lexington law Archives - Hanover Mortgages

May 6, 2021

How long does it take to get a credit card? – Lexington Law

The information provided on this website does not, and is not intended to, act as legal, financial or credit advice. See Lexington Law’s editorial disclosure for more information.

If you’re considering getting a new credit card, you may be wondering how long you’ll have to wait before you can start using your card and building credit. Typically, it takes a few weeks from the time of application to receive the card in the mail. To determine the specifics, it’s important to understand the three stages of acquiring a credit card: application, approval and mailing.

Most of the time, applying and getting approved for a card happens within a matter of minutes. The main holdup is waiting for the card to come in the mail, which may take up to 10 business days. You may also spend more time waiting if you applied for a card that requires exceptional credit, which requires issuers to manually review your application and credit history.

How long does it take to get a credit card? Application time takes less than hour, approval time ranges from minutes to weeks, and mailing time ranges from 5 to 10 business days.

Step 1: Apply Online

Total wait time: Less than an hour

How to Apply for a Credit Card

When you apply for a credit card online, you’ll need to enter personal information like your name, address, income, employment status and identification info, like a Social Security number. Within minutes, you’ll likely receive an approval or denial, because most credit cards have preset approval criteria.

Getting Preapproved

Getting preapproved or prequalified for a credit card will help you get a card faster because it automates the approval process. You may either receive a preapproval offer in the mail or complete an online form with some personal and financial information. Filling out preapproval forms doesn’t have any impact on your credit score and allows your credit card offers to be more personalized.

Step 2: Get Approved

Total wait time: Anywhere from a few minutes to a few weeks

How Does the Credit Approval Process Work?

If you are preapproved or apply for credit cards with preset criteria, you’ll likely know if you’re approved or denied within minutes. However, if you apply for a credit card that requires exceptional credit, you won’t receive an instant verdict. This is because the credit card issuer must manually review your application and credit history. This can take anywhere from a few days to a week or longer. They may look at:

Negative items: Derogatory marks like late payments and delinquent accounts
Debt load: Including your debt-to-income ratio and credit utilization ratio
Credit score: A high-level indication of your credit health

How to Check Your Application Status

If you’re waiting on a mail-in application or approval that’s hard to get due to high standards, you may be able to check your application’s status online. Most major credit card issuers—except Capital One, Chase and Synchrony—allow users to check their application status online. If that option isn’t available to you, or if you prefer talking to someone, call the issuer’s card services number.

How to Increase Your Chances of Approval

Make sure to only apply for credit cards with criteria that fit your credit health. For example, some credit cards are designed for people with bad credit, while others require excellent credit. Overall, if you don’t have much credit history or if you have bad credit, you likely won’t be approved for cards with great rewards and interest rates.

Step 3: Receive Card

Total wait time: Five to 10 business days

How Long Does It Take for Credit Cards to Come in the Mail?

Unless you applied for a card requiring excellent credit, most of the waiting time is eaten up by the mailing process, which typically takes five to 10 business days.

What to Do If My Card Is Taking Longer Than Expected

If you urgently need the card or are wondering what’s taking so long, consider doing the following:

Request an expedite. Expedited delivery for new and replacement cards is offered by many issuers—and sometimes, it’s even free.
Track the card. This won’t help the card arrive faster, but it will give you a better idea of its progress. You can either check the card’s status online or call the issuer using a tracking number. This will help you learn when the card was sent and when you can expect it to arrive.
Call the issuer. If it’s been more than 10 business days or the amount of time estimated for delivery, your card may have gotten lost in the mail, or even stolen. Consider calling your issuer and requesting that they cancel the old card and issue a new one. Even though this will take longer, it’s a wise safety measure.

Credit card taking longer than expected to arrive? Request an expedite, track the card, call the issuer.

Can I Use My Card Before It Arrives?

If you need to pay bills or make important transactions before your card is scheduled to arrive in the mail, you may be able to access your card number immediately after approval. Check with your issuer to see if it offers this feature, and request an instant card number as soon as you’ve been approved. Applying and getting approved for a credit card has never been easier, especially if you’ve been practicing good credit management. Remember to use your new card responsibly to keep your credit score in the best shape possible. And remember that we’re here to help with credit repair if things happen that are outside of your control, like unfair or inaccurate reporting. Talk to us today to get started.

Reviewed by Cynthia Thaxton, Lexington Law Firm Attorney. Written by Lexington Law.

Cynthia Thaxton has been with Lexington Law Firm since 2014. She attended The College of William and Mary in Williamsburg, Virginia where she graduated summa cum laude with a degree in International Relations and a minor in Arabic. Cynthia then attended law school at George Mason University School of Law, where she served as Senior Articles Editor of the George Mason Law Review and graduated cum laude. Cynthia is licensed to practice law in Utah and North Carolina.

Note: Articles have only been reviewed by the indicated attorney, not written by them. The information provided on this website does not, and is not intended to, act as legal, financial or credit advice; instead, it is for general informational purposes only. Use of, and access to, this website or any of the links or resources contained within the site do not create an attorney-client or fiduciary relationship between the reader, user, or browser and website owner, authors, reviewers, contributors, contributing firms, or their respective agents or employers.

Source: lexingtonlaw.com

May 6, 2021

Investing during a recession

The information provided on this website does not, and is not intended to, act as legal, financial or credit advice. See Lexington Law’s editorial disclosure for more information.

When things get lean, it’s natural to want to tighten your belt and save money wherever possible. But should you stop investing completely? It’s an entirely personal decision. Get some facts and insights about investing during a recession below to help you determine what will work for you.

Is It a Good Idea to Invest During a Recession?

It depends on a few factors, including what you’re referring to when you say “investing.” If you’re talking about funding a 401(k), you probably want to continue doing so unless you would be unable to pay your necessary bills and living expenses.

But if investing means the stock market or other similar options, you should seriously consider your financial situation. If you already have emergency savings and have disposable income to risk, investing can be an option. This is especially true if you won’t be touching your portfolio for a while, so you have time to weather the ups and downs associated with a recession economy.

But you do want to be aware of the bear market trap so you don’t fall into it. Bear traps occur when a lot of investors have bought into certain stock. This increases the selling pressure, which just means that there are buyers for the stock but not a lot of stock to be had.

Institutions that want the stock to move higher may push prices lower via short sales or other strategies, making it appear as if the prices are falling. That can scare people into selling the stock. In the long run, however, the stock maintains its price or increases in value, so selling early can mean losing out on future gains. This is just one reason you might want to work with a professional advisor when investing.

