MONEY credit cards

5 Reasons Why You Have a Bad Credit Score

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Maybe you're disorganized or maybe you just don't make enough money to cover your expenses.

A few questions for you: First, have you checked your credit score lately? If not, you might want to do that. It’s one of those habits that everyone knows they should do but often forgets to do until something bad happens — like how you only remember to floss after you already have a cavity.

If you haven’t checked your credit score recently, there are many ways to check your credit scores for free. It’s also a good idea to check your credit reports regularly for errors or other problems — and you can get those for free once a year from each of the major credit reporting agencies.

But if you have checked your credit score recently: YAY YOU. Did you like what you saw? If not, there are plenty of reasons your credit score may not be in as good of shape as you would like it to be. But that’s OK, because once you figure out what the issue is, you can get to work on taking care of the problem, and start to build stronger credit.

1. You & Your Spouse Never Talk About Money

If your finances involve more than one spender — i.e. you’re married, or you’re living with a significant other — you should talk about money things. When expectations are out of whack and there’s little communication about who’s handling what, things can get messy and expensive.

Make sure all your bills are paid, otherwise you may end up with collection accounts on your credit reports and damaged credit scores as a result. No matter how you share or divvy up financial responsibilities, you should still communicate about cash flow, because a lack of planning could put you in a situation where you fall into debt (or you’re already in it and haven’t started working your way out of it).

You each have your own credit scores, but don’t underestimate the impact the other’s habits could have on your credit file — if someone overspends, misses a payment or starts racking up debt, your efforts to find financial balance may have credit-score consequences.

2. You’re Disorganized

Tracking your spending is one of the best ways to stay out of debt. It’s easy to think you’re not spending beyond your means if you’re not budgeting, and maybe you are really good at estimating that stuff in your head, but more likely than not, you won’t realize how much things add up until you need to pay a credit card bill and you can’t afford it.

Even if you’re able to afford your spending, keep in mind that it’s ideal to keep your credit card balances as low as possible, relative to your credit card limit. That’s called credit utilization, and it has a huge impact on your credit scores.

Additionally, if you’re so disorganized you keep missing bill deadlines, you may find yourself with a collection account or two. It’s one thing to have a collection account if you really can’t afford to pay your bills, but it’s another if you can afford to pay but aren’t because you’re not paying attention to when they’re due.

3. You Just Don’t Care

Maybe you see your credit score, realize it’s not great and you’re reaction is, “Oh, well.” Perhaps it doesn’t seem worth the trouble of tracking your credit card’s balance-to-limit ratio or to minimize how frequently you apply for new credit, but in the long run, you may find yourself in a situation that requires you to have good credit.

Your credit score comes into play in your life more often than you might think. Yes, a good credit score is ideal if you’re applying for a mortgage or trying to buy a car, but it can also help you get lower insurance premiums, get a new smartphone or set up Internet without having to pay a large deposit. If you’re not sure what’s considered a good credit score, this guide can help you.

4. Someone Else Is Dragging You Down

This applies if you are an authorized user on someone else’s credit card or vice versa: The other person’s spending habits on that card also show up on your credit report as long as the issuer reports it. That can be good if that person is using the card responsibly, but if that changes, you may find yourself tangled up in their problems. It’s the same if you co-signed for a loan and the primary accountholder isn’t doing their part to keep the account in good standing. This is why it’s helpful to carefully consider the risks before you enter into such agreements.

5. You’re Underpaid

Income has no direct bearing on credit scores, but if you’re not making enough money to cover your necessities, it can put you in precarious financial situation. Even if you’re able to pay your bills right now, the slightest emergency or unexpected expense may leave you with little choice but to go into debt or let a bill go unpaid, which could lead to dealing with debt collectors.

People who receive small paychecks can have great credit, and plenty of wealthy people have bad credit, but it’s certainly easier to manage your finances if you have a steady, sufficient income.

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Thieves Charged $18,000 on Stolen Credit Card in Minutes

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The thieves allegedly bought prepaid debit and gift cards at 2 Target stores in Nashville while Jennifer Puryear shopped for groceries.

Thieves don’t need much time to do a lot of damage. A woman whose wallet was stolen earlier in August while grocery shopping in Nashville learned this firsthand: Between the time she entered the store with her wallet and when she got to the cash register without it, someone had spent $18,000 on her credit card, reports News Channel 5 in Nashville.

