Data Facts Blog


April is Financial Literacy Month: Numbers and Websites You Should Know

In the spirit of Financial Literacy Month, Data Facts has compiled a list of very important numbers and websites for consumers.

Ta-Da!

To obtain a credit report:

www.annualcreditreport.com This site allows you to request a free credit report from all 3 bureaus once every 12 months. Call 1-877-322-8228 to order the report by phone.

To get on the Do Not Call List:

 Call 888-382-1222 from the phone you wish to register, or go to www.donotcall.gov . Due to the Do Not Call Improvement Act of 2007, phones that are registered will remain on the list permanently (previously it expired after 5 years).

To opt out of mail solicitation and pre-screened offers:

 Call 1–888–567–8688  or visit  www.optoutprescreen.com . You are able to opt out electronically for 5 years. To opt out permanently, you will need to print out the form and mail it in.

To contact the Credit Bureaus:

Equifax: Call 800-685-1111 or visit them online at www.equifax.com
Experian: Call 888-397-3742 or www.experian.com 
Transunion: You can reach them at 800-888-4213 or www.transunion.com  

To create a letter disputing errors on your credit report:

Under the FCRA, both the credit reporting company and the information provider  are responsible for correcting inaccurate or incomplete information in your report. To take advantage of all your rights under this law, contact the credit reporting company and the information provider. Visit http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre21.shtm for a sample dispute letter.

Other important numbers to have on hand:

  • Your insurance agent
  • Your health insurer
  • Your bank’s main AND local branch
  • Your brokerage house
  • All of your credit card issuers

Utilize these websites and numbers to make sure you welcome the month of May prepared and in top financial condition!

~~Susan McCullah is the Product Development Director for Data Facts, a 23 year old Memphis-based company.  Data Facts provides mortgage product and banking solutions to lenders nationwide. Check our our website for a complete explanation of our services.

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FHA Changes Their Stance On Collection Accounts…..for now

FHA had decided to implement a new rule that would not provide home loans to applicants with collections of over $1000, unless those balances were paid off before closing.  

The rule (Mortgagee Letter 2012-3) was announced by the agency in March and set to take effect on April 1.  Affecting all potential home buyers who were showing an unpaid collection on their credit reports, this new stance was expected by housing analysts to have a negative impact on the housing market.  

FHA was going to require buyers to pay off collections of over $1000 before a mortgage loan would be extended.  The FHA attributed the change in policy to their ongoing effort of building a stronger portfolio.

The worry from mortgage experts was that this would be especially detrimental to young, first-time homebuyers.  These borrowers most likely would not go through the tedious process of paying off old collection accounts, due to the expense and the frustrating difficulty in dealing with creditors.

According to an article on Builderonline.com   “JPMorgan Chase analysts estimated the rule would cut demand for FHA loans by 10% to 20% in the next few months.”

The ruling has now been postponed to not take effect until July 1. This will give FHA time to seek additional input on this section and work to clarify guidance, as appropriate.

~~Susan McCullah is the Product Development Director for Data Facts, a 23 year old Memphis-based company that provides mortgage product and banking solutions to lenders nationwide. Check our our website for a complete explanation of our services.

Credit Scores: Small Mistakes that Spell Big Trouble

Most people are aware of the big actions that can cause your credit score to take a tumble: filing bankruptcy, having an account sent to collections,or being foreclosed upon. However, these are not the only actions that can decrease your credit score. Here are some other mistakes a consumer can make with their credit. While not ‘major offenders’, these 5 missteps can still prohibit you from joining the credit elite.

Maxing out your credit card.

 The balance to limit ratio is almost as important as paying your bills on time, accounting for 30% of your credit score.  A good rule of thumb is to never charge over 30% of your credit limit. This means if you have a total of $10,000 as the limit on your credit cards, you should never have a balance greater than $3,000.

Consumers who think they are managing their finances wisely by only having one credit card, but are using over 30% of the limit are actually HURTING their credit score.

 Missing a payment

 Just one 30 day late payment can drop your credit score significantly. Payment history is the single most important factor in the calculation of your credit score, at 35%.

A consumer who has no late payments on their credit history is gaining lots of points for their positive usage! One late pay can change all that. It is possible for a good credit score to drop 80 points with just one 30 day late.

Whether you sign up for automatic payments through your bank, get an app that reminds you, or write the date your bills are due on your calendar, pay those bills on time!

 Not checking your credit report.

It is estimated that over a third of credit reports contain some sort of error. These bits of erroneous information can be accounts showing late that were actually not late, collections that should have never gone into collections, or accounts that are not even yours! 

