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You already know that when you submit an application for a credit card, the credit card issuer will check your credit score and then decide whether or not to approve your application. If you have a really low credit score, you will be declined. If you have a solid credit, then you probably will get approved. You might also know that if you have good credit score, your mortgage rate will be lower than those without good credit. It seems bad credit can also get something for you but with higher costs. But, actually, there’re many ways that a bad credit can hurt you.

Job

It’s not surprised that your employers will keep an eye on your credit performance. Today more than 60% of companies will check the candidates’ credit score before they issue the offer to them. The reason behind this is employers think the credit problem might cause tension and pressure at work. They may also think if you’re not good at managing your personal credit, you can’t do your job well.

Auto Insurance

Some of you might still don’t know that some insurance companies will pull your credit report when you request a quote from them. They use your credit performance as a factor to decide the rate you can get from them. I have a personal experience with GEICO. When I wanted to quote online at www.geico.com, I have to enter my SSN on the form. Then I asked them why they required my SSN. They replied with:

GEICO, like many property and casualty insurers, uses credit information as part of our underwriting process.  We use this data because of its very strong, statistical correlation with future losses.  Using this information, along with our other underwriting criteria, allows us to keep our rates competitive. The Fair Credit Reporting Act specifically gives insurers permissible purpose to obtain credit data when used for underwriting.

The good point is insurance inquiries do not affect your credit rating and do not count against you.

Many other insurance companies like AAA will also pull your credit report even they don’t have your SSN.

So, the fact is, bad credit might cause higher auto insurance rates.

Cell Phones

Cell phone providers are very strict with your credit performance. If your credit score is not good, you have to pay a certain amount of deposit before they can open a line for you. I know T-Mobile will require $500 or $250 deposit for those without good credit. If your credit is not good, you can only have one line at T-Mobile. If you pay your bills on time in the next 6 months, they may allow you to have one more line (family plan). Or some may only try the pay-as-you-go plans.

Apartment Hunting

Nowadays most rental property companies may require you to give them your SSN and they will run a credit check to see whether you have bankruptcy history, collections or other serious credit behaviors. They might reject your applications if your credit performance doesn’t meet their requirement.

Utilities

Whenever you move into a new apartment, you have to open electricity, water or gas services. When you handle out your SSN, the utility companies will check your credit report. If your credit is not up to their expect, you have to pay a certain amount of deposit. Of course, some of them might add the deposit on your monthly bills.

Above mentioned are little known places that a bad credit might hurt you. Bad credit is no longer a situation that can be isolated from other areas of your life. If you can maintain a good credit performance, you are a step ahead of others.

According to the latest class-action settlement, eligible consumers can get up to 9 months of free credit monitoring service from TransUnion!

Yesterday TransUnion announced that it will soon provide eligible U.S. consumers up to 9 months of free credit monitoring and related services. This result is part of a settlement of a lawsuit that has been pending for a decade and arose from a product has been terminated in 2001 by TransUnion. The lawsuit claimed that TransUnion has violated the Fair Credit Reporting Act when it sold consumer information to businesses for their targeted marketing products. As we know, Fair Credit Reporting Act allows TransUnion and other related companies sell publicly available data to other businesses but nor private information. TransUnion is claimed to sell private consumer information to businesses which is a violation of the law, although TransUnion said it had not violate the law. TransUnion discontinued that practice is 2001.

As a consumer, what can you benefit from this class-action settlement?

1. 6 months of credit monitoring service, giving you unlimited access to you credit report and credit score. You will also receive email alerts for any changes occur on your credit profile.
2. 9 months of credit monitoring service, plus unlimited access to your credit report and credit score. You can also use TransUnion’s mortgage simulator service.
3. You can also sign up for cash payment instead of free service provided by TransUnion. However, such cash payment will not be available in 2 years. At the same time, the cash payments can only be made when the 75 million fund has been used up for any post-settlement claims.

If you choose the first option, you will sacrifice your right to enter a class-action claim against TransUnion. If you choose second option, you will lose any further legal claims against TransUnion.

Are you eligible?

According to the settlement, any individual who had an open credit account or an open line of credit from a credit grantor (bank credit card, department store credit cards, retails store credit cards, mortgage, auto loans, personal loans, and student loans) located in the United States anytime from January 1, 1987 to May 28, 2008 is able to choose the above mentioned options.

This free credit monitoring service seems to be useful for you to bump you hard inquiries on your credit report.

