credit card Archives | Page 32 of 40

Oct

2022

What to Do When a Family Member Uses Your Credit Card Unauthorized

By Dan Miller | Credit, credit card, Family Finances | Comments Off

One of the main advantages of using a credit card for purchases is that, in most cases, you’re not liable for fraudulent charges. If your card is lost or stolen, usually all it takes is a quick chat with your credit card issuer to resolve the issue. Where this gets a bit murkier is when it’s a family member or friend who uses your credit card without your permission.

While you’re still not liable, the process of dealing with unauthorized credit card charges by family members or friends can get more complicated. Your credit card issuer may want you to file a police report and even take legal action against the person who made the charges. You’ll have to decide whether it’s worth potentially damaging your relationship with your family member or friend.

Authorized vs Unauthorized Credit Card Charges

While you are legally responsible for paying back any authorized credit card charges, in most cases, you will not need to cover any unauthorized credit card charges.

Most credit cards come with a 0% liability guarantee, meaning that you’re not liable for any unauthorized or fraudulent charges that were made with your credit card or account information. This can help protect you against credit card scams and other fraudulent activity, as well as charges made to your card without your permission.

Legal Protection Against Unauthorized Use of Credit Cards

There are two main federal laws that help to protect you against unauthorized use of your credit card or account information:

• Fair Credit Billing Act (FCBA): This law limits your liability for unauthorized credit card charges to $50, though many card issuers lower your liability to $0 for all unauthorized charges.

• Electronic Fund Transfer Act (EFTA): Sometimes referred to as Reg E, this law limits liability for ATM transactions or debit card charges, among other types of transactions, if it’s reported within 60 days.

Recommended: What is a Charge Card

Tips for Handling Accidental Possession of Credit Cards

One of the best things you can do to help avoid unauthorized use of your credit card by a third party is to keep it in your possession. Make sure you know where your credit cards are at all times, especially if you have teens or other adults living in your home.

It’s also a great idea to regularly monitor your bank and credit card accounts. That way, you can spot any unauthorized charges quickly.

Tips for Handling Unauthorized Credit Card Charges

If unauthorized charges were made to your credit card, here are some tips for how to handle the situation.

Contact Your Credit Card Issuer

The first thing you’ll want to do if you spot an unauthorized credit card charge on your account is to contact your credit card issuer. You can do this by calling the number printed on the back of your credit card or contacting your issuer through your online account.

Request a Refund

As the refund process may vary slightly by issuer, the customer service representative you talk with can help you figure out how to request one. A refund is also sometimes referred to as a credit card chargeback. In many cases, the bank will provisionally credit your account within 24-48 hours while they investigate the fraudulent charges.

File a Police Report

In some cases, your bank or credit card company may request you to fill out a police report. In other cases, the card issuer may file a police report themselves. This can make the situation complicated if it’s a friend or family member who made the unauthorized charges.

Disputing Credit Card Charges

Disputing credit card charges is another term for reporting unauthorized or fraudulent activity on your account. When you dispute a credit card charge, you’re letting the card issuer know that you believe you should not be responsible for paying that particular charge. It’s important to dispute any fraudulent charges as soon as possible.

Reporting Unauthorized Credit Card Use

It’s good financial practice to regularly review your bank and credit card accounts for a number of reasons. One reason is to report any unauthorized credit card use as soon as you see it. The best way of handling fraudulent charges is to report them immediately and then let your bank or credit card company investigate them.

Recommended: How to Avoid Interest On a Credit Card

Tips for Avoiding Credit Card Fraud and Unauthorized Use

There are two things that you’ll want to do to avoid unauthorized use on your credit card:

• First, make sure that you keep track of your cards and don’t leave them where someone else might use them.

• Second, regularly monitor your bank and credit card accounts. That way, you can report any unauthorized use to avoid being liable for any credit card purchase interest charges that may accrue otherwise.

The Takeaway

Federal law limits consumer’s liability for fraudulent or unauthorized charges, and most credit cards have a $0 fraud liability policy. So if you do have any unauthorized or fraudulent charges, make sure to report them to your credit card issuer right away.

Where it can get complicated is if it’s a friend or family member who made the unauthorized charge. In the case of unauthorized use of a credit card by a family member or friend, you’ll need to decide whether to try and get the money back directly from that individual or report the charge to your card issuer, which may mean filing a police report.

