Why Credit Card Life and Disability Insurance is a Rip-Off
Chances are, when you apply for a credit card you will be asked if you want to enroll in additional life and disability insurance. If you don’t choose to enroll, rest assured the credit card company will call you a few months down the road and try to get you again.
You will be told that in case of death, critical illness or disability, your credit card payments will be taken care of, relieving you and your family of an additional burden. All you need to do is pay a certain percentage of your monthly balance as an insurance fee.
What you’re not told is that in such an unfortunate event, your policy would only cover your minimum payments - typically 4% of your balance, not your whole debt. You better believe interest will continue to accrue on the remainder of your balance. If you are able to return to work later, you will still be responsible for the remainder of the balance, on top of the medical bills you recently incurred. Essentially the financial institution is asking you to pay premiums on a policy that protects itself. You as the credit card (or loan, or mortgage) holder are not the beneficiary. Other than peace of mind, you don’t gain anything from such insurance.
It is the standard policy of many banks to include this type of coverage in personal loans. Most borrowers are not aware of this and unwittingly sign up. If that’s not bad enough, the bank receives up to 40% commission on reselling you this insurance policy simply for signing you up. You’re better off going directly to an insurance company and springing for a whole life policy that will benefit your family, cover all your debts, not just one and will cost you less money.
Credit lenders are aggressive with these offers, and when you initially refuse, often push you into a free introductory period. Don’t take the bait. These policies are notoriously difficult to cancel - you have to deal with the insurance company itself, so your bank’s customer service department won’t be able to help you. And it can be tough to even find contact information for the insurer.
Be careful to read the terms and conditions on credit card and other loan agreements before signing anything, and make sure your banker explains your agreement fully. When pushed to accept additional insurance, remember to just say “no.”
Credit Card Insurance - What Do They All Do?
Most major credit card issuers now offer their members a variety of different free insurance programs. It is highly recommended that you review the insurance terms of your credit card agreement as in certain circumstances the credit card insurance offered by your card issuer may cover situation beyond those you may originally have thought.
The major credit card insurance programs offered include:
Purchase Protection
If you purchase a product on your credit card that is later damaged, lost or stolen, you should be able to reclaim all or part of the purchase price cost from the insurance policy. Not only is this a useful protection to have if you purchase expensive or fragile products, but can also be a very good additional insurance to any home contents insurance policy you have.
Fraud Protection
Policy covers you should you be the victim of fraudulent use of your card. With the rise of identity theft, and the ever increasing Internet fraud taking place, this policy not only covers the traditional fraud methods but should also cover you for any Internet or telephone fraud.
Stolen Card Protection
Provided you report your card stolen at the first opportunity you have once you have become aware of your card’s theft, this policy should reimburse you for any transactions processed on your card following your last genuine transaction.
Price Protection
Not offered by all card providers, basically this policy will reimburse you the difference between the price you paid for a product and the cheaper price of the same product you later found elsewhere.
Travel Insurance
If you purchase your holiday on your credit card there are two useful beneficial insurances you should check to see if you have. The first is a cancellation policy, which covers you in the event that you need to cancel your holiday between the period of purchasing the holiday and the date of travel.
The second is holiday accident insurance, which should cover you in the event that you have an accident – including emergency accident evacuation - or are killed on holiday. Both of these are very useful to have as they can be a considerable extra on your holiday travel expenses if purchased independently.
Obviously all of the above credit card insurance schemes are subject to time and monetary limitations, so make sure you check these out. Additionally, you should also make sure that any purchases or use of your credit cards outside of the country of issue are also covered by the policy – as, in some cases, they are not.
Car Insurance and Your Credit Score
Did you know that your car insurance premiums may be affected by your credit score? Well, they can, and more and more automobile insurance companies are turning to this new system of premium determination. Not all companies are using this new system but many are, and if your company is using it, you should know a few things.
