How To Repair Debt Letters

Credit repair letters are easy to write, but they are supposed to be used for only one purpose -- to challenge incorrect information on your credit report. The credit bureaus are legally obligated to respond within about 30 days after receiving your letter. Federal law requires the bureaus to conduct investigations and prove that the information on their reports is true. If they cannot prove it, or cannot do it within the time allotted, the information must be removed. That loophole sometimes allows negative information that is accurate to be legally removed as the result of a letter.

Instructions

1

Obtain copies of your credit reports from the Web site Annual Credit Report (www.annualcreditreport.com). You can order them from the home page or call 877-322-8228. The site was established by the nationwide credit bureaus -- TransUnion, Equifax and Experian -- to provide free credit reports as required by federal law. You're entitled to three free credit reports every 12 months, including one from each of the bureaus.

2

Review your credit reports and find accounts that you would like to dispute. You may see an account that does not belong to you, or one showing an incorrect credit line. The Fair Credit Reporting Act gives you the right to challenge anything on your report, even if you know the information is accurate. Thus, you can write letters disputing any of your accounts.

3

Write your letters. Include your name, address and Social Security number. List every account you are challenging and the reason for your challenge. You can deny owning an account, that you never paid an account late, or that you paid an account in full and it should not be listed as delinquent. You can choose other reasons. Then mail your letters to the credit bureaus. The credit bureaus will contact your creditors regarding your account and respond to you by mail with their findings. Sometimes, creditors are slow to respond to inquires from the credit bureaus, and that can lead to information being deleted from reports.

Equifax
P.O. Box 740241
Atlanta, GA 30374-0241
800-685-1111
www.equifax.com

Experian
P.O. Box 2104
Allen, TX 75013
888-397-3742
www.experian.com

TransUnion
P.O. Box 1000
Chester, PA 19022
800-916-8800
www.transunion.com

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How to Pay Someone to Clean Up Your Credit

Those who find themselves struggling to make monthly credit card payments may want to consider paying someone to clean up their credit. Credit repair companies offer services that can do just that. The problem is, the Internet is flooded with scam artist companies offering to repair credit. It is important to be smart when searching for the right company to help repair your credit.

Instructions

1

Do some research. Finding a legitimate credit repair company can seem like a grueling task. Running a Google search will yield hundreds of thousands of companies promising to fix your credit. Take the time to call the companies that seem like a best fit for your financial situation. Talking on the phone with a real human being will be a good indicator of whether the company is going to offer true help in cleaning up your credit.

2

Read the Better Business Bureau's recommendations for when the time comes to select a credit repair company (See Resources). When choosing a credit repair company, there are a few questions that you should always ask. These questions include: What services do you offer? Where can I obtain free educational materials? What are the fees? Will there be a formal written agreement? Are you licensed to offer services in the state? and, What are the qualifications of your credit counselors? These questions are recommended by the Federal Trade Commission.

3

Look for signs that a credit repair company is no good. According to the Federal Trade Commission, some of these signs may include: the company wants you to pay for credit repair services before it provides any services; the company refuses to tell you your rights and what you can do for yourself for free; the company recommends that you do not contact any of the three major national credit reporting companies directly; the company tells you it can get rid of most or all the negative credit information in your credit report, even if that information is accurate and current; the company suggests that you try to invent a "new" credit identity --- and then, a new credit report --- by applying for an Employer Identification Number to use instead of your Social Security number; or company advises you to dispute all the information in your credit report, regardless of its accuracy or timeliness.

4

Obtain a copy of the "Consumer Credit File Rights Under State and Federal Law." Credit repair companies are required by law to give clients a copy of this document prior to the signing of any contract.

5

Read thoroughly the contract, which should spell out your rights and obligations, prior to signing it.

6

Ensure that the contract specifies the payment terms for services, including total cost; a detailed description of the services the company will perform; length of time it will take to achieve the stated result; any guarantees offered by the company; and the company's name and business address.

7

Sign the contract only when you are certain that the company is genuine and there to help.

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Three Largest Credit Reporting Institutions in the U.S.

According to the Farlex Financial Dictionary, "a credit report is a summary of your financial history. Potential lenders will use your credit report to help them evaluate whether you are a good credit risk." Experian, TransUnion and Equifax are the three major credit reporting bureaus. Consumers are entitled to one free credit report per year from each bureau, says Farlex.

Experian

Experian was created after TRW Information Systems & Services and the CCN Group merged in 1996 under the British conglomerate, GUS plc. TRW was once the largest credit bureau in the U.S. and CCN was an information services and credit bureau in Europe before the two merged to form what is now one of the global leaders in credit reporting and protection. Experian also acquired consumerinfo.com and Scorex; the acquisition of those two companies was profitable for Experian. In 2006, Experian demerged from GUS, as the parent company deemed them ready to stand alone In 2007, Experian gained controlling interest in Brazil's "Serasa," which was the world's fourth largest credit reporting bureau at the time. In 2010, Experian is the leader in global information services. They employ approximately 15,000 people and have clients in 65 countries. Experian has offices in 40 countries, according to Experian.

