11 of the Best Items to Regift This Year

A woman gives a regift to a friend
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Maybe you’ve heard a few nightmare tales about regifting — or lived them yourself. Ever received a present that has a gift tag with someone else’s name? That’s probably the No. 1 regifting goof.

But there are ways to pull off a regift successfully — especially in 2020, when our in-person shopping and gift-giving has been reduced, and any present feels like a bright spot in a tough year.

Some items, of course, shouldn’t be regifted. Don’t regift anything that’s been opened — even if the item inside wasn’t used. If the item was homemade for you, like a knitted scarf or jar of jam, don’t pass that on. Never hand over out-of-date technology, even if it’s unused.

And consider the recipient: Don’t give your sister the gift your brother handed you last year.

But that said, here’s a look at some items that should be perfectly fine to regift, if you’re a bit careful about it.

1. Art supplies

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Today’s excellent art supplies aren’t just for kids. Artistic adults, too, may appreciate elegant colored pencils, calligraphy sets and gel pens in all the colors of the rainbow. You can even dress up your regift by adding in an adult coloring book or sketchpad.

2. Candles

Candles next to a houseplant
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Candles offer a warm glow to light up the winter night. But if you know you’ll never light that lovely pine-scented present, pass it on to someone who might appreciate a little light in a dreary year. One caveat: Some major candle stores have one-time or seasonal collections, so if your gift is older, it might be obvious that it’s not a new purchase.

Wine

man drinking wine
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Received a nice bottle of wine, but you’re not a drinker? Or perhaps you only drink reds, and your neighbor dropped off a nice bottle of chardonnay? Wine (or other liquors) is a perfect regift — as long as you know the recipient isn’t avoiding alcohol.

Gift cards

Gift cards
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Few presents are as flexible as a gift card. By putting the present choice in the recipient’s hands, you’ll never give an item that’s the wrong size, wrong color or that someone already owns. And most gift cards are easy to use online — a bonus for those who are trying to stay away from crowds. Just be careful that the card you regift hasn’t been partially used — no one wants to punch in a gift card number and discover they only have 75 cents to spend.

Games and puzzles

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Our household has played more board games and assembled more jigsaw puzzles in 2020 than we did in the previous three years combined. It’s a natural consequence of finding ourselves stuck at home. Games and puzzles that don’t appeal to your family might be a welcome distraction for someone else. Be sure they’re unopened — few things are more frustrating than a puzzle missing a piece.

Kitchen items

Woman making fruit juice with a juicer
ABO PHOTOGRAPHY / Shutterstock.com

Maybe your cousin sent you a handy citrus juicer for a housewarming present — and you already have two. And while those cat tea towels from Grandma are sure purr-ty, you have a drawer full of towels already. Leave any tags and packaging intact, and cook up a tasty regifting plan.

Costume jewelry

Woman wearing earrings
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My mom didn’t have pierced ears, but not everyone in her life knew that. She subtly passed on any pierced earring gifts to her four daughters and kept clip-ons for herself. Don’t pass on heirlooms or pricey presents to those who might not appreciate them, though. And before a jewelry regift, figure out if your recipient actually wears that kind of item. Mom thanks you.

Fragrance and lotions

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Scent is so personal. If someone gifted you rose cologne that makes you sneeze, or vanilla lotion when you only wear the unscented variety, don’t feel guilty about passing an unopened gift along. Try to snoop around first to see if the new recipient is likely to be a fan — some people have allergies, while others love a light fragrance but can’t deal with stronger scents.

Gift baskets

Gift basket
nikkytok / Shutterstock.com

Themed gift baskets can be a huge hit with the right person. But maybe you received a cache of different coffees and you never touch the stuff, or bridgework or braces won’t let your family enjoy the flavored popcorn pack. Regift without guilt — large family groups will usually have at least one person who will appreciate the items.

Toys

Julia Shepeleva / Shutterstock.com

Children are fun to buy for — browsing through toys delivers an irresistible trip down memory lane. But faraway relatives don’t always judge a child’s age appropriately, and middle-schoolers are unlikely to want Disney princess dolls or bath toys. Find the next generation in your family or circle of friends, and pass on those presents.

