Rumors of Relaxed Credit Reporting Standards Vastly Overblown

Using credit responsibly is an integral part of your personal finance. Not only is credit a key factor in securing a mortgage when buying a home, vehicle or other major purchase, landlords and property managers invariably look at credit before approving new renters, as do insurers, utility companies and employers.

It’s not always easy to build and maintain an excellent credit score. That’s not to say it isn’t pretty straightforward. A few helpful guidelines are: to pay all bills on time, realize the importance of HAVING credit cards and open lines of credit but do not carry a balance, review credit statements for accuracy and your credit reporst regularly, live within your means.

There are occasions when your credit report and/or score may suffer such as during a medical emergency or extended hospitalization, catastrophic events like flood or fire, loss of job or change of employment. It’s often been suggested that these sort of occurances should not be allowed affect your credit score. Be aware that they do… and they will continue to do so.

Rumor of more lenient credit reporting standards seems to have been incredibly overblown. Tax liens, judgements, court ordered payments and medical debts WILL NOT BE EXCLUDED from your credit report as widely reputed in recent media reports.

So how might the FDICs more relaxed regulations for credit standards affect your home buying power? In this instance, likely not at all. Read on to see the actual changes that have been introduced.

New Credit Report Mandates: How They May Impact You

By John Voket

This month, the FDIC is reminding consumers that the three major consumer credit reporting companies — Experian, Equifax and TransUnion — have new standards to enhance the quality of the credit reports they produce.

The following changes are in response to a 2015 legal settlement requiring action by these companies to reduce errors on credit reports:

In July 2017, Experian, Equifax and TransUnion began removing tax liens (a legal claim on assets of a delinquent taxpayer) and civil judgment debts (court-ordered payment of damages) from consumer credit reports, if the information is incomplete.
These three bureaus also agreed to exclude medical debts on consumer credit reports until such debts are at least 180 days past due. As of September 15, 2017, the new 180-day waiting period gives consumers time to resolve medical billing issues.

Elizabeth Ortiz, the FDIC’s deputy director for consumer and community affairs says consumers can also take these simple precautions to build a credit history and preserve good credit scores:

Know the Score. Credit scores are developed by scoring companies, such as FICO (the Fair Isaac Corporation), based on repayment history and other information included in credit reports. The higher a person’s credit scores, the more likely he or she is to qualify for credit, rental housing, insurance and, in certain circumstances, employment.

Review the Report. Review your credit reports at least once a year to look for discrepancies and errors, as well as possible signs of identity theft or fraud.

Flag the Fraud. Warning signs of fraudulent activity include an unfamiliar credit card or loan listed in your name. Ortiz says the sooner a fraudulent account is identified in your credit report, the sooner you may be able to limit financial harm.

Order for Free. The Fair Credit Reporting Act requires all three nationwide credit reporting companies to provide a free copy once every 12 months upon request. To obtain your free credit reports, go to www.annualcreditreport.com or call toll-free 1-877-322-8228.

Editors Note: While it is recommended you check your credit reports for free once a year, you can actually keep tabs on your credit report at no charge 3 times a year by ordering a report from one of the three credit reporting agencies every 4 months.

A couple additional tips for maintaining a credit-worthy score are:

Never Use the Cash Advance Option
The prospect of quick cash is tempting, but credit card cash advances almost always come with hefty fees and high interest.

Don’t Close Old Credit Accounts
While this may seem counterintuitive, closing a card can have a negative impact on your credit by reducing credit-to-debt ratio and interrupting your credit history, both major d.

For more information, Call or Text: 602-999-0952
eMail: golfarizona@cox.net
Bill Salvatore / Arizona Elite Properties
Residential Sales, Marketing, and Property Management

Founder: AZVHV ⋅ MEMBER: Heroes Home Advantage
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