To learn more about options for protecting your credit cards and tips for managing your accounts, explore our credit card guide.

FAQ

Who is liable for unauthorized credit card charges?

Federal law limits a consumer’s liability for unauthorized credit card charges and credit card fees stemming from unauthorized use. If you see a charge on your credit card account that you don’t recognize, make sure to report it to your card issuer as soon as possible.

How do credit cards investigate unauthorized charges?

Credit card companies have a variety of different ways that they investigate unauthorized charges. They may contact the merchant, review video from the purchase, or check online activity. In some cases, they may work with local law enforcement and/or pursue criminal charges.

Should you report a family member for unauthorized credit card use?

Whether or not you report a family member for unauthorized credit card use depends on the situation. Keep in mind that reporting a family member for unauthorized credit card use may lead to the card issuer pressing charges against them for fraud. So, depending on your relationship, you may not want to report your family member to the card issuer and instead try to get the money back directly from them.

Photo credit: iStock/Erdark

Oct

2022

What to Do With an Old or Expired Credit Card

By Dan Miller | Credit, credit card | Comments Off

Most credit cards come with an expiration date printed on the face of the card alongside the credit card account numbers. If you keep your account open, you’ll usually get a new card in the mail before your previous card expires. Still, that leaves the question of what to do with old credit cards.

Once you get your new credit card, or if you’ve decided to close your account, you’ll want to be careful about what to do with your expired credit card. There are a few things to keep in mind to make sure you keep your financial information safe.

Things to Do With an Old or Expired Credit Card

If you have a credit card that’s closed or has passed its credit card expiration date, here are some options to consider as you decide what to do with the card.

Shredding Your Credit Cards

The simplest thing you can do after closing a credit card is to shred it. Most modern shredders have the ability to shred plastic credit cards in addition to paper. If you don’t have a shredder, you can cut your card into multiple pieces with scissors.

You might consider putting each piece of your card in a different trash can or trash bag. This will minimize the chance that someone might be able to reconstruct your full account number.

Disposing of Metal Credit Cards

It gets a little more complicated if you’re disposing of a metal credit card. Most retail shredders will not be able to handle shredding a metal credit card. If you have an expired metal credit card, you can try the following:

• Cutting it up with tin snips

• Turning it in at a physical bank branch

• Sending it back via certified mail to your credit card issuer

Contacting Expired Credit Card Hobbyists

Believe it or not, there are people that collect old credit cards as a hobby. They do it as part of the history of credit cards. While you might not feel comfortable having your credit card and account information in the hands of someone else, if you do, there may be someone who would want to have it.

Just keep in mind that while there are some old or historical cards that have actual value as collectibles, most current credit cards won’t be worth anything to a collector.

Deactivating Magnetic Strips and Chips

As part of the process of destroying a credit card that’s past its credit card expiration date, it’s not just the account number that you’ll need to take care of. Most credit cards have either a magnetic strip or an EMV chip (or both) that contain account information that you’ll need to make sure is destroyed.

If you have a contactless credit card, remember that it also contains potentially sensitive information.

Keeping Your Card Out Of The Recycling Bin

Above all else, don’t just throw your card in the recycling bin. While most credit cards are plastic, that doesn’t mean they can be recycled as-is. Check with your local trash or recycling authority to see if credit cards can be recycled. Even if your card can be recycled, it’s not a great idea to toss it in the recycling bin whole due to security risks.

Things to Do Before You Close Your Credit Card Account

It can be difficult to know when to cancel a credit card due to the implications it can have for your credit score. Especially if the account you’re thinking about closing is one of your older ones, it can impact the length of your credit history. As this is a factor that goes into determining your credit score, it could cause your score to drop.

So before closing your credit card account, consider the following options first.

Downgrade Your Card

Instead of closing your credit card account, you might consider downgrading your account to a different type of credit card. Most credit card issuers have a variety of different cards, so you might find one that’s a better fit for you. Plus, keeping your account open can help maintain your average age of accounts.

Recommended: How to Avoid Interest On a Credit Card

Upgrade to an Unsecured Card

If you currently have a secured credit card, you can move from a secured card to an unsecured credit card rather than simply closing out your account.

A secured credit card can make sense if you have a limited credit history or are working on rebuilding your credit history. But once you have an established history of adhering to credit card rules like making on-time payments, you may be able to qualify for an unsecured card.

