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.
Credit card security precautions.

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.

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.

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

The Average Cost of Home Insurance

We’ll get straight to the point: The cost of home insurance varies widely, but the average American homeowner pays $1,249 a year in premiums, according to the Insurance Information Institute’s 2018 figures, the most recent available.

(This is based on the HO-3 homeowner package policy for owner-occupied dwellings, 1 to 4 family units. It provides all risks coverage (except those specifically excluded in the policy) on buildings and broad named-peril coverage on personal property, and is the most common package written.)

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In this article

Home insurance premiums can vary widely in part because of:

  • Your location
  • Your history of claims
  • Your credit score
  • The age and condition of your home

However, there are ways that homeowners can save money on their insurance costs, which we’ll get into. We’ll also walk through which areas in the U.S. are the cheapest and most expensive, typical coverages and more.

[ Read: Home Insurance Quotes, Explained ]

How much does home insurance cost by state?

As you can see below, the average home insurance premium varies widely by state. As you might expect, weather events figure big in the average annual premium by state, although there are other factors, of course, such as your credit score and the age of the home. The figures in this table come from 2018 data provided by the Insurance Information Institute.

State Rank Average annual premium State Rank Average annual premium State Rank Average annual premium
Ala. 13 $1,409 Ky. 26 $1,152 N.D. 18 $1,293
Alaska 36 $984  La. 1 $1,987 Ohio 44 $874
Ariz. 46 $843 Maine 42 $905 Okla. 4 $1,944
Ark. 12 $1,419 Md. 32 $1,071 Ore. 51 $706
Calif. 31 $1,073 Mass. 10 $1,543 Pa. 40 $943
Colo. 7 $1,616 Mich. 38 $981 R.I. 5 $1,630
Conn. 11 $1,494 Minn. 14 $1,400 S.C. 19 $1,284
Del. 45 $873 Miss. 8 $1,578 S.D. 20 $1,280
D.C. 21 $1,264 Mo. 15 $1,383 Tenn. 23 $1,232
Fla. 2 $1,960 Mont. 22 $1,237 Texas 3 $1,955
Ga. 17 $1,313 Neb. 9 $1,569 Utah 50 $730
Hawaii 27 $1,140 Nev. 48 $776 Vt. 41 $935
Idaho 49 $772 N.H. 36 $984 Va. 34 $1,026
Ill. 28 $1,103 N.J. 24 $1,209 Wash. 43 $881
Ind. 33 $1,030 N.M. 30 $1,075 W.Va. 39 $970
Iowa 35 $987 N.Y. 16 $1,321 Wis. 47 $814
Kansas 6 $1,617 N.C. 28 $1,103 Wy. 25 $1,187

Based on the HO-3 homeowner package policy for owner-occupied dwellings, 1 to 4 family units. Provides all risks coverage (except those specifically excluded in the policy) on buildings and broad named-peril coverage on personal property, and is the most common package written.

Most expensive states in home insurance premiums

Below are the most expensive average home insurance premiums by state, according to the Insurance Information Institute’s figures from 2018. Premiums can vary widely within the state, and of course, there are more factors in your premium than the location of your home.

  • Louisiana: $1,987
  • Florida: $1,960
  • Texas: $1,955
  • Oklahoma: $1,944
  • Rhode Island: $1,630

Cheapest states in home insurance premiums

Below are the cheapest average home insurance premiums by state, according to the Insurance Information Institute’s figures from 2018. Premiums can vary widely within each state, and of course, there are more factors in your premium than the location of your home.

  • Wisconsin: $814
  • Nevada: $776
  • Idaho: $772
  • Utah: $730
  • Oregon: $706

What determines the cost of homeowners insurance?

The cost of an individual homeowners insurance policy is determined by a wide range of factors. Some of those factors are within your control, and some of them are not. 

For instance, home insurance can be more expensive in areas with a high risk of flooding or fires than in places where natural disasters are uncommon. Newer homes often cost less to insure than older dwellings — especially those in need of repairs. Insurance companies also look at your personal credit history before covering your home, so people with good credit histories could receive a lower premium than those with poor credit histories.