Jennifer Puryear called American Express as soon as she noticed her wallet wasn’t in her purse, but by then, the company told her the card had been used a dozen times at local Target stores. Based on surveillance camera footage, police say the alleged thieves appear to be a couple who tried to use the card at a third Target, but Puryear had already canceled the card. The alleged culprits were buying prepaid debit cards and gift cards — it’s a common tactic, because credit card fraud can be shut down quickly, as it was in this case, and that gives thieves time to spend the money or sell the cards for cash later.

Consumer protection laws concerning credit card theft generally exempt victims from financial liability for the fraud, as long as the theft is reported quickly. The most credit card fraud victims can be responsible for is $50 of the unauthorized purchases, but it’s a different story with debit cards. Even if you don’t end up responsible for anything, debit card fraud can be much more problematic than credit card fraud, because it can take time for the bank to replace the stolen funds. It’s one of the advantages credit instead have over debit cards. If you don’t have a credit card and are searching for one, you can use this expert guide to credit cards to figure out what kind of card might suit you best.

Puryear’s experience is a good example of why consumers may want to consider setting up transactional monitoring on their financial accounts, no matter what kind of card you have. Banks offer different options, but generally, you can update your account settings to receive alerts when a “suspicious” transaction or a purchase over a certain amount clears your account — you might be able to get alerts for any transaction, so if anything occurs that you didn’t authorize, you’ll know immediately. Given how quickly fraud can get out of control, it’s not an unreasonable thing to do.

The worst-case scenario is something like this goes on for long enough that the fraud ends up hurting your credit (or in the case of a debit card, draining your bank account). If the transactions go unnoticed until the time your credit card balance is reported to the credit bureaus, your credit score could suffer from the seemingly high credit card balances. Because it’s fraud, you should eventually be able to correct the problem, but that’s something you’ll want to avoid having to deal with in the first place. In the event that you don’t catch the fraud on your financial statements, make it a habit to check your credit, so you’ll at least spot the fraud there.

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The 10 Worst Credit Card Mistakes You Can Make

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Use your cards wisely, or you'll have big problems down the road.

Credit cards can be a convenient, safe way to make purchases and build your credit scores. Or they can be an expensive nightmare that could put you in bankruptcy court.

The difference isn’t so much in the cards you use as how you use them. Here are 10 of the biggest mistakes you can make with plastic, and what you should do instead.

Not Using Them Strategically

A debit card may help you avoid overspending, but it also gives fraudsters a direct path into your bank account. Given the massive database breaches at Target, Michael’s, and other retailers, that should give you pause.

Credit cards offer consumers better protections, plus they function as a middleman when you have disputes with a retailer or service provider. Many cards offer additional perks, such as replacing goods that are stolen and extending manufacturers’ warranties. You should use credit cards for all major purchases and for transactions that carry a high risk of fraud, such as online shopping and swiping your card at a gas pump.

Missing a Payment

Want to see your good credit scores instantly drop 100 points or more? Skip a payment on your credit card. Paying a few days late means incurring late fees, but paying 30 or more days late signals to credit scoring formulas that you’re in over your head (even if you’re just forgetful). Pay 60 days late and kiss that great interest rate good-bye, since card issuers can and do impose penalty rates.

Maxing Them Out

A big chunk of your credit scores comes from how much of your available credit you’re using: the less, the better. Maxing out a card, even if you later pay the balance in full, can hurt your scores.

A better option is to spread your charges around so you don’t use more than about 30 percent of your available limit on any card. If you’re working to improve your credit scores, try to get that under 10%.

Carrying a Balance

Carrying balances doesn’t help your credit scores and can cost you a small fortune in interest payments. Contrary to popular belief, carrying a credit card balance is not the norm in the U.S. The most recent Federal Reserve statistics show 62% of households don’t have credit card debt. The median amount owed by those who do is $2,800. That’s a far cry from the $15,000 or so that’s often cited. (The higher figure is an average, which means a relatively small number of heavily indebted households can seriously skew the numbers.)

Making Only Minimum Payments

If there’s a dumber financial move than carrying a balance, it’s paying only the minimum. Even credit card companies don’t like this behavior, since it can indicate you’re in dire financial straits and more likely to stop paying your bill.

Your credit card statement shows exactly how much it will cost you to carry your current balance if you pay only the minimum. (Hint: It’s a lot. You’re likely to pay more in interest than you currently owe, which means you’ll pay for everything you buy twice over.)

Not Checking Your Statement

When was the last time you actually combed through the individual charges on your credit card?

Many people don’t realize the cost of minimum payments is spelled out in their statement because they never bother to look at their statements. Bad move. If you don’t report merchant errors and fraudulent transactions promptly, you may have trouble getting refunds.

