April 2007 ~ Personal Finance and Money Management

Monday, April 30, 2007

What Do the Numbers in a Credit Score Mean?

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According to Fair Isaac Corporation, almost 90 percent of banks in the U.S. use your credit score to determine whether --- and how much --- credit to give you. Credit scores range from 350 to 850, and the higher your score, the more likely you are to receive lines of credit and loans with favorable interest rates. Each credit bureau may have a different score for you based on information reported to that bureau, but the overall formula for determining the score is generally the same.

Your payment history on your accounts determines 35 percent of your credit score. Paying your bills on time and as agreed improves your score; paying late or not at all can reduce it. The payment history score is influenced by any delinquencies, how long accounts have been delinquent, the amount past due, the number of items past due and any other negative information, such as liens, collection items, bankruptcies and judgments.

The amount of money you owe to creditors determines 30 percent of your score. The credit bureaus factor in how much you owe in proportion to how much overall credit you have available; the lower your balances in relation to the credit available the better. Maintaining credit card balances close to the limit will negatively affect your score. The number and type of accounts that have balances also influence your score; a mortgage balance affects your score less than a credit card balance, for example.

The length of your credit history is also factored into your credit score. The credit bureaus look at how long your accounts have been open by account type. The amount of time since account activity has been reported on the accounts also influences the score.

Opening multiple new accounts can affect your score as well. Ten percent of your credit score reflects new credit inquiries. The number of inquiries and the time between inquiries are factored into the score. However, if several inquiries of the same type appear in a short period, such as several auto loan inquiries within one 30-day period, the affect on your score will be minimal. In addition, opening new accounts to re-establish a positive credit history can improve your score over time, if you use credit responsibly.

Your overall credit mix, or the types of accounts you have, makes up 10 percent of your credit score. The credit bureaus take into account whether your debt consists of loans, credit cards, mortgage debt or other types of accounts, and each account type is weighted differently when calculating your score.

How to Report a Delinquency to Equifax

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Businesses and individuals can report delinquent accounts to Equifax if they have a paid membership with the bureau and can provide relevant documentation proving that the account is delinquent. Alternatively, you can contract with a collections agency which will report the debt for you either for free or in return for a low fee.

Instructions

Gather all data relevant to the debt. To collect on a debt taken out by an individual, you'll need their full name, Social Security Number and date of birth. For a business. you'll need its Tax Identification Number and its name.

Sign up for Equifax Business Information Solutions through their website or over the phone (see Resources). Alternatively, you can contract with a collections agency, which may already have an account with Equifax and can handle the reporting process for you.

Submit your data regarding the debt, including copies of any letters you have sent to the business or individual requesting payment. If you have records of previous payments of the debt and the original agreement for the account, include those as well. This will establish that the account is delinquent, which means that the individual or business is at least 90 days late on payments.

Request a copy of the credit report of the individual or business from Equifax at least 30 days after you originally reported it. Confirm that the entry has appeared on their report.

How to File a Credit Report Dispute

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Your credit report is very important because it can affect your ability to get low interest rates, loans and even a job. You are entitled to a free copy of your credit report once every 12 months from each of the major credit bureaus. If you find any errors on the report, such as accounts that do not belong to you, late payments you made on time or incorrect credit limits, you should dispute them with the credit bureau reporting the error. If more than one credit bureau reports the error, you should submit a dispute with each bureau. Unless the credit bureau deems your dispute frivolous, it must investigate your claim within a month.

Instructions

Determine which credit bureau or credit bureaus are reporting the error by checking your credit reports. Though your credit reports from the three major credit bureaus--Experian, Equifax, and TransUnion-will be very similar, they may have slight differences. You only need to file a dispute with the bureau or bureaus reporting the error.

Decide whether you want to dispute the error online or through the mail if you are filing a dispute with Equifax or TransUnion. Experian only accepts disputes online. Credit.com recommends that you file your dispute through the mail, if possible.

Gather the proof that supports your claim and make copies. This can include receipt of payment acknowledgments and checking account statements. For example, if you have a letter acknowledging that your loan was paid in full but your credit report shows it as delinquent, you would want to submit a copy as evidence to support your case. You should also make a copy of your credit report and identify the item or items you are disputing.

Submit your dispute online (see the resources section for dispute sites) or through the mail. The address for Equifax is P.O. Box 740256, Atlanta, GA 30374-0241. The address for TransUnion is 2 Baldwin Place, P.O. Box 2000, Chester, PA 19022. The Federal Trade Commission recommends that you send the letter through certified mail so that you can document the date the credit bureau receives your dispute.

Wait up to 30 days for the credit bureau to investigate your claim. The credit bureau will notify you of their finding and will provide a free copy of your credit report if your report has been changed as a result.

The Length of Time Required to Improve a FICO Score

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There are many factors that determine the length of time it takes to improve a FICO score. An individual with a few late payments and moderately high credit card debt will have a much easier time repairing credit than someone who has recently filed bankruptcy and been through a foreclosure. Start working today to improve your score. The sooner you start, the sooner you will achieve a desirable credit score.

Spelling credit is much easier than improving your credit score.

It may not be pleasant, but until you know the facts of your credit report you cannot effectively take action to improve your score. The most reliable source for an annual free credit report is the Federal Trade Commission. If you don't qualify for a free report, contact the FICO Website. This report will not be free, but the information is necessary. The purchase of a credit report from FICO will include access to online education.

The surest way to improve your FICO score is to eliminate the negative areas first. If there are several negative items on your report, start with the worst first. If you are overwhelmed with credit card debt, the worst thing you can do is avoid your creditors. Contact the credit card companies and arrange a payment plan that is within your budget, and stick to it. Don't make any new purchases on your credit cards. If you don't have the cash, don't buy it. Careless buying behavior will surely contribute to a low credit score.

Create one template letter to request removal of bad reports. By changing a few details you will be able to customize the letter to specific creditors. Get your list of creditors that show negative information and write each of them. Maybe you have 10 negative reports, maybe 100. Don't think about the number, just get started. If your account is current, creditors are more likely to grant your request. However, include all creditors, even the ones where your payments are in arrears. These creditors will not grant your first request, but six months of making timely payments may sway them. Submit a second request at the end of six months demonstrating how you have changed with regard to managing your money. Save all your written requests. Keep a list of creditors so you can cross the successes off your list. It will feel like a small but significant victory each time you draw a line through a creditor's name.

Put yourself on a budget, and pay all your bills on time. If current monthly payments exceed your ability to pay, contact creditors and ask for a temporary reduction in your monthly payments. Don't lose focus on eliminating some of your debt. Be strategic with your payments. You probably can't pay off a huge credit card debt, but it may be possible to eliminate department store debt. Once small debts are paid in full, you can channel those $25 to $50 monthly payments toward your bigger debt.

Granted, this is easier said than done. Except for a very select group of people, money is a limited resource. Break the habits that earned you a poor credit score in the first place. When you go out to dinner, pay for it with cash or use a debit card. If you have to buy a gift, pay for it with cash. You will probably spend less money than if you used a credit card. The great thing about cash is that you will never have to pay any interest on cash purchases. Break the habit of spending money you don't have. It is an easy trap to fall into, but climbing out of that trap can be very difficult.

No one can say exactly how many months it will take to improve your FICO score. However, by following these steps it is safe to say that you will see some improvement in six months. Keep following these steps, and within one year your score will show real improvement. Continue these habits for life and you will not have to worry about improving your FICO score in the future. An excellent resource for creating a spending plan for life is MyMoney.Gov. The website includes tools and resources on how to manage debt and credit. Victory over your FICO score may not be just around the corner, but rest assured that it can be in your not-to-distant future.

How to Solve Money Problems Fast & Forever

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When you spend more than you save, you quickly rack up debt. Reverse your spending habits and create a savings plan to help you pay bills. You can solve your financial distress in any economic climate. Even if you are not wealthy, you can get to a point of financial stability by avoiding debt and always paying cash. Solve money problems fast and forever by sticking to your budget and making reasonable financial decisions.

