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GET THE FACTS ON CREDIT
You probably already know some credit basics. Like paying off your card balance and getting your payments in on time. But there's more to learn to set up your good credit for a lifetime.
Study card agreement
Be sure to read the fine print. Might not seem important - but when it comes to credit cards, it's extremely important.
Use credit wisely
Maintaining good credit depends a lot on how you use it.
Pay off balances quickly
The faster you pay your balances, the less interest you'll pay. And interest adds up.
Pay more than the minimum
The more you can shave off your monthly balance the better. Paying the minimum means you'll incur maximum interest each month.
Know your limit
There's nothing worse than getting your card denied. Know your limit, and know what you can afford.
Pay on time
Late fees, like interest, add up quickly and could end up making your debt unmanageable.
Keep in touch
Stay in contact with your credit card provider to learn about fees, limit increases, and special offers.
Credit counts for loans
Student loan? Car loan? Home loan? Keep your credit in order so you'll have no problem getting the loan you need.
You can never be too careful about your credit. Learn about your rights as a consumer and the best ways to protect your clean credit record.
Know your credit rights
If you're at least 18 years old, you cannot be denied a card based on your age, racial background, sex, marital status, religion, national origin, or participation in a public assistance program. A financial institution's decision about issuing you a card must be based solely on your credit history and other personal information. Make sure you understand your credit report and check it often to verify its accuracy. For a quick overview on the types of information contained in your credit report, visit Practical Money Skills for Life's Reading Your Credit Report.
Protect your personal information
Never give out your credit card number, address, or phone number unless placing a telephone or mail order, or making a purchase online. Be sure online purchases are made on secure systems-look for clues such as a lock and key at the bottom left corner of your browser, a URL that begins https://, or the words Secure Sockets Layer (SSL). And don't use your card as identification. Thieves can use this information to assume your identity and open bank accounts, make purchases, obtain cash, and even get a job or apartment.
If you suspect identity theft:
- Call the fraud hotlines of all three national credit bureaus. Report the problem, request a "fraud alert," and ask for a free copy of your credit report.
- Equifax (800) 525-6285
- Experian (888) 397-3742
- TransUnion (800) 680-7289
- Call the fraud departments of your creditors. Contact your financial institution, other lenders, phone companies, and utility companies. Follow up each call with a letter describing the problem.
- File a complaint with the Federal Trade Commission (FTC). Call toll-free (877) ID-THEFT [(877) 438-4338], or visit www.consumer.gov/idtheft.
Know how to dispute a billing or purchase error
When you challenge a purchase or billing error, be sure to put everything in writing-including your account information and an explanation of the dispute-and note these requirements:
- Billing Errors: The Fair Credit Billing Act protects you in billing disputes with card issuers and certain other creditors. If you think you have found a mistake, write to the billing dispute address on your statement within sixty days after they send you the first bill containing the error. Note: You do not have to pay any amount in question during the investigation, but you are still obligated to pay any undisputed charges. Your card issuer is legally obligated to acknowledge your letter within thirty days, and must either correct the error or explain it to you in writing within two billing cycles.
- Purchase Disputes: According to the Truth-in-Lending Act, purchases eligible for dispute are goods and services that a) cost more than $50, b) have been purchased in your home state or within 100 miles of your mailing address, and c) are not yet paid. First try to resolve the dispute with the merchant. If that doesn't work, contact your issuer in writing. (Keep in mind that this protection does not apply to amounts you have already paid on your credit card bill for the merchandise or service.)
Report stolen or lost cards immediately
Contact your financial institution to report the loss or theft and arrange for a replacement card to be mailed to you. You should keep a copy of your financial institution's name, its customer service phone number, and your Visa card account number in a convenient place-separate from your card. If you can't find the number of the organization that issues your card, call Visa International, toll-free at (800) 336-3386. Outside the United States, call one of our toll-free numbers.
But rest assured, when you use your Visa card to shop online, in a store or anywhere else, you're protected from unauthorized use of your card or account information. With Visa's Zero Liability policy*, your liability for unauthorized transactions is $0-you pay nothing.