Every insurance company calculates rates differently. Some carriers place a higher value on credit score and claims history, while others look more closely at the condition and age of the home. Below is a more comprehensive list of the considerations that might determine your homeowners insurance premium.

[ Read: The Best Homeowners Insurance Companies ]

  • State, city and neighborhood: Some states are more prone to wildfires, earthquakes, and hurricanes than others.
  • Location of home: This information is pulled for crime and claim statistics in your home’s area.
  • Construction of the home: Is the home made out of wood, brick, or vinyl siding?
  • Heating system: Is the home heated with an HVAC or wood stove?
  • Security system: Homes with security systems might be less likely to be broken into.
  • Previous claims on the home: If the home has a history of water and electrical issues, then the homeowner may be more likely to file a future claim.
  • Homeowner’s previous claims: If the homeowner has a history with other insurance companies, he or she may be more likely file a claim again in the not-so-distant future.
  • Credit score: People with low credit scores may be more likely to file a claim.
  • Nearest fire station: The distance between your home and the nearest fire station can be a factor.
  • Marital status: Married couples are statistically less likely to file claims with insurance companies.
  • Replacement cost: The cost to replace an older home and bring it up to code can be more expensive than replacing a new home.
  • Pets: Certain animals might be considered a greater risk for liability claims.
  • Outside structures: Things like pools, sheds or greenhouses can also affect your policy rate.

Aside from these factors, the cost of an individual policy can also be determined by which features you chose to include in your coverage. A few of the options that can affect the cost are:

  • Deductible amount
  • Extra coverage add-ons
  • Bundled insurance policies
  • Discounts

[ More: Complete Guide to Home Insurance ]

Types of coverage

There are many different types of homeowners insurance coverage. Some coverages, like dwelling and liability coverage, can come standard with most policies. But insurance companies also often sell add-on policies that offer protection in certain areas. Here are some of the most common home insurance coverages you might find:

  • Dwelling coverage is insurance that covers qualified damages to the home itself. If the siding of your home tore off in a major storm, dwelling insurance might cover the cost of repairs. Insurance companies might sell add-ons for roof damage, water back/sump pump overflow, flood insurance and earthquake insurance.
  • Personal property coverage pertains to the cost of replacing possessions in your home, such as furniture. If someone broke into your home and stole personal items, personal property coverage might reimburse you. If you need to protect valuables, your agent might recommend you purchase a scheduled personal property endorsement for higher coverage limits.
  • Personal liability coverage protects against lawsuits for property damage or injury. If a delivery driver slipped and fell on your icy driveway, liability coverage might pay for their medical expenses and court costs if they sued you. Some insurance companies offer add-on policies that extend your liability coverage limits.
  • Loss of use coverage might cover additional living expenses you have after your home has been damaged. This might include hotel stays, groceries and gas while your home is being repaired. If your house is under construction after a covered claim, loss of use coverage might pay for your temporary hotel and food expenses up to your policy’s limit.

Generally speaking, your agent may recommend that your home insurance coverages be based on your lifestyle, where you live and the value of your assets.

Keep in mind that your agent may recommend you add coverage as time goes on. If you adopt a puppy six months after you purchase your home insurance policy, your agent may recommend you add pet coverage when the time comes. Or, if you take on a remote job, you can contact your insurance company and see if you should add home business coverage for a small fee.

Every home insurance coverage has a policy limit. A policy limit is the highest amount of money your insurance company will give you after a covered loss. For example, if your dwelling coverage limit is $400,000, that may limit how much is paid out if your home is damaged or destroyed by a covered peril to no more than $400,000, although factors like your deductible may come into play.

When you purchase a home insurance policy, you may be able to set your own policy limits. As a rule of thumb, you may be recommended to have enough dwelling coverage to rebuild your home in its current state, enough personal property coverage to cover the full value of your personal items and enough liability coverage to protect your personal assets.  

[ Read: What is Dwelling Insurance? ]

Reimbursement coverage types

There are three different coverage options commonly provided by home insurance companies. Each option affects your premium differently.

