VALENTINES DAY SPECIAL

Does My Age Help My Credit Score?

Age and credit have a somewhat complicated relationship. Like it often is with personal finance, straightforward questions don’t always have simple answers.
Does your age affect your credit score? In the most literal sense, no: Your date of birth isn’t factored into your credit score. Still, if you’re older, you have a better chance at getting one of the highest credit scores than someone in their 20s, because you’ve had more time to establish a strong credit history. At the same time, it’s still possible to have an excellent credit score before you’re 25.

How Does Age Factor Into Credit?

The average age of your credit accounts is one of the five major factors determining your credit score. Say you took out a student loan and opened a credit card at age 18, and they are your only credit accounts. Ten years later, when you’re 28 and those accounts are still open, you’re doing very well in that category of your credit history. If your best friend of the same age has no loans and opened her first credit card when she graduated college at age 22, her oldest credit account is only six years old, which isn’t great as far as a credit history goes.

How Do I Improve My Credit Age?

Having a 10- or 20-year-old account will help your credit score, but the more newer accounts you have, the lower your average credit age will be. If you’re focusing on improving your credit age, try to minimize the number of new accounts you open, as they bring down your average. Opening new accounts also results in a hard inquiry on your credit report, which will slightly hurt your credit score in the short term.
As it is with all aspects of your credit score, you need to exercise patience as you work to develop a long credit history — after all, you can’t do anything but wait for an account to get older. Tradelines can help to improve your credit score by adding credit information with a positive history.

While you’re waiting for the average age of your credit accounts to rise, focus on making loan payments on time and keeping your debt levels low, because those behaviors have the greatest impact on your credit score

4 Ways to Raise Your Credit Score in 2015

1. Payoff past due accounts.

The bulk of your credit score – about 35 percent – comes from your payment history. The more often you make payments on time, the better your score will be.

So start by checking your credit report for past due accounts. If you have several past due accounts, it's time to triage.

Accounts that are 90 days late will have a bigger negative impact on your score than those that are 60 or 30 days late. So pay off the most past-due accounts first, and gradually catch up on all your payments.

2. Ask for good faith adjustments.

When you look at your credit report you may see just one or two late payments. Maybe these payments were late because of an oversight or because of a one-time financial problem that has since been resolved.

In this situation, you might get an automatic boost to your credit score by asking for a "good faith adjustment." Call or write to the creditor, and ask for a courtesy adjustment. If you've been a good customer and only have one or two late payments on your account, many creditors will remove the late payment from your credit report.

3. Deal with collection accounts, charge-offs and liens.

Accounts that have been charged off or sent to collections have a negative impact on your credit score, and you need to be careful how you deal with them.

Paying charge-offs or liens that are older than 24 months won't boost your credit score. Address charge-off accounts that are less than 24 months old first, then pay the others when you have the funds to do so.

Pay off collections accounts as well, but be aware that paying off collections accounts can, at first, cause your credit score to drop. That's because when you make a payment, the last activity on the account becomes more recent, making it weigh more negatively in your credit file.

The best way to avoid this problem is to ask the collector to erase the account from your credit file when you pay it off. Many collections agencies will delete reporting when you've paid off the account. If the agency agrees to this, be sure to ask for a letter stating that the agency agreed to delete the account upon receipt of your payment.

4. Improve your debt-to-credit ratio.

Another factor used to calculate your credit score is amounts owed. Amounts owed isn't about the actual dollar amount you owe but your debt-to-credit ratio – how much money you owe versus how much credit you have available.

There are several ways to improve your debt-to-credit ratio, which is probably the fastest way to improve your credit score. Here are a few to try:

• Ask for a credit increase. This improves your debt-to-credit ratio without paying an extra dime on your outstanding debt.

• Move credit card balances. Keep your debt at or below 30 percent of your credit limit on each credit card. One way to do this is to simply move balances between cards, even if it means opening a new card. (Plus, you might be able to take advantage of balance transfer promotions.)

