1. Make payments on-time
2. Keep a good balance of accounts and credit limits (higher is better)
3. Maintain a reasonable debt to credit limit ratio (not too high and not to low)
4. Use your accounts and credit cards regularly (at least once a year)
5. DON’T close accounts if possible, particularly before shopping for a loan!
Many people do not understand that your VantageScore also influences other areas of your life. According to Forbes magazine, things, other than loan interest rates, that can be affected by your credit score include your home and car insurance rates, renting a home, getting hired or not, getting utilities for your new home, professional licensing, and even whether or not you will be investigated as a possible TERRORIST … seriously!
Now that you understand the system we are working with, I would now like to get back to the problems with the credit scoring process reported by 60 Minutes and discussed earlier. Because your credit score has such a large and significant impact on your life in so many areas, there is a failure in the system when five to ten percent of citizens are affected negatively because of errors that ARE NOT THEIR FAULT!
60 Minutes highlighted the story of one woman who attempted to fix errors on her reports with the BIG 3 for SEVERAL YEARS. A person with bad credit, with a name and social security number totally unlike hers, was mistakenly being included on HER CREDIT REPORTS! When she tried to fix the problem, the BIG 3 ignored her request or refused to believe her, EVEN AFTER THE OTHER WOMAN AND HER CREDITORS SIGNED AFFADAVITS SUPPORTING HER CLAIMS! People lose jobs and houses over things like this and the BIG 3 were totally unresponsive. 60 Minutes indicated that this was not an isolated incident and reported that it appears to be a systemic problem, a problem the BIG 3 refuse to address or fix … another example of Institutional Terrorism ™ at work in America.
My own credit history was flawless, without a late payment or other blemish for over 30 years and a FICO Score very close to a perfect score of 850. We regularly shopped at Kohl’s, a discount department store chain, for clothes and household items three or four times a year. Kohl’s offers special discounts for the credit card customers, so we applied for a card and used it every few months. We have most of our credit card, utility, and other recurring payment accounts on “auto pay”, having the statement balance taken out of our bank account automatically every month. Because we only shopped at Kohl’s every few months, that option was not possible, so I relied on their email “payment due” reminders and, as a backup, statements mailed to our home to remind me to make a payment.
While paying our bills one weekend, I suddenly remembered that we had shopped at Kohl’s a while back and I had not received an email or statement, so I logged in to their website to see when the payment was due. I do not know about you, but time flies by and when I saw that our account was over 60 days past due, I was flabbergasted! I knew it had been a while, but did not realize it had been 60 days.
I immediately called Kohl’s and told them I was sorry for the late payment, asking to make a payment immediately over the phone. After doing so, I asked the woman if Kohl’s had reported our late payments to the BIG 3 and she indicated that they had. I told her that I had not received a reminder email or statement in the 60 days since making the purchases and asked her if she could PLEASE remedy the discrepancy with the credit bureaus, having had “golden” credit for 30 years. She rudely told me “I guess you are the only customer out of thousands of Kohl’s customers not to receive a statement!” I told her “yes, I guess I am” and asked her again, very nicely, if she could help us out. She told me, in no uncertain terms, that I was a liar and that she would do nothing to help me, so I asked her to close our account. She told me that Kohl’s had already closed our account, again without even notifying us!
What kind of business reports negative information to the BIG 3 and closes a (very good) customer’s account without ever sending an email, statement, late notice, or calling to find out what was going on? We shopped almost exclusively at Kohl’s, spending from $2,000 to $3,000 a year at their stores and had a perfect payment history, 53 straight months without a late or missing payment, a pretty good customer by most standards, and Kohl’s closes my account for a simple oversight? I admitted and continue to assert that, in the end, I AM RESPONSIBLE and should have paid much closer attention to our obligations, but Kohl’s not only failed to help us succeed, THEY INSULTED MY CHARACTER!
As a retired Air Force lieutenant colonel, I take great pride in my core values and character, so if you really want to upset me, question my character! Kohl’s has lost two very good customers, customers who spent in excess of $10,000 over a 5-year period, paying on time in all but the last two months. So who is the loser here? Kohl’s and their shareholders … NOT US … we still buy clothes, from J.C.Penney!
The moral of this story is that a small error, particularly one you caused yourself, can cost you BIG TIME when it comes to your credit score. After Kohl’s reported our two late payments to the BIG 3, our FICO scores dropped from the low to mid-800s to 620! Thankfully, we were not refinancing our mortgage or buying a car at the time because we would have been turned down or forced to pay an interest rate far above prime … all for a simple mistake and two late payments in 30 plus years.
Because credit scores play such a significant role in our everyday lives, making the difference between success and failure, owning a home or living on the street in some cases, it is critical that the BIG 3 get it right and when they do not, they need to respond quickly and with compassion … but they do not and probably will not UNLESS FORCED TO DO SO.
If my constituents decide to support me for political office, I will go after the BIG 3 and ensure that no more citizens are terrorized by ignorance, incompetence, or lack of concern for customers. I will fight Institutional Terrorism, as my family experienced with Kohl’s (and other large companies/organizations) and like the poor woman in the 60 Minutes story experienced with the BIG 3. Why? Because it is the right thing to do and because American citizens deserve to be treated with dignity and respect. Citizens in general and customers in particular should be given the benefit of the doubt instead of automatically being assumed a liar or con artist. Innocent until proven guilty? Maybe in the courts, but not by large organizations like Kohl’s, Experian, Trans Union, Equifax, and others, perpetrating Institutional Terrorism on innocent Americans.
Americans are all struggling financially in this economy, even the richest of the rich have suffered losses … not that we feel too sorry for the millionaires and billionaires who are “suffering” out there. Financial problems invade many if not most homes across the country, so it is important to communicate effectively with your partner about financial issues, ensuring that both parties are at least informed about the current situation, even if it happens to be bleak. Relationship success is based on communication and teamwork, particularly when it comes to finances. Four eyes are much better than two are, especially when large organizations, like the BIG 3, think they can act with impunity, ruining lives without a thought about it. So keep a regular eye on your credit reports by visiting either Experian, Trans Union, or Equifax once every four months at this FREE SITE:
Key Words: Trans Union, Equifax, Experian, Kohl’s, credit reports, FICO, VantageScore, credit, score, bureau, consumers, creditors, lenders, risk, business, payment, bankruptcy, history, accounts, limits, debt, payments, balance, credit card, blemish
Copyright 2013 – C.T. Sorrentino and 3rd Wave Media Group, LLC – All Rights Reserved