My daughter had her purse stolen last weekend from a house party. Sheesh. What a huge inconvenience. Of course, she holds only a cell phone, no land line and her phone was in her purse. Considering someone was playing jokes on her, pretending to be her and texting nasty messages around to her friends, probably that is all they wanted.
We started the process by replacing the phone, so she could go ahead and cancel her credit cards, debit card, etc. She decided to report the loss to the police, mostly because of her expensive camera that was also in her purse. Going to the bank to replace her cards was not that easy without any identification. Thank goodness her passport was held somewhere safe! The kind teller at the bank told her to make sure she notified the credit bureau that her credit card was stolen, as well as to notify the credit card company. That way, the bureau could flag her account for possible identity theft/fraud. I would never have thought of that. Makes sense though, right? One thing you need to do is make sure your credit bureau scores are accurate.
Been told to know your credit score? Wondered what it means? Why do we need a credit score? How do you improve your credit score? It’s stuff we should keep on top of to make sure our financial picture looks clean to lenders, banks and other financial institutions.
Understanding Credit Scores & Credit Report Information
Why do we need a credit score? Lenders use the information given by your score to determine their risk in lending you money. So it is important to understand the bare basics of credit bureau scores. The credit score is a summary of your credit history translated into a number.
Is a FICO® score the same as a credit score? The most widely used credit score is what is called a FICO® score, which was created by an entity called the Fair Isaac Corporation. Lenders receive FICO® scores from three major credit reporting agencies. Fair Isaac develops FICO® scores from information in consumer credit reports maintained at these credit reporting bureaus. Hence, it’s good practice to check your credit score from the credit reporting agencies on a regular basis.
How is our credit score calculated? Your credit score is based on your credit report, which is information gathered by credit reporting agencies on your borrowing history. Your credit report contains information that has the following:
- Types of credit accounts you have open; loans at financial institutions, store credit cards, bank credit cards, lines of credit, mortgages.
- Length of time your accounts have been open and active.
- Whether or not you have made payments on time.
- How much credit you have used and how much you are looking for; shows every time you have applied for line of credit or store credit cards, and whether or not you use them.
What does my credit report look like? The following is listed with points on your credit report:
- Personal Information: Your name, address, birth date and social security number are listed. These are important to ensure your lender is looking at your credit report, not someone with the same first name or birth date only.
- Account Summary: Most lenders that you currently deal with report to the credit bureaus. This information then shows on your credit report. This section will show what institution the loan or credit is held with, the type of credit (line of credit, fixed loan), the total borrowed and if there are any negative items involved in that credit account.
- Inquiries: This section will show how many lenders have requested your credit report in the last two years. Every time you apply for a loan or credit card, you authorize the lender to inquire into your credit report. These will all show whether or not the loan/credit was approved.
- Negative Items: Last but certainly not least, negative items. Lenders will report any delinquent activity on your credit report. If you have been late in making payments, it will show here. Also reported here are public record reports, such as bankruptcies, garnishees, etc.
Your FICO® score takes into consideration all these categories of information. Rest assured, no one piece of information will determine your FICO® score.
How To Monitor Your Credit
Here are some top credit monitoring services you can check up with, if you need to keep up with the credit information that various institutions (and sometimes even your landlord and employer) have on you:
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Just as your credit score isn’t determined by one piece of information, your credit score is only one piece of the puzzle that lenders will consider when analyzing your loan application. Lenders will often look at other things, such as your income, how long you have been working at your present job and the type of loan you are requesting.
Contributing Writer: Carol H.
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You should ALWAYS file a police report if your purse or wallet is stolen. Down the road, if ID theft does occur, your creditors will take you much more seriously if you can show you filed a police report. Otherwise, they may wonder if you’re just trying to avoid paying lots of bills rung up with your stolen credit cards.