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Building Credit


What type of actions harm my credit?

  • Late payments
  • High balances
  • Collections / bankruptcies
  • Depending on your current credit history, the amount of requests for new credit lines may impact your credit

What type of timely payments help my credit score?

Credit Cards, mortgage, and car lease payments will immediately raise your credit. Other payments such as rent, utility, and medical bills will only affect your score if the lender reports it to the credit bureau.

Can I build credit for a minor, or does one have to be at least 18 years old?

You can start building credit for a minor before the age of 18. How? An individual can be added as an authorized user to an existing account. In order to apply for a new credit card, though, you have to be at least 18 years old.

Does paying off a loan early increase credit?

No, paying off a loan early does not necessarily increase your credit. Keeping it open and paying on time is a strong factor that companies view positively.

Does owning a house increase credit?

No, just owning a house will not increase your credit, but owning a house by taking out a mortgage and making timely payments will increase your credit. A mortgage is also an important part of having a good credit mix, and this too, helps increase your score.

What is considered good credit score?

A credit score from 670-739 is considered a good credit score. But in order to get approved for any line of credit your score would most probably need to be above 700.

What is poor credit score?

A credit score within the range of 300-579 is considered a poor credit score. With such a score lenders will view you as a risky borrower and will not extend new credit to you.

Does being added as an authorized user to a credit account help build the authorized user's credit?

When the current credit card account and its history reflects good to excellent credit habits and activity, being added as an authorized user can help build the authorized user's credit.

How does Discover treat the addition of authorized users to credit card accounts?

Discover collects the authorized user's SSN and address. Discover backdates the history of the card on the authorized user's credit report.

What are the rules when adding an authorized user to Citi Credit Card Accounts?

Reporting an authorized user’s SSN is optional with Citi, so be sure to request this when you add an authorized user to your primary card account. Citi does not report the individual address of an authorized user. Citi also backdates for authorized user accounts.

What are the rules when adding an authorized user to Bank of America Credit Card Accounts?

BOA acquires the authorized user's SSN, but not his/her individual address. BOA backdates the authorized user’s credit history to the primary card holder’s credit age.

Does adding an authorized user affect the authorized user’s credit score?

This depends on whether the card issuer reports authorized user accounts to the credit agencies with their social security number (and/or address) as well whether the issuer backdates the authorized user’s credit history based on the primary card holder’s credit history.

Does adding an authorized user to a business credit card help the user’s credit?

Business card issuers do not report business authorized user accounts to credit agencies. Therefore, this practice isn’t helpful or useful for credit building or to increase a credit score.

What are the consequences of late payment?

If the minimum payment isn’t received on time your credit usually won’t be affected right away, but interest will begin to accumulate. You may also be charged a late payment fee in the range of $25.00 – $35.00. Additionally, interest rates will most likely increase as the APR increases. All these charges can add up fast. However, you should know that a missed payment doesn’t mean that all is lost. If you start making timely payments, and your payment is received within 30 days of the due date, your late payment will not appear on your credit report. Additionally, if you call your credit card company with a valid excuse they may waive the late payment fee as a one-time courtesy.

Is it important for me to have credit cards?

While you may survive without a credit card, it is very convenient for everyday and occasional purchases, as well as for travel needs. Additionally, if you ever want to apply for a mortgage you need good credit.If you want to lease or purchase a car on loan, apply for a business loan, etc. you need good credit. Using credit cards responsibly helps you to build the credit you need for large loans.

I don’t have any credit history. How can I start building my credit?

There are three steps you can take to improve your credit standing:

  • Open credit cards with banks that offer small credit limits of $300-500 for people with no credit history, and gradually build your credit by using and paying in accordance with the guidelines.
  • Open a secured card. Secured cards can help you manage your credit and spending limits. However, they do require a cash collateral deposit which then becomes the credit line for that account. The good news is that your monthly payments will be reported to the major consumer reporting agencies, ensuring that your account history is reported to your credit profile.
  • Become an authorized user on someone else’s account. Getting added as an authorized user on a friend's or family member's account means you get extended credit freely and you don’t even have to pay any bills.

What is considered a good credit score?

A good credit score is generally considered to be 760 or higher. Lenders, however, may have different standards for what they consider to be a good credit score, so it‘s important to keep building your score to receive the most favorable interest rates and highest rates of credit approval.