• Pay down revolving debt first. Your credit score will reward you somewhat for paying down installment loans, but you'll get the most bang for your buck when you pay down revolving debt like credit cards and lines of credit.

• Transfer debt to a personal installment loan. Consolidate all your credit card debt under a personal installment loan.

How to Protect Yourself From Taxpayer Identity Theft

Tax identity theft happens when an identity thief swipes your Social Security number, files a tax return and claims a fraudulent refund from the U.S. government.

You may not know that an identity thief has struck until your legitimate tax return gets rejected because a thief used your Social Security number to file a phony return ahead of you.

You might also learn about taxpayer ID theft from a notice by the Internal Revenue Service.

Watch Out for Tax Identity Theft Scams

Beware of email scams. The IRS does not contact taxpayers by email or social media to request personal or financial information. If you receive such a communication, report it to the IRS by forwarding it to phishing@irs.gov.

Phone scams. Beware of scammers claiming to be an IRS agent and threatening you with arrest or deportation if you don’t pay, or asking for your financial information so they can send you a refund. Report scam phone calls to the Treasury Inspector General for Tax Administration at 1-800-366-4484 or online at IRS Impersonation Scam Reporting.

Text messages purporting to be from the IRS are also a scam. Be sure to report them as well.

Protect Your Social Security Number

• Do not carry your Social Security card in your wallet. Keep your Social Security card and any other document that shows your Social Security number in a safe place.
• Only share your Social Security number when absolutely necessary.
• Safeguard your personal financial information in your home and on your computer. Change online passwords regularly.
• Review your credit reports and your Social Security Administration earnings statement each year for accuracy.

Monitoring your credit score regularly is another way to watch out for identity theft. A big unexpected change in your credit score might mean a thief has struck. 

What to Do If You Are a Victim of Tax Identity Theft

Report the crime. File a report with your local police and file a complaint with the Federal Trade Commission at www.identitytheft.gov or by calling the FTC Identity Theft Hotline at 1-877-438-4338.

Request a fraud alert. Contact one of the three major credit reporting agencies, Equifax, Experian, or TransUnion, and ask that a fraud alert be placed on your credit records.

Close fraudulent accounts. Close any credit or financial account that has been tampered with by a thief or opened without your permission.

Contact the IRS. Call the number provided on the IRS notice informing you of the fraud. Complete IRS Form 14039, Identity Theft Affidavit. You can use a fillable form at IRS.gov, print, then mail or fax the form as needed as you clear your tax record.

Pay your taxes. Be sure to continue to pay your taxes and file your tax return on time, even if you must do so by mailing in paper forms.

Stay diligent. If you contacted the IRS about taxpayer ID theft and did not receive a resolution, contact the Identity Protection Specialized Unit at 1-800-908-4490 about your case.

What Is a Tax Lien?

The federal government takes it very seriously if you fail to pay your taxes. And it can be serious for your credit reports and credit scores, too.

Not paying Uncle Sam his due could result in a tax lien being placed on your assets. A federal tax lien is the U.S. government’s legal claim against your property when you fail to pay a tax debt.

Once you fail or neglect to pay a tax liability on time, the IRS files a public document, a notice of federal tax lien, alerting creditors that the government has a legal right to your property.

A tax lien means bad news for your credit. Consumers with no other negative items who have a tax lien appear on their credit reports could see their credit scores plummet by 100 points or more.

A tax lien stays on your credit report for seven years from the date it is paid. And a tax lien could impact your credit for even longer if you should wait to resolve your tax liability.

Fortunately for consumers, the IRS made some changes to its policies concerning tax liens in early 2011 including:

• Increasing the dollar threshold when liens are generally issued to $10,000.
• Making it easier for taxpayers to obtain lien withdrawals after paying a tax bill.
• Withdrawing liens in most cases where a taxpayer enters into a Direct Debit Installment Agreement.