Novelty gifts

Happy woman holding a gift
CarlosDavid / Shutterstock.com

My brother and sister used to trade off the same rubber chicken every Christmas, working each year to package it in a creative and novel way so it wouldn’t be recognized until it was opened. You may not want to go this far, but goofy or gag gifts aren’t meant to be taken seriously. So if you never opened that Bob Ross bobblehead, or won’t ever use those bacon-scented bandages, give them away with a clear conscience. You’ll likely get a laugh, and that’s all these gifts really require.

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

Source: moneytalksnews.com

What is a Judgment?

June 4, 2020 &• 6 min read by Gerri Detweiler Comments 737 Comments

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A judgment is an order issued by a court of law. When you borrow money, you are legally required to repay the debt. This includes opening a credit card account, getting a line of credit from your bank and obtaining financing for a big purchase.

You can also become indebted to service providers. This can include utility companies, medical professionals, cell phone service providers and auto mechanic shops. They provide a service to you and then bill you, similar to a credit extension.

So, what happens when you don’t pay a bill or repay a debt? The company, creditor or collection agency has legal ways to pursue payment. One of those options is to sue you. If they are successful, the court issues a judgment against you.

What Happens After a Judgment Is Entered Against You?

The court enters a judgment against you if your creditor wins their claim or you fail to show up to court. You should receive a notice of the judgment entry in the mail. The judgment creditor can then use that court judgment to try to collect money from you. Common methods include wage garnishment, property attachments and property liens.

State laws determine how much money and what types of property a judgment creditor can collect from you. These laws vary. So, you need to look to your own state for the rules that apply. A consumer law attorney can help you understand your state’s laws on judgment collections.

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What Is a Judgment on Property?

Your property includes both physical items and money. That means judgment creditors can seek debt payment from more than your wages and bank accounts. They may also take back a car you financed or other personal property. Another option is placing a lien on some of your property, such as your home.

What Property Can Be Taken to Settle a Judgment?

Creditors must follow the law when applying a judgment to take, or seize, your property. Some things are exempt—which means they can’t touch those items or properties. Some examples include the home you live in, the furnishings inside it and your clothes. State laws identify these items and set limits based on their value.

Non-exempt property can be taken to help meet a judgment debt. Your creditor can take or leverage these possessions in the following ways:

  • Wage attachments. This is known as wage garnishment. When your employer receives the proper legal notice, they must withhold a percentage of your wages. These payments are sent to the judgment creditor until your debt is paid.
  • The Consumer Credit Protection Act caps these types of garnishments. The limit is 25% of your disposable weekly wages or the amount you earn that’s above 30 times the minimum wage. The lessor of these two amounts applies. Some states set the cap even lower.
  • Nonwage garnishment. If you’re retired, unemployed or self-employed, your bank account may be garnished instead. Here, too, there are exemptions. Veterans payments, social security and disability benefits are not eligible for nonwage garnishment. Some states add even more restrictions to the garnishment of bank funds.
  • Property liens. If you own real estate, your judgment creditor may file a legal claim against it. These liens notify lenders of the creditor’s rights to your property. That way, if you sell your real property, the debt must be paid out of the proceeds. In many states, liens are placed automatically when a judgment is entered.
  • Property levies. Judgments may also allow some of your non-exempt personal property to be taken through a levy. Law enforcement may seize things like valuable collections or jewelry to be sold at auction. Sales proceeds are applied to your debt.

What Can You Do to Avoid a Judgment?

Heading off a lawsuit is the best way to avoid a judgment. To do so, don’t ignore calls and correspondence from your creditor. Reach out to learn if they’ll accept suitable payment arrangements. Educate yourself on smart ways to pay debt collectors, and consider using the services of a debt management agency.

What if the loan company or debt collector has already started the lawsuit? Don’t skip court. Show up and fight. You may win if the statute of limitations has expired.

If you haven’t made a payment on an old debt for many years, you may have a successful legal defense. Most states set the time frame between four to six years. Collectors often still file suit because they win by default if you don’t show up. So, it’s important that you go to court with proof of your last date of payment.

If you successfully defeat or avoid a judgment, don’t stop there. Take some sensible steps to help you get out of and stay out of debt. Adopting these smart financial habits can also help prevent future judgment actions.

How Long Can the Judgment Creditor Pursue Payment?

