Pierre Money Mart Blog

What is Identity Theft? 

According to the FBI, identity theft is one of the fastest-growing crimes in the U.S. Studies show that about 1 in 5 families in the U.S. has been a victim of identity theft. It can occur in a variety of ways, including, stealing your Social Security or credit card numbers and then changing the address on your bills, using your information to impersonate you and then rent or buy products, using your personal information in criminal acts. According to the FBI, identity theft is one of the fastest-growing crimes in the U.S. Studies show that about 1 in 5 families in the U.S. has been a victim of identity theft. It can occur in a variety of ways, including, stealing your Social Security or credit card numbers and then changing the address on your bills, using your information to impersonate you and then rent or buy products, using your personal information in criminal acts.Worst of all, you don’t even know you have become a victim of this federal crime until months later, when you are turned down unexpectedly for a loan, or get a call from a collection agency about an account you never opened, or worse yet, a call from the police about a crime you didn’t commit. Suddenly you are a victim of identity theft.According to the FBI, identity theft is one of the fastest-growing crimes in the U.S. Studies show that about 1 in 5 families in the U.S. has been a victim of identity theft. It can occur in a variety of ways, including, stealing your Social Security or credit card numbers and then changing the address on your bills, using your information to impersonate you and then rent or buy products, using your personal information in criminal acts.Worst of all, you don’t even know you have become a victim of this federal crime until months later, when you are turned down unexpectedly for a loan, or get a call from a collection agency about an account you never opened, or worse yet, a call from the police about a crime you didn’t commit. Suddenly you are a victim of identity theft.Once a thief has tampered with your information, it can take months to restore your credit rating. It can also cost you money. That is why it is important to protect yourself before you become a victim.

According to the FBI, identity theft is one of the fastest-growing crimes in the U.S. Studies show that about 1 in 5 families in the U.S. has been a victim of identity theft. It can occur in a variety of ways, including, stealing your Social Security or credit card numbers and then changing the address on your bills, using your information to impersonate you and then rent or buy products, using your personal information in criminal acts.Worst of all, you don’t even know you have become a victim of this federal crime until months later, when you are turned down unexpectedly for a loan, or get a call from a collection agency about an account you never opened, or worse yet, a call from the police about a crime you didn’t commit. Suddenly you are a victim of identity theft.Once a thief has tampered with your information, it can take months to restore your credit rating. It can also cost you money. That is why it is important to protect yourself before you become a victim.Protect your mail… Do not leave your mail in your mail box. Thieves steal mail and use it to obtain credit in your name. If necessary, obtain a PO Box to protect your mail.

Average Credit StatisticsAs a company that helps the nation’s largest banks and financial institutions assess credit risk, Credit Score is often asked to describe the credit use of a typical consumer. In researching the answer, we discovered that consumers vary immensely in what types of credit they use and how they use it.As a company that helps the nation’s largest banks and financial institutions assess credit risk, Credit Score is often asked to describe the credit use of a typical consumer. In researching the answer, we discovered that consumers vary immensely in what types of credit they use and how they use it.By analyzing a large sample of credit file information on people who recently obtained new credit, Credit Score was able to survey the panorama of credit activity across the U.S. The following statistics reflect the average use of credit by today’s consumers.

As a company that helps the nation’s largest banks and financial institutions assess credit risk, Credit Score is often asked to describe the credit use of a typical consumer. In researching the answer, we discovered that consumers vary immensely in what types of credit they use and how they use it.By analyzing a large sample of credit file information on people who recently obtained new credit, Credit Score was able to survey the panorama of credit activity across the U.S. The following statistics reflect the average use of credit by today’s consumers.Number of Credit Obligations
On average, today’s consumer has a total of 11 credit obligations on record at a credit bureau. These include credit cards (such as department store charge cards, gas cards, or bank cards) and installment loans (auto loans, mortgage loans, student loans, etc.). Not included are savings and checking accounts (typically not reported to a credit bureau). Of these 11 credit obligations, 7 are likely to be credit cards and 4 are likely to be installment loans.

Past Payment Performance
On average, today’s consumers are paying their bills on time. Fewer than 4 out of 10 have ever been reported as 30 or more days late on a payment. Only 2 out of 10 have ever been 60 or more days overdue on any credit obligation. 85% of all consumers have never had a loan or account that was 90+ days overdue, and less than 10% have ever had a loan or account closed by the lender due to default.

Credit Utilization
About 48% of credit card holders carry a balance of less than $1,000. About 10% are far less conservative in their use of credit cards and have total card balances in excess of $10,000. When we look at the total of all credit obligations combined (except mortgage loans), 54% of consumers carry less than $5,000 of debt. This includes all credit cards, lines of credit, and loans-everything but mortgages. Nearly 30% carry more than $10,000 of non-mortgage-related debt as reported to the credit bureaus.

