Almost everyone is in on making credit scores easily available to American consumers.
Everyone except the consumers, that is.
At the urging of the Consumer Financial Protection Bureau (CFPB), credit card companies, credit reporting agencies and non-profit credit counseling agencies are working together to get more people to pay attention to their credit scores by making the scores easily accessible.
Consumer reaction to this unprecedented attempt to increase their financial knowledge – in most cases for free! – has been a collective yawn.
A recent survey by Bankrate.com said that 35 percent of consumers have never checked their credit reports and another 14 percent said they go more than a year without looking at the reports.
“Every consumer who seeks to make use of credit to help manage his or her financial affairs is affected by this industry,” CFPB spokesperson Moira Vahey said in an email response to questions from Debt.org. “Credit reports and scores can determine the terms of people’s mortgages, whether they qualify for auto loans, or if they are eligible for different credit cards.”
Identity Theft An Issue
And yet nearly half of America’s consumers either never check their score or haven’t looked in more than a year. That is surprising, especially given what has happened with security breaches in the past year and the potential for millions to be victims of identity theft.
In 2014, businesses like Home Depot (56 million shoppers affected), Target (70 million) and Chase (76 million households, 7 million small businesses) admitted to security breaches that put credit card and personal information in the hands of hackers. They could use that information to set up phony accounts and make purchases that end up hurting consumers two ways.
- If you don’t pay the bills that result from identity theft, they end up on your credit report and have a huge negative impact.
- If you do pay the bills, you’re out the money with no benefits from the service or product and the person using your stolen identity still has access to the account.
Checking your credit report is one way to determine if your identity is stolen. The government has mandated that every consumer is entitled to one free credit report a year from each of the three major reporting agencies, Experian, Equifax and TransUnion.,
Reports And Scores Are Free
Consumers can go to annualcreditreport.com to sign up for a free credit report, which will show your recent bill payment history; the status of your credit accounts; whether a bill collector is collecting money you owe; and whether there are public records of liens, judgments or bankruptcies against you.
“This latest breaches of consumer information underscores the importance of monitoring your accounts for unexpected or suspicious charges,” Vahey said.
There used to be a charge to take the next step and get your credit score, but there are plenty of places providing it free now. American Express, Discover, Citibank, Barclay, Bank of America and Chase are just a few of the companies with credit cards that entitle you to a free look at your credit score.
Credit counseling agencies, which provide 1.3 million consumers with information on debt consolidation and debt management plans, are the latest to join in providing credit scores as part of their service. FICO, the credit score most often used, reached an agreement with Experian to provide scores. Equifax and TransUnion are in discussions to do the same for their clients.
Employers In On The Issue
While consumers are deciding whether to bother checking in on their credit reports, banks, car dealers, insurance companies, cell phone providers, utilities and landlords, just to name a few, are doing it regularly. That is how primarily how they determine what interest rate to charge you.
Oh, and your future employer can look at your credit report, too.
Yes, businesses routinely check applicant’s credit reports before making a hiring decision. It speaks to the person’s reliability. It may not be a big deal to you if you skip paying a student loan or credit card bill, but it might be a big deal to a company looking at hiring you.
The CFPB says that there are some conditions employers have to meet if they’re going to use a credit report as a reason not to hire you. The employer must provide the consumer with a copy of the report beforehand. The consumer should review the report and if they spot any errors, ask that the errors be corrected.
“This allows consumers to correct errors in their credit report and prevent employers from taking adverse action against consumers based on incorrect information,” Vahey said.
Bill “No Pay” Fay has lived a meager financial existence his entire life. He started writing/bragging about it in 2012, helping birth Debt.org into existence as the site’s original “Frugal Man.” Prior to that, he spent more than 30 years covering the high finance world of college and professional sports for major publications, including the Associated Press, New York Times and Sports Illustrated. His interest in sports has waned some, but he is as passionate as ever about not reaching for his wallet. Bill can be reached at [email protected].
- Carrns, A. (2015, May 6) Millions Miss Out Because They Are ‘Credit Invisible’. Retrieved from http://www.nytimes.com/2015/05/06/your-money/millions-miss-out-because-they-are-credit-invisible.html?ref=topics
- Marte, J. (2015, May 4) Why waiting until you need a loan to check your credit is a huge mistake. Retrieved from http://www.washingtonpost.com/news/get-there/wp/2015/05/04/one-third-of-consumers-have-never-checked-their-credit-reports/