7 Tips for Investing During a Recession

1. Be Patient and Think Long-Term

Buying and selling stocks rapidly to turn huge profits is mostly an event seen in movies and television. And while it’s not impossible for pros to luck into a big win, this is not typically how individuals should look at investing. It may take time for your investments to pay off, especially if the economy as a whole is struggling, so it’s important to avoid being guided by emotions and rely on logic and sound financial advice.

2. Commit to a Personal Investment Plan

A personal investment plan is a written document that includes your financial goals and what types of limitations you might have, such as what you can afford to spend on investing. Creating such a document ensures you have a logical, well-thought-out guide to turn to when things do get tricky. If you feel tempted by a seemingly perfect investment, for example, your plan can remind you what you can realistically put into this new investment.

3. Use the Dollar-Cost Averaging Strategy

Dollar-cost averaging is a strategy used by many investors, including some professionals. Its goal is to potentially reduce the volatile nature of a single purchase. The DCA strategy works like this:

You decide how much you’re going to invest in certain assets within a set period
You divide that budget over that time and make periodic purchases of the asset
You do this despite the price of the asset at any given time

The goal is to build up the investment for a long-term gain strategy. This is actually how most 401(k) investments are managed.

4. Focus on Quality Over Quantity

But don’t think that you have to buy tons of assets to be investing for the future. If you have limited funds to invest with, it can be tempting to buy up stock that is cheap just to get some quantity. But cheap stock isn’t always a great investment, and it might be better to buy a smaller number of shares in a well-trusted company with a history of strong stock performance.

5. Consider Funds Instead of Individual Stocks

Another option is to consider funds, which spread your investment over numerous stocks. You’ve probably heard that you have to diversify your portfolio. That just means investing in numerous types of assets so that if one doesn’t perform well, you have other gains to make up for the loss.

A mutual fund is an investment option that’s already diversified, for example. Plus, it’s a convenient way to add numerous assets to your equity portfolio without buying and managing numerous stocks yourself.

6. Rebalance When Necessary

While investing is a long-term strategy, active investing can’t be a set-and-forget strategy. You have to make efforts to rebalance your portfolio—or ensure someone is doing that for you—from time to time.

Rebalancing just means aligning your assets with your target goals. For example, you might have a goal of 60% in stocks and 40% in other assets. But if your stocks gain rapidly during a few years, outpacing the gains of your other assets, you could have a 70/30 split. If your goal is still 60/40, you would rebalance by selling stock, purchasing other assets or both.

7. Invest in Recession-Resistant Industries

Recession-resistant industries are those that don’t tend to succumb to downturns in the economy, often because they’re necessary. Examples of industries that have historically weathered recessions well include healthcare, technology, beauty, retail, construction and pet products.

Note that because a company is in a recession-resistant industry doesn’t mean that company itself is necessarily resistant. It’s always important to be discerning about which stocks you invest in. For example, if the company doesn’t have strong financial leadership or has known money problems, it may not matter what industry it’s in.

Review Your Finances and Decide What’s Best for You

Ultimately, only you can decide whether investing during a recession is right for you. Start by reviewing your own finances. Some things you might want to look at include:

What kind of savings you have. Having emergency savings is important, especially in a recession. Before you start investing, you may want to build yours.
Your income and expenses. You need disposable income before you can invest. That means that your income should be more than your expenses.
Your credit history. Buying stocks and investing typically doesn’t rely on you having good credit. But before you start building wealth, get a good look at your credit reports to ensure there’s nothing lurking that you might need to attend to. If you find any surprises, consider reaching out to Lexington Law for help disputing inaccurate items and working to make a positive impact on your credit.

And if you do decide to invest—during a recession or otherwise—consider working with a financial advisor to help you navigate the complexities of managing your portfolio.

Reviewed by John Heath, Directing Attorney of Lexington Law Firm. Written by Lexington Law.

Born and raised in Salt Lake City, John Heath earned his BA from the University of Utah and his Juris Doctor from Ohio Northern University. John has been the Directing Attorney of Lexington Law Firm since 2004. The firm focuses primarily on consumer credit report repair, but also practices family law, criminal law, general consumer litigation and collection defense on behalf of consumer debtors. John is admitted to practice law in Utah, Colorado, Washington D. C., Georgia, Texas and New York.

Source: lexingtonlaw.com

May 5, 2021

How long does it take to build good credit? – Lexington Law

The information provided on this website does not, and is not intended to, act as legal, financial or credit advice. See Lexington Law’s editorial disclosure for more information.

Building a good credit score takes time, when building your credit from scratch, you can typically expect to see a score within six months. If you’re working to rebuild your credit after financial setbacks that resulted in a drop in your credit score, repairing your credit comes down to ensuring you’re being financially responsible from here on out.

Establishing a good credit score doesn’t happen overnight, and sometimes it can feel impossible to recover from financial setbacks. There’s no solid timeline for building good credit, but it’s important to understand how your credit score is calculated so you know what actions you can take to get your credit in good standing. Read on to find out how long it takes to build good credit, as well as tips on maintaining and building your credit score.

How long does it take to get a credit score?

Building up your credit score starts with the basics—using credit. Opening a credit card or becoming an authorized user are two ways to start building your credit from the ground up. Many people think that you start with a credit score of zero and have to work your way up, but you’ll typically start with a score around 500 to 700, depending on the health of your credit history thus far.

As mentioned, it can take up to six months to build enough credit history to obtain a credit score. Credit scores range from 300 to 850, with a score over 670 being considered a good credit score.

While establishing a score can take up to six months, working your way up to an excellent credit score can take much longer. Your credit score will typically update every 30 to 45 days, and building good credit will take years of consistent and responsible credit use.

It can take up to 6 months of credit history to obtain a credit score.

How are credit scores calculated?

The credit score you receive is calculated based on your borrowing history. There are five main factors that determine your credit score. These factors include:

Payment history (35 percent)
Credit utilization (30 percent)
Length of credit history (15 percent)
Different types of credit (10 percent)
New credit (10 percent)

Since the length of time you’ve been building your credit plays a role in your credit score, building it up to an excellent score can take some patience.

How to increase your credit score now

If you’re new to credit and just beginning to build your credit history, applying for a credit card is a quick way to start building your credit score. Your information is reported to the credit bureaus every 30 days, so it’s an easy way to start building credit quickly.

