How to Calculate a Credit Score for a Loan

A number of factors go into determining a credit score. One of the most commonly used credit scoring systems is offered by Fair Issac Corp. The score that system produces is known as a FICO score. Other companies offer similar credit scoring models that are based on a person's or a business's credit history. Although calculating your own credit score is challenging, there are ways of finding what score you need to qualify for loans.

Instructions

Calculate a Credit Score for a Loan

1

Contact a credit bureau. You can find out your credit score by contacting one of the three major credit bureaus (Experian, Equifax and TransUnion). Under the Fair and Accurate Credit Transactions Act of 2003, consumers are entitled to one free credit report from each credit bureau every 12 months. However, this free credit report does not contain your credit score. Your credit score is available for purchase from the credit bureau after you have obtained your free credit report.

You can go to AnnualCreditReport.com to request your free report. Call a credit bureau to purchase your credit score. This will help you know what lenders will see when looking at your loan application.

2

Gather credit history information. If you want to compute your own credit score, you will need a detailed credit history. This can include the number of credit cards you have, the age of your loans, the number of loans you have recently applied for, the date the last loan or credit account was opened, the number of loans that have a balance and the balance amounts, the number of days you have been delinquent in paying a loan, the number of accounts currently past-due, and any bankruptcies, liens, foreclosures, repossessions and collections within the last 10 years.

All of this information goes into determining your credit score, which is based on a complex mathematical model. Although the exact formula used by credit scoring companies is not disclosed, you can use a general rule of thumb. The more negative the credit history information, the more it will lower your credit score. Bankruptcies and foreclosures usually hurt credit scores the most.

3

Ask questions. If you have applied for a loan and been declined, the Equal Credit Opportunity Act requires the creditor to furnish you with a notice stating the specific reasons your application was rejected, or to tell you that you have the right to learn the reasons if you ask within 60 days.

Ask the creditor for an explanation. Indefinite and vague reasons for denial are illegal. If you were denied credit because of specifics in your credit report, the creditor is required under the Fair Credit Reporting Act to furnish you with the name and address of the credit bureau or agency that supplied the information.

Call the credit bureau within 60 days of the notice of rejection to find out what the information in your credit report said. If it was related to your credit score, ask the credit bureau what your score is. This information is free and it can help determine what score might be considered acceptable by a lender. The creditor can tell you why your application was denied, but the credit bureau can tell you what information is in your report.

According to Fair Issac Corp., people with credit scores above 750 are considered excellent credit risks. Scores around 700 are considered good, scores around 650 are fair, and scores below 600 signify poor credit risk.

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How to Develop a Credit History

If you are just starting out building your credit history, you may discover it is a challenging process. Lenders are hesitant to extend credit to individuals who do not already have a credit profile. This places you in the position of attempting to get credit without first having credit to show for it. To develop credit, you must build a credit history by proving to potential lenders that, although you have no previous credit history, you are a low risk borrower. This is usually achieved by offering collateral. Collateral is something your lender can seize in the event that you do not pay.

Instructions

1

Apply for a secured credit card. Secured credit cards require you to make an initial deposit to the credit card company. This deposit determines the spending limit on your card. Because your up-front payment is considered collateral, secured cards are much easier to get approved for than unsecured cards when you are trying to build a credit history.

2

Consider a secured bank loan. A secured bank loan is very similar to a secured credit card in that you are borrowing against funds that you already have. Speak to a loan officer at your bank about placing funds into a savings account and then borrowing against those funds. This allows the bank to extend a loan to you at a very low risk since the bank can opt to "freeze" those funds and seize them if you cease making payments on the loan. A bank loan is also beneficial because it appears on your credit report as installment debt. Having a good balance of both installment debt and revolving debt, such as credit cards, allows you to boost your credit score more quickly since the types of debt you hold accounts for 10 percent of your credit score.

3

Make payments on time to both your credit card company and your bank. Your payment history, at 35 percent, has a larger impact on your credit score than any other factor.

4

Charge only 10 percent of your spending limit on your credit card and pay it off each month. If you do not make purchases on your card, you cannot build a good payment history and thus a good credit score. Limiting the charges you make is important, however, because the more you owe on your card, the worse it is for your credit score.

5

Apply for an unsecured credit card after six months. Once enough time has passed to develop a short, but good, credit history, you can apply for an unsecured credit card and be approved. Unsecured cards typically charge lower interest rates and annual fees than secured cards and are a good financial decision for someone who is laying the foundation for a good credit history.

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How to Get a Paid Collection Item Off a Credit Report

Past-due accounts eventually turn into collection items. Collection information can be reported on your credit report for a period of seven years. Collection items can damage your credit by decreasing your credit score, making you more of a credit risk in the eyes of lenders. In certain situations you can have this derogatory information removed from your credit file; however, timing is important.