The answer depends on where you live, since state laws differ. Some states limit collection efforts to five to seven years. Others allow creditors to pursue repayment for more than 20 years. With the right to renew a judgment over and over in many states, it may last indefinitely.

Judgment renewals may be repeated as often as desired or limited to two or three times. This is another state-specific issue. Judgments can also lapse or become dormant. The creditor must then act within a specific time frame to revive it.

What Happens When You Can’t Pay a Judgment Filed Against You?

If you own a limited amount of property, it may all be exempt from judgment collection efforts. Also, you may not work or only work part-time. With the CCPA cap, that may mean you don’t earn enough for garnishment.

This inability to pay your debt is called being judgment proof, collection proof or execution proof. While these circumstances exist, the judgment creditor has no legal way to collect on the debt. It’s not a permanent solution. The creditor may revisit collection efforts periodically for many years.

For a more permanent solution, you may want to consider filing bankruptcy. This process can discharge or eliminate most civil judgments for unpaid debt. Exceptions apply for things like child support, spousal support, student loans and some property liens. Speak with a bankruptcy lawyer to learn whether this will help your situation.

Can You Settle a Judgment?

If you can afford to pay a decent lump sum, you may be able to negotiate a settlement. The judgment creditor may be willing to settle if they fear you will otherwise file bankruptcy. Get the terms and settlement amount you agree upon in writing. Be sure the creditor agrees to file a satisfaction of judgment with the court after they receive your pay off.

Can a Judgment Be Challenged or Reversed?

Challenging and overturning a judgment is difficult, but not always impossible. This is the case if there were errors. Perhaps you weren’t notified of the suit or it was never your debt to begin with. Consult with an attorney to find out whether you have grounds to challenge the decision.

If you want to challenge a judgment, act fast. If you received prior notice of the case, you may have up to six months to reopen it. If you weren’t notified, you likely have up to two years to appeal. By reopening the case, you have the opportunity to fight the claim anew.

Do Credit Reports Still Include Judgments?

For many years, credit reports included judgment information. But that changed in 2017. The National Consumer Assistance Plan is responsible for creating more accurate credit data requirements. These changes resulted in the removal of civil debt judgments from credit reports.

Judgments are still a matter of public record. But the NCAP now requires that there be identifying information on these records for more accuracy. That data includes a social security number or date of birth along with the consumer’s name and address.

Public records cannot include this type of identifying information. It would violate privacy laws. This is the reason these judgments are no longer reported on credit files.

How Do You Find Out if You Have Any Judgments Against You?

You should receive a summons when you’re being sued. So, you can expect a default judgment will follow if you don’t show up in court. You can also expect a notification when a judgment is entered against you.

Mistakes happen, though. You may have missed the notice or moved to a new address. If that happens, you may not learn of the judgment until collection actions start.

What if You Find a Judgment on Your Credit Report?

Take action if you learn that judgments are still being reported by Equifax, Experian or Trans Union. The NCAP eliminated this practice. So if there’s a judgment on your report, this is definitely something that you should dispute. Credit repair services, like Lexington Law, can help you dispute the error and correct your report.

If you’d like a more in-depth look at your credit score, give ExtraCredit, our newest product, a try. It has five killer features that all work together as a solution to your credit troubles. Plus, you’ll be able to see all 28 of your FICO credit scores. 

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Disclosure: Credit.com and CreditRepair.com are both owned by the same company, Progrexion Holdings Inc. John C Heath, Attorney at Law, PC, d/b/a Lexington Law Firm is an independent law firm that uses Progrexion as a provider of business and administrative services.

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What Is Bankruptcy Dismissal?

A bankruptcy dismissal happens when something goes wrong and the court rejects your bankruptcy case. There are many reasons this can happen and many consequences. The word “dismiss” shouldn’t be confused with discharge, which is when certain debts are eliminated.

disappointed woman

Instead, dismissal means that the bankruptcy case has been thrown out. The petition has failed. There is no longer a case. With almost all dismissals, the petitioner has wasted his or her time, although usually, one can try again soon, or after a waiting period.

Why are bankruptcies dismissed?

Filing for bankruptcy is a complicated process with many steps, forms, rules, and criteria for eligibility. The stresses of declaring bankruptcy can contribute to easy mistakes. One single mistake with any aspect of the process can be grounds for dismissal, so there is a lot of room for error.