Using Them to Pay Medical Bills

It’s fine to use plastic to handle a co-pay or other small health care charge, as long as you promptly pay off the balance. If a medical provider pushes you to put a big bill on a credit card, though, beware.

That often makes you ineligible for any discounts or charity waivers that could dramatically lower your bill. Many providers offer interest-free payment plans as well, which are a much better alternative than credit card debt. Ask to speak to a financial counselor at the hospital or medical office to learn your options.

Taking a Cash Advance

A credit card will get you cash at an ATM, just as a debit card will. The big difference is that the credit card transaction is called a cash advance, and instantly triggers an interest rate north of 20 percent. A cash advance is better than using even higher-rate debt, such as a payday loan, but it’s better to avoid this kind of expensive borrowing entirely.

Ignoring Rewards

If you don’t carry a balance, you could be missing out on free money in the form of cash rebates, frequent traveler points, and other benefits. If you’re not into monitoring complicated rewards programs, you can keep it simple by using a cash-back card.

Financial comparison site NerdWallet recommends Blue Cash Preferred from American Express, Citi Double Cash Card, and Chase Freedom.

But Don’t Chase Them Down

As great as rewards can be, they’re not worth incurring the higher-than-average rates charged by most of these cards, so don’t charge more than you can pay off in full every month. And beware of the temptation to spend more to get more rewards. Charging what you’d normally spend to get rewards can be smart; spending more than you normally would to get rewards is just a budget buster.

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MONEY credit cards

Nix Those Sneaky ‘Grey Charges’ From Your Credit Card Bill

Unwanted, ongoing charges added up to $14.3 billion in 2013.

Hey, remember that newsletter that let you sign up for a free trial?

Didn’t think so.

How about that old domain name you registered, or your kid’s gaming membership, or the magazine subscription that was initially offered as a freebie. Forgot about those too, didn’t you?

Rest assured those companies didn’t forget. But they are probably counting on you to do so.

That way they can keep charging your credit card, every year or every month, in perpetuity. And you may not even realize what is going on.

There is even a name for all these sneaky little ongoing fees: ‘Grey Charges’.

“Nine out of 10 people don’t check their credit-card charges carefully,” says Mick Weinstein, vice president of software company BillGuard. “And even if they do, it’s too time-consuming to dispute those charges. So most people simply let them go.”

Such fees are not illegal, per se. But they are designed to keep you on the hook.

The result: 233 million grey charges a year, amounting to a whopping $14.3 billion dollars, according to a 2013 study by industry analysts Aite Group. That is an average charge of $61 per credit card bill.

Just ask Holly Gordon. When the healthy-living consultant from Shawnee, Oklahoma downloaded software called ‘You Need a Budget’, she started discovering all sorts of little charges she had completely forgotten about.

“I was horrified at the number of surprise subscriptions we had,” says the 47-year-old. To wit: Auto-paying for satellite radio since 2009, spending almost $200 annually, along with another $15 every month on various magazine subscriptions on Amazon’s Kindle device.

“Those pesky one-time, quarterly and annual fees just kept popping up, sending my budget into panic mode,” Gordon says.

The most common grey charge, according to the Aite Group report: “Free-to-paid,” where a free introductory period expires and a paid subscription kicks in. Those amount to more than 115 million transactions a year, at a cost of more than $6 billion.

There are plenty of other types of grey charges, too – many with frightening monikers. “Phantoms” are additional products or services tacked onto another transaction. “Zombies” are subscriptions or memberships that keep charging you, even after you have canceled them.

Review Statements

Step one for consumers is to go over your credit-card statement with a fine-tooth comb every month, instead of just blindly paying up.

“Grey charges make it even more important to scrutinize your credit card bill and really look at every charge – especially if you are on auto pay,” says Michael Schreiber, editor-in-chief and chief content officer of

“Often people just scan and look for big charges that they don’t remember making, or just the total amount due,” Schreiber notes. “But those little charges can really add up.”

If you do discover a sketchy charge, take it up with the merchant or the credit-card issuer. Even if they don’t give you credit for past charges, at least you can nix them going forward.

Most of all, don’t think of a grey charge as a minor issue that is not worth your time. After all, even a measly $5 a month turns out to be $60 a year, which turns out to be $300 over five years.

With BillGuard’s smartphone app, you can even let its staff dispute grey charges for you. Chicagoan Zach Moss, for instance, once purchased a one-day Boingo Internet pass – and then started to get dinged $9.99 every month. After a few smartphone taps, BillGuard challenged those charges, and Moss got refunded for three full months.

