2014 housing outlook: Home prices head higher

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2014 housing outlook: Home prices head higher

After a surge in home values in most cities in the past year, prices will increase more slowly in 2014.

By Pat Mertz Esswein of Kiplinger

Home prices will rise in 2014 but at a slower, more steady pace compared with historical trends.
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The housing recovery has pushed up home prices nearly everywhere. In the past year, home prices rose in 225 of the 276 cities tracked by Clear Capital, a provider of real estate data and analysis. (See how home prices are shifting in 276 metro areas.) Prices nationwide increased by 10.9 percent, pushing the median price for existing homes up by $30,000, to $215,000. For people who have waited to sell their home or refinance their mortgage, that's good news. (Bing: How are interest rates looking this week?)

Rising home prices in Seattle enabled Mike and Kristin Litke to refinance their first mortgage last summer and pay off a second mortgage that had an 8.2 percent interest rate. The Litkes, who bought their three-bedroom, 1.5-bath home for $512,500 in 2007 at the peak of Seattle's housing market, had used the second mortgage to avoid paying private mortgage insurance. In 2010, just as home prices in the area hit a trough, they refinanced their first mortgage to a 30-year fixed rate of 4.375 percent but were stuck with the second mortgage because they didn't have enough equity to do a "cash-out" refi.

This time, however, their home appraised for $521,000, allowing them to refinance into one 30-year, fixed-rate mortgage of $416,800 at 4.25 percent. They have reduced their monthly payment by $360, giving them some wiggle room in their budget and providing an infusion of college-savings funds for their kids: Stephen, 3½, and Stella, 10 months.

What's ahead
In 2013, a sense of urgency drove traditional buyers hoping to take advantage of still-affordable home prices and historically low mortgage rates. Buyers found selection limited and were often forced into bidding wars with investors and other buyers who paid cash. Sellers reaped the rewards in terms of quick sales, often above the asking price.

Almost half of the cities tracked by Clear Capital experienced double-digit increases in home prices, led by Las Vegas, with a gain of 32 percent. Such spikes reflected a continuing "correction to the overcorrection," says Alex Villacorta, vice-president of research and analytics for Clear Capital. Buyers and investors rushed in to snap up homes with prices that had fallen too far. Homes continue to be affordable, despite recent run-ups — on average, prices are still 31.5 percent below their 2006 peak. The percentage of monthly family income consumed by a mortgage payment (assuming a mortgage rate of 4.1 percent) is just 15.6 percent, on average, compared with 23.5 percent in mid 2006.

"Houses are very cheap," says David Stiff, principal economist at CoreLogic, a property and mortgage-data analytics company.

Market observers agree that home prices will rise in 2014, but at a slower, more steady pace compared with historical trends. Clear Capital forecasts that home prices nationally will rise by 3 percent to 5 percent in 2014, about the historical average. Kiplinger expects an increase of 4 percent.

"The most notable thing about 2014 will be how un-notable 2014 is," Villacorta says.

Meanwhile, the Conference Board, a nonprofit association of businesses, found that the percentage of consumers who intend to buy a home in the next six months was the highest since 2000. Adding to the push: pent-up demand among young people who, hampered by lack of jobs or insufficient income, have been living in their parents' basements or sharing apartments with roommates. Celia Chen, a housing analyst with Moody's Analytics, says Moody's expects the economy to expand enough in the coming year to enable young people to begin moving out. They'll probably rent first, but low vacancy rates and higher rents will prompt some renters to move on to homeownership.

'Listed': What young homebuyers really want
As home prices continue to rise, more owners who had been underwater — meaning that they owed more on their mortgage than their home was worth — will emerge from the sidelines and start selling and buying homes. CoreLogic reports that almost 3.5 million homeowners were lifted out of negative equity between the end of 2012 and mid 2013. Nevada, Florida, Arizona, Michigan and Georgia have the highest shares of underwater homeowners.