Instructions

Manage well the money that you have. You may have to see a professional to help you understand your budget and investments. For instance, if you are making good money and want to retain financial security, you can see a wealth coach.

Become debt free. You might want to consider the snowball plan of debt reduction, which means that you pay off your smallest debt first and continue to pay off the smallest debts until you are debt free.

Choose a place to rent or buy that is affordable so you do not blow money on your living space. Your living space is one of the least flexible parts of your monthly budget. You want the money you spend toward your living space to take up around 24 percent of your income.

Make a budget that is realistic. According to utahmarriage.org., spouses need to sit down and work out a budget that they can stick to for the month. If you have a significant other, determine which person in your relationship is the saver and let that person take charge of the finances.

Consider asking your parents for an interest-free loan to help you pay off credit card debt. Although financial advisers do not typically advise going in debt to pay off debt, you should save a lot of money by avoiding credit card interest rates and late fees.

How to Obtain a Bank Credit Rating

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When the financial market experiences hardship, you might wonder if your bank or credit union is safe. A few online tools will help you obtain your bank's credit rating, tap into detailed financial information and show potential warning signs.

Instructions

Check out the Bank Rate Credit Rating website (see Resources). Choose your institution type (bank or credit union), the name of the financial institution and click "See results." After you put in the required information, this tool will produce a bank credit rating based on a variety of components, including liquidity, profitability and financial assets.

Interpret the bank-rating results. Bank Rate's tool ranks banks on a scale of one star to five stars, with five stars being the highest result. Bank Rate recommends using a bank with a four-star rating or higher.

Check out the memo section, which includes additional information about the bank or credit union, such as assets, equity and net income. You can view a company's percentile in such categories as earnings, asset quality, capital and liquidity. This information is located under the "Institutional Highlights" header in the memos section.

What Comes Up on a Credit Report?

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Your credit report is more than just your financial history; it can tell an employer or service provider about your character. If you do anything that involves borrowing money or owing a debt, it probably shows up on your credit report. Credit histories tend to favor the consumer, because positive information stays on a report longer than negative information.

A loan or line of credit only appears on your account when you use a lender that subscribes to the national credit reporting bureaus. Common accounts that appear on your credit report are mortgages, credit cards and personal loans. The account usually contains details such as the balance, credit limit, type of account, name of the lender and payment history for each month. Negative accounts affect your credit history for seven years plus six months after the delinquency leading up to the creditor writing the debt down as noncollectable or selling it to a collection agency.

When you miss a payment, the lender usually reports the delinquency to the credit bureaus. If the creditor writes the debt down as noncollectable in its accounting ledger, the account becomes negative. The lender may sell the debt to a collection agency, which appears as a negative account too. Repossessions, such as a foreclosure or when the lender takes back a car, also show up on your report. The bureaus can list negative items for seven years.

Some public records appear on your credit report. Any judgment involving money, such as when a creditor sues you for payment on a debt, affects your credit rating. Criminal records and anything else that does not involve money, such as a lawsuit to change a zoning ordinance, won't appear on your credit history. Any bankruptcy, such as a Chapter 7, 11 or 13, shows up on your report, even if you voluntarily withdraw the case. Chapter 7 bankruptcy affects your credit for 10 years, while Chapter 13 and Chapter 11 stay for seven years after you complete the case.

The credit bureaus keep track of any request for your credit history. If you request your own credit report, or someone pulls your credit history without your consent, such as for a pre-approved credit card, the inquiry shows up as a soft check. A soft inquiry does not affect your credit score. Hard inquiries affect your credit rating and result from you requesting credit or service from a merchant, such as a utility company. Inquiries affect your credit for one year, but appear on your report for two years.

Tax liens issued by federal, state, local and county governments remain on your credit report for seven years after you satisfy the debt. If you leave them unpaid, the bureaus can list them indefinitely, although Experian -- one of the three major credit bureaus -- only lists unpaid liens for 15 years.

Positive data, such as on-time payments, stays on your credit report indefinitely as long as you keep the account active. If you stop using an account, the positive data impacts your credit rating for 10 years. Closed, positive accounts appear on your credit history for seven years.

How to Boost My FICO Score Now

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A FICO score is basically a three-digit number that represents an individual's credit worthiness. The score was originally conceived by Fair Isaac Co., and is used widely by banks and other lenders to determine an individual's eligibility for a loan, mortgage or other forms of consumer credit. FICO scores are based on a person's credit history and ranges from 300 to 850. Generally speaking, most creditors view scores of 760 and above as excellent, while a FICO score that falls below 600 is considered poor. Individuals with poor FICO scores can often find it very hard to obtain credit and sometimes even to find employment.

Instructions

Pay bills on time. Bills that are overdue or become delinquent can drag down FICO scores dramatically. On the other hand, the opposite is true when bills are consistently paid on time. Individuals who establish a record of paying their bills punctually each month can expect to see their scores bounce up quickly.

Watch the balances on your accounts. Keeping credit card balances low is vital to boosting credit worthiness and FICO scores. Individuals who have nearly maxed out their available credit, or have very high amounts of revolving debt, are perceived as extremely risky from a credit standpoint. By paying down credit card balances, and reducing the overall amount of debt, individuals can quickly boost their FICO scores, especially if they also have a record of always paying on time.

Do not open new accounts. Individuals who are trying to boost their FICO scores should take care not to open new credit accounts or make too many credit inquiries. Each time a person opens a new account or makes a credit inquiry, it knocks several points off their FICO score. In order to boost scores, individuals should carefully review their credit accounts and look for opportunities to consolidate their debt and close down cards and other loans as much as possible.

What to Do With an Inaccurate Credit Report?

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Having an inaccurate credit report can prevent you from getting credit cards, lines of credits and home loans. Inaccurate information contained in your credit report can also hinder job searches when certain types of background checks are involved and even cause you to pay more for car or home insurance premiums. Dealing with an inaccurate credit report is a methodical paperwork process.

If you suspect there is inaccurate information contained on your credit reports, you'll want to order a copy of your credit reports from Experian, Equifax and TransUnion. These are the three major credit-reporting agencies responsible for most credit reporting. Once you get a copy of all three, examine each one from top to bottom. Keep track of each section on a piece of paper, noting any discrepancies you find.

Check the spelling of your name along with your current and former addresses and of any alias you've used in the past. Determine if each line of credit noted on the report actually belongs to you. Then make sure each is showing in a correct status.

Follow the dispute process contained with your credit report. Each agency has a slightly different process. They all involve filling out forms they provide, detailing any inaccuracies you found, comments you would like to have added to your report files and the ability to send in any additional supporting documents. It can take 30 to 90 days to have each credit report updated correctly. Unfortunately, there is no speeding up this process.

Until the credit reports are corrected and updated, consider keeping detailed records of dispute process transactions, including a copy of the dispute forms and supporting documents you may have sent back to the credit reporting agencies. When the credit reporting agencies receive your documents, they can update your reports with comments noting that certain items are in dispute and why. That way, when a potential lender, employer or insurance company looks at the credit reports, they can see certain things are in dispute and consider those in their decision-making processes. In these cases, some companies may require to see the supporting documents you sent to the credit-reporting agencies as proof of the inaccuracy.

If you have a paper trail proving the inaccuracy, it may allow the company you're trying to work with to proceed with employment or lending processes. Some examples of supporting documentation can include awarded separation or divorce decrees, letters from financial institutions noting closed accounts, or receipts or statements from companies showing a debt has been settled or paid in full. It's also recommended that you check your credit reports once a year to catch and reduce inaccuracies due to simple reporting errors and identity theft. You can request a free copy of your credit report once a year from all three credit bureaus.