Can I inflate my income on a credit card application?

It is a federal crime to overstate your income on a credit card application. You can face decades in prison, millions of dollars in fines and your credit will be blemished for a lifetime if you overstate your income on a credit card application.

Credit Management


If I want to check my credit, which credit bureau reports is it best for me to look at? Equifax, Experian and TransUnion

If you’re just checking your credit without any plans of applying for a line of credit, any one of those three will give you a good estimate. If you notice something wrong, check all three to see if its one credit bureau that went wrong, or if there is a larger issue.

How often is it ok to pull credit?

It is ok to check your credit as often as you like being that it’s a soft pull; that does not affect your score. A hard pull though, is when the creditor checks your credit.That shouldn’t be done more often than 3-4 times every 6 months, as this will cause your credit score to decrease.

Can someone go to jail for not paying a bill in time?

No, you can not be arrested for any unpaid bills. Bills are considered civil debt and you cannot be arrested for not paying your civil debts.

I just realized that I missed a payment on my electricity bill that was due two days ago. Will it affect my credit?

No. A late payment cannot be reported to the credit bureaus until it’s at least 30 days past due. So in this case pay your balance as soon as possible and it won’t affect your credit.

What is revolving credit?

Revolving credit is credit that's available for usage without being limited by the need for a fixed number of payments. Credit cards are the most common form of revolving credit as they get renewed each time you pay any outstanding balance.

What is the best type of score to check?

The most common score is the FICO score. There are many different versions of FICO such as FICO Score 8, FICO Bankcard 2, FICO Auto Score 8, Each bank will generally have a specific score that they will check since they have their own qualifications that determine if a person should get approved or not. The score the bank checks will also depend on the type of credit you are seeking.

If I generally pay my bills on time but then miss two in a row, can I hope for the late payment to be forgiven?

If you have a good reason as to why you were late (for example- you moved to a different address, didn’t get your bill, or life circumstances ) they might forgive one late fee as a courtesy. However, it is hard to say they will forgive the late fee if you missed 2 payments in a row.

How do student loans affect my credit?

A student loan is good for your credit mix. Make sure to make on time payments so that it should only have a positive impact on your credit.

If I have many cards, and therefore have made many on time payments, is that an extra benefit to my credit?

Yes. Having a couple of cards and making on time payments helps your credit score. Though the number of cards you have won’t necessarily increase your score, making timely payments on a number of cards will help you gain trust by creditors.

What are an authorized user’s rights on a credit card?

An authorized user has the ability to use a card for charges on the credit card, but cannot make changes to the account. The authorized user is not legally responsible for paying the balance either.

How does adding an authorized user affect my credit, as a primary card holder?

When you add an authorized user to your credit card, simply adding this person onto your account in this manner will not affect your credit. The authorized user's credit history is not added to your credit history at all. The main way this practice would affect your credit is if your AU ran up a high balance on the card that you were unable to pay. This bad credit activity will then negatively impact your creditworthiness and your utilization rate.

How can I lessen the impact to my credit as a primary card holder if my AU acts irresponsibly?

The best way to tackle this problem is before it happens. If you are simply trying to help your authorized user boost his credit, it isn’t necessary to provide him with a credit card. However, if you want him to have charging privileges, check whether your card issuer allows you to set a smaller credit line for your authorized user. (The actual larger card limit is what will be shown on his credit report, so setting a smaller charging limit won’t impact his credit score.) If you do see problems beginning to crop up at any time, remove your authorized user from your credit card immediately.

Can I add anyone as an authorized user?

Though you may add whomever you wish to your credit card account as an authorized user, because of the importance of a good credit history, this decision should be carefully reviewed and well-thought-out. Make sure you have a closely established relationship with your authorized user and that you trust the person implicitly.

How can I remove an authorized user from my credit card account?

This is usually fairly easy, requiring no more than a phone call to your card issuer to instruct them to remove your authorized user. Some card issuers even allow you to take care of this online.

As a primary card holder, how can I remove an authorized user from my credit report?

This is kind of a trick question since your authorized user and his credit history is never actually on your credit report. Your card history may be added to your authorized user’s credit report as though it were his/her own, but the reverse is not true, nor is any reference made on your credit report that you have an authorized user. Once you remove the authorized user from your card, no future card activity will be reported to the authorized user’s credit history .