These changes mean it is possible to get a tax lien removed from your credit reports if you’ve paid it before the normal seven-year reporting period is up, or while you still owe taxes if you are paying them back through an installment agreement with the IRS. To have a tax lien withdrawn, you must file Form 12277, requesting the lien be withdrawn. If your request is accepted, the IRS will file a notice of the withdrawal and send you a copy.

You also may request in writing that the IRS notify credit reporting agencies and creditors and your financial institutions about the tax lien withdrawal. Or you can send the notice of withdrawal from the IRS to the credit reporting agencies yourself.

Tax liens can have a major impact on your credit, appearing as a negative account on your credit report.

Do Taxes Affect Your Credit Score?

 

Owing the IRS a big tax bill come April 15 doesn’t automatically affect your credit. But how you choose to pay your taxes does, and unpaid taxes may impact your credit as well.

Here are some ways that you can pay your tax bill and how they impact your credit.

Payment Option 1: A Personal Loan

If you apply for a personal loan to cover a larger-than-anticipated tax bill, the loan amount and your monthly payment record will be noted in your credit reports. And the loan application itself will count as an inquiry into your credit and this will lower your credit score a little bit, though the drop is temporary.

If you need to apply for a personal loan to cover a tax bill, begin by getting a free look at your credit strengths and weaknesses using CreditCheckTotal.com. Minimize loan applications by finding out a lender’s minimum credit score requirements in advance. Choose a lender with credit requirements that match your credit score.

Payment Option 2: A Credit Card

Charging a big tax bill is certainly an option for consumers with credit cards with roomy credit lines. But there are consequences to your credit score if you’re already using a large amount of your available credit. Charging a credit card near its limit can hurt your credit utilization ratio. Your credit utilization takes the total amount of debt you have on all of your revolving credit accounts (i.e. credit cards) and compares it to your accounts’ limits. And this important measurement makes up about 30% of your credit score.

Payment Option 3: An Installment Agreement

Agreeing to pay a tax bill by an installment agreement with the IRS doesn’t affect your credit since installment agreements are not reported to the credit reporting agencies.

The Effect of Non-Payment: A Tax Lien

Failing or neglecting to pay your tax bill could affect your credit, especially if your tax bill is $10,000 or more, the threshold when the IRS generally issues a tax lien against citizens.

A tax lien is considered a serious negative item and could remain on your credit report for seven years after the tax liability is resolved, unless you take steps to have it withdrawn.

In 2011, the IRS made some changes to its tax lien policies making it easier for taxpayers to get lien withdrawals after paying their tax bills and in most cases withdrawing tax liens when a taxpayer enters into a Direct Debit Installment Agreement.

Whatever strategy you choose to resolve your tax debt, it’s a good idea get your free credit reports and free credit scores to make sure there are no unexpected surprises.

FICO INFO WEEK: What’s in my credit report?

Although each credit reporting agency formats and reports this information differently, all credit reports contain basically the same categories of information. Your social security number, date of birth and employment information are used to identify you. These factors are not used in credit scoring. Updates to this information come from information you supply to lenders.

• Identifying Information.
  Your name, address, Social Security number, date of birth and employment information are used to identify you. These factors are not used in credit scoring. Updates to this information come from information you supply to lenders.
• Trade Lines.
  These are your credit accounts. Lenders report on each account you have established with them. They report the type of account (bankcard, auto loan, mortgage, etc), the date you opened the account, your credit limit or loan amount, the account balance and your payment history.
• Credit Inquiries.
  When you apply for a loan, you authorize your lender to ask for a copy of your credit report. This is how inquiries appear on your credit report. The inquiries section contains a list of everyone who accessed your credit report within the last two years. The report you see lists both "voluntary" inquiries, spurred by your own requests for credit, and "involuntary" inquires, such as when lenders order your report so as to make you a pre-approved credit offer in the mail.
• Public Record and Collection Items.
  Credit reporting agencies also collect public record information from state and county courts, and information on overdue debt from collection agencies. Public record information includes bankruptcies, foreclosures, suits, wage attachments, liens and judgments.