January 2006 ~ Personal Finance and Money Management

Sunday, January 29, 2006

How to Cancel Your Credit Report Trial

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Many credit reporting agencies offer free trials for new customers. The free trial lasts anywhere from seven to 30 days and includes a free copy of your credit report and sometimes additional services, such as real-time protection. After the free trial expires, the company automatically bills your credit card the monthly fee for the service. To avoid the expense, you need to cancel your free trial before it ends. Most agencies require users to call and cancel the service.

Instructions

Look for and click on the "Contact us" button. It is usually at the bottom of any page. Look for the phone number on the "Contact us" page and call that number.

Press the menu button that transfers you to a customer service agent. If you are not given the option to speak to an agent, select the "Account questions" option or something similar. You will eventually be transferred to an agent. If you can say an option, say "Agent."

Provide the agent with your personal information when asked. Credit reporting agencies always need your name and Social Security number before canceling or changing your account. Some also ask for your primary residence and the credit report number, which is on your online "Account" page.

Tell the agent you wish to cancel your free trial account. The agent will likely attempt to persuade you to stay and may even extend the free trial. If you still want to cancel, decline the offer. Once your account is canceled, the agent should tell you to write down a confirmation number. If he does not, ask him for the number. You should also be sent an email with the confirmation number.

Does Paying Off a Car Loan Improve Your Credit Score?

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Paying off a car loan is an achievement to be proud of. Not only do you finally own your car, but paying off any loan does a great service to your future buying power. The prime benefits to your credit score come not from paying off the loan itself, but from the payment history of the loan and the successful management of installment debt that your credit report will display for many years to come.

To maximize your credit score, you should have a firm grasp of the types of debt that exist and how a good balance of each can increase your future buying power. Payments you make on a car loan are considered to be installment debt. Installment debt is a debt of a set amount that you pay in regular installments. The other most common type of debt is revolving debt, in which you make payments on debts you accrue over time. These debts do not have a set payoff date. Carrying both installment and revolving debt on your credit report makes you more of a well-rounded borrower when your report is reviewed by a lender. It also accounts for 10 percent of your score.

Your payment history on a car loan affects your credit score to a greater degree than actually paying off the loan itself. Every time you make a payment on an installment debt that is not over 30 days late, you receive a positive notation for that payment on your credit report. Although paying off a car loan certainly cannot hurt your credit score, the payments themselves give your credit report a much greater boost since payment history accounts for 35 percent of your overall score. Only the last two years of payments you have made will be reflected in your credit history. If you paid too many of your payments 30 or 60 days late, the loan will have a negative impact on your credit score even though you have paid it off.

The reporting period for your car loan is 10 years once it is paid off. Therefore, the trade line reflecting that your car loan was paid off will remain on your credit report as a positive entry for a long time. You can request that the loan be reported indefinitely, but the impact it has on your credit score will gradually lessen over time. Keep in mind that your payment history will also be reported as long as the actual loan appears on your credit report.

It is a given that your credit score will greatly benefit from a positive trade line and positive payment history, but you will receive a far greater practical benefit from the service that paying a car loan does for your credit history. Future lenders evaluating whether to extend credit or financing to you will see that you took out a loan on a vehicle and successfully paid it off. If your credit score is iffy, this could make the difference in whether you are approved or not. In addition, by paying off a car loan you reduce the amount of overall debt that you owe. This makes it easier to get another loan in the future.

Even though the good payment history of your car loan will have less of a positive effect on your credit score over time, the older the account gets the more it helps you build a positive past credit history. Credit history counts for 15 percent of your overall credit score. So even if you aren't getting that 35 percent boost that a good payment history grants to you anymore, you will be able to reap the benefits of your loan simply by the age of the account. Usually by the time your payment history no longer affects your score you have procured another installment loan to take the original one's place.

How Much Does Having a Credit Card Judgment Hurt Me?

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Certain financial actions look bad on your TransUnion, Equifax and Experian credit reports and reduce your credit score, which is compiled by FICO (Fair Isaac Corporation) and the credit bureaus. Typical negatives include not paying bills on time, skipping payments entirely and having court judgments for debts lodged against you. The amount of impact is based on the length of your credit history and how you handle all your accounts, but judgments always hurt to some extent.

A credit card judgment is a successful court action by the card issuer or a collection agency that purchased a written-off credit card debt. It happens when the bank or debt collector sues you for the outstanding balance and the court rules against you. Credit reports include financially related court records, so TransUnion, Experian and Equifax all include judgments in your records. Lenders see this information, and it figures into your credit score.

Judgments are particularly bad for your credit score because they are considered part of your payment history, a category that makes up more than a third of your total score, according to the MyFICO scoring website. Other items in this category include late and missed payments, accounts that were written off as bad debt, house and property foreclosures and car repossessions. The Certified Mortgage Planning Specialist Institute warns that judgments make it harder to open new accounts and may prevent you from getting a major loan like a mortgage, unless you pay the owed amount.

Generally you have time to satisfy a bill before a creditor or collection agency files a lawsuit. MSN Money writer Liz Pulliam Weston explains that credit card issuers generally wait six months before writing off a bill and selling it to a debt collection agency. Collection agencies do not always sue but may do so if they believe you have the means to pay the bill, even though you refuse. Banks sometimes sue rather than charging off old accounts if the amount is high and they believe they can recoup the money. According to the Federal Trade Commission, judgments affect your credit for seven years, after which they get removed from your credit files.

Old credit card debts sometimes get sold and resold for pennies on the dollar, even after the statute of limitations for lawsuits runs out. Each state has its own time frame (see Resources), and debt collectors can no longer legally get a judgment against you when it expires, according to Pulliam Weston. Unscrupulous firms may sue anyway, hoping they get a default judgment because you do not respond. Consult a lawyer if you get threatening phone calls about old credit card bills that are past your state's allowable collection period.

Credit Score Laws

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Laws regarding credit scores in the United States are governed by the Fair Credit Reporting Act, originally passed in 1970. This act regulates the manner in which credit information can be obtained, reported, disseminated and used. Every consumer should be aware of the laws contained in the act, as they form the basis of consumer rights in the U.S.

Consumer reporting agencies collect your credit information to create and disseminate your credit report. The three major CRAs are Equifax, Experian and TransUnion. These agencies have legal responsibilities under the FCRA including providing one free credit report per year, to the consumer; taking appropriate steps to verify credit information disputed by the consumer; notifying the consumer within five days by writing if information previously removed from the report as a result of consumer disputation is reinstated; and removing most negative information from the report within 7 years of its initial appearance, removing tax liens within 7 years of payment, and removing bankruptcy information within 10 years of filing.

Information furnishers are the creditors or other firms that report your credit information to the CRAs. Information furnishers have their own set of legal responsibilities, such as reporting only complete and accurate information and informing the consumer of all negative information reported to the CRAs within 30 days of the information being reported. The furnishers are also obligated to investigate information disputed by the consumer and, within 30 days of receiving notice of a dispute, either correct the disputed information or provide documented evidence that the disputed information is correct.

Many entities, including employers, landlords and banks, reserve the right to check your credit report as part of their decision-making process. These entities must also conform to a set of regulations. They must notify the consumer when information obtained from the credit report has a detrimental effect on a decision regarding the consumer's application. In addition, the entities must identify the specific CRA or service that delivered the report, to facilitate the consumer's right of disputation.

Violations of the FCRA by any of the three groups described above can carry significant civil liabilities. In the event of a negligent, or accidental, violation of the FCRA, the consumer is entitled to collect actual damages plus reasonable attorney's fees. In the event of a willful, intentional violation, the consumer is entitled to collect between $100 and $1,000 plus punitive damages in addition to actual damages and attorney's fees.

Why Is a Good Credit Score Important and What Does it Affect?

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When you use credit, the issuer of that credit will report information about your account to the credit bureau. Bureaus keep a database of financial data on each credit consumer, and this information is used to create your individual credit report. As a consumer, it's wise to understand why having good credit is important and how it affects your financial life.

According to MyFico, your FICO score is based upon your credit report information and is comprised of five distinct factors. Thirty-five percent of the score reflects how well you pay your bills, 30 percent is based on how much debt you have, 15 percent is the average length of your credit score, 10 percent of the score reflects the mix of credit types that you have, and the last 10 percent is based on the amount of new credit that you've applied for lately.

