July 2004 ~ Personal Finance and Money Management

Saturday, July 31, 2004

How Often Is Credit Information Updated?

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When you are trying to secure financing, you want to make sure that your credit score is as high as possible. If you have recently paid off an account or done something else that could help your score, you may be anxious for the changes to take effect. The time that it takes to update your report can vary from one situation to the next.

Your credit score is a number calculated from a formula that looks at every area of your credit report. When your credit report changes, so does your credit score. The score is calculated almost instantly when something on your credit report is added or removed. When you do something that could affect your credit, it does not hit your credit report instantly. The amount of time between the action and the change on your report can vary, depending on which creditor you are working with.

The main factor that plays a role in determining when your score changes is the creditor that you are dealing with. If you make a payment to a large creditor, such as a credit card company, the information will most likely be reported to the credit bureaus at the beginning of the following month. If you make a payment to a small creditor like a local bank, the information may not go on your report until the start of the next quarter.

Because of this lag time between the actions you take and the update in your credit report, you should plan ahead when you know you will need to apply for financing. For example, if you know that you will be shopping for a mortgage in the near future, you need to go ahead and pay down the balances on your accounts early. Give yourself two or three months just to make sure that you have plenty of time to see a change.

While under normal circumstances, you should expect a month or more to elapse before your credit report is updated, a service called rapid re-scoring could get it done faster. This is a service that is offered when you work with a mortgage company or other lender. You pay a one-time fee, and the rapid re-scoring service can get your score changed for you. It can make sure that information is updated and correct for you within 72 hours.

Can a Bank Reject Someone Because of Their Credit Rating?

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When you apply for a loan or attempt to open a deposit account at a bank, the banker helping you may check your credit report. Many banks refuse to open new accounts for people with low credit scores and there are no federal or state laws that prevent banks from doing so.

Lenders use the "Four C's of Credit," when underwriting loans or credit products. The Four C's are: capacity, capital, collateral and character. You must have the capacity to repay the loan that means sufficient income to cover the debt. You must have capital or cash for a down payment, suitable collateral (such as a home) and good character. Banks determine character by looking at your credit report to see if you have a good record of paying your debts. If you have a low credit score, the bank can decline the loan application.

When you open any kind of deposit account at a bank, you are effectively lending money to the bank. However, if you overdraw your account, you become a debtor as the bank lends you money to cover the debt. Banks view people with low credit scores as more likely to overdraw their accounts than people with good scores. Additionally, if you have ever had a bank account charged off at another institution, that debt may appear on your credit report and further discourage any bank from allowing you to open a new account.

Some banks do not check your credit score when you attempt to open a new account. However, banks that do not check credit usually get consumer reports from ChexSystems. The reports from ChexSystems do not contain information on your past credit history but do contain information pertaining to your past deposit account history. ChexSystems reports are not the same as credit reports but are classified as consumer reports under the Fair Credit Reporting Act. A bank can decline you for an account due to a debt that shows up on a ChexSystems report even if it did not impact your actual credit score.

Many banks refuse to open checking accounts for people with low credit scores but do allow them to open other kinds of accounts such as savings accounts. Banks perceive savings accounts as less risky because account holders have more limited access to these accounts and they typically don't come with debit cards nor check-writing privileges. Each bank can set its own standards for opening accounts but the bank must apply the same criteria to all customers and not discriminate against certain individuals or groups of people.

Does Settlement Less Than Owed Affect Your Credit Score?

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Paying a creditor or lender less than you owe on a debt may seem like a good option if you're having financial troubles. However, debt settlements reduce credit scores, and a low score will make it difficult for you to get credit cards and loans in the future. Ultimately, the money you save through a debt settlement could cost you more than you anticipate.

Notations such as "settled account" and "settlement" appear on credit reports when consumers dont pay credit and loan accounts in full. In turn, all credit-scoring models will give a negative rating to those accounts, according to Bankrate.com writer Leslie McFadden. Furthermore, McFadden indicates that a settlement on a delinquent account could affect your credit score in the same way debts do when theyre included in a bankruptcy because both settlements and bankruptcies cause creditors and lenders to endure a financial loss.

Debt settlements don't affect credit scores in the same way, since consumer credit histories vary. However, the higher a person's credit score is, the more damage a settlement can do. Fair Isaac Corporation manages the FICO credit-scoring model, and the company's website provides a scenario that demonstrates how much debt settlements can affect consumer credit scores. Someone who has a FICO score of 780 could see his score drop as much as 125 points after settling a credit card debt, according to Fair Isaac. Another person who has a score of 680 may lose up to 65 points for paying less than the full amount to settle a credit card debt.

You may reduce the amount of credit damage a delinquent debt causes if you negotiate a payment plan with the original creditor to pay the debt in full. The FICO credit-scoring model places more weight on what the original creditor reports about a consumer than what a collection company reports, according to MSN Money columnist Liz Pulliam Weston. Therefore, working with the original creditor to pay a delinquent debt in full before it goes to a collection agency may cause less damage to your credit rating. You also would benefit because the creditor would eventually report to credit bureaus that the account was paid in full, not settled.

The consequences for not paying a debt in full may not end with a damaged credit rating if the amount of debt you don't repay in a settlement exceeds $600. The Internal Revenue Service generally considers debt that creditors and lenders forgive as part of a taxpayer's taxable income, which could increase a person's tax bill. Creditors and lenders usually must report the amount of the canceled debt to the IRS. Taxpayers who can show they can't afford the additional tax liability may be able to get it waived by filing IRS form 982.

What Does Profit and Loss in Your Credit Mean?

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A profit and loss charge-off is a statement that appears on your credit report. Specifically, it means that you became delinquent on a debt and the creditor wrote off the debt for collection. A profit and loss charge-off has serious repercussions on your credit score and your ability to obtain credit in the future. Some companies may, however, remove a profit and loss charge-off if your debt is young and you agree to settle the outstanding amount.

Your credit report is a record of your payment history. Companies will use this record for the purpose of making credit decisions. The main part of the credit report is your credit score. In addition to your payment history, credit reporting agencies use the amount of debt you have, the number of accounts you have, past applications for credit and the age of your credit file for determining your credit score. The higher your credit score, the more eligible you are for receiving credit. There are three main companies that produce your credit report. These include Equifax, Experian and TransUnion. When you apply for credit, the lender will consult at least one of these credit reporting companies, if not all three.

A profit and loss charge-off is when a borrower becomes delinquent on an outstanding debt and the lender writes off the debt. This does not mean that you are free from the debt, it just means that the company has given up on collecting the debt from you in the normal fashion. Charge-offs appear on a company's profit and loss statement, which they in turn present to the Internal Revenue Service. Specifically, charge-offs appear as "bad debts" in the loss section of the statement. This in turn has an impact on the creditor's taxes. This is why a creditor may list a delinquent debt as a "profit and loss charge-off" on your credit report. A profit and loss charge-off seriously diminishes your credit score and will jeopardize your chances of obtaining credit in the future.

When a creditor writes off a delinquent debt, they will not give up on it. They will likely exercise one of two options. They may either attempt to collect the debt using their internal debt collection department or they may sell the debt to a debt collection agency. If the debt is large, they may even take you to court. Paying the debt at this point may clear up any business you have with the creditor, but it will not change the fact that you have a profit and loss charge-off on your credit report. Simply paying off the debt will change the profit and loss charge-off to a paid charge-off, which is only slightly better than a profit and loss charge-off. Both types of charge-offs, paid or unpaid, remain on your credit report for seven years.

If the company uses an internal debt collection department to collect your debt, you may still have a chance in removing your profit and loss charge-off from your credit report. This involves communicating with the company, both over the phone and by writing. All companies wish to have debts paid to them somehow. You can thus negotiate payment with the company provided that they remove the charge-off from your credit report. This may involve either the full amount or a negotiated partial amount. This tactic does not always work and will depend purely on the nature of your debt and the company in question.

What is a Good Range for a Credit Score?

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Credit cards and accounts can improve or worsen a credit score.

A "good" credit score is considered to be anything above 700. According to Cash Money Life, credit scores are based on a weighted formula that includes payment history, amounts owed, age of credit history, recent loans and the types of credit you have. Therefore, it is smart to have some amount of credit history. You can create credit history by using credit cards and with loans.