A sellers market
In the past year, sales of existing homes and condos rose by 11 percent, to 5.29 million — almost the highest level in four years. The National Association of Realtors expects sales to remain about the same in 2014. Sales nationally have increased across all regions and in all but one price category, signaling a broad-based recovery.

MSN Money: Getting a mortgage is about to get harder
Although sales of entry-level homes (priced at $100,000 or less) have fallen by almost half in the past year in the West, they're still rising in the Northeast, where the job recovery has lagged behind other regions. Sales of homes priced between $750,000 and $1 million have risen the most.

"A consistent stock market recovery for a prolonged period has opened up the wallets of upper-income homeowners," says Lawrence Yun, chief economist for the National Association of Realtors.

Kitchen Remodeling

Tip #9: Kitchen Remodeling

Kitchen remodels historically provide a significant return on investment, but you shouldn’t lose sight of practicality and designing to your personal style Make sure your kitchen works for you by answering the following questions before beginning any remodeling project:

Don’t fall prey to a designer’s vision that doesn’t match your own. You have to live with your new kitchen, so make sure it's exactly what you want.   If you seek financing for a remodel or a new home purchase—or you know someone who does—please allow me to put my expertise to work for you. Call today to set up a consultation so we can discuss the possibilities.   Sincerely,

THREE FORGOTTEN ACTIONS THAT WILL EXPLODE YOUR SUCCESS

THREE FORGOTTEN ACTIONS THAT WILL EXPLODE YOUR SUCCESS

Written by Dirk Zeller

In my journey coaching and training salespeople for over a decade and observing salespeople up close for more than two decades, there are really three actions that are often neglected by salespeople. I have never met a salesperson who didn't become a top level salesperson when they applied these three actions in a consistent manner over time. The truth is you should begin these actions day one of your sales career and never stop.

1. Personal development

The books that we read, seminars we attend, audio training we listen to, and videos that we watch all dramatically influence our level of sales and success. There is so much to read, listen to, watch, and learn for a salesperson to reduce their time invested and increase their sales.

I remember like it was yesterday, almost twenty years ago, my first success seminar. I was fascinated with the speaker's vast understanding of how to become more successful; how he broke success down to a simple series of actions. One of the actions was personal development. He asked the question of the attendees, "How many books have you read in the last year?" I quickly realized that my number was a goose egg. Scanning back the last few years of my life since college the number of books I had read would be less than the fingers on one hand. I again understood those were not good numbers. I realized the low numbers in my bank account aligned with the low numbers in books read, seminars attended and self improvement audio trainings listened to.

Maybe you are having the same type of lightning bolt moment I had some twenty years ago. Let's fast forward twenty years. The numbers of books, audio training, and seminars, as well as the hours invested in DIPA to devour them are almost uncountable. The personal bank account, while not uncountable, has achieved the definition of financial independence for most people although, I have not quite achieved my wife's definition based on her shopping habits.

Wherever I have found you today in your formal education journey, whether you're a college graduate, you have a graduate degree or just a high school diploma doesn't dramatically influence your level of success in sales and the management of your time. Your formal education, whenever it ended, enables you to make a living. Your personal education gains you access to your fortune. It's the investment of time you make toward that personal education that matters most.

Turning your car into an audio university:

Most of us spend an extended time of our lives in our cars. The natural habit for most of us is to turn on a CD or the radio and listen to music or talk radio. My view is; "What a waste." I rarely listen to these mediums. It's more likely that I am listening to "Wheels on the Bus" because of Annabelle my young child than "Wheel In the Sky" by Journey. It's most likely that I am listening to something that will expand my learning on CD or podcast. With the hours we spend in our car annually we could achieve the equivalent of a college degree in a few years. Turn your car into a learning center for sales skills, financial wealth, relationships, attitude, success, motivation, religion, or any other topic you desire.

2. Role-play and practice

The need for salespeople to role-play and practice their craft is essential. If we invest our time to role-play and perfect our scripts and skills of delivery we will improve our sales. Salespeople do not invest enough time as a whole in role-play and practice.