*Visa's Zero Liability policy covers U.S.-issued cards only and does not apply to ATM transactions, PIN transactions not processed by Visa, or certain commercial card transactions. Cardholder must notify issuer promptly of any unauthorized use. Consult issuer for additional details or click here.
Staying in control of your credit is the key to a healthy financial future. Follow these important tips to maintain a good credit history. Manage your money right from the start. Visit the Practical Money Skills for Life site for a compilation of the best financial resources available on the Web.
Don't ignore the warning signs
Late payments, borrowing on one debt to pay for another, calls or letters from credit agencies, and denied or cancelled credit-they're all signs that your credit record may be in jeopardy. To avoid the trouble:
- Know your credit limit. (This cannot be stressed enough.)
- Always keep a mental running balance of your approximate current charges. Stop or reduce card usage well before you reach your max.
- Remember to save some credit for emergencies.
- Keep in mind that a bad credit rating can have serious negative consequences down the road. But if you can't make your payments, don't panic; just contact your creditors immediately. They'll want to work with you, and together you should be able to plan a realistic payment schedule.
Weigh all your loan options
If you want convenient and ready credit, credit cards are the way to go. But when making larger purchases that require many payments over a long period, you might want to look for a traditional loan with fixed payments that fit your monthly budget.
Be aware that traditional loans require collateral and/or a co-signer. And the loan process is much more complicated and time consuming than applying for a credit card. Consider how much you can afford to borrow, and then use your best judgment.
Ask for help
Don't ever hesitate to seek help with your credit management. To find assistance, start with these additional Credit Resources.
Beware of "quick fix" claims
Credit mishaps such as late payments, foreclosures, and repossessions stay on your report for up to seven years. Bankruptcy information, up to ten. Some companies claim that they can "fix" your bad credit history-but don't fall for it. It is legally impossible to alter an accurate credit history. If you get into credit trouble, revisit your budget and work with your creditors to reestablish a good credit rating.
A credit history is a detailed record of your credit activity. It reflects your ability to handle credit and submit timely payments. Learn more about your credit history and how to keep it clean.
Consumers have the right to request a free credit report from each of the three major credit agencies every year. In compliance with the Fair Credit Reporting Act (FCRA), Equifax, Experian and TransUnion have set up a central website and a toll-free telephone number through which you can order your free annual report. To order, visit annualcreditreport.com or call (877) 322-8228.
What's in a credit history?
Your credit history is contained in a credit report that's kept on file by credit bureaus. This report might include:
- List of credit card accounts
- How promptly you've paid off credit cards and loans
- How well you have handled other bills, such as rent and utilities
- Your checking and savings account histories, including bounced checks
- Your total outstanding debts
- How much credit you still have available on your cards
Who has access to it?
Anyone considering giving you credit or a loan-including credit card issuers, auto-financing companies, college loan issuers, and insurance companies-can legally access this information. Landlords and potential employers can also view your credit report.
Who stores this information?
Credit bureaus are independent agencies that collect information on people who use credit. They act as central distribution centers for credit information, making it easy for potential lenders to access your credit history quickly and easily. All credit bureaus should have the exact same information on your history.
A number of laws regulate credit bureaus and protect your rights. For more information, contact your regional Federal Trade Commission office, or write to:
- Federal Trade Commission
- 600 Pennsylvania Avenue, NW
- Washington, DC 20580
- (877) 382-4357
Checking your credit report
You should review your credit report at least once a year. Per the Fair Credit Reporting Act, you have the right to see a copy of your report, which is maintained by three national credit bureaus and may also be collected by local credit agencies. If you have been denied credit in the past sixty days, you are entitled by law to receive a free copy of your report from the credit bureau that issued it.
Credit bureaus will issue your credit report for a nominal fee. Check your yellow pages or reference one of these national credit bureaus:
- (800) 685-1111
- (888) 397-3742
- (800) 888-4213
Credit bureaus are bound by law to correct mistakes at no charge. If your credit report contains any errors, take these steps:
- Inform the bureau of the problem in writing within thirty days of receiving your report.
- If the bureau fails to correct the error to your satisfaction, send the bureau a written statement of up to 100 words explaining the situation. Be sure to provide copies or other proof to support your claim. In many cases, the bureau will have to include your statement with any future reports that contain the disputed information.