As an authorized user, how can I remove the primary card history from my credit report?

If you become an authorized user on someone else’s credit card because they have a good credit history, but then the cardholder starts paying late, defaults or maxes out the card, this will mess up your credit score. When this happens, you want to have yourself removed from the card as soon as possible. It’s also a good idea to have the card removed from your credit report. To accomplish this, contact the card issuer and the credit reporting agencies to explain that you were an authorized user and that you want the card history removed.

Can utilizing too much of my credit line harm my credit score?

A third of your credit score depends on the open balance of the last statement. This means that if a person has the best credit possible — a score of 800 — but has a high balance, it will most likely result in a reduction of credit score. If you have only 1 card, 1 mortgage and 1 lease, it may even reduce your credit score by a third! Few companies will approve any additional credit if that happens. In fact, there is a strong likelihood that they may close your accounts altogether.

What is a high balance on a credit card?

If someone spends more than 30% of the credit limit. (If the balance is lower than 30% it doesn’t result in an unfavorable rating.) This 30% translates to $300 of every $1,000. If, for example, your credit limit is $5,000 don’t allow the balance to exceed $1,500. If you must use more than 30% make sure not to apply for any additional credit that month to avoid getting declined for new credit due to high balances.

Do I need to pay my statement balance before the due date, or can it be on the due date?

The first thing you should know is that late payments not only harm your credit score, but also add fees and interest to your balance. To avoid this, make sure that your payment arrives before the due date every month. If you send payment by mail, send it a few days in advance to make sure you get it in on time. If you make a payment by phone or online you may be able to pay on the due date, but this varies from company to company.

Should I pay more the entire statement balance before the due date, or only minimum payment due?

Most credit card companies calculate interest for all the money owed from the due date, so you should definitely try to pay the entire balance before the due date. If you wait, you run the risk of forgetting to pay, or having an unforeseen situation prevent your payment. A good suggestion would be to pay the minimum payment due immediately when the bill arrives, and the full balance before the due date.This way, even if you forget to pay on the due date it won’t affect your credit and you won’t be charged late fees.Remember, if you pay off a balance during the grace period you usually pay no interest.

How can I obtain my credit score for free?

The optimum credit score, your FICO score, is not available for free. You can only get it from your financial institution. Sometimes, when applying for credit, you will get a reply with an acceptance or decline letter, along with an explanation about your credit score.

However, you are entitled to one free copy of your credit report every 12 months from each of the three nationwide credit reporting companies. Order online from annualcreditreport.com, the only authorized website for free credit reports, or call 1-877-322-8228. You will need to provide your name, address, social security number, and date of birth to verify your identity. You may buy your FICO score at MyFico.com.

Credit Repair


What can I do to help bring up my credit score?

Why did my credit score drop 100 points because of just one late payment in 7 years?

A late payment does affect your credit a lot but it is probably not the reason your score dropped so drastically. In this case it’s very possible that there are other factors that triggered your score to drop. For example, many inquiries, high balances, new accounts, collections, and bankruptcies may all affect your credit.

Will paying off debt increase credit score?

Yes, by paying off any outstanding debt your credit score will increase drastically. How? Paying off debt reduces your overall debt. Debt is one of the main factors that contribute to your score, and paying it off will higher your score.

How can I raise my credit score quickly?

You should check why your score is low, so that you know what to rectify. Very often when the score is low, it means that you have a high balance. Paying off that balance will raise your score quickly. There are many other steps you can take to raise your score, but those can take months or even years.

Why did my credit score drop after paying off debt?

Paying off a loan or mortgage in full will cause your account to be closed and your score can decrease slightly due to the impact on your credit mix.

Is it possible to restore credit on my own, or do I need a credit restoration expert?

This depends on what you need to restore. If the issue is an overdue balance, you can restore credit just by paying off the balance. For other issues which require credit restoration, such as collections, bankruptcies, late payments, etc. it would be wiser to reach out to a credit restoration expert who has the experience necessary to restore your credit.

How can I restore credit by myself?

Check your report to see if there are any errors (such as unknown inquiries or unknown accounts) on your credit card statements and/or at credit bureas’ records. If yes, dispute them. Otherwise, paying down balances to under 30% of the total credit line can help.

