An Ounce of Prevention

I shouldn’t be surprised by the increased number of bogus offerings, threats and scare-tactics arriving in my inbox, mailbox and phone. Scammers are offering everything from face masks to toilet paper and expedited deposits of the stimulus payments. Identity theft and related scams often spike during times of crisis. So…desperate times require extra diligence on our part, to protect our identity and our hard earned money.

The three national credit-reporting companies, Experian, Equifax and TransUnion, are offering free weekly online credit reports through April 2021. By requesting a free credit report at https://www.annualcreditreport.com/index.action, an individual will get a report from all three companies with the single application.

By establishing a “myEquifax” account at equifax.com/personal/credit-report-services/free-credit-reports  or by calling 866.349.5191, individuals can receive six free credit reports every twelve months from Equifax, through December 2026…that is in addition to the one free report that can be obtained each year from all credit reporting companies at AnnualCreditReport.com.

While checking your credit report is an important habit, there are other things individuals can do to protect their identity and improve their score.

  1. Pay all your bills on time if possible. It may get difficult with layoffs and furloughs, but try to make at least your minimum debt payments by their due date every month to avoid hurting your credit score.
  2. Contact your lenders for help and ask about hardship options as soon as possible—ideally before you miss a payment. Lenders may be able to temporarily lower your interest rate or payment amount, or pause your payments for a period of time. Lenders may also be able to place your loans in deferment or forbearance, which would eliminate payments for a time; as a result, there would be no late payments to report to the credit bureaus. Under the CARES Act, when a consumer contacts their creditor before falling behind in payments, and reaches an agreement with the creditor to a modified payment plan (reduced payments or forbearance), then the creditor may not report late or missed payments to the credit reporting company as long as the consumer follows the agreement. That protection for the consumer lasts until the later of July 26, 2020 OR 120 days after the COVID-19 national emergency declaration ends.
  3. Check your credit regularly and make sure the information is accurate. You can identify any potentially fraudulent activity and respond to it before it damages your credit.
  4. Dispute inaccurate information immediately. Remember that disputes need to be made with each credit bureau where the disputed information appears.
  5. Contact your service providers. If you do not think you can pay your utility, cell phone, cable or other monthly bills, reach out to your providers to see if they offer flexible payment options during this time.
  6. Be extra vigilant about protecting your identity. If you fear identity theft may occur or has occurred in your name, you can also place a free security freeze on your credit file so lenders cannot gain access to it. This prevents people from applying for credit in your name. You can lift the freeze at any time, for free.
  7. Seek financial management help. The Iowa Concern Hotline (800.447.1985) can put you in touch with a financial consultant who will provide confidential information and discussion, free of charge.
  8. For those with investment or retirement accounts, U.S. market fluctuations could cause significant concern. Before you make any rushed decisions with your investments, consult a reputable investment professional who can look at the details of your situation and provide personalized financial guidance on what actions, if any, you should consider at this time. Not sure where to start? The professionals at the firm holding your investments or with your employer’s retirement plan can be a first contact for analysis of your situation.
  9. Make a budget and plan ahead. If you think current conditions may affect your income or finances, consider tightening your budget to help make sure you have enough funds to cover your expenses.

For more information about free help and guidance during these difficult times, check out https://www.extension.iastate.edu/iowaconcern/.

Brenda Schmitt

Brenda Schmitt

A Iowa State University Extension and Outreach Family Finance Field Specialist helping North Central Iowans make the most of their money.

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Credit Score Basics

credit cardYou hear the term credit score mentioned often, but how much do you really know about it?

Credit scores were first developed by Fair Isaac Company – FICO – and FICO is still the most commonly-used credit scoring system. FICO scores range from 300-850; the median score is about 720, which means that half of the population has a higher score and half has a lower score.

Credit scores are designed to predict how reliably you will pay your debts in the future. Lenders rely on them to decide whether to loan you money, and how high an interest rate they will charge.   Not surprisingly, the main factor in these predictions is how reliable you have been in the past.

Implication?  A cash-only lifestyle  may do wonders for your wallet, but it won’t boost your score.  If you rarely or never use credit, your credit score may be very low.

Fortunately, you don’t have to pay credit card interest to achieve a great score.  “Using credit” is not the same as “carrying a balance on your credit cards.”  People who pay off their credit card bills in full every month get the benefit of building a strong credit score, but without the cost of interest. Carrying a balance is expensive and when it exceeds 30-50% of your available credit, your credit score suffers.  An essential key to increasing your credit score is to pay your bills on time.

There is no quick fix for credit card debt.  You may hear or see ads for services promising an immediate repair of credit.  Your credit problem must be determined to be repairable for the companies to accept you as a client.  Repayment may result in added expenses for a service that will duplicate steps you can take yourself.  Changing a due date, requesting lower interest rates, closing the account and agreeing to a repayment plan.

Why does your credit score matter?  It affects SO many things:

  1. Whether you can borrow money in the future and what interest rate you’ll pay
  2. Your insurability and your insurance premiums
  3. Whether you will get hired for certain jobs
  4. Whether a landlord will rent to you

It is not free to check your credit score at www.annualcreditreport.com , but some credit card companies include it with their monthly billing statements and commercial credit score sites will give you a ballpark estimate.  Scoring methods vary from site to site.   You can check your credit score for a small fee at the same time you check your free annual credit report.  If you are planning to borrow funds for an auto or home purchase, knowing you have a higher than normal score can be a bargaining tool to obtain the lowest interest rate and best loan terms.

– Susan

(Edited 2/2/2020)

Barb Wollan

Barb Wollan

Barb Wollan's goal as a Family Finance program specialist with Iowa State University Extension and Outreach is to help people use their money according to THEIR priorities. She provides information and tools, and then encourages folks to focus on what they control: their own decisions about what to do with the money they have.

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