Indeed, the payoff can be major. In part because Gordon started rooting out and killing all those grey charges – think of it like weeding a garden – she and her husband now expect to be out of consumer debt by the end of the year.

“It’s so easy to put your money on auto-pilot and just zone out,” Gordon says. “But it always comes back to bite you.”

MONEY credit cards

5 Credit Scoring Oddities You Should Know About

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Weird things happen to your credit when you lose your card or just don't use it for a year.

Q: I reported my credit card lost and wonder if it will it hurt my credit score. I was reading something online and it said it won’t hurt, but sometimes it would help. Just wonder if that is true.

A: Your question provides a great example of a situation where your credit score may not be helped or hurt directly, but indirectly, could end up slightly better or worse. Along with addressing your question about how the score treats accounts reported as lost (or stolen), I’ve also listed a few additional examples of credit actions that, while not affecting your score directly, can have unintended consequences.

These are not major factors that change a good score to bad or take a low score to high, nor should knowing these scoring facts change the way you manage your credit. Rather, think of them simply as little-known credit scoring oddities that may help explain some of those head-scratching unexplainable changes to your credit score that can drive you crazy.

1. Credit card lost or stolen creates duplicate entry. As soon as your card is reported lost or stolen, it is closed by the creditor and reported to the credit bureaus as “closed — lost or stolen.” Providing the account is in good standing, a new card with a new account number is issued and the existing balance, credit limit and credit history are transferred to this “new account.” If the card is past due or over-limit when lost, a new account and/or card may not be forthcoming until the problem has been resolved.

The newly created account also becomes a new trade line on your credit report, while the old now-closed card continues to appear as well. The result is a duplication of some account information — most notably, the open date — that can affect your credit score a little differently than when reported as a single trade line.

This duplicating of the open date on your credit report can lend some truth to what you read about reporting a card lost possibly helping your score. For the scoring calculations that measure an account’s “length of credit history” (about 15 percent of your score), the open date provides the starting point for this measurement. And since all accounts on a credit report, whether open or closed, are included in your length of credit history, the duplicating of an account can give extra weight to its age within that category’s “average age of accounts” calculations.

Whether this extra weight is good or not-so-good for your score depends on whether the account is older or younger than the average age of all accounts on your credit report. The score can increase by a few points if the card reporting in duplicate is older than the average age of all accounts, thus increasing the average age or, if younger, take away a few points by lowering the average age.

2. Past credit utilization doesn’t matter, but unreported credit limit does. Despite credit utilization (balance/limit ratio) being one of the most important aspects of a credit score — 30 percent — prior utilization is not included in your score.

Yet, while past utilization has no direct effect on today’s score, a past card balance can come back to help or haunt you if, for some reason, the card issuer is not reporting a credit limit for that card on your credit report. Here’s where things can get interesting.

When no credit limit is reported for an account, the “high credit” amount — actually the highest past balance — takes the place of the missing limit to calculate the card’s credit utilization. In other words, instead of dividing the current balance by the credit limit, as is done in typical utilization equations, utilization with a missing limit consists of the current balance divided by the “high credit” (highest balance) amount.

The result is that, since you now have the high credit amount working like a credit limit in these calculations, essentially the higher your highest past balance, the lower your current utilization, and the higher your score. That’s right. When the credit limit isn’t being reported, the higher your highest past balance, the better it is for your score. Go figure!

3. Denial of credit won’t hurt, at least not directly. While credit card approval is indicated by the appearance of a new account on your credit report, the denial of credit is neither noted on the credit report nor considered by the scoring formula. Thus, being turned down for credit has a mostly neutral effect on your score.

However, while being denied won’t hurt your score, the addition of a hard inquiry to your Equifax, Experian or TransUnion credit report as part of the credit evaluation process could lower it by about 5 points on average.

4. Infrequent account activity: Your score doesn’t care, but your card issuer may. Contrary to what you may have read elsewhere, credit scores don’t consider either the frequency of your card purchases or the amount of individual charges. That information just isn’t passed along from your card issuer to the credit bureaus, so it can’t be included on your credit report.

Still, an extended period of inactivity, such as a year or more, can lead the card company to close the card, which will then exclude the card’s zero utilization percentage from ever again contributing positively to your credit utilization calculations. Long-term inactivity can also lead to the card’s removal from your credit report and its positive credit history from your score

5. Loan-shopping protected by 30-day loan inquiry buffer period. Many consumers are not aware that inquiries resulting from most mortgage, auto and student loan applications are ignored entirely by the credit score during the 30-day period following the inquiry date. This, of course, is a good thing for your score.

