Does Credit Counseling Hurt Your Credit Score?

The idea that credit counseling hurts your credit score is for the most part mistaken. However, some credit counseling programs may cause harm to your credit score while helping you to resolve your debt.

Credit Score

The myth that credit counseling hurts your credit score is a persistent one. "The credit score system ignores any reference to credit counseling that may be in your file," BankRate reports. In other words, your credit score does not know whether you are receiving credit counseling.

Credit Report

Credit counseling may appear on your credit history, however. Some creditors may note on your credit report that your debts are being repaid through a credit management plan. As long as you are current on your monthly payments, this should not affect your credit score, although it can give lenders pause when it comes to opening new accounts.

Considerations

There is, however, one exception to the misconception that credit counseling hurts your credit score. If your creditors settle your debt for less than you owe as part of a debt repayment program, they can report this to credit bureaus, with the amount you are being forgiven reported as a charge-off. This can result in a lower credit score.

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What Is the Difference Between Transunion & Equifax?

TransUnion started reporting credit histories in 1969 after it had purchased the Credit Bureau of Cook County in 1968. TransUnion, itself, started as a railcar-leasing company.

Equifax has been reporting credit histories since 1899. Equifax's original name was Retail Credit Company, which tracked individual spending habits for the local Retail Grocer's Association.

Function

TransUnion and Equifax collect personal information that reflects an individual's spending habits and loans. Both companies use the Fair Isaac Company Inc.--FICO--computation model.

Types

TransUnion calls its credit-score model zendough; Equifax calls its credit-score model Score Power. TransUnion uses a score range of 300 to 900, and Equifax uses a range of 300 to 850.

Identification

TransUnion and Equifax prepare credit reports in different formats. TransUnion credit reports are in a table format. TransUnion includes a personal message at the beginning of its credit reports and inquires at the end. Equifax provides short summaries of credit histories and includes inquiries at the beginning of its reports.

Features

TransUnion and Equifax both use codes to summarize people's borrowing, repayments, collections and court-record information. The codes for TransUnion and Equifax have different meanings so each company's credit report has to be read carefully and codes should be checked carefully.

Time Frame

Information by banks, retailers, collection agencies and court records reported to TransUnion and Equifax stays on a persons Equifax credit report for a much longer period of time than on TransUnion reports.

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How Does Putting Somebody on My Credit Card Affect My Credit?

You might help a friend or loved one build his credit history or access a line of credit he otherwise could not get by adding him to your account, but this person could wreck your score while, in some cases, doing no damage to his own credit. Whenever you add someone to a credit card account, you should trust the person and set ground rules on account use. You can even help him get a separate account.

Joint Account

Adding somebody as a joint account holder makes the person a co-owner of the account, so he can use the credit limit as he sees fit and change account details. The credit bureaus report activity on a joint account on both reports. If one joint account holder maxes out a credit card and neither party can pay, both credit histories will suffer.

Authorized User

Adding someone as an authorized user can be safer than adding a joint account holder, but just as dangerous for your credit history. The authorized user cannot change accounting settings and will not receive the bill. However, the authorized user can make charges on the card. Thus, the onus of paying the bill, even for charges you do not approve, falls on the primary account holder. As long as you pay the minimum every month, you and all of your authorized users receive positive payment history. Miss a payment and only you are affected.

Misconception

There is no such thing as a joint credit report. The only time another person's bad credit can affect your credit history is when you become a joint account holder on another account with bad history. Adding someone close, such as a spouse, to an account you own with good credit history boosts their score and transfers all previous history.

Alternative

In most cases, putting somebody on your credit card account is a poor move. There are credit card accounts that nearly anyone can get, such as a retail or gas card, or a secured credit card, which requires a deposit from the primary account holder. You could give someone close a prepaid debit card and load it with funds. While prepaid cards do not build a credit history, you cannot go over the limit with one, and the owner can report payments to an alternative credit agency.

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Is it Possible to Start a New Personal Credit Record?

People with poor credit usually do best to avoid credit repair clinics, which sometimes claim they can give you a new credit record. You cannot wipe your credit file; otherwise consumers could abuse credit and have few repercussions. Instead of trying to get a new record, you should up clean your current file -- and probably get credit sooner than you think.

Why It Is Not Possible

The credit rating agencies track your financial habits via your Social Security number (SSN). Theoretically, you could obtain a new credit record using a Tax ID or Employer ID number (with different digits) in lieu of the SSN, but it's not legal. Some companies even suggest using the SSN of a dead person or minor. In reality, though, nobody can legally sell you information on creating a new credit identity, nor can you do so yourself, because the federal government considers it fraud.

Penalties

Banks can quickly figure out that your SSN is really a fake, and once the creditor finds out, the case will likely be referred to a district attorney. If a credit-repair company helps you commit credit fraud -- even if you do nothing other than give them money -- you are still liable for civil and criminal penalties. Typical first-time offenders receive two years in prison.

Your Record Clears Itself

Information, no matter how bad, leaves your credit report if you wait long enough. Most negative items on a credit report follow the seven-year reporting rule., disappearing after that. A few items stay longer. Bankruptcy can stay on your record for 10 years and tax liens for 15. Generally, incidents on your credit record become less important as time goes on.

Cleaning Up Your Report

While you wait for bad items to drop off your report, start adding positive information to your credit profile. Pull your report for free from each agency from AnnualCreditReport. Review accounts that have negative marks against them. If you have frequent late payments, make a commitment to paying those bills on time. Pay down credit card debt when you use too much of your credit limit. Lenders might work with you to lower interest rates or defer payments during periods of temporary hardship, such as losing a job.

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How to Request an Update On a Credit Score With a Letter

Credit reporting agencies, such as TransUnion, Equifax and Experian, provide records of individuals' credit history and past bill-paying behavior. These agencies also assign a numeric value, called a credit score, to the individual's credit history. Creditors supply the information for credit reports, and federal law requires credit reporting agencies to only report accurate information. If you notice outdated information that could impact your credit score on your credit report, you have the right to request an update to your credit file.

Instructions

1

Place the date in the top, righthand corner of the page. Skip a line and put your name, address and Social Security number under the date. Skip another line and enter the credit reporting agency's name and address on the left side of the page. Address the letter to "Sir or Madam."

2

State the changes that have occurred that require an update in the first paragraph. This may include payments, correction of inaccurate information furnished by a creditor or the inclusion of a new account.

3

Give the name of the creditor supplying the information, the account number and any other relevant information, such as the account balance, history or activity dates in the second paragraph.

4

Tell the credit reporting agency to update the information on your credit report and your credit score to reflect the changes in the final paragraph.

5

Sign and date the letter. Mail it to the credit reporting agency's address, which you can find on the agency's website, and request a return receipt from the post office so you have a record of when the agency receives the letter.

6

Wait 30 days for the agency to process the request and update your credit report and score. You will receive a free report reflecting the updated information. You must go the credit reporting agency's website to request and receive your updated score.