Total Available Credit
The typical consumer has access to $12,190 on all credit cards combined. More than half of all people with credit cards are using less than 30% of their total credit card limit. Just over 1 in 8 are using 80% or more of their credit card limit.

Length of Credit History
The average consumer’s oldest obligation is 13 years old, indicating that he or she has been managing credit for some time. In fact, we found that 1 out of 5 consumers who recently applied for credit, had credit histories of 20 years or longer. Only 1 in 20 consumers had credit histories shorter than 2 years.

Inquiries
When someone applies for a loan or a new credit card account – in short, any time one applies for credit and a lender requests a copy of the credit report – this request is noted as an “inquiry” in the applicant’s credit file. The average consumer has had only one inquiry on his or her accounts within the past year. Fewer than 7% had four or more inquiries resulting from a search for new credit.

Bad Credit Auto Loan

Average Credit Statistics

As a company that helps the nation’s largest banks and financial institutions assess credit risk, Credit Score is often asked to describe the credit use of a typical consumer. In researching the answer, we discovered that consumers vary immensely in what types of credit they use and how they use it.

By analyzing a large sample of credit file information on people who recently obtained new credit, Credit Score was able to survey the panorama of credit activity across the U.S. The following statistics reflect the average use of credit by today’s consumers.

Number of Credit Obligations
On average, today’s consumer has a total of 11 credit obligations on record at a credit bureau. These include credit cards (such as department store charge cards, gas cards, or bank cards) and installment loans (auto loans, mortgage loans, student loans, etc.). Not included are savings and checking accounts (typically not reported to a credit bureau). Of these 11 credit obligations, 7 are likely to be credit cards and 4 are likely to be installment loans.

Past Payment Performance
On average, today’s consumers are paying their bills on time. Fewer than 4 out of 10 have ever been reported as 30 or more days late on a payment. Only 2 out of 10 have ever been 60 or more days overdue on any credit obligation. 85% of all consumers have never had a loan or account that was 90+ days overdue, and less than 10% have ever had a loan or account closed by the lender due to default.

Credit Utilization
About 48% of credit card holders carry a balance of less than $1,000. About 10% are far less conservative in their use of credit cards and have total card balances in excess of $10,000. When we look at the total of all credit obligations combined (except mortgage loans), 54% of consumers carry less than $5,000 of debt. This includes all credit cards, lines of credit, and loans-everything but mortgages. Nearly 30% carry more than $10,000 of non-mortgage-related debt as reported to the credit bureaus.

Total Available Credit
The typical consumer has access to $12,190 on all credit cards combined. More than half of all people with credit cards are using less than 30% of their total credit card limit. Just over 1 in 8 are using 80% or more of their credit card limit.

Length of Credit History
The average consumer’s oldest obligation is 13 years old, indicating that he or she has been managing credit for some time. In fact, we found that 1 out of 5 consumers who recently applied for credit, had credit histories of 20 years or longer. Only 1 in 20 consumers had credit histories shorter than 2 years.

Inquiries
When someone applies for a loan or a new credit card account – in short, any time one applies for credit and a lender requests a copy of the credit report – this request is noted as an “inquiry” in the applicant’s credit file. The average consumer has had only one inquiry on his or her accounts within the past year. Fewer than 7% had four or more inquiries resulting from a search for new credit.

Some common credit mistakes

Increasing credit card limits. Beware! Credit card companies say they are rewarding your credit history by increasing your credit limit. This leaves you exposed to use your credit more and increase you debt. To refuse this increase of line of credit simply write or call the credit card company and refuse the increase.

Not knowing your interest rates and fees. Be sure you take the time to find out your interest rates and annual fees. (Fact, did you know that about 85% of you minimum monthly payment is interest). If you have high interest rates call the credit institution to see if you qualify for a lower interest rate promotion. If not shop around for a lower rate. You would not want to buy a $300 pair of shoes if you can shop around for the same jeans at another store for $100.

Not taking pride in your credit. Good credit is a valuable negotiation tool when you make large purchases such as a home, car, or home furniture. Challenged credit may slow down or stop you from buying such necessities. Try to budget you short and long term debt so you may increase your Credit scores.

Lengthening installment loans to get lower payments. This payment schedule lowers your installment payments but increases the amount of interest you pay over time. Thus, increasing the amount of overall payments over longer period of time. Try to pay installment loans in as short period of time and pay less interest. Be sure to budget your self accordingly.