The Fair Credit Reporting Act in Arizona

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The Fair Credit Reporting Act is a series of federal laws that govern the way in which credit reports are handled. Arizona has passed its own legislation that mirrors this act with a few additional safeguards in place to better protect its residence. These laws strive to protect consumers from unfair use of their credit scores and unscrupulous credit reporting practices.

Credit reports in Arizona are considered private documents. Copies of them can only be given if the consumer has approved the release of the report or directly requested it or courts have issued orders for the release of the report. Special circumstances that also warrant a release of the credit report include employment purposes, credit transactions, insurance underwriting, licensure and legitimate business purposes.

If you find an error on your credit report, the law requires you to send notice in writing to the credit reporting agency stating why the error is inaccurate. The agency then has 30 days in which to decide whether or not the entry is inaccurate. If it is inaccurate or the credit reporting agency cannot verify its accuracy, the agency must immediately correct it and send notice to anyone who received a copy of your credit history within the past six months.

Arizona's laws hold the agency responsible for correcting errors on your credit history if you have properly pointed them out. Specifically, the law holds all consumer reporting agencies, users of credit information or sources of credit information responsible for the way in which they use and maintain that information. Using your credit report maliciously with an intent to harm you makes the entity guilty. In other words, if the agency says it is not incorrect, and you have proof that it is, you can sue for actual and punitive damages under Arizona's laws.

Federal laws allow you a free copy of your credit report from Equifax, TransUnion and Experian each year. Arizona does not offer any additional free copies. If you wish to purchase an additional copy, you can do so through each of the credit bureaus individually. To get the free copy, visit annualcreditreport.com, the official website through which consumers can request these copies. Also, if you are denied credit, employment, insurance or any other benefit due to your credit score, Arizona's laws allow you to get a free copy of your report. You can also get a free copy if you are the victim of identity theft, are on public assistance or are currently unemployed and seeking a job.

How to Clean Up Paid Debts on Your Credit Report

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Your credit score is the single most important element that businesses use to assess your trustworthiness. You need at least fair credit to get a credit card or a loan, and you need a great credit score to get even a decent interest rate. Paying off your existing debt is a great way to raise your score. Once you make the final payment on a debt, your credit report should be corrected automatically within about 60 days. If the debt still appears on your credit report more than 90 days after you have paid it, you need to contact your creditor.

Instructions

Call the company of the card or account you have paid off. Get past the automated system to speak to a live person.

Inform the representative on the phone that you have paid off your debt and you need the credit bureaus to be informed as soon as possible. If necessary, fax or email a copy of your account information that shows your debt has been paid in full.

Listen to the advice of the representative. He may be able to help you over the phone, or he may require you to make a request in writing that the company report your new credit standing immediately. Either way, get a letter from your creditor saying the business acknowledges that your debt has been paid.

Follow up with the creditor no later than one week after you have made the request. Check that they have reported your paid-off debt, and ask that they close any accounts you no longer want open.

Obtain a credit report to check that the company reported your debt as paid. You are entitled to one free credit report a year from all three credit bureaus through the Annual Credit Report website. If the debt still appears on the credit report, then call the company back and ask to speak to a manager who is authorized to help you resolve the issue.

Simple Steps to Repairing Credit

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You may feel that it's impossible to achieve a better credit rating. But even if you have a low score now, simple steps can improve your rating and put you in a better credit category. Think of the benefits of a good credit rating -- better interest rates on loans, easy approvals and a sense of accomplishment.

The less inquiries you have on your credit file, the better. Credit checks are part of the application process, and each time you complete a credit or loan application, you can expect the lender to pull your report. While inquiries are necessary to determine if you qualify for financing, credit checks do hurt your credit rating and will erase points from your score. Put off applying for credit accounts until you have improved your rating, and even then, only get new credit accounts when necessary.

Delinquent accounts contribute to a poor credit rating. But you can fix these accounts and improve your rating by getting on the phone and contacting your creditors. Express your plans to bring past due accounts current and set up a payment plan. Develop a routine of always paying your credit cards and loan payments on time each month. You can't repair the damage of bad credit in days or weeks. But if you continually forward payments on time, your personal credit rating will slowly improve.

There are dangers to excessive credit card debt. Credit card companies routinely report your balances to the credit bureaus, and keeping your balances close to your credit limit reduces your credit rating. Expanding the gap and paying down your balances is another key aspect of repairing a poor credit rating. Keep balances below 30 percent of the given credit limit. For example, if your credit card company gives you a $1,000 limit, charges on the credit card should not exceed $300.

Checking your credit report with each of the three credit bureaus (Experian, TransUnion and Equifax) keeps you aware of your credit file. Information on your credit report affects your credit score, and if some of the information is inaccurate, your personal score may suffer. Checking reports are simple, and you can order them online once a year from Annual Credit Report.

Effect of a Credit Inquiry on Creditworthiness

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Traditionally, lenders have used a variety of different factors in determining your creditworthiness when you apply for an extension of credit. Lenders check your credit report to get an insight into your character from a borrowing perspective. You may have problems obtaining credit if you have a poor score but ironically, a lender can actually hurt your credit score simply by checking it.

Equifax, Experian and TransUnion all compile consumer credit reports in the United States and each firm has its own credit-scoring formula. Nevertheless, each agency uses a scoring system that involves awarding you a score of between 300 and 850. High scores mean that you have a good credit history. According to FICO, or Fair Isaac, the firm that first developed the idea of credit scoring, a credit inquiry normally causes your credit score to drop by no more than five points. However, since many factors have an impact on your score, a credit inquiry has less of an effect on someone who has a lot credit activity than someone who has little or no credit history.

When you apply for a mortgage or a car loan, you may shop around for the best rate. If several inquiries appear on your credit report within just a few days, then the credit bureaus normally record this as one inquiry and do not penalize you for looking for the best deal. However, if you routinely apply for different kinds of credit, your score can drop more dramatically because credit bureaus assume that you are in desperate need of funds. According to FICO, people with six or more inquiries on their credit report are eight times more likely to go bankrupt than people with no credit inquiries on their report.

Only inquiries from creditors have an impact on your credit score and these are known as "hard inquiries." Soft inquiries do not hurt your credit score and these inquiries occur when you check your own score or when an employer checks your score as part of a background check. When a lender obtains a credit report from a credit agency, the report only factors in credit inquiries that occurred more than 30 days ago and some lenders even obtain reports that do not include credit inquiries from within the last 45 days.

A credit inquiry that causes your score to drop by five points could prove costly if that score drop means you fall below the minimum credit score required in order to obtain a loan. However, paying your existing debts on time and keeping your overall debt levels low, can cause your score to rise and offset the damage of a credit inquiry. Aside from your credit score, your lender also factors in your income, the collateral you intend to use for the loan and the overall state of the economy before deciding whether to approve your credit application. Therefore, credit inquiries have a minimal impact on your overall creditworthiness.

How to Repair Bad Credit With a Checking Account

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A low credit score may cause you to pay more money in interest and cause a denial for certain things, like a vehicle or house. Fortunately, you can reestablish your credit and increase your credit score by making timely payments and obtaining long-term credit accounts. A checking account, if used properly, can also help repair your bad credit depending on which merchants you choose to work with. Unfortunately, the checking account itself will not increase your credit score.

Instructions

Apply for a secured credit card with your bank using your checking account. A secured credit card operates similarly to an unsecured credit card only your credit limit is based on the deposit you make into your account. Depending on your bank, the amount of money you have in your checking account can be used as collateral for getting a secured credit card. Contact your bank to determine if they offer this program. You can make timely payments on a secured credit card by making small purchases each month and using your checking account to pay the bill. If your bank does not provide secured credit cards use sites like bankrate.com or credit card.com to locate secured credit cards and banks in your area or online.

Use your checking account for installment loans on certain products. There are certain companies that will extend credit to those with bad credit if they have a checking account. For example, if you would like to purchase a new TV there are vendors who will allow you to put money down and make subsequent payments that will be taken out of your checking account. In return, they will report your good payment history to credit bureaus which will increase your credit score. Sometimes the interest rates for these products are higher than usual but the idea is to rebuild your credit and gain a higher credit score.