Also, because bankruptcy provides a much-desired relief, some candidates attempt to misrepresent their situation. This is grounds for a type of dismissal that has more serious consequences than dismissals related to honest mistakes.

Causes of Bankruptcy Dismissal

Here are some specific reasons your bankruptcy case might be dismissed:

  • Failure to comply with court rules
  • Procedural violations
  • Failure to fulfill credit counseling or pass a means test
  • Jurisdiction or residence issues
  • Lack of timeliness in filing documents and forms
  • Insufficient documentation
  • Fraud against creditors, lenders, or courts
  • Failure to make court appearances or attend creditors meetings
  • Failure to pay filing fees or installment payments
  • Prior cases, prior dismissals, and prior discharges
  • Failure to make timely plan payments in a Chapter 13 case

Effects and Consequences

When a bankruptcy petition is dismissed, all the time, money, and effort that went into the filing is lost, including the lawyer’s fees. Your debts are not discharged, or your payments are not restructured.

Filing bankruptcy grants you an automatic stay against creditors, but when your bankruptcy case is dismissed, this is lifted and you’re back where you started. It’s important to note that despite a dismissal, just merely filing for bankruptcy can remain on your credit report and further hurt your credit scores.

After a dismissal, creditors and collection agencies can come after you again with all the power of the law. This could result in lawsuits, foreclosure, repossession of vehicles, wage garnishment, and nagging collections calls.

In addition, depending on the circumstances of your dismissal, you may not be able to file again for half a year, or in the same court.

Types of Bankruptcy Dismissal

There are a number of types of dismissal, each with different consequences. Among them is dismissal with or without prejudice, voluntary dismissal, and dismissal for abuse. In many cases, as long the details of your petition were made honestly and in good faith, you can either reinstate a dismissed petition or file again right away.

Sometimes a voluntary dismissal is sought because one’s circumstances change. Usually, this means you are able to pay back your debts and no longer need bankruptcy relief.

However, a request for voluntary dismissal isn’t always granted. If your bankruptcy case was dismissed and you still wish to file, mistakes are not taken lightly. Anyone wishing to cheat the system could claim it was an accident; therefore, many mistakes will be cause for a dismissal that cannot be reinstated.

Dismissals with or without prejudice imply that cases were either dismissed for a good reason, such as fraud or because of unforeseen circumstances or honest mistakes. A dismissal for abuse or with prejudice means the bankruptcy case can never be filed again.

After a waiting period, however, usually half a year, a new case can be filed. Issues related to types of dismissals can be very different, so a great deal depends on your own particular circumstances.

Taking Action After a Dismissal

In cases of involuntarily dismissal or dismissal without prejudice, you can try to get your bankruptcy case reinstated if you move quickly and proactively. You’ll often have a small window to continue pleading your case before it’s thrown out, so you have to pursue the issue immediately.

An honest mistake, or administrative dismissal, can sometimes be rectified by a “motion to reconsider” the case. This is your first step, combined with ascertaining and resolving the reason for the dismissal.

A reinstatement is always an option, even if your mistake was an accident. There is also sometimes the option of filing an appeal.

If a dismissal is final, sometimes you can immediately file a new one. But any case of dismissal with prejudice, or for abuse, involves a waiting period, usually of 180 days. After that time you can file a new case, but your automatic stay might be limited to one month, making it more difficult to get approved.

Worth repeating a final time is the fact that a bankruptcy filing will be recorded on your credit report as soon as you file it, and it could remain on your report even if your case is dismissed. Filing a second time will drop your credit scores still further.

Source: crediful.com

Different Types of Debt

  • Get Out of Debt

Debt comes in all shapes and sizes. You can owe money to utility companies, banks, credit card providers, and the government. There’s student loan debt, credit card debt, mortgage debt, and much more. But what are the official categories of debt and how do the payoff strategies for these debts differ?

Categories of Debt

Debt is generally categorized into two simple forms: Secured and Unsecured. The former is secured against an asset, such as a car or loan, and means the lender can seize the asset if you fail to meet your obligations. Unsecured is not secured against anything, reducing the creditor’s control and limiting their options if the repayment terms are not met.

A secured debt provides the lender with some assurances and collateral, which means they are often prepared to provide better interest rates and terms. This is one of the reasons you’re charged astronomical rates for credit cards and short-term loans but are generally offered very favorable rates for home loans and car loans.