There is a philosophy behind this system. Some consumers may not agree with it, but there is one. After years of data collection, research, and study some car insurance companies have concluded that those individuals who have low credit scores are also the individuals who file the most claims. This assertion leads to some interesting questions, the most notable being: Do people with lower credit scores drive more poorly than those with higher scores?
The answer to that question is debatable. It might very well be that car insurance companies receive more claims from lower credit score individuals for reasons that have nothing to do with accidents. It is entirely possible that these same people live in communities where auto theft or vandalism is more prevalent than in other communities. There is also some debate over fraudulent claims, which would increase the overall number of claims associated with those who have lower credit scores.
Of course there is a flip side to this. What about those individuals who have low credit scores but have never had an accident or filed a claim? Is it fair for car insurance companies to increase their premiums? This is the crux of the debate, whether or not it is fair for an entire group of people to be penalized for the actions of a few.
In the past, car insurance companies have often used this broad stroke approach to setting premiums. For instance, we all know that younger drivers are usually assessed a higher premium, and this applies whether the driver in question has ever had an accident or not. All younger drivers pay more, or so it seems, and there is evidence that these younger drivers do have more accidents than people who are older.
On the issue of using credit scores, however, as a basis for determining the car insurance premiums that you may have to pay, there are a couple of things you can do. First, you should review your credit reports and scores to make sure they are accurate. You might be surprised at how often mistakes or omissions are found in these reports. Another option is to ask your car insurance company if they are using this system. You may find it more economical to switch to another company that does not use credit scores as a premium setting module.
Lastly, if you discover your company is using this model, you may want to sit down with your car insurance representative and ask him or her for a waiver. This will only work if you have a clean driving record. They may be willing to offer you a better rate rather than lose you as a customer.
Credit Protection Insurance - Just Another Consumer Rip-Off
Credit protection insurance is a good example of a consumer rip-off that affects millions of people, yet gets little attention in the financial media. Simply stated, you should NEVER buy “credit protection insurance,” or a “payment protection plan” or any other similar type of credit-related insurance. Let’s take a look at how these programs work and why they are a bad deal for the average consumer.
First, let’s dispense with the scam version of this insurance. With identity theft in the news so much lately, con artists have set up telemarketing boiler rooms to call people and try to scare them into buying worthless credit insurance products. Representatives will try to convince you that you’re at risk if someone gets hold of your card and starts making fraudulent purchases in your name. When they call, they may even pretend to be from the “security department” of your bank. In fact, they may actually be part of an identify theft ring, with the goal of getting you to disclose personal information over the phone. Or they may simply be trying to make a fast buck by selling you an insurance policy that you absolutely don’t need.
Under Federal law, you are limited to a maximum of $50 liability for unauthorized use of your credit card. If you didn’t authorize a charge, don’t pay it! Follow your credit card bank’s procedure for disputing bogus charges. You simply don’t need insurance to protect yourself from a situation that is already covered by Federal law!
Now, what about those “payment protection plans” offered directly by the big credit card banks? These are plans that promise to cover your minimum monthly payments for an extended period of time (usually 12-24 months) if you get laid off from your job, become hospitalized due to accident or illness, or become disabled. On the surface, a plan like this sounds like a pretty good idea. After all, how could you keep up with your payments if you suddenly lost your job or became too ill to work?
Of course, you should not be carrying balances on your credit cards anyway. If everyone paid their balances every month in full, then credit protection insurance would not even exist in its current form. You are charged for the insurance based on the amount of debt you’re carrying on the card, so if the balance is zero, then there is no fee. In fact, some bank representatives use this as part of the sales pitch when trying to entice people to sign up for that “free 3-month trial” on their payment protection plan! They attempt to talk you into adding the insurance now, while you don’t need it and when there is no cost, in the hope that one day you will start carrying a balance. By then, you’ll probably have forgotten you signed up, and you’ll wonder what those mysterious charges are on your statement every month.