To improve the quality of your message, you can rely on the two following theories:

The X Theory of Success:

Becoming proficient at anything always takes people a certain amount of time, which I call X. X is different for each person based on your innate talents and previous experiences and skills. The more innate and previous experience you have, the less practice you need.

For example, perfecting your presentation may take you 100 practice sessions, in order to deliver it with power and conviction, handle objections, and persuade the prospect to sign the contract. I may have a tougher time perfecting my message. I may need to practice 200 times before I get it down pat. However, the issue isn't that I take twice as long as you to achieve success, but that I have an idea of where X is, and I'm working toward it regularly.

The Y Theory of Choice:

I now have a decision to make. Because I know I must practice my presentation 200 times, I have a choice of how long I will take, which is the Y theory of Choice in action. I can take ten years, five years, two years, one year, or perhaps even just six months. If I only conduct my presentation live, in front of prospects, and don't practice, it'll take me a long time to reach my 200. For example, say I'm in front of prospects three or four times a month, I may need more than five years to complete my 200 presentations. This is where too many salespeople miss a critical opportunity to make a positive choice. They don't factor in greater frequency of practice in their equation.

Your success in improving the quality of your message is determined by crossing the finish line (X) and using the shortest amount of time to get there. A top salesperson uses a combination of presentations to prospects and a larger number of practice or role-play sessions to advance farther faster when striving to improver her message quality.

3. Performance Evaluation

Successful salespeople are most honest with themselves and where their performance really lies. They are able to look at themselves, their skills, and performance in the moment in an objective, real, honest, and evaluative fashion.

The time you invest in evaluating your personal performance I put in the DIPA category. The time you evaluate others on the sales team or administrative team I put in IIPA. The reason for this distinction between the two, in my view, is that your individual personal productivity produces the greatest results for a salesperson. What you do with your time, how you invest it, who you call, what skills you possess, how you work to improve your skills all effect your personal productivity.

As salespeople with aspirations to improve and increase our income we have to be willing to personally evaluate our performance on our prospecting.

How was our opening statement?
Did it create a high level of connection and interest?
Did we harvest a viable lead?
How effective is my lead follow up sequence?
What's the conversion rate of leads to a sales presentation?
What's the conversion rate from leads to sales?
What's the choke point to improvement in this area?
How well do I present my sales presentation?
Do I give myself high marks in confidence, conviction, enthusiasm, and assertiveness?
Did I listen or speak more than my prospect?
How well do I present benefits aligned with the needs of prospects?
There are also sub-level evaluations for a sales presentation in the area of objection handling and closing. These two areas really separate the top level salespeople from the middle of the pack.

How well do I know the objection scripts furnished by my company?
Do I practice them weekly?
Can I deliver them under pressure in a sales presentation with eloquence?
Can I shift at the end of an objection a prospect raises to closing?
Do I ask for the order in closing more than four times?
The ability to invest time to take an honest look at yourself and your deficiencies takes guts. It's not fun to evaluate problems, mistakes, and faults. While most salespeople would rank prospecting as their least favorite activity, I would say that personal evaluation that is done objectively is really the most difficult. In prospecting we might get rejected by someone, but it's someone we don't know or someone who is barely known in most cases. Personal evaluation can open the door to potential personal rejection by oneself. If you never look in the mirror or check your bank statements you will never know what you look like or what you are financially worth. You have to be willing to know the truth in personally evaluating your performance.

 

For FREE business plan and goal setting material: Call me direct at 517-4959 or email me at Jerry@myfairway.net.

HOME DESIGN AND REMODELING TRENDS FOR 2014

HOME DESIGN AND REMODELING TRENDS FOR 2014

Written by Jaymi Naciri

The end of the year brings many things. Special time spent with family and loved ones. Presents from Santa. The promise of a fresh start. And, if you're like us, an insatiable desire to change up your environment by updating it with the latest trends.

If you are feeling the pull toward renovating, redecorating, or revising your ...home for 2014, there are some exciting trends you may want to incorporate.

We break it down for you below.