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Does an H&R Block Card Affect My Credit Score?

The H&R Block Emerald card -- a prepaid card which requires you to load funds from direct deposit payroll or at an authorized retailer -- might save you hundreds of dollars in checking fees and build some type of credit history. If you want to use this card to improve your credit history with the national credit reporting firms, you are out of luck. The only way this card can build history is through an alternative agency, which lenders may or may not accept.

Identification

As of 2011, the only creditable account H&R Block offers is the Emerald Prepaid MasterCard. Prepaid cards do not build a traditional credit history with the major credit bureaus like a regular line of credit would. The major credit bureaus do not have enough evidence to suggest whether or not prepaid accounts help predict a borrower's willingness to repay, according to Maxine Sweet of Experian.

Alternative Credit History

While the national credit bureaus won't accept history on a prepaid account, you can build history on the card by reporting it to an alternative credit agency. Alternative agencies keep a database of credit histories that contain nontraditional data that the national bureaus do not pick up, such as utility payments or anything else the consumer can prove.

Benefits of Alternative History

In 2011, most lenders, and even the national credit reporting bureaus, are accepting alternative credit histories because they can have as much predictive power as a traditional history. The Federal Housing Administration, one of the largest backers of mortgages in the U.S., accepts nontraditional payment history for its loans.

Tip

While lenders might accept an alternative payment history, building a traditional credit history is still the best option to obtain loans, because almost no lender will reject a report from one of the national credit bureaus. Nearly everyone qualifies for some kind of account that builds credit history. Banks almost always approve applications for secured cards, for instance, because a secured account requires collateral that makes them extremely low risk. Retail store and gas cards also tend to have low-credit requirements.

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How Often Can You Request and Get a Free Credit Report?

Every individual has a credit file. Companies offer to give you paid access to your credit report for a fee. However, you are eligible to receive a free copy of your credit report annually. Consumers should check their credit report at least one every 12 months.

Identification

The Fair Credit Reporting Act defines the term "consumer report" as any written, oral or other communication of a consumer's credit history, including how often and at what amount payments are made. This information is used to determine a consumer's creditworthiness, credit standing and credit capacity. The purpose of a consumer report is to establish a consumer's eligibility for credit and, in some cases, employment.

Purpose

The Fair Credit Reporting Act guarantees you access to all three of your credit reports -- but not your credit scores -- for free once every 12 months. Guaranteed access is given in an effort to make consumers aware of the information that is reported in their credit report, as well as prevent identity theft.

Free Annual Credit Report

According to the Federal Trade Commission, the only place to request, view and print your credit report for free is through the Annual Credit Report website. The Annual Credit Report website was created by the three major consumer credit reporting bureaus: Experian, Equifax and TransUnion. Visit the Annual Credit Report website. You can also call to order your free annual credit report.

Credit Reports

Not all credit reports contain the same information. Consumer credit reporting bureaus rely on creditors, lenders, local courts and collections firms for credit and/or judgment or collections information about a consumer. A consumer credit reporting bureau is always limited to the information that is reported by a third party. It is common for creditors to report credit information at different times to each of the three major consumer credit reporting bureaus.

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What Do Revolving Trade Lines Mean on a Credit Bureau?

Revolving trade lines are credit products that creditors can use multiple times. These accounts include credit cards and equity lines. The accounts "revolve," meaning the balances fluctuate from month to month based on usage. The term "trade" simply means account. The balance you owe, relative to the maximum line amount, has an impact on your overall credit score.

Credit Accounts

Credit accounts fall into two categories: amortizing loans and revolving trade lines. Amortizing loans involve a borrower making fixed monthly payments of principal and interest to pay off a debt over a preset period of time. Revolving lines normally have an expiration date, but while they're active, accountholders can use funds as and when they need them. People with revolving lines of credit are normally required to make monthly interest-only payments.

Types of Credit

Credit scores are based on various factors, including the types of credit accounts you currently use. The type of credit you use accounts for 10 percent of your overall score; people who use different forms of credit receive higher scores than people who only use one type of credit account. Certain individuals may have problems managing revolving credit lines because they just make the minimum payment --- over time, the balance grows so much that they can no longer afford to pay off the debt. Other people handle revolving lines of credit well but lack the discipline to make fixed loan payments on a timely basis. People who use both types of credit and make payments on time receive the highest scores.

Credit Utilization

The total amount of your outstanding credit debt accounts for 30 percent of your overall credit score. If you have several credit cards with very high balances, then you may be close to 100 percent credit utilization. Credit scores are lower for people with high credit utilization levels than those with low balances because credit bureaus work on the assumption that people who use all available credit are more likely to have cash flow problems than people who seldom use the available trade lines.

Misconceptions

Consumers often attempt to improve their overall credit scores by consolidating revolving trade lines such as credit cards into home equity lines of credit or fixed home loans and then closing the paid-off cards. The average length of the account history accounts for 15 percent of your overall credit score, so although paying down revolving lines improves your score, closing the trade lines actually hurts your score because it reduces your average length of account history.

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How to Get a Truly Free Credit Report

If you need to get a copy of your credit report, you will never pay anything if you know where to look. There is one website that exists to help consumers obtain a free copy annually from each of the three major bureaus. This will enable you to keep close tabs on your record, whatever your purpose.

Instructions

1

Access annualcreditreport.com. After you log on securely, you will be directed to one of the three credit bureaus --- Experian, Equifax or TransUnion --- depending upon which one you choose. Because the website is federally mandated, there is no fee to access your report.

2

Obtain your report one of three ways. Access it online via the homepage; call 877-322-8228; or write to: Annual Credit Report Request Service; P.O. Box 105281; Atlanta, GA 30348-5281. Allow two to three weeks for delivery

3

Purchase your credit score directly from the bureau for a nominal fee. While the report is free, the score is not. The report will list the most important aspects of your credit report free, such as inquiries, past due amounts, derogatory information and more. Those are the items you want to carefully check.

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Why Did My New Auto Loan Lower My FICO Score by 60 Points?

When you get any type of new credit, including an auto loan, your FICO credit score will drop. The exact number of points depends on your credit history before the loan. People who have not been managing credit for very long or who have only a couple of credit accounts will see a greater impact than those with a lot of credit history.

Credit Inquiry

Credit inquiries, which occur when a lender checks your credit report in response to a loan application, hurt your credit score. If you did all of your rate shopping within a two-week period, you will have only one inquiry count against you. If you took longer, you could have more than one. Each inquiry generally hurts your score by 5 points or less, but if you do not have much credit history, the impact of inquiries could be greater.

New Credit

About 10 percent of your FICO score is based on the new credit on your report. This includes both credit inquiries and recently opened accounts. When your auto loan account is new, the new account will hurt your credit score. This is because people who have recently opened accounts statistically pose a greater risk to lenders. In addition, because the score looks at the proportion of your accounts that are new, the impact will be greater if you do not have many other accounts.

