Start the new year knowing your credit is in good standing and your credit report is accurate. Under the Fair Credit Reporting Act, consumers can receive a free copy of their credit report from each of the three nationwide reporting agencies — Experian, Equifax and TransUnion — every 12 months.

“Pulling your credit report annually is a smart way for consumers to understand their financial health, as well as avoid financial and identity fraud,” said Kim States, BBB President.

Many television advertisements and websites claim to offer “free credit reports,” “free credit scores” or “free credit monitoring.” However, Better Business Bureau of Southern Arizona reminds consumers that AnnualCreditReport.com is the only authorized source for free annual credit reports under federal law.

Additionally, BBB reminds consumers that a credit report is different than a credit score. A credit report is a snapshot of your credit use history which gives a lender a view of whether you pay your debts back or not. Your credit score is a number which shows lenders how much of a risk you are in paying back a debt.

BBB offers these tips for pulling your annual credit report:

Do not access the Annual Credit Report Request Service through links from unfamiliar websites.  If you get an e-mail or see a pop-up ad claiming it’s from AnnualCreditReport.com or any of the three nationwide consumer reporting companies, do not reply or click on any link in the message. To help ensure the privacy and protection of your personal information, go to AnnualCreditReport.com directly to request your free annual credit report either by secure website, phone or email. AnnualCreditReport.com will not approach consumers via email, telemarketing or direct mail solicitations.

Consider pulling your reports quarterly. While you can pull all three credit reports at once, you can also consider pulling your credit reports quarterly. Pulling your reports separately allows you to better monitor your reports and keep track of any changes or new information that may appear on your credit report. If you pull all your reports at once, you won’t be eligible to pull your report for another 12 months.

Pull your child’s credit report. As child identity theft remains a national problem, it can be just as imperative to pull your child’s report as it is to pull your own. While the credit reporting agencies do not knowingly maintain credit files on minor children, you can contact the credit reporting agencies (more…)

Better Business Bureau of Southern Arizona is warning consumers to steer clear of a new scam that promises to improve consumers’ credit scores using a “credit protection number,” or CPN.

Scammers get the numbers by using computers to find dormant Social Security numbers – often those assigned to children. They sell the numbers to people who use them to establish phony credit and run up huge debts they will never pay off. To get around the law, scammers call the numbers credit profile, credit protection or credit privacy numbers – CPNs – rather than Social Security numbers.

In an Associated Press story, Linda Marshall, an assistant U.S. attorney in Kansas City, was quoted as saying the fraud could lead to another financial collapse. The Federal Bureau of Investigation has been working with lenders to alert them to the fraud, which was uncovered while investigating a mortgage fraud case.

In addition to fraud, the use of CPNs poses another danger to consumers: ruined credit scores for children and others whose Social Security numbers are used to perpetrate the fraud. The buyers open a new, unblemished line of credit, which they then use to build up their own rating in a process called piggybacking.

BBB advises parents to check credit reports for their children regularly. If parents see unauthorized activity under a child’s Social Security number, they should alert authorities and credit reporting agencies.

“This scam is a two-edged sword – defrauding banks as well as consumers whose Social Security numbers are stolen,” said Kim States, BBB President. “Consumers need to protect their credit by (more…)

Better Business Bureau of Southern Arizona is warning financially troubled families to beware of misleading debt settlement companies that claim they can easily reduce or eliminate credit card debt.  Since the start of the recession, BBB’s nation-side have received more than 3,500 complaints from individuals, including many who paid hundreds of dollars in upfront fees to debt settlement companies but only fell deeper into debt.

Locally, BBB has received seven complaints from Southern Arizona consumers against debt settlement companies, and average monthly inquires into the companies have increased 200 percent since the start of the recession.

“The debt settlement industry is flourishing and many families are being lured into believing that debt settlement is an easy fix,” said Kim States, BBB President. “The truth is that the process doesn’t work for many consumers, it has potentially serious negative consequences, and should primarily be used as a last ditch effort to stave off bankruptcy.”

Consumers from all 50 states have filed complaints with BBB about debt settlement companies since the recession began in late 2007. In addition to BBB, angry customers are also taking their complaints to their state Attorney General. Attorneys General from Florida, Maine, Texas, Idaho, Missouri, New York, Illinois, West Virginia, Vermont and Minnesota have taken action against companies such as Dallas-based Debt Settlement America, Debt Rx USA, Financial Freedom of America and Credit Solutions—which has received more than 1,600 complaints alone in the last 36 months—and Austin-based Clear Your Debt and Swift Rock Financial Solutions.

Some practices by debt settlement companies are also coming under fire on Capitol Hill. On April 28, Senator Charles Schumer (D-NY) introduced The Debt Settlement Consumer Protection Act, which seeks to “protect consumers from deceptive, abusive and financially injurious practices rampant in the debt settlement industry.”

Typically with debt settlement (also referred to as debt negotiation), the consumer pays an upfront fee to the debt settlement firm with the understanding that the company will try to negotiate a settlement with creditors for less than what is owed. The debt settlement business works with the consumer to establish a plan for the consumer to put money into an account administered by the debt settlement company or a third party, and that money is used to pay any negotiated settlements. It will usually take at least six months to a year before there is enough money to start settling accounts, and during that time the consumer will typically not be making payments to creditors. Not only does this put the consumer at risk of having creditors file garnishments or other legal actions, his or her credit rating will likely suffer as a result of not making required monthly payments.

Complainants to BBB allege that instead of having their debt settled as promised, they were driven deeper into debt and sometimes sued by their creditors—which led to mounting legal fees—and had (more…)