TransUnion

TransUnion began in 1968 as a rail-car leasing company. The corporation did not begin to deal with credit until 1969 when they acquired "CBCC (Credit Bureau of Cook County), which manually maintained 3.6 million card files in 400 seven-drawer cabinets," according to TransUnion. By 1988, the corporation had information on all "market active consumers" in the U.S. During the 1990s, TransUnion expanded its real estate division so lenders could access information on prospects nationwide. In 2002, TransUnion acquired TrueCredit.com and began offering credit protection services to consumers. As of 2010, TransUnion operates in 25 countries, has maintained the credit histories of more than 500 million consumers and has 500,000 customers. TransUnion has many locations throughout the world.

Equifax

Equifax began in 1899 as RCC (Retail Credit Company). It grew quickly and by the 1920s, it had offices throughout North America. In 1975, the company changed its name to Equifax. Equifax has locations worldwide but its headquarters is in Atlanta, Georgia. It employs approximately 7,000 people in 15 countries. Like Experian and TransUnion, Equifax is more than just a credit reporting institution. It also provides "business credit intelligence, portfolio management, fraud detection, decisioning technology, marketing tools, and much more," according to Equifax.

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How to Do a Credit Report on a Renter

Getting a credit report for a prospective tenant is an important step that you can take as a landlord to limit your potential risk. Credit reports show the record of the tenant for paying her bills on time. Most importantly, it will show whether that tenant has an eviction or foreclosure on her record. While past behavior is not necessarily indicative of what she will be like in the future, it's important enough to want to know before you make a decision.

Instructions

1

Ask that the tenant provide a signed confirmation of her consent to allow you to order her credit report. You can put this on a tenant application form or draw up a separate contract. You will need to be able to prove that she consented in order to get a copy of her credit report. You'll need her full name and social security number as well.

2

Pay the subscription fee for one or all of the three major credit bureaus' reporting services. The three main bureaus for consumer credit reporting are Transunion, Experian and Equifax. If you want a complete picture of your tenant's credit rating, you'll need to order subscriptions for each service. You may cancel afterward if you only need one report or a limited number of reports.

3

Request credit reports from each of the bureaus for your tenant. When requested, send copies of the tenant's signed agreement in order to receive her credit reports.

4

Review the credit reports and use them to inform your decision on bringing in the tenant.

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Why Doesn't My Lease Show Up on My Credit Report?

Credit reports are compilations of information assembled by credit reporting bureaus about your lending history. Any trade line, including a line of credit or a loan, can appear on your credit report. Many leases involve the extension of some form of credit to you. While these leases may appear on your credit report, in many cases they will not, for a variety of reasons.

Credit Reports

Your credit report includes only information that pertains to your access to credit, debt load, and record of paying back loans. While some leases are structured so that you're in effect a debtor -- for example, a lease may allow you to live in a property or own an object before it has been fully paid off -- other leases are structured in such a way that the transaction doesn't involve the extension of credit.

Vehicles Leases

When you take out a lease for a vehicle, the lender will usually report the transaction to a credit reporting agency. However, in some cases, the lease may not qualify as a credit transaction. For example, when you rent a car at a car rental company, you're not being extended any credit. This short-term lease, therefore, does not appear on your credit report.

Property Leases

Often when you rent an apartment on a long-term lease, the lease will appear on your credit report. However, some kinds of leases, such as month-to-month leases in which you pay in advance each month, don't count as a credit transaction. While the lease itself may not appear on the credit report, if the landlord made an inquiry into your credit history, a record of the inquiry will appear.

Considerations

Credit reporting is not mandatory. While many lenders make it a practice to report loans and lines of credit to credit reporting agencies, some do not. Even if a lease involves the receipt of some credit on your part, if a credit reporting bureau is not told about it, it will likely not be able to discover it on its own. In that case, the lease would have to appear in a public record first.

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How to Build a High Credit Score

Building and maintaining a high credit score can be challenging under the best of circumstances. But knowing what variables the credit rating agencies look for can make the process much less difficult. Although the exact formula for determining your score is a secret, getting a good score requires more than just eliminating all of your debt.

Instructions

1

Control your spending. This is still the most important aspect of maintaining a good credit score. Don't give in to impulse buying, especially with big-ticket items like cars or boats. Be certain that you can comfortably fit the payment of anything you buy into your budget.

2

Keep at least some of your old credit card accounts open, even if you're not using them any more. The rating agencies will consider the number of accounts you have open, and if you close out all of your old accounts, then your ratio of outstanding debt to your total credit lines will diminish as will your score.

3

Limit the amount of money you spend on your credit cards. Never max out your credit card or revolving debt if you can help it. Try and limit your balances to no more than two-thirds of your credit limit. The rating agencies will look favorably on this and increase your score over time accordingly.

4

Make your payments on time, and pay off your credit card balances in full each month, if possible. This will not only prevent you from paying interest on your balances but will also improve your score over time. Avoid late payments, as a single late payment can make a sizable difference in your score.

5

Find out your credit score by pulling your credit reports from the three rating agencies. You can do this each year at the Annual Credit Report website. This is the only site that allows you to pull all three of your reports (from Transunion, Experian and Equifax) for free each year. Each agency will assign you a credit score from 350 to 850, based upon the amount of debt you carry and your record of paying it off on time. Each score will probably differ slightly; the middle score is often what lenders will use to determine whether you qualify for a loan. Check your reports to make sure that everything in them is accurate and current. Report any discrepancies to the appropriate rating agency immediately if you find items on them that are inaccurate.

6

Purchase identity theft protection to shield you from identity theft. Identify theft can ruin your credit score for years to come and cost you a great deal of time and money to deal with. Many financial institutions offer this kind of protection.