Color Trends

Radiant orchid is the Pantone color of the year, but color trends for 2014 are also feeling blue. Blues across the color wheel are predicted to be hot hues for 2014.

Navy, in particular, has captured the fancy of design experts. "Navy blue will be a big trend for 2014. I'm seeing a lot of the shade on the runways, on the streets, in editorials, in chic interiors... I actually think everyone will get it in 2014," said designer Mark D. Sikes in House Beautiful's Top Decorating Trends for 2014.

Glamming It Up

Another way to change up your space: inject a glam feel as a nod to art décor or the Great Gatsby. This is another hot 2014 trend showing up in wallpaper, textiles, furniture, and accessories.

"Move over white walls, in 2014 we'll be seeing rooms with a lot more drama and glamour. Dark, moody walls in black will be the perfect backdrop to the metallic accessories that we're all loving right now," said Jeanine Hays of aphrochic.com in House Beautiful.

2014 decorating trends
Mecca Interiors
In the Kitchen

When it comes to renovating, kitchens are going glam too. "The kitchen has long since become the heart of the home, and now designers are dressing it up accordingly," said Elle Décor, "with elaborate custom cabinetry painted in rich gemstone colors, and accented with gleaming brass or chrome, all lit by unusual lighting fixtures. Kitchens are becoming downright glamorous."

glamours kitchens
Elle Decor
Floating shelves are also a hot 2014 design trend according to remodeling firm the Neil Kelly Company.

Bathroom Beauties

A recent Hanley Wood survey revealed that 58 percent of those planning to renovate in 2014 are planning bathroom updates.

The trend toward creating a spa-like environment in the bathroom continues, with "clean lines, fluidity and futuristic bath fixtures. Bring a spa-like feel to your master bath by indulging in floating sinks and softer, contoured shapes that bring a serene feel to the bathroom and give a feeling of spaciousness. Add depth to the bathroom by incorporating textures in the bathroom with mosaic tiles that feel luxurious and modern. Blend in futuristic trends like a waterfall shower, modern touch faucets, and heated floors to add interest and visual splendor," said Scott Yancey from Flipping Las Vegas.

stand alone bath
Neil Kelly
Kelly agrees, emphasizing oversized walk-in showers and elegant standalone tubs as strong bathroom trends for 2014.

The Tech Touch

For those who are remodeling, Kelly also points out the No. 1 trend for 2014 that brings some much-needed tech help to the home. U-Socket is a wall plug that "has two built-in USB ports to power devices including iPhones, gaming devices, digital cameras, Kindles and iPads... and features a smart sensor that allows it to shut off when the device is fully charged."

U-Socket
Neil Kelly: U-Socket
Want more info about 2014 trends and how homeowners' needs have changed over the years? Check out Business Week's Graphic: The House Americans Want Now.

Making An Offer

Tip #8: Making an Offer   After weeks or months of searching, you’ve found it: the home of your dreams. While one challenge has been overcome, you now begin the often-arduous process of completing the deal…beginning with making your initial offer.   Here are a few tips to help ensure your success: I hope you use this information to your advantage to purchase your dream home. I’m always available to serve as your financing advocate, and I appreciate any referrals to others who could benefit from my expertise.

The End is Near

The Jerry Ashford Team is setting up the last of our closings for 2013. We would like to thank each and every one of our clients, realtors, title companies and referrants. You have made this year a record year for The Jerry Ashford Team. We have closed more loans and loaned more money than any of the previous thirteen years. We are expecting great things out of 2014 and would love you to be a part of it.

We have committed ourselves to be the very best that the mortgage industry has to offer. We have docs out three days before closings. We fund our loans the day BEFORE we close. We have the very best in all loan products including VA Loans, Conventional Loans, FHA loans, USDA Loans and 184 Loans. We also handle construction loans and refinancing. If a loan has to do with real estate, we can help.

Our heart is with our military. The Jerry Ashford Team is committied to helping those that serve and give back. ALL of our VA loans have ZERO lender fees with up to a thousand dollar lender credit. We thank those that serve and their families. We appreciate the sacrifice and dedication to our great nation.

