Facts to Know about Child Identity Theft

Babies can be victims of identity theft, a fact that parents do not realize. It is even more likely to happen than identity theft in adults. A recent report of Carnegie Mellon Cylab says that social security numbers that have never been used are highly valuable because thieves can use them with any date of birth and name.

The numbers that have been stolen are then utilized for purposes of illegal immigration and organized crime. The report further adds that the SS numbers of minors are so useful because there is no organized process at the moment that can check the name and date of birth of the original owner of the number. This means that for as long as the number has a clear history, any thief can attach a name and birth date to it. Once there is a violation, it can go unnoticed. Even credit reporting bureaus cannot detect it. For parents to be on guard about the possibility of their child’s Social Security number being stolen here are some important facts to know.

Image via Wikipedia

1.) Children and adults are equally at risk of identity theft.

2.) As a parent, you should check your child’s Social Security number as early and as often as you can. Take note that the longer the theft uses your child’s number, the more complex the case becomes and the more difficult it is to resolve. If you wait for your child to get older before checking her number and you find out that your child is a victim of identity theft, your child may have a difficult time getting a job, renting an apartment or even obtaining a mobile phone plan.

3.) A child’s credit record is not cleaned up by the time they turn 18. This means that if a child grows up and is ready to use his Social Security to apply for accounts and for a credit check, he will still be held accountable for any debt and account linked to his number whether he incurred the account or not.

4.) Pre-approved offers for your child in the mail are possible signs of identity theft. Once you receive this, immediately investigate and do not disregard the situation.

5.) Family and friends as well as criminals are the most common perpetrators of identity theft. They use this for themselves or sell the numbers to the black market.

How to fix a credit score or even how to improve a credit score is a hotly debated concept these days. Especially wit

h the current state of the economy, many people are plagued with bad credit and are looking for ways to get a higher credit score to get better interest rates or even to buy a house.

The thing is, who do you follow or who do you even trust? Afterall, it’s hard to even listen to governments. With some of them looking at going into default, even they seem to have credit issues.

That being said, here are a few notes on common misbeliefs regarding credit and how to improve your credit.

You may have heard some of these things in your time. I bet you may be surprised to see that some of them are just plain bad advice.

Three Myths in Boosting a Credit Score

Credit building is one of the many things in life that can sometimes revolve around myths. People think that there are certain things they do that increases their score even if these things really do not impact their scores in any way. The truth is there are really no easy credit score fixes just like what commercials claim. The simple formula to credit score improvement is having good payment behavior and possessing a healthy mix of credit. Here are some of the wrong beliefs that are not helpful in boosting your credit score.

Image via Wikipedia

Credit Improvement Myth # 1: Choosing to get rid of credit card offers will help

John Ulzeimer, SmartCredit.com’s consumer education president, said that it is a common belief among people that if they choose to get out of credit card offers, the credit inquiries in their reports will be lesser. But, the truth is, these inquiries are “soft” and do not really affect the score. He further adds that people can still welcome the offers but it will not strengthen their credit scores.

Credit Fix Myth # 2: Closing old accounts improves score

Trey Loughran, Equifax’ personal information solutions’ President, says that closing your accounts are not really helpful to a credit score. It can even cause a slight damage by shortening your credit history and leaving you with a minimal amount of remaining credit.

Credit Repair Myth # 3: Opening more accounts helps boost credit score.

Several consumers experiencing problems in their credit think that having many accounts will show that they can manage credit. Actually, this has a reverse effect. According to Experian’s public education director, Rod Griffin, more accounts will make lenders wonder why all those credit are needed. He added that it is even a sign of risk that can make your credit score suffer. What lenders will actually see if you have several accounts is the number of hard inquiries in your report. Those inquiries will decrease your score and lenders will worry that you might be in dire need of financial help because you are gaining access to too much credit.

So, while you are working to get that perfect 800 credit score, just know that there are some things that will help you and some things that are just plain malarky.

Here’s to your credit and financial freedom!

Related articles

• 8 Credit Score Myths Debunked (abcnews.go.com)
• Four Horribly False Credit Score Myths (mint.com)

The Importance of a Good Credit Score

The common ways to obtain credit are simple. These are borrowing less, paying on time and keeping expenses controlled. Although these may sound very easy to do, they can be very tricky. Credit is essential as this dictates your ability to acquire your needs. These include getting an approval for a credit card application and financing big purchases such as a car and a home. But, credit alone cannot make this happen. You must have good credit and maintain it very well.

A good credit is the lenders’ basis for approving your loan and the rate you will be given for it. Your credit shows your borrowing history. If you have a higher rating, then this tells the lender that you may be deserving of a bigger loan with a lower interest.

Before you take out a loan, you can always check your credit standing. You can do this by obtaining your credit report from the major credit bureaus. By law, these three bureaus are required to provide a free credit report once a year. However, if you have already used your free benefit, you can always pay any of the companies providing credit reports.

