Understanding Credit, Credit Reporting & Lifelock
One item has keeps coming up in several emails that I receive each week - understanding credit
scores, reporting and identity protection services such as Lifelock. I decided to add this page, not
to sell products; but to help you with these issues and hopefully give you a better understanding.
So here we go....
General Stuff
First off, there are three major credit reporting agencies: Equifax, Experian and Transunion. They
maintain a record of your present and past credit history by name, social security number, address
(previous addresses), employers and your loans, credit cards, charge accounts and the number of
times and when companies inquire into your credit history.
However, different lenders look at different reports while some look at all three - Capital One does
this, but Chase usually looks at Equifax. Anyway, 95% of all lenders and insurers (banks, credit
card, mortgage, store card, insurance, rental companies...even the credit account at the Firestone
Auto Repair) use MyFico for their scores. MyFico is short for My Fair Isaac which was the first to
use a program to take into account all of the above information and score it. Any other score, even
the ones you get directly from Equifax, Experian and Transunion don't mean anything - but we'll get
to their value in just a minute.
Lastly, women represent the majority of the population of the USA and also are the single most
powerful group of purchasers in the country. Unfortunately, whether you're a man or a woman,
companies offering you deals on credit cards, for example, can damage your score and hurt you
when it counts which is when you buy a home, refinance, buy a car, apply for insurance - in other
words, major purchases.
How Offers Can Hurt Our Score
The higher the amount of available credit you have versus your income has a direct impact on your
score. If that amount is too high, your score goes down. The amount of debt you carry on your
charge accounts also impacts your score unless its 20% or less of total available credit. However, if
you have 5 cards and 4 are at 10% but one is at 80%, that will have a negative impact. Just because
a card has a great deal to offer doesn't mean getting will not hurt you - it can.
Inquiries are when you apply for a product such as any of the ones above. The company making
the offer inquires to one or more of the credit reporting agencies. All three credit reporting agencies
keep a record of inquiries for one year - minimum. If you went shopping and applied for 4 store
charge cards, your score goes down - not by much. But say you decided to buy an automobile the
next week and you apply for credit, you may or may not get approved. However, if you do, the
interest rate will be higher because of the lower scores.
Speaking of buying a car...always negotiate price but never give your social security number until
you've made your decision. If you give it in applying to see what the payments would be at several
dealerships, then when you do buy, your score goes down and interest rate goes up. Same thing
with buying a house...stay away from companies offering to find you the best rates from several
companies - every one of those will result in an inquiry. Always try to go to the original loan source.
Using Credit Reports
You do need to check your credit reports from all three agencies at least twice year for mistakes - or
worse, identity theft. But which to choose?
OK, here is how we use the credit report providers.....If you're about to make a major purchase -
you'll need to go to MyFico because that's the only way you'll know what you're true score is and
they'll show you how it stacks up. But its $15.95 per report and you'll have to get one for each
credit reporting agency - and there are 3.
Because of the cost, we do not recommend doing this more than a few times. However, getting
your score this way will not get inquiries added to your record. Now, what about Scorewatch and
the other stuff? Most of their other products only involve Equifax and if you want the other two,
you'll have to pay more. So instead, go directly to Equifax here:
You can enroll in the program to monitor all 3 agencies for $14.95 per month. Keep in mind that the
Equifax score is the only score that's true BUT all of the other information is correct such as
accounts, balances, inquiries, etc. Therefore, you can monitor your credit and prepare for a major
purchase and then use MyFico when you are close! That's how we do it and it works.
Now, about Lifelock and other identity theft protection services.........
They are all a rip-off!
The main thing they all do is freeze your credit report - in other words, no one can inquire to your
credit report without your express consent. Guess what! Equifax will let you do the same thing as
will Experian and Transunion and all you have to do is go to their sites and they'll show you how!
Don't pay Lifelock and those other companies monthly fees to do what you can do yourself. You
also get $1,000,000 in identity theft protection from Equifax (just like Lifelock) through the service
mentioned above. If you don't believe me, read this: Review on Lifelock
I hope this information has helped you and it saves you money in lower interest rates.
scores, reporting and identity protection services such as Lifelock. I decided to add this page, not
to sell products; but to help you with these issues and hopefully give you a better understanding.
