Dear Liz: I am a 27-year-old contractor now working in Iraq. I’ve paid off all the outstanding credit card debt on my credit report as well as my graduate-school loans, and my undergraduate loans are current. It is taking some time for my credit scores to improve. I wanted to invest in some rental properties, but because of the current state of my scores, it is looking harder to accomplish by the day. Would you recommend placing a healthy down payment on a vehicle, making the payments on time and then pursuing my investments?
Answer: An installment loan such as a car loan can indeed improve your credit scores as long as you make the payments on time and don’t overextend yourself. Clearly, though, this purchase will have to wait until you’re back home, since any credit you get abroad won’t help your credit scores in the U.S.
While you’re waiting for your scores to improve, you can build up your savings — real estate investors need a fat cushion to cover down payments, repairs, maintenance and vacancies — and learn more about the skills you’ll need to be a successful investor. You don’t need to waste your money on expensive seminars, since everything you need to know is available in bookstores and libraries. One book to get you started is “Real Estate Investing for Dummies” by Eric Tyson and Robert S. Griswold.
Blocking access to credit report
Dear Liz: Is it possible to put some sort of block on one’s credit reports to prevent current and subsequent unsecured creditors from attaching additional negative marks? I’ve been told by someone I was referred to (I think he’s an ex-mortgage professional) that it’s possible to place blocks on one’s credit to prevent further negative reporting by unsecured credit card issuers as long as they don’t have a copy of your actual Social Security card. It sounds too easy. Everyone would be doing it to minimize credit-rating damage.
Answer: Of course they would. What the former mortgage pro may have been referring to is a credit freeze, which allows you to block potential future lenders from seeing your credit report.
Credit freezes are an important tool for victims of identity theft or those at high risk of having their identities stolen. With the freeze in place, a lender processing the application of the identity thief won’t be able to access your report and will almost certainly refuse to open a new account for the criminal.
If you need credit, you will have to unfreeze your report to allow a lender to see your data. Credit freezes are available at each of the three major credit bureaus that collect your credit information, although there are typically fees involved for freezing and unfreezing your files.
A credit freeze does not prevent your current lenders from reviewing your credit reports or adding new information to them. The best way to prevent negative information is to pay your bills on time, borrow only what you can afford to repay and prevent disputes from going to collections.
Free-report site won’t charge you
Dear Liz: I saved your column about getting free credit reports at AnnualCreditReport.com. Today I e-mailed my request but the site said I had to send $1 via a credit card. Does this sound right, and is it a safe website and the correct place to request the credit report?
Answer: If you were asked for any money, even if it was framed as a “donation,” you weren’t at the right site. Neither were you at the correct site if you were told you could get access to your credit report in a couple of days, rather than instantly. These lookalike sites are geared to sign you up for expensive and usually unnecessary credit monitoring. They’re supposed to have a banner explaining they’re not the site that offers federally mandated free credit reports, but some are ignoring the rules.
The one and only site to get your free credit reports is https://www.annualcreditreport.com. If you were misled or deceived by any other site, please make a complaint to the Federal Trade Commission at https://www.ftccomplaintassistant.gov.
Liz Pulliam Weston is the author of the book “Your Credit Score: Your Money and What’s at Stake.” Questions for possible inclusion in her column may be sent to 3940 Laurel Canyon, No. 238, Studio City, CA 91604, or via the “Contact Liz” form at asklizweston.com. Distributed by No More Red Inc.