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How Long Does it Take Once I Pay a Collection Bill for it to Show As Paid on My Credit Report?

Creditors typically make monthly reports to the credit bureaus. In instances where you have paid off a delinquent debt, the debt should show as having been paid within about 30 days of the pay-off date. However, in some instances creditors fail to notify credit bureaus about paid-off debts, and even if the debt shows as having been paid, you may not see a big rise in your credit score.

Errors

Under federal law, the three major credit bureaus -- Equifax, Experian and TransUnion -- have to provide you with a free annual credit report through the website annualcreditreport.com. This law exists so that you have the opportunity to review you credit report and notify the bureaus of any errors. When you default on a debt, your creditor may sell the debt to a collection firm. That firm then reports the debt to the credit bureau and this could cause the debt to appear twice, once with the original creditor and once with the collection firm. When you pay it off, the collection agency version of the debt may show as settled but the original debt may still show as unpaid. Resolve this by sending copies of your payoff receipt, details of the original loan number and a letter of explanation to each credit bureau. Bureaus normally rectify issues within 30 to 45 days.

Seven Years

When you default on a debt, it causes your credit score to drop, but the debt also shows up on your credit report in a number of ways. Firstly, it shows up as a 30-day late pay. Credit bureaus also record it as being late at the 60-, 90- and 120-day marks. If the creditor writes off the debt as a loss, it shows up as a "charge off," and it also shows up as a debt that you currently owe. When you pay it off, it appears on your report as "paid" rather than delinquent, but a record of the charge-off and the late payments remain on your credit report for seven years.

Credit Score

A number of factors affect your credit score, including your balances as a percentage to your available credit and your monthly payment history. The credit bureaus rely more heavily on recent credit activity rather than past events. Therefore, if you pay off a years-old delinquent debt, it may have little positive impact on your credit score because your most recent credit activity has a much greater impact on your credit score.

Considerations

It can take months to pay off a delinquent debt and ensure that it shows as paid on your credit report. Furthermore, you may see little or no change in your actual score once you settle the debt. However, while debt settlement does not always drastically improve your credit score, it can make it easier for you to get a bank account or to sign up for any kind of contract service. Many banks and service providers refuse to offer you new accounts until you have settled your delinquent debts. A bank can even refuse to open a checking account in your name until you have settled your past-due debts. Therefore, your payment history as well as your actual credit score can have a major impact on your life.

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How to Check a Credit History in India

Everything we do financially can have an effect on a credit rating and, as with most things in life, going down is easier than going up. It is important that you check your credit history at regular intervals to make certain that it is correct. Inaccurate files can mean refused credit. It is only recently that it has become possible to check your personal credit history in India. The service is not free, and only one agency is appointed to offer this service.

Instructions

1

Apply in writing. This is the only way currently available to check your credit history in India. You must complete the official request form, which can be downloaded in the Resources section.

2

Provide original documentation to get your credit history. Copies will not be acceptable. These include passport, voters' identification paper or a Permanent Account Number, which is produced as a 10-digit alphanumeric listing on a plastic card (similar to a credit card) and is issued by the tax department of India.

3

Provide original documentation proving your place of residence; these may include your latest bank account, electricity or telephone statement.Copies are not acceptable.

4

Purchase a demand draft to the value of Rs 142/- and make it payable to the Credit Information Bureau (India) Limited to be payable in Mumbai; this fee is not refundable. A demand draft or "DD" as it is referred to, is the method that most Indian banks use for transferring money. You will need to obtain an application form from your bank to purchase a demand draft.

5

Ensure that all the documents are placed in one envelope together with the fee and mail to CIBIL, P.O Box 17, Millennium Business Park, Navi Mumbai -- 400710. Your credit history report will be sent to you by mail upon receipt and verification of the completed information.

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Does Paying Off a Defaulted Student Loan Restore Credit History?

If you default on any debt, you will receive negative notations on your credit file. Paying the debt afterward does not undo the damage to your credit report. In the case of some defaulted student loans, however, it is possible to repair your credit history by bringing the loan current.

Types

Student loans can be categorized as either federal or private. Federal loans are distributed by the U.S. government and private loans are distributed by private institutions such as banks.

Loan Rehabilitation

If you want to bring your defaulted federal student loan current, you must undergo loan rehabilitation. This requires you to make at least nine payments on time to bring your loan out of default. If your student loan is private, you may need to do no more than catch up on your payments.

Credit History

Once you successfully complete loan rehabilitation for your federal student loan, all evidence of your previous late payments will be removed from your credit history. Each payment notation on your federal student loan will update to "paid as agreed."

Considerations

You may be able to negotiate with your private lender to remove some or all of your late payment notations once your student loan is no longer in default. A private lender, however, is under no obligation to alter your credit report.

Warning

A defaulted federal student loan will prevent you from being eligible to receive government-backed mortgage financing such as Federal Housing Administration and Department of Veterans Affairs loans.

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How to Stop Unwanted Inquiries on Your Credit Report

Whenever an individual or company pulls up your credit report, it appears as an inquiry on your credit report. Hard inquiries are those by a potential lender that you initiate through an application for credit, and these affect your credit score. Soft inquiries include checking your own credit report, having an employer or landlord check your credit report, and inquiries for preapproved or prescreened credit card offers. You can take steps to stop unwanted inquiries of both types.