By not checking your credit report, these errors linger on your credit history and can cause your score to take a dive. Be sure you are checking your credit report at least once a year.  Review all accounts, balances, and payment history.  Make certain to follow up on any information that looks erroneous, and get it removed from your report by filing a dispute.

 Co-signing a loan.

 Sure, you want to be a good friend, neighbor, cousin, brother, etc. and help obtain a line of credit your loved one cannot qualify for on their own.   However, becoming a co-signer on a loan for someone else is really asking for trouble.  If the borrower does not pay on time or at all, you are responsible for the loan.

The loan will also show up on your credit report and be factored into your credit score. If the borrower is paying late, all those late pays will show up on your credit report, affecting your credit score in a very negative fashion. And once that happens, there is nothing you can do about it.

The scariest part of all is that this can happen without your knowledge. Co-signers rarely receive a copy of the bill, so they would not be made aware of the issue until the account was in a default status.

The best advice on this one is: Just say NO!

 Closing an old credit card

 15% of a person’s credit score is their length of credit history.  Credit cards are factored in by the age of the oldest account, and the average age of all the accounts.

Look at this example. Say you have 4 credit cards. The oldest is one you opened in college, 22 years ago. The others you have had 15 years, 9 years, and one you just opened 2 years ago.  Currently, the oldest account is 22 years old, and the average age of the accounts is 12 years.  If you close the oldest account, that changes the oldest account to 15 years, and the average age of the accounts decreases to 8 years. This change in credit history can cause a decrease in your credit score.

The best idea would be to keep the old credit card, and use it a few times a year to make sure it is positively factored into your credit score.

 It’s obvious to guard against bankruptcy, foreclosures, and collections.  Also make it a top priority to put measures in place to make sure you don’t make any of these small credit mistakes either.  Your credit score will thank you for it!

~~Susan McCullah is the Product Development Director for Data Facts, a 23 year old Memphis-based company that provides mortgage product and banking solutions to lenders nationwide. Check our our website for a complete explanation of our services.

Things You Need To Know About Harp 2.0

Millions of homeowners are underwater on their mortgages, owing more than their homes are worth. This year HARP (Home Affordable Refinance Program) has been re-vamped to allow more homeowners to refinance their mortgages.

This is great news, as Corelogic estimates that 11 million homeowners are underwater and could benefit from assistance. The new changes to HARP will allow the homeowner to refinance regardless of how much their home has dropped in value.

There are some guidelines in order to refinance under HARP. In order to be eligible:

–  The mortgage must be owned by Fannie or Freddie (and originated before June 1, 2009)

–   The mortgage must have been paid on time for the last 6 months, and have no more than 1 30 day late in the last 12 months

–   The current loan-to-value ratio must be over 80%

–   Previous participants in HARP are not eligible

This is GREAT news for homeowners who have kept up with their payments!  These homeowners can move forward in the program right away. Remember, this program is available through December  2013.  Even if a homeowner currently has some recent late payments, if they can get and stay current, they can eventually take advantage of HARP to refinance their home.

Fees have been reduced for HARP loans, and in most cases, an appraisal is not needed.  Lenders can utilize  Automated Valuation Models (AVM’s) to instantly determine the home’s value.

Lenders must then show that the homeowner reaps at least one of these benefits by participating in HARP:

–   The new loan reduces the size of the monthly payment

–   By refinancing, the loan is changed to a more stable loan product

–   The new loan reduces the interest rate

–   The refinance moves the loan to a shorter term

These new changes are expected to help millions of homeowners refinance to a more manageable, stable loan, and allow them to stay in their homes and avoid foreclosure.

 

~~Susan McCullah is the Product Development Director for Data Facts, a 22 year old Memphis-based company that provides mortgage product and banking solutions to lenders nationwide. Check our our website for a complete explanation of our services.

Identity Theft: The Newest Open Door to Thieves

ID theft continues to be a rampant and expensive crime in the U.S.  Purse-snatching, dumpster diving, and mail stealing are all ways that criminals steal your identity. These thieves can then use your credit cards, social security number, and other personal information to rack up charges, open new accounts, and even apply for jobs!

Identity theft and ways to combat it have been topics of many tv and printed articles. You have probably viewed or read some of these tips and even implemented a few of them into your habits. So you are protected, right?

Uh, probably not.

Unfortunately, these crooks are very creative, and constantly scheming up new ways to steal pieces of information about your identity. So, while you may have a locking mailbox, a shredder you use faithfully, and guard your social security number as closely as you would your little sister, you could be overlooking one thing: your cell phone.