  • Actual cash value (ACV) is based on the current market value, or how much your home and personal property is worth, with depreciation factored in. Most home insurance policies offer ACV reimbursement by default. It can be the lowest option.  
  • Replacement cost value (RCV) works in the same way as ACV, but without depreciation factored in. That means you might get a higher payout after a covered claim. RCV home insurance policies can be more expensive than ACV policies, and you may need to purchase an endorsement to get it. Your agent may recommend this if you own valuables or have an expensive home.
  • Guaranteed replacement cost (GRC) is also referred to as extended replacement cost (ERC), and this option can cover the complete cost of rebuilding the home, even if that cost exceeds the policy limit. GRC can be the most expensive replacement cost type, and not all insurance companies offer it. Your agent may recommend this if you live in areas with extreme weather, wildfires, earthquakes or any place where home destruction is more likely. 

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Discounts and ways to save on home insurance

Homeowners insurance can be costly, so before selecting a plan, shop around to find the best deal based on your needs. It can be helpful to consult an insurance agent, read consumer reviews and check online insurance quotes to find companies with the lowest rates. Here are some other ways to save money on home insurance:

  1. Ask about available discounts: Some companies offer discounted policy rates if your home is in a gated community, if you bundle with your car insurance or if you’re part of a homeowner’s association.
  2. Bundle your insurance policies: Oftentimes, companies that sell home, auto and life coverage may deduct up to 15% off your premium if you buy two or more policies from them.
  3. Make your home safer: Some providers may offer a discount if you install fixtures that make your home safer, such as smoke alarms or a security system, that reduce the likelihood that damage or theft will occur in the first place.

How do past claims impact home insurance cost?

It depends on the nature of the claim. Just how much a claim raises your premium varies in part on the provider and the nature of the claim.

There are also further complications when you make the same type of claim twice. Not only can this increase what you pay each month, but, depending on you and your home’s history, it’s possible the provider may even decide to drop you.

Though your premium may increase if you are found at fault, it’s also possible for your monthly bill to increase even if you’re not found to be liable. Your home may be considered riskier to insure than other homes.

Home insurance cost FAQs

No, states do not require homeowners to get insurance when they purchase a home. However, if you choose to get a mortgage loan, most lenders will require you to have some insurance.

To determine how much coverage you should purchase, talk to your agent about your home inventory, your overall worth, and of course, comfort level. Also discuss factoring in the location of your home, and evaluate risks based on weather, fires and other events that could potentially damage or destroy your home.

There are a few ways to potentially get home insurance discounts. Discount options include things like:

  • Bundling your home insurance policy with another policy (such as auto).
  • Going claims free for extended periods of time.
  • Making certain home improvements.
  • Living in a gated community.
  • Installing a security system.

In 2018, 34.4% of home insurance losses were wind and hail related, 32.7% were fire or lightning related and 23.8% were water damage or freezing claims. Only 1% of claims were related to theft, and less than 2% of losses were liability claims. These figures are according to the Insurance Information Institute.

In Florida the most common claims may be related to hurricanes, wind damage, water damage and flooding. In California, earthquake, flood and wildfire claims may be more common. When you purchase insurance, talk to an agent about the specific risks in your area and ask about separate insurance policies you might need, like flood or earthquake coverage.

We welcome your feedback on this article. Contact us at inquiries@thesimpledollar.com with comments or questions.

Source: thesimpledollar.com

Understanding credit card security codes

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.
Credit card security precautions.

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.

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.

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

Getting a second chance with credit repair – Lexington Law

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Credit can be difficult – it’s easy to make mistakes. You apply for credit card after credit card and get approved for every single one of them. You feel like a VIP. Your buying potential seems unlimited, and the temptation to spend is strong. Then, like Brittany, you begin to rationalize your spending. “It’s only a little credit here and only a little credit there,” you think.