Instructions

Stop Unwanted Hard Inquiries

1

Apply for new credit only when you need it. Because an application generates a hard inquiry that affects your credit score, you should consider whether you want new credit enough to have an inquiry.

2

Ask your credit card company if it pulls your credit report before raising your credit line. If so, avoid the inquiry by not requesting a credit line increase. Some credit card companies will periodically increase your credit line without checking your credit report.

3

Do not apply for a checking account if the bank must make a hard inquiry to give you the account. You can ask what its policies are before applying for the account.

Stop Unwanted Soft Inquiries

4

Visit the official OptOutPrescreen.com, which allows you to remove your name from the list of people who can receive prescreened credit card offers, each of which generates a soft inquiry on your credit report.

5

Click on the "Click Here to Opt-In" or "Opt-Out" button at the bottom of the page.

6

Select the option next to "Electronic Opt-Out for Five Years" and click "Submit."

7

Type your name and address into the appropriate boxes. You can also type in your date of birth and Social Security number, which help improve the chance that the website will be able to find your record and remove you from the list. Click "Confirm" when you are done.

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What Is a Bad Beacon Credit Score?

As of 2010, none of the three major credit reporting companies sells the FICO score used by most lenders, but they do provide credit scores based on the FICO model. Experian, for instance, sells the Beacon score. The Beacon score has the same numerical range as the FICO model, and it weighs the variables in its credit score formula much the same way the FICO formula does. Thus, a bad Beacon score means you probably have a poor rating at the other credit rating companies.

Identification

The FICO and Beacon scores range from 300 to 850, for a 550-point spread. The average score in the U.S. was a 692 in January of 2011, according to Experian. Having a score below 692 does not mean you have a bad score. Lenders decide whether to approve someone for a loan and what interest rates to charge based on several factors, although credit score is one of the most important factors. Usually, anyone with a score below 620 is considered a bad credit risk, according to several reports provided by the Credit Scoring website.

Interest Rates

A poor Beacon score likely disqualifies you for most loans. You may have to go to a sub-prime lender, which compensates for your added credit risk by offering its worst interest rate available. In 2008, for instance, the difference in interest rates between the best and worst scores was about 4.3 percent. On a 30-year, $100,000 mortgage, this adds up to an extra $110,325 over the life of the loan, or $307 per month.

Other Effects

A poor Beacon score negatively impacts areas of your life other than your financial activity. Landlords may deny you a residence because you are more likely to break your lease than someone with good credit. Insurers could deny you coverage or raise your premiums, because people with poor credit tend to make the most claims. You could fail to land a job if the employer believes your credit report shows a low amount of integrity and financial duress than could compromise the position.

Tip

Equifax, Experian and TransUnion -- the three main credit reporting bureaus -- provide each consumer with a free credit report each year through AnnualCreditreport.com. You should note any erroneous negative items on your report and attempt to remedy the situation by filing a dispute. If you have missed payments, make it a priority to pay on time. Also, shop around. A Beacon score that's unacceptable for one lender could be acceptable for another.

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How to Obtain All Three Credit Reports

Credit is one of the most important financial aspects of adulthood. Credit worthiness determines whether someone can obtain a loan, travel or receive a good rate on auto insurance. One way that lenders and financial institutions determine someone's credit rating is to pull a credit report. For the consumer, obtaining all three credit reports from Experian, TransUnion and Equifax before obtaining a loan will prevent any uncertainty when a lender pulls the report.

Instructions

1

Gather your personal information and be prepared to enter into a computer or present it over the phone to request a report. Make sure that your Social Security number, prior addresses, employers and salary information is accurate and up to date.

2

Visit the Equifax website and choose from a variety of options based on need. Here you can obtain a three-in-one report---this pulls information from all three reports, including Experian and TransUnion, for around $30. The report also contains a credit score. In addition, Equifax offers services such as ID Patrol, which, for around $15, notifies the member if his credit information is showing up on the Internet or elsewhere. There is also a Credit Watch Gold service for around $10 a month that alerts a member of any changes on his report and offers unlimited credit reports all year. In addition, a score watch, for around $10, sends a free FICO score to the member's email and suggests the best time to apply for a new loan when rates are at their lowest.

3

Visit the Experian website. Here you can pull your credit report at any time. This site offers a combination of all three reports, FICO scores and fraud protection alerts. Prices start around $10 for just an Experian report or around $40 for all three reports.

4

Inquire at TransUnion to obtain a credit report through its website. Here you can pull all three national credit bureaus, or just the TransUnion report. One beneficial service TransUnion offers is credit monitoring. This ongoing service is around $15 a month and gives you unlimited access to your credit report and score, as well as notification of changes and new account openings. TransUnion also delivers a financial analysis using charts and graphs.

5

Obtain all three credit reports for free once a year at AnnualCreditReport.com. This is the only location that offers 100-percent free credit reports for consumers once every 12 months. Be sure to have personal information ready before filling out forms.

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Why Do Some Employers Check Credit Reports?

Financial institutions want to check a borrower's credit: to ensure he is responsible with money. Employers, on the other hand, check credit so they can make a character -based assessment of a possible employee. They can infer many things about a person based on their credit.

Profile

Someone with a bad credit score may be seen as having a less than stellar character or have commitment issues. Some employers fear this will transfer into their work life.

Security Reasons

Jobs on the state and federal level may check credit to determine how trustworthy an employee may be. If the job is highly secretive, an employee may be viewed as a security risk, therefore unemployable.

