Why do I have different credit scores from TrueCredit and Experian?

Posted by Caitlin on October 14th, 2009

The following post in our Reader Question series is an actual user submitted question. To maintain the integrity of the original question, we do not edit or change reader questions in any way.

Q: I have a 3 score report from True Credit and one from Experian. They have totally different scores. Why would this be? I am trying to get Identity Guard but have not had success with that.

A: Your credit score is calculated based on the information in your credit report, and you have three different credit reports, one from each of the three major credit bureaus. Since some businesses choose to report to only one or two of the three bureaus, it is likely that each of your three credit reports contains slightly different data, which would result in different scores. The credit bureaus use different formulas to calculate their scores, which is another reason for variation. Your credit score also changes as new data is added to your credit report, so if you request credit reports and scores from different bureaus at different times, that would account for further variation.

The varying scores provided by the credit bureaus can help you gain an understanding of your credit health. But the vast majority of lenders rely on the FICO scoring system, created by the Fair Isaac Corporation. You have three FICO scores, one based on each of your three different credit reports.

You can purchase your TransUnion and Equifax FICO scores directly from MyFICO. MyFICO also offers a service that monitors your Equifax credit report and Equifax FICO score and alerts you to any changes. Equifax offers a similar service that provides your Equifax FICO score, but monitors all three credit reports. Identity Guard monitors all three credit reports and provides all three credit scores as calculated by the CreditXpert scoring system, which is similar but not identical to the FICO scoring system. It is not possible for consumers to access Experian FICO scores at this time.

If you are particularly interested in your FICO score, the best option would be to obtain all three credit reports and your FICO score from Equifax. Assuming that the data is consistent across all three reports, it would be fairly safe to assume that your Experian and TransUnion FICO scores will also be quite consistent with your Equifax FICO score.

However, it is important to bear in mind that the information on your credit report matters more than any individual credit score. You can't necessarily anticipate how a particular lender will choose to calculate your score, but you can ensure that the data on all three of your credit reports is positive and accurate.

To learn more about credit reports and scores, see our reviews and comparison chart.

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163,000 Social Security numbers compromised in UNC data breach

Posted by Caitlin on September 28th, 2009

In July, a University of North Carolina researcher was unable to access a server containing information pertaining to a federally funded mammography study. That information included records on a total of 236,000 women, and Social Security numbers for about 163,000 of those women. Further investigation revealed that the system had been hacked as long ago as 2007. This past Friday, UNC began to notify the 163,000 women whose Social Security numbers were exposed. The delay occurred due to the need to investigate the extent of the compromise and determine which participants were affected.

Imagine being told that hackers have had access to your Social Security number for the past two years. Two years is more than enough time for an identity thief to open new credit accounts in your name, max them out with charges, and move on to the next victim. Meanwhile, unless you check your credit report regularly or subscribe to an identity theft protection service, you might be blissfully unaware of the debt that "you" have accumulated. At least, until you are denied a loan for a new house or car, or collection agents begin banging on your door. It's important that data breach victims be notified in a timely manner, but sometimes, as in this case, the breach isn't discovered until years later. The only way to immediately informed about any new, potentially fraudulent lines of credit in your name is to invest in credit monitoring or identity theft protection. A credit report monitoring service will alert you to any chances in your credit file, which will allow you to take action in response to any suspicious activity. An identity theft protection service will go beyond this basic level of protection to help prevent, detect and, if necessary, resolve cases of identity theft.

To learn more, see our reviews and comparison charts for credit report monitoring and identity theft protection services.

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Lower credit limits for California residents?

Posted by Caitlin on September 21st, 2009

MSNBC reports that a San Diego resident was told that his credit limit was lowered simply because he lives in California. Paul Smith recieved a letter from issuing bank HSBC informing him that, based on information obtained from Equifax and due to the current economic environment, the credit limit for his General Motors credit card would be lowered from $7,000 to $1,400. Smith contacted Equifax and discovered that, because he carried a $1,400 balance before the credit limit had been lowered, he now owed more than 51% of the available credit on the card, which caused his credit score to drop. Smith's credit report also showed that he had never been late with a payment and had always paid more than the minimum required. So Paul called HSBC and spoke with a customer service representative who explained that his credit limit was cut due to the financial situation in California, and that similar measures were being taken in Nevada, Florida, and Arizona. When reached for comment, an HSBC spokesperson stated, "As standard business practice, HSBC's card business adjusts credit criteria based on economic, market and other factors."

