It's a given that certain businesses will check your credit report as part of the application process. Creditors and lenders, obviously, check your credit before approving your credit card or loan application. Insurance companies check your credit to help set your rates. Utility and cable providers check your credit too, to decide whether you should pay a security deposit.
Having good credit is becoming more important as more businesses rely on your credit report to decide whether to approve your applications and how much to charge you. Creditors, lenders, and other businesses check your credit to determine the likelihood that you're going to repay on time. You can prepare for a credit check by checking your own credit first, to be sure that the information is accurate and to clear up any errors before making your application.
It's an awful situation to find yourself in: more bills than you can afford to pay. You'll find yourself stressing over which bills to pay and which bills to delay. Can you put off some bills until next month? Will that just make the situation worse?
Don't struggle unnecessarily with too many bills. You have more control over your bills than you probably realize. For example, you may be reluctant to disconnect some services that you'd actually be comfortable living without. There may be viable ways of making extra money that you've disregarded. Give them another thought.
Here's some advice on what to do when you have too many bills so you can reduce your stress and fulfill all your financial obligations.
Millions of consumers have an error on their credit reports - errors that could affect their credit scores and even the ability to get approved for a credit card or loan. Disputing errors is much easier when you have proof of the error, for example, a cancelled check showing your payment was received on time.
Last week, the CFPB announced that consumers now have the ability to upload, mail, or fax documents to support a credit report dispute with the three major credit bureaus. The credit bureau is required to forward this information along to the information furnisher who must investigate and update your record with the credit report if there is indeed a credit report error.
The CFPB has received more than 10,000 complaints about credit reporting (as of August 2013) since it began taking complaints in October 2012. Of those complaints, about 45% were related to some type of credit report inaccuracy - inaccurately reported account statuses and accounts listed that did not actually belong to the consumer. Being able to provide proof of credit report errors should make it easier for consumers have those errors cleared up.
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The CFPB is urging top credit card issuers to make credit scores available to their cardholders. Last month, Rich Cordray, director of the Consumer Financial Protection Bureau, wrote a letter to several credit card issuers asking that credit scores be made available to consumers in hopes that the information would prompt more consumers to check their annual credit reports.
Currently, fewer than one in five consumers checks their credit reports in any year, according the to the CFPB, despite the fact that credit reports are available for free through AnnualCreditReport.com.
A few credit card issuers have already made credit scores available to consumers and actually started the trend several months before the CFPB made its request to other credit card issuers. Discover, BarclayCard, and First National Bank of Omaha cardholders now receive a copy of their recent FICO scores on their credit card statements, either paper or online depending on the card issuer.
More credit card issuers making credit scores available would certainly empower consumers by giving them information about one of the most important pieces of financial information. Credit scores influence interest rates, credit card and loan approval, and insurance rates. The underlying data on which a credit score is based also affects a persons ability to get a job.
However, credit scores made available through credit card issuers could get confusing, especially if cardholders who hold multiple credit cards receive a different credit score on each of their statements. It would also mean that credit card issuers have to begin answering questions and dealing with inevitable complaints from consumers about their credit scores.
In the meantime, consumers can still purchase their FICO scores through myFICO.com or any of the three credit bureaus. Credit scores are also available for free through CreditKarma.com, CreditSesame.com, and Quizzle.com.
More on Credit Scores
Year after year, debt collectors remain one of most complained about businesses in the county. The Consumer Financial Protection Bureau has received more than 11,000 complaints on debt collection since it began receiving complaints in July 2013. That's an average of 2,000 per month and makes debt collector complaints the CFPB's second-most complained about business behind mortgages. The data comes from a recent report from the U.S. Public Interest Research Group.
Collectors attempting to collect a debt from the wrong person was the bureau's top complaint against debt collectors. These mistaken identity complaints accounted for 25% of all complaints. Fifteen percent of complaints were about collectors making frequent or repeated calls; 13% - collectors failing to provide enough information to verify the debt; and 11% - collecting on a debt that was previously paid.
Other complaints include: attempting to collect the wrong amount, not giving notice of the consumer's right to dispute the debt, taking to a third-party about the debt, threatening to take legal action, collecting a debt that resulted from identity theft, and continuing to contact the consumers after being asked not to.
The CFPB's complaint data includes complaints for both original creditors and third-party debt collectors attempting to collect a debt. The distinction is important because there's a law - the Fair Debt Collection Practices Act - that applies to third-party debt collectors, but doesn't apply to original creditors collecting a debt.
The PIRG's report says that the CFPB helped more than 2,300 people receive some type of relief, either monetary or non-monetary. If you have a debt collection complaint (or complaint about another financial business), you can submit it to the CFPB at consumerfinance.gov/complaint.
Dealing With Debt Collectors
When it comes to your credit report, it's best to be "in the know." You'll read a lot of advice to check your credit report for cases of identity theft, but that's not the only reason you should review your credit report.
Looking at your credit report also gives you insight into what your creditors are saying about you. If you frequently check your credit report, you'll rarely be surprised about what's there.
If you're wondering when you should check your credit report, now is a good time, especially since you know exactly what you're looking for.
How to Get Your Credit Report
- Six Ways to Get a Credit Report for Free
- How to Order Your Annual Credit Report
- Avoid Free Credit Report Scams
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The IRS requires creditors to send 1099-C Form in most cases when more than $600 of consumer debt is forgiven. In turn, the IRS expects you to include the cancelled debt as income on your tax return. Many people can expect to receive this form if they settled a debt last year. But, you may unexpectedly receive a 1099-C form for debts you haven't heard of in years, for example, if the creditor has decided to cancel the debt.
Having to claim additional income can increase your tax liability resulting in a lower tax refund or even a tax bill. You may be able to claim an insolvency exemption by filing Form 982 if you were insolvent (had a negative net worth) at the time the debt was cancelled. However, that can be hard to do if the 1099-C is for a debt the creditor claims was cancelled in a previous year.
If you get a 1099-C for an old debt it's best to consult a tax professional (not just a tax preparer) who has experience with this type of tax situation.
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Can you imagine what your life would be like if you didn't have to send checks to creditors and lenders every month? How much money you'd be able to put aside for retirement, vacation, and other goals?
You can get out of debt and there are several ways you can do it. For example, you could knock out your debts one at a time by sending all your extra money to your creditors. Or, if you can't afford to pay your debt in full, you might settle your debts. Check out 10 Ways to Get Out of Debt for more ideas on paying off your debt.
More on Paying Off Debt
- 90 Ways to Get Money for Debt
- How Much is Debt Really Costing You
- Sign Up for Weekly Debt Management Tips
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I'm willing to bet there isn't a single person who's paid off a large amount of debt who didn't feel discouraged at some point - or several points - during the process.
The important thing is not to give in to the discouragement and give up on your debt goal. Look for ways to re-motivate yourself, remembering all the reasons you're paying off debt in the first place.
Debt Payoff Tips
Getting approved for your first credit card is pretty exciting. And getting the credit card in the mail is even more exciting.
Up until now, you probably haven't seen much of the credit card process beyond watching other people swipe their credit card for purchases. But that's not enough to help you build the right credit habits. Here's what you should expect with your first credit card. What you do from this point forward affects the rest of your life - or least the next seven years.
More on Using Your First Credit Card: