Credit report can help stop agency scam

Question: A collection agency contacted me saying I owe $900 on a Dillard's card opened in 1997. I never opened any such account at any time. What should I do?

- Sheila Maddox, Peoria


Answer: Get a copy of your credit report and check if a Dillard's account on it. If not, the call you received is probably from a scammer looking to steal personal info from you. Don't take their future calls.

If the account is on your report, call Dillard's and find out when/where the account was opened. If they can't prove it was opened with your signature; demand they remove it from your report. If they have a signature that means someone forged your signature and you must now prove that it wasn't you. One way is to prove you were in a different place at the time certain charges were made on the account.

Credit scores' link to insurance rates tested

Oregon is the latest battleground in an effort by consumer advocates to block insurers from using credit scores to set auto and homeowner rates.

On Nov. 7, Oregonians will become the first voters in the USA to decide whether to bar insurers from setting premiums based on such factors as credit history, debt load and bill-paying habits.

The insurance industry, which opposes the measure, is pumping millions of dollars into an ad campaign to defeat it. The outcome will be closely watched by other states that could come under pressure to take similar steps if the Oregon ballot measure succeeds. Hawaii, California and Massachusetts already have bans.

The battle comes as the use of credit scores — 92% of insurers factor them into auto rates, Conning Research & Consulting says — is under scrutiny elsewhere:

• The Michigan Court of Appeals will decide whether insurers can use credit scores to set rates. The state insurance department had barred such use of the scores, but its ban was struck down by a state judge.

• The U.S. Supreme Court has agreed to review lawsuits that complain that insurance companies failed to inform consumers that low credit scores led to higher rates. The lawsuits argue that failure to do so violated the Fair Credit Reporting Act.

• Oregon lawmakers in 2003 barred the use of credit scores to set rates for consumers with existing insurance policies. Measure 42 on the Nov. 7 ballot would go further by banning the use of credit scores in calculating rates for new customers.

"We've always been concerned that credit scores create unfair insurance rates," says Norma Garcia, senior attorney at Consumers Union. "And the use of them is increasing."

Only about one-third of consumers know that their credit history could affect their insurance premiums, a 2005 report by the Government Accountability Office found.

The industry argues that eliminating credit-based scoring would likely mean that people with good credit would end up paying higher insurance rates. But Garcia notes that in California, insurance rates have dropped since the use of credit scores was banned.

Insurers also argue that people with low credit scores are likelier to file insurance claims. "People who manage their finances well tend to also manage other important aspects of their lives responsibly, such as driving a car," the Insurance Information Institute says.

Consumers Union says there's no proof of that. A review of how credit scores are used to set rates in Texas found that the scores have more to do with economic status than with personal responsibility, says Birny Birnbaum, a former Texas insurance regulator who is executive director of the Center for Economic Justice, a consumer advocacy group.

Gov't bans surcharges on credit card transactions

THE Department of Trade and Industry has ordered a ban on surcharges on retail transactions using credit cards, debit cards and automated teller machine cards, starting Nov. 5.

The new policy is part of a campaign to protect consumers from unfair trade practices, Trade and Industry Secretary Peter Favila said.

Favila has issued Department Administrative Order No. 10, which prohibits any surcharge, extra or additional charge over and above the price tag on items purchased using cards for payment.

"A number of retailers have been charging differently on specific items, depending on the client's mode of payment," Favila said. "Usually, purchases using credit card are priced higher than those paid with cash, and this discriminates against the cardholders," he said.

He said that under DAO 10, all modes of payment available to consumers must always comply with the Price Tag Law.

"When the consumer opts to pay either through cash or card, he or she should pay only what is stated on the price tag," he said. "There should only be a single price tag indicating the cost of each item."

The order also requires that the option to pay in cash, card or installment be disclosed to the consumer if the information is not indicated in the price tag.

The price tag should be inclusive of the value-added tax for items covered by the tax. "It is unlawful to charge an additional tax over the price tag," Favila said.

DAO 10 specifies the proper format of an official receipt. It says the price opposite each item should already incorporate the amount of tax to be paid. The total cost that the consumer should pay is stated and the sum of the tax is shown as a separate item in the receipt. With INQ7.net

Improving your credit score

Credit scoring is a system creditors use to help them determine whether to give you credit. Creditors consider information about you and your credit experience to determine if you are a good credit risk. To add to the mystique, each creditor may use its own individual criteria to determine your credit worthiness and who will get the preferred rate.

Factors that determine your credit score include the following:

Do you pay your bills on time? How large is your debt, and is your debt near its credit limits? How long is your credit history? Have you applied for credit recently? How many times? What type of accounts do you currently have?

To improve your score, pay your bills on time, pay down outstanding balances, do not take on new debt and make sure your credit report is accurate.

It may take some time to improve your score, but the savings in interest charges when you make major purchases like a home or car can amount to thousands of dollars.

Don't wait for the reset -- start thinking about your credit now

Erin Littlefield's adjustable-rate mortgage resets in May 2008. She'll have to refinance -- and she's already dreading it. "We have a 4% interest (rate), so I know it's going to go up," said the Bryan, Texas, college English professor and first-time homeowner.

Although there's some uncertainty when it comes to her future mortgage payments, Littlefield is confronting the issue head-on: She's thinking about it now, starting to budget for increased costs before the ARM's interest rate goes up and higher payments are due.

Getting finances in order and keeping credit scores high are two keys for any homeowner contemplating refinancing. Especially for those who want to trade out of adjustable-rate loans, the ability to command the best interest-rate deals will go a long way to easing the sticker shock of higher payments.

The problem is, many Americans with mortgage rates approaching a reset will delay action until they find themselves unable to make payments, said Patrick Gavin, a certified mortgage planning specialist for The Gavin Group, part of Phoenix-based CFS Mortgage Corp.

"In America, we have an extra chromosome -- it's called procrastination," he said. "People say if I ignore the problem, I don't have to make a decision."

The best way for holders of adjustable-rate, interest-only or negative-amortization mortgages to avoid a grim situation: Refinance to a better deal on or before the adjustment date if the monthly payment is set to drastically rise.

Credit Card Loans

Credit card loans have got higher interest rates than most other consumer loan rates, owed mainly to loan defaults, overhead, and the cost of funding the loans. Unlike most other consumer loans, credit card loans are not secured by assets that could be seized if the consumer defaulted. In improver a card holder is more than inclined to utilize the full line of credit when his fiscal state of affairs worsens – precisely the riskiest clip for a creditor.

Credit card loans usually include other dearly-won benefits such as frequent flyer miles, purchase guarantees, and insurance. About 40 percentages of credit card holders utilize them only as payment devices and pay off their short-term loans before the issuer complaints interest. In malice of these expenses, credit cards are an of import net income centre for most issuers.

Applying for and receiving credit card

To make credit all you need is hold the credit card by your name and not by the parent’s name.

You might also discover that applying for a store credit card at a department or specialty store where you shop often is an option. Be sure that the company reports the status of its accounts to credit reporting agencies. A secured credit card is another option. Secured credit cards require that you place a certain amount in savings. They typically have smaller credit lines and higher interest rates.

A secured loan is guaranteed by the money you have in a savings account. It offers a lower interest rate. After you receive the credit card, make only small purchases, and pay the bill in full when it arrives and well before the due date. Doing this regularly over time helps build your credit history as a prompt payer. Never be late and never skip payments.

Don't fall into the seductive traps of credit cards-overspending and/or making minimum payments. By paying off the balance in full each month, you probably won't incur a finance charge "interest charged on an outstanding balance," but it's still important to keep rate in mind when shopping for a credit card.