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Your credit report reveals more than you might know

by Dan Krell © 2013
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Why is your credit report important?

Bethesda real estateInformation contained therein could determine whether or not you qualify for a mortgage, and possibly the interest rate you are offered. Typically, lenders use credit reports to determine how you generally manage your debts and financial obligations. Besides being used by mortgage lenders; some banks may review your credit report when you apply for a checking account, and even some insurance companies may use your credit report for underwriting purposes.

Your credit report may say more about you than you might know. The report is considered to be a “snapshot” of your financial management ability. The major credit bureaus, Equifax (equifax.com), Experian (experian.com), and Trans Union (transunion.com), act as information repositories for collected information, and make it available to those who need it. The credit bureaus are informed of your activities by your creditors as well as collecting information from public records; the collected information may include details about your identity, existing credit, public records, and recent inquiries.

Identity information may list your name and aliases, address, Social Security number, date of birth, and possibly employment information. Existing credit information lists accounts that are granted to you, and may include: credit cards, mortgages, student loans, and car loan accounts, payment history, and current balance. Public records may reveal liens, judgments, bankruptcies, and open collections.

Anyone with a legitimate need for your credit report can obtain it. Besides banks, lenders, and those who extend credit, others who may be able to view your credit report include (but not limited to) employers, landlords, and child support enforcement. These inquires are listed in the report.

Your credit score is also included in your credit report. Because each of the three credit bureaus use their own algorithms to determine your score based on the bureaus’ information, the three scores may vary somewhat. Many credit decisions are initially determined on credit scores, so it’s important to ensure that the reports are accurate so as to reflect in your credit scores.

Factors that may negatively impact your credit scores include (but not limited to): late payments, accounts referred to collection, and/or reported bankruptcy; having high account balances relative to credit limits; applying for many accounts in a short period of time; and having an excessive number of credit accounts.

With such importance placed on credit reports, it’s important to ensure your reports contain accurate information about you and your credit history. Unfortunately, inaccurate data may find its way into your report through poor reporting, misidentification, and even non-reporting of (positive) information. Additionally, identity theft has been a law enforcement issue for years; and is increasingly considered a major public threat.

You can dispute erroneous data with the reporting company, and/or the credit bureau. If you dispute to the credit bureau, the bureau will undergo an investigation. To assist the investigation, the bureau may require your identifying information, an explanation why the reported information is incorrect, and supporting documentation (such as receipts, police reports, and/or fraud affidavits).

Your credit report is considered to be a “snapshot” of your life and your ability to manage credit. Financial experts recommend that you request your report from each bureau annually to ensure the information is accurate. For more information on credit reports and scores, refer to the Federal Reserve (federalreserve.gov/creditreports), the FTC (ftc.gov), and the Consumer Financial Protection Bureau (consumerfinance.gov).

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This article is not intended to provide nor should it be relied upon for legal and financial advice. This article was originally published the week of April 22, 2013. Using this article without permission is a violation of copyright laws. Copyright © 2013 Dan Krell.

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New legislation affects home owners and home buyers

by Dan Krell

As the end of the year is a time of reflection, let’s reflect on the new legislation that directly affects home owners and home buyers. Although this is not a complete list of new laws, here are a select few that concern taxation, eminent domain, and privacy.

Buying a home in Montgomery County will cost a bit more next year as recordation tax rates will increase effective March 1, 2008. Current recordation tax rate is $3.45 per $500 (or more commonly described as $6.90 per $1,000); the first $50,000 of the purchase price is exempt from this tax if the purchaser will live in the home. The new recordation tax rate will add an additional $1.55 per $500 (a total of $5.00 per $500) for any amount over $500,000.

Confusion about property taxes and new tax assessments will hopefully be a thing of the past as the property tax disclosure requirement will go into effect April 1, 2008. The law requires any home seller to disclose present and estimated future property taxes for the property for sale. The tax amount must contain the current state, county, and municipality tax as well as any special services tax imposed. The estimated future tax must represent an accurate portrayal of any future tax increase. Estimating future property tax increases may sound tough, but don’t worry – the Montgomery County Department of Consumer Protection is required to assist home sellers and real estate agents with the tax estimations.

Additional property tax legislation includes the Homestead Tax Credit. The credit caps any property tax increase due when the home is reassessed. For homes purchased after December 31, 2007, the law requires home owners to file the one-time application within 180 days of the purchase. All other home owners have until December 31, 2012 to file the application.

Eminent domain has been a recent hot topic. Four changes to eminent domain in Maryland went into effect July 1, 2007. The first is the requirement to file for condemnation within four years of the decision to acquire the property. Subsequent changes increased the cap on mandatory payments to the displaced: the cap to displaced property owners increased to $45,000; the cap to displaced tenants of rental property increased to $10, 500; and the cap for moving and relocation expenses increased to $60,000.

Privacy protection is always a concern. However, effective January 1, 2008, all businesses including real estate brokers are required to take “reasonable steps” to ensure that personal information is protected when client records are destroyed. Additionally, businesses are required to notify their clients as well as the Maryland Attorney General’s office if there is a security breach of electronic files containing client information.

Also becoming effective January 1, 2008 is the ability for a consumer to place a security freeze on their credit report. Without the freeze, anyone with basic information can request a credit report. If the freeze is requested, the information can not be accessed without express prior authorization of the consumer.

For more information on the new legislation, you can go to the Maryland General Assembly website (http://mlis.state.md.us) or the homepage for the County Council of Montgomery County (www.montgomerycountymd.gov/csltmpl.asp?url=/content/council/index.asp).

This article is not intended to provide nor should it be relied upon for legal and financial advice. This article was originally published in the Montgomery County Sentinel the week of December 31, 2007. Copyright © 2007 Dan Krell.

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