Changing your credit card to Gold or Platinum. Most companies charge an annual fee for these higher status cards. Typically, $50 – $100 per year. Try turning these cards down and keep the use of you credit card for basic needs.

Never co-sign. When you co-sign you are not only responsible for your self, you are responsible for the other person you co-signed for. It also increase your income debt ratio which may count against you if you apply for a car or home loan.

Contact your lending institutions if you change your address and/or status. When you get married or divorced make sure you change your legal status. If you move update you information with the creditors and the major credit bureaus.

Minimum Purchase Rule. A lot of stores require a minimum purchase per transaction. This leaves the temptation to spend more money when you do not have to. Avoid putting yourself in this situation and avoid the credit card companies that also enforce these rules.

How Mistakes Are Made

When a credit report contains errors, it is often because the report is incomplete, or contains information about someone else. This typically happens because

• The person applied for credit under different names (Robert Smith, Bob Smith, etc.).
• Someone made a clerical error in reading or entering name or address information from a hand-written application.
• The person gave an inaccurate Social Security number, or the lender misread it.
• Loan or credit card payments were inadvertently applied to the wrong account or the wrong person.
• Auto Loan

Credit Reports

Credit reporting agencies maintain files on millions of people. Lenders making credit decisions buy credit reports on their prospects, applicants and customers from the credit reporting agencies.

Your report details your credit history as it has been reported to the credit reporting agency by lenders who have extended credit to you. Your credit report lists what types of credit you use, the length of time your accounts have been open, and whether you’ve paid your bills on time. It tells lenders how much credit you’ve used and whether you’re seeking new sources of credit. It gives lenders a broader view of your credit history than do other data sources, such as a bank or credit union’s own customer data.

Creating Your Credit Report
Your credit report does not really exist until you or a lender asks for it. It is then compiled by the credit reporting agency based on the information stored in that agency’s file. This information is supplied by lenders, by you and by court records.

Thousands of credit grantors – retail stores, credit card issuers, banks, finance companies, credit unions, etc. – send updates to each of the credit reporting agencies, usually once a month. These updates include information about how their customers use and pay their accounts.

Your credit report reveals many aspects of your borrowing activities. All pieces of information should be considered in relationship to other pieces of information. The ability to quickly, fairly and consistently consider all this information is what makes credit scoring so useful.

Improving Your Score

It’s important to note that raising your score is a bit like losing weight: It takes time and there is no quick fix. In fact, quick-fix efforts can backfire. The best advice is to manage credit responsibly over time.

Payment History Tips

• Pay your bills on time. Delinquent payments and collections can have a major negative impact on your score.
• If you have missed payments, get current and stay current. The longer you pay your bills on time, the better your score.
• Be aware that paying off a collection account will not remove it from your credit report. It will stay on your report for seven years.
• If you are having trouble making ends meet, contact your creditors or see a legitimate credit counselor. This won’t improve your score immediately, but if you can begin to manage your credit and pay on time, your score will get better over time.

Amounts Owed Tips

• Keep balances low on credit cards and other “revolving credit”. High outstanding debt can affect a score.
• Pay off debt rather than moving it around. The most effective way to improve your score in this area is by paying down your revolving credit. In fact, owing the same amount but having fewer open accounts may lower your score.
• Don’t close unused credit cards as a short-term strategy to raise your score.
• Don’t open a number of new credit cards that you don’t need, just to increase your available credit. This approach could backfire and actually lower score.

Length of Credit History Tips

• If you have been managing credit for a short time, don’t open a lot of new accounts too rapidly. New accounts will lower your average account age, which will have a larger effect on your score if you don’t have a lot of other credit information. Also, rapid account buildup can look risky if you are a new credit user.

New Credit Tips

• Do your rate shopping for a given loan within a focused period of time. Credit scores distinguish between a search for a single loan and a search for many new credit lines, in part by the length of time over which inquiries occur.
• Re-establish your credit history if you have had problems. Opening new accounts responsibly and paying them off on time will raise your score in the long term.
• Note that it’s OK to request and check your own credit report. This won’t affect your score, as long as you order your credit report directly from the credit reporting agency or through an organization authorized to provide credit reports to consumers.
  Types of Credit Use Tips 
  • Apply for and open new credit accounts only as needed. Don’t open accounts just to have a better credit mix – it probably won’t raise your score.
  • Have credit cards – but manage them responsibly. In general, having credit cards and installment loans (and paying timely payments) will raise your score. Someone with no credit cards, for example, tends to be higher risk than someone who has managed credit cards responsibly.
  • Note that closing an account doesn’t make it go away. A closed account will still show up on your credit report, and may be considered by the score.