If you decide to open a credit card or account or obtain a loan, make sure you are able to pay and your finances are secure. Good credit history is made when payments are made on time, in full and over an extended period of time. If you miss a payment, it can easily drop your credit score.

You can either improve or worsen your credit score depending on your ability to pay in full and in a timely manner on all credit accounts and loans. Here's a tip: Visit annualcreditreport.com (free and no strings attached) once a year to argue any negatives on your accounts, hopefully getting them removed.

What Is the Quickest Way to Raise My FICO Score by 40 Points?

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If you need to raise your FICO score by 40 points to obtain a better loan rate or to qualify for a certain loan product, take the necessary steps to quickly boost score. Your FICO (Fair Isaac Corporation Scoring Model) score represents your debts, assets, investments and judgments against you. A score below 600 typically means that you will be paying points (fees) on your loan or that your score is too low to obtain the loan. If you need to increase your score by only 40 points, closely examine your credit report to dispute judgments against you.

Instructions

Reduce your debt ratio to quickly boost your score by 40 points. Pay down your high balance credit cards, car loans, home loans or personal loans for an instant credit score boost. If you see the statement, "Proportion of loan balances to loan amounts is too high" it means that your debt ratio is too high, which creates a lower FICO score. For best results, reduce your credit card debt ratio by 80 percent. Even a 30 percent reduction will garner positive results.

Dispute bad credit or judgments against you. One of the fastest ways to boost your FICO score by 40 points or more is to have bad credit removed from your report. Contact your creditors directly and negotiate terms, eliminate late fees or set-up new loan repayment terms. Negotiating or disputing bad debts can possibly remove bad credit from your report.

Remove errors from your credit report. Negative credit or judgments against you can only impact your credit score for up to seven years (10 years for bankruptcy). If you find that an old debt is lingering on your record, write to the credit reporting agency to have it removed. In some cases, someone else's bad credit may be haunting your credit report. Review your report with a fine tooth comb to ensure that every item pertains to your credit history. In some cases, another individual with the same name may end up on your report.

Does Opening a Joint Bank Account With Someone Ruin Your Credit?

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Co-mingling household funds via a joint bank account is a common practice among married couples, but parents who wish to monitor their childrens spending and individuals caring for their aging parents also benefit from sharing a bank account. While convenient, sharing a joint bank account with an irresponsible individual could threaten your credit rating.

Each banking institutions policies differ but, in general, banks require that customers undergo a credit check before opening a new checking account. Most banks conduct soft credit checks for customers who simply wish to open a new account rather than apply for a loan. Unlike hard credit checks, which shave several points off your credit score, soft credit checks do not diminish your credit rating.

Some individuals mistakenly believe that opening up a joint bank account with someone with a tarnished credit history will adversely impact their credit rating. Sharing a joint bank account, however, does not cause the account holders credit information to mingle even if those account holders are married. While banks report loans and credit cards to the credit bureaus, banks will not report your joint checking account and who you share it with on your credit report.

The act of opening a joint bank account cannot ruin your credit rating. Failing to properly maintain the account, however, can. With a private account, you can control how much you spend to ensure that you never overdraw your account. If another persons name is on the account, you no longer enjoy full control over the funds. The other account holder is free to withdraw money at will.

If the other account holder overdraws the account, your bank may charge you a fee for every purchase you make while the account is overdrawn. If neither you nor the other account holder pay the fees, the bank will turn the account over to a debt collector. Debt collectors will report the debt to the credit bureaus and it will cause considerable damage both to your credit and that of the other account holder.

If you are worried about the credit damage you may sustain should the other account holder mismanage funds, consider signing up for online banking. Online banking lets you view recent withdrawals and deposits and check the accounts balance 24 hours a day.

While online banking isnt always 100 percent accurate (transactions sometimes take a day or more to go through), it gives you a ballpark figure of the accounts current status whenever you need it helping both you and the other account holder remain within the accounts limits and protect your credit scores.

Credit Repair Tricks

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Financial institutions use a credit report to determine whether you will be approved for credit or pose too much of a credit risk. Many factors are used in determining your actual credit score. These include your payment history, the total amount of outstanding credit, the length you have maintained a credit history and the types of credit you have established.

If you are credit-challenged and cash-strapped, chances are your credit may be suffering. There are, however, ways to repair your credit.

First, get a copy of all three of your credit reports from the major credit bureaus and review them closely to ensure there is no erroneous information on any of them. If there are errors, write a detailed request to the credit bureau to have them corrected or removed.

Follow up 30 days after your request to ensure the corrections are made. Subsequently, order a copy of your updated credit reports. You may need to repeat this process until all errors have been corrected, and if they are not corrected within 90 days of your original request, you may have to file a complaint with the Federal Trade Commission. This is your legal right under the Fair Credit Reporting Act. Once errors are corrected, take additional steps toward repairing your credit.

Simply put, pay all bills on time. On time means by or before the due date shown on the bill. Keep in mind that although a creditor cannot report a payment late as long as it's paid within 30 days of the due date, it can report the number of times a late fee is accessed or the total amount of late fees you incur within a specific time frame, so it's important to know this when attempting to repair your credit. Be careful to avoid anything that could possibly be a red flag to a potential new creditor.

Avoid having too many inquiries appear on your credit report. These lower your overall credit score, especially if repeatedly applications have resulted in denied credit with too many companies.

Don't ignore the fact that many utility companies report late payments to the credit bureaus. If you are struggling to keep these payments current, contact each utility company and request to get on a budget plan. If your request is granted, stick to the plan, and if you run into a problem, ask to renegotiate the previous budget plan.

Your balance to payment ratio is another important factor in keeping your credit file in order. If you have an account where you are only making the minimum required payment each month, not only will you take much longer to pay the balance off but it will harm your credit rating.

If you are struggling to make larger payments to chip away at the total balance owed, always pay more than the minimum balance on all credit cards, even if it's just a few dollars more.

Be aware of companies that promise a "quick fix" for repairing your credit. Chances are, they will seek an upfront payment from you to begin the process. Even if a company appears to be legitimate, there is no reason not to investigate thoroughly. Many people have been scammed and left with worse credit than they had before, so remain cautious.

Remember that credit repair is not an overnight event. Most likely it was not damaged overnight, and it will require a serious plan of action to get back on track. With patience, discipline, consistency and determination, you can repair your credit and be on your way to a fresh start.

Difference Between a Hard & Soft Background Check

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Hard and soft background checks both involve running a credit check. While both are credit checks conducted by employers, landlords or other creditors, some differences exist between the two types of background check. Both hard and soft background checks are run through one or more of the three credit reporting agencies, which are Equifax, TransUnion and Experian.

A hard background check occurs when a full credit report and credit score are pulled. When a hard background check is run, it shows up on the credit report as being a full credit pull rather than an inquiry. A soft background check, however is when a portion of your credit is pulled rather than a complete credit report. The inquiry section on a credit report shows any creditors, lenders or other companies that have looked at your credit, which is a soft background check.

The primary difference between a hard and soft background check is the level of detail. A hard background check provides full details on your credit report. In order to run a hard background check, a social security number, full name and an address is required. In order to conduct a hard background check, the company or person running the check typically obtains an application with this information, along with a disclosure that they are pulling credit and a signature of consent from the applicant.

A soft background check supplies less detail on the credit history. The most common form of a soft background check is when a creditor is pre-screening possible candidates for a special offer. When you receive pre-approved credit card applications in the mail, this is an example of a soft background check. The credit card issuer looks at a portion of your credit, doing a soft background check, and decides whether you are worth the risk of extending credit. Contrary to a hard background check, a soft background check does not require consent. When an individual pulls a credit report, it shows as a soft background check or inquiry on the credit report, even though the person receives a full copy of the report.

Another difference between a hard and soft background check is how it affects the credit of the person. A hard background check lowers the credit score, while a soft background check does not. Therefore, a hard background check has a negative effect while a soft background check has little or no effect. Even though a hard background check lowers a credit score, it does not lower a credit score as much as making late payments does. If a lender sees too many inquiries on a credit report, it may cause the lender to deny credit.

Credit laws protect consumers who are shopping for a loan, mortgage or credit. Even if hard background checks are run, as long as the checks are run in a two-week period, each check does not decrease the credit score. The background checks have to be for the same type of loan, but if done in the two-week period, then all of the background checks count as one inquiry rather than multiple ones.

How Badly Will Debt Settlement Affect My Credit?