Credit Cards


Can I use Paypal to make automatic payments?

Yes. Paypal and many other online payment companies have the option of automatic payment. Here’s how to do it:

  • Log in to your PayPal account.
  • Click PayPal Credit
  • Click Make a Payment
  • Click Automatic Payments
  • Set the desired amount to be paid each month
  • Select payment method
  • Click Continue
  • Review payment details and click Agree and Schedule Payments

What is a charge card?

A charge card is a credit card that has no preset spending limit, though you need to pay your balance in full every month. American Express is the most popular company that offer charge cards. This means that you can spend as much as you want since you don’t have a preset spending limit. However, the balance needs to be paid in full every month, or else you will be charged a very high interest rate.

What is the difference between a secured and an unsecured credit card?

A secured card is a card which requires that users provide a security deposit so that the person seeking to obtain a secured card can create a trustworthy relationship with the company. This is good for someone who has no credit history yet, or someone that wants to rebuild their damaged credit.

Unsecured credit cards are the most common credit cards and they are utilized by people who already have credit. They are generally not secured by collateral.

What is APR?

APR (Annual Percentage Rate) is the interest charged for a balance that is not paid in full before the due date. The interest charge will be show on the next month’s statement.

What’s the easiest type of card to get?

A secured credit card is the easiest type of card to get approved for, and this is especially good for you if you’re new to credit or have a low credit score. A person that has a good credit score should be able to get approved for other great unsecured cards. An unsecured card usually means that you don’t have to give a deposit when getting approved for the card and you generally get a larger line of credit.

Are there benefits to my credit if I am added as an authorized user to an existing credit card account?

Yes. If the account that you are added to as an authorized user is in good standing, and it’s an old account with on-time payments and no high utilization it will positively impact your credit score. However, if the account has any negatives or high utilization it will negatively impact your score.

How can I avoid paying interest?

By paying your credit card balance in full each month before or on the due date you will avoid paying interest.

How does Chase view authorized user's account credit history for its card applicants?

Despite an elevated credit score, Chase will usually decline an applicant if credit history doesn’t reveal other cards or credit lines of his/her own. One tip to help overcome this hurdle is an established relationship with Chase, such as a savings and checking account.

What are the rules when adding an authorized user to American Express Credit Card Accounts?

AmEx collects the SSN of the authorized user, but doesn’t collect the authorized user’s individual address, nor does this card issuer backdate the authorized user’s history.

How does American Express view authorized users' account credit history for its card applicants?

AmEx will approve newbies with no more than an authorized user account on their credit report, but only for their lower end cards. Additionally, the authorized user account must have a good history of at least 6 months, and a low utilization rate.

How does Discover treat the addition of authorized users to credit card accounts?

Discover usually allows authorized users who don’t have their own cards qualify for their low end cards.

What are the rules when adding an authorized user to Capital One Credit Card Accounts?

Capital One is a yes all across the board: the issuer collects the SSN and the address of the authorized user and backdates.

How does Capital One view authorized user account credit history for its card applicants?

It’s fairly easy to qualify for a low-end Capital One card with a high credit score from an authorized user account, even when the authorized user has no individually owned cards.

How does Citi view authorized user account credit history for its card applicants?

It’s difficult to qualify for a Citi Card based solely on an authorized user account. But if the authorized user has at least one individually owned credit card as well, this makes a big difference. It can even help qualify for Citi’s higher end cards. This is the case even if the authorized user’s individual card is fairly new.

What are the rules when adding an authorized user to Barclay credit card accounts?

Barclaycard collects the authorized user’s SSN, and address. They also backdate authorized user accounts.

Can I utilize my entire line of credit immediately upon receipt of my credit card?

Use your credit cards in a predictable manner that’s in line with your income and spending limit. Do not suddenly make any uncharacteristic purchases or changes to your spending pattern. For example, if your credit line limit is $5,000 don’t charge $4,000 immediately upon being approved for a card. Radical charges such as these signal a red flag. Chances are that the credit card company will place a hold on your card and either ask for proof of income or permanently terminate your card. Use cards carefully and gradually build up credit with the company. If you’re planning a very large transaction its best to call your credit card company ahead of time and clear it with them.

Can I lend my card to others to use?