Instructions

1

Negotiate with your creditor. Whenever you have a collection item on your credit report, the best time to get a creditor to remove it is before you pay it. Collection items can remain on your credit report for seven years. Items will remain on your file if the creditor takes no action. Ask the creditor to remove the collection item as a condition of paying the balance in full. Some creditors will agree to this and others will not. Its completely up to the creditor.

2

Obtain the confirmation in writing. Make sure you receive written confirmation if the creditor agrees to have the information removed. A written document is proof that you have an agreement to have information removed from your credit report. All terms should be spelled out specifically. Find out how soon a request will be put through after the debt has been paid off. This should be included in your confirmation. Store this paperwork with your important documents for future reference.

3

Pay your debt. When you receive written confirmation from the creditor, send your payment in full. This will appear on your credit file as a paid collection. Make sure you keep a record of your payment as further proof. Once the creditor removes the collection item from your file, the entire trade line will disappear. A trade line records all the information from a creditor, including the creditors name, balance owed, date account opened, date last paid, and pay history.

4

Order your credit report after 60 days. Waiting 60 days allows the creditor adequate time to remove the derogatory information. You can get a free copy of your credit report once a year from all three credit reporting agencies. Verify that the information has been taken off all three reports. To order a credit report go to annualcreditreport.com. Order by mail, phone, or online.

5

Follow up with the creditor. If the information has not been removed, contact the creditor to see if the request has been put through. They will be able to give you an approximate date of submission.

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Poor Credit & Jobs

Being a job seeker with poor credit is a catch-22. Many employers run credit checks on prospective hires as part of the hiring process. And, unfortunately, poor credit can sink your chances of landing a job. Critics state that such a practice is discriminatory because creditworthiness is not an indication of an applicant's job qualification. Some states propose limiting credit checks as a basis to hire and fire.

Credit Checks and the Hiring Process

Credit checks as part of the hiring process are perfectly legal, although a credit check may seem unfair, especially if a job seeker has poor credit due to past financial struggles. Reviewing your credit score, reference and past employment information fall under the umbrella of background checks. A bad credit score might limit your employment opportunities even though you may be the right candidate for the job.

Why Companies Run Credit Checks

According to the Society for Human Resource Management, 60 percent of the employers it surveyed for its November 2009 report said they conduct credit checks as part of their hiring process. Most said they only do so on a select group of candidates and check as far back as six or seven years. The survey participants said they look for judgments, accounts in collections and bankruptcies. Employers argue that a credit check is a useful screening tool, particularly for job candidates whose responsibilities include handling money, such as a cashier, or having access to sensitive materials. Still other companies use credit checks on a perfunctory basis to gather such information as education, past employment and driving record.

Argument Against Credit Checks

According to many consumer rights groups, denying a job seeker employment because of his bad credit is not only discriminatory, but also hampers the economy. Critics argue that an applicant's credit history has no bearing on his job performance or abilities. Some states have even decided to ban or limit the practice. As of 2011, several states have passed or proposed laws restricting the use of credit scores as a factor in employment.

Your Rights

You have the right to know what's in your credit report and dispute any false or inaccurate information. In addition, you are entitled to a free copy of your credit report every 12 months under the Fair and Accurate Credit Transactions Act (FACTA). Before you start your job hunt, obtain your credit report and check if for any inaccuracies, false or missing information. Under the Fair Credit Reporting Act (FCRA), if a potential employer intends to run a credit check on you, it must get your permission. If the company denies you employment based on your credit report or score, it must provide you the name of the credit rating agency it used plus give you a copy of your credit report. The company must also pass along a copy of "A Summary of Your Rights under the Fair Reporting Act," the document recommended by the Federal Trade Commission.

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What Is Provided on My Credit Report?

Your lenders, landlords and even potential employers may pull your credit report as part of a background check when you apply for a loan, lease or job. Knowing what they are likely to see can help you know what to avoid to make your credit report look as pristine as possible. In addition, you can receive a free copy of your credit report from each of the three major credit bureaus once per year.

Identification

Your credit report contains information to identify you including your name, address and Social Security number. It also lists where you have worked and your birthday so that you can be identified and not confused with other people who may share your name. However, this information does not affect your credit score; it merely acts as a safeguard to make sure that your credit information belongs to you rather than accidentally reporting the credit information of someone with a similar name.

Credit History

For each credit line that you have, your credit report shows how you handled that debt. Credit lines include student loans, credit cards, mortgages and car loans. In addition to showing your payment history, the credit report also shows your credit limits for each account, how much you currently owe on the credit line and the age of the credit line. The longer you have had credit and the more responsibly you have used it, the higher your credit score will be. Negative information, including late payments or foreclosures, remain on your credit report for seven years.

