The Advantage Advisor
Volume 3 / Issue 9/ 2008
This Issue:
Credit card offers
Get free credit monitoring service
Raise your credit score
Lawsuit may mean free credit monitoring
Monitoring your credit report is very important. Not only does monitoring ensure there are no errors on your credit report, it also helps you to ensure no one else is using your personal information to abuse your credit or open credit in your name.
Everyone is entitled to a free copy of their credit report from each of the three credit reporting bureaus — Equifax, Experian and TransUnion — once a year. But now a class action lawsuit may mean you can see your TransUnion credit report and score again and receive free credit monitoring service for a period of time.
The lawsuit was brought about by a group of consumers about 10 years ago. The consumers alleged that TransUnion violated the Fair Credit Reporting Act and state laws when it sold their private information to companies for the purpose of marketing. According to media reports, TransUnion representatives have denied any wrongdoing, but recently agreed to a preliminary settlement.
There doesn’t appear to be any danger of identity theft from the incident. However, it created a hassle for many consumers who found themselves flooded with unwanted mail offers.
Anyone who has had a credit card or loan between Jan. 1, 1987 and May 28, 2008 is eligible to register as part of the class action lawsuit.
Any consumer who wants to be a part of the settlement must register by Sept. 24, 2008.
During the registration process, choose one of several options you would like to receive once the courts approve the final settlement.
Everyone involved in the settlement will have access to their TransUnion credit report and score.
One option is to receive six months of free credit monitoring service and retain the ability for a cash disbursement, if there is going to be one. However, the possibility of a cash payout is slim because of the number of claimants, the amount of fees the company will have to pay, and a variety of other expenditures.
The second option is to sign up for nine months of a free, enhanced credit monitoring service that will allow you to see your insurance scores and use a mortgage simulator service. If you sign up for this option you give up legal rights to receive a cash payment or file a lawsuit on your own.
While a chance to look at your credit report and score is always a good thing, there are some who are concerned about the settlement.
Ed Mierzwinski of the U.S. Public Interest Research Group told Bankrate.com that he is concerned that TransUnion may try to “upsell” people into more products or trick them into buying credit monitoring at the end of the free term. He also said consumers appear to be giving up more legal rights by going with the nine months of enhanced credit monitoring.
If you want to be part of the lawsuit, you can file your claim by going to the settlement web site at www.listclassaction.com or by calling (866) 416-3470.
Pre-approved ... for what?
Piles of credit card offers from various banks clog your mailbox everyday. Mostly they are ignored, but sometimes a great rate catches your eye and soon you’re scribbling in all the required information, hoping to soon have a shiny, new, low APR card in your hands. But will you really get the offer you are expecting?
Probably not.
Most pre-approvals are taken from a list of qualifying candidates compiled by the three major credit bureaus (Experian, Equifax and TransUnion). Unfortunately, these lists are sometimes incorrect, which can cause offers to be sent to the wrong people. And even when the customer was correctly targeted, circumstances may change between the time that list was generated and the submission of the offer.
Plus, creditors only have to display a range of possible interest rates, so you’re never sure what you qualify for until you receive it.
Read all of the fine print. Check if the rate is fixed or variable, which balance calculation method is used, if there are annual fees, what the grace period is, the repercussions of falling behind (late/over-limit fees, default APRs), and other hidden fees (for balance transfers, cash advances, or even inactivity). If there is anything that you don’t understand, call the toll-free number that should be provided and ask for more information.
Also, pay attention to when the special introductory rate ends and what the interest rate would rise to at that time.
If you do apply and receive a card you do not want, cut it up right away. Do not make any purchases, but instead write a letter to the issuing company that you wish to close the account.
Ultimately, the best route is to become informed about your credit situation and seek out offers on your own.
Credit unions often have great deals, and you can compare many different cards at once on Bankrate.com. The proactive consumer will often get the best rates available, with a little legwork.
Dear Debt Monkey
Q: I have a credit card with a balance I’m trying to pay off. Is it a good idea to transfer this balance to a credit card with a lower interest rate?
A: Transferring a balance from one credit card to a new credit card, with a lower interest rate, might be a good idea as long as you educate yourself on everything the offer entails. According to Bankrate.com, there are certain things you need to be aware of:
The time frame of the offer – the low interest rate is probably only good for a set amount of time.
Know what the zero or low interest rate really covers – Your new low interest rate might only cover the balance you transferred and not any new purchases you put on the card.
Beware of hefty fees – You could be charged a fee based on the percentage of the balance you’re transferring. Read the fine print on the offer.
Watch out for bait-and-switch – Just because the offer said 0% interest, that doesn’t mean that’s the interest rate you’ll get. If you have a low credit score, you’re rate could be higher.
Always pay the new card on time – If you don’t pay on time, you’ll probably lose your new low rate.
Also, check with your current credit card. Some credit card companies don’t accept balance transfers as a form of payment.
For more information contact:
(888) 511-2227
Did you know ...
Your credit score is made up of several components. While there is no way to accurately calculate your own score, you should be aware of the factors that contribute to your score. Those factors are the length of your credit history, your payment history, how much debt you owe, if you’ve recently applied for new credit and the various types of credit you have.
In terms of your credit history, especially good credit history, you should keep credit cards open even if you don’t intend to use them. If you close a credit card with a positive repayment history, you are getting rid of your good credit history. Also, canceling the card will increase the amount of credit you’ve used in relation to your available credit. Generally speaking you should try not to utilize more than 30 percent of your available credit limit.
For more information about credit scores, visit www.myfico.com.
The Advantage Challenge
ACCS is challenging you to ...
Raise your credit score over the next year.
You can choose to raise your score by a certain percentage or by a number of points.
There are a few steps you can take to raise your score, but it will take time.
Check your credit report and correct any errors.
Pay all of your bills on time.
Pay down any existing debt, especially unsecured debt like credit cards.
Try not to accrue any new debt.
If you need help figuring out how to find more money in your budget to pay down your debt or to avoid wracking up new debt, call Advantage CCS for help from a certified counselor.
Resources
Federal Trade Commission can help with numerous consumer complaints and concerns. You can find the FTC online at www.ftc.gov or call the following numbers for:
Complaints: (877) 382-4357
Identity theft: (877) 438-4338
Other calls: (202) 326-2222