“Hard inquiry” refers to a credit pull initiated by you, and it does affect your credit score. If you are curious about your credit score, you might find out that a hard inquiry might drop you credit score 5~7 points. If you have many hard inquiries in a short time period, your application for a new credit might get rejected even if you still maintain your credit score at a relatively high level. The reason is very simple, you are requesting too many credits from credit issuers such as banks, credit card companies and other financial institutions. However, “soft inquiries” will never affect your credit scoring. Because soft inquires are invisible to credit grantors. (Hard Pull and Soft Pull)

Usually hard inquires will disappear from your credit report in about 25 months in all three credit report agencies (TransUnion, Experian, Equifax). But do you want to bump off those notorious hard inquiries from your credit report earlier than 25 months? If you want to knock hard inquiries off of your credit report, there is a very easy way. I personally was able to get rid of all of hard inquiries on my credit report at TransUnion and Equifax. I applied for many credit cards in last August: Blue from American Express, Starwood Preferred Guest Card from American Express, Citi CashReturns Card, Discover Open Road Card, BOA Rewards American Express Card, CapitalOne No Hassle Cash Card etc. There are more than 12 hard inquires on my TransUnion and Equifax credit reports. However, right now, there is no hard inquiry on my TransUnion and Equifax credit reports!

The method is popularly named as “bumpage”—the process of pulling your personal credit report repeatedly in a short time period (usually 1 pull per 1 or 2 days or several times per week). In this way, you can generate a lot of soft inquiries on your credit report and eventually knock hard inquiries off of your credit report. The reason why you can bump off hard inquiries is credit report agencies have only limited space to store your personal information. If you throw in much new information in their system, they tend to delete older information. (Note: only works for inquiries.) However, “Bumpage” only works for TransUnion and Equifax.

How can you generate soft inquiries? There are many credit services on the market which allow you to pull your credit report in a daily manner. The most famous one is TrueCredit.Com and other credit services from TrueCredit but under other names (e.g. NationalCity Identity Protect). If you have an American Express card, you can choose CreditSecure from American Express. My “Know Your Credit Score” post have summarized some credit services on the market for your reference. However, there are many free ways to pull soft inquiries for you. For example, the pre-determination process from HSBC and BOA can generate a soft inquiry on your credit report every time you check for a credit card offer from them. The credit limit increase button in your online account at American Express can also generate a soft inquiry for you for free!

If you use only one credit service and pull your credit report daily, it will takes you about 2 months to start bump your hard inquiries. If you use multiple credit services at the same time, the bumpage process can be accelerated.

However, you might get rejected by TrueCredit or other credit service providers due to your excessive access to your credit report! But it’ highly YMMV.

Important update: This trick is not working for TransUnion now. Some one reported that the bumped inquiries came back on their credit reports again.

This is a guest post from Sarah Scrafford.

Do you have more credit cards than fingers on your hands? Are you finding it difficult to juggle around balances and payments? Thinking of cancelling a few of those pieces of plastic? Stop, and think again – cancelling a credit card can have an adverse impact on your credit scores. Ironic, isn’t it? Just when you want to set your financial aspects in order and watch your spending habits, something as positive as cancelling a credit card seems to have a negative effect on your credit score!

But there’s more than meets the eye to the relationship between a cancelled card and your credit score. Besides other factors, your credit score is calculated by taking the ratio between your outstanding credit and the total credit that’s available to you, which means that lower numbers are better credit scores. When you cancel a card, you also bring down the total credit that’s available to you, which is why your credit score goes up and your credit rating down. But the reverse is also true – the lower your outstanding balance is, the higher your chances are of a better credit score.

If you know how, you can have your cake and eat it too – cancel your cards and not affect your credit score too much. The trick lies in picking and choosing which cards you cancel and how well you manage your finances after the cancellation:

• Hold on to the cards you’ve had for a longer time and cancel the newer ones.
• Cancel cards that have the highest interest rates.
• After you cancel a card, make all your payments in time and avoid maxing out any of your remaining cards. This will, in time, get your credit score back to normal.
• Do not cancel cards that have balances that need to be paid.
• If possible, cancel cards only when all your balances are nil.

Sarah Scrafford is an industry critic, as well as a regular contributor on the subject of credit cards. She invites your questions, comments and freelancing job inquiries at her email address: sarah.scrafford25@gmail.com.

Today I received an email from one of my readers asking about the free credit report stuff. He seems to order a “free” credit report from FreeCreditReport.Com after he watched the ad in the TV. Then he realized that he was billed $14.95 per month. Yes, it’s not free! If you google with “freecreditreport.com”, you can see a lot of ripoff reports about freecreditreport.com. Be careful then!

I have seen a lot of commercials from FreeCreditReport.Com including the popular commercial Dream Girl. However, the truth is FreeCreditReport.Com is not free! Don’t be fooled! The only website you can get your free credit report is AnnualCreditReport.Com which is supported by the federal government.

Here I put some of the famous commercials by FreeCreditReport.Com together. I don’t want them to fool people again.

This one is not!!!