Pay your utility bills on time using your checking account. There are sites online that will allow you to use your timely payment of utility bills as a way of increasing your credit score. Using your checking account not only proves the date that you paid your bills, but also creates a paper trail in the event there are any errors that can affect your credit with utility companies.

Does Making Late Payments a Couple of Times Affect Your Credit Rating?

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Your credit rating can, and probably does, vary among the different credit bureaus. This is due to some lenders reporting the timeliness of your transactions to only one or two credit bureaus while other creditors report to all three major credit bureaus. The three major credit bureaus are Experian, TransUnion and Equifax, and they use a new credit rating system called VantageScore. Several factors determine whether late payments affect your credit rating.

VantageScore has five grades for credit: A (900-990), B (801-900), C (701-800), D (601-700) and F (501-600). A creditor with an "A" credit rating has a history of timely payments while someone with an "F" has a high risk of default. The rating affects your ability to obtain credit as well as the rate of interest charged.

Your payment history may determine whether the lender reports your late payment to the credit bureau. Additionally, how late the payment is made determines the amount of damage to your credit score. A payment that is 90 days late will impact your credit rating for a longer time than a payment that is 30 days late, according to Motley Fool.

Some credit card lenders have a policy of not reporting payments that are less than 30 days late, and others wait 60 days before notifying the credit bureau. Mortgage companies, however, tend to report the status of your payment every month and they generally place the report with all three credit bureaus. Making late payments a couple of times on your mortgage will have an adverse effect on your ability to obtain future credit.

The type of loan you obtain can affect your credit rating. Finance companies and payday loan establishments often charge a higher interest rate than traditional banks and credit unions. The resulting higher payments increase the chance of default. Just having this type of loan can lower your credit score. Additionally, if you make late payments on a finance company or payday loan, then the credit bureaus may lower your credit rating even more.

Utility companies and some other creditors do not report your excellent payment record to the credit bureau. They only report late payments, according to the Privacy Rights Organization. This burdens the consumer with never getting a higher credit rating for an excellent payment history yet having the rating dinged for a single late payment.

How to Get a Loan With Bad Credit and Without a Checking or Credit Account

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There are several reasons you may need a loan. A medical emergency, unexpected bill, or car trouble are common ones on the list. If you have bad credit, getting a loan can be more difficult, but you can get a loan even without a checking account. If you have collateral or a job, it may be possible to get a quick loan for those emergencies. If the loan is for something specific, such as a car, your proof of employment may suffice. In some cases, you may be able to get a loan if you have someone willing to cosign for you.

Instructions

Choose your collateral. If you have direct deposit of your paycheck into your prepaid debit card, you can use this to prove that you have steady funds deposited into your account and apply for a payday loan. If not, you may decide to use your vehicle for a loan. To do this, you will have to have a clear title on your car.

Gather all the required paperwork. For a title loan, you will need the title to your car. For a payday loan or title loan you will also need paycheck stubs, typically a months worth. You may also need references as well as a prepaid debit card that you can use to get the loan deposited into and funds paid back through. You should also have proof of residence such as a utility bill or lease agreement. If you are applying for something specific, such as a car loan, you will need at least a month's worth of proof of employment, as well as your employer's contact information.

Apply for the loan. There are online loan companies as well as those that have an office in most major cities. There are places that offer a no-credit-check loan if you have proof of employment, such as title loan and payday loan businesses. You may want to call ahead and make sure that you have all the necessary paperwork. Once you apply, most places will give you an immediate decision, but some may require that you wait up to 48 hours.

Sign all the paperwork and make sure you understand the agreement. A no-credit-check loan is high risk, so you will be charged a high interest. Make sure you know when payments will be drafted from your debit card and when you will have paid your debt.

Find a cosigner for your loan. A cosigner is someone who signs the loan agreements with you. This means that if you default on your loan, he will be affected as well. The cosigner should have better credit than you do in order to qualify for the loan.

Read the loans with your cosigner. Make sure that both you and the cosigner understand that should one of you default, the other will be responsible for the loan. Any activity on the loan affects your credit as well as the cosigner's whether negative or positive.

Sign the paperwork. Make sure that both signers have copies to file.

How to Use a Personal Statement to Protect Credit

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The Fair Credit Reporting Act lets you protect your credit rating by disputing incorrect entries on your TransUnion, Equifax and Experian credit files. The Federal Trade Commission explains that the agencies have to verify their information with the providers and erase it if this is not possible. Sometimes a lender or other provider will produce verification even if you do not agree with it. You can add personal statements to your credit files to tell your side of the story when this happens.

Instructions

Review your credit reports to see if the information you do not agree with appears on all three of them. Money Management International, a financial counseling website, explains that the three reporting agencies are separate companies, so their reports often differ. You only need to add statements to the files that contain the offending information.

Write out a short, fact-based statement. It cannot be longer than 100 words, according to Equifax. Do not place blame or go into a long explanation of why you do not agree with the information in your file. Lenders give it more credibility if it explains your position clearly and provides facts to back you up. The Federal Reserve Bank of San Francisco warns that reporting agencies can refuse to accept statements they consider frivolous or irrelevant.

Mail personal statement copies to the credit reporting agencies that have the incorrect information in your files. Money Management International explains that you can find the current address on the agency websites. Keep a copy of the statement for your own records.

Check your credit files to make sure your personal statements are included. The FTC explains that the reporting agencies are required by law to give you one free report every year if you get them through annualcreditreport.com. Your statements should be part of the appropriate reports.

How to Clean Up & Improve Your Credit Score

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Cleaning up and improving your credit score can put you on the path to A+ credit, which means lower interest rates on loans and easy loan approvals. Acquiring good credit is a major accomplishment. But like most things in life, keeping a high credit score is an ongoing job. While it takes effort to maintain a high rating, the rewards of a prime rating are well worth the effort.

Instructions

Monitor your personal report. Get a credit report annually to keep wrong information off your report. Dispute errors to help increase your credit score. Obtain reports from Annual Credit Report. Consumers are entitled to one free credit report a year.

Fix your payment history. Start anew and rebuild your credit by improving your payment habits. Pay every creditor on time each month and do not skip payments. Online payment systems help alleviate late payments.

Deal with high balances. Begin making higher payments on credit cards to help bring down or eliminate your balances. High debts lower your credit score, and lenders prefer applicants who demonstrate self-control.

Put off applying for new lines of credit. Applying for a credit card or loan when trying to improve your credit score can cause further damage. Each credit application reduces your credit score. Think twice before requesting a credit application and only apply when necessary.

Negotiate with creditors. Establish a payment plan with old creditors to satisfy collection accounts and judgments. Ask your creditors to delete these accounts from your credit report once you've paid the balance. Removing negative remarks can help your credit score.

What Are Consumer Credit Reports?

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A consumer credit report is a document that is generated by the credit bureaus and outlines your credit history. This document keeps track of much of your financial information, and it is consulted by any lenders who wish to make a lending decision about you. The information in this document can significantly affect your financial life.

While several credit bureaus exist, the three major credit bureaus are the most prominent players in the credit reporting industry. TransUnion, Experian and Equifax are the three biggest credit bureaus and they keep track of all of your personal credit information on this report. Each creditor that you have dealings with will usually report information to the credit bureaus. For example, when you make a payment to a credit card, it is reported to the bureaus and included on your credit report.

The information in your credit report is used in several ways. When you apply for new credit with a lender, the lender will look at your credit report. The information in your credit report helps the lender decide if it should extend credit to you. Besides the actual lending decision, the credit report also will help the lender determine at what interest rate to loan you the money. Your credit report also is used by insurance companies to set premium rates. It can be used by landlords and cell phone companies to determine how much of a deposit you have to pay as well.