The FICO score ranges from a low of 300 to a high of 850. The higher your score, the better your credit. What number constitutes good credit varies from lender to lender; however, according to Bankrate, a good credit score is above 700. A high credit score can open financial doors for you, resulting in lower interest rates, access to more employment opportunities, zero percent interest on credit cards, approvals for home or car loans, and lower insurance rates.

The largest single factor of your FICO credit score is your payment history. To maintain or achieve a good credit score, you must pay your bills on time. According to Bankrate, one single 30-day late payment can drop your score by as much as 110 points. Charge-offs, repossessions, judgments, bankruptcy and other derogatory payment events will lower your score as well. Negative account history remains on your report for up to seven years and bankruptcy can remain for up to 10 years.

Know what's in your credit report. The Fair and Accurate Credit Transactions Act gives consumers the right to receive one free credit report each year from each of the three bureaus: TransUnion, Equifax and Experian. To comply with FACTA, the bureaus created the Annual Credit Report website -- annualcreditreport.com -- that allows you to order all three reports in one place. If you find any errors, you have the right under the Fair Credit Reporting Act to dispute that mistake with the bureaus and have it corrected or removed. You can file a dispute at the bureau's website, or by phone or mail using the address or phone number found on the bureau's website or on your credit report. Bureaus have up to 30 days to complete the investigation of your dispute then notify you of the results.

Ways to Improve a Credit Score During Bankruptcy

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A bankruptcy, depending upon which type you file, can stay on your credit report for up to 10 years. During this time, mortgage, auto and personal lenders will be able to see that you once filed for bankruptcy protection. This makes you a riskier borrower in their eyes. It also lowers your three-digit credit score, the number that lenders rely on to determine whom to lend money and at what interest rates. The good news is that you can immediately take steps to improve your credit score after filing bankruptcy.

Individuals can choose from two types of personal bankruptcy: Chapter 7 and Chapter 13. Choosing the least severe of the two will have less of an impact on your credit score. Filing for Chapter 7 wipes out your debts, while filing for Chapter 13 sets up a repayment plan that allows you to pay off your debts at a pace that works for you. Both negatively affect your credit score, but Chapter 7 is more damaging. The impact on an individual's credit score depends on a variety of factors, including how high his score was before filing for bankruptcy. Chapter 13 bankruptcy also stays on your credit report for a shorter period of time. This type of bankruptcy will remain a part of your credit history for seven years, while Chapter 7 remains on your report for 10.

You can immediately being improving your credit score during a bankruptcy by becoming a more responsible consumer. This means that you start a new history of paying all your bills on time, each and every month, and that you never again run up large amounts of revolving debt. This is the surest way to boost a credit score back to the range that lenders prefer: above 720. It won't happen overnight, but paying your bills on time will steadily boost a credit score.

It may seem counter intuitive, but it's important for individuals to begin a new credit history as soon as they can once they've declared bankruptcy. That's because consumers need to show lenders that they've learned from their mistakes and are now able to use credit cards wisely. Consumers won't be able to qualify for the credit cards with the best rates and benefits after filing for bankruptcy. But it's OK to start small with less attractive cards. The key is to get a card and then to use it properly, meaning that you only charge what you can afford to pay off each month. If you do this for a long enough period of time, you'll gradually rebuild your credit score.

9 Ways to Kill Your Credit Score

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Credit scores are determined by credit bureaus that collect information about individuals' credit history. Credit scores are greatly impacted by consumers' payment history and amount of outstanding debt. Certain decisions and transactions made by consumers kill their credit scores, and you should attempt to avoid them to prevent damage to your credit score.

Your payment history has the biggest impact on your credit score. Neglecting to make timely payments will greatly decrease a credit score in a short period of time. Financial experts suggest making timely payments, even if it's only for the minimum amount.

Maxing out your credit cards and going over the credit limit will kill your credit score. The higher your credit score, the more points you will lose by maxing out your credit cards. You will also incur over limit fees and possibly a higher interest rate. When your outstanding credit card debt is close to your available credit limit, you will see a decline in your score.

Only possessing one credit card hurts your credit score because it limits how high your score can rise. Lenders like to see individuals that can responsibly handle several types of credit, including credit cards, mortgages and car loans.

It is tempting to settle a debt for less than what is owed when you're in debt but doing so can damage your credit score. The process to settle a debt can last for a significant amount of time and many consumers fail to make payments while in the debt settlement process. If your account is already in collections, settling a debt will have less of an impact on your credit score.

When you are consistently late on a loan payment for a home or car, the lender has the right to foreclose or repossess your property. Foreclosures and repossessions hurt your score because of consecutive late payments and can also lead to a judgment taken against you by the creditor.

Your credit score receives a greater boost from old accounts than new ones. The reason being is that old accounts show lenders that a consumer is responsible and able to pay his debt. Opening too many accounts in a short period of time can kill your credit score.

When you close an account that has a balance, your outstanding debt remains the same while your available credit limit declines. When you close too many accounts and cause the ratio to increase, your credit score declines. The same is true when you transfer a balance to another account.

Even if you pay your bills on time, having errors on your credit report can hurt your credit score. Enrolling in a credit monitoring program is beneficial for some people because any unusual credit activity performed in your name is immediately reported to you.

You should file for bankruptcy as a last resort because it has an immediate impact on your credit score that is lasting. Individuals that file for bankruptcy usually end up with a credit score that is near the bottom of the range. Alternatives to bankruptcy are forbearance, loan modification, credit counseling and settling your debt.

How to Keep Your Credit Report Clean

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Your credit report is real time detailed analysis of your current credit status. Credit reports help both you, as the consumer, and lenders to review your credit standing. Keeping your report "clean" is important if you are seeking new loans, credit or lower interest rates. The report contains information about you, how much debt you owe, if you pay your bills timely and if you have any bankruptcy, foreclosure or lawsuits related to your credit.

Instructions

Pay your bills on time. Most lenders and credit card companies offer a grace period in which you can pay your bills after the due date, with penalties such as late fees. However, if you do not pay within the grace period, creditors will report this delinquency to the credit bureaus. Your credit report will also show if you have paid bills timely.

Maintain a proper income to debt ratio. Do not accrue too much debt, max out your credit cards or carry large balances on your credit cards. Having a large amount of debt reflects negatively on your credit report and may stop lenders from issuing new credit or raise your interest percentage when the opportunity legally presents itself. Your credit report will show the amount you owe on each debt and too much will appear as an overextension of credit.

Check your credit reports with the three major credit reporting bureaus at least once annually. Mistakes and identify theft do happen and if you find a negative error on your credit report, you can file a dispute. Depending on the misinformation, you will need to work with the credit agency among others to get your credit report amended.

Call your creditors and lenders when you are having difficulty paying your bills on time. Instead of not paying your bills and loans and risking tarnishing your credit report, ask creditors if they would restructure your payments into something you can afford. Other alternatives such as debt cancellation are possible options, but will negatively impact your credit report. However, this option is not as damaging as bankruptcy or foreclosure.

Establish some debt if you have none. Even if you pay for everything in cash and have no outstanding loans, you should maintain a credit card pay this balance off each month. The longer your credit history, the better this will reflect on your credit report. Having no credit is considered unfavorable when applying for credit, as creditors do not know how much risk you may pose.

What Is Affected by Credit Scores?

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Lenders use your credit score as a convenient and reliable way to determine how creditworthy you are. If your score is on the lower end of the 300 to 850 scale, you'll pay a lot more in interest, or you'll have a harder time getting credit than if it's higher, according to the Consumer Federation of America.

According to a 2007 U.S. News & World Report article, boosting your credit score by just 30 points can save you more than $75 in finance charges alone on your credit card over the course of a year. You'll also be eligible for a higher credit line if you have a higher score.

According to Experian, your credit score helps determine how much you'll pay monthly in interest, and how big your loan will be. Finance changes on your mortgage also depend on factors such as your income and home loan size, according to Experian. The nonprofit consumer organization, CFA, reports that a buyer with a credit score of 720 can earn a 5.5 percent interest rate, while a buyer with a 580 score will be subject to rates exceeding 8.5 percent. Over the life of a 30-year, $100,000 home loan, the buyer with the better score will spend nearly $75,000 less in interest.

You may not be ready for a home loan. You may want to rent. If your credit score is too low, your apartment application may be turned down, which may make it hard for you to find a place to live, according to the CFA. Lower credit scores may also cause you to pay bigger deposits for utilities, such as electricity and phone service.