Depending on your balance, lower credit limits can often lead to a lower credit score, since the percentage of available credit that is being used is one important factor in calculating your score. For this and many other reasons, it's a good idea to monitor your credit report for any significant changes. Keep in mind that it's best not to carry a balance greater than 50% of your available credit at any given time. Check out our reviews and comparison charts to learn more about credit cards and credit report monitoring.

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Seriously, people, check your statements!

Posted by Caitlin on September 2nd, 2009

As you probably know by now, federal law limits your liability to $50 for unauthorized credit card charges. But that limit only applies if you notify your bank within 60 days. That's why it's absolutely crucial to check your bank and credit card statements regularly.

One Colorado retiree learned this lesson the hard way. Don Godding never looked at his statements. He simply made his minimum payments of $200 every month, without ever knowing his actual balance. So when an identity thief charged almost $11,000 to Godding's credit card within two months, Godding had no idea until it was too late. Since Goddard continued paying and never contested the charges, Bank of America assumed that they were legitimate, and when the card was overdrawn, Bank of America demanded $2,500 immediately. Since Goddard didn't have $2,500, he decided to transfer his entire balance to a Chase account. By doing so, he assumed complete liability for the debt, and now he's been forced to take a part time job to pay his $500 minimum each month.

There are protections for consumers, but you have to take on some degree of personal responsibility in order to benefit from those protections. Godding blames himself, and says, "Pay attention. Observe. Watch what you're doing." Take his advice, and check your statements often. For additional protection, you may want to consider credit report monitoring or identity theft protection.

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Consumer Reports advises college students on responsible use of credit

Posted by Caitlin on August 24th, 2009

In anticipation of the start of a new school year, Consumer Reports is blogging about personal finance issues for college students. Today's post kicks off the series by addressing credit card debt.

Some points worth noting:

• 84% of undergraduate students have at least one credit card, and more than half have four or more.
• Only 17% pay off their balance each month.
• The average balance is $3,173.
• Recently passed credit card reform will regulate credit card companies' aggressive marketing toward college students.
• The new rules will require consumers under the age of 21 to provide either a co-signer or documentation of their ability to repay card debt in order to obtain a new credit card.

Consumer Reports recommends that students begin building a good credit history by finding a credit card with no annual fee, using the card to charge a recurring expense, and paying off the balance in full and on time each month. If you are in the market for a credit card, check out our reviews and comparison chart. And if you're concerned about building and maintaining a good credit history, you may be interested in learning more about credit report monitoring.

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U.S. government gives away Social Security numbers

Posted by Caitlin on August 19th, 2009

In March, Holly Ramer received a letter from a debt collector demanding that she pay $7,306 in two days. But she didn't owe that money. Instead, the debt belonged to a Micronesian man who defaulted on a disaster loan from the U.S. Small Business Administration. Because that Micronesian man had the same Social Security number as Holly Ramer, his debt ended up associated with her credit file.

The Federated States of Micronesia, the Republic of the Marshall Islands and the Republic of Palau each has an independently operated Social Security Administration. In exchange for defense rights, the U.S. provides these nations with aid, including grants and loans after disasters. When grant and loan applicants provide their local Social Security numbers to federal agencies, the numbers are sometimes reported to credit bureaus. Two of the three Pacific Island nations use Social Security numbers with eight digits, rather than nine, and in some cases, computers automatically enter a zero to fill in the blank. That can create new numbers beginning with two zeroes, which makes them identical to numbers in New Hampshire and Maine. If your Social Security number starts with 002-6, 003-9, 005-7 or 007-8, it could match a number in Micronesia. Numbers that start 006-4 could match numbers in Palau. Those that start with 004 could match numbers in the Marshall Islands. Nobody knows exactly how many Social Security numbers overlap, but estimates show that there are roughly 135,000 possible matches. The U.S. Department of Agriculture is aware of the issue and claims to be working on a fix, but so far, nothing has been done.