Applications for Credit

Any time you apply for a new line of credit and the lender pulls your credit report, an inquiry is added to your credit report. When lenders look at your credit report, they can see the number of new credit lines you applied for within the past two years. For example, if in the past two years you applied for three new credit cards, inquiries noting those applications would be visible to someone pulling your credit report. In general, consider keeping inquiries to a minimum so that your credit score will be higher. Your credit report also notes any employers who have pulled your credit report during the past two years. For example, if you applied for a job at a bank and as part of their background check the bank ran a credit check, that inquiry would also be included in your credit report.

Public Information

Public records include bankruptcies, tax liens and judgments. Public records are typically generated by state or local courts. If you have an unpaid tax lien, it can remain on your credit report forever while Chapter 7 bankruptcies remain on your credit report for a decade. Other negative public information, such as Chapter 13 bankruptcies and collections, remains on your credit report for seven years. However, as information ages, it has less of an impact on your credit score. For example, a collection from six years ago will not have the same impact as a collection last month.

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How Long Do Records Stay on Credit Records?

Negative Element

A credit score is lowered when a negative element on your record is reported to the three major credit bureaus: Equifax, TransUnion or Experian. This negative element can be any sort of financial liability tied to your Social Security number, such as a collections account for an unpaid debt, bankruptcy or a tax lien. Each credit bureau gives a different weight to these negative elements, which is why the same person can have different scores from each bureau.

Deletion Negotiation

A debtor may be able to negotiate a collections deletion from his account to have a creditor remove a negative element from his credit history. This option can be pursued if the debtor wishes to pay in full a debt that has gone to a collections agency. The debtor contacts their creditor or collections agency and negotiates a payment term. Any creditor who has created a negative element on a debtor's credit history can remove it. Sometimes, an extra fee may be charged for the deletion service. Paying a debt without requesting a deletion causes a negative element to remain on a credit history for its full term.

Inquiries

Credit inquiries are removed from an individual's credit history after 2 years. Inquiries are reported when an individual has her credit score and history checked as part of a loan or credit application.

Delinquencies and Collections

Delinquencies and collection notices are removed from an individual's credit history after 7 years. Delinquencies are dated from the initial missed payment. Collections records are dated from the date the account moved into collections.

Bankruptcy

Bankruptcy records begin from the date of filing. Chapter 13 bankruptcy filings remain on an individual's credit report for 7 years. Chapter 7, 11 or 12 bankruptcy filings remain on an individual's credit report for 10 years. Individual accounts reported in the bankruptcy filings and subsequent judgments remain on a credit history for 7 years.

Tax Liens

Tax liens levied at the city, county, state or federal level remain on an individual's credit report for a maximum of 15 years from the date they were reported. Once the tax lien has been paid in full, the paid lien record will remain on a credit history for 7 years from the payment date.

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How Much Will Your Credit Score Go Up After Paying Credit Cards Off?

Having a credit score higher than 700 opens up your ability to get loans and credit cards at favorable rates. One of the factors in determining your credit score is how much debt you carry. In general, the lower your debt, the higher your credit score will be. So if you can pay off your credit cards while keeping them open, you could see your credit score rise more than 100 points.

Factors In a Credit Score

Your FICO credit score can range from 300 to 850. This number comes from a total of five areas: Payment history (35 percent or up to 193 points), amounts owed (30 percent or up to 165 points), length of credit history (15 percent or up to 82 points), new credit (10 percent or up to 55 points) and types of credit use (10 percent or up to 55 points). Credit scores are used to identify people who are good credit risks, which are those people with credit scores of at least 700.

Debt to Credit

To figure out how much your credit score will increase if you pay off your credit cards, you need to understand how the credit score views your debt. Divide the total amount of credit you're carrying with the total of your credit lines. The result is your debt-to-credit utilization. For the best rates, you want your utilization rate to be no more than 0.30 or 30 percent of your total credit.

Changes in Score

Credit Karma surveyed 70,000 credit scores and compared the scores to the utilization rates. Each 10 percent change in your credit utilization will change your credit score by 15 to 25 points on average, but the Credit Karma survey did not take into account other factors. According to the "amount owed" factor of your credit score, each 10 percent change in your utilization score is worth 17 points on your credit score. However, what the Credit Karma survey did show was that totally paying off your revolving credit debt actually caused a drop in the credit score compared to people who have a utilization rate in the single digits.

Keep It Gone

If you pay off credit cards in full each month, it does not mean that your utilization rate will be zero. This is because you don't know when the credit card reports balances to the credit agency. It could be reported before your balance shows as being paid off. Also, according to the Credit Karma survey, carrying a small amount of debt from month to month is not a bad thing. Also, don't close accounts you don't use because this will increase your utilization rate since your total credit is reduced.

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How to Repair Debt & Bad Credit

Eager to keep up with the neighbors, you overspent. Perhaps you are faced with immense medical bills or a layoff. Getting your act together starts today and has an impact on tomorrow. You and your spouse may wonder if trying to repair financial woes can really make a difference at this point; it can. Every beneficial step you take with your finances shows up on your credit report. Following a few simple tips can get your family in better financial shape.