Besides getting a credit card, make sure you’re making your payments on time every month, since your payment history is worth 35 percent of your credit score. Make at least the minimum payment on time each month and your healthy payment history will be reported to the credit bureaus monthly. This healthy history can help you increase your credit score over time.

Lastly, reducing your available amount of credit can play a significant role in increasing your credit score. If you’re able, increasing your credit limit or paying down your debts in lump sums can help free up some of your available credit. Remember, credit utilization accounts for 30 percent of your credit score—keeping your credit utilization ratio as low as possible is key to improving your credit score.

What to avoid when building your credit score

Unfortunately, when it comes to credit, one financial mishap could end up costing you—sometimes taking years to recover from. To maintain an upward trend of positive credit history, you’ll want to avoid these common mistakes:

Missing payments

Since your payment history accounts for 35 percent of your credit score, missing even one payment can be detrimental, as it can stay on your credit report for up to seven years. Late payments are usually reported 30 days after their due date.

Applying for multiple credit cards or loans

When applying for a credit card or loan, creditors run a hard inquiry to assess credit history and determine the trustworthiness of a borrower. One hard inquiry doesn’t have much of an impact on your credit score and may only drop it by five points. However, having multiple hard inquiries in a short amount of time can hurt your credit score and make you seem like a risky borrower to lenders.

Defaulting on a loan

Defaulting on a loan occurs when you’ve failed to make payments for a consecutive period of time. Your credit score drops every 30 days that you’ve missed a payment, and failure to pay can have an extreme impact on your credit score. If too much time passes, lenders can contact the credit bureaus, resulting in a credit score drop.

If you continue to fail to make a payment on a loan your account could be sent to collections by the loan issuers, where legal action can take place. Depending on the type of loan you have, lenders may try to garnish your wages or take your assets.

Using too much available credit

Your credit utilization accounts for 30 percent of your credit score, making it one of the most important factors contributing to your score. If you use too much of your available credit, your credit score can take a serious hit. For example, if your credit limit is $4,000 and your current balance is $3,000, that puts your credit utilization at 75 percent, which is significantly higher than recommended.

Additional tips for building and maintaining a good credit score

Now that you have a solid understanding of what can hurt your credit score, let’s take a look at how you can increase and improve your credit score.

Open a secured credit card account

Secured credit cards are best for individuals who have no credit or have a low credit score, and they work to help borrowers build or repair their credit. Unlike traditional credit cards, secured cards require the borrower to put down a cash deposit, which can be used to settle any unpaid debt should the issue arise.

In most cases, the amount you put down will be equal to your available credit amount. For example, to get a credit limit of $1,000, you’ll typically need a deposit of $1,000. Credit limits for these cards are traditionally lower than unsecured credit cards and have higher interest rates.

If you’re working on building your credit from the ground up or repairing your bad credit, a secured credit card can be a good option to help build your creditworthiness. Once you’ve built up your credit and have remained a responsible borrower, you can move your way up to an unsecured credit card.

Become an authorized user

If you’re just starting to build your credit, you may not be approved for a traditional credit card just yet. In this case, becoming an authorized user on someone else’s credit card is an easy way to start building your credit history.

As an authorized user, you’ll have access to a credit card and can use it as such, but the primary holder of the account will be legally responsible for the debt. This option is best for those building their credit history from scratch, but it shouldn’t be used as a long-term option.

Apply for a credit builder loan

A credit builder loan is an option for those with no or low credit history looking for a low-risk way to build their credit. Unlike a personal loan, a credit builder loan essentially works backwards—the lender puts your approved loan amount into a savings account, you repay the loan over time and once the loan is paid off, the lender releases the funds to you. This allows you to build a solid payment history, thus increasing your credit score over time.

Keep balances low

A credit utilization ration below 30% is recommended to help keep your credit score in good standing.

Experts suggest that your credit utilization ratio should always be below 30 percent to maintain a positive credit score. If you can, consider paying more than the minimum payment each month to ensure your credit utilization ratio stays as low as possible. So long as you’re paying off high balances before the next reporting period, your credit score should not be negatively impacted.

Pay credit card bills on time

Since payment history is the leading factor in your credit score, it’s important to be on top of your monthly payments. If needed, set up an automatic payment system so you never have to worry about making your payments on time each month.

Don’t close unused credit cards

If you’re not using a credit card, keeping the account open won’t hurt your credit score, but closing the account can. The length of your credit history impacts your credit score, so keeping any accounts open can help build your credit history and increase your total available credit, boosting your score over time.

Monitor your credit report

If you’ve been a responsible borrower and see sudden drops in your credit score, check your credit report and look for any discrepancies. If there are errors on your report, dispute the errors immediately to get them removed. The longer those errors stay on your report, the more damage they can do to your credit score.

Building credit takes time, and getting your credit score in good standing takes years of consistent and responsible credit management. Make sure you understand the ins and outs of credit score ranges, and follow the tips in this article to help build and maintain good credit.

Reviewed by Miriam Allred, an Associate Attorney at Lexington Law Firm. Written by Lexington Law Firm.

Miriam Allred was born and raised in Southern California. After high school she joined the US Navy. She then went on to get an Economics degree from Chapman University where she got to enjoy an internship at the United States Supreme Court. Miriam then went to Brigham Young University where she received her Juris Doctor. Prior to joining Lexington Law, Miriam worked as a civil rights attorney dealing with discrimination and sexual harassment. In this role she helped write and create policies and investigate sexual harassment and discrimination complaints. Miriam also has experience in family law. Miriam is licensed to practice in Utah.

Source: lexingtonlaw.com

May 5, 2021

The evolution of the good faith estimate

The information provided on this website does not, and is not intended to, act as legal, financial or credit advice. See Lexington Law’s editorial disclosure for more information.

A good faith estimate (GFE) is a comparison of mortgage offers provided by lenders or brokers to a consumer. It was recently replaced by the loan estimate—a similar concept with a few small differences.

What Is a Good Faith Estimate Designed to Do?

The GFE’s purpose was to present mortgage shoppers with all the details they need to know about their mortgage options to help them make well-informed decisions. This transparency ensures consumers are aware of all the costs associated with the mortgage—including fees, APR and other expenses.

Borrowers would receive a GFE three business days after submitting their mortgage application, and after thorough review, would then select which mortgage option they would like to move forward with.

Are Good Faith Estimates Still Used?

The term “good faith estimate” is not used by lenders anymore, but the concept remains prevalent. In 2015, the GFE was replaced by the loan estimate. Anyone who purchased a home after October 3, 2015, received a loan estimate rather than a GFE.