A big Thank YOU from The Jerry Ashford Team. We look forward to next year. Please contact our office if we can help in any way.

Jerry

10 things credit bureaus won’t say

10 things credit bureaus won’t say

They’ve got your number. And they’re not afraid to use it

By AnnaMaria Andriotis

Dave Whamond

1. “We track a lot more than just your credit.”

Credit bureaus are well known for tracking consumers’ credit history, including tabulating such details as whether they pay their bills on time and how much debt they carry. And as evidenced by the recent case of Julie Miller, who was awarded $18 million after she sued Equifax — one of the three main credit reporting bureaus — for failing to correct major mistakes in her credit report, the information they compile can sometimes be riddled with errors.

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But the bureaus also maintain information that has nothing to do with credit, from consumers’ home addresses to their employment records. While that data isn’t used to calculate credit scores, lenders can access this personal information and use it to help evaluate borrowers who are applying for credit — even to justify denying them a loan altogether. Individuals who change addresses often, for instance, may be presumed less financially stable and harder to track down if unpaid debts ever need to be collected, says Louis Hyman, a consumer-credit historian and assistant professor at Cornell University. Similarly, those who change jobs every few months could be viewed as more likely to miss payments, he says.
The credit bureau industry says it needs this identifying information to develop accurate credit report databases. Norm Magnuson, a spokesman for the Consumer Data Industry Association, which represents credit bureaus, says storing consumers’ addresses helps bureaus identify the correct credit report to give lenders when a consumer applies for credit. (Questions to the three main bureaus about industry practices were directed to the CDIA.) Social Security numbers by themselves often won’t suffice, he says, because some consumers apply for credit without providing that information. He says the CDIA cannot speak to such lender underwriting practices though they are regulated by laws that protect consumers.
Consumers’ salary information can also be up for grabs. Equifax, one of the three national credit bureaus, maintains a private database of salary records on more than 33% of U.S. adults — information it acquired when it purchased a data-mining company in 2007 — and it can sell this data to eligible lenders, including mortgage and car finance companies, that are trying to gauge a consumer’s ability to repay a loan. This year, seven members of Congress sent a letter to Equifax asking for proof that its subsidiary isn’t breaking laws that protect personal privacy. (The other two major bureaus, Experian and TransUnion, say they don’t collect salary information.)
Timothy Klein, a spokesman for Equifax, says the company provides salary information only when permissible under the Fair Credit Reporting Act, which went into effect in 1970 and regulates how consumer information can be distributed. A company statement to congressional members stated that it’s in “compliance with all applicable consumer protection laws.” Also, he says, the company will only provide this data to lenders if the consumers first agree to it.
Lenders have to ask consumers for permission to verify their employment or income, typically by including language authorizing that disclosure in the loan application, says Klein. If the consumer declines, he says, it’s up to the lender to determine whether to offer a loan without income information.
2. “Selling your secrets is how we make our money.”
Each of the three major credit bureaus, Equifax, Experian andTransUnion, maintains more than 200 million files on consumers, according to the Consumer Financial Protection Bureau — tracking about 63% of the U.S. population. And the bureaus sell some of that information to lenders. Selling data is a primary revenue source for the credit bureau industry, which had U.S. revenue of about $4 billion in 2011, according to the CFPB. Bureaus also sell data to other companies, including insurers and debt collectors, as well as to consumers, says John Ulzheimer, president of consumer education at SmartCredit.com, a credit-monitoring site.

