NEW HAVEN, Conn. (WTNH) — Your credit score is a key piece of your financial puzzle. A poor credit score can end up costing you hundreds, if not thousands of dollars in interest in your lifetime. That’s why scammers are targeting consumers desperate to raise their scores.
Joining us Sunday on Good Morning Connecticut, financial professional Roger Cowen with Cowen Tax Advisory Services explains the warning signs of a credit score scam.
According to Cowen, the Connecticut Better Business Bureau is reporting an increase in consumers targeted by scammers. There are two types of scams. Some companies will try to persuade you to contest accurate information on your credit report. Others will urge you to apply for a new ID number or give you a stolen Social Security number and tell you to apply for the loan with a new number. Both of these are illegal.
There are legitimate credit repair companies, but Cowen says to watch out for these red flags:
- Asking you to pay in advance. This is illegal in the US and Canada.
- Promising to create a new identity for you.
- Promising to get accurate, but damaging information removed from your credit report.
- Claiming to increase your credit score, but not giving specifics.
- No contract provided before work starts.
Cowen advises that if you’ve been scammed, report it! Start by filing a report with the state attorney general. You should also file complaints with the Federal Trade Commission and the Better Business Bureau. I have links to all of those resources on my website, cowentaxgroup.com.
Below are some other ways consumers can improve their credit scores without hiring a credit repair company:
Know Your Score:
Consumers are entitled to one free credit report per year from each of the three credit reporting agencies (Experian, Equifax, and TransUnion). The CRAs have agreed to post links on the front pages of their websites. Your credit score is not included in your report – you can get it for free from several credit card issuers or through websites like creditkarma.com.
Some of the most common errors are unauthorized purchases, amounts that are different from what you actually paid, incorrect dates for purchases, incorrect items, missing payments that were made and accounts that weren’t authorized by the consumer. Even your Social Security number and personal information can be wrong, which could make you responsible for someone else’s debt.
Watch your ratio:
Your credit score depends a large part on the ratio of credit used to credit available. Ideally you want to be using less than 10% of your available credit. If you are using more, work on paying down that debt. One way to do that is to make micropayments throughout the month.
Use your cards lightly:
Racking up big bills on your credit cards can hurt your score- even if you pay them off each month! Try to limit your charges to 30% of a card’s limit. You can set up text or email alerts with your credit card company to help you keep track.
Keep cards active:
You can also boost your credit score by keeping your cards active. The older your credit history, the better- so it is good to keep an older credit card active as well. If you stop using a card, the company may stop reporting it to the credit bureaus.
For more information, visit www.cowentaxgroup.com.