If the debtor fails to make payments on an unsecured debt, such as a credit card, then the debtor may file a judgment with the courts or sell it to a collection agency. In the first instance, it’s a lot of hassle without any guarantee. In the second, they’re selling the debts for cents on the dollar and losing a lot of money. In either case, it’s not ideal, and to offset this they charge much higher interest rates and these rates climb for debtors with a poorer track record.

There is also something known as revolving debt, which can be both unsecured and secured. Revolving debt is anything that offers a continuous cycle of credit and repayment, such as a credit card or a home equity line of credit. 

Mortgages and federal student loans may also be grouped into separate debts. In the case of mortgages, these are substantial secured loans that use the purchase as collateral. As for federal student loans, they are provided by the government to fund education. They are unsecured and there are many forgiveness programs and options to clear them before the repayment date.

What is a Collection Account?

As discussed above, if payments are missed for several months then the account may be sold to a debt collection agency. This agency will then assume control of the debt, contacting the debtor to try and settle for as much as they can. At this point, the debt can often be settled for a fraction of the amount, as the collection agency likely bought it very cheaply and will make a profit even if it is sold for 30% of its original balance.

Debt collectors are persistent as that’s their job. They will do everything in their power to collect, whether that means contacting you at work or contacting your family. There are cases when they are not allowed to do this, but in the first instance, they can, especially if they’re using these methods to track you down and they don’t discuss your debts with anyone else.

No one wants the debt collectors after them, but generally, you have more power than they do and unless they sue you, there’s very little they can do. If this happens to you, we recommend discussing the debts with them and trying to come to an arrangement. Assuming, that is, the debt has not passed the statute of limitations. If it has, then negotiating with them could invalidate that and make you legally responsible for the debt all over again.

Take a look at our guide to the statute of limitations in your state to learn more.

As scary as it can be to have an account in collections, it’s also common. A few years ago, a study found that there are over 70 million accounts in collections, with an average balance of just over $5,000.

Can Bankruptcy Discharge all Debts?

Bankruptcy can help you if you have more debts than you can repay. But it’s not as all-encompassing as many debtors believe.

Chapter 7 bankruptcy will discharge most of your debts, but it won’t touch child support, alimony or tax debt. It also won’t help you with secured debts as the lender will simply repossess or foreclose, taking back their money by cashing in the collateral. Chapter 13 bankruptcy works a little differently and is geared towards repayment as opposed to discharge. You get to keep more of your assets and in exchange you agree to a payment plan that repays your creditors over 3 to 5 years.

However, as with Chapter 7, you can’t clear tax debts and you will still need to pay child support and alimony. Most debts, including private student loans, credit card debt, and unsecured loan debt will be discharged with bankruptcy.

Bankruptcy can seriously reduce your credit score in the short term and can remain on your credit report for up to 10 years, so it’s not something to be taken lightly. Your case will also be dismissed if you can’t show that you have exhausted all other options.

Differences in Reducing Each Type of Debt

The United States has some of the highest consumer debt in the world. It has become a common part of modern life, but at the same time, we have better options for credit and debt relief, which helps to balance things out a little. Some of the debt relief options at your disposal have been discussed below in relation to each particular type of long-term debt.

The Best Methods for Reducing Loans

If you’re struggling with high-interest loans, debt consolidation can help. A debt consolidation company will provide you with a loan large enough to cover all your debts and in return, they will give you a single long-term debt. This will often have a smaller interest rate and a lower monthly payment, but the term will be much longer, which means you’ll pay much more interest overall.

Debt management works in a similar way, only you work directly with a credit union or credit counseling agency and they do all the work for you, before accepting your money and then distributing it to your creditors.

Both forms of debt relief can also help with other unsecured debts. They bring down your debt-to-income ratio, leave you with more disposable income, and allow you to restructure your finances and get your life back on track.

The Best Methods for Reducing Credit Cards

Debt settlement is the ultimate debt relief option and can help you clear all unsecured debt, with many companies specializing in credit card debt. 

Debt settlement works best when you have lots of derogatory marks and collections, as this is when creditors are more likely to settle. They can negotiate with your creditors for you and clear your debts by an average of 40% to 60%. You just need to pay the full settlement amount and the debt will clear, with the debt settlement company not taking their cut until the entire process has been finalized.