In October of 2015, the good faith estimate was replaced by the loan estimate.

If you applied for a reverse mortgage, HELOC, a mortgage through an assistance program or a manufactured loan not secured by real estate, you will not receive a loan estimate. Instead, you will receive a Truth-in-Lending disclosure.

The purposes of a GFE, a loan estimate and a Truth-in-Lending disclosure are largely the same: providing transparency to borrowers. The main difference—and benefit—of a loan estimate is that there’s more regulation by the Consumer Financial Protection Bureau (CFPB). Since the GFE was not standardized through regulations, they were sometimes difficult to decipher, especially for first-time homebuyers. Conversely, each loan estimate must contain the exact same information in a standardized way, which we’ll cover below.

What Appears on a Loan Estimate?

According to the CFPB, a complete, compliant loan estimate should include the length of the loan term, the purpose of the loan, the product (fixed versus adjustable interest rate, for example), the loan type (conventional, FHA, VA or other), the loan ID number and indication of an interest rate lock. Additionally, the loan estimate will include the following:

Loan terms: A summary of the total loan amount, interest rate, monthly principal and interest and penalties, and whether these amounts can increase after closing.
Projected payments: A summary of monthly principal, interest, mortgage insurance, taxes and insurance. Broken down by years 1–7 and 8–30 for a 30-year mortgage.
Costs at closing: Estimated closing costs and the total estimated cash needed to close, which includes the down payment and any credits.
Loan costs: Origination charges—which is broken down by 0.25% of the loan amount, application fees and underwriting fees—and other fees.
Other costs: Taxes, government fees, prepaid homeowners insurance, interest and prepaid property, escrow payment at closing and title policy.
Comparisons: Metrics you can use to compare your loan to others. Includes the total principal, interest, mortgage insurance and loan costs you will have paid after five years.
Other considerations: Information about appraisal, assumption, homeowner’s insurance, late payment fees, refinancing and servicing.
Confirmation of receipt: A line at the end of the statement that confirms you have received the form. This does not legally bind you to accept the loan.

Your loan estimate will also include your personal information, including your full name, income, address and Social Security number. Make sure to double-check all of this information for errors, as they could cause potential problems later in the process.

To better understand your loan estimate, explore the CFPB’s interactive guide.

Closing Disclosure

For first-time homebuyers in particular, it’s important to understand the timeline of events so that you can be prepared for your home buying process and have all the information and necessary documents at hand.

Closing Disclosure Timeline

Lenders are required to send you a loan estimate form no more than three business days after receiving your application. Finally, at least three business days prior to loan consummation—when you are contractually obligated to the loan—you will receive a closing disclosure.

Lenders are required to send you a loan estimate no more than three days after receiving your application and a closing disclosure at least three days prior to loan consummation.

What Is the Purpose of a Closing Disclosure?

The purpose of a closing disclosure is to assign “tolerance levels” to fees listed in the loan estimate form. This means that fees cannot increase over their tolerance level unless a specific triggering event occurs. There are three different tolerance levels:

Zero percent tolerance: Fees in this category cannot increase from what is listed on the loan estimate. These fees are typically those paid to a creditor, broker or affiliate, such as origination fees.
10 percent cumulative tolerance: Fees in this category are added together, and the sum of these fees are not to increase by more than 10 percent of the amount listed in the loan estimate. Fees include recording fees and third-party service fees.
No tolerance or unlimited tolerance: Fees in this category have no limits at all, and can increase by any amount, as long as they are disclosed “in good faith,” using the best information available. These are usually fees lenders have little to no control over.

Remember not to confuse “zero percent tolerance” with “no tolerance,” as they are quite different. Zero percent tolerance fees cannot increase, while no tolerance fees can increase by any amount as long as it is considered “in good faith.”

Does a Loan Estimate Affect My Credit?

The act of applying for a mortgage may temporarily cause your credit score to dip, as it requires a hard inquiry by lenders. However, you may shop around for different mortgages from different lenders to get multiple preapprovals and loan estimates. As long as you do this all within a 45-day window, these separate credit checks will be recorded on your credit report as one single hard inquiry.

This is because lenders realize that you are only going to buy one home, so they categorize all of the actions you take under one umbrella of applying for a mortgage. Note that you may want to consider the 45-day rule loosely. Prioritize finding the best mortgage deal possible. Even if this means processing a hard inquiry outside of the 45-day window for a better deal, you’ll likely end up saving more money in the long run.

To learn more about what affects your credit and how to work toward improving your credit profile, contact our team at Lexington Law.

Reviewed by Kenton Arbon, an Associate Attorney at Lexington Law Firm. Written by Lexington Law.

Kenton Arbon is an Associate Attorney in the Arizona office. Mr. Arbon was born in Bakersfield, California, and grew up in the Northwest. He earned his B.A. in Business Administration, Human Resources Management, while working as an Oregon State Trooper. His interest in the law lead him to relocate to Arizona, attend law school, and graduate from Arizona State College of Law in 2017. Since graduating from law school, Mr. Arbon has worked in multiple compliance domains including anti-money laundering, Medicare Part D, contracts, and debt negotiation. Mr. Arbon is licensed to practice law in Arizona. He is located in the Phoenix office.

Source: lexingtonlaw.com

May 5, 2021

Understanding credit card security codes – Lexington Law

The information provided on this website does not, and is not intended to, act as legal, financial or credit advice. See Lexington Law’s editorial disclosure for more information.

Credit card security codes are an important security measure to prevent fraud and identity theft. They add an additional layer of safety when making purchases and help ensure the buyer is, in fact, the cardholder.

These security codes—often called CVV codes, short for “card verification value”—are three- or four-digit codes located directly on your credit card. They’re typically, but not always, asked for when making card-not-present transactions, such as those made online and over the phone. Here, we detail where to find them, how they work and why they’re important for consumer protection.

Where to Find Your CVV Code

The location of your CVV code depends on the credit card issuer:

Visa, Mastercard and Discover: The code will be three numbers on the back of the card to the right of the “authorized signature.”
American Express: The code will be four numbers on the front of the card above and to the right of the card number.

Where to locate your card's security code.

How to Find Your CVV Code Without the Card

Credit card security codes were designed to ensure that the person making a purchase actually has the card in their possession. Because of this, it’s impossible to look up your CVV code without having the physical card. This is why it’s important to have the physical card on hand if you need to make a purchase that requires a CVV code.

