Hacked Again! Equifax was just hacked again and what does that mean to you? What does your credit score mean to you and how does it impact you when buying a home?
Whenever you need to borrow money whether to buy a house, car, or to get a credit card. Your credit is measured on the likelihood of repayment of the loan. Nearly every adult in the U.S. has a credit report and score, which is a reflection of your financial fingerprint and is almost as important as your bank account.
Your credit report and score determines not only if you can borrow money on credit, it is also factored into the terms In which you can borrow.
When there is breaking news that Equifax has been hacked, what does that mean? It means that someone has accessed your vital personal information in the Equifax database which includes personal information such as your social security numbers, date of birth,
current/past addresses and your work history. The hackers could also access your credit accounts, limits, and balances. All very important information that you hope hackers wouldn’t have.
In the most recent Equifax breach, prior to this one, Equifax offered assistance with freezing your credit so no-one could open up new credit in your name as well as credit monitoring to notify you when any activity on your credit was taking place. My recommendation would be to check your credit and sign up for the free Credit monitoring offered through equifax. If there has been any fraudulent activity on your credit, work with the credit reporting agency to clear that up.
Now let’s say you have not been the best steward of your credit report and now you want or need to clean it up, and your question is how do I go about it?
First off, you need to order all three credit reports and you can do that by going to Equifax.com where you can order all three of them or go to each individual website;Transunion.com and Experian.com.
Review your credit and the accuracy of the reports. There should be a place on each site where you can dispute the negative reporting. I cannot give you any advice on how and what to dispute, but I can tell you that it is the responsibility of the reporting agencies to validate the accuracy of the reporting and if the credit reporting agency is not able to validate the debt, they have to remove it.
For Example, there is an old medical collection placed on a credit report that reported over five years ago and it is has been disputed. The credit reporting agency will reach out to the collection company who placed the collection on your report. Let’s say the collection agency is no longer in business so they do not respond to the credit reporting agency, the credit reporting agency has to remove the negative reporting. Because there are three reporting agencies, you have to do that three times to each credit reporting agency…
When looking to buy a home, your credit is one of the most important elements to purchasing a home. For most people, buying a home is the biggest financial decision they will make in their life. I highly recommend if you are in the market to buy a home that you get pre-approved and discuss your financing options so you know where you stand before shopping for a home.
There are many myths about your credit score being impacted by banks looking at your credit reports too often. Each time you apply for a loan or request credit, the financial institution (aka Bank or Lender) will do a credit check. When a buying a home they do what they call a “Tri-Merge” where your three credit reports are pulled all at once and the lender will qualify you on the middle of the three credit scores. Most often, a third party to the lender will provide your credit reports to the lender.
One myth is that the credit score goes down each time the credit is pulled. Yes that is true, but only by one or two points and if your shopping for a loan and you have three or four mortgage financial institutions reviewing your credit at or around the same time, the credit reporting agency recognize what you are doing and the score is adjusted accordingly .
Where your credit score will drastically drop is when you have your credit checked a bunch of times from different types of financial institutions i.e. car dealership, credit card company, cell phone company, etc..
What really impacts your credit score is how much credit you have, length of credit accounts, balances on accounts, and credit inquiries. The perfect credit report will have at least four trade lines. One or two accounts that are over 24 months old. Your report should have at least one revolving account, which is an account like a credit card or line of credit where the account can be credit borrowed against and paid off. For the best score keep the revolving credit balance under 30% of the credit limit. You should also have an “Installment Account” which is like a car loan or mortgage loan. The longer you have had the installment loan and a payment
History, the better your score will be…
Again, your credit report is your financial fingerprint and can be your financial leverage. For more information, please contact us or click on the link below.