If you do carry balances on your cards, credit protection insurance is still a very bad deal. To see why, let’s look at the math here. A typical loss protection plan costs $0.85 for every $100 of balance carried on the card. So if you’re carrying a debt of $5,000 on the credit card, it will cost you $42.50 per month to buy the insurance. Over the course of 12 months, you will spend $510 under this scenario. That’s equivalent to paying an extra 10% in annual interest!
A light bulb should be shining over your head right about now. Why not take that same $42.50 per month and use it to pay down the balance faster? Good question. When you consider that most consumers who have credit protection carry it year after year, without ever becoming eligible for a claim against the insurance policy, the amount of wasted money can add up to a truly staggering sum.
Continuing with our $5,000 example, with a typical minimum payment of $125/month, it will take more than 26 years to pay off the balance in full, at a cost of $7,115.42 in interest. By applying that extra $42.50 per month that would otherwise go toward the insurance, for a total monthly payment of $167.50, you’ll have the debt paid off in only 40 months! And you’ll have saved $5,435.22 in interest charges. It simply makes no sense to waste this money , especially when you consider that the credit protection plan is normally only good for 12-24 months anyway.
There’s another important factor involved here. Credit protection is also a bad deal because the eligibility requirements are so very restrictive. When you read the fine print, you’ll realize that there are all kinds of situations that aren’t covered. Let’s say, for example, that you’ve been fighting a medical condition for some time. So you buy the insurance thinking it’s a good idea. Eventually, you end up in the hospital for treatment and recovery. Can you breathe a little easier knowing your credit card payments are covered? Nope. Most of these policies have exclusions for pre-existing conditions. And there are numerous other loopholes that allow the bank to deny your claim under the policy. In view of the lousy math and the restrictive nature of this type of insurance, these programs should really be named “bank profit protection” instead of “credit protection insurance.” Instead of spending good money on an insurance plan that you will probably never use, you’re far better off applying that same amount toward paying off the debt early.
Charles J. Phelan has been helping consumers become debt-free without bankruptcy since 1997. A former senior executive with one of the nation’s largest debt settlement firms, he is the author of the Debt Elimination Success Seminar™, a five-hour audio-CD course that teaches consumers how to choose between debt program options based on their financial situation. The course focuses on comprehensive instruction in do-it-yourself debt negotiation & settlement designed to save $1,000s. Personal coaching and follow-up support is included. Achieves the same results as professional firms for a tiny fraction of the cost.
Do You Need A Credit Insurance?
What is Credit Insurance?
To define, Credit Insurance is an insurance policy associated with a specific loan or line of credit that pays back some or the entire amount owed should certain things happen to the borrower, such as death, disability, or unemployment. Like any other insurance policy, the costs, called a “premium” for the credit insurance are usually charged monthly by the insurer.
Credit insurance is not mandatory and it’s illegal on the part of the lender to include it in the loan without the borrower’s permission. The borrower has every right to say no to credit insurance. However, it’s always good to have your payments insured in case of secured loans because you might end up loosing your home if you default on the payments of your secured loan.
When do you need credit insurance?
Secured loans generally require credit insurances. This is because the repayment period for such loans is generally long. It can stretch from 5 to 30 years. Ad anything unforeseen, unanticipated, unplanned and unfortunate can happen in this long period. So, to be on the safer side, borrowers opting for secured loans should go for credit insurance.
Credit insurance for secured loans can be of the following types:
Credit Life Insurance- In event of death, this insurance will pay off the whole or a major portion of your outstanding amount on secured loans.
Credit Disability Insurance- This covers accidents, illness and other injuries that might happen in the course of secured loans.
Involuntary unemployment Insurance- This will make the payments on your secured loan in case of job loss or business failure.
Credit Property Insurance- This is the most apt insurance cover for secured loans. It protects the property that is used to secure a loan in the case it is lost or destroyed.
It’s said that protection is always better than cure. The same applies in case of secured loans. So, go for a protection cover in shape of credit insurance and play safe.