A poor credit score can also cost you more when you apply for a car loan. U.S. News & World Report again notes that boosting your score by 30 points can save you $20 monthly in interest charges on a three-year car loan. A low credit score can also cost you a job, as more employers look at these scores to judge an applicant's "level of personal responsibility." Different lenders have different standards, so it's hard to say what a "good" score is, but generally, if your score is under 600, don't expect the best interest rates.

Does Paying Off a Car Early Improve a Credit Score?

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Credit scores are used by lenders to determine how creditworthy a potential customer is. Credit scores are determined by five categories: your payment history, the amount of money you owe, how long your credit history is, what types of credit you use and whether you have recently applied for new credit. Besides the effects on your credit score, you should also consider the financial implications of paying off your car loan early.

Your payment history is the largest section of your credit score, accounting for 35 percent of your total. Your car loan is an opportunity to show lenders that you can make payments on time. Length of credit totals 15 percent of your score. If you continue to make on-time payments over the life of the loan, you will build up a longer credit history. However, it may not make sense financially to keep paying interest on a loan that you can pay off.

The amount of money that you owe accounts for 30 percent of your credit score. If you pay off your car loan early, you will decrease the amount of money you owe, which can improve your credit score. However, make sure that you have enough money put aside to cover emergency expenses because if you pay off your car loan but then have to put significant charges on your credit cards, your score will drop because revolving debt, like credit card debt, is weighed more heavily than loans. Paying down your debt will also make you a more attractive customer for future loans.

The type of credit that you use accounts for 10 percent of your credit score. Because the payments on the auto loan count as an installment payment, having a car loan can improve your score if you do not have other installment loans.

Paying off your car loan early can save you a large amount of money in interest payments because the less time you take to pay back the money the less time interest will be charged on the money you owe. Unlike home mortgage interest, there is no tax deduction for auto loan interest. However, some auto loans charge a significant penalty for paying off your loans early.

If your loan requires that you carry a higher level of insurance on a car even though it may be older, you may be able to save money on your insurance by paying of the loan. If you remove the lien from the loan, you will no longer need to carry the extra insurance.

How Your Buying Habits May Impact Your Credit Score

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Many things directly impact your credit score, like the number of credit accounts you currently have open, your balances, available credit and how promptly you pay the bills, according the the Federal Reserve Bank of San Francisco. Your buying habits indirectly affect your score because they influence how you handle your finances. Your credit rating suffers if your finances are handled improperly because of your spending.

Payments are the most important part of your credit score, as the MyFICO credit score information site explains that more than one third of the total score is based on whether you pay credit-related bills on time. Buying so much that your high balances force you to skip payments lowers your score. Longer delinquencies have more negative impact.

Your credit score may drop lower even if you pay your bills every month if you are only able to send the minimum required amounts. Much of your minimum payment is channeled onto the interest, which is billed every month, the Motley Fool financial site advises. It takes years to pay off a high account balance if you do not send extra money. Your score is harmed when you owe large amounts on your credit cards.

Credit cards are revolving accounts, which means you get a set credit line and can buy things until you reach it. Your credit score is partially based on the ratio of your available credit and your balances. It goes down if you have reached the limit on most or all of your cards, according to MSN Money writer Liz Pulliam Weston, because lenders want to see a large gap between your credit limits and total debt.

Excessive buying that keeps you from paying your bills can lead to charged off accounts. Pulliam Weston explains that credit card issuers write off balances after about six months without a payment. You are not excused from paying a charged off account. It pulls down your credit score, and the original lender can sell it to a third party debt collector to pursue repayment. Charge-offs do not get erased from your credit reports for seven years.

Debt can become so bad that you face bankruptcy if you do not rein in excessive spending. Most negative incidents appear on your credit reports and affect your score for seven years, but the Federal Trade Commission (FTC) warns that bankruptcy remains on your records for 10 years. You must undergo counseling before filing, and at the conclusion of your case. The post-bankruptcy counseling includes information on budgeting and developing better spending habits, the FTC explains.

Six Steps to Rebuilding Your Credit Score

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A mortgage foreclosure, repossession or bankruptcy will cause a severe drop in your credit score. But once you've gotten over the shock and shame of losing your possessions or filing for bankruptcy protection, it's time to rebuild your credit score and improve on your poor credit history.

Getting a credit card after a bankruptcy is key to rebuilding your credit score and undoing the damage of a discharge. Several options are available to you, including getting a secured credit card from your bank. These require a cash deposit that's paid before you can receive an approval. Another option includes applying for an unsecured credit card designed to help people with bad credit improve their score. These cards typically have high finance fees to compensate for a poor credit rating.

Major car dealerships and the lenders that finance these automobiles may not accept your application for credit with bad credit, unless you have a co-signer for the loan application. But if you want to get an auto loan without the help of a co-signer, there are auto dealers designed for customers with poor credit. These smaller, privately owned dealership usually offer in-house financing, and they'll approve you for a car loan with no credit history or bad credit.

To avoid the hassle of applying for a credit card and risking a credit denial, ask someone that you trust, perhaps a sibling, spouse or parent to add you as an authorized signer on their credit card to help you rebuild your credit history. Being an authorized signer means that the account will show on your credit file. Make sure the person who adds your name has a good payment history, since they're responsible for the monthly payments. A late payment on their part can cause further damage to your rating.

If you maintain other debts after a credit mishap, maintain a good relationship with your creditors to help improve your low credit score. This includes paying down debts and keeping your balances below 30 percent of your credit limit.

Because your payment history makes up 35 percent of your credit score, late payments and skipped payments have a detrimental affect on your credit rating. Stop bad habits and learn from your mistakes. Paying bills on time requires careful budgeting to ensure you have enough cash to meet your expenses. Keeping up with due dates is also a major factor in avoiding late payments.

Mistakes on your credit file can slow your efforts to rebuild your credit score. Make a point of checking your credit report at least once a year. Annual Credit Reports provides you with one free report from each of the bureaus a year.

Does Medical Debt Go on Your Credit Record?

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Medical debt is responsible for thousands of bankruptcies every year. You may believe you have adequate medical insurance but co-pays can add up to more than you can reasonably expect to pay back. Short stays of two or three days in a hospital can cost several hundred thousand dollars. If you are required to pay a co-pay of 20 percent, it can more than wipe out most peoples savings accounts.

Doctors, hospitals, laboratories and diagnostic facilities report medical debt to the credit reporting agencies. If you have insurance, usually the debt does not appear on your credit report until after the insurance carrier pays its portion of the debt. However, if the insurance company is late making the payment, the total cost can appear on your report. The debt affects your credit score, which drops dramatically if you fail to pay the co-pay when it is due, or you do not negotiate payment terms with your medical creditors.

It is not possible to negotiate with credit reporting agencies. The only thing you can do is to provide them with a consumer statement that becomes a part of your report. The statement should clearly explain the reason you are behind in your payments. Lenders tend to disregard medical debt, or at least give it less weight than your other debts. However, the problem is that if you are very delinquent on your medical debt it has a negative impact on your credit score. Many creditors use your credit score alone to determine whether to extend credit to you.

Low credit scores impede your ability to get credit cards, buy a car, refinance your home and even get a job or a reasonable rate on insurance. If you get far enough behind paying your medical payments, the creditor may turn your debt over to a collection agency to attempt to collect payment.

Credit agencies are required to remove delinquent medical debts from your credit report after seven years. If your creditor turns the debt over to a collection agency, the agency attempts to collect for some time. If they are not successful, the creditor gives your file to another collection agency. Each time your creditor turns your file over to a different collection agency, it starts the seven-year clock again. This can continue for a very long time. If you are unable to pay the debt, your score stays low and prevents you from re-establishing credit.

You should always try to negotiate directly with the medical providers before the credit agencies receive your file. The providers try to work out a reasonable payment plan with you. If the best they can offer is more than you can possibly handle, tell the creditors that you will have to file for bankruptcy protection. Let them know that you are willing to provide them with proof that the payment schedule they offer is more than you can pay. They may negotiate the balance down to a figure you can work with.

This is primarily a negotiating tactic. Filing bankruptcy should be considered only as a last resort. Actually declaring bankruptcy is a high-stress procedure. Of course, you should discuss your situation with an attorney before making any decision regarding bankruptcy.

How to Obtain Your Credit Report Without Joining a Service

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Many websites that offer you a credit report require you to join a service and pay a monthly fee. However, you can view your credit report from the three major reporting services (Experian, Equifax and TransUnion) once a year for free. It takes only a few minutes to fill out your personal information to receive each report, and no credit card is required.

Instructions

Go to AnnualCreditReport.com. Select your state and click "Request Report."

