Is Identity Fraud Driving Your Interest Rates Higher?
A new Experian survey finds some consumers don’t even check their credit score before major purchases.
A new survey from Experian – one of the three big credit reporting agencies in the U.S. – finds that over half of Americans may be at risk of facing higher interest charges as a result of identity theft and fraud. Given the string of data breaches and corporate database hacks that have been reported over the past few months, this could mean significantly more added interest on major purchases, like homes and cars.
So how does identity theft equate to higher interest charges?
Identity theft adds negative items to your credit report that can drive down your credit score. This includes things like extra accounts that don’t get paid and wind up in collections, or added charges that push you over your credit limit on one or more credit cards.
The biggest problem is that many times consumers don’t know about fraud until they apply for a loan on a major purchase, like a home or car. You think you have good credit, until the lender tells you otherwise and says you can’t qualify for low interest rates. Higher rates mean more money paid out over the life of your loan – and this really adds up on big-ticket purchases.
The survey found only 60 percent of homebuyers and a low 25 percent of car buyers actually check their credit before they apply for a loan. If you need to make the purchase soon and you don’t check your credit early, you won’t have enough time to repair your credit before you sign the loan. Often, the credit repair process can take up to six months, so it may be too long to wait if you haven’t planned ahead and checked your credit early.
With the recent string of identity theft cases that have made news since the winter holidays, it’s surprising that 82 percent of consumers surveyed felt confident about their credit. Even if you have been responsible, identity theft means someone else may be taking liberties with credit in your name.
Still, the solution is simple – just check your credit before you intend to make a big purchase. Ideally, checking your credit six months ahead of time gives you room to fix any issues you may find. This helps ensure you get the lowest interest rate possible.
If your own problems with debt are driving up your interest rates, remember, we can help. Call Consolidated Credit today to talk to a certified credit counselor about how you can cut your debt and start building better credit. You can also take the first step online with a request for a Free Debt Analysis.