Equifax Data Breach: Reason for Bizarre Credit Score Declines?
Seldom do I use my one and only personal credit card, provided by Citi®, so I was thinking that maybe the reason my TransUnion® and Equifax® credit scores, which use the VantageScore 3.0 scoring model, both experienced sudden and precipitous declines was because I was being penalized for:
Too Few Accounts Currently Paid As Agreed: FICO® Scores consider the number of accounts that are paid as agreed. Your score was impacted because the number of these accounts is too low, or because you've missed payments recently on some of your accounts.
No recent revolving balances: FICO Scores consider whether a person’s credit report shows recent balances on revolving accounts. Your FICO® Score was impacted because you are not currently demonstrating active revolving credit management.
Seems unreasonable to me that a consumer should be penalized for avoiding revolving credit, but that's the system folks (The above bullet points are from Citi / FICO / Equifax Bankcard Score 8.)
So, on a recent check, my scores bounced back to 800+. A glitch in the system, or related to the Equifax Data Breach?
Credit Scores: TransUnion and Equifax VantageScore 3.0
And my Citi / FICO / Equifax Bankcard Score 8 score skipped higher, from 820 to 822.
So, according to both CreditKarma.com and CreditSesame.com, my VantageScore 3.0
credit scores from TransUnion® and Equifax® dropped more than 80 points, and for no reason.
Credit Scores: TransUnion and Equifax VantageScore 3.0
So I visited www.AnnualCreditReport.com to check my credit reports from the 3 major bureaus: TransUnion, Equifax and ExperianTM:
TransUnion: I was able to access and download my credit report. I found no problems.
Equifax: Fail; online delivery not available (see image below.)
Just signed up with Credit Sesame (www.CreditSesame.com - +Credit Sesame Inc. ) to see if they offer anything unique in the free-credit-scores game.
Not much to report here. Very similar to Credit Karma, which I use often, but in this duel of free-credit-score websites, Credit Karma wins, because the site offers free access to both my +TransUnion and +Equifax scores, while Credit Sesame only gives me the Equifax version.
You can pay for premium services at Credit Sesame (see image below), but for me these extras don't offer much value.
My Three-Year-Old Thinks a Credit Card Can Solve Our Problems
One of my son’s favorite “toys” is his credit card. In actuality, it is a pre-paid Master Card that I received for the mail-in rebate on a PDA phone. The money long gone, I must have kept the card in my purse, because my excavating toddler found it and claimed it as his own. The card is bright orange, so it’s reasonable to believe that he would play with the small piece of plastic; however, the game he was playing was cause for alarm. My husband and I made the discovery one afternoon as he was leaving to run errands. We must have been discussing a bill of some sort because my son interrupted us, declaring, “Mom, it’ll be fine - I got my red car!” ‘Red car’, of course, is slurred toddler-speak for “credit card” - he pulled it out of his pocket to show us.
While the sentiment was heart warming, the premise was horrifying. First of all, how does my son know what a credit card is? We only have one credit card right now, and it’s locked away with the Hope Diamond as we rebuild our credit by paying off bills and living beneath our means. He may see us pay for items in retail stores with debit cards, but that’s only every now and then, as he rarely goes shopping with us. We knew that he understood that some plastic cards represent money, but to call it a “credit card” specifically and then assure me that everything would be okay because he had one was a leap in understanding that I did not predict or foster in my three-year-old son. Where did he get the idea that credit cards make everything alright?
Hubby and I laughed nervously, and then looked at each other, wondering how he could have formed such an idea. We talked about it and came to some realizations that we weren’t so happy with. Although we know that young children absorb new information like sponges, frequently learning things that their parents have not taught them directly, we were unaware of how acute his understanding of currency is…for a three-year-old, anyway. While he still thinks all paper money is worth $50, he comprehends that adults exchange money for items and services. He believes that money gets you things that you want; he usually wants food, and he sees us pay for food with money. However, to leap to the assumption that credit cards solve non-food related problems (my husband and I were not discussing food on the day in question) is a broad jump in my opinion. He is learning about money from some other sources, too. As a parent, I felt that it was time for me to take a closer look into his media exposure as it relates to money, credit, and how the economy works.
After I thought about it, I began to see how we in the Western world are so inundated with media messages promoting a consumer credit culture that there is no way to escape it without becoming a hermit. One of my son’s favorite cartoons has a main character who is rich, and she uses credit cards to fund her lifestyle - in elementary school. One CBS Evening News segment by Nancy Cordes explores how credit card companies are deliberately targeting children as young as three years old by integrating credit cards into children‘s games and toy accessories.
Then, even the safest of prime-time television shows are interrupted with commercial messages from credit card companies that promote lush, satisfying lifestyles that are made possible by the almighty plastic. While the television doesn’t baby sit my children, they see enough of it to possibly be affected by the onslaught of credit card marketing and comic characterizations of rich super-spenders who don’t carry cash.