If an identity thief obtains your credit card number—for example, via shoulder surfing—may try to call the bank and pretend to be you in order to get the CVV code. However, banks typically don’t give out this information. Each financial institution has their own policies, but if you can’t read or access your CVV code, they will usually issue you a new card.

While most retailers require a CVV code when making card-not-present transactions, many don’t. In these instances, crooks would still be able to use your card.

How Are CVV Codes Generated?

According to IBM, CVV codes are generated using an algorithm. The algorithm requires the following information:

Primary account number (PAN)
Four-digit expiration date
Three-digit service code
A pair of cryptographically processed keys

Other Names for CVV Codes

Depending on the credit card company and when your card was issued, your security code may go by a different name. Even though there are many different abbreviations, the basic concept remains the same. Below are all the abbreviations and meanings for credit card security codes:

CID (Discover and American Express): Card Identification Number
CSC (American Express): Card Security Code
CVC (Mastercard): Card Verification Code
CVC2 (Visa): Card Validation Code 2
CVD (Discover): Card Verification Data
CVV (All): Card Verification Value
CVV2 (Visa): Card Verification Value 2
SPC (Uncommon): Signature Panel Code

Credit Card Security Code Precautions

While CVVs offer another layer of security to help protect users, there are still some things to be aware of when making card-not-present transactions.

Sign the back of your credit card as soon as you receive it.
Keep your CVV number secure. Never give it out unless absolutely necessary—and if you fully trust the person.
Review each billing statement to ensure there are no transactions you don’t recognize or didn’t authorize. If there are, contact your financial institution immediately and consider freezing your credit.

Protecting your identity requires constant vigilance—but emerging technology may have the potential to mitigate some of the risk of credit card fraud.

Shifting CVVs: The Future of Credit Card Safety?

Since chip-enabled cards replaced magnetic stripes, in-person credit card fraud has taken a big dip. Crooks are turning toward online and card-not-present methods of fraud. CVV codes are good at combating this type of fraud—but shifting CVVs, also referred to as dynamic CVVs, may be even better.

The technology works by displaying a temporary CVV code on a small battery-powered screen on the back of the card. The code regularly changes after a set interval of time. This helps thwart fraud because by the time a hacker has illegally obtained a shifting CVV code and tried to make a purchase, it will likely have changed.

Despite the security benefits, shifting CVVs haven’t been widely implemented due to high cost, and it remains to be seen if the technology and process can scale. Financial institutions have many measures in place, such as fraud alert, to notify you of potentially suspicious activity.

If you suspect you’ve been a victim of identity theft, call your credit card company, change your passwords and notify any credit bureaus and law enforcement agencies. By regularly checking your credit card statements, being careful about who you give your information to and being vigilant when making purchases, you’ll help do your part in keeping your identity secure.

Reviewed by John Heath, Directing Attorney of Lexington Law Firm. Written by Lexington Law.

Source: lexingtonlaw.com

May 5, 2021

Paying taxes as a freelancer

The information provided on this website does not, and is not intended to, act as legal, financial or credit advice. See Lexington Law’s editorial disclosure for more information.

Paying taxes as a freelancer can be a bit more involved—and expensive—than paying taxes as a W-2 employee. When you’re a freelancer, you’re the boss. That’s great if you want some flexibility, but it also means you’re self-employed, so you are responsible for both the employer and employee parts of employment taxes.

When you work for someone else, your paycheck amount is your pay minus all appropriate deductions. That includes deductions for federal and state income taxes as well as Medicare and Social Security contributions.

But what you might not realize is that your employer covers part of the Medicare and Social Security amounts. As a self-employed individual, you have to pay the total amount yourself. That’s 12.4 percent for Social Security and 2.9 percent for Medicare—a total of 15.3 percent of your taxable earnings, not including federal and other income taxes.

When Do I Have to Start Paying Taxes as a Freelancer?

According to the Internal Revenue Service, if you earn $400 or more in a year via self-employment or contract work, you must claim the income and pay taxes on it. The threshold is even lower if you earn the money for church work. If you earn more than $108.28 as a church employee and the church employer doesn’t withhold and pay employment taxes, you must do so.

What Tax Forms Should I Know About?

Freelancers report their income to the IRS using a Form 1040, but they may need to include a variety of Schedule attachments, including:

Schedule A, which lists itemized deductions
Schedule C, which reports profits or losses from their freelancer business
Schedule SE, which calculates self-employment tax

These are only some of the forms that might be relevant to a freelancer filing federal taxes. Freelancers must also file a tax form for the state in which they live as well as with any local governments that require income tax payments.

If you’re planning to do your taxes on your own as a freelancer, it might be helpful to invest in DIY tax software. Look for options that cater specifically to home and business or self-employment situations. These software programs typically walk you through a series of questions designed to determine which forms you need to file and help you complete those forms correctly.

Six Tips for Doing Your Taxes as a Freelancer

As a freelancer, chances are you spend a lot of your time attending to clients and getting production work done. You may not have a lot of time for business organization tasks such as accounting. But a proactive approach to paying taxes as a freelancer can help you prepare to do your taxes and pay what can be a surprisingly big bill each year.

Here are six tips for handling taxes as a freelancer.

1. Keep Track of Your Income

Track your income so you know how much you may need to pay in taxes every year. Keeping track of your numbers also helps you understand whether your business is profitable and how you’re doing with income compared to past years.

You can track your income in a number of ways. Apps and software programs such as QuickBooks and Wave let you manage your freelance invoices and track income and expenses. Some also help you generate financial reports that might be helpful come tax time.

Alternatively, you can track your income in an Excel spreadsheet or even a notebook, as long as you’re consistent with writing everything down.

2. Set Money Aside in Advance

It’s tempting to count every dollar that comes in as money you can use. But it’s wiser to set money aside for taxes in advance. Depending on how much you earn as a freelancer, you could owe thousands in federal and state taxes by the end of the year, and if you didn’t plan ahead, you might not have the money to cover the tax bill.

That can lead to tax debt that comes with pretty stiff penalties and interest—and the potential for a tax lien if you can’t pay the bill.

3. Determine Your Business Structure

Make sure you know what your business structure is. Many freelancers operate as sole proprietorships. But you might be able to get a tax break if you operate as an LLC or a corporation. Talk to legal and tax professionals as you set up your business to find out about the pros and cons of each type of organization.

4. Know About Relevant Deductions

As a freelancer, you may be able to take certain federal tax deductions to save yourself some money. Tax deductions reduce how much of your income is considered taxable, which, in turn, reduces how much you owe in taxes. Here are a few common deductions that might be relevant to you as a freelancer.