Your credit report includes several pieces of important information about your financial life. For example, it keeps track of what creditors you have accounts with. It also keeps track of your payment history with each individual creditor. On the credit report, your creditors also can find how much debt you have in relation to the amount of available credit. It also keeps track of when you apply for new credit or when someone accesses your credit report.

Your credit score is based on the information in your credit report and it is a numerical summary of your credit history. Raising your credit score can help you get approved for loans easier and get lower interest rates. The information in your credit report can be changed based on your actions. If you start making your payments on time and paying down your credit balances, you can make your credit report more attractive to lenders. This will raise your credit score and make it easier to get approved for financing.

Will Paying Off Credit Card Debt Help My Credit Score?

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If you are planning to apply for a loan or a new credit card soon, lowering your credit score first can help you get a better interest rate. Paying off credit card debt is one of the best ways to help your credit score increase rapidly.

The main effect of paying off credit card debt is that it decreases you utilization ratio, or the percent of available credit you are using. Because the utilization ratio makes up 30 percent of your credit score, having a better ratio will definitely help your credit score.

Liz Pulliam Weston, credit card expert with MSN Money, recommends paying down each of your credit cards so its balance is no more than 30 percent of the available credit on that card. Getting all of your cards below 30 percent would help your score more than putting the payments toward paying off one card completely.

Lenders like to see that you pay off your debt responsibly and are capable of managing your finances. If you have credit cards that are maxed out, this leads lenders to believe that you are desperate for credit and may not be able to repay your debts.

What a High Credit Score Can Do for You

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A credit score is a three-digit numerical measure of an individual's creditworthiness. TransUnion, Experian and Equifax -- the three major credit bureaus -- use the FICO algorithm, which takes into account a consumer's credit report information including payment history, debt owed, length of credit and types of credit, to calculate these scores. Credit scores range from 300 to 850, with scores above 640 considered good and ratings above 720 considered excellent. You can gain many advantages by having a high credit score.

Having a good to excellent credit score allows you to get lenders' and credit card companies' lowest interest rates. For instance, according to a June 2008 article from Bankrate.com, individuals with 720 credit scores or higher receive mortgage interest rates nearly a full percentage point lower than people with credit scores of 620, the minimum score to obtain most mortgage loans. Paying lower interest rates can save you hundreds, if not thousands, of dollars over several years' time. Additionally, an excellent credit score allows you to negotiate with lenders for better interest rates, fee schedules and loan or credit card terms.

In addition to favorable interest rates, lenders also give other benefits to people with good to excellent credit scores. If you have a good to great FICO score, credit card companies will often allow you higher credit limits on your cards, giving you more purchasing power. This will allow you greater access to funds in times of financial need. Additionally, having high credit limits further improves your credit score, as the FICO algorithm takes debt-to-credit ratio into account.

Cellular phone, home telephone, cable, Internet and electric and gas companies often check individuals' credit reports, requiring people with low credit scores to make deposits or pay fees, or even denying them service in some cases. By having a good credit score, you avoid those hassles and charges, saving money and time. Additionally, some phone, cable and Internet companies will offer you lower-priced service plans if you have a good-to-excellent credit score

Many automotive insurance companies check credit scores before issuing coverage. These companies will either deny people with unsatisfactory credit scores insurance coverage or charge them higher premiums. Having a high credit score allows you to avoid those pitfalls and may even earn you a discount on your car insurance.

Employers often check credit when performing background checks on potential new hires. While having a poor credit score could get a person turned down for a job, possessing a good credit score may give you an advantage in your job search. Additionally, most landlords pull credit scores and reports on applicants for apartments and rental houses.

Does Being Sued Affect Your Credit Score?

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A lawsuit provides a civil method by which a business or individual can seek justice for a real or supposed wrong. The court then determines liability for the incident in question and, if the plaintiff wins the case, awards him a monetary judgment. While the act of being sued does not in itself affect your credit score, losing a lawsuit does.

A judgment the court levies against you becomes a part of your county's public record. The credit bureaus routinely pull and evaluate court records for new entries. When this occurs, the public record will appear on your credit report.

A public record of a judgment notes that you owe money to another party that you failed to pay -- forcing that business or individual to seek legal recourse against you. Because of this, judgments have a derogatory effect on your credit scores. Unfortunately, because everyone's credit information differs, there is no way to estimate the negative impact a judgment will have on your credit scores.

Judgments on your credit report do not follow the standard seven-year reporting period for derogatory information. Rather, the Fair Credit Reporting Act notes that, once the credit bureaus insert a judgment, the judgment will remain until the statute of limitations for enforcing the judgment expires. Each state has different laws regarding how long judgment creditors have to enforce their judgments. The adverse information appears on your credit report for the full duration of this period.

One exception to the rule occurs if your state statute of limitations for enforcing judgments is shorter than the seven-year standard reporting period. Should this occur, the judgment appears on your credit report for seven years from the date the court entered its decision in the public record.

When you pay off a creditor's judgment, the creditor files paperwork with the court noting that you satisfied the judgment. The court then updates the public record to reflect the new information and, subsequently, the credit bureaus update your credit report. While paying a judgment does not remove it from your credit report or boost your credit rating, it does look better to prospective lenders that you satisfied your legal obligation to your previous creditor rather than ignoring the debt altogether.

The results of a lawsuit vary depending on the parties involved, the case itself and the judge who hears the case. Thus, there is no guarantee that a business or individual who sues you will obtain a judgment by doing so. If you win the case, no record of a judgment appears on your credit report and your credit score remains unaffected. The court does not enter the fact that you were sued on the public record if it did not award a judgment to the plaintiff.

Does Opening a Joint Bank Account Merge Credit Scores?

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The good news for your credit score is that joint bank accounts do not require you to merge credit reports with the co-owner, but a joint bank account can still affect your credit score. Thus, you should only open a joint account when you have complete faith in a person to use it wisely, such as when you have a blood relation to the co-owner.

The credit reporting bureaus never merge credit reports, so opening a joint bank account cannot merge the reports of any consumers. The bureaus report accounts on multiple credit reports when consumers co-sign on an account, but this does not automatically happen -- not even when you use a joint bank account to pay on a loan.

Couples that merge bank accounts often merge other accounts, such as credit cards. This too does not merge credit scores, but joint accounts affect both spouses equally. On-time payment on joint credit accounts, such as a mortgage, boosts the scores of both owners, or lowers their scores in case of default. Even if the owners on a joint account are not related, a joint bank account can negatively affect the owners. For example, if one owner withdraws everything from the account, the other party may not have the funds to pay monthly bills, which leads to default and a lower credit score.

Creditors can levy a bank account without the consent of either party when one owner defaults on a debt. The lender would have to file a lawsuit to obtain a garnishment order, but a bank levy can wipe out a bank account, which leaves both owners with less money to pay regardless of whether the garnishment order is for only one owner.

If you open a joint account with someone, keep only enough money to pay everyday expenses. Your bank may allow you to require any transaction over a certain limit require the signature of all owners. Also, monitor activity on the account through online banking. Even if you are married, consider having individual accounts and only co-signing a loan when it provides a lower interest rate.

Does Getting on Someone Else's Credit Help Your Credit Score?

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Your chances for improving your credit score by getting your name added to a friend or family member's credit card account are limited. Some creditors and lenders don't use such accounts to gauge financial responsibility, and a dispute with your credit benefactor could hamper your efforts to build credit altogether.

The credit card industry refers to someone who can legally use another person's credit card as an authorized user. In such cases, cardholders have their card issuers add another person's name to their account as an authorized user. They also may receive a separate card that bears the original cardholders account number. The biggest difference between the two cardholders is that the authorized user isn't held responsible by the issuer for making payments on the account. Still, the user's credit score could drop if the original cardholder makes late payments on the account.