Recommended: When Are Credit Card Payments Due

Keep Your Card for Small Purchases

It may make sense for you to keep your credit card and use it to make small purchases here and there, especially if it doesn’t have an annual fee. Keeping a credit card open can help you maintain your average age of accounts, especially if the card is one of your older ones.

Just keep in mind that if you do decide to keep it open, you may want to make occasional small purchases on it. Otherwise, your credit card issuer may close it for inactivity.

Recommended: Can You Buy Crypto With a Credit Card

The Takeaway

If you have an old or expired credit card, it’s important to take the necessary steps to keep your financial information safe. In most cases, it’s a good idea to shred your expired card so that nobody can access your information. You might also just keep your credit card account open to avoid lowering your average age of credit accounts.

If you’re in the market for a new card, you might consider a cash-back rewards credit card like SoFi’s credit card. If you get a credit card with SoFi, you can earn unlimited cash-back rewards, which you can use to invest in fractional shares, apply as a statement credit, or meet other financial goals you might have, like paying down eligible SoFi debt.

Apply for a SoFi credit card today!

FAQ

Can an expired credit card be charged?

In most cases, if you try to make a purchase after your credit card’s expiration date, it will be declined. Keep in mind, though, that merchants may continue to charge a card after its expiration date if you have it set up for recurring charges. Check with any merchants where you have recurring charges to see how this might affect you.

Can I cancel a credit card online?

Yes, in most cases you do have the ability to cancel a credit card online. You could do so through your online account or possibly by using a chat feature on the card issuer’s website. If you’re not able to cancel your credit card online, you may have to call the customer service number on the back of your card to cancel your card.

What should I do before canceling a credit card?

Knowing when to cancel a credit card is a matter of balancing a variety of different factors. Before canceling a credit card, make sure that it won’t drastically affect your credit score. You’ll also want to contact any merchants where you have recurring charges to update your account information. That will ensure that you don’t have any interruption in service.

Photo credit: iStock/dzika_mrowka

¹See Rewards Details at SoFi.com/card/rewards.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

The SoFi Credit Card is issued by SoFi Bank, N.A. pursuant to license by Mastercard® International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

Members earn 2 rewards points for every dollar spent on purchases. No rewards points will be earned with respect to reversed transactions, returned purchases, or other similar transactions. When you elect to redeem rewards points into your SoFi Checking or Savings account, SoFi Money® account, SoFi Active Invest account, SoFi Credit Card account, or SoFi Personal, Private Student, or Student Loan Refinance, your rewards points will redeem at a rate of 1 cent per every point. For more details, please visit the Rewards page. Brokerage and Active investing products offered through SoFi Securities LLC, Member FINRA/SIPC. SoFi Securities LLC is an affiliate of SoFi Bank, N.A.

SoFi cardholders earn 2% unlimited cash back rewards when redeemed to save, invest, a statement credit, or pay down eligible SoFi debt.

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Oct

2022

Instant Approval Credit Cards: How They Work

By Dan Miller | Credit, credit card | Comments Off

When you apply for a credit card, there are a few things that can happen. You may be instantly denied, or you may receive a notice that the card issuer needs more time to evaluate your application. Another possibility is that you’re instantly approved for the credit card.

When you receive an instant approval for a credit card, you can rest easy knowing that you’ll get the credit card and any applicable welcome bonus. In some cases, credit card issuers will allow you to have instant access to your credit card number. That can be useful if you want to make an immediate and time-sensitive purchase.

What Is an Instant Approval Credit Card?

An instant approval credit card is a credit card that guarantees a decision about your application within a matter of minutes. Once you submit your application, the credit card issuer will instantly let you know if you’ve been approved or denied for the card.

Not all credit card issuers do instant approvals, and it’s possible to not receive an instant approval even if you have excellent credit and income. For some issuers and certain credit cards, when you’re instantly approved, you also receive your credit card number and everything else you need to make a purchase with the card right away.

How Instant Approval Credit Cards Work

When you apply for a new credit card, the card issuer will conduct a hard pull of your credit report and review your credit history, income, and other financial information. They will use this information to decide whether or not to approve you for a card.

If they have enough information on your credit report to approve you automatically, you may be instantly approved. In other cases, a credit analyst may need to review your application before making a decision. This will impact how long it takes to get a credit card.

