Are you a Junior? Merged Files may be giving you a Bad Credit Score…
Bad credit information can get on your credit report in many ways. This post will examine the issue known as “merged files” - which is what happens when your credit reports contain inaccurate or incomplete information, such as:
- an incomplete address
- you have a jr. at the end of your name - you could be confused with your namesake father
- a very common firstname and surname, such as a John Smith etc
The possibility of suffering from Merged files is very great if you have a common name, because the credit bureaus could easily insert credit information that doesn’t belong to you in your credit file. Of course you could correct the information with the credit bureaus, but the time lost could cost you in more ways than one. The credit bureaus would like to have you believe that the possibility of file mergers are rare - but this couldn’t be any further from the truth.
That’s because the credit bureaus do not verify information, they simply report what they have on file whether that information is accurate or not. When you apply for credit, a snapshot of your credit history is collected - such as loans and credit cards. The credit bureaus may only provide your first name, or the first seven digits of your social security number. Guess what happens if there’s another person in your area with the same first name or first seven ssn digits?
You can protect yourself by reviewing your credit reports periodically. If you have been denied credit when you know you have a decent score, ask to see the information used to qualify you.
Get a free copy of your credit report (minus the credit score) from annualcreditreport.com - remember to say no to all the stuff they try to get you to sign up for.
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Freezing Your Credit Report
In 2007, more than 8 million people were victims of identity theft. As a result, an increasing number of Americans are freezing their credit reports in an attempt to combat identity theft. Freezing your credit information can be an effective way of prevent identity thieves from damaging your credit by obtaining new loans or credit cards in your name. A major disadvantage of freezing your credit is that you will also be denying access to potential creditors who may need to use your credit score to determine your rates, such as insurance companies, potential landlords or employers.
When should I freeze my credit report?
It’s best to consider freezing your credit report if you are not going to be looking for a job, applying for insurance, credit or any other major purchases that you would need credit. A freeze essentially locks down your credit reports, and so no lender or creditor can get access to your credit reports without your permission. And this includes your credit scores. So without access to your credit reports or your credit scores, it’s highly unlikely that they would extend credit to someone who’s trying to commit identity theft on you.
Disadvantages of freezing
- No More Instant Credit - since your credit report is frozen, you won’t be able to get instant credit anymore because you have to remove the freeze before anyone can look at your files. If you are in the market for a major purchase that requires credit such as a house or car, you will have to remove the freeze beforehand.
- Cost - You will have to pay a one-time to the three major credit agencies: Experian, Equifax and TransUnion to place a freeze on your credit. This can cost anywhere between $5-$10 per agency, so that’s a rough total of $30. Additionally, when you need to “thaw” your credit, i.e. temporarily remove the freeze - you may have to pay another small fee to each credit bureau to allow potential creditors access to your credit file. You may also have to pay another small fee to re-freeze the credit reports.
Credit freezes are usually free to victims of identity theft. You will need to show a police report as proof. However please note that these costs are small compared to what an identity thief could do if they were able to obtain a credit card in your name.
How to Freeze your Credit Report
Consumers must send requests in writing, typically by certified mail, to each of the bureaus and provide such information as birth date and Social Security number. When you place a freeze, you’ll get a personal identification number from the bureau that you can use to temporarily lift it.
Equifax 800-525-6285; www.equifax.com; P.O. Box 740241, Atlanta, GA 30374-0241
Experian 888-397-3742; www.experian.com; P.O. Box 9532, Allen, TX 75013
TransUnion 800-680-7289; www.transunion.com; Fraud Victim Assistance Division, P.O. Box 6790, Fullerton, CA 92834-6790
Alternatives to Freezing
There are alternatives to freezes, such as a 90-day fraud alert if you’re not an identity theft victim and an extended alert if you are. The alert means that potential creditors are supposed to take certain steps to verify an applicant’s identity before offering credit, but the alert doesn’t block access to credit reports or scores. Click here to learn more about a service from Equifax called Credit Watch which places alerts on all your credit reports with the three major bureaus.
A freeze will still allow certain people access to your credit reports - mainly
- companies you already have accounts with
- anyone with a subpoena or court order
- law enforcement agencies
If you’re older with an established credit history, and you already have a few major purchases such as a house, car, a few open credit lines - then by all means you should consider freezing your credit report in an attempt to thwart identity theft.
If you’re a younger person with no credit history or a little credit history, you should consider alternatives such as the Credit Watch option by placing alerts on all your credit files that still allow potential creditors access to your credit, but they must contact you first.
Freezing credit reports can be an effective tool for fighting identity theft and credit card fraud.
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