Credit Protection Insurance - Just Another Consumer Rip-Off
Credit protection insurance is a good example of a consumer rip-off that affects millions of people, yet gets little attention in the financial media. Simply stated, you should NEVER buy “credit protection insurance,” or a “payment protection plan” or any other similar type of credit-related insurance. Let’s take a look at how these programs work and why they are a bad deal for the average consumer.
First, let’s dispense with the scam version of this insurance. With identity theft in the news so much lately, con artists have set up telemarketing boiler rooms to call people and try to scare them into buying worthless credit insurance products. Representatives will try to convince you that you’re at risk if someone gets hold of your card and starts making fraudulent purchases in your name. When they call, they may even pretend to be from the “security department” of your bank. In fact, they may actually be part of an identify theft ring, with the goal of getting you to disclose personal information over the phone. Or they may simply be trying to make a fast buck by selling you an insurance policy that you absolutely don’t need.
Under Federal law, you are limited to a maximum of $50 liability for unauthorized use of your credit card. If you didn’t authorize a charge, don’t pay it! Follow your credit card bank’s procedure for disputing bogus charges. You simply don’t need insurance to protect yourself from a situation that is already covered by Federal law!
Now, what about those “payment protection plans” offered directly by the big credit card banks? These are plans that promise to cover your minimum monthly payments for an extended period of time (usually 12-24 months) if you get laid off from your job, become hospitalized due to accident or illness, or become disabled. On the surface, a plan like this sounds like a pretty good idea. After all, how could you keep up with your payments if you suddenly lost your job or became too ill to work?
Of course, you should not be carrying balances on your credit cards anyway. If everyone paid their balances every month in full, then credit protection insurance would not even exist in its current form. You are charged for the insurance based on the amount of debt you’re carrying on the card, so if the balance is zero, then there is no fee. In fact, some bank representatives use this as part of the sales pitch when trying to entice people to sign up for that “free 3-month trial” on their payment protection plan! They attempt to talk you into adding the insurance now, while you don’t need it and when there is no cost, in the hope that one day you will start carrying a balance. By then, you’ll probably have forgotten you signed up, and you’ll wonder what those mysterious charges are on your statement every month.
If you do carry balances on your cards, credit protection insurance is still a very bad deal. To see why, let’s look at the math here. A typical loss protection plan costs $0.85 for every $100 of balance carried on the card. So if you’re carrying a debt of $5,000 on the credit card, it will cost you $42.50 per month to buy the insurance. Over the course of 12 months, you will spend $510 under this scenario. That’s equivalent to paying an extra 10% in annual interest!
A light bulb should be shining over your head right about now. Why not take that same $42.50 per month and use it to pay down the balance faster? Good question. When you consider that most consumers who have credit protection carry it year after year, without ever becoming eligible for a claim against the insurance policy, the amount of wasted money can add up to a truly staggering sum.
Continuing with our $5,000 example, with a typical minimum payment of $125/month, it will take more than 26 years to pay off the balance in full, at a cost of $7,115.42 in interest. By applying that extra $42.50 per month that would otherwise go toward the insurance, for a total monthly payment of $167.50, you’ll have the debt paid off in only 40 months! And you’ll have saved $5,435.22 in interest charges. It simply makes no sense to waste this money , especially when you consider that the credit protection plan is normally only good for 12-24 months anyway.
There’s another important factor involved here. Credit protection is also a bad deal because the eligibility requirements are so very restrictive. When you read the fine print, you’ll realize that there are all kinds of situations that aren’t covered. Let’s say, for example, that you’ve been fighting a medical condition for some time. So you buy the insurance thinking it’s a good idea. Eventually, you end up in the hospital for treatment and recovery. Can you breathe a little easier knowing your credit card payments are covered? Nope. Most of these policies have exclusions for pre-existing conditions. And there are numerous other loopholes that allow the bank to deny your claim under the policy. In view of the lousy math and the restrictive nature of this type of insurance, these programs should really be named “bank profit protection” instead of “credit protection insurance.” Instead of spending good money on an insurance plan that you will probably never use, you’re far better off applying that same amount toward paying off the debt early.