Enter your personal information in the required fields, type in the security code and click "Continue."

Select the credit companies from which you wish to receive a report; you can select one or all three. Click "Next." You will be transferred to the first credit reporting site you selected. Verify your personal information and click "Continue."

Verify your identity by correctly answering two personal financial questions and then click "Continue." Select "No, I want to see my credit report" when asked if you would like to pay a fee to see your credit score.

Click "View and print my credit report" to see your report. Select "Return to AnnualCreditReport.com" at the top of the page if you choose to view more than one credit report. Repeat Step 4 for each report.

Do Credit Card Assist Programs Hurt My Credit?

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When a person takes out a credit card -- essentially, a line of credit with a financial institution -- he runs the risk of taking on more debt than he can pay back. In this situation, the person may turn to a number of debt counseling and relief programs. While consulting these programs will not lower a person's credit score, negotiating an alternative payment plan or a reduction for money owed can.

When a person's debt becomes unmanageable, he may receive credit counseling, usually from a private organization. However, in some cases, the debtor may attempt to speak directly to the credit card company about possible payment alternatives. In neither case will the person's credit score be affected by simply requesting credit counseling or inquiring about assistance paying the debt. However, if the person takes action based on this advice, his score may decline.

One of the main solutions to unmanageable debt is debt consolidation. Under debt consolidation, a lender purchases the person's debt -- either a single debt or multiple debts -- and issues the debtor a new loan, one that allows them to pay in smaller installments over a longer period. Debt consolidation will generally not harm a person's credit score as the person pays off his credit card debts.

In some cases, the debtor may negotiate a reduction in the total amount of money he owes. He will either do this by negotiating directly with the credit card company or through an intermediary. In either case, if he receives a reduction, the credit card company will likely report to credit reporting agencies that it wrote off part of the debt. Anytime a debt is written off, the debtor's credit score will fall, with the severity depending on the amount of money written off.

If a person negotiates a settlement with a credit card company that requires him to pay less than the amount he originally owed on the account, the credit card company does not absolutely have to report this debt to credit reporting bureaus as written off. If the company chooses, it can legally report the debt as paid in full. As a condition of negotiations, some debtors require that, despite receiving a reduction, the credit card company report the debt as paid in full.

Do Things Get Removed From Your Credit Report After a Certain Amount of Years?

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Your consumer credit report is arguably the most important document relating to your personal finances. Landlords, loan companies and potential employers may judge you in part by what's on your report. Cleaning up your credit involves paying down bad debt and waiting for old debt to roll off at its appointed time.

A consumer credit report is a record of the management of your personal finances. There are three major credit reporting companies: Equifax, TransUnion and Experian. Each company keeps a record of your credit accounts, debts and credit inquiries on your credit report. Each company manages its own report information, and your credit reports may vary somewhat between the three agencies.

The Fair Credit Reporting Act (FCRA) regulates how your credit report is used and how the credit bureaus handle your record. Debts on your consumer credit report stay on for seven years from the last activity on the account. At that time, the agencies remove the debt automatically. Creditors can remove a debt at any time for any reason by contacting a credit agency. However, they rarely do so unless you pay off the debt or work out a payment plan.

The FCRA allows exceptions to the seven-year rule. Bankruptcies, under both Chapter 13 and Chapter 7, stay on your credit reports for up to 10 years. Credit inquiries generally stay on your reports for about two years.

Sometimes a debt appears on your credit report for longer than it should according to the law. For example, if a collection company buys your debt from the original creditor, it might report your debt again with a new date of last activity. Credit agencies can also confuse your information with that of another person, or there may be glitch in the system. Whatever the case, if you see something on your report that should have been removed, contact the credit agency and show it directly. You must contact each agency to have items removed from their reports.

How to Remove a Security Freeze on Experian

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With identity theft being such a problem, all three of the credit reporting agencies allow consumers to put a freeze on their credit. A freeze makes it impossible for a criminal to open a credit account using your identity: The credit issuer pulls up your credit report, and if there's a freeze on it, no credit will be issued. This is a great way to prevent ID theft.

While even you can't open a credit account that's under a freeze, you can remove a security freeze from Experian, TransUnion and Equifax when you need to.

Instructions

Contact Experian; be able to provide verification of your identity.

Make a statement. You need to state to Experian that you wish to either permanently or temporarily remove the freeze. If it will be a temporary freeze, you must tell Experian who is going to receive your credit report or during what time period the report is to be made available.

Provide your PIN number (you received a PIN number when you initiated the freeze). You need to have this number to remove the freeze.

Temporarily remove an Experian security freeze. If you want a credit issuer to gain access to your credit information so that you can open an account, you can remove the freeze for 7, 15 or 30 days (you can also request a different time period). During this period, any third parties who wish to can view your credit report.

Permanently remove the freeze. If you apply for credit often, you may want to permanently remove the credit freeze. By removing the freeze, third parties will be able to view your credit information just as they did before you had a freeze in place.

Request a PIN number reminder. You must have your PIN number to request the security freeze to be lifted. If you forgot your number, you can request a reminder from Experian. You need the PIN to both temporarily and permanently remove the freeze.

Contact Equifax and TransUnion, too. You must contact each credit reporting agency separately to initiate or remove a freeze.

How to Increase Your Credit Score Rapidly

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Your credit score is based on a number of factors, including the length of your credit history, your payment history on credit accounts, the variety of types of credit you have, and the amounts owed in relation to the amount of credit available. Although the payment history portion of your credit score requires many years of timely payments, you can make rapid changes to your credit score through other areas of your credit history.

Instructions

Don't apply for new credit. Credit inquiries other than those automatically generated for pre-approved credit offers and those you make on your own account reduce your credit score. If you are shopping for a loan, make credit inquiries over a short period of time, as they will be scored as one inquiry rather than many.

Call your credit card issuers and ask if they can give you a credit line increase without running a credit check. Increasing your available credit will lower the percentage of it that you are currently using and likely increase your credit score. However, if the credit card issuer needs to check your credit report first, this will lower your credit score in the short term.

Pay off as much of your credit-card debt as possible. Try to get the balance on each credit card to less than 30 percent of its credit line. If you have credit cards you are not using at all, consider transferring some of the balance from a card that is almost maxed out to your other cards to get each of them to below 30 percent of their limits. Ideally, keep all of your credit cards at 10 percent or less of their limits, according to CNN Money.

Obtain free copies of your credit reports from the Annual Credit Report website (see Resources). Check that the credit line reported for each of your cards is accurate and ask credit card issuers to correct any errors.

Look over errors such as accounts that do not belong to you or erroneous reports of late payments. Dispute errors through the processes outlined by the credit bureaus. If you need faster results, work with a rapid rescoring agency to remove errors within just a few days. Rapid rescoring agencies correct errors quickly through direct contact with the credit bureaus. Ask your mortgage lender or broker about rapid rescoring if you are trying to increase your credit score before applying for a loan.

Is My FICO Score Really What's Used to Get a Mortgage?

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Before the housing crisis of 2008 consumers could often get a mortgage with nothing but a good FICO score, because stated-income mortgage waived the income verification process. In 2011, mortgage providers are far more careful about who gets a mortgage, and a FICO score is usually just one piece of the puzzle to qualifying for a mortgage.

A borrower's credit history and FICO score are always important to a lender, but a good score will probably be the major factor in setting your interest rate. Most lenders have a chart that lines up the range in which a borrower's credit score falls and the interest rate for that tier. In 2011, for instance, only scores above 760 usually garner the lowest interest rate.

Credit scores only tell a lender if the consumer is likely to pay back a loan on time every month, not his ability to pay. The most accurate picture of an ability to pay is the debt-to-income ratio. Lenders probably won't approve a mortgage until the borrower's monthly debt obligations fall below 20 percent to 35 percent of his monthly income. This typically includes only debts listed on your credit report, not monthly bills, such as a cell phone and utilities. Banks check tax returns and pay stubs to verify income.

A low debt-to-income ratio and great credit score won't guarantee a mortgage unless you agree to put down some collateral. Banks want to know that you have some hard investment in the place and to prevent the mortgage from going underwater -- when the borrower's mortgage exceeds his equity in the property. In 2011, the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation have a pending rule that would require a 20 percent down payment or else the bank cannot sell the loan without retaining a 5 percent stake in the property, according to Credit Loan.

In general, mortgage providers want to see somebody with a stable life. This means holding a job at the same company for two years at the time of the application. A credit report also contains previous addresses and phone numbers. Constantly moving from state to state and switching phone numbers might signify to the bank that you are a flight risk or might lose track of the monthly bill with so much movement.