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Debt settlement is an awful item on any credit report, but it is usually not as damaging as the events leading up to the settlement. Since any negative item has an unknown effect on a credit score, it is best to avoid settlement if possible. Settlement is usually the least optimal choice to tackle debt, and most customers do not benefit from or need debt settlement.

How much a debt settlement affects a credit history depends on when the lenders agree to settle. Most creditors do not settle until the borrower misses several late payments. If the creditor writes off the account and sells it to a collection agency, the fact that the borrower refused or could not pay the debt does the brunt of the damage, according to Maxine Sweet of Experian.

The maximum number of points a consumer can usually lose is 125, according to Ellen Cannon of Bankrate.com. This would probably only occur to a consumer with a score of 780 before the creditor declares the account settled and if the account had yet to go to a collections agency or been written off as debt.

A settled account can only affect a borrower's credit score for seven years under the Fair Credit Reporting Act. However, the credit bureaus weigh negative items less heavily as they go on. While any settled account hurts a score more than just about any other item, the effects become much weaker in the FICO scoring system after two years.

Consumers usually do not need a debt settlement and a debt settlement company may do more harm than good. Debt settlement companies often suggest purposely missing payments to make it look like the borrower is about to file bankruptcy and scare the lender into accepting something rather than nothing. Also, forgiven debt is taxable income. The tax implication could be far worse than the original debt, because unpaid taxes are nearly impossible to discharge and unpaid tax liens can stay on a credit report forever. Lenders usually have a hardship program, such as deferred payments, if the borrower warns the creditor of problems before the account is too delinquent.

Sources for Credit Score Repair

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Lenders rely on credit scores to determine your worthiness as a consumer. Your score is important when you finance a car or home, obtain insurance or apply for a job. Past credit missteps -- even those seven to 10 years ago -- and errors on your report will affect you financially if you don't repair your credit score. "There's no quick fix for creditworthiness," says the Federal Trade Commission; however, you can improve it legitimately with time and a conscious effort to manage and repay your personal debt.

Federal law empowers consumers to repair their own credit scores free of charge, according to the FTC. Under the Fair Credit Reporting Act (FCRA), you are entitled to a free annual credit report from the three major credit bureaus -- Experian, Transunion and Equifax. You are also entitled to a free report when a company takes "adverse action" against you, such as denying your credit application, says the FTC. Under the FCRA, both you and your collector are responsible for correcting outdated items or mistakes that affect your credit score. Credit reporting errors often occur because the report is incomplete, because the report is about someone else with a similar name or because of clerical errors, according to myFICO.com.

Inform the collector or company reporting the false information of the mistake or outdated item in writing and provide any supporting documentation. Ask the company to remove or delete the item from your file and send notices of the correction to anyone who requested your report within the past six months. You can also ask the company to send the revisions to anyone who received your credit report for employment purposes in the past two years.

A credit repair organization only comes in handy if you don't have the time or simply don't want to do the work of repairing your own credit score. A credit repair company can't do anything you can't do yourself. A legitimate company will advise you up front of your capabilities and rights by giving you a copy of the "Consumer Credit File Rights Under State and Federal Law," says the FTC. It must also provide you with a written contract that reiterates your rights and responsibilities as the consumer and give you three days to review the contract. it may charge fees, but never before the service is completed.

Beware of companies that claim to repair your credit score by removing negative information from your credit report, as the FTC says deleting accurate information is illegal. The FTC warns of these signs of a scam: a required up-front payment for repair services; no discussion of your rights as a consumer or your ability to make repairs yourself; asking you not to contact the credit bureaus; and trying to establish a new credit identity under an Employer Identification Number rather than your Social Security number.

Some mortgage brokerages or lenders have access to rapid rescoring services which expedite the credit-reporting process in as few as 72 hours. The resource is used by loan brokers or loan officers whose applicants' credit challenges hinder their mortgage qualification. The mortgage representative maintains an account with a credit-reporting service that provides your tri-merged FICO report. If the report contains erroneous or outdated information for which you you can provide documentation, the service can send the proof directly to Experian, Transunion or Equifax. The service verifies its validity, reports it to the bureaus -- with whom it has a special relationship -- and the bureaus update the credit report and generate a new score. Mortgage professionals may also have access to rescore preview software, which allows them to analyze the effect certain changes will have on your score. Each service is for a fee, approximately $30 per trade line, per bureau, says The Truth About Credit Cards.

Does a Settlement Clear Off Your Credit Report

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Settlements look bad on your credit reports. The Experian credit bureau warns that they are negative even though they show you negotiated a satisfactory repayment with a creditor or paid off an old bill. Eventually, settlements drop off your Experian, TransUnion and Equifax reports, and sometimes you can hasten the process or even get them converted to neutral or positive information.

A settlement is an agreement with a creditor or collection agency, which agrees to accept a certain amount of money as payment in full for a bill even though it is less than the original amount. The past due bill, charge-off or debt collection account on your Experian, TransUnion and Equifax credit reports changes to reflect this event when you pay the agreed-upon money to the creditor.

Settlements fall into the same category as most other negative credit report data, getting cleared away automatically after seven years. You may dispute a settlement if you find it on your credit reports after that reporting time. The Federal Trade Commission explains that annualcreditreport.com gives free annual reports if you wish to ensure that old data has been erased.

Prevent credit score problems by negotiating removal of a settlement from your credit reports before making the payment, Bankrate.com writer Steve Bucci advises. Lenders and debt collectors primarily want to get money from you, and it costs them nothing to stop reporting certain information to the credit bureaus. Ask for your account to reflect "paid as agreed" status, which is good for your credit score, or to be removed completely in exchange for your payment. Never send money until you get a written commitment to those terms. Order your Experian, TransUnion and Equifax reports through annualcreditreport.com a month or two after settling the account to be sure it is cleared from your records or changed to a positive entry.

Never agree to a settlement with a debt collector who is pursuing a bill that is beyond your state statute of limitations. Every state specifies a certain number of years during which creditors and collection agencies can sue you for a bill. They lose their power to legally force payment when that time expires, although the NOLO legal website warns that buyers of old debt try to trick you into settling. Do not acknowledge the bill, and never send money or make a settlement agreement or you might restart the statute.

Will Being Overdrawn at the Bank Affect My Credit?

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Between 2006 and 2008, over 50 million Americans had a negative checking account balance -- called being overdrawn -- according to the Center for Responsible Lending. In addition to penalties, overdrawing an account can damage your credit rating. Even if your credit rating stays intact, being overdrawn can hurt your chances at acquiring bank accounts in the future.

Overdrawing an account does not automatically damage your credit rating, because banks do not report banking history to the major credit reporting bureaus. However, if you ignore an account with non-sufficient funds, the bank can send the account to a collection agency, which will report the delinquency to the credit bureaus. The bank can also sue you, which will create a public judgment also picked up by the credit bureaus.

Even if an overdraft does not go to collections, overdrawing on an account usually goes on your ChexSystems report -- a parallel reporting system for banking history. Most banks run a ChexSystems report before approving you for an account. A single overdraft can cause a bank to deny you service. As of 2011, negative items on a ChexSystems report stay for five years, according to Don Taylor of Bankrate.

You might consider purchasing overdraft protection -- a small line of credit only used to cover a negative balance -- or the bank might offer this as a courtesy. Banks usually run a credit check before approving you for overdraft protection because it technically counts as a loan, so the bank incurs some risk. The inquiry for an overdraft line of credit does no more than five points of damage to your credit rating, but successive inquiries within the same year can do much more damage.

Reviewing your account before every transaction is the only way to guarantee that you do not overdraft. If you do overdraft, pay off the balance owed to the bank immediately, even if you have overdraft protection, as overdraft protection is still a loan that needs to be paid back. You can also link bank accounts at the same institution. If you overdraft because you do not earn enough money, look for ways to trim your budget, such as moving to a cheaper apartment.

How to Get a Quick Jump in Credit Score

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If you want to increase your credit score quickly, you have to know which items affect your score. Lenders use a credit score to assess the risk that you will default on a loan. Credit scores range from 300 to 850. A high score increases your chance of receiving favorable credit terms from a lender. The items with the most impact on your score are the amount of debt you have and how you pay it.

Instructions

Review your credit report to check the balances and credit limits. Look at each credit card account.

