There are different OPTIONS to solve your consumer credit needs.
Your financial situation is different from someone else. The consumer credit services that work for someone may not be the best choice for someone else. You should take the time to understand all the consumer credit services options available to you to find the best solution for your needs and goals.
Consumer Credit Services Solutions
Consumer Credit Services - The Basics
Credit is simply the ability for a consumer to be able to borrow money in order to purchase a product or service. Borrowed money can take many forms, such as a car loan, home mortgage, student loan, or credit cards for product purchases.
When you receive credit from a creditor, for example from a bank, you are assuming debt. Debt is the other side of credit. You will need to pay back the full amount of this debt, interest and possible late fees depending upon the terms of the credit agreement.
Having access to credit means you can buy something before you pay for it. This ability to borrow gives you the flexibility in planning your purchases and makes it possible to pay for a large purchase over time. However, you also pay interest on the purchase amount, so use credit wisely, and only borrow money to make necessary purchases.
There are four different types of credit starting with revolving credit, charge card, service credit, and installment credit. When you get credit and pay it back on time your credit rating improves over time and allows you the opportunity to borrow more from grantors.
Creditors (and credit agencies) look at three factors to determine your credit score, which determines your eligibility for a loan. The factors are typically referred to as the three C’s of credit: character, capacity, and collateral.
Your credit score is determined by the three credit agencies and helps lenders determine how much money you’ll be able to borrow and what interest your loans will have. The interest is additional money that you are charged and will need to pay back so the lender can profit on your loan.
Consumer Credit Services - Credit Score
Based on a consumer’s 3C’s (Character, Capacity and Collateral) a credit profile or Consumer Credit Score is determined by the credit agencies. Using these three factors, credit agencies assign you a FICO credit score, which ranges from 300 to 850.
In the past, lenders determined your credit worthiness by looking at your credit report. But now, most lenders use an electronic system that assigns numbers to create your credit profile or your credit score. The number you are assigned dictates what type and how much credit you can receive. This technique is referred to as credit scoring. A credit score tells the lender how likely it is that you will pay back the loan and adhere to the loan terms.
There are five primary factors that determine your credit score. Each contributes a different percentage to your overall credit score.
- Payment History – 35%
- Amounts Owed – 30%.
- Length Of Credit History – 15%
- Types Of Credit On Report – 10%
- New Credit – 10%
To determine your creditworthiness, potential lenders will acquire your credit report from credit agencies. You have a right to request a copy of your credit report at any time and can get one for free from each agency once a year. The three credit agencies are: Equifax, Experian and Trans Union. You can also get your credit reports from a government-mandated website known as annualcreditreport.com.
It is imperative that we make consumers more aware of the long-term effects of their financial decisions, particularly in managing their credit card debt, so that they can avoid financial pitfalls that may lead to bankruptcy.
Consumer Credit Services - Credit Repair
Consumer Credit Repair refers to the process of disputing mistakes and errors in your credit reports. Your creditors monthly report your credit activities (payments, credit applications, etc.) to the credit bureaus. Each credit bureau has their own proprietary version of your credit report. They are not consistent between each credit bureau. The information in your credit report is accurate, based on what is received from your creditors. But your creditors and the credit bureaus commit errors in reporting.
Credit repair is the process you use to correct those errors by submitting a dispute to the credit bureau that issued that report. If the information cannot be verified within 30 days, the credit bureau must remove the item you disputed.
You or a third-party credit repair company can do this. There’s nothing a credit repair company can legally do for you, even removing wrong information, that you can not do for yourself for little or no expense
There is no quick fix for your credit. Information that is negative but accurate (such as late payments and delinquencies) will remain on your credit report for 7-10 years. However, there are steps you can take to repair and improve your credit scores over time.
- Check your credit report. If you find information that is incorrect, you can file a dispute. If there are items that you do not recognize it might be fraudulent activity.
- Pay your bills on time. Payment history is one of the most important components of your credit score.
- Minimize the amount of credit that you are using. Keep you credit utilization rate under 30%.
- Once you have paid off credit accounts, keep them open. Your aged credit accounts in good standing will help your credit score.
- Minimize opening new credit accounts. Opening several credit accounts in a short amount of time can appear risky to lenders and negatively impact your credit score.
Consumer Credit Services - Identity Theft
Consumer Identity Theft is a crime in which someone accesses information to commit fraud, typically by getting false credentials, opening new accounts in someone else’s name or using someone else’s existing accounts. Consumer identity theft is a serious crime in the United States. Nearly 15 billion dollars were stolen from identity theft victims in 2017.
There are a lot of ways identity theft can happen to you. Hackers may get your information from a data security breach. Or, you may unknowingly provide it on social media, during conversions others can hear or by leaving financial documents in unsafe places. That information may include your:
- Social Security number.
- Full name, address and birth date.
- Credit card or bank account numbers.
- Car insurance or medical insurance account numbers.
- Details to your account-recovery questions.
If you are a victim of Identity Theft, reacting quickly may be the most important thing you can do. Here are steps you should take to minimize the damage to your personal life:
- Contact the business where your information was misused. Let them know there was fraudulent activity on your accounts and close them.
- File a police report.
- Contact the three major credit reporting bureaus and consider putting a fraud alert on your credit. This ensures future creditors will take extra steps to verify your identity.
- Consider a credit freeze, which is stronger than a fraud alert and ensures no one can use your credit to open new accounts.
- If you don’t have a credit monitoring service you should consider setting one up.
- Change your online account passwords to be strong and unique.