Charles J. Phelan has been helping consumers become debt-free without bankruptcy since 1997. A former senior executive with one of the nation’s largest debt settlement firms, he is the author of the Debt Elimination Success Seminar™, a five-hour audio-CD course that teaches consumers how to choose between debt program options based on their financial situation. The course focuses on comprehensive instruction in do-it-yourself debt negotiation & settlement designed to save $1,000s. Personal coaching and follow-up support is included. Achieves the same results as professional firms for a tiny fraction of the cost.
Credit Card Optional Services
All major credit card companies today offer various optional services for the consumer to purchase that go along with their credit card. While most consumers do not want to spend extra money on optional credit card services, it is good to know more about these additional services. We all want to find the best credit card at the lowest interest rate. I think everyone can agree that finding a card with no monthly fees or maintenance costs is a great deal, but there may be times when you may even wish to add some of these optional services onto your card.
Credit Insurance
This is a popular option for a lot of people. By purchasing credit insurance the credit card company will make your payments for you while you are incapacitated. The monthly fee is generally very small. The credit card company calculates the cost of the credit insurance based upon your card balance. Of course the higher your balance, the higher the monthly cost.
Credit card insurance is designed to help you in circumstances that make it impossible for you to make your minimum payments. It could be from a loss of your current job, or you become ill and hospitalized. For anyone who carries a high balance on your credit card, this may be a good option to look into purchasing. Be sure to look over all the terms and conditions prior to purchasing this coverage.
Fee Paying Credit Cards
There are many people who want to pay a monthly fee for their credit card. I know that may sound contradictory to saving money, but let me explain. Many different credit card companies will offer a lower interest rate, or optional benefits, or a combination of both in exchange for a monthly fee. Why would you want to pay a monthly fee for something like this?
For those folks who carry a balance and pay a high interest rate, a fee based credit card that offers a lower interest rate can be very appealing. It can save you a lot of money over the course of time. It can certainly save you much more money than the cost of the monthly or annual fee. Another reason is that often times a credit card company will offer a higher maximum spending limit with fee-paying cards. This may be something that is important to you.
In many cases a fee-paying credit card can give you much needed assistance in times of trouble. For example, if you lose your credit card, most credit card companies simply offer a special number to call and you eventually are sent a new card. Many of the fee-paying credit cards will provide you with a new card in less than 48 hours. Some will even provide a way for you to get cash until the new card arrives. This peace of mind can be priceless in times of trouble like this.
While not everyone may want to opt for the various optional services a credit card company offers, they do have their advantages and it is something everyone should look at. In the end though, it all simply comes down to a matter of personal choice.
Do You Need A Credit Insurance?
What is Credit Insurance?
To define, Credit Insurance is an insurance policy associated with a specific loan or line of credit that pays back some or the entire amount owed should certain things happen to the borrower, such as death, disability, or unemployment. Like any other insurance policy, the costs, called a “premium” for the credit insurance are usually charged monthly by the insurer.
Credit insurance is not mandatory and it’s illegal on the part of the lender to include it in the loan without the borrower’s permission. The borrower has every right to say no to credit insurance. However, it’s always good to have your payments insured in case of secured loans because you might end up loosing your home if you default on the payments of your secured loan.
When do you need credit insurance?
Secured loans generally require credit insurances. This is because the repayment period for such loans is generally long. It can stretch from 5 to 30 years. Ad anything unforeseen, unanticipated, unplanned and unfortunate can happen in this long period. So, to be on the safer side, borrowers opting for secured loans should go for credit insurance.
Credit insurance for secured loans can be of the following types:
Credit Life Insurance- In event of death, this insurance will pay off the whole or a major portion of your outstanding amount on secured loans.