So here we go....
General Stuff
First off, there are three major credit reporting agencies: Equifax, Experian and Transunion. They
maintain a record of your present and past credit history by name, social security number, address
(previous addresses), employers and your loans, credit cards, charge accounts and the number of
times and when companies inquire into your credit history.
However, different lenders look at different reports while some look at all three - Capital One does
this, but Chase usually looks at Equifax. Anyway, 95% of all lenders and insurers (banks, credit
card, mortgage, store card, insurance, rental companies...even the credit account at the Firestone
Auto Repair) use MyFico for their scores. MyFico is short for My Fair Isaac which was the first to
use a program to take into account all of the above information and score it. Any other score, even
the ones you get directly from Equifax, Experian and Transunion don't mean anything - but we'll get
to their value in just a minute.
Lastly, women represent the majority of the population of the USA and also are the single most
powerful group of purchasers in the country. Unfortunately, whether you're a man or a woman,
companies offering you deals on credit cards, for example, can damage your score and hurt you
when it counts which is when you buy a home, refinance, buy a car, apply for insurance - in other
words, major purchases.
How Offers Can Hurt Our Score
The higher the amount of available credit you have versus your income has a direct impact on your
score. If that amount is too high, your score goes down. The amount of debt you carry on your
charge accounts also impacts your score unless its 20% or less of total available credit. However, if
you have 5 cards and 4 are at 10% but one is at 80%, that will have a negative impact. Just because
a card has a great deal to offer doesn't mean getting will not hurt you - it can.
Inquiries are when you apply for a product such as any of the ones above. The company making
the offer inquires to one or more of the credit reporting agencies. All three credit reporting agencies
keep a record of inquiries for one year - minimum. If you went shopping and applied for 4 store
charge cards, your score goes down - not by much. But say you decided to buy an automobile the
next week and you apply for credit, you may or may not get approved. However, if you do, the
interest rate will be higher because of the lower scores.
Speaking of buying a car...always negotiate price but never give your social security number until
you've made your decision. If you give it in applying to see what the payments would be at several
dealerships, then when you do buy, your score goes down and interest rate goes up. Same thing
with buying a house...stay away from companies offering to find you the best rates from several
companies - every one of those will result in an inquiry. Always try to go to the original loan source.
Using Credit Reports
You do need to check your credit reports from all three agencies at least twice year for mistakes - or
worse, identity theft. But which to choose?
OK, here is how we use the credit report providers.....If you're about to make a major purchase -
you'll need to go to MyFico because that's the only way you'll know what you're true score is and
they'll show you how it stacks up. But its $15.95 per report and you'll have to get one for each
credit reporting agency - and there are 3.
Because of the cost, we do not recommend doing this more than a few times. However, getting
your score this way will not get inquiries added to your record. Now, what about Scorewatch and
the other stuff? Most of their other products only involve Equifax and if you want the other two,
you'll have to pay more. So instead, go directly to Equifax here:
You can enroll in the program to monitor all 3 agencies for $14.95 per month. Keep in mind that the
Equifax score is the only score that's true BUT all of the other information is correct such as
accounts, balances, inquiries, etc. Therefore, you can monitor your credit and prepare for a major
purchase and then use MyFico when you are close! That's how we do it and it works.
Now, about Lifelock and other identity theft protection services.........
They are all a rip-off!
The main thing they all do is freeze your credit report - in other words, no one can inquire to your
credit report without your express consent. Guess what! Equifax will let you do the same thing as
will Experian and Transunion and all you have to do is go to their sites and they'll show you how!
Don't pay Lifelock and those other companies monthly fees to do what you can do yourself. You
also get $1,000,000 in identity theft protection from Equifax (just like Lifelock) through the service
mentioned above. If you don't believe me, read this: Review on Lifelock
I hope this information has helped you and it saves you money in lower interest rates.
Copyright 2009 People Succeed
Contact: bryan@peoplesucceed.net
Contact: bryan@peoplesucceed.net