Money Institutions

Companies that handle large sums of money like banks and investment firms almost always run credit checks on potential employees. They may feel that someone with bad credit may be tempted to steal while someone with great credit may not feel the necessity to steal.

Work History

Sometimes employers may want to verify work history. A credit report can usually substantiate the applicant's claims of their former places of employment.

Considerations

If you have spotty credit, you may want to research laws governing what an employer can and cannot use against you. You should know your credit score, and if the question arises during an interview, do not lie about it. Remember, if they decide to run a credit check on you, they have to have written consent from you.

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Does Co-signing for a Mortgage Hurt My Credit?

A credit score, or FICO score, is a number that signifies the risk of lending to a particular borrower. Your credit score can affect how easily you can access credit and the interest rates you are charged on debt. When you co-sign a mortgage, you agree to pay for the debt if the primary borrower does not pay. Co-signing is likely to damage your credit score.

Outstanding Debt

The amount of debt you have versus your total amount of credit is one of the main factors that determines your credit score. The more debt you have, the lower your credit score will tend to be. Co-signing for a mortgage essentially adds the full amount of the mortgage to your outstanding debt. According to MSN, "Even if the loan is repaid on time each month, another lender may consider the amount of debt that you co-signed when determining if you already have too much credit." This can hurt your credit score.

Payment History

Your payment history on debts is the single most important part of your credit score. If you've never missed a payment for a debt in your life, your credit score will tend to be high, while missed payments can significantly reduce your credit score. The reason lenders require co-signers is that borrowers with poor credit are very likely to fail to make payments. If the person you co-sign for happens to miss a payment, you are liable for the missed payment, even if you didn't know she failed to make the payment. It can be difficult to make mortgage payments for someone else in addition to your own debts. Co-singing increases the chances of missed payments.

Potential

In the event that the primary borrower cannot pay a co-signed mortgage, lenders may go after the co-signer rather than the primary borrower to collect the debt. According to MSN, "the bank can do more than ruin your credit rating: it can sue you and get a judgment against you for the amount of the loan plus interest." The bank may even be able to charge its own legal fees to you as it attempts to collect.

Considerations

In a best-case scenario, the person you co-sign for will pay back the mortgage on time each month for the life of the mortgage. Even in this case, co-signing will likely reduce your credit score due to the increase in outstanding debt. The Federal Trade Commission warns that co-signers often end up paying. Financial issues like co-signing can harm personal relationships in addition to credit scores.

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I Want to Raise My Credit Score

Raising your credit score not only increases your chances of qualifying for a new loan or credit card, but it also decreases the interest rate you pay on borrowed money. Use several strategies to raise your credit score, some of which have an immediate effect and others that require a few years to have a significant impact.

Lower Utilization Ratio

One of the fastest ways to raise your credit score is to lower your utilization ratio. This number is the ratio of the amount you are currently borrowing on your credit cards to the amount you could borrow, or the credit limit. For example, if your credit card has a limit of $4,500 and your last bill listed a balance of $3,247, your utilization is 72 percent. Liz Pulliam Weston of MSN Money recommends having a utilization ratio of no more than 30 percent on each credit card. Getting the ratio down to 10 percent or less can help even more.

Pay On Time

The single largest factor in your credit score is your payment history, which makes up about 35 percent of your score. This portion not only considers how many late payments you have had, but also the number of accounts sent to collections, accounts settled for less than owed and negative public records, such as bankruptcies or court judgments. The best way to raise your credit score in this area is to set up payment reminders or automatic payments on all of your accounts so you always pay on time. If you are having trouble affording your payments, reduce other expenses in your budget so you have money to pay on time. Making on-time payments will not get rid of previous mistakes, but you will slowly see your credit score rise in the upcoming years.

Avoid New Credit

For the best credit score, you should have at least one credit card and at least one installment loan, such as an auto loan, student loan or mortgage. After you have these, don't get any new credit accounts unless you absolutely need them. New credit hurts your score by adding a credit inquiry and new account to your credit report and shortening your average account age. If you do need new credit for a mortgage or auto loan, shop for rates within a two-week period so you have only one credit inquiry count against you.

Check Credit Report Accuracy

None of the credit improvement techniques works if the accounts are being reported inaccurately on your credit report. For example, even if you make every payment on time, sometimes a lender will accidentally report a missed payment for you. Get a free copy of each credit report from the Annual Credit Report website and look over the report to verify that everything is accurate. If you find anything wrong, initiate a dispute with the credit bureau. The bureau's phone number or website for disputes is listed on the credit report.

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What Information Is Found on a Credit Report?

A credit report is a detailed and current report of your credit history and activity. Your credit report is one of the most important pieces of information you have in protecting your name and assets and in helping you acquire credit for a credit card, car or home loan. Typically, when you apply for credit, a creditor will refer to your credit report.

Personal Information

Your name, Social Security number, address history, employment history and driver's license are on your credit report.

Credit History

Your credit report includes any and all of your accounts (including past due and closed), credit cards, unpaid child support, mortgages and loans.

Credit Inquiries

Your credit report contains information on any credit inquiries within the past 12 months.

Disputes

Your credit report will also contain any delinquent accounts as well as information on how to dispute any information.

Credit Score

A credit score, or FICO, though not included on your credit report, is another key piece of information that lenders use to determine credit. A credit score may range from 340 to 850, with anything over 680 considered to be good.

Considerations

It's a good idea to maintain access to your credit report. While the Fair Credit Reporting Act (FCRA) requires each of the three credit companies (Equifax, Experian and TransUnion) to provide you with one free report per year, it may be worth it to pay for constant access (about $14 per month).

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Will Going Over My Limit on My Secured Card Affect My Credit Score?

About 14 percent of credit card holders are close to reaching the limit on their card at any given time, according to the 2008 CNN article "Credit: Know Your Limits." While people often think fees and rate hikes are the most serious consequence of going over the limit on a credit card, doing so also damages your credit. You can go over the limit on a secured card and damage your score just as much.

Identification

Secured credit cards are credit cards, usually with a low limit, backed by a security deposit the same as or close to the limit on the card. When you spend money, the issuer taps the card's credit, not the deposit. On either a secured or regular card, going over the limit will damage your credit because your credit utilization ratio increases. Credit utilization is the ratio of credit used to the balance available and falls under the "Amounts Owed" category of the FICO score formula, which counts for 30 percent of your credit score.

Considerations

Creditors do not report fees and surcharges to the credit reporting agencies, but they report balances over the spending limit. When other lenders pull your credit report, they will see you went over your limit and may consider you too risky to lend to. If you receive credit after going over the limit on your secured card, you may see a higher than normal interest rate.

Solution

Going over the limit on a secured card once or twice probably won't raise any red flags with lenders. If you are chronically over the limit, stop making purchases on the card or try to raise your limit, which will require you to increase the size of your deposit.

Tip

Ideally, you should only make small purchases on a secured line to rebuild your credit. Secured credit cards often have higher interest rates than normal credit cards, and some secured cards exist only to collect exorbitant fees from people going over the limit or paying late. After a year or so of good payment history, the lender will probably offer an unsecured line.

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How Will Credit Be Affected After Getting a Car Repossessed?

The more reliable you are about paying your bills on time, the higher you can reasonably expect your credit score to be. If you fail to pay your car payment, your lender may repossess the vehicle. The repossession will then appear on your credit report and hurt your score.

Facts

A car repossession will have a different effect on your credit score depending on how high it is. An individual with a high credit score can expect to lose more points than an individual with a low credit score.

Time Frame

The account you held with your lender, including the notation that the vehicle was repossessed, will appear on your credit report for seven years from the date the repossession occurred.

Considerations

The missed payments that resulted in the repossession may hurt your credit score more than the repossession itself. Your payments to your creditors are responsible for 35 percent of your credit score.

Misconceptions

Some individuals offer to give their cars back to their lenders voluntarily to mitigate damage to their credit score. Unfortunately, a voluntary repossession is just as damaging to your score as an involuntary repossession.

Effects

The more recently a repossession occurred, the greater the effect it will have on your credit.

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How a Foreclosure is Reported to the Credit Bureaus

The biggest worry of going through a foreclosure is, of course, losing your home. But you should also be concerned about the effect on your credit. Foreclosure can be very hard on your credit score and a note of the foreclosure remains on your credit report for seven years.

Lender Reporting

Your mortgage account is reflected on your credit report from the moment you take out the loan. Your monthly payment history is noted on your report via regular reports that your mortgage lender makes to the credit bureaus. When you begin to fall behind on your loan, this will appear on your report, and then your lender will also report the foreclosure action to the bureaus.

Public Record

Even if you can persuade your lender not to report your foreclosure to the bureaus, it may still appear on your report as a matter of public record. If you live in a judicial foreclosure state, your court proceeding is a public record. If you live in a nonjudicial foreclosure state, the notice of default and then the notice of sale must be lodged at the county recorder's office. All of these public records can be accessed by the credit bureaus and the information added to your credit report.

Effects of Foreclosure

Depending on the level of your score before the foreclosure, the action can lower your credit score between 85 and 160 points. The higher your score previously, the bigger the fall. It's likely that a lot of damage has already been done to your score, even before the foreclosure. Defaulting on your mortgage payments for up to 90 days, as is common with foreclosure cases, will have almost as severe an effect on your score as the foreclosure itself.

Alternatives

Some homeowners avoid foreclosure through either a short sale or a loan modification, believing these alternatives may be better for their credit. In fact both of these events will also be reported on your credit report by your lender. A short sale can result in a drop in your credit score equal to that of a foreclosure, depending on your situation and your previous credit history. A loan modification will also show up on your report as an alteration of your mortgage account "not as originally agreed."

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Will Paying Off Charge Offs & Collections Boost My Credit Score?

Financial experts, such as Steve Bucci of Bankrate, say that paying a charge-off or collection account does not affect your credit score, but in some circumstances it might. However, the effect on your credit score usually is negligible. Far more important to creditors is the fact that you paid a collection or charge-off.

Identification

The status on a charge-off or collection account -- paid or unpaid -- does not affect your credit score; the credit scoring model looks at all such accounts as a negative. However, the outstanding balance on these accounts can affect your score, because the FICO credit scoring model counts unpaid collections and charge-off accounts in the "amounts owed" variable. Your total amount of unpaid debt counts for 30 percent of your FICO score, so paying these accounts could significantly boost your credit score if they comprise most of your debt.

Other Benefits

Some creditors may focus more on your actual credit history than on your credit risk rating. If you pay off a collection or charge-off, your lender may consider you a better risk than what your credit score states, because paying an old debt shows you follow through on a commitment to pay back money your borrow. Settling the old debts also means the creditor cannot surprise you with a bank seizure, wage salary or other judgment that could impact your ability to repay future debt.

Considerations

You might do better to let a collection account or charge-off go unpaid if it is close to the federal credit reporting time limit. Both type of accounts can only stay on your credit report for seven years after the first delinquency. Even if you have several years left until the accounts fall off your report, the money you spend to repay the debts might benefit you more if you use it to keep current on other debts and prevent more defaults.

Tips

Dispute the negative accounts if you think there might be an error or the creditor or collections agency did not keep proper records. Creditors must report accurate information and be able to verify the facts they report to the major crediting bureaus. You can also try to settle for less than the full amount, but make sure to get a commitment in writing that the creditor will report the account as "paid as agreed" before remitting payment.

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How Do I Change My Credit Report?

If you apply for new credit, such as a mortgage, car loan, credit card, or other form, the lending agency will likely use your credit report as a deciding factor in whether you get the loan, or in determining your interest rate. Any errors on your credit report can harm your chances of receiving the credit you need. The Fair Credit Reporting Act requires that creditors and credit reporting agencies provide accurate information in these reports. Because of this, all three of the major credit reporting agencies allow consumers to request changes to errors in their personal credit reports.

Getting Your Credit Reports

Equifax, TransUnion and Experian are the three main credit reporting agencies. Some lenders may look at just one of these reports, some may look at two and some may look at all three. It is important that you obtain copies of all three reports since they can contain very different information. Without knowing which report your lender will pull, it's best to be prepared by having all three correct and ready to go. The websites of all three credit bureaus can be found in the Resources section below. Or, you may request all three of your credit reports from AnnualCreditReport.com for free once per year. Find a link in References.

Making Changes

Once you have all three of your credit reports, you will want to go over each one carefully. Check your address and contact information, employment history, account names and numbers, payment histories, and public records such as bankruptcies. If anything is in error, you can start the dispute process to get it cleared up.

The credit reporting bureaus provide ways to make disputes through their websites. But if your disputes are more complicated or you have documentation to share, it is better to handle the dispute through the mail. Here are the mailing addresses for handling disputes:

Equifax Information Services, LLC
P.O. Box 740256
Atlanta, GA 30374

Experian Credit Bureau
475 Anton Blvd.
Costa Mesa, CA 92626

TransUnion Consumer Solutions
P.O. Box 2000
Chester, PA 19022-2000

Write the credit reporting bureau a letter explaining the error or errors that you have found. Explain what account or other information is incorrect and also spell out what the correct information should be. If you have any written documentation that supports your position, include a copy of that documentation with the letter. Never send originals, as you will not get them back. You may also want to include a copy of your credit report with the error highlighted to make it easier for the person reviewing your claim to understand the nature of the problem.

Once the credit reporting bureau has your information, it has 30 days in which to conduct an investigation. The bureau will contact the creditor to clear up any misinformation. If your claims are correct or if the creditor does not respond within 30 days, the credit reporting agency will make the changes requested. At this point, the credit reporting bureau will send you a letter detailing the results of the investigation and what actions were taken.

If there are negative items on your credit report that are accurate, they will automatically be removed in seven years, or 10 years if it is a bankruptcy, from the time they occurred.

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How to Stop a Debt Collector's Hard Credit Pull

A hard credit pull is when a creditor identifies a problem with your account, namely a late or missed payment, and inquires about you via credit bureaus. When a debt collector shows up on your report, it is called a hard pull because it can negatively affect your credit score; meanwhile, a soft inquiry just checks the status of your other accounts. Though there is no guarantee that it will work, you can take steps to try to stop a debt collector from doing a hard credit pull.

Instructions

1

Contact the debt collector as soon as you receive a letter or have a discussion at the first call. In many cases, if the debt collector can't get in touch with you, he may resort to going to a credit bureau instead to find out how to reach you. Your credit report contains information about your most recent addresses and phone numbers. The debt collectors may also look to see if you have available credit lines to pay off the debt.

2

Collect information related to the debt from the bill collector and negotiate to come to a proposed settlement regarding the matter.

3

Request that as part of the settlement the debt collector agrees not to do a hard credit pull. If the collector already did a hard pull, ask him to remove the negative item as a condition of your settlement.

4

Get your agreement from the collector and the settlement details in writing. Abide by your side of the settlement arrangement to avoid having the debt collector report to credit bureaus in the future.

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How to Add Aged Trade Lines to Credit

Today's financial environment demands higher credit scores. Apartment rental, automobile insurance and cell phone companies look at applicants as a financial risk. The philosophy is how a person handles their credit may indicate how they handle other aspects of their life. Adding seasoned tradelines to your credit report is a legal way to raise your credit scores and add good payment history to your credit. Seasoned tradelines are credit accounts that have been active for several years. They should have low balances and excellent payment histories. (Credit card accounts work best). This is referred to as "piggy backing" in the credit industry.

Instructions

1

Talk with Mom, Dad or your spouse (or person most likely to assist you) to discuss them adding you as a user on one or more credit card accounts. Explain that adding you to the accounts (tradelines) as an authorized user allows the credit card company to report that credit card's payment history to your report. Have your report handy to show and discuss account tradelines and the score raising technique and benefits of adding you to these accounts. Explain that you will not have possession of or use of the accounts, all you want is the payment history of each card reported to your report.