Instant Approval vs Pre-qualified Offers

Many credit card issuers also allow you to pre-qualify for a credit card. When a lender pre-qualifies you for a credit card, they usually take your basic information and do a soft pull on your credit report, as opposed to the hard inquiry done for formal approval of your application. This soft pull allows them to see a limited amount of information about you, which may be enough for them to pre-qualify you.

Being pre-qualified does not mean that you’ll necessarily be approved when you fill out the complete application. In contrast, when you receive an instant approval, that means that you’ve actually been approved for the card.

Recommended: What is the Average Credit Card Limit

Pros and Cons of Instant Approval Credit Cards

Fast credit cards approval has some obvious upsides, but there are also some possible downsides to take into consideration as well:

Pros	Cons
You know right away when you are approved	You may not be instantly approved, even with good credit and income
You may be able to access your card information instantly	Instant access to your credit card number may tempt you to spend more

When to Consider an Instant Approval Credit Card

The only time it may be worth it to go out of your way to go for an instant approval card is if you have a large purchase that you need to make within the next day or two. In that case, being able to secure a big signup bonus on a new card or get a card with an introductory 0% APR offer may be worthwhile, given how credit cards work.

When possible, however, it’s better to manage your credit cards and credit card applications so that you don’t have to depend on instant credit card approval.

When to Skip an Instant Approval Credit Card

In most non-emergency cases, it doesn’t make sense to go out of your way to find an instant approval credit card. Instead, review the different credit cards that are out there and find the best card for you — regardless of whether you might be instantly approved.

Choosing a credit card that’s right for you might earn you hundreds of dollars or more in rewards. In the end, it may be worth more than getting the card information a few days earlier.

Choosing an Instant Approval Credit Card

It’s not always possible to determine whether any particular card will give you instant approval. Some card issuers (including American Express) publicly state that they offer instant credit card numbers to eligible cardholders.

That being said, receiving instant approval (and an instant credit card number) is contingent on the information on your credit report and the credit card requirements of the card issuer itself. In other words, instant credit card approval and use is not something that can be guaranteed.

Increasing Your Chances of Approval

While there isn’t always a guarantee of getting instant credit card approval, there are a few things you can do to help increase your chances of getting approved immediately.

Provide Information About Your Income

Most credit card applications ask about your total household income. Providing accurate income information can help the credit card issuer understand your financial situation and possibly approve you instantly.

Remember, one of the key credit card rules is that you should be truthful. If an issuer finds out that you were dishonest on your application, they may close your account.

Recommended: How to Avoid Interest On a Credit Card

Check Your Credit Reports

Another great idea if you’re hoping to secure instant approval on a credit card is to check your credit report. Keep your eye out for any incorrect or inconsistent information. If there’s incorrect negative information on your credit report, it may prevent you from being instantly approved for a credit card.

In general, it’s a wise financial move to regularly review the information on your credit report at least on a yearly basis.

Apply for the Right Instant Approval Credit Card

You’ll also want to be realistic about your approval odds for the credit card you’re looking at. If your credit isn’t that great, you might not want to try applying for an instant approval credit card that requires excellent credit (meaning a score of 800+). It’s more important to try to apply for a card that you’re likely to get approved for than one that might offer instant approval.

Alternatives to Instant Approval Credit Cards

One alternative to an instant approval credit card is to just apply for the best credit card for you, regardless of whether you might be instantly approved. You might also look at virtual credit cards, where you can get a temporary, randomly generated credit card number that’s linked back to your actual credit card account.

If you are in need of fast funding, there are other options to explore there, too. Some online lenders offer funding the same day you apply and get approved for a loan. You might also consider tapping into your emergency fund, which you then can replenish once you’ve addressed your need for fast cash.

The Takeaway

When you apply for a credit card, it’s possible the credit card issuer may instantly approve you. In other cases, they may need more time to decide whether or not to approve your application. If you are instantly approved, you may also be able to have immediate access to your card number and other credit card details. Instant approval credit cards with instant use can be useful if you have an immediate need to make a large purchase and want to do it on a new credit card.

Whether you're looking to build credit, apply for a new credit card, or save money with the cards you have, it's important to understand the options that are best for you. Learn more about credit cards by exploring this credit card guide.

FAQ

What credit score do I need for an instant approval credit card?

