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Free Credit Freezes and Other Legal Changes You Should Know

May 29, 2018 By Jeff Hoyt Leave a Comment

Free Credit Freezes And More Credit Changes You Need To Know

Although big banks stole most of the spotlight in the Economic Growth, Regulatory Relief, and Consumer Protection Act, the new law includes improved fraud alerts and credit freezes for consumers.

The law President Trump signed late last week had attempted to dismantle the post-credit crisis legislation known as Dodd-Frank. While it achieves some of that for big banks, it also gives consumers some additional tools to protect their credit reports.

Improved Fraud Alerts

Fraud alerts notify lenders that someone else may try to apply for credit in your name. Lenders must then take reasonable steps to verify the identity of anyone requesting credit in your name.

To take pre-emptive action, you can file an initial fraud alert with one of the three major credit bureaus (Equifax, Experian, and TransUnion). The bureau that receives the filing will notify the other two bureaus.

Under current law, initial fraud alerts only last for ninety days. The new act extends them to one year. Initial fraud alerts are still free, and they can still be re-applied after the time lapses.

If you are a confirmed victim of identity theft or fraud, you can place an extended fraud alert for up to seven years. That remains unchanged.

Free Credit Freezes

When you apply a credit freeze, no potential creditor can access your credit report to establish a new line of credit – even if you are the one making the request.

To apply for new credit, you must remove the credit freeze (also known as thawing the account) prior to submitting the credit application and reapply the freeze after the new account has been established.

You must freeze your account at each of the three credit bureaus individually.

Fees for Freezes

Currently, state laws govern the fees associated with each freeze or thaw. Typically, freezes and thaws are free for confirmed victims of credit fraud and range from $2 to $10 for other consumers.

In some states, you could pay up to $30 for each freeze or thaw. The new legislation eliminates these fees, making credit freezes free to all.

Critics note that by placing credit freeze policy under federal law, state laws with stronger protections may be pre-empted.

State or Federal Oversight

The battle between state and federal oversight is likely to continue – but, in the meantime, most consumers will benefit from free credit freezes and thaws.

Credit protections for children were also addressed in the new bill. Child identity theft usually isn’t spotted until many years later, when the child’s credit is already ruined.

Under the new law, representatives of minors aged sixteen and under can prevent theft by freezing their child’s credit for free. They may ask that a file be established for their child to freeze it, also for free.

Effective Dates

These changes are set to take effect in September — 120 days after the President signed the bill.

To be sure you understand the provisions of your state laws and how they may change, contact your state Attorney General’s office and any other state office responsible for consumer protection laws.

Remove Bad Information

Other reporting changes to the credit bureaus are designed to make it easier to remove adverse information from your credit report.

You may be able to remove defaulted private student loans from your credit report if you’re involved in a loan rehabilitation program through your lender and you make enough on-time payments to demonstrate both willingness and ability to pay off the loan on time from that point forward.

Veterans with Medical Debt

If you’re a veteran with medical debt, the new law offers further relief. Your medical debt can’t be reported to the bureaus until one year after the medical services took place.

Under current law, the grace period for reporting is 180 days from default of the medical debt.

If you’re a veteran with medical debt in collections, the debt must be removed from credit reports when the debt is paid, settled, or assumed by the Department of Veteran Affairs. Generally, removal takes seven years under existing law.)

If you’re on active military duty, you will also be able to sign up for free credit monitoring through the credit bureaus. Some sites already do this for free, but the new Act requires the offer.

The Takeaway

Whether you look at the dismantling of Dodd-Frank as correcting regulatory overreach or as the gateway to the next recession, the new bill’s effects on credit reports and credit freezes can help you in the short term – if you choose to use them.

Note that almost all of the legislative changes are passive. If you don’t use fraud alerts or credit freezes, the new rules have no effect on you at all.

Similarly, a lender isn’t going to remove a private student loan default from your credit report unless you ask.

Credit Management

Proper credit management requires action on your part. Check your accounts and your credit report regularly for signs of identity theft or fraud.

Promptly correct any errors that you find with the credit bureaus. If any of these new provisions can improve your credit score, apply them at the first opportunity.

Finally, take advantage of fraud alerts or credit freezes as they may apply to your situation. Either one may cause mild inconvenience, but that’s nothing compared to the misery of rebuilding your credit after criminals have destroyed it.

If you would like to monitor your credit to prevent identity theft and see your credit reports and scores, check out our free credit monitoring service.

This article was provided by our partners at moneytips.com. Photo ©iStockphoto.com/Robertindiana

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Millennials are Apathetic About Finance

November 15, 2015 By Amanda Blankenship 3 Comments

Millennials are facing some of the greatest challenges when it comes to personal finance and credit. The generation, although they are saving a great deal, they are not able to get their credit scores higher, nor are they able to really stabilize their finances.

Experian recently announced a survey of more than 1,000 millennials ages 19-34. They surveyed the group about a variety of personal finance topics. Questions ranged from information about their future views, to loan status, to credit knowledge, to use of technology.