Amount Owed

A new auto loan could exponentially increase the amount you owe, especially if you do not have many other debts. Because 30 percent of your credit score is based on amounts owed, the debt hurts your credit score. In addition, part of your score looks at the proportion of an installment loan amount that you still owe. Therefore, when you still owe the full amount, this will hurt your score most. As you pay down the loan, your score will increase again.

Length of Credit History

About 15 percent of your FICO score is based on your credit history length. Although a new loan will not shorten your overall credit history, it adds a brand new account that shortens your average account age. For example, if the only thing on your credit report was a card you have had for two years, adding an auto loan cuts your average account age in half to just one year.

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Quick Ways to Improve Your Credit Score

A borrower's credit score is a direct reflection of his past and current credit history. A lender uses that credit score to determine a borrower's ability and willingness to repay new debt. With a few simple fixes, a borrower can quickly improve his credit score prior to applying for a new debt.

Check Report for Errors

Pull a copy of your credit report. A free one can be obtained from AnnualCreditReport.com. Check your report for errors and immediately report any to the credit bureau through the website. Make sure to check all three bureau's reports, TransUnion, Experian, and Equifax. Remove any erroneous information to help improve your score.

Pay Down Credit Card Debt

A credit score is made up of numerous variables, one of which is credit utilization. To bring your score up, lower your credit utilization. Pay down your credit cards to less than 30 percent of the credit limit to quickly raise your credit score.

Avoid New Credit

In the months leading up to applying for a new loan, do not allow another lender to check your credit to prequalify you for a purchase or new debt. Also, do not open a new debt or line of credit. New items on your report, as well as credit inquiries, will bring your credit score down.

Keep Trade Lines Open

Do not close any old or unused debt. This shortens the length of your credit history and lowers your credit score. Keep all trade lines that are open until you acquire the new debt.

Pay Off Negative Items

Pay off any negative items on your credit report, such as collections, judgments, liens or bankruptcies. The lender may require these items to be paid in full prior to closing on the new debt. These items have less of an impact on your score if paid in full.

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What Are the Two Major Sources of Information About a Person's Credit?

Your credit is used to determine the risk that you'll default on money you borrow on a credit card or through a loan. Your credit report and credit score are two major sources of information about your credit.

Credit Report

A credit report is a compilation of most of your credit-based accounts, including credit cards and loans. It gives details about how much you've borrowed and whether you've paid on time.

Credit Score

Your credit score is a numeric summary of the information in your credit report. Credit scores range from 300 to 850, with higher scores being better.

Significance

Businesses usually use both your credit report and your credit score to decide whether they should approve your application for a loan.

Free Credit Check

You can check your credit report for free by visiting AnnualCreditReport.com and your credit score at CreditKarma.com.

Warning

When you check your free credit, watch out for sites that ask for your credit card information. These sites sign you up for a trial subscription and charge your credit card if you don't cancel.

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How to Cancel Credit Expert

Good credit is one of the keys to getting necessary loans or low interest rates. Because many people don't know their current credit score, companies offer free credit score reports. However, some companies offer the reports for free only if you sign up for a membership and then make it exceedingly difficult to cancel the membership prior to being billed for the additional services. This article explains how to cancel Credit Expert from Experian.

Instructions

Call

1

Call Experian's toll-free number (1-866-252-8811). Call this number to cancel your membership. Speak with a representative and firmly but politely request the cancellation of the membership. The representative will likely try to convince you to keep the membership. However, because you are following the guidelines for cancellation put forth on the Experian site, by law, Experian is obligated to cancel the membership at your request. Be firm and persistent.

2

Send an email cancellation request to Experian if the representative refuses to cancel your membership or if you cannot speak with a representative when you try to call. Use the email listed for customer service because the site does not offer one specifically for cancellations. When you send the e-mail, send a carbon copy to yourself so you have a copy of your correspondence.

3

Write Experian a letter requesting cancellation of the membership. Detail in the letter previous attempts for cancellation and your reason for sending the request via postal mail instead of using the cancellation phone number provided. Get a certified receipt of delivery on the letter from the post office (this service costs approximately $1 to $2) when you send the letter. The receipt verify that your request was received in case Experian attempts to bill you. State in the body of the letter that you are sending the letter in this manner to prompt representatives to reply faster. Keep a copy of the letter for your records.

4

If Experian continues to bill you for unwanted services, ask an attorney to draft and send a letter to Experian that details your legal right to cancellation under Experian policies and which requests the cancellation under threat of legal recourse. Because attorney fees are expensive, this is a last resort and should be done only if you feel that the cost of the attorney's time will be less than having to pay Experian for service you don't want.

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Does Your Credit Score Go Up if You Have a Cosigner?

When your credit score is low, lenders might ask you to get a creditworthy co-signer for your loan. The co-signer is a person who signs the loan documents with you as a pledge to pay back the loan if you do not. The lender then gives you the loan based on the co-signer's good credit history. Having a co-signer does not directly affect your credit score, but you might experience a few indirect effects.

Credit Reporting

Each of your credit accounts, including loans, credit cards and lines of credit, appears on your credit report if the lender provides the account information to the credit bureaus. When an account appears on your credit report, it can raise or lower your credit score. Accounts with co-signers are not reported any differently than other accounts, so having a co-signer on an account as opposed to not having a co-signer will not change the way your credit score calculates the account data.

Getting Credit

The major benefit of having a co-signer is that this person can help you get credit that you otherwise would not have been able to qualify for. You need to have credit accounts to have a credit score, and if your score is low because of credit problems and bankruptcy, opening a new account and using it responsibly is one of the best ways to improve your score. Therefore, the co-signer can indirectly increase your score just by making it possible for you to get a credit account, which you can then use to improve your credit.

Interest Rates

Another perk of having a co-signer who has better credit than you do is that this person can help you qualify for lower interest rates. This is because the lender bases the rate on the co-signer's creditworthiness, not yours. A lower interest rate means lower monthly payments than you could have gotten on your own. The lower payments will be more affordable, which means you should be less likely to miss the payments. Making payments on time helps your credit, so this is another way that your co-signer indirectly helps your credit score.

Financial Support

Your co-signer should be interested in making sure you make your payments on time because all of the account data appears on the co-signer's credit report as well as yours. Because of this, your co-signer might be willing to help you make a budget, set up automatic payments or remind you to make sure you pay your bills. If you are in a tight spot financially, the co-signer might even be willing to make a payment for you so neither of you feel the negative effects of a missed payment.

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A Legitimate Way to Establish Credit if You Don't Have a Credit History

Your credit score is based on your past history of credit use, according to major score provider FICO. Lenders want to see established positive records before they open an account for you. This makes it tricky when you are just starting out and have no accounts yet. Liz Pulliam Weston of MSN Money explains that secured credit cards are a legitimate way to establish some records that will eventually qualify you for other other cards and loans.