Sooner or later, your cards are maxed out, and you’re barely able to keep up with the minimum payments each month. You’re no longer a VIP, but a someone who is a financial risk in the eyes of creditors. You might find yourself in a situation where you may have a financial emergency that you can’t cover. Like Brittany, you may be denied for a necessary loan. Instead of being approved for credit like you were before, you face denial after denial, which can be humiliating. But when you’re faced with this situation, what can you do? Who do you turn to? It may feel like there’s no way of getting what you need, because credit impacts so many aspects of our lives – from being able to get a credit card to buying a home, to how high insurance premiums are going to be or even if you get hired for a job.

Impact of Bad Credit

Bad credit can have serious consequences and in Brittany’s case it influenced her becoming homeless and hopeless. Her credit created challenges as she struggled to find housing to rent or to own. Credit can make or break you. It can be the difference between paying or saving thousands of dollars in interest, between homelessness and having a roof over your head. Credit impacts your lifestyle and having good credit can help you have the type of lifestyle you deserve.

Going from bad to good credit may feel hopeless, and fixing it can seem impossible. Luckily, the right inspiration can lead to starting the credit repair journey. This can be daunting, but Brittany found the inspiration to start hers. It was her family. She wanted to give her child a better life. Good credit can lead to a more stable, secure future – and that’s something a lot of us want to give our children. But it can be easy to lose hope if you’re drowning in debt, or if you don’t have the credit score needed to qualify for a home.

Credit Repair

Enter Lexington Law Firm. We will challenge negative accounts on your behalf that are unfair and inaccurate. In 2017, we saw 10 million removals from our client’s credit reports. We have over a decade of experience working with hundreds of thousands of clients on working to improve their credit, making us the trusted leaders in credit repair.

We will personalize your case to your unique credit circumstances – ranging from medical bills to divorce to help you with errors on your credit reports. With extensive knowledge of consumers rights and laws related to credit reporting, and a team of paralegals and attorneys fighting on your behalf for your right to a fair and accurate credit report, there is hope. There is a second chance. We offer credit repair, credit monitoring, and identity theft protection services to help you stay on track. Lexington Law Firm wants to help you reach your goals, like Brittany did, so that you can have the second chance you deserve that can help lead you to a better future. Call today for your free credit consultation.

rebuilding credit

Disclosure: Similar results should not be expected and are not guaranteed. Your results will vary.

You can also carry on the conversation on our social media platforms. Like and follow us on Facebook and leave us a tweet on Twitter.

Source: lexingtonlaw.com

Do I need a consumer statement on my credit report?

If you’ve experienced financial distress or want to highlight errors on your report, a consumer statement may be used to explain derogatory credit information to credit bureaus and/or potential lenders. While these statements won’t hide negative credit histories, they may help answer some questions on your report to eliminate concern and give a lender the clarity they need to extend you a line of credit or loan. 

If you’re wondering if adding a consumer statement to your credit report is right for you, read on as we outline exactly what a consumer statement is and a few instances where you may need one.

What Is a Consumer Statement? 

A consumer statement is a 100-word statement (200 words for residents of Maine) that can be added to your credit report to address any negative information shown in your credit history. Once placed, potential lenders may review this statement to help clear up any concern they have about your creditworthiness or ability to pay back a loan. 

A consumer statement should clearly explain any negative history or discrepancies on your credit report. See an example of a consumer statement below: 

“On March 30, 2020, I was laid off from work as a result of the coronavirus pandemic and related shutdowns. Due to this unexpected job loss, I fell behind on my monthly debt payments. I found employment on May 12, 2020, and I am working to catch up on all missed payments. While my credit rating was in good standing before losing my job, I believe these late payments associated with [name of creditor] account are not a true reflection of my creditworthiness.” 

Once a consumer statement has been added to your credit report, it will be visible to a lender or creditor each time they view your credit report. Once the financial situation on your consumer report has been straightened out, you can elect to remove the consumer statement so it no longer shows up on your report. 

Where does a consumer statement go? A consumer statement can be found on your credit report under your personal information.