There isn’t a single credit score you’ll need to be approved for an instant approval credit card. Instead, each credit card has its own criteria for approval. When choosing a credit card, it’s important to select a credit card that matches your credit profile. If you have fair or worse credit, you shouldn’t apply for a credit card that requires excellent credit — you’ll likely be denied.

What is the difference between instant approval and instant use of credit cards?

When you apply for a credit card, you may be instantly approved if the card issuer has enough information to make an automatic decision. If you’re instantly approved, some issuers allow you to have instant access to your credit card number and account.

Does an instant approval credit card guarantee you’ll be approved?

There’s no guarantee you’ll get approved when you apply for a credit card, and the same goes for instant approval credit cards. Whether you’re approved will depend on your financial specifics and the credit card requirements. Even if you’re pre-qualified or pre-approved, that does not guarantee that you’ll be approved when you go through the formal application process.

What if my application for an instant approval credit card gets declined?

If your instant approval credit card application is denied, you may still eventually be approved for the card. It may just mean that the issuer needs additional information or more time to determine if they can extend credit to you.

Photo credit: iStock/PeopleImages

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

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Oct

2022

Guide to Canceling a Credit Card Payment

By Kelly Boyer Sagert | Credit, credit card, Family Finances | Comments Off

Whether you’ve noticed a potentially fraudulent charge or you simply changed your mind on a purchase, there are a number of reasons why you might want to cancel a credit card payment. Luckily, there are actions you can take to do so, assuming the payment falls within certain parameters.

Read on to learn how to cancel a credit card payment, whether the charge is still pending or if it’s already posted. We’ll also cover how to stop payments on credit cards if you don’t want your scheduled payment to go through.

Can You Cancel a Credit Card Payment?

Per the Fair Credit Billing Act (FCBA), a law that all credit card issuers must follow, there are times when you can withhold a payment. So if you define “cancel” as disputing a charge instead of making the payment, there are instances when it’s acceptable under the law to cancel credit card payment.

You can also request to cancel a credit card payment if you believe it’s the result of fraudulent activity.

Related: How to Cancel a Credit Card

Things to Consider Before You Cancel a Credit Card Payment

Before you go willy-nilly with canceling credit card payments, it’s important to note that the previously mentioned FCBA guidance only applies when you believe a billing error was made. Per the Federal Trade Commission (FTC), examples of billing errors include:

• Unauthorized charges

• Charges with the wrong date or amount listed

• Charges for items or services you didn’t accept or that weren’t delivered as agreed

• Mathematical errors

• When the credit card issuer didn’t post your payments or your returns/credits

• When the credit card issuer didn’t send the bill to the appropriate address, assuming they were provided adequate notice of any change in address

• Charges where you’ve asked for written proof of a purchase or an explanation of it, along with a claim of an error and a clarification request

Further, you generally must have made the purchase on your credit card in your home state or within 100 miles from your home for the laws on credit card disputes to apply. The charge in question must be for more than $50. Credit card rules stipulate that it’s also necessary to have made an attempt to resolve the issue with the merchant first.

Recommended: What is a Charge Card

Reversing a Credit Card Payment After It Has Been Made

If you’ve already paid the merchant but are unsatisfied with how they’ve responded to your complaint, contact your credit card company to see if you can get the charge reversed. They may call this a chargeback.

Parties that will get involved in the process, besides you, can include your credit card issuer, the merchant from whom you purchased goods or services, the merchant bank, and the credit card network. This is due to how credit card payments work.

Typically, you’ll receive credit on the disputed amount while an investigation takes place. If you win the billing error dispute, this credit card refund will remain permanent. If the case isn’t decided in your favor, then the amount would get added back to your credit card balance.

Recommended: When Are Credit Card Payments Due

How to Cancel a Credit Card Payment After It’s Made

If you’re hoping to cancel credit card payment, here are the general steps you should go through to do so.

Attempt to Resolve the Dispute With the Seller

As an initial step, contact the seller of the item you’re unhappy with and explain the situation. It’s possible, for example, that you received the wrong item or a part may have been defective in what you received. Perhaps they can send you a replacement. Or you can ask the seller to reverse the charges on your credit card, resulting in a credit card refund.

Avoid Paying the Disputed Amount

If you don’t get satisfaction by working with the merchant, you can decide to not pay the disputed amount and have the situation investigated. To make that happen, though, you need to follow specific steps, starting with reaching out to your credit card issuer.