Why Is a Mortgage Credit Report Score Lower Than a Regular Report?

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When you prepare to apply for a mortgage, you may want to review your credit scores before your lender does. You should be aware, however, that the credit score you review may differ from the one your lender will pull.

There are two main types of credit scores: consumer credit scores, which are calculated by the credit bureaus, and FICO scores which are calculated by the Fair Isaac Corp.

The annual free credit report you are entitled to from the credit bureaus contains a consumer credit score, while the credit report your lender pulls will reflect a FICO score. This can result in your score being either lower or higher when pulled by a lender.

If you pulled your own credit report from a third party provider such as freecreditreport.com, the score you receive won't be a consumer credit score or a FICO score. Third party credit report providers can only provide you with a estimated score, which may be wildly inaccurate.

You can pull the same credit scores your lender does by purchasing your credit reports and scores directly from MyFICO.com. You may, however, only purchase scores from Equifax and TransUnion. Experian will not sell FICO scores to individuals.

Mortgage lenders take more than just your credit score into consideration when evaluating your loan application. The primary aspects of your credit history such as types of accounts you have and your payment history will be the same on both types of credit report.

How to Obtain a Credit Score From All 3 Reporting Agencies

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Your credit score is the basis on which you're approved for loans, assigned an interest rate and is sometimes used to determine your insurance premiums or to screen you for employment. You should monitor your credit periodically, at minimum, and always check your credit several months before you plan a major purchase such as a car or a home so that you have time to correct errors. Because many lenders look at an average of the three credit scores, or choose the median credit score, you need to check your credit at all three bureaus.

Instructions

Log in to any of the three credit bureau websites. The three credit bureaus are Equifax, Experian and TransUnion. All of them offer credit reports although other products and prices may vary.

Locate the available products for the bureau. Scan the list for a product that specifies "3 in 1" or a similar indication that you will receive all three bureau reports in one printout.

Select the product that interests you. Make sure the product you select specifically states that it provides the 3 in 1 credit "report," as 3 in 1 credit "monitoring" is also available at some bureaus, but that is not what you need. It is also a very good idea to order a 3 in 1 credit report with all of your credit scores. Check the product to ensure the credit score is included. If it is not, chose another product where the credit score is included.

Click on the product and enter your personal information. You will need to enter your name, address, email and Social Security number for most products. The credit bureau may then send you a question about one of your line of credits to verify your identity.

Proceed to checkout after verification and pay for the credit report by one of the methods offered by the credit bureau. After your payment has been processed, you will receive an email or a pop-up message stating that your credit report is ready for viewing with a link provided to view the report.

How to Read and Understand Your Tri-Merge Credit Reports

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Credit history is an important part of overall financial health. Strong credit is rewarded by lenders in the form of low fees and low rates on all types of consumer loans--including large mortgages. The best way to monitor your credit is to periodically access and review your three credit-bureau reports. These are sometimes called tri-merge reports. Essentially, they are three separate reports from the main credit bureaus--TransUnion, Experian and Equifax. Once you have this report, though, you must be able to understand what you are reading.

Instructions

Visit the AnnualCreditReport website. This is the federally mandated website for American consumers. The passage of the Fair Credit Reporting Act (FCRA) mandated that all consumers could access their reports once per year for free. You will need to make three separate transactions to get all three reports.

Look at the personal information section first. This will list your demographic information, such as name, address, Social Security number, date of birth, employer and phone number. Double-check this information for accuracy. You will need to contact the credit bureaus if this information is incorrect.

Find the inquiries section on the tri-merge report. This will list all hard inquiries on your report. "Hard" inquiries are generated when a lender pulls your credit. "Soft" inquiries, such as when you pull your own credit, do not show up on this list. If you have more than six inquiries in the last six months, your rating may suffer. Lenders see excessive inquiries as deteriorating credit.

Look for the public records section. This is the area where you'll find all publicly disclosed information regarding your credit. Common public records are credit report liens (taxes, usually), bankruptcies and judgments. These are all negative marks on your credit. When cleaning up your credit, these issues must take priority.

Find the trade lines. This is the meat of the tri-merge report. This section lists, in all likelihood, all of your credit accounts--both open and closed. It shows payment history, when you opened accounts, balances and payment amounts. Lenders scrutinize this section very carefully. If you have delinquent accounts, credit cards with high or over-limit balances, or charged-off accounts, your rating will suffer.

Explain Canadian Credit Scores

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The process of credit scoring in Canada is extremely similar to that in the U.S. A Canadian who wishes to apply for credit, new employment or housing may be subject to a review of his score. The lender determines his eligibility based on the score itself and other varying factors, such as how much debt he currently has and if he has made timely payments to his creditors in the past.

Until 2009, Canada used the same three credit bureaus that the U.S. uses: Experian, Equifax and TransUnion. In April of 2009, the Canadian branch of Experian closed, but the other two credit bureaus remain open. The credit reporting agencies use the same credit scoring formula in both the U.S. and Canada.

The information in Canadian credit reports that determines consumers' credit scores is subject to reporting periods that vary by province. Unlike U.S. laws, which are federal, regarding reporting periods for credit information, there are no national laws in effect in Canada that regulate the amount of time a debt may appear on a credit report.

When a Canadian pulls his credit report online, it appears in the exact same format as a U.S. report. This allows Canadians who move to the U.S. to provide copies of their credit reports and scores for housing and utilities approval.

Canadians may request free copies of their credit reports as often as they like to review their scores. As long as the request is made in writing, the Canadian credit bureaus honor the request and mail the individual a free copy of his credit report to review.

Even though the same agencies that service the U.S. calculate Canadian credit scores, U.S. institutions can't pull a Canadian credit report. This is because institutions track Canadians via their Social Insurance Numbers, rather than Social Security Numbers, and the credit bureaus separate files by country.

How to Dispute Negative Credit Items

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Do you have negative credit items on your credit report? Do you desperately want to improve your credit score by having these erroneous items taken off? Well, we have great news for you, now you can. If you're ready to clear up mistakes and improve your score at the same time, let's go.

Instructions

Get a free copy of your credit report. Our legal system allows you to obtain a free copy of your credit report (from one of the three major agencies - TransUnion, Equifax and Experian) every 12 months, if you're unemployed and are currently seeking employment, if you have been denied insurance or credit or employment within 60 days of the denial. To receive your free copy, contact Annual Credit Report service by mail at Post Office Box 105281, Atlanta, Georgia 30348, by phone at 877-322-8228 or by visiting annualcreditreport.com. You'll be required to verify your information by providing your Social Security number, birth date, address, amount of mortgage payments, etc. Once that has been verified, you can order your free report.

View your credit report. Once you receive your free credit report, evaluate it carefully. Check dates of credit accounts, balances, and minimum payments. If you find any negative credit items or discrepancies, circle them for later reference.

Contact the reporting credit bureau. You can do this by filling out the dispute form provided by the creditor or writing a dispute letter. Either way, clearly state the reasons why you are disputing the negative and erroneous credit items. Enclose any supplemental material that might help your case, like copies of canceled checks or closing letters from the creditor.

Implement a formal investigation. Once the credit bureau has received this information, they will engage in a formal investigation of your complaint. They will contact the credit issuer regarding the disputed transaction. If the creditor can't prove that the information is valid, it will be removed. If they can prove it is valid, it will remain on your file. After the investigation has been completed, you'll receive a complimentary copy of your report with changes indicated.

Take further action if you lose the dispute. Ask the reporting agency to include a statement that explains the situation. Although credit agencies can report negative information for up to 7 years, this will at least allow you to show your point of view. In addition, you can also contact the creditor directly to see if you can prove that they were incorrect. In this instance, you'll need to provide them with proof of the wrong information.

What is a Credit Report Score?

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A credit report score, more commonly known as just a credit score, is a three-digit number that tells lenders how creditworthy you are. Every time you borrow money, the lender will report it to one or more of the credit bureaus. The bureaus take this information and collate it into a credit report. They then convert that information into a single number to make it easier for lenders to decide how credit-worthy you are.

A credit report contains all of your borrowing and repayment history from the past seven years. In reality, you don't have one credit report, you have at least three. Each of the three major credit bureaus--Experian, Equifax and TransUnion--compiles its own set of credit reports. Lenders use one of multiple bureaus to report information about their borrowers, as well as to get information about potential borrowers.

