To some people, credit monitoring is an advanced version of twice-in-a-year or once-in-a-year credit report check. However, it makes sense to monitor your credit record regularly, instead of making it a bi-yearly affair. Luckily, you don’t need to embark on the intense monitoring activities all by yourself. At a reasonable fee, a credit monitoring company will keep an eye on your credit history and oversee your financial activities.

Generally, credit monitoring is a tool for achieving the following;

Fraud Detection

While some financial pros may have contrary opinion about the effectiveness of credit monitoring, many people are commending the service. A lot of people view credit monitoring as an extremely valuable service to consumers. The high value placed on this service is based on the reasoning that credit monitoring can help detect fraud early before it deteriorates to an uncontrollable state.

Security Provision

If you have been a victim of fraud previously, you will feel more comfortable and secure taking advantage of credit monitoring service to keep an eye on what is happening to your credit report and financial activities. In essence, you will have peace of mind knowing that someone is watching out for unauthorized activities and will alert you of any likely sign. Although some people argue that a consumer can do exactly what a credit company would do, you should bear in mind that the task is daunting and may not be consistently performed by a consumer who barely make out time for any other activity. Effective credit monitoring requires consistent and nearly round-the-clock efforts.

To What Extent Would Your Credit be Monitored?

If you request for credit monitoring service, the aspects that would be covered will depend on the agency and/or your specifications. An agency may be solely concerned about your credit report, watching out for fraud-related signs such as sudden reckless spending or presence of new accounts. Another agency may decide to include cross-referencing in their monitoring services, keeping an eye on all data associated with your name or identity number. This additional service helps the credit monitoring agency to spot unauthorized accounts even when such accounts do not reflect on your credit report.

Fraudsters tend to be aware that people are monitoring their credit reports closely. Therefore, their activities seem to be minimal nowadays. Ultimately, credit monitoring service is helpful for curbing credit frauds and identity theft.

Filing Credit Card Dispute – The Process Involved

The process of disputing a credit card issue starts with a letter written to your credit card company.  The letter will basically address the specific charge you wish to dispute. You need to provide details, including some facts, documents or other evidences to substantiate your claims. Example of such proofs is bill from the seller. Spell out what you want to achieve through the dispute process in clear terms. For instance, if the credit card issue involves a fraudulent charge, indicate clearly in the dispute letter, that the charge be taken off your account.

Although you can send your dispute letter via email or dispute the issue via phone, certified mail is a better option when sending your credit card dispute letter. The reason is simply to provide tangible evidence. Also, it would be difficult to deny receipt of the letter. Usually, any credit card issue should be disputed within 60 days from the time the issue came on board. At the expiration of 60 days, you may no longer dispute a credit card issue.

So, What would be the Next Action?

After submitting a credit card dispute letter, do not proceed with your payment. The law in force regarding this subject permits you to hold back both the principal amount and the interest that ensues from the purchase. However, do not stop making your payments while the matter is in process. This will prevent penalty for late or skipped payments.

You would wait for the credit card company’s decision on the issue you raised in your dispute letter. Usually, a credit card company will decide the dispute to the favor of their customer. Generally, the decision is usually a fair one. A credit card company will normally acknowledge receipt of a dispute letter within thirty days, and would investigate the issue within 90 days in order to respond accordingly.

Resolving a credit card issue would require patience and steady effort in following-up the progress. Therefore, do not relent in your follow-up efforts until the dispute is resolved. Request for your credit card report to ensure your record is straight.

However, a charge off does not eliminate a further attempt by the creditor to collect the debt outstanding.  Charge off only rules out the reflection of the outstanding debt amount in the Accounts Receivables – it is basically intended to ascertain the amount of uncollected income or earning from unpaid invoices issued to customers. Even when an invoice is written off (charged off) the Receivables’ main section, the invoice is not taken off from the company’s general financial records.

For many companies, charge off is used as a strategy for detecting pending invoices that have not yet been paid even after the payment is overdue. Companies that want to avoid using a charge off may opt to use periodic reminders for about 4 months (120 days) following the due date of the invoice. Afterwards, the company may still charge the invoice off, so that it no longer reflects on the Accounts Receivables. Subsequently, the debt is handed over to a debt collection agency.

If the debt collection company is able to collect the outstanding debt on delinquent invoice, an amendment or creation of new invoice may be necessary to reflect the amount on the original invoice, less the service fee quoted by the collection company. However, no reversal is usually made to the charge off.