Just be aware that when that “30-day buffer period” expires and the inquiry begins to affect your score, you may be surprised to see slightly fewer points despite your credit report looking much as it did 30 days ago.

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Should You Pay Your Medical Bill With a Credit Card?

Why it's smart to charge a payment at the beginning of your billing cycle.

Since the Affordable Care Act, the large majority of us have health insurance, which means we all have to figure out how we’ll cover co-pays, deductibles and bills for expenses not covered. While paying a co-pay with cash isn’t unheard of, you may find it more convenient to pay with a credit or debit card.

Increasingly, you’ll be asked for a co-pay when you make a scheduled health care visit (there are exceptions; certain checkups and procedures require no co-pay). In that case, a credit card may be your best bet. That should give you some time to come up with the co-pay if it’s not in your regular budget. And if you have a rewards card and will be able to pay the card off in full, some of the pain of an unexpected bill can be mitigated by a small reward. (Or, if you anticipate a large expense — think pregnancy or knee replacement — a balance-transfer card might be useful if it has a low- or zero-interest promotional rate.)

Especially in the case of non-routine care, you may also be faced with co-insurance, the amount you have to pay after insurance pays. That can be stickier, because sometimes insurance doesn’t pay as quickly or as much as you might hope, and you may be getting a bill that you have reason to believe you won’t ultimately owe. What then? Do you pay it?

It actually happened to me recently when, after nearly six months, I worried that a still-unpaid bill might be sent to collections, thus doing serious damage to my credit score. I truly believed insurance would eventually cover the expense (I had appealed a denial) … but also that the account was close to being turned over to collections. And so I put it on a credit card at the beginning of a billing cycle, to maximize the time between when I charged it and when I would have to pay it, hoping that insurance would come through and pay its share of the bill.

Eventually insurance did come through. The medical provider told me I’d be issued a refund in 4-6 weeks. Instead, I paid the provider the appropriate amount for my co-pay with a check, and successfully disputed what I charged to my credit card with the credit issuer (and thus had the charge removed).

If you’re hoping to use a credit card to buy time on a bill you don’t think you should have to pay, here’s what to know:

  • Paying carries its own risks. Once the bill is paid, health care providers may be less motivated to help you get insurance to pay. In addition, if you’ve already paid the “retail” rate, you lose the ability to negotiate a lower price. If you’ve ever looked at a bill and seen how much the “negotiated rate” your insurance company pays compared to the full retail rate, you’ll understand why it’s such a big deal to potentially lose that ability.
  • But not paying the bill is also risky. Your credit report can reflect late payments (most health care providers do not report to credit reporting agencies, but a few do). If your account is sent to collections, your credit score is likely to suffer. You could lose a good credit score that you’ve worked hard to build, and you could either not be approved for credit or you could end up having to pay more in interest if you do qualify.

For me, paying and timing it so that I had nearly two billing cycles to continue to fight with my insurer bought me time to resolve it. Disputing it (even if insurance had not eventually paid) would have resulted in a bit more time while the credit card issuer investigated. And all of that time was interest-free. (I should add that the reason I filed a chargeback is because I know that under federal law the provider couldn’t drag its feet and take “4-6 weeks” to issue a refund to my card after they agreed I was due one. It wasn’t just a stall tactic.) Most important to me, it prevented a huge hit to my credit for a bill I actually did not owe.

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7 Times Your Credit Card Company Could Freeze Your Account

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Fraud alerts, defaults and exceeding your credit limit could all be the culprits.

Have you ever been puzzled when your credit card was declined? Sometimes it’s a technical glitch like a worn-out magnetic stripe or a merchant’s intermittent communications system, but other times it turns out that your account has been frozen.

Why would your account be frozen? It turns out that there are a few pretty good reasons why a credit card issuer would suspend your purchasing power, sometimes for reasons within your control, and other times not.

Here are seven times your credit card account could be frozen, and what you can do about it.

1. Fraud Alerts

Credit card issuers attempt to detect fraudulent transactions through pattern recognition and behavior detection formulas. In most cases, these systems work well at preventing unauthorized purchases, and your account will be frozen when a potentially fraudulent transaction is detected. According to Ashley Dodd, communications manager for Chase Card Services, “There are many variables that can impact account activity. We look at a number of factors — such as concerns about fraud — when evaluating a customer’s credit situation and determining if any action needs to be taken.” To prevent false fraud alerts, contact your card issuer before making any unusually large purchases, and before using your card outside of the U.S.