Instructions

1

Begin what Dave Ramsey coined "the snowball." A snowball means you repay your smallest debt and put what you would have paid toward your next smallest debt until that one is paid. Make your other minimum payments on time and use any extra money on the smallest debt you have.

2

Pay student loans on time. Important marks go against your credit record if you default. One positive thing about student loans is that the interest rate is typically low.

3

Eliminate the problems that got you into this mess as quickly as possible. Take out health insurance if your problem was unreasonably large medical bills; perhaps sign up for Medicaid if you qualify or a discount plan. Starting an emergency fund that can help you survive for three months without an income is also important.

4

Take out a secured credit card to build credit. Secured credit card companies let you take out a small bit of credit that equals your security deposit. They have small risk because companies don't let you take out more than you can pay.

5

Ask a close relative such as a parent or spouse if you can be added to their oldest credit card account. If they seem unsure, make clear that you do not even need to own the card and that it can be in their possession. Let them know exactly what you are trying to accomplish, which is building credit through their on time payments.

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How Are Points Added to Your Credit Score?

Your credit score can be one of the most important numbers in your life if you want to buy something using a payment plan. Improving your credit score will give you access to loans at a lower interest rate, may lower your insurance rate and can increase your ability to borrow money. The three credit reporting agencies -- Experian, TransUnion and Equifax -- compile credit scores based on what is in a consumer's credit report, and their scores reflect the amount of risk to the creditor that the borrower will not pay back the loan.

Remove and Prevent Negative Items

Removing negative items from reports will increase scores. Negative items, such as late or missed payments, not paying the full amount due and repossessions, will lower a credit score. Negative information will be removed from a report in time -- seven years for a late payment -- but the credit bureau will remove erroneous information if you prove a disputed item. Negative items lose their impact over time but affect your score until they drop off your report.

Lower Outstanding Debt

Lowering the amount you owe on debt accounts will add points to a score. The credit bureaus look at the amount of credit a consumer has available compared to how much he owes on those accounts and whether he is reaching his balance limits. Lower balances reflect a cautious use of credit and can raise your score. The amount of debt you have compared to available credit makes up a good part of your credit score -- about 30 percent of your score reflects your credit utilization. To add points to your credit score, use your credit cards less frequently and make more than the required payment to lower the balances.

Long Credit History

Credit bureaus look at how long you have had credit when determining your credit score. The longer a person has had good credit, the lower the risk that the person will quit paying her bills. The amount of time that you have maintained accounts can make up 15 percent of your score.

Lower the Frequency of Asking for Credit

The more credit you apply for, the lower your score. Credit bureaus assume that if you are applying for many different lines of credit you need access to money, which could make you a credit risk. New credit inquiries will remain on your report for two years and new accounts can comprise up to 10 percent of your score.

Pay on Time

Consistent timely payments are mandatory to add points to a credit score. Paying your bills every month shows the credit bureaus that you are not over-extended and able to meet your current obligations. Your payment history can attribute as much as 35 percent of your score, which makes paying on time a key path to a high score. If the payment falls at a difficult time of the month, your account provider may be able to change the date.

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Are Balance Transfers Bad for Your Credit?

If you have a significant balance on a credit card that carries a high interest rate, such as 16 percent or more, and you receive an offer in the mail for another card with a lower rate, you may not think twice before deciding to transfer your balance to the lower rate card in order to save money. However, if you are interested in improving a mediocre credit rating or in maintaining a stellar credit score, you should carefully consider the potential effects of a balance transfer on your financial future.

The Cost of Transfer

Before making the transfer, consider the total cost. While the original credit card company cannot charge you a fee to transfer a balance, since in effect you are "paying" the debt on that card, the new company often does. Without careful comparison shopping, you could end up with hundreds of dollars in transfer fees being added to your credit balance on the new account, adversely affecting your debt-to-credit limit ratio and ultimately your credit score.

Credit Inquiries

Each time you apply for a new credit account, the issuer will make an inquiry into your credit report. The major credit bureaus---Experian, TransUnion and Equifax---record each new inquiry on your credit history. Several credit card inquiries within a short period of time can indicate that you are financially overextended, and this can adversely affect your credit score, also known as your FICO (Fair Isaac and Co.) score. According to FICO, one additional credit inquiry usually takes less than five points off their FICO score. If you are trying to improve your rating, applying for several new cards for the purpose of balance transfers will add up to a lower credit score. One or two applications, however, will have a lesser effect.

Credit History

You should also consider keeping an older credit card account active with lighter use rather than closing it. A longer history of using credit makes for a better score. The best strategy, however, is to keep the credit cards you have and consistently make payments to lower the balances, rather than moving your debt to new cards. Liz Weston, writing for MSN Money, says getting your balances below 30 percent of the credit limit can really help, while getting balances below 10 percent is even better. By paying down credit card balances, you improve your debt-to-credit ratio, which reflects positively on your FICO score.