Calculate how much of your available credit you are using for each credit card. Credit reporting agencies consider all your accounts together to calculate an overall percentage of credit usage. For all credit cards, if the total usage is 30 percent or more of available credit, your score will decrease.

Pay your credit card balances down or off. Send in enough money for each credit card account to get the percentage of use below 30 percent. You can also choose to pay your accounts off in full. When the credit reporting agencies update your information you will see a jump in your score.

Make sure creditors receive your payments before the closing date on the bill. If your closing date is June 22, your balance at that point will be reported to the credit reporting agency. Credit card statements are mailed out on the day after the closing date (in this example statements go out June 23). If you pay down your credit cards on June 23, it will be another full month before the new balance information is reported to the credit reporting agencies.

How Does My Credit History Affect My Future Financial Plans?

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According to myFICO.com, "Credit scores give lenders a fast, objective measurement of your credit risk." Credit is composed of five areas: payment history, amounts owed, length of credit history, new credit and types of credit. Managing all aspects of credit is important to ensure you can purchase a vehicle or home when that time arrives.

Missing payments or making payments 30, 60 or 90 days late will lower a credit score. Payments made 60 to 90 days late can remain on a credit report for up to seven years. The more often a payment is late, the more damage is caused.

Making more than the minimum payment will help increase your credit rating. Maintaining a low balance on credit cards and paying loans down is beneficial.

Credit history is not factored solely by when an account was opened. Also considered is when credit was last utilized and the total debt to available credit. Keeping a credit card for 10 years, using it every six months and paying off that balance looks better than a stagnant card.

Applying for many types of credit in a short period damages credit. Shopping around for the best rates on a mortgage or vehicle loan within a 30- to 45-day time frame is considered just one inquiry. The more inquiries made to harness available credit, the more damage caused.

When lenders examine a credit report, variety is important. Maintaining one or two credit cards, a car loan and an educational loan show wise credit choices.

Learning about credit and how credit affects your ability to make large purchases later is wise. Knowing how credit scores are calculated and what lenders look for will help in making sound credit decisions. When in a position to purchase a house, finding the perfect home will be the only concern.

How to Send a Dispute Correspondence to TransUnion

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Your credit report tells your financial story to creditors deciding whether to lend you money, and---more and more---it may even be used by a potential employer deciding whether to hire you. With so much at stake, it is important to stay on top of your credit report and be sure that all the information on it is accurate.

TransUnion is one of three credit bureaus who record the information provided by your creditors and generate your credit report. From time to time, there may be an error in your report. Fortunately, you can dispute anything you feel is incorrect, and there are several ways to do so.

Instructions

Call TransUnion Customer Service toll free at 800-916-8800 and choose "Dispute item" from the automated system. You will be transferred to a customer service representative.

Record the date, time and name of the representative with whom you are disputing the item for your records.

Provide the representative with the details listed under the "Things You'll Need" section in this article when prompted. The representative will assist you in filing your dispute. You will receive notification via First Class mail of the results of TransUnion's investigation--usually within 30 to 45 days.

Launch the "TransUnion: Submit a Dispute" Web page and click "Online."

Click "First Time? Click Here." Or click "Returning? Click Here" if you already have a TransUnion login.

Enter the information listed under the "Things You'll Need" section of this article as prompted on the online form. Click "Next" to proceed through each screen and click "Submit" when finished.

Print or save the completed form for your records. You will receive notification via e-mail of the results of TransUnion's investigation--usually within 30 to 45 days.

Launch the "TransUnion: Submit a Dispute" Web page and click "Mail."

Download and print the "TransUnion Request for Investigation" form.

Complete and sign the form.

Scan or copy the completed, signed form and keep the copy for your records. You will receive notification via First Class mail of the results of TransUnion's investigation--usually within 30 to 45 days.

How to Cancel Free Credit Report Accounts

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FreeCreditReport.com is a subscription-based online service that will monitor your credit report with Equifax, Transunion, and Experian. FreeCreditReport.com will supply you with monthly credit reports which detail your credit score with the three agencies. These reports will keep you updated on reported payments to debtors and all open loan accounts. If any new loan accounts are opened using your social security number, FreeCreditReport.com will send you alerts in your email to combat fraud. FreeCreditReport.com accounts can be canceled at any time.

Instructions

Locate and note your Social Security Number.

Call 888-829-6560 to contact FreeCreditReport.com customer service.

Inform the customer service agent of your intent to cancel.

Provide your Social Security Number to the customer service agent when prompted. This will allow them to confirm your identity and pull up your FreeCreditReport.com account.

Answer any remaining questions the customer service agent may have. Once done they will process the cancellation for you.

How to Repair and Report Rent Payments to the Credit Bureau

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Consumer reporting for rental payments was not collected by credit rating agencies until 2011, when Experian acquired RentBureau. RentBureau is a network of 45 property companies with owners and managers who utilize its data in their property rental candidate selection, and in turn, report payment histories on a daily basis.

Rental payments are reported only by the property managers and owners. RentBureau does not accept consumer-reported payments. If a credit report reflects an inaccurate account of payments, it can be repaired by the consumer.

Instructions

Go online and obtain your credit report from each of the three credit reporting agencies: Experian, Equifax and Transunion. They all report rental payment histories, but Experian's is more comprehensive due to their acquisition of RentBureau. Review credit reports for reported rental payment history and reporting accuracy.

Write a letter to any credit agency with an inaccurate report, and provide the correct dates of your payments. Attach copies of cancelled checks and dated receipts for substantiation.

Submit your dispute online at each respective credit agency websites. Letters can also be sent with attachments through regular mail to Equifax and Transunion. Experian only accepts online disputes.

Follow up with credit bureaus after 30 days.

Soft Vs. Hard Credit Check

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Credit bureaus profit from collecting personal and financial information about you. They sell reports to banks and other creditors as well as to insurance firms and others who wish to check your credit worthiness. The bureaus also sell pre-screened data to marketers, and they charge you to receive copies of your own reports if you do not use the official free website, AnnualCreditReport.com. Credit checking is considered "soft" or "hard," depending on the purpose.

Credit checks occur when anyone, including you, checks your credit reports through the TransUnion, Experian or Equifax credit bureaus. Each bureau keeps and sells its own records, so a creditor may check one, two or all three reports. A credit inquiry is "hard" if it results from an application, the Lending Tree loan website explains. "Soft" checks result from marketer inquiries or reviewing your own reports.

Soft credit checks are harmless to your credit rating. Companies processing applications do not see them on your reports, and they are not included in credit score calculation. Hard inquiries lower your score, and lenders are less likely to extend credit to you if you have too many on your records. The MyFICO website explains that a single hard inquiry may not affect your score at all, but it can lower your score by up to five points depending on other items in your report. Six or more inquiries hurt your score significantly.

You generate a number of hard credit inquiries if you go loan shopping for a low interest rate. For example, you might fill out multiple applications while looking for a cheap car loan or mortgage rate, and your credit bureau files show every one of those inquiries. The MyFICO website notes that shopping around does not hurt your credit rating significantly, because scoring formulas take this common practice into consideration. Several inquiries for the same loan type within a few weeks count as just one credit check when your score is calculated.

Neither soft nor hard credit checks stay on your credit reports forever. The Equifax credit bureau explains that they automatically get erased within two years. The hard inquiries no longer damage your credit rating once they are gone. Check your credit reports yearly by obtaining free copies of your reports from AnnualCreditReport.com to make sure outdated credit checks no longer show up. The Federal Trade Commission website explains that you have a right to dispute mistakes, including outdated entries, with TransUnion, Experian and Equifax. They are legally obligated to remove disputed data if it is past the allowable reporting time.

The Fair Credit Reporting Act of 2005

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Creditors typically pull a consumer's credit report when the consumer requests a loan, credit card or line of credit. Since creditors use this information to determine a consumer's creditworthiness, it is important that credit reports are accurate. The Fair Credit Reporting Act, initially passed into law in 1970 and updated through 2010, ensures that creditors report accurate information, credit bureaus protect a consumer's privacy and consumers have the right to know what is in their credit report.

A consumer's credit report can contain details of his credit history, including open and closed credit accounts, payment history and amount of debt owed. Credit reports can also contain information about adverse actions taken against a consumer, such as collection accounts, judgments and liens. Information about bankruptcy cases is also reported. Typically, the credit bureaus can report this information for seven years, or 10 years in the case of bankruptcy. Older information must be deleted from a credit report.