Never lend your credit card to others. Unfortunately, people perceive borrowed credit card charges less responsibly than a regular loan. However, lending your credit card essentially means that you’re giving someone a loan. If you aren’t paid back for this ‘loan’, you won’t be able to dispute charges on the credit card that easily. Saying that someone else used your card will not be accepted by the credit card company. The cardholder is the one responsible for the charges.

Is it possible to eliminate an annual fee?

Each card is different. It is always worth taking the time to call the credit card company and requesting that they waive the annual fee for you. Some credit card companies will waive the fee if a certain amount is transacted within the full year.Some credit card companies offer to utilize the reward points for the annual fee payment. Others will offer to downgrade the card to one that doesn’t have an annual fee. However, there are no guarantees that this will happen. If you want to avoid an annual fee, there are plenty of cards that don’t have one.

If the full balance isn’t paid on time, how is the interest rate calculated?

Usually, credit cards have a grace period, a time before the bill’s due date, when no interest is charged. After that, the calculation of interest depends on the APR. A card that has a 14.99% APR means that for every $100 debt, you’ll pay $15 annually. This amount is divided per day, and then added to the monthly statement. It’s worth noting that interest may wipe out the value of the reward points.

What is the best method of accumulating reward points?

The best way to accumulate rewards points depends on how often you use your cards. The larger the amounts you spend the more reward points you will earn. But if you don’t have too many expenses that you can pay with credit cards, the best method is to take advantage of credit card company offers for bonus reward points for opening new cards. Sensibly opening new credit card accounts that have good offers can help you earn maximum reward points with minimal spending. However, it is not advisable to open more that 4-5 accounts per year.

How do I close a credit card account?

A closed card adversely affects your credit. Therefore, a card without an annual fee isn’t worth closing. A card that has an annual fee should be downgraded to a card that has no annual fee. This is not considered a closed card and doesn’t adversely affect your credit. What you should not do is close cards in order to reapply for offers. The age of a card brings up credit score tremendously, so be especially mindful about keeping your oldest cards without annual fees open.

What is a foreign transaction fee?

A foreign transaction fee is a separate fee charged for using your credit card abroad. If your card was issued in the US, and it was used in Europe, you will pay around a 3% ($3.00) Foreign Transaction Fee. Many cards nowadays don’t charge a foreign transaction fee, and experts predict that it will be eliminated completely as the world becomes more global.

Does earning credit card rewards depend on how much I spend or what I buy?

Yes. Different cards offer different rewards. Most cards offer between 1— 1.5% per dollar spent. Many credit card companies offer double or triple reward points in different categories. Sometimes, you’ll get a notice in the mail about these offers. Other times, a card may offer more rewards in a specific category of your choice. In that case, you’ll have to select your choice of category from a list of categories. Call your credit card company for details.

What is a cash advance?

A cash advance is when you use an ATM to withdraw cash from your credit card account. This is never advisable. Fees are applied,and the interest is assessed immediately, unlike purchases which begin accruing interest only at the next billing cycle if not paid in full. If you have an emergency and need to do a cash advance, you will usually need a PIN number. Sometimes you can go into the bank with a photo ID and you may not need a PIN.

What is a charge account?

A charge card is a card that must be paid in full at the end of each month. It usually carries a larger credit line, and is often geared towards business purchases. However, you may find some charge cards for personal use. American Express offers personal and business charge card.

What is a business credit card?

A business credit card is designed specifically for commercial use. It is important to clarify two reward points regarding a business card:

  • The approval of credit and the liability of such cards is on the person applying for the card — not the entity utilizing the card.
  • Some banks (amongst them Chase, Amex, Bank of America) don’t report business cards to your personal credit report as long as payment is timely, and the balance vs. limit ratio is good. When they report the delinquent activity may vary, with some banks reporting the delinquency after 30 days, and others after 60 or 90 days.

There are some banks (amongst them Capital and Discover) which do routinely report your business card’s activities to your personal report.

Can I use a business card to accrue personal rewards?

A business credit card is designed specifically for commercial use. Companies use these cards to pay for large ticket items as well as set expenses. The best business credit cards allow you to accumulate personal frequent flyer miles while spending company money; just check with your company to ensure that they are ok with it.

Why don’t many merchants accept American Express cards?