Your Social Security number and your credit file can impact so many aspects of your life. Monitoring your credit or subscribing to an identity theft protection service are two ways to maintain some level of control and awareness over your credit and your name.

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International hacker gets busted

Posted by kent on August 18th, 2009

The US Department of Justice has indicted Albert Gonzalez for his part in a massive ID theft hacking operation. Maybe you know him by his other names: segvec, j4guar17, or soupnazi, but you probably don't. However, chances are that you've used at least one of the corporations that Gonzalez hacked, America's favorite purveyor of Slurpees and beef jerky: 7-Eleven. Using what the DOJ is calling "a sophisticated hacking technique called an 'SQL injection attack,'" Gonzalez managed to get around the network firewalls and grab over 130 million credit and debit cards from Heartland Payment Systems, supermarket chain Hannaford Brothers, and the aforementioned convenience store chain.

According to the DOJ:

"Gonzalez and his co-conspirators researched the credit and debit card systems used by their victims; devised a sophisticated attack to penetrate their networks and steal credit and debit card data; and then sent that data to computer servers they operated in California, Illinois, Latvia, the Netherlands and Ukraine."

As consumers, we expect that credit card transactions should be pretty secure. We trust that all our payment data is being locked away in a secure safe-house, never to be seen by criminal eyes. We expect that these corporations use the best security systems available. And maybe they do. Unfortunately, with hackers, it's an arm's race. Where there's a gap, they will exploit.

While corporate network security is beyond the control of everyday consumers, individuals can protect themselves with Identity theft protection and credit report monitoring. That way, even if your data does get hacked, there's a better chance you can control the damage.

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Phishing scams in plain English

Posted by Caitlin on August 12th, 2009

This video breaks down phishing scams as simply as possible, to ensure that everyone understands the risk and how to protect themselves.

As suggested in this video, you may want to consider anti-phishing software. You can learn which Internet security software includes spam and phishing protection by checking out our reviews and comparison chart. The video also suggests that you monitor your credit, which can be faciliated by a credit report monitoring service. You might also consider investing in an identity theft protection service, which can help protect you from the risks posed by phishing and similar scams.

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Are the monthly fees per person or per family?

Posted by Caitlin on August 3rd, 2009

The following post in our Reader Question series is an actual user submitted question. To maintain the integrity of the original question, we do not edit or change reader questions in any way.

Q: Are the monthly fees you cite per person or per family? The reason I ask is that I was recently told by Equifax that I was paying one monthly rate for monitoring my credit and one monthly rate for monitoring my wife's credit. Why? Because some of our credit cards were in her name, some in my name. I said two charges were outrageous and stopped their service. But now I wonder, since everyone's prices are about the same, whether another company would be any cheaper. What is your advice?

A: Since the three credit bureaus maintain credit files on an individual basis and do not merge the credit files of married couples, it is typical for credit report monitoring services to charge per person. As a married couple, some of your accounts and information are likely to overlap, but much of your credit history will differ, as will your credit scores. And if an identity thief were to open a fraudulent account in either your or your wife's name, it would only appear on one credit report. In order to get a clear picture of your current credit health and detect new account fraud, we would recommend that you and your wife each sign up for a credit monitoring service. Our credit report monitoring comparison chart should make it easy to determine which service best meets your needs.

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Your cash is no good here

Posted by Caitlin on July 29th, 2009

A popular Manhattan restaurant has issued a press release announcing its new "credit cards only" policy:

Carrying around cash is a thing of the past. Leave it to Commerce, Harold Moore's West Village hot spot, to modernize and go "paper-free," now only accepting credit cards as a convenience to its patrons. With robberies on the rise in the West Village, owner Tony Zazula also sees the switch as a safety precaution. It will eliminate the dangerous situation that employees face when walking to local banks with large sums of cash. So forget about that last-minute trip to the ATM and head to Commerce for a relaxing meal.

Could this be the start of a new trend? It is difficult, but still technically possible, to live without the convience of credit cards. But it doesn't look as though cash will be making a comeback any time soon. As our reliance on credit increases, so do the risks. It's important to use credit responsibily and to guard against credit card fraud. You may be interested in our reviews, comparisons, and FAQs if you'd like to learn more about credit cards, credit report monitoring, or identity theft protection.

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