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That’s largely how credit card solicitations end up in consumers’ mailboxes. Card issuers pay credit bureaus for the contact information of individuals who meet specific criteria, like a certain minimum credit score. Similarly, mortgage lenders pay bureaus for a list of consumers within a specific credit score bracket and mortgage balance so that they can contact them with refinancing offers. Nessa Feddis, senior vice president with the American Bankers Association, says the process helps lenders find customers who are likely to be interested in and qualified for the loans they’re offering.
Video: How to fix mistakes on your credit report
Lenders also pay the bureaus for updates on existing customers: Some card issuers will pull credit scores on their cardholders to determine if they’ve become riskier, says Ulzheimer. They can use a lower credit score as a basis for cutting a customer’s credit line or increasing their interest rate on new purchases, he says. (They can also check to see if their customers have become less risky, in which case they can make more credit available.) Feddis, of the ABA, says every transaction on a credit card represents a new loan, so lenders check on their customers to make sure they’re still eligible for revolving credit and likely to be able to repay the loan.
To be sure, the Fair Credit Reporting Act states that credit bureaus can provide consumers’ information to companies that plan to make a firm offer of credit. Magnuson of the CDIA says the credit bureaus are careful about who has access to their systems, and they vet the lenders’ intended uses of credit reports. He adds that consumers can benefit from this dissemination, because they stand to receive loan offers that are less expensive than what they may currently have. Individuals who’d like to avoid solicitations can remove their name from the lists that credit bureaus sell by visiting OptOutPrescreen.com.
3. “What we know could cost you a new job.”

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Blemishes on a credit report don’t just make it tougher to get a loan — they can also make it more difficult to get a job. Federal law permits employers to pull job applicants’ credit reports and to use the information within them as grounds for not hiring someone. In fact, roughly 47% of employers say they pull credit reports on some or all job applicants, according to the Society for Human Resource Management. If a credit background check reveals negative information, employers say, certain credit problems, such as outstanding judgments, accounts in debt collection and bankruptcy, are most likely to make them decide not to extend a job offer, according to a separate SHRM survey. The assumption is that a bad credit report might indicate poor work habits and decision-making.
Opponents of the practice question whether there’s a connection between a poor credit file and work performance. “Things that might make you have bad credit have nothing to do with whether you’re a liability,” says Hyman.
Job applicants have to be informed if their credit report will be reviewed. (At least seven states prohibit companies from conducting credit checks on many job applicants.) Under the Fair Credit Reporting Act, which regulates how consumer credit information is handled, companies must get permission from applicants in writing to check their credit reports. While applicants can deny the employer permission, they might want to consider instead explaining the circumstances that led to their credit problems, says Ulzheimer, since that may improve their chance of getting the job.
4. “Good thing no one’s reporting on our mistakes. Oh, wait.”
When errors appear in credit reports, the impact on those borrowers can be severe. Negative information, like missed payments or a foreclosure, can send the borrower’s credit score (which is calculated based on the details in the credit report) into a tailspin. That, in turn, will make it harder to get approved for credit, increase the chances of ending up with higher interest rates on loans, and even make it tougher to rent an apartment (many landlords check consumer credit) or, again, get a job.

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This month, the Federal Trade Commission released a study showing that one in five consumers has an error in at least one of their three credit reports. Some 13% of consumers had credit report errors that impacted their credit scores, while 5% had errors that could lead to paying more or being denied credit.
A variety of mishaps can lead to errors — most of which consumers have no involvement in. That includes cases of identity theft and instances when creditors identify the wrong person as owning debt, like the account holder’s spouse, according to testimony by the National Consumer Law Center at a Senate hearing in December. That same month, a report by the CFPB found that almost 40% of consumers’ disputes relate to debt collections.
The credit bureau industry, however, says the FTC data confirms that few errors of consequence occur. The CDIA’s Magnuson says the bureaus work with lenders to reduce errors, and that in most cases, consumers aren’t disputing that an account is theirs but rather have an issue with how their lender is reporting an account, such as the balance or whether they missed a payment.
5. “You all look so much alike…”
When consumers order their credit reports, they have to provide their full name, Social Security number, date of birth and address. But credit bureaus often use fewer pieces of information to match account activity — like a report from a lender that a person has applied for a new line of credit — to borrowers’ credit reports. In many cases, they’ll only use seven out of the nine digits of the borrower’s Social Security number, says Chi Chi Wu, a staff attorney with the National Consumer Law Center, a nonprofit focused on consumer advocacy.