Credit reports usually include authorized-user accounts, but the Experian credit-reporting company indicates that may not boost an authorized user's credit rating with creditors and lenders. Some creditors and lenders exclude the accounts as they consider credit and loan applications, they know authorized users aren't responsible for repaying the debt associated with such accounts. Therefore, authorized-user accounts generally arent a good measure of how the users manage debts, so some credit-scoring models are designed to ignore the accounts.

An authorized-user account would help establish a credit history for someone who doesn't have one, but adding that person to an established account as a joint accountholder might prove more useful. Experian notes that joint accountholders share responsibility for paying debts accumulated on a credit card, so they could establish a good credit rating if the account is paid on time each month. A joint accountholder may eventually qualify for a separate credit card if the joint account remains in good standing.

Bankrate.com writer Leslie McFadden warns against relying on authorized-user accounts to establish a credit history. McFadden notes that the original cardholder and authorized user could have a disagreement that causes the cardholder to remove the user from the account. The user could lose the only credit card he has as well as the opportunity to build a credit history. Secured credit cards are another option for people who need to establish credit. Secured card issuers require a cash deposit that establishes a credit line for cardholders. A co-signer isnt required because the issuer holds the deposit as security on the account.

How to Increase Your Credit Score by Reporting Payments to the Credit Bureau

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It is very important to improve and maintain a good credit rating. You can do this by making sure all your payments are being recorded on your report. Your credit report might not contain all your credit accounts or payment records. Some creditors don't provide information to credit reporting agencies. Sometimes current accounts with good payment records are not being reported. This can be frustrating, especially when you are trying to build credit. However, you can ask your creditor to add your missing payment history to your credit report. Your credit score can increase once your credit report is updated to show that you have in fact made payments, even if the credit report earlier showed those debts as unpaid.

Instructions

Order a copy of your credit report from the three major credit bureaus--Experian, Equifax and TransUnion. You can obtain a free copy of your credit reports online once a year by visiting AnnualCreditReport.com. Also, if you have been turned down for credit because of something in your credit report, you can get a free copy.

Carefully go through your credit reports. Make a note of any accounts or payments that you made but that are not recorded on your report. It is important that you go through your entire credit report a few of times, to be certain that you do not miss relevant details.

Add any missing accounts to your credit file. Contact each creditor about the missing information, and request that it add your payment history to your report. Remind the creditor that your account payments are an essential part of your credit record, and that you would appreciate it reporting your payments to the three major credit bureaus.

Allow sufficient time for the creditor to report your payment history to the credit bureaus. You can allow about 30 days before you review your credit report for updates.

Get a copy of your credit report from each of the three credit bureaus, and check to see whether your missing credit history has been added to each credit report.

If the creditor hesitates, then contact each credit bureau and request it to add your credit payments to your report. Include proof of your payments. Mail the letter to the credit bureaus by certified mail. They might charge you a fee to add the payment information to your credit file.

Why Doesn't the Date of Last Activity Show on My Credit Report?

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Credit reports are largely known for important items such as payment histories, inquiries and public records. However, your credit report contains some other information that can be critical to your financial future. One such item is the date of your last activity.

Your credit report shows all of the credit accounts you have, which includes the payment history of each account. Also included is the date you opened the account, the high balance on your cards, how many times you've been late and the last date your account status was reported to the bureaus. You may also find that your credit report shows your date of last activity.

As the name suggests, the date of your last activity shows when you last performed a transaction on the account in question. Your date of last activity is a significant number for a variety of reasons. Not only does it show if you're actively using your account, but it can be an important benchmark within your credit report. If your account is closed out because of a negative action, such as a charge-off or bankruptcy, the date of last activity is considered when that negative action begins. The negative information stays on your credit report for the duration of the statute of limitations -- usually seven years or more -- from the date of last activity.

The date of your last activity is usually indicated on your credit report, but it might have a different name. You might see a category with a similar title, such as Prior Delinquency or Date of Last Delinquency. This accomplishes the same purpose as the date of last activity, but focuses only on late payments. It's also possible that your credit report doesn't show the date of your last activity.

Since there are so many different websites selling credit reports, there isn't one consistent format for your report. As a result, some items have different names or are omitted altogether. If your date of last activity isn't specifically listed, you still might be able to figure out the date. Your payment history chart should show the status of all of your payments for the past two years; if the date of last delinquency falls in that range, you'll be able to see it. Your last delinquency may also be listed in the Creditor Comments section of your credit report. If you still aren't sure, call your creditor to find out your correct date of last activity.

Does Applying for a Loan Hurt Your Credit?

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Each time you apply for a loan, those banks and lenders make an inquiry into your credit report to determine your credit score and how responsible you've been with financial management. They use this information to determine whether to extend credit and approve the loan. Too many loan applications can have a negative impact on scores, depending on a variety of factors. Existing creditors may make inquiries to ensure that their customers are generally keeping up with loan payments, although those have no impact on credit scores.

According to Fair Isaac, research shows that "opening several credit accounts in a short period of time represents greater credit risk." As a result, credit scores will generally go down. This is because those consumers who may be in a financial bind are more likely to apply for multiple loans, including credit cards, than people who are in a secure financial position.

There is no set formula for determining the impact of a loan application on your credit score. This depends on a variety of factors including length of credit history, credit utilization and payment consistency. One or two credit inquiries for a loan will generally have little impact. For those consumers who have a brief credit history or only one or two open accounts, the impact will be much greater. Fair Isaac points out that "people with six inquiries or more on their credit reports can be up to eight times more likely to declare bankruptcy than people with no inquiries on their reports."

In general, the impact on credit scores is the same whether applying for a credit card, auto loan or line of credit. Problems can arise when consumers apply for a loan in order to make the payments on a credit card or another loan, which leads to an escalating cycle of increasing interest charges and payment difficulties.

Consumers who shop for cars, mortgages or student loans often apply to multiple lenders, which causes many inquiries even though only one loan is the goal and end result. This is known as "rate shopping," for which credit scores remain unaffected. The result is that such multiple inquiries are counted as only a single inquiry for credit-scoring purposes.

Is Your Debt-to-Income Ratio on Your Credit Report?

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Your credit report is a record of your borrowing and repayment activity from the last seven years. It includes a lot of your financial data, but not your income. You can calculate your debt-to-income ratio by adding up all of your monthly bills and dividing them by your monthly income.

Your credit report contains personal identifying information such as your name, date of birth, Social Security number, current and past addresses, and driver's license number. It also includes all of your borrowing activity from the past seven years, including mortgages, credit cards, loans, car leases, store cards, even cell phone contracts. If you've been to court over your finances, the court judgment will be in your credit report, as will any liens.

Your credit report does not include information about your income. It may include the name of your employer, but not how much you earn. A credit report has no record of your savings. It also does not state your ethnicity or religion affiliation.

Before lending you money, a creditor will calculate your debt-to-income ratio to decide whether or not you can afford another monthly repayment. You will have to state your income on the application, as it is not included in your credit report. By combining the information from the application and the credit report, the creditor can get a good idea about your financial circumstances. In certain cases, the creditor will call an employer to verify that the applicant did not lie on the application.

Another important number is your debt-to-credit ratio. It's a measure of how much of your credit line you are using. A lender can calculate this number solely from your credit report. A high debt-to-credit ratio will make you look overstretched. It can hurt your credit score and make you look like a high-risk borrower. Avoid maxing out your credit cards to keep this number low and your credit score high.

Who Puts Negative Comments in a Credit Report?

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The credit agencies and your lenders work behind the scenes to keep the most accurate and up-to-date tabs on your financial habits for your credit report. However, you might cause some negative information to appear on your credit report. In any case, you may be able to remove certain negative items from your report.

The national credit bureaus get most of their information from your lenders. If you miss a payment, your creditor can report it to the bureaus, but does not have to. Sometimes, creditors give you a break and do not report the occasional error, such as a 30-day late payment. Lenders do not have to subscribe to the national credit reporting bureaus and many small lenders do not due to the extra time and money it costs them.