When to Add a Consumer Statement to Your Credit Report

There are a few reasons why you may consider adding a consumer statement to your report: to provide context for derogatory information on your credit report or to dispute any errors that may be negatively impacting your credit. There are two basic types of consumer statements that can be added to an individual’s credit report: 

General Consumer Statements

These are used to provide background information on your entire credit report, and they can stay on your report for up to two years. An example of when to add a general consumer statement on your report might be after an instance of identity theft or financial hardship as a result of an illness. 

Account-Specific Statements

These statements apply to individual accounts and can be used to explain items that may be negatively impacting your credit report. Account-specific statements can remain on your credit report until the accounts they’re associated with are removed. An instance where someone might include an account-specific statement on their report might be to address a late payment that was made due to a mailing or shipping delay. 

When should I include a consumer statement on my credit report? General consumer statements include identity theft, delinquency on multiple accounts as a result of extended unemployment, delinquency due to natural or declared disaster or financial hardship due to illness or injury. Account specific statements could include response to fraud, a problem with a lender or a dispute on your credit report that was denied.

Frequently Asked Questions About Consumer Statements 

How Do I Add a Statement to My Report? 

If you’d like to add a consumer statement to your report, you can do so free of charge. You’ll need to write a 100-word statement (200 words in Maine) and submit it to your preferred credit bureau. You can do this by sending a letter along with your statement to their address or submit your consumer statement online. You’ll need to look online or call your credit bureau of choice for instructions on how to add a consumer statement to your report, as each bureau may have its own guidelines.

Does a Consumer Statement Hurt My Credit Score? 

A consumer statement will not change any accurately reported information on your credit report and is unlikely to impact your scores. However, providing an explanation for your financial distress or poor credit history may help a creditor or lender better evaluate your creditworthiness or ability to make payments on time. 

Can I Remove a Consumer Statement? 

If your credit history or financial situation has improved, you can elect to remove a consumer statement so that lenders and creditors can’t see it on your credit report anymore. It’s best to remove a consumer statement as soon as it is no longer necessary, as it may notify potential lenders that you had a negative credit history in the past and could be a cause for concern when evaluating your creditworthiness. Typically, you can request a removal in the same way you submitted your consumer statement to the bureau. If you have any questions, contact the credit bureau directly. 

For more insight on ways to improve your creditworthiness, contact us today for a free personalized credit consultation.


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.

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

Getting a second chance with credit repair

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Credit can be difficult – it’s easy to make mistakes. You apply for credit card after credit card and get approved for every single one of them. You feel like a VIP. Your buying potential seems unlimited, and the temptation to spend is strong. Then, like Brittany, you begin to rationalize your spending. “It’s only a little credit here and only a little credit there,” you think.

Sooner or later, your cards are maxed out, and you’re barely able to keep up with the minimum payments each month. You’re no longer a VIP, but a someone who is a financial risk in the eyes of creditors. You might find yourself in a situation where you may have a financial emergency that you can’t cover. Like Brittany, you may be denied for a necessary loan. Instead of being approved for credit like you were before, you face denial after denial, which can be humiliating. But when you’re faced with this situation, what can you do? Who do you turn to? It may feel like there’s no way of getting what you need, because credit impacts so many aspects of our lives – from being able to get a credit card to buying a home, to how high insurance premiums are going to be or even if you get hired for a job.

Impact of Bad Credit

Bad credit can have serious consequences and in Brittany’s case it influenced her becoming homeless and hopeless. Her credit created challenges as she struggled to find housing to rent or to own. Credit can make or break you. It can be the difference between paying or saving thousands of dollars in interest, between homelessness and having a roof over your head. Credit impacts your lifestyle and having good credit can help you have the type of lifestyle you deserve.

Going from bad to good credit may feel hopeless, and fixing it can seem impossible. Luckily, the right inspiration can lead to starting the credit repair journey. This can be daunting, but Brittany found the inspiration to start hers. It was her family. She wanted to give her child a better life. Good credit can lead to a more stable, secure future – and that’s something a lot of us want to give our children. But it can be easy to lose hope if you’re drowning in debt, or if you don’t have the credit score needed to qualify for a home.