Credit Disability Insurance- This covers accidents, illness and other injuries that might happen in the course of secured loans.
Involuntary unemployment Insurance- This will make the payments on your secured loan in case of job loss or business failure.
Credit Property Insurance- This is the most apt insurance cover for secured loans. It protects the property that is used to secure a loan in the case it is lost or destroyed.
It’s said that protection is always better than cure. The same applies in case of secured loans. So, go for a protection cover in shape of credit insurance and play safe.
Free Credit Reports: Will The 3 Major Credit Bureaus Really Give You A Free Credit Report!
Get your credit report online for FREE. Many financial advisors suggest that you periodically review your credit report for inaccuracies or omissions.
This could be especially important if you’re considering making a major purchase, such as buying a home. Checking in advance on the accuracy of information in your credit file could speed the credit-granting process, clean credit is a must.
A recent amendment to the federal Fair Credit Reporting Act (FCRA) requires each of the credit bureau`s to provide you with free credit reports, at your request, once every 12 months.
Free Credit Reports, contain information on where you live, how you pay your bills, and whether you’ve been sued, arrested, or filed for bankruptcy. Nationwide credit bureau`s sell the information in your credit report to creditors, insurers, employers, and other businesses that use it to evaluate your applications for credit, insurance, employment, or renting a home. There are three nationwide credit reporting companies Equifax, Experian, and Trans Union.
Everyone in the Western states will first be able to order their free credit reports under the federal law beginning December 1, 2004. Consumers in other states will be able to order their copies according to a regional roll-out detailed below.
In recent months, consumers have asked the FTC for more details about their rights under the federal FCRA and the Fair and Accurate Credit Transactions (FACT) Act, which established the free credit reports program. They’ve also asked about credit reports in general. Here are the most frequently asked questions and the answers.
Q: How do I know when I’m eligible to get a free credit report?
A: Soon free credit reports will be phased in during a nine- month period, rolling from the West Coast to the East beginning December 1, 2004. Beginning September 1, 2005, free credit reports will be accessible to all Americans, regardless of where they live.
Everyone in the Western states Alaska, Arizona, California, Colorado, Hawaii, Idaho, Montana, Nevada, New Mexico, Oregon, Utah, Washington, and Wyoming can order their free credit reports beginning December 1, 2004.
Everyone in the Midwestern states Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Nebraska, North Dakota, Ohio, South Dakota, and Wisconsin can order their free reports beginning March 1, 2005.
Everyone in the Southern states Alabama, Arkansas, Florida, Georgia, Kentucky, Louisiana, Mississippi, Oklahoma, South Carolina, Tennessee, and Texas can order their free reports beginning June 1, 2005.
Consumers in the Eastern states Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, North Carolina, Pennsylvania, Rhode Island, Vermont, Virginia, and West Virginia the District of Columbia, Puerto Rico, and all U.S. territories can order their free credit report beginning September 1, 2005.
Q: How do I order my free credit report from the 3 major credit bureau`s?
A: You may order your free credit reports from each of the three nationwide credit bureau`s at the same time, or you can order from only one or two. The law allows you to order one free copy from each of the nationwide credit reporting companies every 12 months.
Q: What information do I have to provide to get my free credit reports?
A: You need to provide your name, address, Social Security number, and date of birth.
If you have moved in the last two years, you may have to provide your previous address.
To maintain the security of your file, each nationwide credit bureau`s may ask you for some information that only you would know, like the amount of your monthly mortgage payment.
Each company may ask you for different information because the information each has in your file may come from different sources. The nationwide credit reporting companies will not send you an email asking for your personal information. If you get an email or see a pop-up ad claiming it’s from any of the three nationwide consumer reporting companies, do not reply or click on any link in the message it’s probably a scam.
Forward any email that claims to be from any of three credit bureau`s to the FTC’s database of deceptive spam at spam@uce.gov. Any of three credit bureau`s also will not call you to ask for your personal information.