Creditors, financial institutions and other parties have limited access to a consumer's credit report under the Fair Credit Reporting Act. Generally, a creditor can only request a copy of a consumer's credit report if it intends to do business with the consumer. Employers can request a copy of an employee's credit report if the employee gives her employer written permission to do so. State and local child support agencies can also request a credit report.

Consumers have the right to request a copy of their credit report and their credit score from the credit bureaus any time. If a creditor denies a consumer credit, the creditor must supply the consumer with a written letter stating why the application was denied and information on how the consumer can obtain a free copy of his credit report. If the consumer finds inaccurate information in his credit report, he has the right to dispute the information with the credit bureau. The credit bureau must investigate all consumer claims within 30 days.

Active duty military personal have different rights under the Fair Credit Reporting Act. For example, an active duty military officer can request that an Active Duty Alert be placed on his credit file. The credit bureaus must notify any creditor requesting the officer's report about the alert for at least 12 months, according to the Federal Trade Commission. The credit bureaus must also exclude anyone with an Active Duty Alert from pre-approval credit offers.

Does Requesting an Increase in Credit Line Affect My Score?

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Credit scores, or FICO scores, are three-digit numbers between 300 and 850. These scores show lenders a borrower's borrowing behavior and credit-management skills. FICO scores of more than 700 are considered "very good," and scores of less than 600 "indicate high risk," according to the Consumer Federation of America. Many factors, such as amount of debt, number of accounts, judgments, credit line increases (and decreases), and credit inquiries affect the credit score.

There are two main types of credit inquiries: hard credit inquiries and soft credit inquiries. Soft credit inquiries are triggered by a consumer checking her own credit report. The federal government requires that all U.S. citizens have free access to their credit reports through AnnualCreditReport.com. Accessing a credit report at this site will trigger a soft report. A hard inquiry is generated by any lender who checks a borrower's report for the purposes of rendering a credit decision.

Soft credit scores do not affect a credit report at all. Customers can pull these monthly, in needed. Credit monitoring is essential for financial health, and the passage of the Fair Credit Reporting Act was designed partly to help customers more easily manage credit reports.

However, hard inquiries do affect credit scores. One or two hard inquiries are not a problem. But excessive inquiries (more than six over a six-month period) will begin to lower a FICO score.

Credit-line increases are not technically loan applications. Borrowers usually need not fill out paperwork or submit income documents to request a credit-line increases. However, in most cases, lenders must pull a new hard credit report to render a decision on requests for credit-line increases. Lenders are required to disclose this. Therefore, a request for a credit-line increase should be treated as a loan application. If borrowers have many credit inquiries, they should think twice before requesting an increase.

There are three major credit bureaus--TransUnion, Equifax and Experian. Although there are subtle differences between these three agencies, they all generally follow the same credit scoring method.

Credit reports, more than anything, show trends. These trends can lead to predictions. One of these trends is deteriorating credit. Lenders will deem a borrower's credit "deteriorating" if he has recent past-due payments, recent collections and many credit inquiries. Excessive inquiries tell lenders that a borrower is desperately trying to obtain credit.

However, the benefit of requesting a credit-line increase can outweigh the potential negative consequences of the credit inquiry. For example, say a consumer has a balance of $1,800 on a credit card with a $2,000 limit. This is a high balance percentage--another factor than could decrease a FICO score. A credit inquiry could lower the FICO score, but if the increase is granted, it will bring the total utilization on the credit card much lower. This will help the FICO score.

What Is the Cutoff With Having Bad Credit to Get Loans?

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People get loans all the time with bad credit and some without any credit at all. The vast majority of loans available to people with bad or no credit are highly undesirable and sometimes predatory. If you have bad credit, adding more debt to your profile is usually a negative for your credit profile, so try to pay down existing debt instead.

There is no cutoff point where lenders refuse to approve a loan because of a low credit score. Lenders are free to extend credit to whomever they please. Theoretically, you can get a loan with the lowest score in the Fair Isaac risk model (FICO) -- a 300. In general, however, most lenders consider 620 the break point between good and bad credit according to the Bargaineering website.

Some lenders cater to the bad credit demographic. These are often called sub-prime lenders. Sub-prime lenders make up for the much higher risk of their borrowers by charging higher interest rates. Bad credit borrowers usually pay several percentage points more on any loan. This could wind up being an extra $100,000 on a large loan like a mortgage.

An even riskier credit industry exists that caters to people with no credit or the worst of the worst credit scores -- payday loans. These lenders rarely perform a credit check because they expect most of their customers to have terrible credit. Instead of a credit check, payday lenders require a postdated check or bank account information. Payday loans are usually only for a short time, so annual percentage rates can get over 300 percent. A few federal government programs offer bad credit loans at reasonable rates. The Federal Housing Administration, for instance, backs loans that a normal lender would not approve. In 2011, borrowers only need a score of 500 to qualify for an FHA loan.

The high cost of bad credit makes it worthwhile to clean up your credit before applying for a loan. If you pay down credit card debt, starting with the balance that has the highest APR, you will have more monthly income available to pay debt faster or for other expenses. Once you eliminate most of your dates and pay every bill on time for several months, your score should see an immediate boost. You might even be able to qualify for a loan with the best rates in a year or two.

Credit Scores That Will Allow You to Obtain Credit Cards

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Credit scores play a major role in your ability to get a credit card, and to obtain low interest rates on them. The score you need to get a credit card varies widely, as lenders have different criteria for credit card approval. In general, the higher you can get your credit score, the easier it will be to get a credit card.

One of the most commonly used credit scores, the FICO score, ranges from between 300 and 850. The median credit score in the United States is about 725, according to the 2004 "Frontline" report "The Secret History of the Credit Card," and creditors consider borrowers with a credit score of 770 or above as the safest and least likeliest to default on a loan. If your score is 770 or higher, you are practically guaranteed a credit card, and one with very competitive rates.

The Federal Citizen's Information Center, or FCIC, reports that a credit score if 700 or above is generally considered good credit. Borrowers with a 700 credit score face few challenges receiving a credit card. Credit card companies may freely offer credit cards to consumers with scores as low as 620, though the cut-off between good and bad credit is often somewhere in the mid or low 600's, depending on the lender.

Borrowers with credit scores below the mid-600's are generally considered high-risk or "subprime" borrowers. These borrowers face the hardest prospects for receiving credit. Many borrowers with low credit scores may only be able to get a secured credit card, one that requires the borrower to provide a security deposit or other form of collateral. Unsecured credit cards do not require a security deposit, but they do require better credit scores.

While a good credit score will make it much easier to get a credit card than a bad score, your credit score isn't the only factor creditors consider when determining if your credit application gets approved. Creditors typically ask about your income when you apply for a credit card. Even if you have a nearly perfect credit score, having no income makes it nearly impossible to get a credit card.

Does a Negative Checking Account Hurt Your Credit Score?

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Irresponsible financial behavior -- such as missed payments to creditors or a defaulted debt -- hurts your credit score. The lower your credit score falls, the harder it is to obtain new credit. A simple miscalculation and the resulting overdraft fees can leave you owing a negative balance on your checking account. Fortunately, overdrawing your checking account once or twice doesn't hurt your credit score.

Although banks hold reporting contracts with the credit bureaus to report consumer loans and lines of credit, banks do not report the status of your checking account. Not only is the amount you hold in your checking account private, but checking accounts are a method by which you store your own money -- and thus not a reliable way for lenders to determine if you are likely to repay money they lend to you.

When your checking account reflects a negative balance, that means you spent more than your account contained. The bank covers this amount -- often charging you a fee for the service -- and expects you to repay the debt as soon as possible. Provided you pay off what you owe, you won't suffer a credit penalty.

When you deposit money into an overdrawn checking account, the bank automatically applies the money to the negative balance in your account. Provided you deposit more than you owe, the simple act of making a deposit brings your checking account current again. Leave your overdraft unpaid, however, and the bank will eventually give up on you paying off the negative balance and sell your debt to a collection agency.

Unlike a checking account, a collection account will appear on your credit report and factor into your overall credit score. A collection agency's report to the credit bureaus is always derogatory. Thus, an overdraft won't hurt you if you pay if off, but if you ignore the debt, it will damage your credit score.