Credit Repair

Enter Lexington Law Firm. We will challenge negative accounts on your behalf that are unfair and inaccurate. In 2017, we saw 10 million removals from our client’s credit reports. We have over a decade of experience working with hundreds of thousands of clients on working to improve their credit, making us the trusted leaders in credit repair.

We will personalize your case to your unique credit circumstances – ranging from medical bills to divorce to help you with errors on your credit reports. With extensive knowledge of consumers rights and laws related to credit reporting, and a team of paralegals and attorneys fighting on your behalf for your right to a fair and accurate credit report, there is hope. There is a second chance. We offer credit repair, credit monitoring, and identity theft protection services to help you stay on track. Lexington Law Firm wants to help you reach your goals, like Brittany did, so that you can have the second chance you deserve that can help lead you to a better future. Call today for your free credit consultation.

rebuilding credit

Disclosure: Similar results should not be expected and are not guaranteed. Your results will vary.

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Source: lexingtonlaw.com

How to Apply for a Credit Card

Credit cards can be a convenient way to pay for your daily transactions, cover larger expenses, or manage monthly subscription payments. However, if you’ve never applied for a credit card before, the process can seem a little daunting. You might not know what perks or requirements to look out for or whether a particular card is actually a good deal.

We’re here to help. This is your one-stop guide to knowing how to get approved for a credit card: from choosing a card that’s right for your personal finances to making sure that you meet the requirements to apply, we’ll walk you through what you need to know. 

Use these links to navigate the article below if there’s a specific question you want a quick answer to. Or, if you’re new to how to apply for a credit card, start reading from top to bottom for your full guide. 

Let’s start by explaining the basics: how credit cards actually work.

How credit cards work

Credit cards allow you to essentially borrow money for a short amount of time before you have to start paying interest. They are a form of revolving credit, a type of loan that allows you to borrow up to a certain limit. That limit is your credit limit, which is the total amount that you’re permitted to put on your card each month. 

Because credit cards are like a loan, credit card companies follow many of the same rules of thumb that lenders do when deciding whether an applicant will be approved for a mortgage, auto loan, or personal loan. They assess your history as a borrower (usually represented by your credit score), as well as other personal financial details like your monthly income and the assets you own. 

Paying for things with a credit card can, at first, feel almost like it’s free money; you just swipe your card, and suddenly your new shoes or groceries are yours. However, it’s important to remember that credit cards build up a bill—one that you are responsible for paying each month. 

Risks to keep in mind

Knowing how to get a credit card also means being aware of the risks they post to consumers. That’s because, as mentioned above, it can be easy to feel like it’s infinite free money at your fingertips. But it’s important to remember that that is not the case. At the end of each month, you’ll be required to pay off your balance—or at least a minimum balance, which is a smaller portion of your bill. 

Many credit cards have fairly high interest rates—often higher than 15%. That means if you owe $500 on your card, for example, you could owe as much as $75 more if you do not pay in full, even if you do make the minimum payment. What’s worse is that this interest is usually compounding, which means that, if you don’t pay multiple months in a row, the new months’ interest is based on the total balance that includes previous months’ interest. Compound interest can add up fast. 

Credit card debt is a chronic issue for millions of Americans. Some of it can’t be helped; people are often forced to put costly medical bills on credit cards, for instance. However, some of it can be prevented or managed by being careful about when and how often you use your card, how promptly you pay off your balance, and generally being mindful of the risks. 

  • Looking for more info? Check out our post on how credit card interest works for an in-depth explanation. It can also help to choose the right credit card.