How do millennials feel about finance?

Results from the survey showed that Millennials have conflicted feelings about their personal finances. Many of the people surveyed said that they are uncertain about the future of their finances but they lean toward optimism.

Another surprising number from the survey showed a general lack of knowledge about credit amongst millennials or feelings of apathy toward it. A vast majority of the generation have had their credit impacted in some way (positively or negatively) by credit scores, meaning the millennials are being turned down for leases and loans because their scores are so low.

The survey also showed that millennials are quick to try new technology, but they are quick to try new things instead of staying loyal to one company or product.

“Millennials are coming of financial age at a very unique time,” said Guy Abramo, President, Experian Consumer Services. “They’ve experienced a recession and the explosive advancement of personal technology. As a result, they’ve developed different views toward managing money, using credit and how they expect financial services to be delivered. The survey also showed that millennials will abandon loyalty for better products and services, which is something the entire financial services sector should consider; the pressure is on to keep innovating.”

However, the push to continue innovating may be having an impact on the generation’s reality. The generation is rather bad at realizing what their actual financial stance is. The estimate their credit score almost 30 points higher than it is in reality (654 [est.], 623 [actual]). Millennials also estimate there debt to be just higher than $26,000 when in actuality many of them are $52,000 in debt.

The innovative generation

The majority of millennials are using financial mobile apps to manage finances. Many of them have at least three apps on their phones to manage their finances.

Thirty-nine percent of millennials are familiar with non-bank lenders and 13 percent have already used that kind of service. Almost half of millennials surveyed said they would likely use one of those lenders in the future.

Being so innovative and willing to try new things prevents the generation from using traditional services to meet their needs. Loyalty to a specific brand is tough to sell to millennials. About 46 percent of them look for new companies to better suit their needs and 75 percent of the generation said they would switch accounts if it better suited them.

The verdict

After Experian conducted the survey, there are some clear facts surrounding the millennial generation. Many of them have a deficit of knowledge about credit. Many of them do not know their credit score and may even feel apathetic about the score.

The generation seems to have a bit of youthful angst when it comes to settling down with one company, especially if the company isn’t extremely innovative. It seems millennials will be facing the problems that come with new technology and ideas, but they will be facing many of the same old challenges other generations faced.

Did Credit Karma Just Fundamentally Change the Free Credit Score Industry?

February 4, 2015 By Jeffrey Strain 6 Comments

Credit Karma just changed the free report industry

Credit Karma recently announced it was now offering all its customers two free credit reports, an expansion from the one it had previously been offering. Most of those following Credit Karma and the free credit score and report industry looked at this move as nothing more than a convenient expansion of what the company had already been doing. What many have failed to see is this latest move may have fundamentally changed the free credit score and free credit report industry.

What is such a big deal about one company offering two credit reports instead of just one? Up until the announcement, all the major players in the industry were tied exclusively to one of the three credit bureaus. Credit Karma receives its free credit score and credit report information from Transunion. Credit Sesame receives its information exclusively from Experian. Quizzle received its information from Equifax. Credit.com aligns with Experian. Lending Tree gets its information from Transunion. Mint sources its information from Equifax. All the sites giving out free credit scores and free credit reports have, up to this point, only used a single credit reporting bureau.

That’s no longer the case. By offering a second credit report, Credit Karma instantly broke down the exclusive free score and report arrangement that has held between these sites and the credit bureaus for years. Doing so could be a much bigger deal than it first appears. The reason is the information each credit bureau keeps on each customer isn’t necessarily the same. If a consumer wanted to know a credit score or what was on a credit report more than once a year (everyone can receive a free credit report from each of the credit bureaus once a year at AnnualCreditReport), they had to sign up with multiple websites. One to find out their information from Transunion, another to find out their information from Experian, and yet another one to find out their information from Equifax. By becoming the first site to offer credit reports from multiple credit reporting agencies, Credit Karma has lined itself up to be the one-stop shop for this information.

Think about it. If you were a member of Credit Karma for your Transunion information and a member of Quizzle or Mint for your Equifax credit score and report information, with this new announcement, why would you need to keep your Mint or Quizzle account? You can now get both from Credit Karma, which gives consumers a reason to stay if a consumer ever decides he needs to choose between competing sites.

Credit Karma vs Quizzle: Which is Better for Free Credit Scores and Reports?

September 22, 2014 By Lori Kelley 16 Comments

Credit Karma and Quizzle: whihc is the better free credit score company?

There are so many websites out there that promise free credit scores and free credit reports. The problem is many of them walk the tightrope of being scams, and only a few of them tend to deliver on their promise. Credit Karma and Quizzle are two credit reporting websites that, for the most part, actually delivery on their promise of no cost credit scores and reports. While both deliver, they aren’t identical, and there are a few differences which exist between them.

What is Credit Karma?