Contact Your Credit Card Issuer

Write and send a letter to your credit card issuer that outlines the billing error and disputes the charge. Your credit card company should have a billing inquiry address listed on its website.

Make sure to send this letter within 60 days of receiving the billing statement with the disputed charge. Keep copies of the letter, and consider sending it via certified mail with a return receipt.

Await Your Credit Card Company’s Decision

Then, you wait. The creditor has up to two billing cycles — a maximum of 90 days — to resolve the dispute. The result may be that you don’t have to pay the disputed amount, or that you do. Or, you may end up needing to pay part of it.

If you have reason to believe that the creditor isn’t following the rules set out by the FCBA, you have the right to sue them. If you were to win, the court may award you damages and order the credit card company to pay your attorney fees.

Understand the Limitations

After you’ve filed a dispute, you aren’t required to pay the charge in question until after the investigation ends and a decision is made. That said, you are required to pay whatever else is owed on this bill — such as a credit card minimum payment or finance charges on the undisputed portion of the bill. And, of course, remember there’s no guarantee that you would win a lawsuit.

Recommended: What is the Average Credit Card Limit

How to Stop Payments on Credit Cards

Perhaps you want to know how to stop a scheduled payment on a credit card that hasn’t already been made. In this case, you’d need to contact your bank at least three business days before the payment is set to come out. Do so in person, in writing, or over the phone. The financial institution may require a follow-up of this request in writing within 14 days.

Note that, even after the bank stops a payment, you may still be responsible for making the payments to the credit card company. If you have questions about liability, you can email the Federal Deposit Insurance Company (FDIC) or call toll-free at 1-877-275-3342.

Here are some other general tips to keep in mind for the process of stopping payment on a credit card.

Identify the Credit Card Payment You Want to Cancel

When you contact your bank, make sure you’re clear about which payment you want to cancel. If you only have one automatic payment taken out, this wouldn’t apply.

Check the Restrictions That May Apply

Be clear about whether your stopped payment falls within your FCBA rights. Remember that you’re still liable to pay your credit card bill outside of any disputed charges due to how credit cards work.

Contact the Credit Card Provider to Stop the Pending Payment

If you want to contact your credit card company to stop a pending payment, use the phone number on the back of your card. You can then talk to someone about stopping the payment.

Verify That the Payment Has Been Canceled

Whether you talk to your financial institution or the credit card company, ask for the name of the person you spoke to and a confirmation number. Take good notes and keep them. Later, you’ll want to check back to make sure that the payment was indeed canceled.

What to Do in the Case of the Non-Reversal of Funds

If you aren’t satisfied with how your credit card company is handling a situation, you can submit an online complaint online to the Consumer Financial Protection Bureau (CFPB) or call them at (855) 411-2372.

Also keep in mind that if your dispute was denied, you can request an explanation from your credit card company. You also have the option to appeal the decision.

The Takeaway

It is possible to cancel a credit card payment if it falls within your FCBA rights or it’s due to fraudulent activity. There are protections built into the law for when you receive erroneous billing, as well as an established process to follow to address this issue. In the meantime, you’re still liable to make minimum payments outside of the disputed amount.

If you’re looking to apply for a credit card, SoFi offers one that’s designed to help you save and invest as well as to pay down SoFi debt.

The SoFi Credit Card offers unlimited 2% cash back on all eligible purchases. There are no spending categories or reward caps to worry about.¹

Take advantage of this offer by applying for a SoFi credit card today.

FAQ

Can I cancel a pending transaction on my credit card?

Possibly. Contact the merchant and ask them to cancel the transaction. Aim to do so in the day or two before the pending charge is added to your balance. Once it’s posted, then you would need to pursue another route, like filing a dispute or asking for a chargeback.

Does canceling a credit card payment affect your credit score?

If you dispute a charge, it may show up on a credit report, but it won’t directly affect your scores. The FCBA notes that it’s not legal for someone to be denied credit because they disputed a bill. That said, to avoid your credit score getting dinged, you must keep up credit card payments outside of the disputed amount.

How long does it take to cancel a credit card payment?

You should provide at least three days’ notice before a bill is set to be taken out of a bank account. That should provide adequate time for the cancelation of the credit card payment.