A balance transfer can also help with credit card debt. A balance transfer credit card gives you a 0% APR on all transfers for between 6 and 18 months. Simply move all of your credit card balances into a new balance transfer card and then every cent of your monthly payment will go towards the principal.

The Best Methods for Reducing Secured Debts

Secured debt is a different beast, as your lender can seize the asset if they want to. This makes them much less susceptible to settlement offers and refinancing. However, they will still be keen to avoid the costly foreclosure/repossession process, so contact them as soon as you’re struggling and see if they can offer you anything by way of a grace period or reduced payment.

Most lenders have some form of hardship program and are willing to be flexible if it increases their chances of being repaid in full.

Source: pocketyourdollars.com

Freezing Your Credit

  • Raise Credit Score

In the age of paperless transactions, identify theft is something that virtually all of us are susceptible to. If your identity is stolen, the consequences can be severe, and in some cases, can take years to recover from. One way to be proactive against fraud and defend yourself from identity theft, is to freeze your credit report with each of the three major credit bureaus—Experian, TransUnion, and Equifax. 

Placing a credit freeze on your credit report will stop identity thieves from being able to open new accounts, lines of credit, or make any large purchases in your name, regardless of whether or not they have your Social Security number or any other sensitive information. 

What a credit freeze means

A credit freeze is a process that shuts off access to your credit reports at your request. Without your verified consent, your delicate information cannot be acquired. This means that if someone were to attempt to apply for credit in your name, your report would come up as “frozen,” and therefore the creditor would not be able to see the information needed for the application to be approved.

You can unfreeze your credit at any time by using a PIN or a password. 

Reasons to freeze your credit

It might be a good idea to freeze your credit if you’re experiencing any of the following situations:

  • Your data has been compromised in a data breach: It happens. If you’ve been a victim of a data breach and personal information related to your identity has been leaked or made vulnerable to cyber criminals, a credit freeze can offer you some extra protection. 
  • You have reason to think you’ve been a victim of identity theft: Perhaps you’ve checked your credit recently and noticed open accounts that you don’t recognize. Maybe you’ve been getting phone calls from collections agencies requesting payments from accounts you know you didn’t open. While a credit freeze won’t be able to stop them from using accounts a thief has already opened, it can stop them from opening any more. 
  • You want to protect your child from identity theft: According to the Economic Growth, Regulatory Relief and Consumer Protection Act, parents and legally guardians of children 16 years old and younger have the right to open a credit account for their child with the sole purpose of putting a freeze on it to protect them from identity theft. 

How to freeze your credit 

The process of freezing your credit is simple but does require a few steps. You will need to get in touch with each of the three major credit bureaus one by one and request a credit freeze:

  • Experian: Contact by phone at 800-349-9960 or go to their website.
  • Equifax: Contact by phone at 888-397-3742 or go to their website.
  • TransUnion: Contact by phone at 888-909-8872 or go to their website.  

The credit bureaus will ask you for your Social Security number, your date of birth and other information to verify your identity.

Once you freeze your credit, your file will be unattainable even if a thief has sensitive information such as your social security number or date of birth. If you need to use your credit file, you can unfreeze your credit report at any time. 

How to unfreeze your credit

Once you’ve frozen your credit file, it will be remain blocked until you decide that you would like to unfreeze it. You will need to unfreeze your credit report in order to open a new line of credit or make a major purchase. 

Unfreezing your credit file is simple. All you will need to do is go online to each credit bureau website and use the personal identification number (PIN) that you used to place the freeze on the account. If you don’t want to complete this task online, you can also unfreeze your credit file over the phone or through postal mail. 

When the unfreezing process is done online or by phone, it is completed within minutes of submitting the request. However, if you send your request via mail, it will take much longer. 

Keep in mind that you don’t necessarily need to unfreeze your credit through all three of the major credit bureaus if you don’t want to. For instance, let’s say you plan to apply for credit somewhere. You can ask the creditor which credit bureau it will go through to pull up your report, and only unfreeze that one credit bureau. 

You may also have the option to unfreeze for a specific amount of time. Once the time is up, your credit file will automatically freeze again. 

