Credit Report

When an adult's identity is stolen, he or she often discovers the theft in a month or so, when the next financial statement comes in. But when it's a child who is being ripped off, it can be many years before the fraud is discovered. "Parents have no idea that their children's identities have been stolen until they have become adults and find that their credit report says they are in debt," said Steven Toporoff, an attorney with the Federal Trade Commission's division of privacy and identity protection.

The nation's credit bureaus, lambasted by consumers and consumer groups for inaccuracies and slowness to respond to information requests, are cleaning up their act.Legal agreements between a number of states and two of the three major credit bureaus, TRW Corp. and Equifax, have mandated improvements in recent months. In addition, legislation designed to boost credit bureau efficiency and service will go to the floor of the U.S. House this fall.Already, TRW has begun providing one complimentary credit report each year, regardless of whether you were turned down for credit or not. (All agencies give a free report copy if you were turned down for credit because of a report.

Elizabeth J. Gammie is not dead. I haven't known her long, but I'm going to vouch for her. Standing before me on a recent afternoon, her cheeks looked rosy and her hand felt warm and soft when we shook. The almost 81-year-old Parkville resident was heading out to play a mean game of cards with friends. Just to make sure it wasn't a body double, I inspected her passport and Maryland driver's license to make sure she really is who she says she is. Short of a DNA test, I was convinced. But I digress.

I opened my credit-card statement to find my 6.9 percent promotional rate had been unexpectedly jacked up to 22.49 percent. According to the fine print of my cardholder agreement, that can be done when I've made a late payment. But my payments to the company have been made on time. The only blemish on my credit report stems from a dispute with a book club. A surly phone representative at the credit-card company told me that they also could raise my rate if I'd made a late payment to any other company, and that they periodically review my credit report looking for such delinquencies.

While apartment hunting in Detroit this spring, Laura Tropea pulled her credit report to see how a prospective landlord might view her as a tenant. The 28-year-old civil rights lawyer expected to see some late credit card payments from her undergraduate days at the University of Michigan. But she was amazed to discover on her credit report that she owed about $168 to the Ann Arbor, Mich., public library for books checked out years ago. "I haven't lived in Ann Arbor for five years. ... It's bizarre to me," said Tropea, who maintains that she returned the books and never received an overdue notice.

WHEN YOU'RE allowed to open a credit account on the spot at a department store and begin charging, it's not because the clerk thinks you look reliable. It's your credit score. The score, the result of your credit report information fed through a mathematical model, tells lenders the probability that you'll pay your debts. It's widely used by lenders these days. And it can determine the fees, interest rate and terms you're offered, or even if credit will be extended at all, experts said.

With 2011 winding down, there's still time for some smart moves to keep your finances in order. Here are some tips that will help you in 2011 and next year: Make charitable donations. Make a donation today by credit card and you'll get the deduction on your 2011 tax return, but won't have to pay the bill until 2012. Clean out closets. Donate gently used clothes and goods for a tax deduction. Goodwill Industries of the Chesapeake is taking donations today from 9 a.m. to 4 p.m. Contribute to college savings plan.

I had a credit card account turned over to a collection agency several years ago. I never paid the bill, but the negative effect on my credit report seemed to be getting less over time. Unfortunately, a new collection agency has purchased the debt, and it's showing up on my credit report with a new date. This debt is at least 6 years old and should have disappeared in less than a year under the seven-year statute of limitations for negative items on a credit report. Now it shows as a fresh transaction doomed to linger for seven more years.

My daughter has always been very responsible with money. We gave her our credit card for emergencies in college, and through four years at school she never used it. At the beginning of her senior year, she was talked into applying for a credit card of her own in return for a free magazine subscription. Afterward, she felt bad about it and called me for advice. I told her not to activate the card when it arrived. I regret that advice now. Her bills for this card were never forwarded to her new address, and now that she's out of school she's being turned down for loans because there's a small unpaid balance from that supposedly free magazine.

By now, you're probably aware of the wide use of credit scores, and how this three-digit number can determine whether you get credit and under what terms. But there is a lot of misinformation about scores, too, and what you don't know can hurt you. You could end up unnecessarily paying interest on credit cards or lowering your score in attempts to improve it. Here are some of the myths: Myth: You must carry a credit card balance for a good score This fallacy is prevalent.