Credit Balances and Credit Scores

Don't let the initial relief of lowering your monthly minimum payment via balance transfer blind you to the big picture. Paying down that balance is critical to improving your FICO score. Disciplining yourself to faithfully reduce your credit balance each month will do your credit rating the most good. Above all, don't miss a payment, because "a single skipped payment can knock as much as 110 points off your FICO score," according to Weston.

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How to Protect Your Credit by Restricting Access to Credit Bureaus

Whenever you apply for a credit card or loan, the potential lender checks your credit report. However, you may wish to prevent anyone from accessing your credit reports, especially if you are concerned about possible identity fraud. If you place a "security freeze" on your Equifax, Experian and TransUnion credit reports, virtually no company can immediately access your credit report. You set up a password with each credit bureau, and one of their representatives verifies that you authorized the transaction before releasing your credit file. Remember, each credit reporting agency is a separate operation; you must complete your security freeze request with each company.

Instructions

1

Decide how you want to contact each credit bureau. You can place a security freeze by postal mail or online. Be sure to have your Social Security number handy to complete the process.

2

Visit the security freeze websites for Equifax, Experian and TransUnion if you selected this option. If you prefer postal mail communication, proceed to Step 6.

3

Fill out the online form for each credit reporting agency as prompted. Provide personal information such as your name, current address and date of birth. If you moved in the last two years, you must provide your last two addresses.

4

Select a personal identification number (PIN) or allow the credit bureau to create one on your behalf. Whether you choose a PIN or let the agency select one, be sure to memorize it.

5

Submit the form as directed. You will receive e-mailed and postal mail confirmation.

6

Write a brief letter requesting a security freeze if this is your preferred option. Include your full name, current address, date of birth and Social Security number. Those who have changed residences in the past two years also must provide their last two addresses.

7

Photocopy your driver's license and a utility bill or bank statement. If you reported possible identity theft to law enforcement officials, also make a photocopy of any police reports or court documents.

8

Mail the letter and documents using a traceable form of delivery. The addresses are as follows:
---
Equifax Security Freeze
P.O. Box 105788
Atlanta, GA 30348
---
Experian Security Freeze
P.O. Box 9554
Allen, TX 75013
---
TransUnion Fraud Victim Assistance
P.O.Box 6790
Fullerton, CA 92834

9

Wait to receive a postal mailed confirmation. If you have further questions, contact the credit bureaus at the following numbers: Equifax, (800) 685-1111; Experian, (888) 397-3742; TransUnion, (888) 909-8872.

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How Long Does It Take to Repair My Credit Score?

For Americans, debt practically has become a natural part of life. We have loans for school, mortgages for houses and numerous credit cards. If you hit a rough patch in life and can't pay back your loans on time, this lowers the score on your credit report. Even if the situation seems dire, you can be on the road to repairing your credit in a few months.

Identification

The history of credit reporting goes back hundreds of years, but the notion of a credit score is a fairly recent invention. Fair Isaac Corporation, which was founded by an engineer and a mathematician to show that the intelligent use of data could improve business decisions, developed the first formula to calculate the FICO credit score.

A good credit score is essential for achieving the highest standard of living. High credit ratings are needed for lower interest rates on credit cards and mortgages, and some employers factor credit ratings into hiring decisions.

Time Frame

There is no set timetable to repair poor credit. How long something negative stays on a credit report depends on the type of debt and how much debt you have. Data that hurts your credit score usually can be reported for seven years or more in extreme cases.

However, you can start to raise a credit score within six to 12 months, because the payment history is the most important factor when calculating credit ratings. Your payment history counts for 35 percent of your score.

Other Factors

How much credit you owe counts almost as much as your payment history, 30 percent of your credit score, so paying off debt is one of the quickest ways to repair credit. Other factors that influence your score are how long you have used credit (15 percent of your score--the longer, the better), the type of credit used recently (10 percent) and how much new credit you have applied for recently (10 percent). For example, lots of credit card debt taken at one time lowers your score because it looks like you have financial problems.

Defaults and Bankruptcy

Some financial situations are of such concern to credit companies that they stay on your credit report for a long time and usually prevent new lines of credit. Bankruptcy, owing more than you can afford to pay, can stay on your record as long as 10 years. Defaulting on a government-backed student loan can stay on a report for seven years after the account is considered in bad standing.

Warning

Some companies and individuals claim that they can instantly repair credit histories or give you a brand new history. These are scams. These companies either take your money and do nothing for you or tell you how to commit identity fraud. Other scams include removing debt obligations through bankruptcy, which should be done only in extremely dire situations.