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This practice becomes problematic when people have similar names and Social Security numbers, because it can lead to “mixed credit profiles,” when credit information relating to one consumer is placed in someone else’s file (also the main issue behind the $18 million lawsuit filed against Equifax). Critics claim the bureaus have been aware of this issue for years. In the 1990s, the FTC began requiring the bureaus to take better steps to prevent mixed files. But mixed files are an ongoing problem, says Ulzheimer. This includes “ownership” disputes, like when a debt collector attributes an account to the wrong borrower. In the last three months of 2011, 33% of credit disputes related to claims by a consumer that an account in their file did not belong to them, either because of an error or identity theft, according to the CFPB.
If the erroneously-applied information in the credit report is negative, of course, that will result in a lower credit score for the person whose actual name is on that file. “It’s one of the worst types of errors that can occur,” says Wu.
Magnuson says the credit bureaus are careful in matching data. He adds that a 100% match wouldn’t solve such concerns and says it would force bureaus to omit account activity from credit reports whenever there’s a small mistake in, say, the last two digits of a Social Security number, even if most of the identifying information is correct.
6. “… it’s tough to tell you apart from someone pretending to be you.”
In many cases, consumers only find out they’re victims of identity theft when they pull up their credit report and spot a fraudulent account, says Jay Foley, partner at identity-theft consulting firm ID Theft Info Source. In fact, identity theft is a cause of credit disputes, according to the CFPB.
While lenders have mechanisms in place to stop identity thieves, they’re not always successful. In those cases, when thieves apply for credit under a consumer’s name, the lender pulls that unsuspecting person’s credit report, tells the credit bureaus to add the loan account to that report, and then communicates missed payments to the bureaus, tarnishing the credit score tied to that account. Then, when consumers find out they’ve been a victim of identity theft — rather than the burden of proof being on the credit agency or lender — they have to provide the credit bureaus with evidence of their innocence.

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Consumer advocates say the credit bureaus share some of the blame for these cases. Wu, of the NCLC, says the bureaus’ loose matching procedures contributes to identity theft problems. If bureaus matched all the information, including the person’s full name and full Social Security number, fewer identity thefts would occur, she says. The credit bureau industry disagrees, saying that the duty to verify someone’s identity is with the lender. The CDIA’s Magnuson says that credit bureaus have identity verification systems to protect consumers and that bureaus’ databases are not the entry point for identity theft or the sole source for its prevention.
Consumers can take some steps to avoid becoming victims of identity theft. For instance, they can place fraud alerts on their credit reports for free by contacting the credit bureaus. Lenders will then have to try to verify an applicant’s identity before issuing credit. Many banks also sell identity-theft services — costs can run $10 or more a month — that mostly involve daily credit monitoring, including flagging new accounts opened in a consumer’s name and sending alerts to that individual.
Consumers who learn a fraudulent account has been opened in their name should consider filing a police report and sending a letter with a copy of that report to the credit bureau and the lender who approved that account. In such cases, lenders will usually get fraudulent accounts removed from a credit report within 90 days, says Foley.
7. “Your ‘credit dispute’ doesn’t quite capture our attention.”
Credit bureaus recommend that consumers check their credit reports at least once a year (they can do this for free at annualcreditreport.com) and file a dispute if they notice any errors. But consumer advocates contend that the dispute system is broken. No matter how many papers and other documentation consumers submit to the bureaus, the bureau will apply a two- or three-digit code that offers a brief summary of the dispute, such as “not his/hers” or “disputes amounts,” according to the NCLC. The bureaus will send that code and a one-page form to the creditor involved in the dispute. “We’ve seen [court] cases where the consumer attached canceled checks, letters from [lenders], and court judgments saying this is wrong and none of that gets sent,” says Wu. (The CDIA says it’s in the early testing stages of sending consumers’ documentation to lenders.)