Each bureau uses its own formula to calculate a three-digit credit score. The range of scores differs depending on the bureau, but is usually between 300 and 850. The higher the score, the more credit-worthy you are. Each time a lender runs a credit check, the bureau will calculate a new, up-to-date credit score.

The exact formulas used to calculate the scores are secret. However, we do know what sort of information goes into that calculation. Approximately 35 percent of the score is your repayment history. Missing a payment can cost you points off your score. Another 30 percent is the total amount you owe. A further 15 percent is the length of your credit history. The remainder takes into account other factors, such as new credit applications and the mix of credit types.

You can get a free copy of your credit reports from Annualcreditreport.com. These reports will give you a good idea about the health of your credit history and let you check for signs of identity fraud. However, they will not give you a concrete credit score. For that, you will need to go directly to the credit bureaus. You can request your scores via their websites. However, you will have to pay a fee for the privilege. You can also sign up for a credit monitoring service, which will give you access to your scores whenever you want. This, too, will cost you money.

Your credit score matters a great deal. If you are applying for a mortgage, your credit score will determine whether or not you get approved and the interest rate you will pay. If your score is too low, you may not have access to common personal finance tools such as credit cards, loans and cell phone contracts. Landlords often run credit checks before accepting a tenant. Even some employers run credit checks before deciding whether to give you a job.

Does a Returned Check Affect Your Credit Score?

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These days, when the criteria for opening new credit accounts is stricter than ever, it's important to pay attention to your credit score. Carefully monitoring your score and paying your bills each month is one way to keep your score high, but sometimes things go wrong. Whether due to an accounting error, a forgotten transaction or a later-than-expected paycheck, an overdrawn checking account can have consequences for your financial picture--and if not addressed quickly, it can affect your overall credit picture.

In general, if you "bounce" a check, or it is returned because there isn't enough money in your account to cover the amount, your credit report and score are not affected. In most cases, the bank will notify you of the returned check, charge a fee and request that you add money to the account to cover the amount of the check, if they paid it. If the bank opted to overdraft your account and pay the check, you will not face any consequences from the recipient of the check.

If you wrote a check to a creditor, such as a credit card company, and the bank returns the check unpaid, your credit score may take a hit. Writing a bad check to the creditor leads to returned check fees, and if you cannot make good on the payment before the due date, a late fee as well. The late payment may also be reported to the credit bureaus, and your balance, instead of being reduced by your payment, is increased by the added fees. This changes your debt-to-income ratio slightly, and your amount of available credit, which can affect your credit score.

When you create an overdraft on your account, in effect the bank becomes a creditor and you have to pay the money back. Depending on your bank's policies, the overdraft fee may be a one-time fee or a daily fee for as long as your account remains overdrawn. If you do not repay the balance, the bank may send the account to collections. Collection accounts do appear on your credit report and reduce your credit score. To avoid a bounced check from hurting your credit, pay any overdrafts as soon as possible, or add overdraft protection on your checking account.

Many retailers and banks report returned checks to national databases, such as ChexSystems, which keep track of how you use your checking accounts. If you demonstrate a pattern of bouncing checks over a period of time, you may find that you cannot open new bank accounts, or even write checks to retailers that run a check of the database before accepting your check payment. In addition to making it more difficult to write checks, if you do not have an extensive credit history, lenders may look at your FICO Expansion score, which does consider returned checks. Fair Isaac, the creator of the formula that determines credit scores, developed the FICO Expansion score to assess your checking account history and accounts with nontraditional lenders, such as payday lenders and rent-to-own companies. A pattern of returned checks lowers your FICO Expansion score, hindering your ability to get new credit.

What Do Third Party Credit Checkers Look for When You are Applying for an Apartment ?

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Landlords often use a third-party credit checking company to help determine whether to rent an apartment to a particular tenant. Because your history with managing money is likely to suggest future behavior with paying your rent on time, this screening process helps landlords determine whether you are likely to be a good tenant. A third-party credit check often includes features beyond getting your basic credit report.

A third-party credit checker typically pulls up your full credit report from at least one of the three major credit bureaus: TransUnion, Experian and Equifax. This report contains information about your major credit accounts, including credit cards, student loans, auto loans and personal loans. Your report also shows if you have had accounts sent to collection agencies and if you have had court judgments or bankruptcies. Paying your bills on time, applying for credit sparingly and keeping your credit card balances well below their limits are a few behaviors that lead to a good credit report. The credit checker might or might not provide the apartment landlord with your full credit report, but your landlord will at least get a general overview of your credit.

Credit checkers typically run searches of state court databases for records of evictions. Because evictions go through the court, they are public records that anyone can access. If you have been evicted from a home or apartment before, this reflects poorly on you as a potential tenant.

A third-party company will probably try to check whether you have a history of paying rent on time. One way to do this is by looking up the information in a landlord-reported rental history database. Otherwise, the credit checking company may call the previous landlord you listed on your application and ask how long you lived there and if you consistently paid your rent on time.

Apartment companies or landlords like to see that an applicant has reliable income to be able to afford the rent. The third-party credit checking company might call the employer you list on a rental application to verify that you are employed and that your annual salary is approximately the amount you listed.

You might be able to write a check for rent every month, but if the check bounces, the landlord is out of luck. Banks often report the names of account holders who frequently bounce checks to companies such as ChexSystems that gather provide it to other parties. Therefore, one component of some tenant credit checks is to check whether a tenant is listed as someone whose checking account history is poor.

Does Shopping for a Mortgage Affect Your Credit?

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When you apply for a mortgage loan, you authorize potential lenders to request a copy of your credit report from a credit bureau. Credit inquiries are then listed on your credit report. Although making multiple inquiries can make you look like a greater credit risk, rate shopping for a single mortgage loan affects your credit score differently. Certain types of credit inquiries can impact your credit score while others do not.

According to Fair Isaac Corporation (FICO), although multiple inquiries will show up on your credit report when you are shopping for a mortgage loan, this should not have much effect on your credit score. Inquiries made by mortgage, auto or student loan lenders within a 14-day period are treated as a single inquiry. Newer versions of the scoring formula allow for a 45-day rate-shopping period. As a result, your credit score will not drop by all that much.

In order to compensate for rate shopping, the FICO scoring formula ignores mortgage loan inquiries made in the 30 days prior to scoring. Rate-shopping is a normal step when it comes to finding the best home loan package to fit your financial needs, so lenders don't want to penalize consumers looking for just one loan. The length of time over which you make inquiries helps differentiate whether you are looking for a single loan or several new lines of credit. What you don't want to do is to apply for new credit cards or charge major purchases to existing cards at the same time as you are applying for a mortgage loan. A move like that could lower your credit score by increasing your debt ratio.

Lenders take into account other aspects of a consumer's credit history when reviewing loan applications. In most cases, the number of inquiries listed on your credit report is only one small factor that lenders consider when assessing credit risk. Based on your individual credit history, inquiries can cost some consumers more points. Even so, a lender gives more attention to if you pay your bills on time as well as how much debt you already owe. Lenders also look for low credit card balances.

For most people, inquiries have little impact on a credit score. However, if you have a short credit history, the number of inquiries listed on your credit report could have a negative effect on your score. A single credit inquiry can drop your credit score by up to five points. Credit scorers might think that you are continuing to apply for mortgage loans past the shopping period because you have been denied credit. This could lower your credit score. Usually, it's in a consumer's best interest to comparison shop and choose a lender within the customary shopping period. That way, multiple inquiries will count only as one.

Derogatory Public Record Definition

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Many people believe that credit cards, mortgages, car loans and similar transactions are the only factors that affect their credit rating. However, public records, particularly derogatory public records, can have a detrimental affect on an individual's credit rating. Also, depending on the nature of the derogatory public record, the notation may remain on a credit report for years, even after it has been fully paid off.

Public records are maintained by federal and local government agencies, with some level of access to the public. While some public records, such as divorce records, do not have an adverse affect on credit, public records that pertain directly to an individual's financial transactions definitely do bear on a person's credit status.

Added to the hardship of losing one's home, foreclosures are considered a derogatory public record. While falling behind on mortgage payments is not considered public information, once legal action has been taken, it becomes a matter of public record. A foreclosure definitely has an adverse affect on an individual's credit.

Tax liens are a means of collecting money owed by attaching the wages or assets of an individual. Tax liens may be filed by the federal government or a state in the absence of a payment agreement or other negotiated settlement. Judgments are granted to creditors and merchants who successfully bring suit against an individual for failure to pay a lawful debt. Tax liens and judgments are considered derogatory public records.