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How to Get an Eviction Off a Credit Report

Apartment leases are legally binding agreements. Walking away from a lease or getting evicted from your apartment can damage your credit rating. In turn, it becomes harder to purchase a home, finance an automobile or obtain a credit card. There are ways to get an eviction remark off your credit report. Once creditors remove this remark from your report, your FICO score will improve and you'll qualify for better rates on future loans.

Instructions

1

Contact your old landlord and offer to pay off the balance. For example, if you didn't pay your rent for two months, the landlord is likely to want to recoup this loss, plus interest. Offer to make a one-time payment and eliminate this past-due balance or to make installment payments.

2

Negotiate a debt settlement with the landlord. If you can't afford to pay off the entire balance, inquire about a settlement. Rather than pay the full balance, the landlord might agree to accept a percentage of the past-due balance. If you owe $2,000 in rent payments, the landlord may accept $1,000.

3

Ask the landlord to remove the eviction remark from your credit report. Once you've paid off or settled your past-due balance, ask the landlord or leasing company to remove the negative remark from your credit report. They're not required to oblige your request, but some landlords will recognize your effort to pay off an old balance, and this may persuade them to delete the eviction remark.

4

Check your credit report. After three or four months, order a copy of your credit report (see Resources). If the landlord agreed to remove the eviction remark, check the report and make sure the eviction is off your record.

5

Write a dispute letter to the leasing company. Occasionally, credit bureaus make mistakes, and someone else's eviction remark may appear on your credit report. If you don't recognize an account or creditor, contact the reporting creditor (or landlord) immediately and ask them to remove the eviction from your report. If they don't respond to your request, send a dispute letter to the three credit bureaus.

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How to Freeze Credit History

Consumers who have been victims of identity theft often request a security freeze or lock on their credit file. A credit freeze prevents anyone from viewing your credit history. When you request a credit-reporting agency to freeze your credit file, the only way your credit report can be viewed is if you contact the credit-reporting agency, in writing, and authorize the lender to have a copy of your credit file.

Instructions

1

Call the credit bureau with which you will be requesting the freeze on your credit report. Be prepared to answer security questions regarding your credit file. You will need to provide the credit representative your name, Social Security number, date of birth and mailing address. You may need to fax proof of your identity.

2

Tell the credit bureau representative that you need to freeze your credit file. Explain the reasons necessary for the credit freeze. If you are given a security pin number, write it down and keep in a secure place.

3

Ask the representative to give you the details required to request your credit report during the credit freeze. Inquire if there will be a fee to freeze and unfreeze the account. According to the Clark Howard Show, the bureaus may charge up to $10 per freeze or the freeze may be free.

4

Follow up with any items the credit bureau requests to process the credit freeze.

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How to Cancel Triple Advantage Credit Monitoring

Triple Advantage is a credit monitoring service offered by Experian, one of the three major credit bureaus. Experian runs ads enticing consumers to get a free copie of their three credit reports and their credit score. To get these items, they must sign up for a trial of the Triple Advantage credit monitoring service for a monthly fee. The only way to avoid the charge is to cancel within the trial period. You can cancel after the trial, but you will only get a pro-rated refund at that point. Either way, you must be sure that you cancel properly and can prove the cancellation.

Instructions

1

Send an email to support@freecreditreport.com informing them that you wish to cancel their service, and send a carbon copy to yourself. If you only want the free trial, send this email the very next day to make sure that it falls within the trial period. If you have already had the service for a few months, let them know you want the cancellation to start the next month.

2

Follow up with a phone call to (888) 829-6560 and let the representative know that you send an email for cancellation and that you are following up to ensure that the cancellation is noted. You may wish to record the phone call; some states require you to let the other party know it is being recorded, while others only require the consent of one party. Follow the law in your particular state.

3

Check your credit card statement carefully for the card you used to order the free trial and pay for the service if you've had it for a few months. Go over it item by item for the next three months, making sure there are no charges from Triple Advantage.

4

If you find charges from Triple Advantage after the cancellation, send them an email at support@freecreditreport.com. Remind them that you have evidence of the cancellation, citing your email and the recorded phone call, and instruct them to remove the charges from your card immediately. Let them know you will file a dispute with your credit card company if they do not remove the charges.

5

If your email does not get a response, call Triple Advantage at (888) 829-6560 and explain the situation. Remind them that you have evidence of your cancellation, and let them know you will dispute the charges with your credit card if they do not resolve the matter. Record the phone call, following your state's laws for notification.

6

If Triple Advantage still refuses to refund your money, file a dispute with your credit card issuer. Be prepared to provide evidence that you cancelled and made a good faith effort to resolve the complaint directly with Triple Advantage. You can use your emails and phone records to show this.

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How Does Retirement Affect Credit Score?

There are many factors that affect your credit score. Retirement isn't one of them. A credit score is a shorthand summary of your credit history. Your credit history includes all of your borrowing and repayment activity from the past seven years. It does not include your income. Simply retiring will not affect the score. However, a drop in income can make it more difficult to get credit, even with a good credit score.