Ultimately, the credit bureaus are responsible for maintaining your credit history and putting negative items on your record. They also seek information that relates to your ability to repay a debt through public information databases from all levels of government, such as bankruptcies, tax liens and small claims judgments.

When you apply for a loan, the lender sends all of the information from the application to the credit agencies, including demographic information, such as your job and address. While demographic information does not hurt your credit score, lenders do take it into account when reviewing your application. If, for example, you change jobs or addresses all the time, they may interpret this as lack of stability.

The Fair Credit Reporting Act gives consumers the right to object to any negative item on their credit reports if they feel the agencies have listed it in error. You can write, phone or email the credit bureaus with your dispute. You might want to ask the creditor to correct a mistake, even if he only needs to contact the agencies to correct an error. No matter whom you talk to, always include copies of your evidence and only dispute items you truly feel are wrong.

How Soon After You Clear Your Credit Card Is Your Credit Score Increased?

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Clearing your credit card debt is one of the fastest and surest ways to boost your credit score. Wiping out credit card debt and how soon those accounts reflect on your credit report have some bottlenecks, such as the lender and the credit reporting bureau. You may need to wait a few months to use your new and improved score to apply for credit.

The credit reporting bureaus usually take about a month to update a credit file. The bureaus, however, only report information from lenders, so when your creditor sends an update could delay a zero balance from appearing on your credit report. If he takes a month and a half to send new data, for example, it might take two or three months to show up.

The FICO scoring model offers no guarantees and often gives bizarre results, so clearing your credit card debt may have little or no impact on your credit score. Maxing out a card when you have a score of 680, for example, may cost as little as 10 points. Thus, if you only use a small amount of your credit--less than 35 to 50 percent--eliminating that debt likely has a minimal effect on your score.

Not all lenders report to the national bureaus, especially mid- to small-size creditors. If your credit card provider does not subscribe to a credit reporting service, the account won't affect your credit. In rare circumstances, the card issuer may choose to report to only one or two bureaus.

Try to pay off your credit card balance as early in the month as possible, suggests Martha White in an article on the website Wallet Pop. Most lenders report statement on your latest bill as your balance. If your credit card statement displays a balance, your credit report probably has the same information. Your card may even allow you to make several payments during the month, so you could pay every two weeks instead of once a month.

How to Help Raise My Credit Score

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On average, a person with a poor credit score will end up paying hundreds of thousands of dollars more over the course of their lifetime than a person with a good credit score. This is due to the fact that your credit score determines how much you'll end up paying for mortgages, credit cards, consumer loans, insurance and a myriad of other items. Typically, a good credit score is a score over 700; a poor credit score is a score under 619; and an average score is everything in between. To raise your credit score to a higher level, you should pay attention to five main factors: payment history, current debt, credit history, applications for credit and credit mix.

Instructions

Pay down the balances on your credit cards. Paying down the balances of credit cards has a larger positive impact on your credit score than paying off installment loans such as your mortgage. Also, for maximum results, keep your balances below 30 percent of the total credit limit on each account.

Pay all your bills on time every month. Any delinquent or missed payments will have a negative impact on your credit report.

Use your credit cards lightly. Charging anything over 30 percent of your credit line, even if you pay it off in full at the end of the month, will negatively affect your credit score. When you use your credit cards, it's best to only charge small balances and never go over the 30 percent mark.

Check your credit report for inaccuracies. You should regularly check your credit report to verify that the information contained in it is correct. Once every 12 months you are entitled to a free credit report from each of the three credit bureaus through the Annual Credit Report website.

Use your oldest credit cards. The oldest accounts on your credit report have the greatest impact on your credit score. You'll want to keep these accounts active and regularly use them so the card issuers will continue to update your account information with the credit bureaus.

Get some goodwill. If you're a loyal customer with a lender, but have had one or two mishaps with them in the past, they may be willing to remove these items for you. All you need to do is call them up and ask.

Dispute old negative accounts. You can dispute old accounts by claiming they're not yours and if the validity of the account cannot be verified by the credit bureau, the item will be removed from your credit report.

Resist the urge to open new accounts too rapidly. Too many credit inquires in a small amount of time can have a negative impact on your credit report. Only open a new line of credit when you really need it.

An Explanation for Lowered Credit Scores From the Past Few Years

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Your credit score gives potential creditors a quick impression of how likely you are to pay your loan back on time. During poor economic times, many people may have lower credit scores because of loss of income and other financial crises. Always contact your creditors to make payment arrangements if you cannot pay your bills on time and use credit wisely to keep your credit score healthy regardless of economic conditions.

FICO bases your credit score in part on your debt-to-income ratio: how much debt you have in comparison to how much income you earn. If you lost your job or earned less money from a business than in the past due to poorer economic conditions,your debt-to-income ratio will rise because of the loss of income. Thus, even if you are paying all your debts on time your credit score will fall.

If you have a financial crisis due to an unexpected emergency such as a medical problem or an ongoing crisis such as job loss, you may find yourself with an overwhelming amount of debt that you cannot afford to pay back. Late payments, missed payments and collections activities can all contribute to lower credit scores. Contact your creditors immediately if you have financial problems that make it difficult to pay your bills.

Paying your bills on time is the single most important factor in your credit score. Even if you eventually pay your bills in full, paying them late can seriously impact your credit score. Occasional lateness will not affect your credit score much, as long as you pay your bills on time most of the time. However, if you are habitually 30 days or more late, your credit score will drop. Payment history accounts for about 35 percent of your credit scores.

If you file for bankruptcy due to your overwhelming debt, the bankruptcy stays on your credit for seven to 10 years, depending on the type of bankruptcy you file. You must rebuild your credit after bankruptcy so that the bankruptcy affects your credit less. It takes about two years after filing for bankruptcy for your credit scores to rise if you pay all your bills on time and use credit sparingly.

How to Improve a FICO Score With Credit Cards

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Credit is important. Without it, you couldn't get an auto or mortgage loan. In addition to establishing credit, it's also vital for consumers to maintain a good FICO score. Nowadays, many entities, such as insurance companies and employers, check an applicant's credit score. Those with a high FICO score receive prime consideration. Fortunately, there are ways to improve a low score. And in many cases, a credit card can help boost a low score.

Instructions

Apply for at least two credit cards. Having one credit account isn't enough to improve a low credit score. Potential creditors prefer applicants with multiple lines of credit. This can include a credit card, auto loan, installment loan or line of credit.

In order to improve your FICO score, you have to use the credit card. Acquiring a new credit card and storing the card in a safe doesn't help your personal score. Credit cards are useful. However, the key is using them responsibly.

Submit credit card payments early. Paying credit card bills on time is the number one way to improve a low FICO score. However, unexpected situations can arise in which late payments are inevitable. The credit cards online payment system can have a glitch, or you may forget to mail a payment. One late payment can reduce your score by 10 points. Rather than waiting until the last minute, resolve to pay credit card bills a few days before the due date. You may also consider automated bill pay.

Pay off the balance every month. Even if you can't pay off the credit card every month, attempt to pay off the balance every two to three months. This keeps your debt low, and it shows a measure of self-control. Maintaining a low debt-to-income ratio and paying off credit cards adds points to your FICO score.

Keep the account open. Closing a credit card account shortens your credit history and overall available balance. Both factors play a significant role in credit scoring, and this seemingly simple maneuver reduces your FICO score.

Steps to Establish Credit

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Taking steps to establish credit should start early in your life if you intend to buy a house or a car. You need to have a stellar credit rating to get those loans for the big things you want after graduating from college. However, establishing credit doesn't end there. It should be a lifelong endeavor in case you need credit late in life.

An early way to establish a good credit score is to open and carefully maintain a checking or savings account. You can start doing this before you even start college. The Kiplinger website says to avoid any bounced checks or overdraft issues. These can hurt your credit score. If you keep a clean record on your accounts, it can be one piece of proof to convince a lender you handle money well.