For consumers, the most common types of bankruptcy are Chapter 7 and Chapter 13. Chapter 7 bankruptcy is a general dissolution of debt by a debtor unable to meet his financial obligations. The financial slate is essentially "wiped clean." Chapter 13 is a negotiated repayment plan that allows an individual to settle his debts for a fraction of the actual amount owed. Both Chapter 7 and Chapter 13 are considered derogatory public records.

Most derogatory public records remain on a credit report for seven years from the date they are filed. Chapter 7 bankruptcies and unpaid Chapter 13 bankruptcies remain on a credit report for 10 years. Unpaid tax liens remain on a credit report indefinitely. Payment of the derogatory item does not affect these reporting times, although consumers can have the payment noted on their credit report along with the derogatory public record.

Will My Credit Score Improve After Paying Off Delinquent Loans?

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There are a number of factors that combine to make up a person's credit score. These include the person's previous credit history, the length of his credit history and the amount of debt outstanding. In nearly all cases, paying back delinquent loans will raise a person's credit score.

Credit scores are determined by companies called credit reporting bureaus. Using a formula pioneered by the Fair Isaac Corp, these companies examine various factors related to a person's credit history to determine the likelihood that she will pay back a loan. This information is compiled using information sent to the bureaus by debtors. As new information is sent in, a person's score will change.

If a credit reporting company believes that a person has a relatively high chance of paying off a loan, he will be assigned a high score. People with outstanding delinquent loans are generally considered to be at a relatively high risk of defaulting on a new loan. Therefore, they are generally assigned relatively low scores. Paying off these debts will generally raise the person's score.

Although paying off outstanding debts will generally cause a person's score to improve, a record of the debts will not disappear from her record. The fact that a person was delinquent in paying back a debt can remain on her record for up to seven years. During this time, it will drag down her overall credit rating.

The way in which the person pays off a delinquent loan will also affect the movement of his score. The best way for a person to pay off a loan, at least in terms of its effect on his credit rating, is to pay the full amount owed. The creditor will mark the payment "paid in full" and report this to the reporting bureaus. However, if the borrower negotiates to pay less than the full amount owed, the creditor may mark some of the debt as written off, which will pull down the person's credit score.

The only real way of healing a tarnished credit record is time and new loans. As a person takes out new loans and pays them on time and in full, their credit rating will gradually improve. A full repair cannot occur until the delinquent loan is removed from the person's record at the end of seven years. But becoming current on outstanding debts and staying that way is the best short-term solution.

What Kind of Debt Consolidation Won't Hurt My Credit?

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Debt consolidation options are often looked at by borrowers to reduce their debt load and maybe help their credit score, but they can have the opposite effect. Whether a debt consolidation plan helps or hurts your credit depends on how you go about it. Usually, however, debt consolidation is a band-aid for more serious financial mismanagement.

Debt consolidation is a term used for several types of debt management. Traditional debt consolidation packages several loans into one larger loan, which hopefully lowers a person's monthly payment or at least only requires paying a single creditor. Debt management plans are also sometimes called debt consolidation. In a DMP, a credit counselor negotiates a more affordable payment plan for the debtor or advises him to stop paying to force the creditor to settle on the balance -- both of which have the potential to hurt a score. Settling a debt, even if you just negotiate lower payments, can lower a score by up to 125 points.

Opting for a debt management plan has the potential to destroy your credit, because the single payment to the counselor may not meet the monthly minimum for all creditors involved. This results in the creditor reporting the account as delinquent. If you can meet the minimums, your score improves. Also, some lenders look upon credit counseling as just as bad as bankruptcy. If you settle the debt, you could pay less than half of what you owe, but also hurt your credit score, because the account will say settled rather than paid in full.

All debt consolidation plans have the potential to harm your credit, because it might entice you to keep overspending. A debt consolidation loan, for example, usually adds to the cost of your debt financing, because it takes longer to pay off. Zero percent interest teaser rate credit cards may offer a reprieve from finance charges, but give you additional credit that could entice you to spend more. Also, acquiring a credit card or new loan might require a credit check, which dings your score by three to five points.

You may be able manage your current debt without getting a new loan. Credit card companies, for instance, may lower your interest rate if it looks like you won't be able you meet your payments. Also, try to make the largest payment possible on the loan with the highest interest rate, while meeting the minimum on your other accounts, suggests MSN Money Central.

How a Credit Score Is Created

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Every consumer in the United States that uses credit will get a credit score sooner or later, which will affect their ability to get terms on more credit. This number is constantly changing and takes into account a number of factors that reveal the individual's personal habits, dealing with how they handle money. A credit report begins when credit is issued to an applicant, but a credit score is not given right away.

A credit score will not be generated for someone until there is a certain amount of credit information available. Each of the three major credit bureau--EquiFax, Experian, and TransUnion--have their own credit scoring system and use a different numbering system.

MyFICO says that in order for a credit score to be calculated there are two things that must have taken place. The first is that you must have one credit account that has been open for at least six months, and secondly, that at least one account will have been updated within the past six months.

The reason for this time frame is so that the credit lender can know that the credit score is based on a sufficient amount of information, as well as information that is recent. Once this is in place, then the lender knows that a rather good picture of your current financial practices is in front of them.

According to Experian, there are three different types of information that goes into your credit score. This includes information about your various accounts, such as credit cards, loans, mortgages and student loans, inquiries from lenders when you apply for credit, and from public records including bankruptcies or tax liens.

The credit score is constantly changing. It is not a static number. There are five things that affect your credit score and each one of them affects it with a different percentage. How well you pay, for instance, affects your FICO (Fair Isaac Company) score by 35 percent. This means that things like late payments and bankruptcies will negatively affect your credit scores more than anything else. Other factors that go into your credit score include the amount of debt you have (30 percent), how long you have had credit (15 percent), new credit (10 percent), and the types of credit; the more types (mortgage, car loan, credit cards) the better, according to the Consumer Federation of America.

Credit reports will often contain errors on them. If found, they should be corrected by contacting the credit bureau and following the steps given on their Webpage. Having a low credit score for whatever reason will mean you do not get the best interest rate, longevity of payments, or the amount you want. Experian advises constantly checking your credit report in order to get better deals on things like insurance, cellphone contracts, and renting an apartment. Even a potential employer may take a look and it is possible to not get a job because of something they see on your credit report.

How to Get a FICO Expansion Score

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Traditional credit scores use statistical models that are based on traditional data. As the economy becomes tumultuous and as new consumers enter the market without a significant credit history, the Fair Isaac Corporation, which produces FICO scores (the credit scores most used by Equifax, TransUnion, and Experian), has recognized that new data is necessary to accurately predict the behavior of new consumers with regard to credit, bad debt, loans, bankruptcy, and other borrowing behaviors. The FICO Expansion score is an answer to the need for creditors to predict whether a consumer with a short credit history will pay back his or her debts and not default on loans in this climate of rapid change. Read on to find out how to get a FICO Expansion score of a consumer's credit history.

Instructions

To get a borrower's FICO expansion score, see http://www.myFICO.com/Business/. Using data pulled from the ScoreNet Network, Fair Isaac calculates FICO Expansion scores as another type of credit score. Creditors now have access to a way to rate borrowers who are new to credit or who have very little credit history, since the data gathered provides enough information to predict borrowing habits of these consumers with a short credit history.

Like the "Classic" and "NextGen" FICO scores, the FICO Expansion score predicts how likely a borrower is to become delinquent in the next two years.

Lenders can interpret the FICO Expansion score number similarly to the way they interpret other FICO scores.

Consumers who may not have been eligible for credit before because of lack of data that could predict their behavior may now become eligible for credit due to the usefulness of a FICO Expansion score.

Breakdown of Credit Scores

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Once you have received your credit report you may be wondering what, exactly, your score means and how it reflects upon you as a consumer. While the company that produces the scores, the Fair Isaac Corporation, FICO, does not provide exact numbers to break down the credit score ranges, financial experts provide guidelines for the ranges you should aim for to obtain the best interest rates.

Those with very good to excellent credit will get the best interest rates on credit cards and loans, and will have an easier time qualifying on credit checks for rentals and potential jobs. According to, Michael Feldman, co-founder of the website Mortgage IT, very good credit is qualified as being in the mid-700s and above. The Fair Isaacs Corporation credit scoring model runs up to 850; therefore, scores ranging between 750 and 850 are generally considered very good.