Instructions

1

Save several hundred dollars to provide as collateral for your secured credit card account. Pat Curry, a Bankrate financial site columnist, states that some banks let you get a secured card with as little as $300, but you may want to give more because your credit limit is tied into your deposit. You get a higher limit if you deposit more money as security, which lets you use the card for more purchases or expensive items.

2

Apply for a secured credit card with reasonable terms. Banks know people who apply for these cards do not have established credit or have past problems like delinquent accounts and bankruptcies, so they usually charge higher interest and fees. Curry recommends comparing several cards before opening an account with the best possible interest rate and fee structure.

3

Charge purchases regularly on the secured card and make all payments on time. You need to establish a history of responsible credit use. FICO explains that this means making transactions within your limit and never missing a payment deadline.

4

Order credit report copies after several months to ensure your credit history is being established. You get one free copy from Equifax, Experian and TransUnion every year, according to the Federal Trade Commission, as long as you place your order through annualcreditreport.com. All three of these credit bureaus should be reporting your secured card account information. Complain to your bank if it does not appear.

5

Ask the bank to convert your secured credit card account to a regular credit card when you have established good records for a year or two, Pulliam Weston advises. You should qualify for better terms after you have proven yourself for at least a year.

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Ways to Build My Credit Score

A credit score, also known as a credit rating, is a numerical score used by credit card companies and lenders to assess the likelihood that a person will pay back a loan. Generally, a failure to pay back a loan within the agreed-upon time frame will lower one's credit score, raising the amount of interest the borrower will have to pay on future loans. Fortunately, for those holding low scores, there are a number of ways of building up one's rating.

Look for Errors

The quickest way to rebuild your credit score is to make sure that the information used to compile it is correct. After receiving your score, examine the items in the attached report. If there are any incorrect items, contact the credit-rating agency and explain the error.

Pay Your Bills

The surest way of building a credit score is to pay your credit card bills and make payments on your loans on time. The more consistently you make your payments, the higher your score will rise.

Get Current on Payments

If you fall behind in a payment, your credit score will usually be lowered. To build your score back up, get current on your bills as quickly as possible and stay that way.

Keep Your Debt Low

According to credit-rating agency Experian, high levels of outstanding debt can lower your score. To build your score, keep your debts low.

Don't Close Unused Accounts

According to BankRate.com, it's a mistake to close unused accounts before lowering your total debt. Instead of raising your rating, this can shift your debt ratio higher and actually lower your score.

Don't Open New Accounts

According to Experian, you should also not try to open new accounts to try to lower your debt ratio and raise your available credit, as this could backfire and sink your rating.

Shift Balances

According to BankRate.com, you can improve your rating by shifting your debt between accounts. Credit-rating agencies consider it better to have a number of cards with a small amount of debt on each than one card that is almost maxed out.

Beware of Credit-Repair Scams

According to the Board of Governors of the U.S. Federal Reserve system, there are a number of scams that purport to be able to quickly repair your credit. These are almost uniformly misleading or fraudulent and should be avoided.

Wait

According to the Fair Isaac Corporation, the inventors of the modern credit score, building a credit rating takes time. The only sure way of raising a credit score is to continue to pay bills on time and then wait for it to slowly rise as credit-rating agencies become more confident in your ability to repay loans.

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How Are Credit Scores Calculated?

Though it may not seem like it, our lives are constantly governed by one thing--our credit score. A few simple numbers decide whether you get approved for things like credit cards and bank loans, and decide just how much interest you're going to pay. A high number means a lifetime of low interest rates and large limits. A low number can mean trouble. This poses the question: How exactly are rates calculated? Thankfully, the answer is a simple one.

Instructions

1

Understand what is taken into consideration when your credit score is calculated. The frequency at which you pay your bills is a big one. These go from car insurance to mortgage payments to credit cards and everything in between. Also taken into consideration is how much credit you have available.

2

Know how the credit bureaus use this information to calculate your score. The three major credit bureaus all take the information listed in step one and plug it into a mathematical equation and get your scores. These three scores are then averaged together--this is the score a potential lender sees when you apply for a credit card or loan.

3

Not paying your bills on time is certainly a way to lower your credit score over time. Having accounts that have been turned over to collection agencies is also extremely bad. Declaring bankruptcy is the worst thing you can do to your credit score--it will ruin your credit history for up to seven years.

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How Will a Repo Affect My Home Loan?

Car repossession may wreck your credit, but your home loan is probably safe. However, in some cases the bank can cause you to miss payments, leading you to default on the mortgage. This can happen only when you bank with a single institution. Thus, going to separate creditors mitigates the chance that a car repossession also affects a mortgage.

Immediate Effect

As long as you already have a home loan, a car repossession will not affect your mortgage, according to Bills.com. In the credit card industry, defaulting with one creditor allowed other credit card providers to change the terms of your agreement -- called universal default -- before the Credit Card Accountability Act of 2009 changed this practice. There is no universal default rule among home loans as of 2011.

Refinancing

Any repossession, even one where you voluntarily give up the car, damages your credit score, probably by dozens of points. Even if you have a mortgage, you may want to refinance your mortgage -- apply for a new mortgage to pay for another one -- in the future to take advantage of lower rates. If you have a car repossession on record when you try to refinance a home, the bank might reject your application or you will only find rates and terms worse than your original agreement.

Right of Offset

Creditors have the "right of offset" in most cases of default. If you took out an auto loan from the same bank that issued your mortgage, the bank that issued your mortgage can draw money out of your savings or checking accounts to pay for the repossession if you also do your personal banking with that lender. When a bank exercises its right of offset and you cannot pay your home loan, you could default on the mortgage, which might lead to foreclosure.

Tip

You should always call your creditor before an auto loan delinquency gets to the point that the creditor thinks taking the vehicle back is the only way to get you to pay. Consumers are responsible for any deficiency on the auto -- the difference between the balance on the loan and what the creditor sells it for -- so you will probably have to pay the full cost of the loan anyway. Try asking the creditor to defer payment for a few months or lower the interest rate.

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What are Credit Scores?

Your credit score is yet another number that becomes a part of your life. It is unlike your Social Security number because your credit score can change. A credit score is somewhat similar to what your grade point average was to you in school. Just as your GPA reflected how well you were doing in school, your credit score reflects how well you are doing with the money you borrow.

Credit Scores

Whenever you take out a loan, charge items on your credit card or pay rent or a mortgage, your creditors report your activity to the three major credit-reporting agencies, which are Experian, Equifax and TransUnion. If you pay your bills on time every month, your credit score will likely be high. If you are consistently late or if you stop paying completely and have debt collectors after you, your credit score will be low.