Credit freeze pros and cons

There are a few reasons why you might want to freeze your credit in this day and age, but just like with anything else, there are pros and cons to credit freezing. Here is a general breakdown of the benefits and downfalls of putting a freeze on your credit report:

Pros:

  • It prevents thieves from opening new lines of credit: With a credit freeze placed on your account, no one will be able to open a new line of credit or any other type of account requiring a credit check using your personal data. Anyone trying to commit fraud will be stopped in their tracks as soon as lenders notice that the report is frozen. 
  • It won’t affect your credit score: Freezing your credit report will not damage your credit score. Additionally, if you’ve been a victim of identity theft, freezing your credit report could actually protect your credit score from being damaged due to fraud. 
  • It’s free: It used to be the case that some credit freezes would cost a fee, but that is no longer the way it works. 

Cons

  • It requires some effort: Putting a credit freeze on your credit report takes some effort. You will need to get in touch with all three credit bureaus. 
  • You will need to remember your PINs: A PIN is required to lift or freeze your credit report. If you lose it, you will need to jump through extra hoops to create a new one.

It can’t stop thieves from accessing your existing accounts: Credit freezes can only stop fraudsters from opening new accounts using your information. If you’ve already been a victim of identity theft, a credit freeze can’t block thieves from committing fraud with your current accounts. This means that thieves can still make a purchase using a credit card they stole from you.

Source: pocketyourdollars.com

Experian Credit Score vs. FICO Score

January 14, 2021 &• 7 min read by Barry Paperno Comments 17 Comments

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When you think “credit score,” you probably think “FICO.” The Fair Isaac Corporation introduced its FICO scoring system in 1989, and it has since become one of the best-known and most-used credit scoring models in the United States. But it isn’t the only model on the market.

Another popular option is called VantageScore, the product of a collaboration between the three major credit reporting agencies: Experian, Equifax, and TransUnion. It uses similar scoring methods to FICO but yields slightly different results.

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Each scoring model has multiple versions and multiple applications—you don’t have just one FICO score or one VantageScore. Depending on which bureau creates the score and what type of agency is asking for the score, your credit score will vary, sometimes siginifcantly. One credit score isn’t more “accurate” than another, they just have different applications. Learn more about the different types of credit scores below.

When you sign up for ExtraCredit, you can see 28 of your FICO scores from all three credit bureaus. Your free Credit Report Card, on the other hand, will show you your Experian VantageScore 3.0.

What Is a VantageScore?

VantageScore was created by the three major credit reporting agencies—Experian, Equifax, and TransUnion. It uses similar scoring methods to FICO but yields slightly different results.

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One of the primary goals of VantageScore is to provide a model that is used the same way by all three credit bureaus. That would limit some of the disparity between your three major credit scores. In contrast, FICO models provide a slightly different calculation for each credit bureau, which can create more differences in your scores.

FICO vs. VantageScore

So, what are the differences between an Experian credit score calculated using VantageScore and one calculated via the FICO model? More importantly, does the score used matter to you, the consumer? The answer is usually no. But you might want to look at different scores for different needs or goals.

Is Experian Accurate?

Credit scores from the credit bureaus are only as accurate as the information provided to the bureau. Check your credit report to ensure all the information is correct. If it is, your Experian credit scores are accurate. If your credit report is not accurate, you’ll want to look into your credit repair options.

Our free Credit Report Card offers the Experian VantageScore 3.0 so you can check it regularly. If you want to dig in deeper, you can sign up for ExtraCredit. For $24.99 per month, you can see 28 of your FICO scores from all three credit bureaus. ExtraCredit also offers rent and utility reporting, identity monitoring and theft insurance, and more.

Features of ExtraCredit

Understanding the Scoring Models

FICO and VantageScore aren’t the only scoring models on the market. Lenders use a multitude of scoring methods to determine your creditworthiness and make decisions about whether or not to give you credit. Despite the numerous options, FICO scores and VantageScores are likely the only scores you’ll ever see yourself.

Here’s what FICO uses to determine your credit score:

  • Payment history. Whether or not you pay your bills in a timely manner is critical, as this factor makes up around 35% of your score.
  • Credit usage. How much of your open credit you have used—which is called credit utilization—accounts for 30% of your score. Keeping your utilization below 30% can help you keep your credits core healthy.
  • Length of credit. The average age of your credit—and how long you’ve had your oldest account—is a factor. Credit age accounts for around 15% of your score.
  • Types of credit. Your credit mix, which refers to having multiple types of accounts, makes up around 10% of your score.
  • Recent inquiries. How many entities have hit your credit history with a hard inquiry for the purpose of evaluating you for credit is a factor for your score. It accounts for about 10% of your credit score.