Founded in 2008, Credit Karma is a website offering free credit and financial management services. The site provides free credit scores, free credit reports, and credit monitoring from TransUnion. When you visit this website, you can access your TransUnion credit score and reports at no cost. All the services offered at the site are completely free, and there is no need to pay or give your credit card to access any of their services. They are a legitimate site offering a solution to allowing you access to credit score and reporting.

What is Quizzle?

Just like Credit Karma, Quizzle was also launched back in 2008. Quizzle is also in the business of offering consumers information regarding their credit score and their credit standing at no cost. The site also doesn’t require a credit card or any other form of payment to access the services they provide. They are a legitimate company which offers consumers free access to their credit score and report.

What is the difference?

One can’t help but ask what are the differences between Credit Karma and Quizzle. The most significant difference between the two is the credit agency they use to create your score and report. Quizzle makes use of the credit agency Equifax, while Credit Karma makes use of the credit agency TransUnion. Since each of the three credit reporting agencies (Equifax, Transunion and Experian) are different, what their scores and reports contain can be different from the others.

Another difference between Credit Karma and Quizzle are the types of credit scores each provides. Of the two, Credit Karma offers consumers four scores (TransRisk Score, TransUnion Home Insurance Risk Score and TransUnion Auto Insurance Risk Score and VantageScore) while Quizzle only offers the VantageScore through Equifax. All these scores from both companies are FAKO scores.

Both companies also offer free credit reports, but again, these are from different credit reporting agencies. Consumers get their credit report from TransUnion when using Credit Karma, and it can be accessed as often as once a week. Consumers get a report from Equifax when using Quizzle, but can only have access to it every 6 months.

Of the two companies, Credit Karma is generally regarded as having the better combination of credit tools and access to the scores and reports, but a lot depends on the consumer’s individual needs. It also depends a lot on which credit bureau they want to see the information obtained from (Experian free credit score information can be found at Credit Sesame). While in general terms the two companies appear to be almost the same, there are some key differences which favor Credit Karma over Quizzle for many people.

Is Credit Sesame a Scam or Legit?

March 12, 2014 By Lori Kelley 6 Comments

Your credit score is important for a variety of reasons. This score can have a huge impact on how much you’ll end up paying in interest on loans, sometimes with a difference of tens of thousands of dollar, depending on how good your FICO score is. For that reason, people who are looking to take out a home mortgage or car loan are rightly concerned to know their credit score.

Since credit scores cost money if you get them directly from the credit bureaus which keep them, consumers looking to find out their score often come across sites like Credit Sesame that offer free credit scores. Anytime the word “free” and financial information go hand-in-hand, you should question the legitimacy of the website and offer to protect your finances. Your should begin to ask questions like, “Is Credit Sesame a scam?” You should also wonder if Credit Sesame is safe and secure. In order to determine the answer to these questions, it’s important to know how their free credit offer works.

Credit Sesame was launched in 2010, and has a business model that’s much like that of Credit Karma. They provide a number of financial services which helps you understand your credit score standing. While they give you a score in generally the same way as Credit Karma does, the way that the scores are generated is a bit different. Credit Karma uses Transunion data to generate their score while Credit Sesame uses data information generated from Experian.

In doing so, they do not charge money or force you to sign up with a service in order to access to your credit score. Instead, they show advertising and perform lead generation for other companies in order to make their money. As you use their site, you may come across offers to lower your mortgage payment through refinance, or a credit card offer that may have a better interest rate than your current card. If you happen to sign up with one of these offers, Credit Sesame gets paid for the referral, and this is how they earn their money. It’s a legitimate business model which means the offer is not a scam, but it’s important to understand exactly what you’re getting since it might not be what you think.

One of the big issues to be aware of is that the credit score you receive from Credit Sesame is not your FICO credit score. If you are looking for an accurate score because you’re going to be taking out some type of loan, the score that you receive from this service could be higher or lower than your real FICO score. Instead, you are getting what is called the Experian National Equivalency Score.

The question becomes, “Why wouldn’t they use your real FICO score?” The reason is that your real FICO score costs about $20 to obtain which would create a cost that would make their business model based on advertising and lead generation fall apart. The reality is they couldn’t afford to pay for this and keep the credit score free. If they tried, they would go out of business. So what they do is license a less expensive version of your credit score which will give you an approximation of your FICO score, but not your exact score. It’s a trade-off that could or could not be acceptable depending on why you need access to your credit score. So, while you will be getting a free credit score, you won’t be getting the actual credit score that you probably thought you would be getting.

The other big issue is that you need to turn over sensitive financial information to this third-party company in order to get the free score. That leaves open one more possible way to have your financial information breached than if you obtained this information yourself. There are a number of ways that you can get your credit report for free without having to use a third-party company.

In the end, Credit Sesame is legit. It’s not a scam and you can get a credit score for free without having to give a credit card number to obtain it. You will get a score that is similar to your true FICO score, but it won’t be the same, and you won’t know if it’s higher or lower than the real one.