Five Factors

The reason you have a credit score is to give lenders a way to determine whether you'd be a good credit risk. Different credit scoring models exist, but the one that dominates all the rest is the Fair Isaac Corporation, or FICO, credit score. FICO scores range from 300 to 850, and the higher your score, the better. Five factors determine your credit score, and each factor is weighted differently. Payment history has the biggest impact on your credit score, accounting for 35 percent. How much you owe accounts for 30 percent of your score. Lenders prefer that you keep your balances low on revolving credit. Length of credit history comprises 15 percent of your credit score; the longer you have a credit history, the better. The types of credit you have account for 10 percent of your score, and new credit, which includes recently opened accounts and credit inquiries, also makes up 10 percent of your score.

Credit Report

You can get an idea whether your credit score is high or low by getting a free copy of your credit report. Do this by going to AnnualCreditReport.com (see Resources). Everyone is entitled to a free credit report from each of the three credit-reporting agencies every 12 months. Because each report can be different, stagger your requests. For example, get your Experian report, then in four months get your Equifax report, and in another four months, order your TransUnion. Start the cycle over the following year to keep track. You won't get to see your actual score, though, unless you pay extra for that, which is typically around $15.

Good Score or Bad

How the mathematical algorithms arrive at your credit score vary, but as a general rule, a FICO score above 750 is excellent and should get you the best interest rates on loans. Scores around 700 are good; a score around 650 is fair. If your score is below 600, lenders consider that a poor score, and you might not be able to get a loan, or if you can, you probably will pay a high interest rate.

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Does Marriage Affect Your Credit Score?

When you say "I do" and sign your marriage license, you make a legal change that affects many areas of your life. Although getting married does not change either of your credit scores immediately, the steps you take together as a married couple could impact both of your credit scores.

Separate Credit Scores

Marriage does not directly impact your credit score. Your credit scores are not averaged into one joint credit score. After you get married, you and your spouse still maintain entirely separate credit reports and credit scores. Therefore, the act of getting married does not change anything about your credit. You still have all of the positive and negative credit history from your past.

Moving Forward Together

After you get married, you and your spouse might join your finances in a few ways, including opening joint bank accounts, credit card accounts and loans. Any joint account you have will consider both of your credit scores and will appear on both of your credit reports. If the spouse with good credit habits manages these accounts, both of your credit scores will benefit as you add positive credit history to your files.

Mortgage Considerations

One significant way in which credit scores often come into play after you get married is when you and your spouse want to buy a home together. If you will be relying on both of your incomes to qualify for the mortgage, both of your credit scores will be used to determine the terms of the mortgage and the interest rate you will pay. If one of you has bad credit, consider applying for the mortgage under only the name of the spouse with good credit. Although you might not qualify for as large of a mortgage, you will likely get a better interest rate than if you applied together.

Tips for Credit in Marriage

If a spender marries a saver, disagreements over how to spend, and especially how to manage debt, are common. Before getting married, discuss how you plan to manage your finances as a couple. Consider whether to maintain separate accounts or whether to join your finances completely. Be honest about the debt you are bringing into the marriage. Make a plan for who will manage each account and pay each bill to avoid letting anything slip through the cracks and damage your credit. Most importantly, discuss decisions that will significantly impact your household's finances, such as taking out a new loan or making a large debt payment, rather than handling them independently.

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The Length of Credit History

The length of time items stay on a person's credit history is ruled by several guidelines, Most people are concerned with the negative credit information, which remains on a person's credit report for seven years and then is removed; however, there is other information, such as concerning bankruptcies, which remains on a credit report for a longer time.

What Lenders Look For

In general, a person needs to have at least 12 months of established credit history to apply to borrow money. Lenders will typically look for a minimum of three lines of credit within two years. Creditors are required to report on your credit history for up to seven years; however, lenders can look at your entire history for reference, if available.

Having No Credit History

Young adults and immigrants to the United States are often in a position of having no (or "zero") credit history, and must work to build one before being allowed to borrow funds. Typically, the best way to do this is to obtain a credit card and make payments on time (see Reference section). The longer the credit line receives on-time payments, the more credit history will be established. The more good credit history is established, the better the credit report appears.

Credit Accounts

Accounts on which payments have been met (positive information) stay on file in credit history reports indefinitely, but can be dropped after seven years if there is no activity on them. Accounts not paid (negative information) will remain for seven years.

Public Records

Court judgments (whether paid or not) and paid tax liens (from the date paid) will stay on a person's credit history for seven years; however, unpaid tax liens remain permanently. Bankruptcies under Chapters 7, 11 and 12, as well as bankruptcies dismissed, remain for 10 years from the date they were filed. Chapter 13 bankruptcies (where all or part of the debt has been repaid under a payment plan) will be dropped after seven years. Most other public records are deleted after seven years; however some states have specific laws regarding how long credit history will remain on public records (i.e., New York and California).

Collection Accounts

Reports from collection agencies will stay on a person's credit history for seven years.

Inquiries

An inquiry into your credit history, made by yourself or an outside source, will show up on credit history reports. Depending on the type of inquiry requested, these will be dropped from the report after one or two years.

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Is it Possible to Remove a Charge-Off From My Credit Report?

A charge-off is a very damaging item to have reported on your credit report. Charge-offs occur when you fail to repay a loan for a significant portion of time. Once your credit report has a charge-off on it, you should take any steps you can to remove it, as it will significantly affect your chances of getting additional credit.

Charge Offs

A charge-off occurs when a creditor determines that an uncollected debt is no longer an asset. Charge-offs do not mean that you no longer have the responsibility to repay the debt, but merely that your creditor has changed how it categorizes the debt. Typically, creditors do not list an account as a charge-off until a debtor has failed to make a payment for a significant amount of time.

Credit Report

All your activity as a credit user gets included on your credit report. If you have a charge-off on your report, this greatly lowers your credit score, as does the late payment reports and collection agency reports that typically accompany a charged-off account. You can inspect your credit report for free each year by visiting the Federal Trade Commission's authorized credit report website: annualcreditreport.com.

Errors

Credit reports commonly have errors on them, and it is possible that your report could contain a charge-off that is not supposed to be there. If you do find an error on your report, you can demand that the credit reporting agency that issued the report remove the information. You must be able to prove that the report is in error, typically by providing the credit reporting agency written proof that backs up your claim.

Timeline

If a legitimate credit card charge-off appears on your report, you have some recourse if the charge-off has been on your report for more than seven years. If a charge-off record still appears on your report after seven years and 180-days from the date it was first reported, you can demand the reporting agency remove the item in the same way as you would an error.

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Can You Get a Free Credit Report in Florida?

Floridians, like everyone throughout the United States, have records at the three major credit reporting agencies. TransUnion, Experian and Equifax collect, store and sell personal and financial data. The Federal Trade Commission explains that Americans, including Florida residents, are entitled to review those records regularly at no cost under a federal regulation called the Fair Credit Reporting Act, or FCRA.

