser whose principal office is located in Wisconsin. Opinions expressed are those of AMG and are subject to change, not guaranteed, and should not be considered recommendations to buy or sell any security. Past performance is no guarantee of future returns, and investing involves multiple risks, including, but not limited to, the risk of permanent losses. Please do not send orders via email as they are not binding and cannot be acted upon. Please be advised it remains the responsibility of our clients to inform AMG of any changes in their investment objectives and/or financial situation.  This commentary is limited to the dissemination of general information pertaining to AMG’s investment advisory/management services. Any subsequent, direct communication by AMG  with a prospective client shall be conducted by a representative that is either registered or qualifies for an exemption or exclusion from registration in the state where the prospective client resides. A copy of our current written disclosure statement discussing our advisory services and fees continues to remain available for your review upon request.

Without even knowing it you might be doing things that are damaging your credit score, which affects your ability to get credit and the interest rate you pay when you do get credit. A 2014 survey by Credit.com found that consumers sometimes don’t understand which actions will and will not help them improve their credit scores. To take the right steps to boost your score, you need to start by understanding the basics of credit scores. The FICO credit score is the most widely used score in lending decisions and ranges from 300 to 850. A FICO score of 750 to 850 is considered excellent, and those with a score in that range have access to the lowest rates and best loan terms, according to myFICO.com, the consumer division of FICO. A score of 700 to 749 is good, and those with a score in this range will likely be approved for loans but might pay a slightly higher interest rate. A score of 650 to 699 is considered fair, and those with a score in this range will pay higher rates and could even be declined for loans and credit, according to myFico.com. The three credit bureaus – Equifax, Experian and TransUnion – also have created the VantageScore, which ranges from 501 to 990, and the VantageScore 3.0, which ranges from 300 to 850 (to mimic the FICO range). The VantageScore is growing in popularity among lenders but still isn’t as widely used as the FICO score. No matter the name, scores can vary by credit bureau depending on when the score was calculated and what specific method was used to make the calculation. Each credit bureau has its own formula. Once you know your score, you can start taking the right steps to improve it. To do so, follow these six habits of people with excellent credit scores. 1. Pay on time. Payment history is the top factor in most credit scoring models, says Gerri Detweiler, director of consumer education at Credit.com. So payments that are 30 days or more late can quickly drag down your credit score. And one late payment is enough to hurt your score, she says. According to myFICO.com, 96% of consumers with a credit score of 800 pay credit accounts on time; 68% of those with a score of 650 have accounts past due. Even if you can only afford to pay the minimum, always pay on time because that will have a bigger impact on your score than the amount you pay, Detweiler says. Set up automatic bill pay through your credit account or bank account so you don’t miss a payment. 2. Minimize use of available credit. Usually, the second most important factor in your credit score is how much debt you have compared with the amount of available credit you have, Detweiler says. Those with a credit score of 800 use only 7% of their available credit, on average, according to myFiCO.com. But most consumers with a score of 650 have maxed out their available credit. You can see a significant increase in your credit score shortly after you pay down highly utilized credit accounts, Detweiler says. If your credit cards are maxed out and you can’t pay them off quickly, she recommends consolidating your balances with a personal loan from a bank because the so-called credit utilization ratio (total credit balance divided by total credit limit) for those loans isn’t calculated in the same way and doesn’t weigh heavily on your score. 3. Maintain low or no balances. People with excellent credit almost always keep low balances on their credit cards, and often don’t pay interest because they pay their balances in full every month, says Jason Steele, a credit card expert for CompareCards.com. In other words, they only use cards for things they can afford to pay off with cash, he says. To become disciplined with credit and avoid racking up balances, Steele recommends logging into your credit account online after making a purchase to pay it off.  4. Have a lengthy credit history. Those with a credit score of 800 have an average account history of 11 years (with oldest account opened 25 years ago) versus an average account history of seven years (with the oldest account opened 11 years ago) for those with a score of 650, according to myFICO.com. So opening several new accounts at once can shorten the average age of your credit history, Detweiler says. And closing old, inactive accounts also can hurt. This move can increase your credit utilization ratio since closing an account means you no longer have access to that available credit. 