ChexSystems is a consumer reporting agency that keeps track of debts consumer owe in connection with irresponsible banking. If, for example, your bank closes your unpaid negative account and sells it to a collection agency, it will also report the debt directly to ChexSystems, where it will remain for five years. Banks routinely check ChexSystems before granting new checking accounts to consumers to weed out individuals who owe debts to other banks. Although ChexSystems is a consumer reporting agency by law, it does not assign consumers a credit score.

According to the Federal Reserve Board, you have the option to request that your bank not cover your overdrafts. Should you attempt to spend more than you currently have in your checking account, the merchant will decline your debit card. While the situation may prove embarrassing, it protects you from a negative checking account balance and the steep overdraft fees certain banks charge for providing overdraft protection.

What Credit Scores Are Good?

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Knowing your credit score can be an important consideration in trying to get a loan. The higher your score, the more likely it is that you'll get a loan at the best possible rate. Having a low score means some lenders will not loan you money, or if they do, they'll charge you a higher percentage than someone with a better score.

In today's society, having a good credit score is important. Business is conducted electronically, and accessing information is a commonplace occurrence. Some businesses will base a hiring decision on your credit score, and attempting to make any kind of large purchase without having a good credit score can cost you thousands of dollars in paying an increased interest rate. Before you can get a mortgage loan or lease a car or rent an apartment, you should know your credit score is going to be examined.

There is no one right answer when it comes to what makes a "good" credit number. Different lenders have different numbers. In addition, as economic conditions change, the idea of what makes a good credit score number changes, as well. In 2009, according to Steve Ely of Equifax, one of the three major credit reporting companies, a "good" credit score is 720, while "very good" can range from 725 to 759, and everything above 760 can be considered "excellent." These numbers can change depending upon the economy. In addition, different companies have different scoring systems. When a credit score is given to a mortgage lender, different criteria are examined as opposed to when it is given to a consumer checking his credit score. The mortgage lender usually requires more in-depth numerical data than the individual does.

There are ways to improve your credit score. Whenever you pay off a debt or lower your balance on your credit cards, this directly affects your credit score. For example, when you keep your balance on your credit cards under 50 percent of your credit limit, your score will be lower than if you maintain a high balance. When you decide to get rid of a credit card, don't close out the older card. Instead, shut down the newer one. Part of credit scoring is factoring in how long a credit account has been open. The longer it's been open, the better your score. If there are any outstanding debts owed, pay them off as soon as you can. Also, if you're looking to get your score higher, don't try to get any more credit cards. Whenever you try to get a credit card, that counts against you.

Although it is helpful to know your credit score, lenders do not have to tell you what score they require to do business with you. So, even though you might have a score of 750, a company that wants to only lend credit to someone with a score of 760 or higher isn't required to do business with you, nor do they have to tell you their scoring requirements.

Georgia Credit Report Laws

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Federal laws, such as the Fair Credit Reporting Act (FCRA), and state codes govern credit reporting rights for Georgia citizens. Credit reports contain information about whether or not an adult pays his bills on time and can impact companies' decisions about granting credit card accounts, housing, vehicle loans and, in some cases, employment. Other types of personal information, such as any criminal history, are also reflected on credit reports.

If you filed Chapter 13 bankruptcy, partially repaid your debts under credit counseling, didn't pay a bill on time or failed to pay it entirely, then this type of information will negatively impact your credit rating for seven years, warns the state of Georgia's website. Other types of negative credit events, such as a lost lawsuit, tax lien or Chapter 7 bankruptcy, report to your credit profile for 10 years from the date of the event. If you pay all of your bills on time and keep the accounts open, then the resulting positive payment history reports indefinitely; once an account is closed, the on-time payments report for 10 years, notes the credit bureau Experian.

Starting in 2005, all Georgia residents were entitled to obtain one free credit report from the Federal Trade Commission each year from the three major credit bureaus: Equifax, Experian and TransUnion. Each adult requesting his credit report must prove his identity by answering multiple-choice questions about credit accounts and past addresses or providing a valid government-issued photo ID.

Some people choose to place security freezes on their credit reports to protect themselves against identity theft, notes the attorney general of Georgia. Once a security freeze is placed, potential creditors cannot view the report or grant new accounts without verifying the applicant's identity. Georgia residents can request security freezes online, over the telephone or through postal mail. As of 2011, it costs $9 to place a security freeze with all three major credit bureaus.

Sometimes credit reports have errors due to computer issues or identity theft, according to the state of Georgia. The FCRA and state laws allow citizens to demand an investigation into any inaccurate credit report information. The credit bureau then has 30 days to either prove the validity of the reported information or remove it. In the event that inaccurate information is not removed from a consumer's credit report, that person has the right to sue the credit reporting agency and/or the creditor reporting the incorrect information.

How Long Do Adverse Accounts Stay on a Credit Report?

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An adverse account is any item that appears on your credit report that is considered derogatory by the lenders that pull your credit for review. Adverse accounts lower your credit score.

Adverse accounts are categorized as either derogatory accounts, such as unpaid debts, or public records, such as bankruptcies.

Charge offs, collection accounts, foreclosures and judgments can appear within your credit file for 7 years. Bankruptcies, however, can appear on a credit report for up to 10 years.

The Fair Credit Reporting Act gives you the right to contest any adverse information that you believe is appearing on your credit report in error and request its immediate removal.

An adverse account may not appear on all three of your credit reports. Which credit reports reflect the account depends upon the creditor's membership in each credit bureau's reporting program.

As long as an adverse account appears on your credit report, you will be considered a higher lending risk. This may result in you paying higher interest rates on credit cards and loans.

How to Find Out Your Credit

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You can find out about your credit by reviewing your credit reports. Your credit reports will provide your credit scores from the three nationwide credit bureaus -- TransUnion, Equifax and Experian. The reports will show the current status of your accounts, and other information including public records such as liens, judgments, bankruptcies or foreclosures.

Instructions

Get your credit reports for free from the website Annual Credit Report. The website was created by TransUnion, Experian and Equifax to provide you with one free copy of your report every 12 months, from each of the bureaus, as required by federal law. Visit the website or call 877-322-8228 to get your free reports. On the website, click on the menu tab "Request Report" and follow the prompt to instantly view and print your reports.

Review your reports after receiving them online or by standard mail. Check the reports for correctness and dispute any errors by writing the individual credit card companies at the address listed on the credit reports. Or enter disputes online by finding the "Disputes" menu tab.

Visit a nonprofit credit counseling service if you feel your credit is bad and you need help getting back on track. Nonprofit agencies such as Consumer Credit Counseling Service are not credit-repair firms and won't promise to fix your problems overnight. But they can provide financial literacy classes, help with budgeting, and more. Most of the services are free. Check your telephone directory for an agency in your area, or seek referrals from community organizations such as the United Way or Salvation Army.

How to Improve Your Credit Score After an Eviction

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An eviction may or may not damage your credit report. It all depends on how your landlord handled the situation. Some landlords will not take any action against you if they can rent out your unit in a reasonable amount of time. A landlord could purse legal action in a court of law and win a judgment. This process will be damaging to your credit history. If your credit report is damaged, there are some things you can do to improve your score.

Instructions

Pay all of your debts on time right now and in the future. When you pay on time, it helps to boost your credit score. Approximately 35 percent of your credit score is derived from your pay history. Also, pay down your other debts. When you pay off other debt,s it helps to lower your credit usage, which in turn helps improve your credit score.

Wait a while. If your landlord had a judgment placed on your credit file, initially your credit score will decrease. The longer the judgment is on your credit file the less of a negative impact it has. After two or three years, you will see the negative impact of the judgment lessen. Your other credit accounts will contribute more of a positive effect on your credit file. After seven years, the judgment will fall from your credit file. When you reach the five- or six-year mark the damaging effect will be minimal.

Negotiate with the landlord. When you were evicted, you probably were not in a good financial situation; however, if things change, you may be able to negotiate with your ex-landlord regarding the judgment amount. As part of your agreement to pay he must have the derogatory information removed from your file.

Don't apply for any new credit. Those credit inquiries can help to bring down your credit score. This is especially true if you incur a lot of inquiries in a short period of time, such as seven or eight inquiries in 30 days. Also note that inquiries fall from your credit file in two years. Unfortunately, if you have to apply to rent another apartment at several complexes, it will damage your credit score. When a prospective landlord sees an eviction, they most likely will not rent to you. Any prospective landlord that looks at your credit report will see all of the previous inquiries; if you have applied elsewhere, they may assume that you were probably rejected as a tenant elsewhere.