What’s a mom to do?
I have to take a direct approach to teaching my toddler about money and credit, even now. Christian Credit One gives some great advice about how to begin exposing children to money management lessons, even in their pre-school years. Their website is at http://www.ccone.org/.
I plan on implementing some of those tactics in my daily routine with my little one. The first step is getting him a personalized piggy bank that he can cherish and keep as he gets older. I want him to be able to correlate responsible money management with fond family memories and family values. That way, instead of thinking that he is helping mommy by using his “red car,” he will remember the lessons that mommy and daddy taught him about saving and spending less than what you have in the bank, not more. We want him to think about how fun it was to go to the grocery store and help mom and dad pick out items based on cost to value comparisons, helping to spend the family money wisely. I have fond memories of learning about money in pre-school. I want his memories to be pleasant, too; not a reminder of how young he was when he first started on the road to ruining his credit through a warped understanding of money and red cars.
Before the economy fell into the dark pit of despair that it seems to be in today, I was barely making ends meet. We had far too many bills than we had money coming in. At one time I sat down and ran the numbers and we were over $150,000 in debt on an income of $50,000 a year (I was not working at the time). Coupled with the fact that I was in very poor health and making over a year and a half's worth of doctor trips and hospital visits, and we were afraid to answer our phone from the bill collectors calling day and night. I had four hospital stays in that period of time from kidney stone and getting my gall bladder out, and then was plagued with fibromyalgia and interstitial cystitis. Between the mounting medical bills and having more bills than income, we were sinking further and further behind. Finally it got to the point when they (the bill collectors) were offering to settle our past due debt for 50% of the balance. Some of these were medical bills, others were credit cards used to get by when we just didn't have any money left. There were even times when I was getting a cash advance on one just to pay the minimum payments on the rest. Truly a dark time in our financial life.
The Pro's The phone stopped ringing with twelve different collection agencies calling about the same bill. That was the biggest relief. Then there was the matter of just knowing that the debt was settled, done, and over with. It was a positive step in the right direction to trying to rid ourselves of debt and credit. It was far easier to come up with the diminished lump sum payment they wanted to settle than it was the entire amount of the debt. Every dollar that we "saved" in the lesser amount was able to go toward another debt that was still in the (now shrinking) pile of bills. Attempts at payment arrangements never seemed to be enough for the creditors that we had. They (before the settlement offer) were unwilling to accept a payment plan that would have worked for us, and kept piling on late charges and over the limit fees on the credit cards.
The Con's About two months after settling the debt, it was showing up on our credit reports. I didn't think about it at the time, considering it a good thing that we at least paid most of the debt and stopped the collections, but it was working against us still credit wise. They were actually viewing the settled debt worse than if we weren't paying on the debt. What we did was do a "charge off" where the agencies forgive the large portion of the debt and stop trying to collect. These charge offs appear on our credit statement just as if we hadn't paid a thing and the companies decided to just stop attempting to collect. A very bad sign for anyone looking at our credit report. Now I realize that with our new mindset of Cash Only in paying for things the credit report should really not matter much, but it does.
In summary, if you are in over your head it’s a very personal decision. It definitely isn't a magic wand quick fix and all your credit and debt troubles go away. The best advice would be to talk to a financial consultant about where you are and where you would like to be in the future and the best method to get to that happy place. For us, had I had it to do over again knowing about the black marks on the credit report and everything, I'm certain I still would have done it. Today I have a savings, no credit debt, no harassing phone calls all the time from collection agencies, and the ability to know that we can save for the things we want instead of paying for it on credit. It was a good decision for me.
I am currently in credit card rehab – my loving husband, who admitted me, is also the chief of staff. We are in the process of getting out of debt for good, so there has been absolutely no credit card usage allowed, period. It’s been like this for quite some time now, and I have to say, I didn’t think that I would make it this long. Paying off debt while ceasing from creating new debt seems like an obvious solution, but putting such theory into practice is harder than it seems. When we abruptly stopped charging purchases, I began to show withdrawal symptoms, which is why I am here, cleaning up my act.
Although I went down kicking and screaming, I always understood that my husband was right for putting a halt to all credit card spending until we were ready to be responsible users. We did what many newlyweds do – we got a joint card almost as soon as we got married and bought things that we thought we needed for our new life together. The problem was that we didn’t have the money to get those things outright; thus, the use of credit. This kind of spending put us in a vice that really began to squeeze when unexpected situations arose, pinching our finances so hard that accounts became delinquent.
How did that happen?
