Q&A: Credit reports for the deceased

Dear Liz: How does one get credit reports for someone who is dead? My deceased husband is still on my mortgage and I’d like to review his report to make sure it is correct. The estate went through probate, so I have court documents showing I am the executor. I looked at credit bureau websites and attempted to contact them by phone but have not been able to determine what information they need or where it should be sent.

Answer: The only thing that needs to be correct about your husband’s credit reports is the fact that he’s dead. Any other mistakes are irrelevant at this point, but his identity can still be stolen if the bureaus don’t know he’s deceased.

This is no small issue. About 2 million dead people have their identities stolen every year, either because they’ve been deliberately targeted or because criminals filling out credit applications used made-up Social Security numbers that happen to match those of people who have died, according to a 2012 study by research firm ID Analytics.

Eventually, the credit bureaus should get word of a death. Bureaus periodically check the Social Security death master file, which is a database of all the deaths reported to the agency. Lenders also notify the bureaus when they receive information that someone has died.

Just to make sure, though, you should notify the bureaus directly. Ask that a “deceased alert” be added to his files. Send death certificates — the real thing, not photocopies — by certified mail, return receipt requested. The addresses to use include:

TransUnion LLC, P.O. Box 2000, Chester, PA 19022
Experian, P.O. Box 2002, Allen, TX 75013
Equifax, P.O. Box 740260, Atlanta, GA 30374

Q&A: Credit card useage

Dear Liz: I recently refinanced my home and one of the perks was a 0% interest credit card. The problem is that I have two credit cards and I am happy with them, but I am afraid that having a third will adversely affect my credit score. I have no plans to borrow money in the near future but I can’t shake the feeling that it is a detriment to have the card. I haven’t activated the new card and I never carry a balance on either of the older cards I use. What do you advise?

Answer: The new card affects your credit reports and scores whether or not you activate it. Chances are good, though, that the overall effect will be positive.

Yes, your scores may have been dinged a few points when the new card was issued, but over time responsibly handling multiple credit cards will help, not hurt, your numbers.

Failing to use the card, on the other hand, could cause the issuer to close it, and that could negatively affect your scores.

Just do what you do with your other cards: Charge lightly (no more than about 30% of the card’s limit) and pay the bill on time and in full. There’s no credit score advantage to carrying debt.

Q&A: Paying for credit repair

Dear Liz: I’m seeking help in reviewing my credit report and how to fix any issues. I am not financially distressed, but have FICO scores in the 675 range. Could you recommend someone I can hire to assist as I need to refinance a house I bought for cash?

Answer: There’s so much fraud in the credit repair industry that you’re likely better off doing it yourself rather than exposing yourself to rip-offs.

Credit repair companies aren’t supposed to take money upfront or promise things they can’t deliver, but many do.

One of the scammers’ most common ploys is to flood the credit bureau with disputes and to take credit for any negative information that temporarily disappears. By the time the negative information pops back up on the file, the scam artists have disappeared with your money.

Another approach they recommend is starting over with a “clean” slate, sometimes using borrowed or stolen identification numbers. That’s fraud, and even if it works, you’ll often find yourself worse off with no credit history than with a flawed history.

The Federal Trade Commission has some helpful advice on do-it-yourself credit repair.

You’ll need to first get copies of your credit reports from each of the three credit bureaus, which you can do once a year for free at www.annualcreditreport.com. Dispute any inaccurate information, such as collection accounts that aren’t yours or late payments that you made on time.

Follow up with any creditors that persist in reporting bogus information.

One relatively fast way to improve your scores is to pay down any credit card debt to 10% or less of the accounts’ credit limits. Don’t close any accounts while trying to improve your scores, since that won’t help your score and could hurt.

Opening new accounts can ding your scores as well, but it can be worth it to add another credit card to the mix if you only have one or two.

Q&A: Credit scores and new accounts

Dear Liz: My spouse signed up for a store credit card to receive a discount on a large purchase. As she has no strong interest in maintaining a line of credit there, is there a simple way of discontinuing this account without affecting our credit scores, given that we may apply for a mortgage in the near future?

If not, is it critical we maintain some frequency of use on this account?