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A CFPB report released in December found that the bureaus resolve an average of only 15% of consumer disputes internally, while the remaining 85% are passed on to the lenders or creditors. It added that “the documentation consumers mail in to support their cases may not be getting passed on to the data furnishers for them to properly investigate.”
Magnuson of the CDIA says that lenders are the most qualified to respond to questions of accuracy and that the dispute system is designed to “quickly and accurately deal with consumer disputes, which is what consumers want.” He says the bureaus serve as a point of contact for consumers and act as a clearinghouse for access to lenders who will make the final determination.
But experts say when lenders are forwarded consumers’ discrepancy claims, some will just review their own records with the bureau’s to make sure they match — though both could be wrong. Wu says lenders will use this as a basis to reject the consumer’s claim. The American Bankers Association says lenders conduct investigations but that how deep they go depends on the nature of the consumer’s dispute.
See also: The biggest threat to your credit score
8. “But bypass us on a dispute, and it’ll cost you.”

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If consumers believe a credit bureau wrongly dismissed their dispute, they have the right to take the case to court based on the Fair Credit Reporting Act. But if consumers bypass the bureaus and contact the lender with their dispute, they won’t have the right to go to court if that lender claims there’s no error. The CDIA says that while writing the law, Congress recognized that exposing lenders to such lawsuits could result in an unintended consequence: Lenders might stop providing credit-related data about consumers to credit bureaus, which in turn would harm consumers whose reports and scores wouldn’t reflect that they pay their bills on time and are in good credit standing.
Ulzheimer says the law leaves consumers in a difficult spot but recommends that they stick to dealing with the bureaus so that they don’t give up their legal right to a court case should they need it. He suggests they keep all their communications with the bureaus in writing and make copies of all the letters they receive and documentation they submit. That will help them build evidence in case they need it in court.
9. “By the time you’re done fighting us, your toddler could be a teen.”

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Upon receiving a consumer’s dispute, credit bureaus legally have between 30 and 45 days to respond with their findings. But if the bureau, following the lender’s investigation, doesn’t agree that there’s an error, borrowers can be stuck fighting that decision for years. The NCLC, for instance, says it has worked with attorneys representing consumers who were trying to resolve such issues in court for up to 10 years. The CDIA, for its part, cites a 2011 credit-industry-funded study by the nonprofit Policy and Economic Research Council, which works on public and economic policy matters, which found that 95% of consumers are satisfied with the result of their disputes.
Consumer advocates contend there are few options for consumers, and they often require waiting to recover their true credit history for many years. Individuals who decide not to fight the bureaus will be stuck with the error for seven to 10 years — that’s the amount of time it takes for negative credit events, such as bankruptcies and foreclosures, to be automatically removed from a credit report.
See also: Consumers’ real problem with credit scores
10. “Be careful what you pay for.”
For a price ranging from $7 to $20, credit bureaus and other companies will sell consumers their credit score. But in some cases, consumers are paying to see an “educational score” — one that’s based on their credit activity and can give them an idea of where they stand as borrowers — rather than the actual score a lender will see when reviewing their loan application.

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One out of five consumers who purchase their credit score will likely receive a score that is “meaningfully different” than the one a lender would get, according to a CFPB study released in September. As a result, the CFPB says, they may end up with loan terms that are different from what they expected, and they could waste time applying for a loan that they’re not qualified for. The CDIA, which represents the credit bureaus, says that no single score is used by all lenders and that as an educational tool, credit scores can help consumers better understand their creditworthiness relative to others.
While consumers tend to think of one credit score, there are actually many different types of scores, each with its own mix of payment history, debt and other factors, which the bureaus are selling. Equifax, Experian and TransUnion each have at least one score of their own, and then there’s also the so-called VantageScore, which was created by the three bureaus. Though lenders have access to many scores, the FICO score — a measure of credit risk that ranges from 300 to 850 and is calculated based on the data in credit reports from the three major credit bureaus — remains the most widely used in 90% of consumer and mortgage loan decisions, according to CEB TowerGroup, a financial services research firm. Consumers can purchase their FICO score on MyFico.com, FICO’s consumer division.