In today’s economy, it is difficult to keep finances in balance without at least a small line of credit, and it is almost impossible to buy property or a car without a few years of good credit history.
Creating a credit history can seem like navigating a maze, and as the number of digital transactions increase, a growing gaggle of grifters is looking for personal information leaks to exploit.
“A bank is going to look at several factors including past credit history,” said Marty Hainzinger, vice president of consumer lending for First State Bank. “A lot of people worry about their credit scores, but that isn’t necessarily the deciding factor on every type of loan. Banks also look at stability – how long an applicant has paid on accounts, the high and low dollar amounts, and the amounts paid.”
Building and maintaining credit helps a household plan budgets and manage finances. Higher credit ratings result in lower interest rates on credit cards, car loans and home mortgages. A low score can result in high interest on a loan or outright refusal.
“It is important to get credit updates,” Hainzinger said. “Often, people aren’t aware a debt has been turned over to a collections agency until they apply for credit.”
Federal law states everyone is entitled to one free credit report each year from each of the major credit agencies of Equifax, Experian and TransUnion. An official site is maintained by the three at www.annualcreditreport.com, or call (877) 322-8228.
Always check the accuracy of a credit report, because errors are common. Ensure business has been done with all listed creditors and that all past addresses are accurate; inaccuracies can indicate identity theft or fraud. Dispute any mistakes.
“The local bank can help with any accounts they have with their customers,” said Rita Steiner, customer service representative with First State Bank. “If they detect fraud, they can cancel their debit cards or checking accounts, and open new ones.”
The Federal Trade Commission, credit companies and banks offer some suggestions to build and protect credit:
To build and maintain credit:
• Open a checking or savings account. A financial history is important when applying for loans.
• Pay bills on time.
• Keep credit card balances low.
• Pay off debt instead of moving it to new cards with low introductory rates.
• Don’t open unnecessary lines of credit.
• Stick with credit card accounts. Creditors like stability.
To protect credit:
• Shred mail and documents with personal information such as charge receipts, copies of credit offers and applications, insurance forms, medical statements, discarded checks and bank statements and expired credit cards.
• Use caution when giving out credit card numbers, addresses or other personal data. Determine whether an organization is reputable before sharing such information.
• Social Security cards should be kept at home or in a safe deposit box. They should never be carried.
• When making online purchases, look for a lock and key at the bottom corner of the browser, a URL that begins https://, or the words Secure Sockets Layer (SSL), to ensure the transaction is secure.
• Do not use a credit card as identification. The information can be used for identity theft to open accounts, make purchases, obtain cash, get a job or rent an apartment with your identity.
• Credit freezes may be placed on an account, which makes it unavailable to new creditors or anyone who might use it for fraud. Only existing creditors have access. To obtain further credit, the freeze must be temporarily lifted.
Suggestions for victims of identity theft and fraud:
• If a wallet or purse is stolen, an initial fraud alert can be placed on a credit file. Duration of the alert is 90 days and it requires creditors to verify identity before issuing credit.
• If a victim of fraud, fill out an Identity Complaint Form with the FTC and place an extended fraud alert of seven years on credit files. The alert requires creditors to actually speak to the person on file before issuing credit.
To improve damaged credit:
• Get current on all accounts.
• Pay bills on time.
• If falling behind on payments, contact creditors or seek credit counseling and let them know the situation. Creditors are usually willing to work with their customers.
• Get a credit report every few months to monitor progress.
To read an online exclusive about a poll asking residents about credit status, go to tahlequahTDP.com.