Answer: First, let’s correct a popular misconception that marriage somehow combines your credit records. Assuming she applied for the card in her name alone, this account won’t show up on your credit report or affect your scores.

Should you apply for a mortgage together, however, her scores could affect the interest rate and terms you get. Opening and closing accounts can ding scores, so it’s best to avoid both when you’re in the market for a major loan.

Issuers vary in their policies on closing inactive accounts, so it’s hard to predict how much activity would prevent the card from being shut down. Typically, though, a small charge every two to three months is enough to keep an account open.

Q&A: Credit CARD Act

Dear Liz: I have a business credit card that offers cash rebates. It has an interest rate of 15.24% on purchases and 25.24% on cash advances. I carry balances in each category. Each month the issuer posts my entire payment to my lower-interest purchases balance and nothing to my cash advance balance. I telephoned to complain but I was told that they will not post any payments to my cash advance balance until my purchases balance is completely paid off. I thought that there was a federal regulation that payments had to be posted to the highest-rate debt balance first. Am I mistaken? If not, to which federal agency can I complain?

Answer: There is indeed a federal law that requires payments in excess of the minimum to be applied to the highest-rate balance. It’s part of the Credit Card Accountability Responsibility and Disclosure Act of 2009. But the Credit CARD Act applies only to consumer credit cards — not business cards.

It’s not a good idea to carry a balance on any credit card, but it’s even more dangerous to carry a balance on a card that lacks the consumer protections promised in the Credit CARD Act. Talk to the bank that has your business checking account to see if you can arrange a lower-rate loan to pay off your balances.

Q&A: Credit card interest rates

Dear Liz: I have had a certain credit card for over five years. I just received a letter stating that my interest rate was going to be raised from 10.24% to 12.24%. My FICO score is 819 and I have never had late payments on any of my cards. I called the issuer to complain about this change but they will not reduce the rate. The letter states that they obtained my FICO score of 819 from Experian and used the score to make the decision to raise my APR. They told me that they are raising rates across the board for customers with FICO scores over 800. Why are credit card companies allowed to do this? It is so unfair.

Answer: Credit card companies are no longer allowed to raise interest rates arbitrarily on individuals’ existing balances, as they could — and often did — before the Credit Card Accountability Responsibility and Disclosure (CARD) Act of 2009. Now card issuers are allowed to raise your interest rate on an existing balance only if you’re 60 days or more late with your payment, a promotional rate has expired or the index to which a variable-rate card is linked has gone up.

Credit card companies can, however, raise your interest rate going forward for pretty much any reason they want, and new balances will accrue at the higher rate. Also, the CARD Act’s restrictions apply only to consumer credit cards; business credit cards aren’t covered by the law.

Changeable rates are just one of the reasons why it’s not smart to carry credit card balances. Since you have high credit scores, though, it should be easy for you to find another card with a low promotional rate. Some cards now offer a 0% rate for 12, 15 or 18 months, although you’ll typically pay a balance transfer fee of around 3%. Sites such as CreditCards.com, NerdWallet and LowCards.com, among others, list these competitive offers.

Once you get the new card, you should work to pay off the entire balance before the promotional rate expires.

Q&A: Credit freezes

Dear Liz: Is there a way to lock my credit history and access to prevent the unscrupulous from opening accounts in my name? Maybe I’m rare, but I have enough existing credit cards, don’t have a mortgage and essentially have no debt, and I want to keep it that way. I suspect businesses that make their living issuing credit reports will resist this ability, but I want to do all I can to make it tough for anyone to steal my identity.

Answer: You can lock up your credit reports with what’s known as a credit freeze (also called a security freeze). The three major credit bureaus — Equifax, Experian and TransUnion — have information about how to do this on their websites. You also can find general information about credit freezes on Consumer Reports’ site.

Credit freezes can prevent new account identity theft — someone opening new credit accounts in your name. Lenders typically check credit reports when they get new credit applications. If they can’t access your reports thanks to a credit freeze, they’re unlikely to approve the application.

Of course, the freeze applies to you as well. If you change your mind and want to apply for a new account, you’ll need to temporarily thaw the freeze.

Other entities also check credit reports, so you may need to lift the freeze if you apply for a job, insurance, new utilities or cellphone service. You typically have to pay fees (which range from $2 to $15, depending on your state) to each bureau to lock up your credit and another set of fees to thaw it.

Credit freezes won’t interfere with your ability to use your credit cards or prevent your current lenders from accessing your reports.

Credit freezes also won’t prevent other types of identity theft, including tax refund fraud, medical identity theft and criminal identity theft (which occurs when criminals give law enforcement your information when they get arrested, rather than their own).

Still, credit freezes are a good solution if your identity has already been stolen or you’re at high risk because your Social Security number has been swiped or exposed in a data breach.

Credit bureaus may suggest you put a temporary fraud alert on your reports instead, or pay for credit monitoring or identity theft “protection” (which actually doesn’t protect you against anything but simply offers an early warning if your reports are compromised). A credit freeze is a more secure solution, but you have to weigh the potential hassle and cost against the benefit.

Q&A: Mistaken address leads to debt collection

Dear Liz: A debt collector says I owe a small debt from a store credit card I opened about six months ago. The wrong address was on file, so I hadn’t received any documentation at all. After opening the account I had called the store customer service line to arrange a payment, but the representative told me I had to wait for my account number and card in the mail. It never showed up, obviously, because of the wrong address issue. I understand that it was still my responsibility to pay this, but I called the store and then the bank that issued the card and got no response. Do I have any right to dispute the collection or at least catch a break?

Answer: The Fair Credit Billing Act requires that when accounts are opened, lenders send written notice about the account holder’s right to dispute errors, said credit expert Gerri Detweiler. Lenders are also supposed to send you statements when your account has activity (such as a balance due).

You could make the argument that the lender violated federal law by sending the information to the wrong address, Detweiler said, and that your credit scores have suffered as a result.

Yes, you should have contacted the store again after the card failed to arrive, but the lender should have fixed the problem and called off the collector once it was notified.

You can file a complaint with the Consumer Financial Protection Bureau at http://www.consumerfinance.gov and it will contact the lender to try to resolve the dispute. You’ll be able to log into the CFPB site to track the progress of its investigation.

You also should get copies of your credit reports and dispute any negative information related to this account, including any collections activity, said Detweiler, who writes about credit and debt at Credit.com.

Should the lender balk at removing the derogatory information from your credit reports, you can hire a consumer law attorney (referrals from http://www.naca.net) to press your case.

Q&A: Could reducing your credit limit hurt your credit score?

Dear Liz: I asked one of my credit card issuers to increase my credit line from $2,000 to $5,000 but was turned down. The reason given was that I have too high credit limits from my other cards. Combined, I have about $100,000 in available credit, although I’ve never used more than $15,000 at any time and always paid promptly. If I ask these credit card companies to reduce my available credit, will I damage my FICO credit scores, which are around 785?

Answer: Your credit scores may well take a hit if you reduce your available credit, and there’s no guarantee that doing so will induce the issuer you’re courting to raise your limit. If this card is relatively recent, you may find that simply waiting a few months and asking again will get you the credit line increase.

If not, you have plenty of other options. Credit card companies are falling all over themselves to attract creditworthy customers like yourself. Check out some of the offers you’ll find at credit card comparison sites such as NerdWallet, CreditCards.com, CardRatings, LowCards.com and others.

Q&A: Using a separate credit card for online purchases and automatic payments

Dear Liz: I saw your recent column from the couple upset about the inconvenience of having to reset the automatic payments when their credit card was reissued due to fraud. We had the same problem (our credit card has been reissued six times now!) and got some great advice I’d like to share. We got a separate credit card that is used for nothing but automatic payments and online purchases. It has never been hacked like our other card that we use constantly in the community because we earn airline miles. The last two times our regular card had to be replaced was in the Target and Home Depot hacking, but the other card has been fine so far. We are keeping our fingers crossed. Our issuer has now given us a chip card to replace the constantly hacked one, so I hope we have better luck going forward with both credit cards.

Answer: Several other readers wrote to say they do something similar by using different cards for different purposes, including devoting one to making automatic charges.

It might be wise to have a separate card just for online purchases, however, since the incidence of “card not present” fraud (including online and phone transactions) is higher than that for transactions where the card is physically presented to the merchant.