Another early way to develop your credit score is to get a credit card while in college. Kiplinger says a secured credit card is good, despite a required $300 to $5,000 deposit. The site also warns that many college students take on too many cards and get themselves into financial trouble early. But if you're a responsible person, it can be a huge advantage if you plan to buy your own home straight out of college. It's best to stick with just one card at this point.

While maintaining credit in college, Visioncredit.org recommends that you take out a personal loan from your bank. This can also help you establish a good credit record as long as you successfully make payments each month. It's best to take out a small loan for around $1,000. Your bank may ask for collateral using a one-year certificate of deposit.

If you want more than one credit card, it is best to open an account through a major retail store or even a gas station. These accounts are easier to obtain than a regular credit card. Maintaining a credit account through these places, making minimal purchases and paying for them on time will account for one small piece of your overall credit score. Kiplinger.com warns to avoid cards with high annual fees or interest charges.

If you have trouble obtaining a credit card while in college, you can have your name placed on your parents' credit card account or that of someone you trust as a joint user. Through time, you will establish a credit score concurrently with your parents or trusting friend. Of course, it's risky if your parents or friend fail to make their payments on time. This will affect your own credit score.

After you graduate and buy your home and car with your established credit, Kiplinger.com reminds you to make your payments on time. This should continue through the rest of your life. Additionally, you should not max out your credit cards since it will not only get you into debt, but will damage the good credit score you built and maintained for so many years.

What Are Landlords Looking for in My Credit Report?

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Before renting an apartment, house or other residence, a landlord will ask you for permission to access your credit report. This report contains a wealth of personal, legal and financial information about you compiled by the three credit bureau agencies Experian, TransUnion and Equifax. A prospective landlord then uses this information to decide whether you will be a reliable tenant.

Landlords want to know if you pay your bills on time. Late payments on revolving credit card accounts or real estate and auto loans will show up on your credit report. Closed credit card accounts may indicate problems with paying off high credit card debt.

State and county court records show up in your credit file. Landlords scan credit reports for bankruptcy filings, late or delinquent child support payments, tax liens and judgments--all of which may mark you as a risky tenant.

If you were convicted of a felony or are a registered sex offender, it will be there on your credit report. Landlords can request a criminal background check as part of your credit report.

Job stability may indicate not only your staying power as a tenant but your ability to pay the rent. The number of times you changed jobs in the past five years and how long you have been with your current employer are things your landlord wants to know.

Your credit report reveals not only your current address but where you have lived in previous years. It also tells your landlord if you have ever been evicted.

Things that won't appear on your credit report include bankruptcies more than 10 years old, delinquent child support payments and criminal convictions more than seven years old. Misdemeanors do not make it in your credit file either. Because of health insurance privacy laws, medical information is off limits too.

You may want to look at your credit report first before allowing your landlord to view it. As part of the Federal Fair Credit Reporting Act, you are entitled to receive your own credit report from each one of the credit bureau agencies at no charge.

How Getting Another Credit Card Would Affect My Credit

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While obtaining a new credit card is sometimes a good thing for your credit score, it might wreck it. Ultimately, how you use your credit card determines whether it is a help or hindrance to your credit. Pay your credit card on time and use it sparsely and it will probably positively affect your credit.

Whether or not you receive approval for the new credit card, the inquiry into your credit will harm your score. Whenever a creditor runs a check because of an application you put in, it always dings your score a few points. How the credit card affects the rest of the factors in the FICO formula is another story.

Any new line of credit lowers the average age of your accounts unless you are a new borrower and have no other accounts. If you had a single line of credit for 10 years, for example, a new line of credit would reduce the average age to five years. Credit history counts for 15 percent of your credit score, according to the Fair Isaac Corporation.

Acquiring a credit card when you have no other accounts is positive because you establish a credit history. When you only have an installment account and then add a credit card, it increases your variety of credit accounts -- 10 percent of your score. When you have several accounts, nobody can say what kind of effect a credit card has on your credit score. The FICO scoring model has so many factors that pinpointing the effect of any one item is nearly impossible.

Go over your contract for the credit limit and any fees on your account. Retail credit cards, for instance, are notorious for having low limits and high fees that could drastically increase your credit utilization as soon as you activate the account. Credit utilization is the percent of your card's limit you use. A card with $250 in fees and a $500 limit, for example, starts off with a utilization of 50 percent -- high for any account. Also, limit the number of credit cards you apply for each year because more than six hard inquiries in a year is extremely negative.

How to Get a Bankruptcy Off Your Credit Report After 10 Years

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Your credit reports are the main ways a lender determines whether or not to grant you a loan or issue you a credit card. Some potential employers even use a credit report when considering whether or not to give you a job. Credit reports list everything from your contact information to employment information to information on your credit accounts.

Credit reports also show if you have tax liens and bankruptcies in your financial history. The federal Fair Credit Reporting Act says that discharged bankruptcies can stay on your credit report for up to 10 years. However, this information isn't always removed automatically after that 10-year period, and you must work to get it removed from your reports in order to fully improve your credit.

Instructions

Find out which credit reports still list your bankruptcy. Experian, TransUnion and Equifax are the three main credit-reporting agencies used to determine creditworthiness. These companies are separate entities, so you must work with each separately to have the bankruptcy information removed.

Write a letter to each credit reporting agency stating that the 10-year reporting period is over. Indicate that your credit report still reflects your bankruptcy and the Federal Credit Reporting Act states that they must remove this information after receiving your letter. Be sure to include your full name and social security number to help them identify you correctly. At the end of each letter, ask that the agency make the change within 15 business days and send you a corrected copy of your credit report.

Include copies of any official court documents showing that the 10-year reporting period is over. These documents help support your position and expedite the removal process.

Send your letters certified with return receipt requested through the United States Postal Service. Doing this provides proof that your letter received by the intended addressee. Having this proof can come in handy if you need to verify that you sent the letters.

Follow up if you don't hear from the credit-reporting agency within a reasonable period of time such as 30 days. Credit-reporting agencies receive thousands of letters each day and it's possible yours could get lost. If you don't hear back, resend your request letter certified and return-receipt requested. It may take more than one request, but eventually you'll either receive a request for more information, or an updated credit report with the bankruptcy removed, allowing you to pursue a new financial future without the bankruptcy.

Monday, April 30, 2007

Payment History

Amount Owed

Length of Credit History

New Credit

Types of Accounts

Saturday, April 28, 2007

Instructions

Instructions

Friday, April 27, 2007

Get a current credit report

Focus on the negative to get positve results

Ask creditors to remove bad reports

Pay all your bills on time

Live within your budget

You will see progress

Instructions

Instructions

Accounts

Negative Data

Public Information

Inquiries

Tax Liens

Positive Data

Thursday, April 26, 2007

Instructions

Wednesday, April 25, 2007

Investigate

Dispute

Paper Trail

Release of Reports

Errors on the Report

Failure to Correct Errors

Getting Your Own Copy

Instructions

Tuesday, April 24, 2007

Don't Apply for Credit Accounts

Avoid Delinquencies

Keep Personal Debts Low

Obtain Credit Reports

Score

Multiple Inquiries

Types Of Inquiries

Considerations

Instructions

VantageScore Credit Rating

Payment History

Lender Policy

Type of Loan

One-Sided Reporting

Sunday, April 22, 2007

Instructions

General Loan

Loans With Cosigners

Saturday, April 21, 2007

Instructions

Instructions

Where Reports Come From

How It Is Used

What Information Is Included

Fixing Your Credit

Wednesday, April 18, 2007

Effects

Expert Insight

Significance

Interest Rates

Credit Limits

Utilities

Insurance

Employment and Rent

Tuesday, April 17, 2007

How It Works

Time Frame

Paying the Judgment

Lawsuit vs. Judgment

Identification

Considerations

Other Risks

Tip

Authorized User