Order a free copy of your credit report and check for any errors. If there are items that should not be on your credit report, you can contact the credit reporting agency to have them removed through their dispute process. Any derogatory information reported on your credit report that is not yours can still hurt your credit score.

Don't close out your older accounts. The length of your credit file contributes to your credit score. The longer you have been on file with the credit reporting agencies, the better. Suppose you only have two accounts on your credit file and one is 10 years old and the other five years old. If you close out the account that is 10 years old, your score will be reduced. Now it looks as if your credit file is only five years old instead of 10.

How to Dispute Incorrect Information On Your Credit Report

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The Fair Credit Reporting Act (FCRA) provides U.S. consumers with the ability to receive a free credit report once every 12 months from each of the three nationwide consumer reporting companies, Experian, Equifax and Transunion. When you find erroneous or incorrect information on a credit report from any of these companies, you can file a dispute online at the company's website through a step-by-step form-completion process. However, you can also file a dispute via postal mail. The Federal Trade Commission (FTC) provides basic directions for consumers who wish to start a dispute in this manner.

Instructions

Make a photocopy of your entire credit report. If you have multiple reports, photocopy the report featuring the incorrect information.

Circle the accounts or data you believe are incorrect on the photocopied credit report.

Type or write the date, your name and your address at the top of your letter. Follow this with the address of the complaint department for the company whose credit report you are disputing. For example, if you are disputing information presented on your Experian report, type in the address of Experian's complaint department as it was provided to you within your credit report.

Type a salutation. Explain in your first sentence that you wish to dispute information presented in your credit report. Specify the report number printed at the top of your credit report here in case your credit report and cover letter become separated.

Specify the item or items you wish to dispute within your report in the second paragraph. Include all identifying information, such as a creditor's name, the account number, the amount of funds reported and the account type. If you want to correct an error such as a misspelled name or an erroneous address, specify that information here.

State why you believe the items you are disputing are incorrect, and specify whether you need the items to be corrected on your report or removed entirely.

State any additional items you are enclosing within the letter in your third paragraph. You should enclose copies of any documentation you have supporting your statements regarding the incorrect entry, such as court papers and payment records from an account holder. Explain how the enclosed documents verify the statements you made regarding the inaccuracy found in your credit report.

Close your letter and leave space for signing your name beneath the closing.

List enclosed documents beneath the space for your name. List your credit report and any additional supporting papers enclosed. Specify the number of pages that each listed enclosure consists of, such as "Credit report: 12 pages."

Print your letter if it was typed and sign your name. Place the letter and all necessary supporting documents within an envelope.

Mail your letter at a postal counter or with metered postage to ensure enough postage is paid to post the letter. Use certified mail with a return receipt to verify delivery of your paperwork. The return receipt is signed by a representative of the reporting agency and returned to you via postal mail.

How to Improve a Bad Credit Score Quickly

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Too much bad credit can make it very hard to get a loan on a car or even get a credit card. It is always good to improve your credit score and that way you can get a loan at a good interest rate. There is ways of getting a no credit or bad credit loan but the negative thing is you will have to pay a much higher interest rate and it will cost you a lot more money over the life of the loan.

Instructions

There are some great ways to improve your credit score and we are going to give you some of the top tips so you can get on your way to having a great credit score.

First what you need to do is to obtain your credit report form the main three credit reporting agencies. All of these agencies Equifax, Tansunion and Experian allow you one free credit report a year so there will be no problem getting free one.

It is important that when you get your credit report that you go through it and check for any errors you may have. It is important that you dispute all things that you feel are not correct on your credit report. The reporting agency is responsible to determine whether the error is correct or not and if they can not within a 30 day period then they are required to remove the negative item from your report.

Remember that having a good credit score is very important to you with getting a job and getting a loan. It is up to you to dispute the errors and get them off of your report so that you can improve your credit score.

In Texas, Can I Have a Civil Judgment Removed From My Credit Report If I Settle the Debt?

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Getting taken to court is never a pleasant experience, but losing a creditor lawsuit can have far-reaching effects that take place beyond the courtroom. Any time a creditor sues you and wins, that information gets included on your credit report, and can negatively affect your credit score. In Texas, as in all other states, credit reports are governed by the Fair Credit Reporting Act, a federal law that applies across the nation.

A credit report is a detailed account of each individual person's history in using various forms of credit. There are three main companies that create consumer credit reports in the United States: Experian, TransUnion and Equifax. Each of these companies maintains detailed information about how you have used credit in the past, and includes such details as your payment history, the amount of money you currently owe and whether you've been sued for failure to pay back your debts.

A civil judgment is what happens once a civil court determines the outcome of the lawsuit. For example, if you fail to pay back your credit card debt and your credit card company sues you in court, you may face a civil judgment. Once the credit card company sues you and wins its case, the court grants the company a judgment stating exactly how much you have to pay. Typically, that judgment is listed as a negative on your credit report.

Under the terms of the Fair Credit Reporting Act, or FCRA, you can typically only remove erroneous or inaccurate information from your credit report. Otherwise, negative information must remain on your report for at least seven years after the date upon which the negative event occurred. If, for example, you lose a lawsuit and the court renders its judgment on July 1, 2011, you cannot generally have that information removed until July 1, 2018.

Some financial advisers, such as John Ulzheimer of SmartCredit.com, state that some lenders may be willing to remove negative credit information from your credit report in certain situations. These "goodwill adjustments" typically happen for borrowers who, for example, miss a single payment or do some other relatively harmless action that negatively impacts their credit report. However, a judgment is a major negative on your report, and lenders are unlikely, and may even be unable, to remove such information.

How to View a Credit Report

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There are many reasons to view your credit report. One of the most important is to verify that your identity has not been stolen and your credit report is accurate. You can view your credit report online or order it in the mail. Credit reports may be viewed free annually, by paying for each separately or ordering a 3-in-1 credit bureau report or by ordering credit-monitoring services. You also may view your report by initiating a dispute online.

Instructions

View your annual free credit report at annualcreditreport.com. This website is managed by all three credit bureaus, Experian, Equifax and TransUnion, and provides consumers with free access to their credit reports once a year. Enter the requested personal information.You also will be required to answer a security question about your past financial history, such as "What bank did you take out a car loan with in 1995?" You will be able to view one credit bureau's report at a time. Make sure you print your report because you will not be able to review it again without paying. You may write your request for your free annual credit reports. If requesting by mail, make sure to write or type your personal information and send to:

Annual Credit Report Request Service
P.O. Box 105281
Atlanta, Georgia 30348-5281
1-877-322-8228

Order your credit report directly from the credit bureaus. All three credit bureaus will sell you your credit report for a fee. Experian and Equifax charge a flat rate. TransUnion does not sell individual credit reports without the purchase of other products such as credit monitoring. All three credit bureaus will sell you your report cheaper if you order other products such as their credit-monitoring services. All will sell you a 3-Credit Bureau, or 3-in-1 Online Report, for $29.95 or more depending on the bureau. You can opt to have your credit report sent to you by mail or view and print it online. You must enter your personal information and enter your credit or debit card details to process your order.

View your credit report through a third-party vendor such as FreeCreditReport, Credit and myFico. Many of these vendors, with the exception of myFico, will allow you to view your credit report in exchange for purchasing or signing up for a free trial of their credit-monitoring service. MyFico is the official website of the Fair Issac Corporation (FICO).

Check your record carefully to determine if you need to dispute an entry on your credit report. To initiate a dispute with any of the credit bureaus, go directly to the bureau's website and select the Dispute option. The bureau will give you access to your report so you can select the entry you would like to dispute. You can change your mind at any time and select not to dispute.

How to Fix a Poor Credit Report to Raise it to a Plus Score

6:32 PM No comments

Fixing up your credit reports so that a poor credit score becomes a plus or positive score is not very difficult. It is actually something that you can do on your very own without the assistance of a third party or outside source that will charge you hefty fees. However, it will require some time and money, and then after that some time for the credit reports to update at all three credit bureaus.

Instructions

Order a credit report from Equifax, Experian and TransUnion if you have already used your one free annual credit report. Locate every creditor on every credit report that shows 30-days late. Write a brief letter to each creditor explaining what took place that year and ask for forgiveness in the form of a never late.