2

Have a person who is adding you to credit card accounts call credit card companies to let them know he is adding you. There may be a form or written request required. Once the form is sent or the request is made, have him ask when the accounts will be reported to the credit bureaus.

3

Wait until 30 days past the date of reporting to credit bureaus and pull your personal credit reports to be sure the accounts are reported, and see how these have affected your credit scores. You can do this by going online to freecreditreport.com. Be aware that, despite the name, this service is not free. There is a charge for the scores.

4

Take good care of the credit accounts you have. The idea is to use the piggybacked accounts to boost scores to build more credit. Once your score is boosted, you can apply for more credit. Do this carefully.

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Do I Earn Credit With a Debit or a Savings Account?

Having a debit card or savings account shows financially responsibility, but won't improve a credit score, even though a debit card "looks" like a credit card. Opening a savings account or account linked to a debit card may boost your creditworthiness in the eyes of lenders. You could opt for a sort of "in between" card known as a "secured credit card."

Identification

Debit cards and savings accounts do not report to the credit bureaus, because they do not extend a line of credit, since you prepay for your purchases. A savings account could affect your credit score if you write a check for more than your balance and the bank sends the overdue bill to a collections agency.

Could Help You Get Credit

Creditors can and must consider nontraditional payment data when no traditional credit history exists. If you open a savings account with a bank, they will probably extend credit at some point in the future after you establish responsibility with the account. At the very least, keeping a savings account is a sound financial strategy and can prove stability to future lenders.

Banking History

Almost everything having to deal with payments has a consumer report. Banks use reports from ChexSystems. Use your savings or debit cards wisely, and banks are more likely to approve you for future accounts because you have a clean ChexSystems report. Having a bank account is important to improving your credit score in the future and meeting financial goals. Mortgage providers, for example, usually only accept checks for payment.

Tip

If you cannot find a lender willing to approve you for a unsecured credit card, consider a secured line, suggests Bank Rate. On a secured credit card, the lender requires a deposit against the limit, so there is little risk to the creditor, but he can still report payments to the credit rating agency. Shop around for secured cards. Some may charge excessive yearly fees, because secured cards are often used by people with no other option for building credit.

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What to Do About Credit Fraud

Credit card fraud affects millions of Americans each year, and the problem is so widespread that most credit card companies have departments dedicated exclusively to credit card fraud. If you own a credit card, it's important to understand what to do if you believe you've been victimized and how you can prevent credit card fraud.

Contact the Card Issuer

The first thing to do if you believe you are the victim of credit card fraud is to contact your credit card company. The majority of credit card companies have 24-hour hotlines that consumers can call to report a lost or stolen card. After you report a stolen or lost credit card, the maximum amount that you're liable for by law is only $50 per credit card, according to the Better Business Bureau. This makes it extremely important to contact your credit card company as soon as you believe you're the victim of credit card fraud.

Contact Credit Bureaus

If you see unauthorized activity on your credit report, contact your credit bureaus in writing. Send them a letter with a list of the activity on your credit report you believe is inaccurate. In addition, you may want to ask them to freeze your credit accounts. Freezing your credit accounts can be beneficial because it means that lenders can't review your credit history and prevents new lines of credit from being opened. However, bear in mind that unfreezing your credit accounts takes several days after you ask a credit bureau to freeze it.

Prevention

The Federal Trade Commission suggests avoiding lending your credit card to friends and avoiding leaving your card out in plain sight. In addition, you should always destroy carbon copies of credit card transactions and save receipts for all your transactions. If you save your receipts, disputing unauthorized transactions will be much easier later on. It's also important to make sure you don't sign blank receipts. Always draw a line through blank spaces above your total.

Review Your Monthly Statement

Wells Fargo suggests reviewing your monthly credit card statement each month and looking for unauthorized charges. If you don't review your statement each month, you might never find out that you're the victim of credit card fraud.

Online Safety

Never send your credit card number to another person or credit card company via email. Emails are usually not secure, according to Wells Fargo. In addition, you should always look for "secure transaction" symbols at the bottom of your web browser before shopping online. If you do not see "secure transaction" symbols, the website is probably not safe to shop on.

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Consumer Credit Index Definition

The consumer credit index includes the amount of credit Americans have, the amount they are using and their confidence in their financial situation. The consumer credit index changes daily with the economy and has ups and downs as with any other index.

Significance

The significance of the consumer credit index is that it provides a realistic view of the country's creditworthiness as a whole. For example, the consumer credit index shows how in debt Americans are, how the debt is being paid off, when consumers on average are late in paying their debt and the like. The consumer credit index acts like a microscope on Americans' credit profile.

Considerations

It's important to keep in mind the consumer credit index is based on research and the actual state of credit as a whole when the index is reported. When the index reports Americans are more in debt than ever, it simply means that never at a previous point in history has so much consumer debt existed as a whole, not that every single American is in debt.

Misconceptions

The consumer credit index is simply a measuring tool. It helps economists view the country and its financial status through the view of outstanding credit. Few people realize that by monitoring the credit index it's easier to predict recessions, economic stalls and other problems like slow growth. The consumer index is not about the average American as it is believed. Instead, it's about the average credit status of all American credit accounts.

Benefits

The benefits of the consumer credit index is that the country may be studied on the basis of its credit status and how it corresponds to the economy and the world.

Warning

As the country's credit index falls, this shows that Americans are struggling to keep up with their obligations. It's important to pay attention to the index so the government knows when it needs to intercede.

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