Definition

Credit reports are compilations of data that include a person's current and past credit card accounts, outstanding and paid loans, account balances and timeliness of payments, according to the Federal Reserve Bank of San Francisco. They also list actions taken against that person for nonpayment of bills, such as collection agency turnovers and court judgments. Lenders, insurers and employers make decisions about potential clients and employees based on these reports, which they purchase from the agencies.

Purpose

Credit reports may contain mistakes and signs of identity theft, such as delinquent loans and credit card accounts opened by a criminal. This can result in denied credit and insurance applications and rejection by potential employers. The Office of the Florida Attorney General explains that Floridians can catch such problems early through regular report reviews. The Fair Credit Reporting Act spells out a way to dispute mistakes, according to the Federal Trade Commission. Consumers can contact banks and other lenders to check the legitimacy of unfamiliar accounts.

Process

The FTC says the free credit reports mandated under the FCRA can only be ordered through Annual Credit Report. The website asks users to select their state. Floridians choose the appropriate response from the drop-down box, then fill out the form that asks for name, current and previous addresses, birth date and Social Security number. Next is an option to select a report from one, two or all three credit bureaus. Each selected bureau has its own identity verification questions before it provides a report.

Time Frame

Free credit reports from Annual Credit Report are available once each year, according to the FTC. Consumers can order the three reports together or spread them out over the entire year. For example, some request a report from one credit bureau every four months and repeat that process annually, according to the Wall Street Journal.

Warning

The Office of the Attorney General of Florida warns that some companies promise free credit reports but force individuals to pay for credit monitoring or other services to get the promised information. Sites that require consumers to make a purchase or sign up for a trial membership in exchange for a credit report must prominently post information on how to get truly free reports from Annual Credit Report, according to the FTC. Misleading sites can be reported to the FTC and the Florida Attorney General.

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How to Get a Copy of a Credit Report When You Are Refused Credit

If you are denied credit for any reason, you have the legal right to obtain a free copy of your credit report, thanks to the Fair and Accurate Credit Transactions Act of 2003. Although the report does not include your credit score, it can help determine any inaccuracies or problems with your report.

Instructions

1

You should get a credit denial letter by mail. The institution that denied you credit must provide the reason, as well as the name of the credit agency that supplied the report. By law, credit denial letters must be provided within 30 days.

2

Find out which credit agency supplied the credit report (Equifax, Experian or TransUnion). The agency will be listed near the bottom of the credit denial letter. If reports from all three agencies were used, you can request a copy of each report.

3

Visit the agency website to get your free report (see Resources). You'll be asked to provide some personal information.

4

Request your free report by mail if you don't want to receive it online. Make a copy of the denial letter, your driver's license and a utility bill. Send these documents to the specific credit agency address, along with a short letter asking for your report by mail.

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Will My Credit Score Drop If I Order My Credit Report?

The Fair Credit Reporting Act governs nationwide credit reporting agencies and consumers' rights to check their credit scores. Ordering a credit report generally does not have an impact on a consumer's credit score, with some exceptions.

Facts

Nationwide credit reporting agencies like Equifax and Experian have to provide consumers with a free copy of their credit report at least once every 12 months, according to the Fair Credit Reporting Act. These annual credit report orders do not affect a consumer's credit score.

Effects

Consumers who order multiple copies of a credit report in a year might experience minor deductions on their credit score. According to myFICO, one additional inquiry a year can reduce a credit score by five points.

Considerations

Ordering your credit report annually can be an effective way to check for any errors on your report. Multiple inquiries in a year, however, can appear suspicious and have a slight effect on your credit score. Stick to the federally regulated one credit report a year to keep your credit score in check.

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How Does Settling a Debt Affect a Credit Score?

Settling your debt with your credit card issuer for less than what you owe affects your credit score a lot, according to the Kiplinger website. This black mark on your credit remains for seven years.

Effects

Typically, your credit card issuer only settles with you if you are late on your payments. If the credit card company agrees to a settlement, the usual practice is to report the number of days you were delinquent and the amount of the settlement to the credit bureaus, which lowers your score.

Considerations

It is better to settle your debt, however, than to not pay your debt at all. It is also better to settle than to leave your account in a delinquent status, according to Bills.com. When you settle your debt, it generally appears on your credit report as "settled as agreed." This is better than having an unpaid account that you still owe on.

Expert Insight

A tip reported on the MSN Money website suggests that you can ask your credit card company, as part of the settlement, to report your account as "paid in full" rather than "settled" or "settled as agreed." Your credit card issuer may not agree to this, however, because the credit bureaus frown on incorrect reporting.

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How to Get a Credit Card With Terrible Credit

Getting credit with a terrible credit history can prove challenging. Although credit is needed to improve a bad score, lenders and banks may not accept your applications. While you may not qualify for a major credit card or other types of financing with a terrible credit history, getting credit is doable. The key is knowing where to apply and choosing the right type of credit card.

Instructions

1

Get an income source. Credit card applications ask for the name of your employer and annual income. Secure a steady source of income before seeking a credit card with poor credit.

2

Complete an application for a secured credit card. Numerous banks issue secured credit cards to people with terrible credit. These accounts require a security deposit, and paying a secured card on time helps raise a low credit score. Ask your personal bank for an application, or complete an online application from websites such as Creditcards.com. You'll need to open a savings account with the chosen bank.

3

Ask someone to become a joint user on a credit card. Major credit cards are difficult to acquire with terrible credit unless you have someone to co-sign or become a joint account holder. Adding your name to someone's credit account can also get you a credit card with terrible credit. As an authorized user, the credit card company will issue a card in your name.

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Help to Repair My Credit Report

A credit report is a record of your financial borrowing and repayment history, including late payments. Credit bureaus maintain your credit reports in the event you, or a lender, needs to examine your credit worthiness. Having a bad credit report can cause you to pay higher interest rates or be ineligible for loans. However, it is never too late to repair a credit report.

Creating a Budget

A bad credit report is typically a consequence of delinquent debt payments or debt that is out of control. When you create a monthly budget, you will know exactly how much money you have to set aside for bills and necessities, such as groceries. You can then see how much money you have left over to use towards paying off your debts faster. A budget will help you have a sense of control over your finances and prevent you from overspending.

Piggyback

"Piggybacking" is a term used when a person with a bad credit report tries to repair it by becoming an authorized user on another person's credit card. The individual who opened the credit card account must have good credit to make piggybacking work. With time, the individual's good credit history reflects positively on the piggybacking person, as long as this person does not use the credit card or pays the balance in full upon receiving the bill. Before making a credit piggybacking arrangement, both parties should keep in mind that payment delinquency would reflect poorly on both credit cardholders.

Pay Cash

Geoffrey Chaucer stated in his poem "Troilus & Criseyde" that time heals all wounds and the same can be said for bad marks on a credit report. A credit report can improve with time as long as you continue to make good spending decisions and no longer use credit cards to make purchases.