5. Only apply for credit when necessary. It’s important to have a healthy mix of lines of credit, including credit cards, auto loans, mortgages and even personal loans, Steele says. This shows that lenders are willing to trust you with their loans. And the more available credit you have, the lower your credit utilization ratio will be, he says. But that doesn’t mean you should apply for every line of credit you’re offered. Multiple inquiries from lenders for your credit reports in a short period can trim your score, especially if you don't have many credit accounts or you have a short credit history. Be especially careful when car shopping because Detweiler has heard lots of complaints from consumers whose scores dropped when they had several dealers pulling their reports for financing options. Rather than let a dealer shop your credit, choose a lender you like beforehand and get pre-approved for a loan. 6. Choose credit cards carefully. People with excellent credit usually get the best credit card offers. But they’re smart about the cards they choose. For example, even though retailers often offer discounts on purchases when you sign up for their credit cards, these cards often have low credit limits, which can hurt your credit utilization ratio if you carry a balance on those cards. Cards with annual fees also should be avoided, Steele says, unless they’re packed with benefits -- such as cash-back rewards and miles that can be redeemed for travel – that outweigh the fee. Those who are smart with credit look for cards that waive that fee for the first year then re-evaluate the card in the second year to see if the benefits outweigh the fee, Steele says. It’s also smart to look for cards that offer a 0% interest rate for the first year, he says. Source: Kiplinger

Your credit score—the three-digit number that creditors use to evaluate the risk when they lend you money—helps determine which loans or interest rates you qualify for and how much you’ll pay. Landlords, utilities and cell-phone companies may also check your score before doing business with you. Dozens of credit scores may be attached to your name, including versions tailored to specific industries, such as auto lending. However, the two big consumer credit scoring models—FICO (which is used by the majority of lenders) and VantageScore (a newer model created by the three major credit bureaus)—value similar behaviors when calculating your score, even if they weight those factors differently. Both grade your creditworthiness on a scale of 300 to 850, with a score of 750 or above generally considered good enough to qualify for the best rates. On-time payments. Both FICO and VantageScore prize on-time payments above any other factor. As long as you pay at least the minimum due each month, your payment history will stay clean (though you will rack up interest on your balance). Lenders typically don’t report a late payment to the credit bureaus until it’s more than 30 days overdue. If you make a late payment, it won’t haunt you forever: The impact on your credit score will diminish as long as you consistently pay your bills on time. Limits on your credit usage. Your credit utilization ratio is the amount you owe on your credit cards as a proportion of the total limit on each card, as well as the total limit for all of your cards in aggregate. VantageScore advises consumers to keep their utilization ratios below 30%, but “the lower the better,” says Barry Paperno, who answers credit questions at his website, SpeakingOfCredit.com. He suggests aiming for a utilization of 1% to 9%, rather than zero, because you can pick up a few more points by showing you are managing your credit well. You can improve your utilization ratio by spending less on your credit card and by asking your issuer to raise your limit. Applying for a new card would also increase your available credit (but having too many accounts showing balances can lower your score). Most credit card issuers report the balance from your monthly statement to the credit bureaus. To make that balance appear lower, dole out a few mid-cycle payments or pay off your bill shortly before the closing date for your monthly statement. A long track record. This slice of your score considers the age of your oldest account and the average age of all your accounts. Opening new cards may improve your credit utilization ratio, but it also lowers the average age of revolving accounts, which lowers your score. Note that a closed account in good standing remains in your credit history for 10 years, so you’ll benefit from your track record; however, keeping no-fee credit cards open (and using them now and then) is smart to help your utilization ratio stay low. Other factors. A mix of revolving and installment loans also boosts your score. But don’t overdo it when applying for new credit. Having “hard inquiries” on your credit report from potential lenders will temporarily shave points from your score. When you’re shopping for a mortgage, student loan or auto loan, inquiries made within a certain time period, typically between two weeks and 45 days, count as one inquiry. Source: Kiplinger