Businesses pay a processing fee to the credit card company for each transaction. American Express (Amex)is perceived as having the highest fees; therefore, some businesses refuse to accept Amex. Another reason may be that Amex has stringent policies for approving merchants to accept Amex charges, thus not all merchants are qualified to accept Amex cards.

How can I protect myself while shopping online or on the phone with a credit card?

Larger online shopping outlets have strong assurances and encryption (that scramble your credit card numbers) in place that protect you from identity theft. However, with smaller outlets it is better not to divulge your credit card number, especially over the phone. Other than this, there isn’t a lot you can do to protect your credit card information.

Do credit cards offer everyone benefits, or do I need to fit a specific requirement?

Having a good credit and a large credit card limit can benefit pretty much everyone. If you accumulate reward points wisely, you can make thousands of dollars in reward points. However, people who know that they are likely to miss payments and ruin their credit, should stay away from credit cards and opt for a debit card instead.

What do I look for when applying for a credit card?

What to look for before applying for a card depends on the potential usage and the objective of the card. As a rule of thumb, look for the card that offers the best bonus reward points and the least fees.

How many credit cards can I open at once?

This depends on how strong your credit is. New credit and credit inquiries affect credit scores. Each time you apply for a credit card, the card issuer pulls a copy of your credit report, and this inquiry ends up on your credit report, temporarily lowering your credit score. A single inquiry every few years will not hurt your score, but it's better to avoid inquiries if you don’t really need them. Opening too many accounts within a short period of time is generally viewed as a sign that the person may desperately need credit, and that's considered a big negative. As a general rule do not apply for more than three cards within a six month time frame.

Why do credit card companies offer rewards?

Credit card companies offer lucrative reward points to its cardholders to entice consumers to use their card for purchases. Credit card companies profit by betting on the consumer to leave open balances and then charging them interest. They also profit by charging a few percent to the merchant when the card is used.

What is the difference between reward points and miles?

Miles and rewards are almost the same thing. Miles are a type of rewards points specific to airlines. Rewards points include any kind of point account system given by companies as a reward for doing business with them. These can be used towards hotels, rental car companies, department stores, etc. For the consumer, the key is to keep track of what you have with whom and to know which points can be turned into miles.

Why are some reward points worth more than others?

For the same reason that certain shirts, cars and electronics are worth more than others. Each type of reward point is worth what you can get for it, in terms of supply and demand. Some programs offer better deals than others because they have their own calculations on what is good for their company. You may also notice that the value of reward points may fluctuate, just as value in many other markets fluctuate as well.

What can I do with my credit card rewards, points, or miles?

You can use them toward payment for airline tickets or other purchases, or you can sell them for cash. You will find nothing in the legal code of the credit card company that prohibits the sale of rewards points or miles. The airlines, however, forbid the sale of miles and if they find out you have sold them they may close your account.

Fraud Protection


Is there any risk associated with a lost or stolen credit card if it has expired?

No one can charge or swipe your account with an expired card. However, it is worthwhile to report it to the creditor as a precaution so that if someone is successful in accessing your account because of the expired card they found, you’ll be protected.In the eventuality that they are successful in accessing the primary card holders personal information, a fraudster might be able to request a new card from the company.

Can you get money back from stolen debit card?

Yes, depending on when you report the card as lost, and when the charges were done. If you are a victim of debit card fraud, you are responsible for the following:If you report the loss right away and the card has not been used you are not responsible for anything. If you notify the bank within 48 hours of your lost or stolen card you are responsible for up to $50. If you notify your bank within 48-60 days you are responsible for paying up to $500 of unauthorized +spend. If you report the fraudulent charges after 60 days you will be responsible for everything.

How can I protect myself while shopping online or on the phone with a credit card?

Larger online shopping outlets have strong assurances and encryption (that scramble your credit card numbers) in place that protect you from identity theft. However, with smaller outlets it is better not to divulge your credit card number, especially over the phone. Other than this, there isn’t a lot you can do to protect your credit card information.

What do I do if I suspect fraudulent activities on my credit card account?

It is very important to review your bills for fraudulent or suspicious activity. If you see any charge you don’t recognize call your credit card company to report it immediately. If you call in a timely manner you will not be held liable for these charges. Also banks now have systems in place that intercept suspicious activity and contact the cardholder.

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