Home Office

You can take the home office deduction if you’ve set aside a certain area of your home for use by the business. The IRS does have a couple of stipulations.

First, you have to regularly use the space for your business, and it can’t be something you use regularly for other purposes. For example, you can’t claim your dining room as a home office just because you sometimes work from that location.

Second, the home has to be your principal place of business, which means it’s where you do most business activity. You can’t claim the deduction if you normally work outside the home but sometimes answer work emails while you’re in the living room.

Equipment and Supplies

You can also deduct the cost of equipment and supplies that you buy for your business. That includes software purchases and relevant subscriptions, such as if you pay monthly for Microsoft 365 or annually for a domain name.

Make sure you have backup documentation for any business expenses you deduct. That means keeping receipts that show what you purchased so you can prove that the expenses were for business. You also have to be careful to keep business and personal expenses separate—art supplies for your child’s school project, for example, wouldn’t typically be considered valid business expenses.

Travel and Meals

Meals and travel expenses that are related to your business may be tax deductible. If you stay in a hotel, book a flight or incur other travel expenses that are necessary for the running of your business, you can claim them as a deduction. The same is true for 50 percent of the value of meals and beverages that you pay for as a necessity when doing business.

The IRS does set an “ordinary and necessary” rule here. For example, if you’re traveling to meet with a client and you need to eat lunch, that is likely to be considered necessary. But if you opt for a very lavish meal for no other purpose than to do so, it might not be allowed under the “ordinary” part of the rule.

Business Insurance

If you carry liability or similar insurance for your business, you can deduct it as a cost of doing business. You may also be able to deduct the cost of other insurance policies if they are necessary for your trade.

5. Estimate Your Taxes Quarterly

The IRS offers provisions for estimating your employment taxes on a quarterly basis. Self-employed individuals, including freelancers, can make these estimated tax payments, too. Paying as you go means you won’t owe a large sum every April, and if you overestimate, you may get a tax refund.

Quarterly payments are due in April, June, September and January. They can be mailed or made online. Depending on how much you earn, you may need to make quarterly estimated tax payments to avoid a penalty at the end of the year.

6. Consult a Tax Professional

As you can see just from the basic information and tips above, paying taxes as a freelancer can get complicated quickly. Consider talking to a tax professional to understand what all your obligations are and how best to reduce your tax burden using legal deductions. You might be missing a major deduction every year that could save you a lot of money.

And remember that as a freelancer, you’re running your own small business. That means paying attention to all your finances, including your credit report. If you ever want to take out a business loan or seek other funding to grow your business, you might need to rely on your good credit score.

Check your credit score, and if you find inaccurate negative information making an impact on your score, contact Lexington Law to find out how to get help disputing it.

Reviewed by Cynthia Thaxton, Lexington Law Firm Attorney. Written by Lexington Law.

Source: lexingtonlaw.com

May 4, 2021

What is a debt jubilee? – Lexington Law

A couple happily throws papers into the air.

A debt jubilee is when a country or large
organization cancels debt and clears it from the public record. Simply put,
it’s large-scale debt forgiveness. Some economists believe in enacting a
jubilee as a method of preventing a depression, while others believe in more
moderate approaches, such as direct-to-consumer stimulus checks.

Debt Jubilee (noun): When a country cancels debt and clears it from the public record.

What Might Cause a Debt Jubilee?

When debt-fueled spending is the catalyst for
stimulating the economy during hard times, concern rises over long-term
economic stability. Historically, calls for a debt jubilee have occurred when
nations have teetered on the edge of an economic depression.

The conditions in which a debt jubilee may occur
are similar to those that would call for stimulus checks. The following
conditions may increase the likelihood of debt jubilee policies:

Increasing gaps in wealth
Sizable consumer debt
Mass bankruptcy
A public health crisis
Widespread job loss
Sinking stocks

What Would a Debt Jubilee Look Like in America?

Countries have implemented large-scale debt relief in the past to stimulate the economy. For example, Iceland wrote off and subsidized massive amounts of mortgage debt after the country was hit particularly hard by the Great Recession in late 2008.

Debt jubilee was an ancient practice carried out in Babylonia and Syria, and the concept of complete debt annulment isn’t necessarily feasible in modern-day America. However, some large-scale government-initiated debt relief practices in recent history are the closest equivalent we’ve seen. For example, American businesses and corporations implemented debt jubilee relief efforts such as US veteran bonuses during the Great Depression.

For a debt jubilee to happen in America today, banks would need to write off significant amounts of consumer debt—either student, credit card or mortgage debt or a combination of these—and erase it from credit reports. Because of this, many see debt jubilee as a modern method of redistributing equity and resources while fighting against monopolies and the extreme elite.

What Does a Debt Jubilee Mean for Consumers?

The goal of a debt jubilee in America would be to restore Americans’ ability to pay taxes and enjoy more disposable income by freeing them from crippling debt. A debt jubilee may also open up the conversation for what the ideal debt system looks like in America. Many are already advocating for a more just and equitable debt system, including practices such as:

Individual Voluntary Arrangements (IVAs): An alternative to declaring bankruptcy that involves a contractual agreement with creditors of a payment plan for unsecured debts.
Reduced stigmatization of bankruptcy: The view that bankruptcy is a viable option rather than a shameful one, and that sometimes outside factors are out of someone’s control.
Debt forgiveness for poorer countries: The refusal to exploit other nations and the ability to arrive at a mutual understanding with them to maintain peaceful relations.

Modern debt jubilee efforts may include: individual voluntary arrangements (IVAs), reduced stigmatization of bankruptcy and debt forgiveness for poorer countries.

While our expert team at Lexington Law can’t guarantee debt cancellation, we can help you take steps to get your credit in better shape. Explore our credit repair services to start your journey toward better financial health today.

Reviewed by Cynthia Thaxton, Lexington Law Firm Attorney. Written by Lexington Law.

Note: Articles have only been reviewed by the indicated attorney, not written by them. The information provided on this website does not, and is not intended to, act as legal, financial or credit advice; instead, it is for general informational purposes only. Use of, and access to, this website or any of the links or resources contained within the site do not create an attorney-client or fiduciary relationship between the reader, user, or browser and website owner, authors, reviewers, contributors, contributing firms, or their respective agents or employers.