In today’s “smart phone world” a person can manage their entire lives. Paying bills, banking, stock trading, and online shopping can all be conducted over your nifty little phone. This makes your phone a goldmine to identity thieves.

Ways the thieves can steal it:

 They steal your phone. Cell phones are evolving constantly, and the amount of storage available on them is growing by leaps and bounds. By stealing your phone, criminals can access your credit card numbers, banking applications, and email accounts. This can supply them with a plethora of information that they can use to steal your identity.

They tap into your Bluetooth connection: Thieves can access your Bluetooth connection, and connect their device with yours, pilfering pieces of information that are not secure on your cell phone.

They can eavesdrop on you. A crook with access to your phone can download software that allows them to listen to your phone conversations. From there, they can extract any information you talk about on your cell phone, and use this to gain access to your accounts, credit cards, etc.

They buy it from you: There are unscrupulous people cruising the internet for used cell phones on sites like Craigslist and Ebay. Their goal is to buy a cell phone that has not been completely cleared of important, sensitive information that they can use to steal your identity.

When it comes to Identity Theft, ignorance is definitely NOT bliss.  Being aware of these sneaky ways to steal your identity can put you in a better position to protect yourself. Here are some ways to make sure you are not vulnerable.

1: Lock down your cell phone with a strong password. Utilizing a number/letter password is the first step toward securing your phone from intruders. Make sure the password is not easily guessable, and set your phone to auto lock.

2: Don’t auto-save your banking passwords. Any applications that deal with sensitive information need to also have a strong password, and take the few extra seconds to type it in every time you access the app.

3: Always turn your Bluetooth off if you are not using it. This can greatly minimize an identity thieves’ ability to hack your phone.

4: Don’t leave it laying around. Keep your cell phone with you when you are out and about, and out of sight at work. This will guard against a person being able to download software that can tap into your conversations and emails.

5. Erase it before selling. When it’s time to get rid of your old phone, make certain all sensitive information is completely removed from the device.

Identity theft is largely a crime of opportunity. By decreasing your cell phone’s exposure to criminals’ access, you can effectively guard against becoming another statistic.

 

~~Susan McCullah is the Product Development Director for Data Facts, a 22 year old Memphis-based company that provides mortgage product and banking solutions to lenders nationwide. Check our our website for a complete explanation of our services.

The Truth About Closing Credit Cards

If you have read anything about how to get and keep a high credit score, you have probably seen this advice: never close your credit cards. This advice is true and good. Sort of.

The 2 parts of valid reasoning behind the idea of not closing any credit cards are:

1: Closing a credit card will decrease your debt utilization ratio. A whopping 30% of your credit score is calculated from your Amounts Owed. Your debt utilization ratio (your total revolving debt divided by your total credit limit) needs to be as low as possible in order to reap the maximum credit score. Closing a credit card takes away some of your total credit limit, which can raise this ratio, and lower your credit score.

2. Closing a credit card will impact your length of credit history. It’s a fact that the credit scoring model looks at how long a person has had credit established; the longer, the better. Closing a credit card you have had for many years may cause your length of credit history to decrease, which can result in a lower score.

So, there are valid reasons to not close your credit cards.

ADVICE: Never close a card that has a balance, your only credit card, or your oldest credit card!

But what if you have a ton of cards, are aiming to streamline your finances, and want to close some of them? Which ones can you close that will have minimal impact to your credit score?

If you have made the decision to close some of your credit cards, choose these (in this order):

Your newest card. The last credit card opened needs to be the first one to go. This card is not helping you very much with your length of credit history, so closing it should not have much impact on your credit score.

Your card with a zero balance. If you never use a particular piece of plastic, it is probably not figured into your credit score (credit lines must be used at least every 6 months in order to be factored into your credit score). Closing a card you never, ever use should have no impact on your credit score.

Your card with the worst terms. Big annual fees, high interest rates, and no perks give you no incentive to keep a card active.

You card with the lowest limit. A low limit credit card is probably having little effect on your debt utilization ratio. Closing low limit plastic can help limit your number of cards without great danger of credit score damage.

Closing credit cards doesn’t have to kill your credit score, just make sure you are choosing wisely.

Other points to remember are:

Always look at your debt utilization ratio before closing a credit card. If your ratio is going to be over 30%, don’t do it.

Always keep at least one credit card open and active, and pay the bill on time. This will give you points for managing credit wisely.

Always keep your oldest credit card open and active.

Take these tips to heart to ensure that whittling down your lines of credit has minimal impact on your credit score.

~~Susan McCullah is the Product Development Director for Data Facts, a 22 year old Memphis-based company that provides mortgage product and banking solutions to lenders nationwide

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