Most people fall into the "good" credit range. According to a Bankrate article by Steve Bucci entitled, "Grading Your FICO Score," 40 percent of people fall into the middle ranges: 20 percent of the population earn a score between 620 and 690, and another 20 percent receive a score between 690 and 745. Generally, those earning a score above 650 will receive the lowest interest rates, with further reductions for higher scores.

Those with credit scores from 620 and below may find themselves stuck with high interest rates, as lenders view them as a high credit risk. A low credit score indicates that you've had trouble repaying your debt in the past, and lenders will be weary of your ability to repay any money they loan you. Financial experts recommend boosting your score by paying your creditors on time, lowering your balances to no more than 40 percent of your credit limit, and keeping your oldest accounts open.

According to Smart Money writer AnnaMaria Andriotis, five factors determine your credit score. Timeliness of payments accounts for 35 percent of your credit score. Your credit utilization ratio, or how much debt you have in relationship to the amount of credit available to you, makes up 30 percent of your score. The length of your credit history is 15 percent, with new credit and the diversity of your credit making up 10 percent each.

How Can I Remove a Satisfied Judgment From My Credit Report?

8:44 PM 1 comment

If you have applied for financing, you have crossed paths with the credit triumvirate: the big three credit reporting agencies -- TransUnion, Experian, and Equifax -- that together keep track of your personal financial data relating to your creditworthiness. These agencies must comply with the Fair Credit Reporting Act (FCRA) in keeping your information updated and accurate, and you can help by reviewing your reports periodically and disputing any inaccuracies.

This federal legislation protects Americans' right to privacy, fairness and accuracy in reports regarding their credit histories. Under FCRA, you have the right to dispute any inaccuracies in any personal or business credit report that either the big three or any local agencies distribute by filing a written dispute that the agency is obligated by law to investigate. The FCRA requires credit reporting bureaus to delete any inaccurate or unverifiable information from your report. In addition, FCRA limits them to reporting most negative information for seven years -- or 10 years for bankruptcies -- at which time they must delete it.

According to Experian, "Civil judgments ... remain for seven years from the filing date. When an individual judgment is paid, the status is updated to show that it is satisfied. Like the business credit report, the judgment will show the new status for the remainder of the time until it is deleted." When you pay a legal judgment, the credit agencies update your report, according to court information, to indicate the judgment is satisfied, but unless you take further action, the record will not be deleted for seven years from the judgment date.

One way to have a judgment record removed from your credit report is to make an advance agreement with your creditor that when you have paid the court-ordered amount, the creditor will vacate the judgment -- dismiss it -- on the grounds that it has been satisfied, released or discharged. You can submit a copy of the signed order to vacate to any credit bureaus that have listed the judgment on your report. Because it is no longer valid, as far as the court is concerned, the FCRA prohibits its inclusion on your record.

Even if you are not successful with your first credit report dispute, persistence can pay off. You can file a request that the credit bureau re-investigate your dispute if you believe that the initial investigation was incomplete. In addition, if you encounter insurmountable difficulties in dealing with any of the big three credit reporting agencies, you can submit a complaint to the Federal Trade Commission (FTC), and although FTC does not resolve consumer complaints, it enters them in a national database accessible by law enforcement agencies worldwide.

What Are the Meanings of Credit Scores?

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Despite the fact that credit scores can help determine whether you get get a job or a mortgage, only about 3 in 10 Americans know what a credit score tells a lender, according to the Consumer Federation of America. Credit scores are a fast and effective means of determining your willingness to repay a debt rather than relying on subjective data, such as demographic information.

Credit scores offer a purely mathematical way to calculate the likelihood of a borrower missing a payment. A person with a score of 615 under the FICO system, for example, represents a 9 in 1 chance of defaulting on an account. By relying on verified financial data, credit scoring systems eliminate some of the bias and errors of informal credit underwriting.

Lenders hold the right to determine your creditworthiness, so one lender can decide a score of 615 might expose it to too much risk, while another creditor might consider this good enough for a loan. Also, not all scores are alike and some models use a different range than the standard FICO model. A 615 on the FICO scale is an OK risk, but that same score is very bad under the VantageScore system.

The credit rating agencies only include factors in their credit score algorithm that have a correlation to real world lending statistics or an ability to verify data. A job and salary affect whether you can pay a loan, but this can be hard to verify, because some people have side income -- for example, money earned doing odd jobs such as mowing lawns -- that would take too much time to document.

Things you can do to increase your credit score, such as paying bills on time, reflect positively on your credit file and likely your credit score. If you need credit now, try shopping around several lenders to find one willing to give you the lowest rate for a student or auto loan or mortgage -- the credit scoring model allows you 45 days to apply for as many of these types of loans as needed and only counts the applications as a single inquiry. Each time you apply for a credit card your score drops a little, as the credit bureaus do not allow rate shopping for revolving loans.

How to Get 10/10 on Your Credit Rating

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Lenders are much more stringent about the type of customers they lend to following the economic downturn and housing crisis of the late 2000s. Your credit rating is one of the factors that determine whether you qualify for a home, auto loan or credit card account. It also impacts your eligibility for employment at some companies. It is vital to keep an unblemished credit record to get approved for a loan, because even the smallest of mistakes will cost you.

Instructions

Obtain your credit report (see Resources). You can get your credit report once a year for free, or multiple times by paying a small fee. Check to be sure there no errors. If errors exist, contact the credit agencies to have them corrected.

Ensure you are on the electoral roll. Credit reference agencies obtain information from the electoral roll. It is vital to be listed; otherwise, it will appear as though you are starting fresh without any credit or as if you do not exist at all.

Establish a credit record by borrowing money and making timely payments to pay your balance on time and quickly. Companies want to know that individuals can handle debt. Opening an account with a mobile company or another provider with less stringent criteria can be a starting point to establishing a good credit record.

Check all bank statements. Set up standing orders and direct debits to automatically make payments for you, so all payments are on time and consistent.

Cancel and close any credit card accounts that are no longer being used and overdrafts that are no longer required. To be sure an account has been closed, write the company an actual notice of cancelation. Cutting up the credit card is not enough.

Do not apply for multiple credit applications. Each time a company checks the credit record it leaves a footprint, and too many footprints will most likely give companies the wrong impression of you and affect your score negatively.

Use any extra cash to pay off bills, loans and other credit arrangements so you are debt free or as close to being debt free as possible. Showing that you can handle debt responsibly will be taken as a positive sign by the financial organizations.

Ensure all arrears are up to date, and make sure there is a notice of correction put on the record. Nothing will get you a higher interest rate and prevent you from obtaining credit faster than missed payments. Pay off any arrears, and if there is a good reason for missing the payment, submit a notice of correction. Make sure all accounts that have been settled show on the credit record. In case of a County Court Judgment, a CCJ, a Certificate of Satisfaction by the county court will most likely need to be sent to credit reface agencies.

Sunday, January 29, 2006

Instructions

Friday, January 27, 2006

The Facts

Payment History

Reporting Period

Benefits

Credit History

Definition

Effects

Time Frame

Warning

Thursday, January 26, 2006

Consumer Reporting Agencies

Information Furnishers

Information Users

Liability for Violation of the FCRA

Identification

Significance

Considerations

Prevention/Solution

Wednesday, January 25, 2006

Choose The Less Severe Bankruptcy

New Habits

Get Credit Again

Payments

Spending Too Much

Not Having Enough Accounts

Settling Debt

Foreclosure and Repossession

Too Many New Accounts

Closing Accounts

Neglecting to Check Report

Filing Bankruptcy

Tuesday, January 24, 2006

Instructions

Credit Cards

Home

Renting

Other

Monday, January 23, 2006

Payment History and Length of Credit

Balances Owed

Types of Credit Used

Other Considerations

Insurance Costs

Sunday, January 22, 2006

On-Time Payments

Payment Amounts

Credit Limits

Charge-Offs

Bankruptcy

High Interest Credit Card

Bad Credit Auto Loan

Authorized Signer

Debt and Credit Scoring

Learn from Mistakes

Credit Report

Saturday, January 21, 2006

Medical Debt

Credit Reporting Agencies

Collection Agencies

Medical Providers

Friday, January 20, 2006

Instructions

Credit Counseling

Debt Consolidation

Debt Reduction

Considerations

Thursday, January 19, 2006

Consumer Credit Reports

The Seven-Year Rule

Exceptions

Removing Old Debt

Instructions

Remove the Freeze

Wednesday, January 18, 2006

Instructions

Identification

Debt-to-Income Ratio