Choosing the right credit card

There are hundreds of credit card options out there, with many major brands offering dozens of options, each with its own perks and costs. It can easily feel overwhelming. Here are a few of the features to look out for when picking the right card for your wallet:

  • APR: Annual percentage rate is essentially the cost that you pay for the ability to borrow money from your credit card company. This is the amount that you will be charged if you do not pay your full balance.
  • Annual fees: Some cards, though not all, have fees that must be paid to keep the account open. 
  • Penalties: Your credit card company may charge you an additional fee or higher rate of interest if you miss a payment, make a late payment, or pay less than your minimum payment. 
  • Rewards: Many credit cards offer rewards points for money spent on the card. For instance, you might get rewards cash that you can put toward your monthly bill or airline miles that can be used to purchase flights at discounted rates. Many stores also offer credit cards that provide rewards and discounts to users. If you frequently shop at a particular store, it may be worth signing up for a store-based credit card. 
  • Introductory rates: When hunting for the right card, you will likely notice that several offer introductory rates—lower interest rates than you’ll pay after the introductory period has passed. This can be enticing, but it’s important to remember that these rates are only temporary.
  • Security features: Identity theft is, unfortunately, a fact of modern life. Be sure to check what features a credit card may offer to protect you. 
  • International fees: Some cards charge extra fees for use in another country; others allow you to do this for free. It’s smart to check if you plan on using the card abroad.

Not sure where to start? Check out Mint’s list of the best credit cards. Once you’ve found a card that has the desired rates and features, it’s time to focus on the card’s requirements.

Requirements to get a credit card

Different credit cards have different requirements. Some are only available to those with very high incomes and impeccable credit; others are more accessible to people with any income level and an average credit score. 

In general, though, you can expect a few baseline requirements for most credit cards:

  • Age: Most credit cards require that applicants be 18 or even 21 to apply. If you’re younger than this, you may be able to become an approved user on a parent or guardian’s credit card until you are old enough to apply for your own. 
  • Income source: Credit card companies want to know that you will be able to pay off your balance each month. During the application process, you will likely be asked about your employment status or source of regular income. 
  • Low outstanding debt: It’s normal to have student loans or a car payment, but if you have a considerable amount of outstanding debt—or you’re behind on your payments—credit card companies might get nervous about lending you money. 
  • Credit history: Your credit history, often measured with your credit score, is what lenders use to determine whether you are a trustworthy borrower. The more money you’ve borrowed and consistently paid back, the better your history looks.

Often, one of the biggest parts of knowing how to apply for a credit card is knowing whether you meet the card’s requirements. 

How do I get a credit card without credit history?

It’s the classic conundrum: you can’t build credit history because you don’t have a credit card, but you also can’t get a credit card because you don’t have credit history. What are you supposed to do if you don’t know how to get a credit card for the first time?

You have a few options. 

  1. You might consider becoming an authorized user on someone else’s credit card, usually a parent or guardian. This is a safe and simple way to start building credit from a young age. 
  2. You can sign up for a secured credit card. These allow you to put down a security deposit in the same amount as your line of credit. Think of it as a credit card with training wheels—if you can’t make a payment, you technically already have through your deposit. 
  3. Student credit cards are designed for young people who have just begun building credit. They may have lower requirements and lower credit limits but can be a great first step. 

If you’re just getting started in the world of personal credit, you can also check out our post on how to build credit at 18.

Applying for a credit card

You’ve found the card that works for your lifestyle, and you’ve sized up the requirements and think you’ve got a good shot, now it’s time to learn how to apply for a credit card. 

Applying for a credit card can be fairly straightforward when you do it online. Most companies have a series of online forms you’ll need to fill out. They require information like:

  • Name
  • Date of birth
  • Home address
  • Contact information
  • Social security number
  • Income sources and amounts

It’s important to note that applying for a credit card could trigger a credit inquiry—which may or may not have a temporary effect on your score. This is especially important if you’re planning to apply for other loans in the near future. 

Managing your credit with Mint

If you need help keeping track of your credit card payments and the amount you owe, as well as knowing your net worth and managing your credit, the Mint app can be a game-changer. The app sends notifications and emails when a credit card bill is near-due, will update your balances and display them in one convenient place, and can help you keep tabs on your credit score to make sure you’re where you want to be. 

Applying for and using a credit card can seem challenging, but by managing your personal finances well—and with a little help from Mint—it can be a great way to build credit, make daily expenses, and fund your lifestyle. 

Sources:

Discover | ConsumerFinance.gov | Consumer.gov | Berkeley.edu 

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Source: mint.intuit.com