When you are dealing with debt and bad credit, it is best to pay bills and other items with cash, a check or debit card so you only spend money you have. Doing this will help improve your credit report because the amount you owe on credit cards and other loans will continually decrease instead of remaining stagnate or increasing..

Paying Smaller Debts

According to Dave Ramsey, a financial expert, many people believe they should try to tackle their largest debts first to get them out of the way. Ramsey, however, says that the smallest debts are the ones you should focus on first. By paying off your smaller debts, you will have more money to pay off larger debts and eliminate them in a shorter amount of time.

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Levels of Credit Ratings

Your credit is checked anytime you apply for a mortgage, car loan or credit account. Potential employers may also check your credit, as do banks when you want to open an account. Your credit score, or rating, is a summary of your credit history. Lenders rely on credit scores to assess risk. They want to know how likely you are to repay the money you want to borrow.

Description

Your credit score is based on the contents of your credit history, or credit report. Consequently, a good credit history results in a high credit score. Although there is more than one credit scoring system, the Fair Isaac Corporation (FICO) score is most widely used. A FICO score ranges from 300 to 850. The main factors making up FICO and other credit scores are whether you pay bills on time, the amount of debt you carry and the length of your credit history. Other factors include the frequency with which you open or close credit accounts and the types of credit you have.

Good Credit Scores

According to the Credit Scoring website, the average American's credit score is around 720. A good score is anything over 700, and a score of 770 or above is considered excellent. With a high credit score, you can obtain the credit you need almost all the time, at favorable interest rates. The best interest rates go to people with credit scores in the high 700s.

Poor Credit Scores

Once your credit score falls below 690 to 700, lenders have concerns about your ability to repay a loan. With a credit score in the middle 600s you can usually finance a car and get a mortgage or credit card, although you may pay a higher interest rate. A score below 620 is called "subprime" and is considered poor. If your credit score is subprime, many lenders will not extend credit and you may find it difficult to finance a home. Those who do extend you credit will charge you significantly higher interest.

Guarding Your Credit

Paying bills on time and otherwise using credit in a responsible manner are the best ways to raise your credit score. However, you should monitor your credit history carefully. Errors on your credit report can lower your credit score. You can get a free credit report once every year from each major credit reporting agency (Experian, Equifax and TransUnion). These reports are available from the Federal Trade Commission's authorized provider, Annual Credit Reports (see Resources). If you discover an error, contact the credit bureau and have the mistake corrected.

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Why Will Paying Off Collections Hurt Credit Scores

When you are trying to improve your credit score, you may think that paying off old collections will help. Think again. You may be surprised to learn that paying off old debt could hurt rather than help your credit score.

Misconceptions

If you are working to boost your FICO credit score, there are a number of steps you can take. Some are obvious, such as staying current on paying your bills. But others are not so clear and may be counter intuitive. You may know that your credit score is calculated by considering a number of factors. Your payment history and the amounts you owe make up 65 percent of your credit score. So, it is natural to think that if you pay off that old bill your credit score will improve. But it depends on when you pay off the debt.

Effects

According to the Fair Issac Corporation, which calculates FICO scores, there are two factors that it considers regarding collections. These are whether you have any collections on your credit report and the date they appeared on your credit report. When you pay an old debt, the credit bureau adjusts the date on the collection, making it a current event. In the FICO software's algorithm, current events are weighted more than older items.

FICO gives more importance to the entry of the original creditor compared to a collection agency. If enough time has elapsed and the account has been turned over to a collection agency, the original creditor may have reported a balance of zero. Fair Issac spokesman Craig Watts told MSN Money, "If the trade line balance is showing zero, you're not going to help your FICO score by paying off a collections account."

Considerations

You may feel a moral obligation to pay your old debts, but if you are trying to improve your credit score for a specific purpose, such as getting the best possible mortgage interest rate, you should wait until after you close or make the purchase to pay off the collection. If the collection is on a debt that you have disputed, or if you have some other reason why you believe you do not owe the money, you can do nothing and it will drop off your credit report seven years after the last activity on the account. So if the collection was reported in January 2006 and you continued to make payments on it until June 2006, it will come off your report in June 2013.

Either option will save you a lowered credit score and possibly thousands of dollars in increased interest payments than if you had chosen to pay off your old debt at the wrong time.

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If You Pay Your Rent Monthly Does it Affect Your Credit History?

Paying your rent on time used to do nothing for your credit history. It was only if you went seriously into arrears that your payments would show up on your credit report. But changes at one of the credit bureaus, Experian, mean you can now help your credit history by keeping current with your rent.

Defaults

The only information that used to be reported to the credit bureaus about rent payments was debts that went into collection. If you fell so far behind in your rent payments that your landlord called in a collection agency, this remained on your credit report as a black mark for seven years, probably along with the public record of your eviction.

Timely Payment

In June 2010, Experian acquired a specialized credit bureau called RentBureau that keeps records on more than seven million renters. This means the agency can now incorporate rent payments as an open account on the credit reports that it keeps. If you maintain current payments, this will be reflected positively in your credit history.

Which Landlords

Not all landlords are covered by Experian. If you rent from a large property management company, your payments are probably being reported. If you rent from a small private landlord who has just one or two rental units, it's likely that he isn't reporting your payments. Small landlords do have some resources to be able to report tenant rent histories, but it costs money, so they may only be motivated to do so if you are in default.

FICO Score

While your rent payments may now appear on your report, they can't yet affect your FICO score. Experian will factor your payments into its own proprietary score, the VantageScore, but FICO has not incorporated the new information into its scoring model. Since your FICO score is the one most often used by lenders and other financial institutions to assess your credit, your rental history won't yet help in this regard.

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National Credit Rating Agencies

Credit rating agencies are responsible for providing investors with information regarding corporation and organization creditworthiness. Credit rating agencies are different from the more widely known credit reporting agencies. While credit reporting agencies are responsible for compiling a wide variety of financial data necessary for loan decisions for individuals, credit rating agencies do the mathematical and statistical math involved in placing a number (rating) on an organization or corporation's credit history.

Standard & Poor

Standard and Poor's credit rating service was founded by Henry Varnum Poor in the late 1800s, after writing a book about the future of securities analysis and financial reporting. Over time, the company released corporate bond, municipal bond, and sovereign debt ratings. By 1966, Standard and Poor's became well-known through the S&P 500 for investor analysis and U.S. economic indicators.

Moody's Investor Service

John Moody was the founder of Moody's Investor Service. In 1900, he published a manual that contained statistics and other information regarding industrial stocks and bonds. In 1914, Moody's Investors Service began providing ratings for government bond markets. In the 1960s to present time, Moody's rates both paper and bank deposits, resulting in a highly-successful full-scale rating agency.