VantageScore uses the same factors, but weighs them a little differently. Your VantageScore 4.0 will be most influenced by your credit usage, followed by your credit mix. Payment history is only “moderately influential,” while credit age and recent inquiries are less influential.

Each company also gathers its data differently. FICO bases its scoring model on credit data from millions of consumers analyzed at the same time. It gathers credit reports from the three major credit bureaus and analyzes anonymous consumer data to generate a scoring model specific to each bureau. VantageScore, on the other hand, uses a combined set of consumer credit files, also obtained from the three major credit bureaus, to come up with a single formula.

Both FICO and VantageScore issue scores ranging from 300 to 850. In the past, VantageScore used a score range of 501 to 990, but the score range was adjusted with VantageScore 3.0. Having numerical ranges that are somewhat consistent helps make the credit score process less confusing for consumers and lenders.

Your score may also differ across the credit bureaus because your creditors aren’t required to report to all three. They may report to only one or two of them, meaning each bureau likely has slightly different information about you.

Variations in Scoring Requirements

If you don’t have a long credit history, VantageScore is the score you want to monitor. To establish your credit score, FICO requires at least six months of credit history and at least one account reported to a credit bureau within the last six months. VantageScore only requires one month of history and one account reported within the past two years.

Because VantageScore uses a shorter credit history and a longer period for reported accounts, it’s able to issue credit ratings to millions of consumers who wouldn’t yet have a FICO Score. So, if you’re new to credit or haven’t been using it recently, VantageScore can help prove your trustworthiness before FICO has enough data to issue you a score.

The Significance of Late Payments

A history of late payments impacts both your FICO score and your VantageScore. Both models consider the following.

  • How recently the last late payment occurred
  • How many of your accounts have had late payments
  • How many payments you’ve missed on an account

FICO treats all late payments the same. VantageScore judges them differently. VantageScore applies a larger penalty for late mortgage payments than for other types of credit payments.

Because FICO has indicated that it factors late payments more heavily than VantageScore, late payments on any of your accounts might cause you to have lower FICO scores than your VantageScores.

Impact of Credit Inquiries

VantageScore and FICO both penalize consumers who have multiple hard inquiries in a short period of time. They both also conduct a process called deduplication.

Deduplication is the practice of allowing multiple pulls on your credit for the same loan type in a given time frame without penalizing your credit. Deduplication is important for situations such as seeking auto loans, where you may submit applications to multiple lenders as you seek the best deal. FICO and VantageScore don’t count each of these inquiries separately—they deduplicate them or consider them as one inquiry.

FICO uses a 45-day deduplication time period. That means credit inquiries of a certain type—such as auto loans or mortgages—that hit within that period are counted as one hard inquiry for the purpose of impact to your credit.

In contrast, VantageScore only has a 14-day range for deduplication. However, it deduplicates multiple hard inquiries for all types of credit, including credit cards. FICO only deduplicates inquiries related to mortgages, auto loans, and student loans.

Influence of Low-Balance Collections

VantageScore and FICO both penalize credit scores for accounts sent to collection agencies. However, FICO sometimes offers more leniency for collection accounts with low balances or limits.

FICO 8.0 also ignores all collections where the original balance was less than $100 and FICO 9.0 weighs medical collections less. It also doesn’t count collection accounts that have been paid off. VantageScore 4.0, on the other hand, ignores collection accounts that are paid off, regardless of the original balance.

What Are FAKO Scores?

FAKO is a derogatory term for scores that aren’t FICO Scores or VantageScores. Companies that provide FAKO scores don’t call them this. Instead, they refer to their scores as “educational scores” or just “credit scores.” FAKO scores can vary significantly from FICO scores and VantageScores.

These scores aren’t completely valueless, though. They can help you understand where your credit score stands or whether it’s going up or down. You probably don’t want to shell out money for such scores, though, and you do want to ensure the credit score provider is drawing on accurate information from the credit bureaus.

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Source: credit.com