2. Defaults

If you stop paying your credit card bills, then it’s only a matter of time until your account is frozen. How long will that take? While it depends on both the card issuer and the specific customer, it’s unlikely that your account will be frozen immediately after missing a single payment, but it’s a pretty safe bet that your card will stop working after missing two. If you ever miss a payment for any reason, contact your card issuer as soon as possible to explain the situation, and to arrange to make up the payment as quickly as you can. Once your account is in good standing, you should be able to use your card again. Keep in mind that missing payments on your credit cards not only risks a freeze, it also damages your credit.

3. If You Cancel the Primary Cardholder’s Account

If the primary account holder closes his or her account, all of the authorized cardholders will have their cards frozen as well. Nevertheless, most card issuers will still display the account in the user’s online profile for several months, if only so that customers can track the status of their remaining balance and payments.

4. If an Authorized User’s Account Is Canceled

If you are an authorized user on another person’s account, he or she could contact the card issuer to and cancel your cardholder privileges. So if you have a credit card with the account of a family member or an employer, you might want to check with them if it stops working one day.

5. If You Exceed Your Credit Limit

Making purchases beyond your credit limit may result in your account being frozen. Some card issuers offer products with no-preset spending limits, while others will allow cardholders to exceed their limit upon request. Otherwise, expect your card to be declined if you attempt to make a purchase that exceeds your available credit limit. But by making a payment to your card issuer, you can quickly free up your credit limit again. However, going close to your limit can damage your credit score, which depends partly on how much you charge relative to your credit limit. Experts recommend using no more than 30% of your available credit for credit scoring purposes.

6. If You Freeze Your Own Card

Discover offers a novel feature called Freeze it that allows customers to suspend their own accounts, kind of like an on/off switch you can use if you misplace your card or if it’s stolen. Freezing an account prevents its use for most new purchases, cash advances and balance transfers, while still allowing recurring bill payments, returns, credits, dispute adjustments and payments.

According to Laks Vasudevan, vice president of products and innovation with Discover, “One of the main reasons we developed the Freeze it function was to give our cardmembers better control over their account. This function is extremely beneficial for the times cardmembers either leave their card at an establishment, or maybe misplaced their card in their car or home. Having the ability to temporarily freeze an account during these instances gives cardmembers piece of mind that purchases won’t be made on their card. And if there is a declined transaction made while the account is frozen, the cardmember is immediately alerted.”

7. If the Issuer Is Performing a Financial Review

A credit card issuer may suspend your account while it performs a financial review. In particular, American Express is known to do this. To pass the review, customers must authorize American Express to verify their income by viewing their tax statements. Once customers have passed this review process, their accounts will be reactivated.

Note: It’s important to remember that interest rates, fees and terms for credit cards, loans and other financial products frequently change. As a result, rates, fees and terms for credit cards, loans and other financial products cited in these articles may have changed since the date of publication. Please be sure to verify current rates, fees and terms with credit card issuers, banks or other financial institutions directly.

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6 Stealthy Credit Report Errors You Can Quickly Eliminate

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Contact the credit reporting company immediately to avoid headaches down the line.

Financial institutions rely on one major determining factor when deciding whether or not to give you a loan (or a loan with favorable terms, at least) — and that’s your credit report.

Credit reports contain a lot of information, including your name, address, place of employment, credit lines, balances, payment history and more. But that information isn’t always correct. In fact, research from the Federal Trade Commission reveals that 25% of consumers have credit report errors that could lead to lower scores, and 5% of those consumers could see a drop of up to 25 points while one in 250 people could see a drop of 100 points as a result of incorrect information. Which is why — since credit report errors are relatively common — you should check your credit report thoroughly from your three freebies available to you annually from the ‘Big Three’ credit bureaus: Equifax, Experian, and TransUnion.

Here are some of the stealthier errors that often fly under the radar that you can resolve by flagging and reporting them to the respective bureaus:

1. Incorrect Social Security Number

Our Social Security numbers (SSNs) are sacred information as they link us to many establishments that use the digits as identifiers. They’re important because sometimes our other identifying information may be similar to someone else’s — our names, especially — and that can become confusing if those lines somehow get crossed. An incorrect SSN can lead to a major financial headache if it isn’t caught early on.

“Transposed or incorrect numbers for a Social Security number can result in a merged report,” explains personal finance and credit expert Kristy Welsh, a contributor for If you notice that your SSN is incorrect contact the bureau(s) that has the wrong information so they can amend and update your correct information.