Credit Scores

When you think about your credit score, you should be thinking about three numbers, not one. Each of the three main credit bureaus -- Experian, Equifax and TransUnion -- issues its own set of scores. Your score will differ from one bureau to the next. The bureaus use slightly different formulas to convert your credit history into a number. Moreover, not all lenders report to all three bureaus. The difference in the formulas and the difference in data result in different scores. However, if you have a low score with one bureau, it's unlikely that you will have a much higher one with another. Bad credit history is bad credit history, regardless of who is rating it.

What Is In a Credit Report

A credit report is a record of your borrowing and repayment history. It contains information about your debts, including mortgages, loans, credit cards, store cards and cell phone contracts. This includes balances, credit limits and missed and late payments. If a lender passes your debt onto a collection agency, it'll be on your credit report. If you've had any liens or court judgments against you, it'll be on the report. If you've filed for bankruptcy or defaulted on a debt, it's in the report. You can get a free copy of your credit report from www.annualcreditreport.com.

What Is Not In a Credit Report

A credit report doesn't have any information about your income. If you retire, it will not affect your credit score. The report doesn't include any of your savings or checking accounts. With a few exceptions, it doesn't contain information that is more than seven years old. Chapter 7 bankruptcy will stay on your credit report for 10 years.

Getting Credit

Whether or not you get credit depends on a variety of factors. Your credit score is just one of them. Your income is another. When you retire, your credit score shouldn't suffer. However, if your income drops, it will be more difficult to borrow money. If you're looking to take out a large loan, like a mortgage, your age may also be a factor.

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How to Access a Trilegiant Credit Report

Trilegiant offers a membership-based credit reporting service called PrivacyGuard. PrivacyGuard gives you access to up-to-date credit reports from Experian, Equifax and TransUnion. These are the three major credit reporting agencies. Your credit report contains a variety of financial and personal information such as your credit score and a list of your credit cards, loans and bank accounts. Reviewing your credit report on a regular basis helps ensure that the information on your credit report is accurate. It also helps you stay abreast on any possible identity theft.

Instructions

1

Sign-up for PrivacyGuard account. Fill out the enrollment form on the PrivacyGuard website. Include your personal information, home address and credit card information. Accept the terms and conditions. As of early 2010, the monthly membership fee was $16.99. You can also join by calling 800-374-8273.

2

Access your online account. Log in with your username and password. This will take you to your account homepage.

3

Select the "Obtain Credit Reports" option. Select Equifax, Experian or TransUnion. You can only view one report at a time.

4

Verify the last 4 digits of your Social Security number and date of birth. Once you do this a copy of your credit report is displayed online.

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How Much Will Buying a Car Boost My Credit?

There's no one answer as to how buying a car will benefit -- or hurt -- your credit. Loans and credit purchases don't exist in a vacuum. The effect of any one transaction will depend on your credit history at the time. Generally, taking out an auto loan can cause a short-term credit-score drop but in many cases will eventually be an asset on your credit report.

Initial Effect

Shopping around for a car and a lender may lead to multiple companies pulling your credit report. Each credit inquiry can lower your score, but if you complete your shopping within a 30-day period, the credit bureaus will treat the multiple inquiries as if they'd received a single request for your file. Opening a new credit account often causes an initial drop in your score, but that should fade within a few months if you keep up payments.

Credit Types

If all of your debt is on credit cards, adding a car loan to your credit mix can be a plus. Credit cards are revolving credit, meaning that when you pay off the balance, you renew your ability to borrow. Car loans are installment loans; paying the loan off means it's gone. The Fair Isaac credit-scoring company says about 10 percent of your score is based on whether you have a variety of loan types, rather than just credit cards.

Payments

Payment history contributes 35 percent of your FICO score. If you take out an auto loan and make your payments on time for the life of the loan, that will benefit your credit score. If, on the other hand, you pay late every month or you miss a payment or two, that's a big negative. It's not a permanent negative, however. If you miss one payment the first year of the loan and never again, the effect of the black mark will diminish with time.

Considerations

The impact of your loan or any other credit transaction will vary according to your previous credit history. If you already have a good score and a history of timely payments, one more loan may not boost it much. If you're young, with little credit history, buying a car and paying off the loan will count for a lot more. The negative effects of taking out a loan may hurt someone who's maxed out his credit cards more than someone who carries a low or zero balance.

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Is It Possible to Fix Bad Credit?

The consequences of bad credit can impact employment opportunities, insurance rates and loan approvals. And because credit scores improve gradually, some people feel that's too difficult or impossible to reverse their bad credit. This attitude can affect the effort put forth to fix bad credit. Bad credit isn't permanent, and several methods can help improve a low score.