Photo credit: iStock/solidcolours??

¹Members earn 2 rewards points for every dollar spent on purchases. No rewards points will be earned with respect to reversed transactions, returned purchases, or other similar transactions. When you elect to redeem rewards points into your SoFi Checking or Savings account, SoFi Money® account, SoFi Active Invest account, SoFi Credit Card account, or SoFi Personal, Private Student, or Student Loan Refinance, your rewards points will redeem at a rate of 1 cent per every point. For more details please visit the Rewards page. Brokerage and Active investing products offered through SoFi Securities LLC, member FINRA/SIPC. SoFi Securities LLC is an affiliate of SoFi Bank, N.A.

¹See Rewards Details at SoFi.com/card/rewards.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

The SoFi Credit Card is issued by SoFi Bank, N.A. pursuant to license by Mastercard® International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

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Oct

2022

What’s a Credit Bureau? Examining the Top 3 Bureaus

By Dan Miller | Credit, credit card | Comments Off

Credit bureaus are companies that gather and store credit-related information on just about every adult in the United States. There are three major credit bureaus, or credit reporting agencies: Equifax, Experian, and TransUnion.

The information collected by the credit bureaus is used to make financial decisions that have a major impact on the lives of many Americans. While credit bureaus themselves don’t make lending decisions, lenders rely on the information that credit bureaus provide to judge individuals’ creditworthiness.

What Is a Credit Bureau?

A credit bureau is a company that gathers credit and debt information about consumers. The three major credit bureaus in the U.S. — Equifax, Experian and TransUnion — also sell credit reports and credit scores to creditors, such as credit card issuers and mortgage lenders.

Credit bureaus keep a database of historical financial records about consumers. This may include information like the total number of credit or loan accounts you have open, your current account balances, and your payment history.

How Does a Credit Bureau Work?

Credit bureaus work by detailing and cataloging credit and loan transactions. The bureaus get their information from a variety of sources, including public records and information reported by lenders.

Not all third parties report to each of the three bureaus, which is why you may see different information on credit reports provided by different bureaus. If a lender wants one report that has information from all three major credit bureaus, they’ll need to get a tri-merge credit report.

Why Are Credit Bureaus Important?

Credit bureaus serve an important role in the overall financial markets. While credit bureaus do not make lending decisions themselves, they provide historical financial information on consumers to potential lenders and creditors. This information is used by potential lenders when deciding whether or not to issue you credit, which is why it’s important to regularly review your credit report and dispute a credit report if there’s any incorrect information.

Credit Bureau Regulations

The Fair Credit Reporting Act (FCRA) regulates the credit bureaus and helps ensure that consumers are protected. One part of the FCRA states that information held by each credit bureau cannot be given to someone without authorization or a valid purpose. The FCRA also has a provision that gives every American the ability to see their credit report for free at least once per year.

The 3 Major Credit Bureaus

As previously mentioned, there are three major credit bureaus in the U.S. While not the only credit credit bureaus in the country, these are the three credit bureaus that dominate the collection and dispersal of information.

Equifax

Equifax was founded in 1899 and is headquartered in Atlanta, Georgia. With 13,000 employees in total, Equifax operates in 25 countries.

Experian

Experian traces its roots back to 1826 and is currently a conglomeration of several different companies. Headquartered in Dublin, Ireland, Experian currently has over 20,000 employees working in 43 countries around the world.

TransUnion

TransUnion was formed in 1968 by the Union Tank Car Company, a railcar leasing operation. Shortly afterward, they acquired the Credit Bureau of Cook County and got into the credit reporting business. TransUnion currently serves over 30 countries on five continents.

What Information Do the Credit Bureaus Monitor?

Generally speaking, credit bureaus monitor credit and debt information. For example, a credit card issuer might share the number of financial accounts you have, when you opened or closed them, your maximum credit line for each account, and/or your payment history. They may also collect information on debt collections and bankruptcies in your financial history.

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How Do Credit Bureaus Use Your Information?

The credit bureaus themselves do not use your information to make any lending or financial decisions. Instead, the credit bureaus simply store and catalog this information. Credit bureaus then sell access to the credit data, allowing lenders and other potential creditors to view information about borrowers for a fee.

When credit card companies report to credit bureaus, the information they provide is added to the credit report for that consumer. This is why credit reports are constantly changing and updating, leading to credit score updates. As such, companies often regularly purchase reports and scores for their current customers.