It’s interesting to see that Warren Buffett has a FICO credit score of 712 according to the Fortune Magazine. (2008, March 31, The Oracle’s Credit Crisis) Well, how can that be? We all know that Warren Buffett is one of the wealthiest men on the planet?

But believe me or not, if a bank ever denies Warren Buffet’s application for a credit card, Warren will go on CNBC and say that bank has really bad economic outlook and then watch and laugh as its stock price dips 10% immediately. Even Warren has a very low credit score, no banks will refuse to provide financial services to him. Maybe he is also a Centurion Card holder.

Anyway, regardless whether you are a billionaire or not, you FICO credit score always tells your lenders the same fact: based on your past credit actions, how likely are you to become seriously late in repaying your creditors during the next couple of years? Your income or net worth aren’t factored into the FICO score – only your history of paying back your debts as documented in your credit report.

Want to have a better credit score than Warren? Tips to boost your credit score:

1. Never pay your bills after due date—never leave a late payment in your credit profile.

2. Never carry a huge balance on a single credit card—increase your balance to credit limit ratio will hurt your score.

3. Never open a new account frequently—open a new account when it’s necessary or when you’re doing AOR.

4. Always check your credit card statement—find out any suspicious credit fraud activities or identity thefts.

5. Always check your credit report—you can find a lot of ways to access your credit report for free.

I have many individual posts about how to get your free credit score and credit report. You can get a free copy of your credit report every year from www.annualcreditreport.com which is a government supported website. However, this website doesn’t provide credit score. Then how can you get your credit score for free? Let me tell you……

WaMu Platinum Visa Credit Card

Actually, this card was formerly issued by Providian which was then acquired by WaMu one year ago. From then on, all the WaMu credit cards will provide free credit score to the card holders. You can see your credit score once you log in you online account at www.wamucards.com. The credit score is based on your TransUnion credit report and is updated every month. Recently, they are sending out some invitations with sign-up bonus. Some readers report that if you don’t use this card for a while, they will close your account due to inactivity.

I have to mention that WaMu just launched a new credit card—ESPN Total Access Visa Card. This card is easy to get. If you can’t receive the invitation from WaMu and want to take advantage of the free credit score service, you can try for this card.

CreditKarma.Com

I have an introduce about this website here. They provide FAKO credit score based on your TransUnion credit report. (Although they claim that they can pull your credit report from any of 3 credit bureaus, you’d better believe that they only use TransUnion credit report.) Yes, it’s free! They will not charge you for your free credit score. But they have you credit status on hand. They can make money by corporate with many financial institutes by promoting some financial services to you.

Prosper and Lending Club

The above two mentioned websites are famous person-to-person lending clubs. They will pull your credit report, if you sign up as a borrower there. Instead of a credit score, they will give you a credit grade. By referring to the credit grade, you can roughly know your credit score. If you have a very good credit score, your default loan rate will be much lower than those with bad credit grade. You may not familiar with these websites. Currently, they are offering $25 sign-up bonus.

E-Loan.Com

You can also get a free credit score at eloan.com! It’s very simple. Click this link to eloan.com. You will see a variety of credit services provided by eloan. But they are not free! At the bottom of that page, you will see ” Free Credit Score (Credit Score Only)“. That’s not FICO score and is based on your credit profile at Experian. In fact, it’s supposed to help you to choose some better mortgage rate. It’s valid only for once. You can choose when to use it.

I hope this post will be of any help for you all!

You’ve probably seen a lot of “free credit score” or “free credit report” advertisements all around the internet. Actually, they will charge you a certain amount of monthly fees if you don’t cancel the service before trial period. If you search on the web, you can see tons of reports of complaints about credit service providers. Until now, you can only get free credit report without credit score from annualcreditreport.com. If you want to get credit score, you will have to pay a certain amount of fees. Or you can join some trail program and cancel them before the date they’re gonna charge you. Hereby I’d like to introduce the free credit score service from Creditkarma.Com which is a start-up company.

The process is really simple. You have to use the invitation code:”CKFRND” to register at their website, and then put in you personal information. They can use the information you provided to access your personal credit file and give you a FAKO credit score. You can see your credit score at any time. It doesn’t say from which credit bureau the score is based on. However, they can pull from any of the 3 big credit bureaus (Experian, Equifax, TransUnion). So how can they make money from you? How can they survive? Or do they just want to gather your information and sell them out? In fact, they are advertisers supported. They promoting financial related products through their website. It’s a genius idea, isn’t it?

Security and Privacy Concerns: It’s smart to think twice before you jump in a trap and give out you personal information like social security number to a start-up business. They use some common security systems like TRUSTe, Verisign and ScanAlert Hacker Safe to ensure your personal information is safe there.

You may want to check out other related posts: “FICO Credit Score Estimator“, “Know Your Credit Score“.