Pay credit card balances, as an example, down to at least 15 percent to 30 percent of the entire credit card balance if you are still using the credit card. Pay balances down also on credit cards that have a positive rating even if they are not used. Remember, don't close out these accounts, keep the balances paid low or paid off and let them continue to age.

Pay debt off or down rather than shuffling the debt from one credit card to another or from one type of loan (unsecured loan) to another type of loan (secured loan). Don't shuffle because you can't make the due date etc. Pay the minimum amount due before or on the due date.

Order your credit reports from all three credit bureaus every six months rather than only once a year if you have a major purchase that you'll need to make in the next year or two. Major credit report cleanups will require you keeping close watch to ensure that creditors do not reenter any negative notation once they've agreed upon a positive notation.

Stop judgments, collections, repossessions, bankruptcies and other major negative notations from entering on your credit reports by negotiating with your creditors. Most creditors would rather have at least some of their money rather than chasing you or having to take you to court to regroup some of their money. Make payment arrangements or negotiate for a clean credit record in exchange for paying at least 60 percent of the balance.

Will Breaking a Lease Affect My Credit in Georgia?

11:31 PM No comments

Breaking a lease in any state has the potential to damage your credit in any state, even in Georgia. Whether a lease goes on your credit report depends on the type of property that you lease and how you break it. You may be able to legally break a lease, meaning the creditor cannot come after you for rent or report it to the credit bureaus.

Your credit report follows you around wherever you live, because three major credit reporting bureaus handle the majority of consumer credit reporting in the United States. The type of lease you have has an impact on whether the lender can even report it to the national credit bureaus. Auto dealers usually report leases to the credit reporting agencies, so breaking it almost always negatively affects your credit report. Apartment leases, rarely appear on a credit report, because most landlords cannot afford to subscribe to the national credit bureaus and do not have enough accounts to qualify as a creditor for the national reporting bureaus. However, one of the major credit reporting bureaus in the United States, Experian, lists leases on credit reports if the landlord reports to the rental history agency RentBureau.

A creditor or lessor may be able to damage your credit even if it cannot directly report your lease violation to the credit bureaus. If the creditor files a lawsuit, for instance, the credit bureaus probably will report to outcome eventually, because they scour public databases for civil judgments. Alternatively, if the creditor sells the debt, the debt collector may report the account to the credit bureaus. Both are significant negative events in your credit history.

Look at the details of your contact for ways to break the lease legally. Many landlords allow you to terminate the lease for a fee, which might include the remaining rent on the lease and cleanup costs. You always have the option of trading the lease with someone else, such as when both parties want to swap cars, or a sublease agreement in the case of an apartment. In Georgia, the landlord must keep the dwelling up to code and perform any services promised in the lease agreement. If the landlord violates any of these provisions, you might be able to break the lease without any consequences. However, you usually have to give a 30-day notice of your intent to vacate the property.

Breaking a lease without the landlord or creditor's consent is a risky option, so it is wiser and more responsible to ask the lessor how to terminate the lease. The lender may accept a small buyout if it means avoiding the hassles of evicting you or taking your property. You also want to avoid an eviction going on your tenant history. Landlords often report to companies that collect rental data. While rental histories rarely appear on a credit report, a poor tenant history report might prevent you from renting an apartment in the state of Georgia.

How to Pull a Credit History

12:08 PM No comments

With the advent of the Internet, pulling credit history is easier than ever. Accessing these personal records only requires that you provide a minimum amount of personal information, including a Social Security number, for identity verification. Credit history can be instantly obtained from Equifax, TransUnion and Experian three of the biggest credit monitoring companies in the United States. It only takes about three minutes to obtain a full, itemized credit history report.

Instructions

Go to a reputable, online credit reporting bureau. (See Resources for list of credit reporting bureaus.)

Select the link option that redirects you to the personal information data forms. This particular link should read, "Get Credit Report Now" or "View Free Credit Report."

Fill out the blank data forms in the order form table by typing in your personal information, such as your name, address and phone number.

Click the "Continue" action at the bottom of the blank data forms' table.

Enter your Social Security number, date of birth and credit card information on the second page to finish the personal data information section.

Click the "Submit" action at the bottom of the table.

Answer the verification questions correctly to complete the identity verification portion of the application prior to viewing the credit history report.

Opt to save the credit history report to your hard drive, once it is displayed at the end of the verification process.

Credit Rating Methodology

5:54 AM No comments

Your credit score, is an important number. It determines whether you qualify for credit, and if so, what interest you will pay for borrowing money. Your credit rating is based on your credit history, which is stored under your Social Security number. Three different bureaus keep a "credit report" on you, which is a record of all of your credit transactions. These three bureaus are Transunion, Equifax and Experian. These credit bureaus use this credit history information to determine your credit rating, or FICO score.

Your credit score is based on a formula created by the Fair Isaac Corporation, so it often is referred to as your FICO score. A number of different components go into the methodology of determining your credit rating. The basic methodology is as follows: 35 percent of your score is determined by your payment history, 30 percent by the amount you owe, 15 percent by how long you've had credit, 10 percent by how much credit you apply for and 10 percent based on your different types of credit.

The methodology for determining your payment history takes into consideration more than just your payments. It is true that this section of your credit score is partially determined by whether you have ever made a late payment. Late payments are grouped into three categories; 30 days late, 60 days late and 90 days late. Even one late payment can adversely impact on your credit score. However, this section also takes other things into account. Bankruptcies and judgments against you are listed under payment history, as are short sales or settling debt for less than you owe. All of these things lower your credit score, and bankruptcies and foreclosures in particular can have an adverse impact on your credit rating for up to 10 years.

There is a somewhat complex methodology used to determine the portion of your credit score based on how much you owe. First, the creditors consider your debt-to-income ratio. The more money you make, the more you can borrow without lowering your credit rating. Second, creditors look at how much of your available credit you use. This is called your debt-to-credit ratio. A lower debt-to-credit ratio is better. This means that you will have a higher credit rating if you have two cards, each with a $100 limit and a $50 balance, than if you have one card with a $100 limit and a $100 balance.

New credit plays a dual role in the methodology of your credit rating. First, every time you apply for a new credit card or loan, the creditor looks up your credit report. This process, called a "hard pull," shows up as inquiry on your credit report. Too many inquiries can lower your credit rating, because it makes creditors believe you are living beyond your means and/or borrowing more than you will be able to pay back. Second, when you apply for a new loan, it lowers the average age of your credit. This factor is responsible for 15 percent of your FICO score.

The final component in the credit rating methodology considers types of credit. There are two major types of debt: secured debt and unsecured debt. Secured debt refers to debt that is secured or guaranteed by collateral; in other words, if you don't pay, the bank can take the thing that you borrowed the money to buy. Mortgage debt and car debt are examples of secured debt. Unsecured debt refers to credit card debt. Your credit rating will be higher if you have a mix of many different types of debt, than if you have only one type of debt.

Saturday, July 31, 2004

Credit Score Calculation

Creditor Impact

Planning Ahead

Get the Job Done Faster

Wednesday, July 28, 2004

Loans

Deposit Accounts

Other Reports

Other Considerations

Scoring Models

Credit Scores

Payment Plans

Considerations

Tuesday, July 27, 2004

Your Credit Report

Profit and Loss Charge-offs

Resolving Bad Debt

Resolving Profit and Loss Charge-offs

Obtaining a Good Credit Score

Ability to Pay

Bottom Line

Monday, July 26, 2004

Instructions

Opening an Account

Misconceptions

Warning

Considerations

Your Credit Report

Strategies

Cautions

Conclusion

Sunday, July 25, 2004

Use

Hard Background Check

Soft Background Check

Effects

Time Frame

Friday, July 23, 2004

Considerations

Maximum Points it Can Cost

Time Frame

Tip

You

Credit Repair Organizations

Mortgage Professionals

Wednesday, July 21, 2004

Definition

Time Frame

Prevention

Warning

Tuesday, July 20, 2004

Identification

ChexSystems

Overdraft Protection

Tip

Instructions

Friday, July 16, 2004

Payment History

Amounts Owed

Length of Credit History

New Credit

Types of Credit

Future Plans

Instructions

Telephone

Online

Mail

Tuesday, July 13, 2004

Instructions

Instructions

Obtain Copies of Your Credit Reports

Monday, July 12, 2004

Definition

Effects

Considerations

Reporting Time

Sunday, July 11, 2004

Information in a Credit Report

Disclosing a Credit Report