2. Inaccurate Loan and Credit Card Payments

Did you know that 35% of your credit score is impacted by your payment history? According to Welsh, one late payment can affect your score dramatically. But what if you’re diligent about paying on time and your report erroneously shows a 30-day late pay? It happens.

3. Out-of-Date Charge-Offs and Closed Lines of Credit

The day you make your last payment on a loan is always a great day. I’ve successfully paid off two of my student loans and I celebrated each one. So the last thing you want to see is an open line of credit on your report that you worked very hard to close.

“It’s not unusual for a closed line of credit to continue to appear active on a credit report,” says John Heath, directing attorney and credit expert at Lexington Law. “If you’ve closed a line of credit, it should be noted as closed or canceled.”

4. Incorrect Address

If you tend to move somewhat frequently, then your current address may not be updated. When scouring your credit report, ensure that your current residence is listed as your primary dwelling.

“An incorrect address may not seem like a big deal, but they can lead to merged accounts,” Welsh warns. “A wrong address may impact you in other ways,” she says. “Because insurance companies, for instance, base their rates in part on where you live, you may (inadvertently) end up paying more for your car insurance.”

Welsh knows firsthand the ramifications of an incorrect address on her credit report, as it were.”Because the person with whom I was merged shared my past address, an erroneous tax lien appeared on my credit report. Once the mess was straightened out, I immediately removed all of my previous addresses from my credit report.”

5. Incorrect Name

This error hits close to home as my stepbrother and I share the same first and last name, and we shared the same address for a period of time. As such, our financial information — including our taxes — has gotten mixed up in the past.

Welsh provides a sample scenario for comparison.”Your name is Betty Jones, and although you’ve never gone by Elizabeth, this name appears on your credit report,” she explains. “Because of this, you may have another Elizabeth’s information on your credit report. Merged credit reports often happen with family members who share the same name (Jr. and Sr., for instance), or when a person applies for credit under several names: Robert Jones and ‘Bob’ Jones.”

The best way to avoid this situation, of course, is to change your name to Merlin Shrewsbury — for whom there are zero results on Google. Safe bet.

6. Lagging Negative Listing

Negative listings that should have been removed can also appear on your credit report erroneously.

“Generally negative marks on a credit report should cycle off after seven years; 10 years for bankruptcies; and 15 years for tax liens,” Heath explains.

If your negative listings persist beyond those timelines, make the necessary calls to have them removed.

How to Dispute Errors on Your Credit Report

Once you’ve flagged an error, contact the respective credit bureau(s) to which the error belongs. But sometimes there are intricacies involved.

Kari Luckett, financial expert and content director for, explains.” If you find a mistake, contact that credit reporting company only,” she says. “All three allow you to file an online dispute. If you have supporting documentation, attach it to your disputes.”

Luckett also advises to protect yourself with documentation of the dispute throughout the process. “That way if the reporting agency fails to properly investigate and resolve an issue after multiple attempts, the consumer has enough evidence in their back pocket to sue the agency and prove their case.”

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MONEY Benefits

Best Job Perk Ever? Startup Covers Vacation Tab for Workers

View over Kasbah to Tangier, Morocco
Robert Harding World Imagery—Alamy View over Kasbah to Tangier, Morocco

Free flights and hotels for trips that aren't work-related!

The San Francisco startup Betabrand describes itself as a “Crowdfunded Clothing Community.” The unique business model incorporates designs from its customers in addition to in-house employees, and items are produced and sold only after passing through a process involving public online feedback and the gathering of a critical mass of customers to agree to pre-order (or fund) it. This is how garments like “Ready Active Jeans,” which have specially lined pockets that supposedly stop hackers from scanning credit cards and passports, have come to market.

Hand in hand with Betabrand’s innovative model is a unprecedented job benefit that was brought to light recently by MarketWatch. Over the past year or so, the company has been making most of its purchases with a rewards-friendly corporate credit card, and Betabrand has been passing along the rewards compiled on the card to different workers, in the form of totally non-work-related vacations around the world.

So, yeah, Betabrand is handing out free vacations to employees, and neither the company nor the employee is paying a dime.

Betabrand CEO Chris Lindland told MarketWatch the idea came about last fall during a company happy hour, when it came up in conversation that many company workers had never traveled outside the U.S. He decided that enabling them to travel the world with company credit card reward points would simply be “a good team spirit, fun thing to do.”

Employees must apply for a trip and include details about where, why, and when they hope to travel. The company founders periodically choose a winner, who typically receives round-trip airfare, four nights’ hotel, and travel insurance—all covered by credit card rewards. Thus far, Betabrand workers have been rewarded with free trips to France, Japan, Iceland, and Morocco, among other destinations.