Q: Why would I want to get a copy of my free credit reports?
A: You may want to review your free credit reports:
because the information it contains affects whether you can get a loan and how much you will have to pay to borrow money. to make sure the information is accurate, complete, and up-to-date before you apply for a loan for a major purchase like a house or car, buy insurance, or apply for a job. to help guard against identity theft.
That’s when someone uses your personal information like your name, your Social Security number, or your credit card number to commit fraud.
Identity thieves may use your information to open a new credit card account in your name. Then, when they don’t pay the bills, the delinquent account is reported on your credit report. Inaccurate information like that could affect your ability to get credit, insurance, or even a job.
Q: How long does it take to get my report after I order it?
A: If you request your free credit reports online, you should be able to access it immediately. If you order your report by mail using the Annual Credit Report Request Form, your request will be processed and mailed to you within 15 days of receipt.
Whether you order your report online, by phone, or by mail, it may take longer to receive your report if the 3 major credit bureau`s needs more information to verify your identity.
There may be times when the major credit bureau`s receive an extraordinary volume of requests for credit reports. If that happens, you may be asked to re-submit your request. Or, you may be told that your report will be mailed to you sometime after 15 days from your request. If either of these events occurs, the 3 major credit bureau`s will let you know.
Q: Are there any other situations where I might be eligible for a free credit report?
A: Under federal law, you’re entitled to a free credit report if a company takes adverse action against you, such as denying your application for credit, insurance, or employment, and you ask for your report within 60 days of receiving notice of the action.
The notice will give you the name, address, and phone number of the credit reporting company. You’re also entitled to one free credit report a year if you’re unemployed and plan to look for a job within 60 days; if you’re on welfare; or if your report is inaccurate because of fraud, including identity theft.
Otherwise, a credit reporting company may charge you up to $9 for another copy of your report within a 12-month period.
To buy a copy of your report, contact:
Equifax 800-685-1111 www.equifax.com
Experian 888-EXPERIAN (888-397-3742) www.experian.com
Trans Union 800-916-8800 www.transunion.com
Under state law, consumers in Colorado, Georgia, Maine, Maryland, Massachusetts, New Jersey, and Vermont already have free access to their credit reports.
Q: Should I order a credit report from each of the 3 major credit bureau`s?
A: It’s up to you. Because the credit bureau`s get their information from different sources, the information in your credit report from one company may not reflect all, or the same, information in your reports from the other two companies. That’s not to say that the information in any of your reports is necessarily inaccurate; it just may be different.
Q: Should I order my reports from all three of the major credit bureau`s at the same time?
A: You may order one, two, or all three free credit reports at the same time, or you may stagger your requests. It’s your choice. Some financial advisors say staggering your requests during a 12-month period may be a good way to keep an eye on the accuracy and completeness of the information in your reports.
Q: What if I find errors either inaccuracies or incomplete information in my credit reports?
A: Under the Fair Credit Reporting Act, both the credit bureau and the information provider (that is, the person, company, or organization that provides information about you to a credit bureau`s) are responsible for correcting inaccurate or incomplete information in your report. To take advantage of all your rights under this law, contact the Credit Bureau and the information provider.
Tell the credit bureau, in writing, what information you think is inaccurate.
They must investigate the items in question usually within 30 days unless they consider your dispute frivolous. They also must forward all the relevant data you provide about the inaccuracy to the organization that provided the information. After the information provider receives notice of a dispute from the credit bureau, it must investigate, review the relevant information, and report the results back. If the information provider finds the disputed information is inaccurate, it must notify all three credit bureau`s, so they can correct the information in your file.
When the investigation is complete, the credit bureau must give you the written results and free credit reports if the dispute results in a change. (This free report does not count as your annual free report under the FACT Act.) If an item is changed or deleted, the credit bureau`s cannot put the disputed information back in your file unless the information provider verifies that it is accurate and complete. They also must send you written notice that includes the name, address, and phone number of the information provider.