Source: lexingtonlaw.com

May 4, 2021

How joining a credit union can boost your credit – Lexington Law

When it comes to establishing or repairing credit, one of the first things you’ll need is a checking or savings account. If you can join a credit union, that’s even better. Credit unions are member-owned banks (sort of like a banking co-op) that tend to offer better perks than a large corporately owned bank. Furthermore, since they’re owned by members and not stockholders, customer service tends to be better and more personal.

Credit unions are not-for-profit, which means service will always take a higher priority than bottom line, because there are no profit margins to worry about and no stockholders to whom they must answer. Joining a credit union can do wonders for your credit. Here’s why:

Credit unions genuinely want to help you

Since credit unions are member owned, it’s beneficial to them if their members have good credit across the board. It’s for this same reason that it’s a better banking situation for those who are working on credit repair than a traditional bank. When credit union members have better credit scores across the board, not only does it help lower fees for everyone, but it also helps better the community in which the credit union is located.

Credit unions have lower fees

Since credit unions aren’t trying to appease stockholders or increase profit margins, fees and interest rates tend to be considerably lower for members. For those who are working to build or repair credit, every penny matters, so lower fees and interest rates are especially beneficial in such instances. If you’re looking for a small auto loan, secure credit card, or other credit building tool, you may want to consider joining a credit union.

You might be able to get a small loan from them

Credit unions are more likely to work with a member on a small loan, even if that member has a poor credit rating. These are usually referred to as “credit builder loans” and can really help those with bad or no credit get a leg up on building their credit. They also have other offerings designed to help members improve their credit, so it’s worth your time to do the research and find a credit union that you can qualify for.

How to join a credit union

The one drawback of a credit union is that they have specific rules about who can join. Many credit unions exist to cater to a specific demographic (such as Naval Credit Union, which serves military members and their families). Credit unions may also accept members based on where they live or work, where they went to college, or for many other reasons. Many people might think it’s difficult to join a credit union because of their strict eligibility rules, but there’s a credit union out there for everyone. You may even be able to join one based on your religious affiliation, as many churches have started credit unions to help their parishioners.

If you’re concerned about your credit, contact Lexington Law for a free consultation.

You can also start up a conversation on our social media channels. Like and follow and interact with us on Facebook, Instagram, and Twitter.

Source: lexingtonlaw.com

May 4, 2021

Joint credit cards: 6 perks and pitfalls

The information provided on this website does not, and is not intended to, act as legal, financial or credit advice. See Lexington Law’s editorial disclosure for more information.

“For richer and for poorer”—it’s the vow millions of couples across the nation make every year. Every day, partners navigate money issues, from saving and budgeting to managing debt. Joint credit cards offer a great opportunity for couples to build credit and manage their finances together, but they require substantial teamwork and communication.

To better understand how couples navigate their financial journeys together, Lexington Law ran multiple surveys over the past two years. Below are some key takeaways to help you better understand joint credit health:

Approximately 30 percent of couples talk about finances on a daily basis. (source)
One in five couples fight at least half of the time they talk about money. (source)
Half of Americans share debts with their partner. (source)

Half of Americans share debt with their partner.

Couples who make consistent, respectful communication a habit may have no problem with joint credit cards, and they may take full advantage of their benefits. However, credit health is something to take very seriously, and joint credit cards also have the potential to cause problems if not managed properly. Here, we will discuss the benefits, dangers and alternatives to joint credit—and provide actionable tips for success.

Two Ways to Share a Credit Card

If you’re recently married, you may wonder how it affects your credit score—and what the best way to share credit accounts is. First, it is important to understand that you are only directly responsible for your spouse’s credit if you apply for joint lines of credit—like a mortgage, another loan or a joint credit card.

Contrary to popular belief, being an authorized user is not the same thing as having a joint credit card. Here, we will detail the differences.

Authorized User

Adding an authorized user means that your partner will be able to make purchases with your credit card, and the positive payment history will appear on their credit report. It can be a fairly safe way to boost their credit by allowing them to benefit from your positive credit history.

Be careful when adding anyone as an authorized user on your card. No matter how much they use the card, you will ultimately be the one legally responsible for paying the balance—not them. If you are considering adding your partner, have an open and honest discussion about your credit limit and how much you’re comfortable with them charging each month.

Joint Credit Card

With a joint credit card, both people apply for the account together. Both credit reports will be considered during the application process, and this will result in a hard inquiry for you both. Unlike being an authorized user, both people are equally responsible for making payments—and the consequences of success or failure will affect both credit scores.

Potential Perks of Joint Credit Cards

Just like regular credit cards, joint credit cards can offer some wonderful benefits if properly managed. However, there can also be some serious consequences of miscommunication and lack of responsibility that can harm both cardholders. Before applying, make sure you’re aware of all the perks and pitfalls.

Streamline Your Finances

When it comes to budgeting, joint accounts—both checking and credit—help simplify your finances. That’s because both people’s transactions are now under one account instead of separate ones. A joint account can help you both get a view of your financial health as a couple and manage your money as a team.

Potential pitfall: If either person abuses their card privileges, they may add stress and even resentment to the relationship. Additionally, if a couple needs to separate or divorce, dealing with joint credit cards can be complicated.

Tip: Maintain open and honest communication about card use, especially large purchases. This will help you stay on track with your budget and financial goals as a couple.

Pool Your Rewards

A joint credit card gives you the ability to amplify your cash back rewards by pooling them in the same account, rather than scattering them among multiple credit cards. Additionally, since the account is being used by two people, the card may see higher use than a singularly owned one, which will rack up the rewards faster.

Potential pitfall: Options for joint credit cards are very limited, so it may be tricky to find a rewards program that fits your lifestyle and needs.

Tip: Thoroughly research the annual fees, incentives and cash back percentages before applying for a joint credit card. We detail the three most common options in a later section of this article.

Improve Your Score

Joint credit cards have the potential to boost both of your credit scores, as long as you make on-time payments each month. Additionally, if one person does not have good enough credit to apply for a card on their own, they can leverage the other person’s better credit to score a joint credit card with better interest rates and terms.

Potential pitfall: Just as joint credit cards have the potential to increase your score, they also have the potential to harm your credit score—even if it is not directly your fault. If your partner fails to uphold their payment agreement or charges enough on the card to push you past a 30 percent credit utilization rate, your score will likely take a dip.

Tip: Make an agreement on how payments will be made each month to ensure no payments are late or missed. Consider setting up automatic monthly payments to ensure each person contributes to paying off the balance.

