Credit Bureaus Archives - Page 4 of 4

Credit scores not perfect? Don’t sweat it

Dear Liz: I just bought a home and my FICO credit scores are excellent: 842, 813 and 809. I requested copies of my files from all three credit bureaus, and one of them — which showed me with the lowest score — said the reason my score wasn’t higher is that I had “too many inquiries in the last two months” (I had two, one of which was for my mortgage) and an “insufficient length of credit history” (my first credit account was opened in 1980). I called the bureau, but the representative wouldn’t give me any more information and just wanted to sell me my credit score for $7.95. The person I talked to was in India, which upset me even more. If companies want to outsource to foreign lands, that’s up to them, but they are making money of off every American’s personal history. We should have a right to keep our personal information here in the U.S. I have emailed my lawmakers about this, but what more can I do?

Answer: One of the things you can do is stop worrying about why your credit scores aren’t higher. Once you get above 760 or so on the 300-to-850 FICO scale, you’ll get the best rates and terms from virtually any lender. The software that provides the scores is set up to spit out “reason codes” for why your numbers are the way they are, but the higher your scores, the less relevant those reasons may be. The software has to tell you something, even if “fixing” the “problem” wouldn’t really affect your numbers.

You also need to stop turning to the credit bureaus for information about your scores. Although they sell FICO scores to lenders, the bureaus use a proprietary formula purchased from another company (also called FICO). The bureaus can’t really tell you much more about how the formula works than you could find out for yourself at MyFico.com, which is a site FICO co-founded. Plus, the credit scores the bureaus want to sell to you typically aren’t the FICO scores used by most lenders.

As for your right to decide where your credit information is kept, in effect you have none. The credit reporting system was set up to benefit lenders, not consumers. If you want to change that, continue contacting your lawmakers.

Could son’s unpaid bills harm parents’ credit? Maybe

Dear Liz: Our 24-year-old son lives with us. He failed out of college, has been fired from two restaurant jobs and is working part time at a grocery warehouse. He has neglected to pay his credit card for several months. He also waits until his cellphone carrier threatens to turn off his phone before he pays half of that bill. We are concerned that his poor payment history may start to reflect on our good credit histories. We are retired and may want to build a new house. His bills are sent to our address, and creditors call our home phone number looking for him.

Answer: His debts shouldn’t affect your credit reports and scores unless you cosigned loans or other credit accounts or added him as a joint user to your credit cards.

Note the word “shouldn’t.” It’s possible that an unethical collection agency would try to get you to pay these bills by posting the overdue accounts on your credit reports. That could negatively affect your scores. Check your credit reports at least once a year at http://www.annualcreditreport.com. You also may want to consider ongoing credit monitoring, which can alert you if any collections or other suspicious activity shows up on your reports.

Speaking of unethical actions, you need to consider the possibility that your son could steal your financial identity. He probably has access to the information he would need to open new accounts in your name, including your Social Security numbers. His failure to pay his bills, even though it appears he can, indicates some moral shortcomings. He may not be low enough to rip off his parents, but if you have any suspicions about his trustworthiness, consider putting a credit freeze (also known as a security freeze) on your credit reports. This freeze should prevent anyone from opening credit accounts in your name.

Finally, you can write letters to creditors telling them to stop contacting you. You run the risk that such a letter could lead a creditor to sue your son. But his creditors may sue him anyway if he doesn’t respond to their requests for payment.

Credit scores not perfect? Don’t sweat it

Could son’s unpaid bills harm parents’ credit? Maybe

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