Fitch Ratings

The Fitch Publishing Company was founded by John Knowles Fitch in 1913. Using financial statistics in the investment industry, he produced a manual that outlined the AAA to D rating system that all the credit rating agencies use as their standard today. Fitch now operates subsidiaries that specialize in enterprise risk management as well as data services and industry training from the financial factor.

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Does a Mortgage Payment Made During the Grace Period Affect Credit Score?

Credit scores are determined based on the information your creditors provide to the credit reporting agencies. Creditors do not report your payments as late unless your payment is a minimum of 30 days late. If your creditor receives a payment during your grace period, it has no effect on your credit score. You should mail your payment at least two weeks before the grace period ends, however, to ensure it arrives on time.

Scoring

The exact method of scoring is proprietary information, but all three credit reporting agencies are believed to use the same basic algorithm to calculate the credit score. The difference in scores among the agencies usually is due to the information each agency has in your credit file. Some creditors report payment information to all three bureaus, while others only report to one or two. Prior to the mortgage crisis of 2008-2009, a credit score of 640 typically was enough to qualify for a conventional mortgage loan. In 2011, you usually need a minimum score of 680, and some lenders require a score of 720 or more.

Reports

The three major credit agencies in the United States are Experian, TransUnion and Equifax. Everyone should review his credit report at least once a year. Congress passed a law requiring that each agency allow you to review a copy of your credit report once a year. You can get a copy of your credit report by visiting the AnnualCreditReport website and requesting a copy from one of the agencies. If you wish, you can request one from a different agency every four months, so that you have an opportunity to review each report once a year. There is no charge for this service.

Repairing

When you review your report, you will find a form to send to the credit reporting agency requesting that it correct any errors. If you detect inaccuracies, gather any documentation you have regarding errors on your report, and send the information to the credit agency, along with a cover letter explaining the situation. If the credit reporting agency confirms that an error exists, you should receive a corrected copy of your credit report from the agency in 60 days or less. No law at the time of publication enables you to obtain a free copy of your credit score. If there are errors on your report, you should not pay to see your credit score until the agency corrects the error(s).

Considerations

One payment that is more than 30 days late can have a major impact or your credit score. The credit reporting bureaus will lower your credit score as soon as your creditor reports your late payment. Furthermore, it takes several months of prompt payments to bring your score back to its previous level. One late payment can prevent you from receiving a mortgage or vehicle loan. If possible, send in the minimum payment or more as soon as you receive your statement. If you wait until the last moment and the mail is delayed, the credit bureau will not be sympathetic.

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How Does Credit History Work?

The Past

Credit histories are collected and cataloged by the major credit reporting bureaus: TransUnion, Experian and Equifax. The process behind collecting the data is relatively simple; lenders report to the credit bureaus, and the bureaus in turn keep track of all the information. Every consumer who has ever applied for credit or been granted credit by a reporting lender has a credit history. The history lists pertinent information that is designed to assist potential lenders in deciding whether or not to grant you credit based on how you have treated credit in the past. Items listed on the credit report pertaining to your past include previous addresses you've lived at, previous accounts you've held and a listing of the credit you have applied for even if it was denied. Creditors look very closely at your credit history to see if you have a good record of making payments on time and have not overextended yourself financially.

The Present

Although credit histories are not exactly accurate right up to the very minute, the payment history is usually accurate within one or two payment periods. This is because the creditors report periodically on accounts instead of immediately as they are updated. When lenders look at your credit history, they get a quick glimpse at how you are dealing with credit right now. Do you have open accounts? Are you overextended with your credit? Have you been applying for a lot of credit recently? Most importantly, are all your accounts up to date? Your credit history won't list accounts like utilities or child support payments unless they are delinquent or court-ordered, but lenders can get a reliable image of how you handle your credit card and loan payments by looking at your credit history.

The Future

Using all the information on your credit history, lenders can make a fairly accurate assumption as to your creditworthiness--in other words, how likely you are to pay on time if the lender grants you credit. If you have a strong history of making payments in a timely manner and you do not max out your credit lines on a constant basis, then chances are you will continue along the path of making wise credit choices. While some lenders will review an entire credit history, others are concerned only with the credit score attached to the report. The score does tell lenders a lot about your odds of paying them back, and the higher your credit score, the more likely you will be able to obtain credit approvals in the future.

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How to Transfer Your Credit History to a Newly Assigned SSN

When you are assigned a new Social Security Number (SSN), your previous credit history will not automatically transfer. Credit history is not kept by the Social Security Administration. Instead, the three major credit bureaus, Experian, TransUnion and Equifax, keep their own records of your credit history. Therefore, to transfer your credit history you will need to notify each of the credit bureaus directly and provide evidence of your claim.

Instructions

1

Contact your current lenders and inform them of your newly assigned SSN. They should begin to report your credit under your new number.

2

Type a letter to the credit bureau, explaining that you have a new SSN. Keep the letter simple and to the point. List all previous numbers you had credit under and any previous names you used. Request that your account be listed in your new credit report.

3

Print four copies of the letter, one for each of the three credit bureaus and one for your own records. Sign the three copies for the credit bureaus.

4

Address one envelope to each credit bureau, affix a stamp and write your return address. The three credit bureau addresses are as follows:

Equifax

P.O. Box 740241

Atlanta, GA 30374

Experian

P.O. Box 2002

Allen, TX 75013

TransUnion

P.O. Box 1000

Chester, PA 19022

5

Make three copies of the document you received from the Social Security Administration informing you of your newly assigned SSN. Attach one to each letter and put each letter in an envelope. Mail the letters to the credit bureaus.

6

Wait a month or two and request a free copy of your credit report through AnnualCreditReport.com from each credit bureau. Verify that your credit history has been transferred by each credit bureau. If it has not, call the credit bureau in question to sort out the problem.

Equifax

1-800-685-1111

Experian

1-888-397-3742

TransUnion

1-800-888-4213

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How to Report Corrections to All the Credit Bureau Agencies

Errors on your credit report can lower your credit score and inhibit your ability to open new accounts. Fortunately, you are entitled to copies of your credit reports and can notify the credit bureaus of any corrections that are needed to remove erroneous information. You will need to check your reports from all of the bureaus and report any problems to each individual bureau to make sure they are corrected.

Instructions

1

Request a free copy of your credit report from all three of the main credit bureaus. Transunion, Equifax, and Experian must all provide you with one free copy upon your request on an annual basis. This allows you to check regularly for any needed corrections.

2

Go through each of your credit reports, making a note of any incorrect information. Make a list of what is wrong and the report(s) on which the errors appear.

3

Visit each credit bureau's website and fill out a dispute form for the incorrect items. You must report corrections separately to each of the three bureaus, even if the same mistake appears on all three of your reports. Each credit bureau is a separate company, and they do their investigations independently.

4

Request a second copy of your credit report from each bureau to which you reported corrections. Give them 60 days to investigate the problem and make corrections before requesting the new copy. If the information is not corrected, they are required to report the results of their investigation.

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