3 potential benefits of joint credit cards: pool your rewards, streamline your finances, improve your score.

Frequently Asked Questions About Joint Credit Cards

Once you have decided to apply for a joint credit card, you may be wondering what’s next. After reading your card’s terms and conditions, you may have additional questions such as the ones below:

How Do I Get My Name Off a Joint Credit Card?

Unlike an authorized user credit card—which is easy to remove yourself from—it is impossible to remove yourself from a joint credit card without completely closing the account. To do this, both parties must agree to pay off the entire balance before closing the account. Keep in mind that this may temporarily lower your credit score, as it will cause your credit utilization rate to increase.

What Happens to a Joint Credit Card When Someone Dies?

Notify your credit card issuer immediately in the event that someone on your joint credit card passes away. Ask if they had set up any recurring charges on the card, and see that they are canceled. You should then be able to continue using the card normally, as the sole cardholder. Keep in mind that you will still be responsible for paying off the balance, regardless of who charged it.

Does a Joint Credit Card Build Credit?

Yes—you may be able to build your credit if the account is managed properly. Just like a regular credit card, consistent, on-time payments will have a positive impact on your credit score—no matter which person pays. In your journey of building credit, remember to check your credit report regularly, as errors are all too common. If you spot any questionable negative items, Lexington Law can help you dispute them. Removing these from your report can typically help you repair your credit and reach your financial goals.

Reviewed by Cynthia Thaxton, Lexington Law Firm Attorney. Written by Lexington Law.

Source: lexingtonlaw.com

May 3, 2021

Credit card convenience checks: the basics – Lexington Law

A couple looks at a computer while holding a credit card.

The information provided on this website does not, and is not intended to, act as legal, financial or credit advice. See Lexington Law’s editorial disclosure for more information.

Some credit cards come with checks. Called convenience
checks, they work a lot like the checks that come with your bank account—with a
few notable exceptions. Convenience checks typically have a lot more strings
attached, for example. Learn more about convenience checks below so you can
decide if you should use yours or not.

What Is a Convenience Check?

A credit card convenience check is a check issued by your credit card company. It’s tied to a credit card account in the same way regular checks are tied to a checking account. When you write a convenience check, you’re actually writing against your credit card limit just as if you “swiped” the credit card.

For example, if you have a credit card limit of $1,000 and
you write a convenience check for $300, you’ll have a credit card balance of
$300 and an available limit of $700 after the check clears. In effect, writing
the check is similar to using your credit card to make a purchase—you create
credit card debt for yourself that might come with fees and interest.

Your credit card issuer often sends convenience checks
when they’re making you an offer of some kind. It might be that you’re a new
credit card account customer and you get a few convenience checks to encourage
you to start spending on your account.

In other cases, you might receive convenience checks as
part of an offer for limited lower interest rates on qualified purchases. And in
some cases, you can request convenience checks from your credit card company if
you intend to use your card credit limit to make a large purchase.

What Are Convenience Checks Typically Used for?

It might seem silly to write a check when you can just
swipe your card; however, convenience
checks make it easier to pay for large-ticket items or transfer money between
credit cards. Convenience checks can be used for a variety of purposes,
including:

Purchases. You can use a convenience check to pay for goods or services almost anywhere checks are accepted.
Cash advances. You can write a convenience check to yourself and cash it to get a cash advance on your credit card.
Balance transfers. You can write a check to pay off another credit card, effectively transferring the balance to your new credit card account.

Where Can You Cash a Convenience Check?

Generally, you can cash a convenience check anywhere you can cash a regular check. That includes your own bank and check-cashing services. As with any personal check, banks and other service providers might limit the dollar amount you can cash.

Your bank might allow you to deposit a convenience check
in a large amount when it won’t let you cash one immediately. In these cases,
the total amount deposited might not be available in your account for a few
business days. That’s because the bank is waiting to ensure that the check
clears.

4 Drawbacks of Convenience Checks

While convenience checks are exactly what they sound
like—a convenient way to access some of your available credit—they do have some
drawbacks. Some of the biggest disadvantages of using convenience checks are
summarized below.

1. Transaction Fees

The checks might come with transaction fees that
increase the cost of the purchase you’re making. Read all of the information
that comes with your convenience checks or review your credit card terms of
service before you use the checks. It’s important to know how much the check
might cost you so that you can make an educated financial decision.

2. Time Restraints

Your convenience checks might come with a deadline for using them. Read all the information that comes with the checks so you know if they expire on a certain date. You don’t want to plan on using your convenience checks only to find out that they don’t work.

3. Limited Terms

Many convenience check offers include a limited low-interest rate period. For example, you might receive checks from your credit card company with an offer for 0% APR for 12 months on any balance you carry with the checks. That can be a great way to make a big purchase on credit without paying extra in interest; however, you have to ensure that you can pay the total amount off within the promotional period. If you don’t, you could be looking at debt with a hefty interest rate that makes it harder to pay off the debt incurred via the convenience check.

4. Impact on Your Credit Score

Don’t forget that using your convenience checks does drive up your credit card balance. That can increase your credit utilization ratio.

Credit utilization refers to how much of your available balance you’ve used. If you have a $10,000 credit card limit and you write convenience checks totaling $6,000, you’ve used 60% of your balance. Credit utilization accounts for roughly 30% of your credit rating, so using convenience checks in this manner is likely to have a negative impact.

4 drawbacks of convenience checks: transaction fees, time restraints, limited terms and impact on your credit score.

Is It Ever a Good Idea to Use a Convenience Check?

The decision to use convenience checks—and the manner of use if you decide to do so, —is a personal matter. In some cases, convenience checks can be a positive tool to help you transfer high-interest credit card balances to pay down debt faster or make a large credit purchase at a low-interest rate.

To benefit the most, though, you have to manage your credit card account responsibly—which includes the use of convenience checks.

What Should You Do With Unused Convenience Checks?

You may not use all the convenience checks a credit card company sends you. But if you simply toss them in the trash whole, you open the door to the possibility of identity theft. Someone could easily write one of those checks in your name, effectively stealing from you. They might also be able to use the check to collect personal information about you to help them steal your identity.

To best protect yourself against identity theft, write “void” across unused convenience checks and then shred them. You should also be able to call your credit card issuer and ask that they stop sending you checks. In addition, make sure to regularly review your credit report and look for potential signs of fraud or other inaccurate information.

Reviewed by Kenton Arbon, an Associate Attorney at Lexington Law Firm. Written by Lexington Law.

Source: lexingtonlaw.com