Tell the creditor or other information provider in writing that you dispute an item. Many providers specify an address for disputes. If the provider reports the item to a credit bureau, it must include a notice of your dispute. And if you are correct that is, if the information is found to be inaccurate the information provider may not report it again.
Q: What can I do if the credit bureau or information provider won’t correct the information I dispute?
A: If an investigation doesn’t resolve your dispute with the credit bureau`s, you can ask that a statement of the dispute be included in your file and in future reports. You also can ask the credit reporting company to provide your statement to anyone who received a copy of your report in the recent past.
You can expect to pay a fee for this service.
If you tell the information provider that you dispute an item, a notice of your dispute must be included any time the information provider reports the item to a credit bureau.
Q: How long can a credit bureau report negative information?
A: A credit bureau can report most accurate negative information for seven years and bankruptcy information for 10 years.
There is no time limit on reporting information about criminal convictions; information reported in response to your application for a job that pays more than $75,000 a year; and information reported because you’ve applied for more than $150,000 worth of credit or life insurance.
Information about a lawsuit or an unpaid judgment against you can be reported for seven years or until the statute of limitations runs out, whichever is longer.
Q: Who else can get a copy of my credit report?
A: The Fair Credit Reporting Act specifies who can access your credit report. Creditors, insurers, employers, and other businesses that use the information in your report to evaluate your applications for credit, insurance, employment, or renting a home are among those that have a legal right to access your report.
Q: Can my employer get my credit reports?
A: Your employer can get a copy of your credit report only if you agree. A credit bureau may not provide information about you to your employer, or to a prospective employer, without your written consent.
Credit Insurance Solution
The credit insurance(popularly known as payment protection insurance), originally developed in USA, has witnessed a spectacular growth throughout the world. This is because of enormous presence of credit culture in the western economies and subsequent protection for the lenders & consumers against the unforeseen events such as death, disability and unemployment of consumers loosing his ability to repay the loan.
The term is primarily associated with a specific loan or line of credit that’s design to mitigate the risks of the lender. And in today’s credit happy society, its very much relevant. Apart from the lender’s point of view of safe-guarding their financial interests over the lending money, borrowers ought to confirm that their families are safe and won’t be in a debt trap.
Just imagine, you are permanently disabled and have lost your job or steady flow of income and/or any extremity has happened to your life, what would be the miseries prevail in your family? And here comes the essence of credit (protection) insurance.
Although in today’s credit happy world, this type of insurance is much common, you have to make sure that you have the proper credit plan that could adequately safe-guard you. In this case, its not only you who’s an insurable interest, creditor or lender has a legal insurable insurance on your life (as a borrower or debtor).
Credit insurance may be of three kinds, depending on the type of credit.
**Decreasing Term Coverage for close-ended installment payment system. This is normally seen in case of mortgage, automobile, consumer, educational lending where the load balance decreases with repayment at regular intervals.
**Ordinary Term Coverage for single payment loan where the loan repayment practice is in a single lump sum amount (single premium credit insurance) and the outstanding amount won’t decrease.
**Varying Amount Insurance Coverage in open-ended nature where the credit amount varies from month to month such as credit card loan. Normally the mortgage and loan-based credit insurance are more popular than varying amount credit insurance(open-ended). Make sure that at-least your loan amount must be covered by the credit insurer as a large portion of your borrowings may remain uncovered due to certain upper limit of coverages from the credit insurance company.
The important coverages are-
1. Death: In case of borrower’s death, the claim amount is paid to the creditor or lender.
2. Disability: Claim, arising out of disability, is payable as per definition or contract of insurance which is again subject to a specific waiting or elimination period.
3. Unemployment: The benefit is payable if the borrower’s lost his job, may be due to termination, lay-off, strikes, labor disputes. But the majority of credit insurance plans do not cover the conditions such as retirement, resignation or illness.