What Is a Credit Report?

A credit report shares information about how you as a consumer have handled your credit accounts. It contains identifying information about you, such as names you have used, places you have lived, and your birthdate or Social Security Number.

Additionally, a credit report shows information about the different types of credit accounts or credit tradelines that you have or have had. More specifically, this information can include details on payment history, account balances, and credit limits, as well as any derogatory marks, like late payments, civil lawsuits, or bankruptcies.

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Information Included in a Credit Report

Credit reports typically contain the following:

• Identifying information: This includes your name, address, phone number, birthday, and Social Security number. You may also find information on your current and previous places of employment.

• Credit summary: This portion of your credit report details any accounts you have, such as credit cards, mortgages, or other loans. Information will include the date the account was opened, the account balance, the highest balance, the credit limit or loan amount, the payment status, and the payment history.

• Public records: Your credit report also contains information pulled from public records, such as bankruptcies or debt collections. You’ll also see payment defaults and late payments noted.

• Credit inquiries: In your credit report, you can also see any party that’s requested access to your credit report in the last two years. This could come from a credit card or loan you applied for.

When reading a credit report, it’s important to make sure that the information on it is valid and accurate. Incorrect or inaccurate information on a credit report can lead to higher interest rates or being denied for credit.

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Who Uses Credit Reports?

Credit reports are primarily used by potential lenders or creditors. This might include banks, credit card issuers, or other lenders. Landlords and employers are two other groups that often pull credit reports.

Lenders and creditors use credit reports to assess how creditworthy you are, which may help them determine whether to extend you credit (and at what rate). In the case of landlords and employers, your credit report may help them determine whether to offer housing or an employment opportunity.

What Else Do Credit Bureaus Do?

The main role and responsibility of credit bureaus is to provide credit information to potential lenders and creditors, for a fee. In addition to this main business model, credit bureaus also provide access to credit reports to the consumers themselves. This is to remain in compliance with the Fair Credit Reporting Act.

Some Other Credit Bureaus

In the United States, the big three credit bureaus are Equifax, Experian, and TransUnion. These three companies do also maintain credit information in other countries. However, outside of the U.S., there are also country-specific credit bureaus. For example, there is SCHUFA in Germany and UC in Sweden.

Credit Bureaus vs Credit Rating Agencies

Confused on what credit bureaus vs. credit rating agencies are? While both credit bureaus and credit rating agencies provide information on creditworthiness, there are some key differences to be aware of:

Credit Bureaus	Credit Rating Agencies
Primarily focus on individual consumers	Rate corporations
Credit ratings use a 3-digit credit score	Credit ratings use letters, such as AAA or BB
The top three credit bureaus are Experian, Equifax, and TransUnion	The major credit rating agencies are Moody’s, Standard & Poor’s, and Fitch Ratings

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The Takeaway

Credit bureaus gather, maintain, and collate credit information about millions of consumers throughout the United States and across the world. Lenders and potential creditors use this information to make decisions about whether to extend credit, as well as how much and at what rate. In the U.S., the three major credit bureaus are Equifax, Experian, and TransUnion. Any new credit card that you open will appear on your credit report maintained by one or more of these credit bureaus.

FAQ

Do you need all three credit scores from the major credit bureaus?

Because each of the major credit bureaus uses different sources of information, you may have slightly different information on each credit report. Also, each credit bureau uses the information they have differently in calculating an overall credit score. Because of this, some lenders prefer what is called a tri-merge credit report, which is one report that has information from all three major credit bureaus.

How many credit reporting agencies are there?

There are hundreds of credit reporting agencies throughout the world, each with a different focus. In the United States, there are three main credit reporting agencies or credit bureaus: Equifax, Experian, and TransUnion.

Which credit bureau is used the most?

Although Experian is the largest credit reporting agency, Equifax and TransUnion are generally considered to be just as reliable and accurate. There is not one credit bureau that is necessarily used the most. Instead, it varies by geographical region and the preference of the lender or creditor asking for the credit report.

Why doesn’t my report show a credit score?

There may be a variety of reasons why your credit report doesn’t show a credit score. One of the most common reasons is that the credit bureau does not have enough financial information about you to make an accurate decision. When your credit information updates, your credit score updates as well.

Photo credit: iStock/damircudic

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