I believe that, at least for me, the problem began when the foundation was laid for my conceptual understanding of credit. Besides the fact that my teacher was an eighteen year old girlfriend, there were negative influences and temptations on every side. College campuses are now lairs for predatory lenders with magic plastic cards, giving you a free t-shirt or tote bag for books in exchange for your credit application. Hip, trendy boutiques make it all too easy for young people to obtain store credit. So, my belief system concerning the purpose for and availability of consumer credit was corrupted from the very start.
I bought into the idea that credit was a pipeline as opposed to a lifeline. From what I had gathered from my friends and the credit card companies, consumer credit was there so that I could purchase things I couldn’t afford and simply pay for them later. As long as I made small monthly payments, I could buy whatever I wanted, up to my credit limit. Credit was a money pipeline, creating cash flow in the present based upon resources from the future. I could keep the pipeline going, so long as I put a little cash into it on a regular basis.
While that sounds good, it’s a shame that it’s completely untrue!
Consumer credit was originally developed as a lifeline, primarily for the well-to-do and business owners in order to purchase necessary equipment or other assets that would either appreciate in value or help them turn a profit. That’s a far cry from getting some new clothes (that I really can’t afford) this week, even though I don’t get paid until two weeks from now.
Well, after living a while with this “pipeline mentality”, I soon came face to face with the realities involved with racking up debts that I couldn’t pay, and then being denied the help I really did need in the future because of past indiscretions. Then, I turned around and started fresh again when I got married. Apparently, I hadn’t learned my lesson in college.
I sure did learn it during my stay in credit card rehab, though. It’s actually been a couple of years now. I honestly believe that I have been rehabilitated. But, just to be sure, we don’t plan on getting another credit card until we know exactly what we will use it for and that we will pay the balance off every month that we use it.
Apparently, living within one's means is so uncommon these days that the New York Times reports a 'cultural shift' moving Americans toward not living like debt is a lifestyle, but like the burdensome financial responsibility that it is. Because of the economic slow down stemming from increasing foreclosures and unemployment, fresh credit is harder to attain, so people are cutting back. That's what the New York Times is reporting.
Is being marginally responsible news now?
What happened to the values that we learned growing up? What happened to saving for a rainy day, not taking more than you needed, exercising restraint? I understand that sometimes people find themselves in a tough spot and often have no choice but to use credit to live, but most of us don't fall into that category. Most of us have financed lifestyles that our paychecks can't justify. Most of us have at some point or another lived as happy contributors to the debt carrying culture we call Western living.
Well, now the chickens have come home to roost. It's time for us to pay up and live like people did before consumer credit became mainstream.
Teaching Kids to Manage Credit: It's as Easy As ABC
Good credit starts at home and spreads abroad -
Well, the old adage actually says "charity" instead of "good credit", but the latter case still rings true. When kids are taught financial literacy and responsibility growing up, they take those lessons with them throughout their lives, eventually teaching their own children.
My mom and dad had no idea that I would need to become financially literate before I left home. My parents had children in their later years, so we are from two totally different generations. Sure, they taught us basic spending and savings skills, but there was not much mention of credit, investments, retirement funding, or anything that "grown up." They simply thought that we had time to learn those things.
They realized that they were wrong when I came home from college with a plummeting credit score and some serious unpaid bills.
There are lots of families, however, who are aware and are taking action early. This recent USA Today article highlights some great strategies that real parents are using to foster fiscal fitness in the lives of their children. I saw some things that I plan on implementing with my little ones when they come of age.
Hopefully, they will learn from my errors and omissions and provide even better training for their children...
Life Lessons: How Will Your Children Learn About Credit?
I remember my first credit card - it was a store card for a popular fashion outlet. I recall how nervous I was as I completed the application; I didn't think that I would be approved. Despite my financial advisor's assurance that I would easily attain this line of credit, I found myself anxious, uncertain if they would trust me that much. And why should they? I was an eighteen-year-old college freshman who's financial advice came from a nineteen-year-old.
My best friend was one year older and that much wiser, but she was my role model 500 miles away from our home in a brand new environment. She told me that I should have this card for emergency party clothes and other such dire necessities, and since I could also use it in their sister company's catalogue, it was an absolute must-have.
Who could argue with that?
A well educated, financially literate young adult could. My parents had no idea that I needed to be taught about the proper use of credit because they did not anticipate it even being an issue so soon. I was supposed to be a mature adult before anyone would even approve me for a line of credit. By then, I should have had the wisdom to know what to do.
Needless to say, I waltzed down a slippery slope that quickly led to bad credit. I am still recovering. Years later, I still have the same best friend, whom I still tease, accusing her of single handedly ruining my credit with her bad advice. However, it wasn't her poor advice that sealed my fate, but the lack of good advice from the proper sources.
Bottom line: I am not going to let my kids go down the same road I did. I am going to teach them about money and credit. If I don't, who's going to teach them? Predatory lenders, and teenaged peers who really have no idea what they are doing, that's who.
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