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A Stranger's Card is Improving My Credit

 
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December 28, 2012
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QDear Erica,

I’m a sophomore in college. I’ve never had a credit card, but I want one. So, I did what you said and got my credit reports and FICO scores. They are not very good because there is not much there. However, on my TransUnion report, there is a credit card listed that is not mine. The entry says “CITI/B paid or paying as agreed,” and that it was opened June 1, 2011. The credit limit is $25,000, and it says “high credit $2,600.” The charge of the last payment was $400. There are also bunch of zeros. I don’t know whose card it is, but it is definitely not mine. My TransUnion report has a score of 721. The other two are only in the 600s. Can I get a credit card with the TransUnion score alone because it’s the best? Should I ask them to take that card off? – Pete

AHi Pete,

You don’t want some random guy’s credit account on your consumer credit report, just as you wouldn’t want another student’s Philosophy 101 grade on your college transcripts — no matter how good the grade is. School and financial records should list only accurate information.Ask Erica

You just gave a great example of why everyone ought to check their credit reports on an annual basis. The account that you’re seeing may be just an odd error — and it sounds to me like it probably is — but it could also be evidence of identity theft. Sometimes thieves open credit cards or take out loans using other people’s credit and financial information.

Therefore, yes, contact TransUnion immediately to have the card removed. Visit its website and dispute it. Even if it’s not fraud and the mistake is benefiting you now, that might not always be the case. If the cardholder begins to miss payments (the zeros indicate that he or she has paid on time so far), hits the credit limit (instead of charging just $2,600) and stays there, or one day discharges the debt in bankruptcy, your credit will suffer.

Regarding applying for a card on our own, you don’t know which credit report the card issuer will check, nor can you dictate that. The reason credit reports exist is to provide data to businesses (such as credit issuers) so they can make sound decisions. They need to know your history with borrowing and repaying money so they can determine if you might be a good customer. Errors impair their judgment. So you want all your reports to be clean and correct.

As you are new to the world of credit, your reports should be fairly blank. So it’s not surprising your other scores are just meh: Not much has really gone on yet, so , lenders will have a hard time gauging risk. You could be a responsible guy, but you may not be — it’s impossible to guess without a clear pattern of past behavior.

That doesn’t mean that you’re ineligible for a line of credit, though. Hey, everyone has to start somewhere.

Your two basic options include asking someone with an established and excellent credit history to co-sign a credit account with you (called “piggybacking“), or to get a secured credit card, which requires you to put some cash down with the bank as collateral. Of those choices, I almost always prefer the latter.

Secured cards are perfect for those wedging a foot in the borrowing door, as they are fairly easy to qualify for and both you and the issuer assume little risk. The charging limit is often fairly low (so you can’t get into too much debt right away). Plus, if you fail to pay according to the contract, the issuer can take the funds you leave in the deposit account. With an unsecured account, to get their money back they’d have to (in order) hassle you endlessly, ruin your credit with black marks and then sue you and win the case.

After you dispute the mysterious card, your FICO scores should all be relatively the same in about 30 days. And yes, that one high one will probably drop down to the level of the others. At that point, start lifting them all. Research secured card offers, and apply for the one that best matches your credit rating and needs. And when you get it? With regular charging and paying the balances in full and on time, all of your scores will rise — without the help of some stranger.

Got a question for Erica? Send her an email.


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