The Significance of Charge Off

It is basically an organizational strategy for eliminating uncollectable debt from a corporation’s accounting records. Updating an organization’s current Accounts Receivable figures is easier using the charge off approach. The approach also helps a company to be realistic with their expectations on outstanding incomes within a particular period, say 1 – 3 months.

So, basically, charge off is completely an organization’s strategy. But, it is also good for individual’s to know how it works. Obviously, a charge off does not declare a debtor debt-free. Even when the debt is eventually regarded as bad debt, it does not leave the organization’s overall financial record. Consequently, the debt is likely to reflect on the debtor’s credit report. So, it is always best to make your payments when due.

If you are considering a loan, you may want to know what a lender is looking for in your credit history. Basically, a lender would be looking out for three things in your credit background;

1.    Likely borrowed money for the down payment

2.    Your ability to pay back the loan

3.    The possibility of additional creditors somewhere who are not featured in your credit report.

What Happens After Bankruptcy?

In 2001, a good number of people in America sought solace in personal bankruptcies as a way of getting a financial fresh start. Fortunately, personal bankruptcies declined steadily two years after. However, there seems to be a significant rise in bankruptcy cases, over 1million cases. No doubts, you may get a fresh financial start by filing bankruptcy, especially when it is the only way out. However, bankruptcy does not proffer an immediate clean slate.

Once you have a bankruptcy record, rebuilding a credit history that would attract desirable lending rates may take up to 5 years. Pending when your credit history becomes clean, you may obtain credit but at ridiculously high rates, including exorbitant fees on credit items such as cards.

Apartment Hunting – Request Denied?

Your case may be like Jennifer’s, a divorcee aged 35. Jennifer lives in New York with her husband. Then, comes a divorce, one of those sulking things prevalent in America. Well, Jennifer has no option but to look for another apartment where she and her two little girls can stay.

She proceeded with apartment hunting. She found a habitable apartment eventually and was given a form to fill after inquiries. Unfortunately, her rent request was denied. She was confused and demanded to know the reason for the denial. The agent in charge of the building points out that her credit is not clean, and that she’s ineligible to rent as a result. Jennifer couldn’t place what the problem was since she has not defaulted in her Visa and car payments.

So, what could she do at the moment? Jennifer decided to contact the credit bureau…guess what? There’s an alarming revelation in her credit report… Keep a date with our next post to find out what happened and how Jennifer was able to resolve the issue. Of course, she finally got an apartment, good news, isn’t it?  But, she had to fix her credit record first.

Several factors in your credit record are weighed while trying to determine your credit score. Such factors include balances, payment history, the number of credit accounts in your possession and their types. Using a formula, more objective results are derived, compared to using different factors to arrive at a standard for credit scoring. But, formula also has its limitations – e.g, you will be scored low if you have no credit history due to regular cash purchases.

What Credit Score is Considered Good?

Credit score range is between 350 and 850; the higher the score, the better. On the other hand, lower credit score increases credit risk. Good credit score is relative. Industry-wise, there’s really no available standard for determining what constitutes good credit score. Creditors and lenders would usually consider critical factors in determining low risk or no-risk credit score. Normally, majority of creditors would consider a score in 700s (or more) as low risk or risk-free score.

Sometimes also, scores around the 600s are considered good credit scores by some creditors. However, it is good to work your credit score up to the 700s or even more. This would make you a good candidate for credits.

Am I responsible for not Having a Credit Score ?

If you do not have sufficient credit info, the credit scoring models are not able to generate a credit score for you. Little or no credit history will deny you a credit score. Apply for a secured credit card to start creating your credit history.

How Do Credit Cards Affect my Credit Score?

The aspect of credit cards that affect an individual’s credit score is the balance owed on each card. If you carry large amounts of credit available,  or high balances on your credit cards, your credit score will suffer. However, it all depends on your overall credit history. You can carry several credit cards and still keep an optimum credit score, the secret lies in carrying modest balance and making timely payments.

Is my Credit Score Affected by Late Payments?

Sure, the single critical factor that affects credit score severely is late payment. Regardless of the duration, late bill payment sends a red signal of your inability to pay debt in the future. Therefore, lenders frown severely at late payments. Don’t forget that late payments linger on an individual’s credit report as long as 7 years.

We will be back with more insightful credit score FAQs and Answers from Experts.