After obtaining your report and you find out that you have a bad credit score, do not be discouraged that you cannot take out a loan. Usually, lenders will give you a chance for as long as you try to pay back your existing debts no matter how difficult your situation is. On the other hand, lenders may not give a chance if you are a borrower with a record of disregarding your current debts.

If you do not get lucky with obtaining a loan that fits your needs, you can always try next time when your credit standing has already improved. No matter how bad your current credit score is, you can always change that by doing something about it. The best way to pull up your low credit score is to stop getting more debts. If for example you have a credit card, work out to reduce your balances below 50% of the total card limit. Instead, you must concentrate in lowering the balances of your existing loans and making your payments current.

This may seem hard to do but you can always try. Start making a monthly budget that will include your expenses and debt payments. You may have to sacrifice a little but this will pay off in the long run. You must learn to minimize your dependence on credit as much as possible if you want to change your life and boost your credit standing.

Home mortgages didn’t used to have such a high down payment. Back in the late 2000′s we say the heyday of the 0% down loan. It was not uncommon for people to just put down 2-5%.

But, then all of a sudden things changed. And if you’ve been around in the last 5 years, it’s easy to see why. Does the term Mortgage meltdown ring any bells?

Well, since the subprime loan debacle, and all of the bad loans out there, lending standards have gotten tighter… should I go as far as say waaaay tighter.

I’ve heard of 40% downpayment with a minimum 750 credit score to get the best interest rates.

For the average, however… I’m seeing a 20% downpayment needed.

The Effects of a 20% down payment Requirement from Potential Homebuyers

Future homebuyers may be required to put a 20% down payment according to the newly proposed rules. The purpose of this is to prevent another possible financial breakdown.

The rules that are being proposed are ways to put into effect the Dodd-Frank Wall Street Reform and Consumer Protection Act launched in the U.S Congress in the past year. One of the many rules are to ask for a 20% down payment in order to ensure that the home loans being sold by the banks in the secondary market are safe, said Robert Fletcher, the Ohio Association of Realtor’s executive officer.

Fletcher said that implementing the rule on the 20% down payment will disqualify 60% of potential homebuyers. Since the housing market plays a main role in the economy, removing buyers considered as low risk from the housing market will be a big hindrance to the recovery of the economy, added Fletcher.

In Greater Cincinnati, the average price of houses is at $151,080. With the proposed rules, this will require about $30,216 down payment excluding closing costs. This amount is more than the average price of most brand new cars that consumers can afford.

The purpose of the risk retention requirements like the 20% down payment is to address the challenges in the residential, commercial and loan markets. It seeks to provide a solution to their problems by asking the organizations that are selling securities to maintain an economic interest in the credit risks of their combined and sold assets, according to the rules proposed by the regulating agencies.

Aside from shooing away potential buyers to the housing market, another effect of a 20% down payment requirement on home purchases is that more and more people could not afford to buy a home. It may also cause banks to become less willing to let the consumers take a loan for a more affordable cost. Overall, it will reduce the housing demand, cut house prices and eventually hurt the industry of home building.

On top of the down payment requirement, the proposed rule may also ask the homebuyer to provide a credit history, a proof of income and a documentation showing that the down payment source is valid.

Based on this, you can expect that lending standards are going to remain high for quite some time. If you are looking to buy a house, then you are going to need to make sure you have money to put down, and you will need the credit score to support your purchase.

Could you afford to pay a 10-20% down payment on your home? from CRA NC on Vimeo.

Credit Score Requirements are Now Stricter for Homebuyers

Recent data shows that getting the best terms for a mortgage loan needs more than just excellent credit. Today, only individuals and families with exemplary credit standing can benefit from the historically low interest rates of 30 year mortgages.

The Mortgage Bankers Association reports in the Mortgage News Daily that about half of the newly written mortgage loans during the first quarter of the current year were given to consumers with credit scores that are higher than 750.

On the contrary, only up to one-third of the new loans in 2008’s third quarter, the period before the credit crisis started, were given to consumers with greater than 750 credit scores. FICO scores, the term referring to credit cards, is the basis of most lenders in the mortgage terms that they issue to the consumers. Scores usually range from 300 to 850. In the past, having a score of at least 720 is enough to obtain the best terms for mortgage loans.

At present, consumers who are at the lower end of the credit score range have a tougher time in getting a mortgage approval, according to the Mortgage Bankers Association’s recent data. The scores that used to easily qualify for mortgage loans are now making majority of the lenders contemplate. Actually, less than one out of ten loans, about 9%, were given to aspiring homeowners with below than 650 points credit standing, reported the Mortgage News Daily.
Experts say that the changes in the requirements of the FICO score is part of the consequences caused by the credit crisis that started in 2008 and the resulting decline of the economy.

Michael Rubin, the author of Beyond Paycheck to Paycheck: A Conversation about Income, Wealth and the Steps in Between, says that there has been a significant shift in mindset which is why banks are not very willing to take the risk anymore. He further added that most banks were not very careful until the second half of the year 2008. During that time, they were very much focused on lending.

Today, banks have changed strategies by being careful with their borrowers. They are now very keen in screening their consumers because they want to make sure that they will be repaid.