MONEY credit cards

I Raised My Horrible Credit Score 100 Points in 3 Months

stevanovicigor—Getty Images

Here's how.

After years of zero debt and paying off her credit cards every month, Kristen valued her high credit score. But that was before the tsunami of divorce and single parenthood made it all but impossible to maintain. Kristen had been out of the paid workforce when she was an at-home military parent living in Germany. Once in the States, she knew she needed to return to school to train for what she hoped would be a well-paying job.

But again, things did not go exactly according to plan. She had trouble finding work in her field as a graphic artist. She was working part time, “and I just fell behind.” Her student loans were in default, and she really didn’t see a way to turn things around without a dramatic new start. She decided to take the radical step of selling her car and donating most of her belongings. She mailed what she would need to her grandparents, and then she bought one-way tickets for her daughter and herself from her home in Nebraska to Louisiana, to live with them for a couple of months while she got on her feet.

She found a job that used some of the skills she went back to school to acquire, and she purchased health insurance for herself and her daughter. And, with that glimmer of hope, she made some calls to see what she needed to do to get her student loans out of default (she now pays $5 a month on an income-based program, but she knows it will reset much higher). She’s not even chipping away at the $46,000 she owes, since the total grows while she makes minimal payments, but at least she’s no longer in default.

Last February, she filed her taxes as soon as she had the necessary documents, because she wanted to use her tax refund to help her begin to establish better credit. She got a secured credit card from USAA, with a $250 limit, which she has since raised to $350. She wanted to automate payments to be sure she never had to worry about a late payment hurting her credit. (After all, she was getting this credit card to help her rebuild her credit.) Her daughter needed braces, and she would have a $212 monthly bill. But if she put that on the card, she would have had a credit utilization of almost 85% — and experts recommend no more than 30%, and preferably less.

A Plan to Improve Credit

So she came up with a strategy. The orthodontic expenses do go on her secured card, but a few days before that, she makes a payment of $212 on the account. So when she incurs the charge, it does not raise her credit utilization. There are a couple of other bills she does this way, being careful to pay the credit card account before she puts a purchase on the credit card. She said she does occasionally charge other small expenses, but she has paid off the balance every month. In a sense, she is using her credit card as you might use a prepaid debit card. However, while a prepaid debit card does not report to the credit bureaus, her secured credit card does. And if she needed to dispute a charge, prepaid cards aren’t bound to the same consumer protections that credit cards are (including secured credit cards).

Asked about her unique approach, Rod Griffin, Experian’s director of public education, says,”I can see no reason her strategy wouldn’t work, as long as the account is paid before the balance is reported by the lender.” He added, “I’m assuming [she] has verified that the secured account is being reported. It’s a good idea to verify that it is. While most secured accounts are, I’ve come across a rare instance in which it is not. If the account is not reported to at least one of the national credit reporting companies it won’t help her build credit, even if the account is paid in full each month.”

Kristen is doing that, as well as checking her credit score. She has seen her credit score (an Experian FICO score, provided by USAA) go up more than 100 points, from 426 to 529. Before her divorce, it was north of 700, and she’d like to get it there again. But in the meantime, “I’m trying to be smart with money.”

Finding Motivation, Making Mistakes

For her, that means using apps to help. She said graphic representations of her financial picture are more meaningful to her than columns of numbers, so she makes sure she quickly translates things “out of numbers and into pictures.”

She rented some furniture, in hopes that those payments will be reported to the credit bureaus (she had been told that they would). That, she said, was a huge mistake: “Now I am stuck with paying $37.35 a week until February 2016 which will be $935 more than what the furniture is worth new.” Worse, she looked at her credit report, and the furniture payments are not being reported. “The only things that I saw that are being reported is the USAA secured credit card and the program I have for getting my student loans out of default,” Kristen said. And she is now paying off some old accounts, and will be finished with those in September.

A steady income is helping Kristen catch up — but so did realizing she was spinning her wheels and getting nowhere. Moving in with her grandparents temporarily helped, and she was able to buy a car from her grandfather.

“I’m now able to provide — to be a responsible adult,” she says. And she’s making progress against debts and raising her credit score.

Consumers can get their credit reports for free once a year from each of the three major credit reporting agencies through When you’re trying to establish a credit-building plan, knowing what’s on your report, and ensuring the information is correct, can be a helpful first step. Many credit issuers and other sources also offer credit scores for free. Keeping an eye on your credit scores can help you track your progress, and work to adjust your course along the way as needed.

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