Credit Limits

The majority of credit cards have a limit, and going over or nearing this limit can hurt your FICO score. MyFico.com suggests paying down debts and keeping a low credit limit to help fix bad credit. The amount owed on your credit cards makes up 30 percent of your credit score. Increasing your score involves getting a handle on your debt and spending, and eliminating as much debt as possible. Shopping with cash and forwarding higher payments each month helps put a dent in credit card balances and fixes your score.

Due Dates

Some people develop a bad credit history because they can't pay their creditors on time. Creditors report your payment history to the bureaus, and failing to make timely payments not only results in derogatory remarks, but also a reduced credit score. Fixing bad credit entails paying attention to your due date and making sure your creditors receive your payments on time. There are ways to achieve this. Online payment systems allow you to make payments from your home computer. If mailing a payment, do so several days before the due date to eliminate lateness.

Rebuilding Credit History

Late payments and high debts aren't the only cause of bad credit. Bankruptcy and foreclosure can also hurt your score. And while these credit mistakes may seem permanent, it's possible to rebuild your credit history and get rid of bad credit. Because your finance options are few after bankruptcies and foreclosure, a secured credit card or collateral-based personal loan can help restore your rating.

Update Credit File

Don't allow mistakes on your credit report to lower your score and stop loan approvals. Checking your credit report is essential to good credit because creditors can make mistakes. Checking your report involves ordering your file from Annual Credit Report once a year, and probing each listing for accuracy. Inform creditors of inaccuracies and request an update to help fix your credit score.

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How to Check My Credit Score

Checking your credit score can be done for free in most cases, and may only cost a bit in others. If you do so for free, you have access to one report from each credit bureau once a year.

Instructions

1

You can request a free credit report from AnnualCreditReport.com. The site allows you to view and print your complete credit report free of charge, online. The site is sponsored by the three major credit bureaus: Experian, TransUnion and Equifax. You can only do this one time per year, however.

2

Enroll into a credit report monitoring system, such as freecreditreport.com. Credit monitoring companies allow you to receive your credit score for free when you pay a monthly fee to have the service monitor your credit report. The program does cost some money, but companies like this help keep your identity from being stolen.

3

You can also get free credit report from myFICO. The site offers a free trial for services that give you your Equifax FICO score. FICO scores are used by the largest U.S. banks to determine whether your are suitable to lend to.

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How to Increase Your FICO by Over 100 Points

Your FICO score determines the interest rate, as well as the types of loans offered during the financing process. The higher the FICO score, the better the overall loan offers will be. Therefore, it is in your best interests as a borrower to have the highest FICO score possible. With a few simple tasks, you can raise your score more than 100 points.

Instructions

1

Procure a copy of your credit report through a website like AnnualCreditReport.com. You may receive one free report annually; additional credit reports and access to your credit score require payment. You will have to provide the website with your full legal name, date of birth, Social Security number and a credit card to verify your identity.

2

Comb through the credit report. Note any errors and report them to the credit bureau immediately through the website. Keep track of any error reporting. The credit bureau is required to respond to your error notification within 30 business days. If the credit bureau disputes the validity of your argument, you may have to contact the original creditor to have the information removed.

3

Note any negative items, such as collections, liens, judgments or bankruptcies. Be sure to pay these items in full. While paying them will not dramatically increase your credit score, it will slightly lessen the impact and allow them to fall off your report sooner.

4

Pay down any installment debt, such as credit cards and lines of credit to less than 30 percent of the credit limit. This lowers your credit utilization and can quickly and dramatically increase your credit score.

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How to Build Credit History in Canada

Building a good credit history plays an important part in your financial freedom. A low credit score can make it difficult to obtain credit; all lenders in Canada use the services of credit reporting agencies.

A low credit score doesn't always mean that your credit history is poor; it could be that the credit reference agencies have little knowledge about your finances. Perhaps you only have one credit card or maybe you don't use the cards you have. Perhaps, too, you have few or no other lines of credit such as personal loans or a home loan. You may only have just attained the legal age to apply for credit. All these factors can affect how high your score is. Borrowing money sensibly and making timely payments are essential in building a credit history.

Instructions

1

Apply for your Canadian credit history. This can be obtained free by mail from either of the two credit reference agencies listed in the Resources section. Click on either link. This will take you directly to the page where full details are given and the application form can be downloaded. If you want to get it more quickly and view it online, a fee is payable.

2

Check your credit history report carefully for errors. Contact the credit reference agency if anything needs correcting. If correct, identify if there are any obvious ways to build your credit history. Check your payment records for any loans or credit cards. If you have been late or missed a payment this will be shown. Make certain that all payments are made by the due date. This helps build your credit history.

3

Using credit cards will build your credit history. If you don't have any, apply for one. If approved, wait some time before applying for any more. Multiple applications reduce your score. Never exceed the credit limit. Keeping about 60 percent or more of your available credit and using it regularly builds your credit history.

Store cards are often easier to get than a major credit card when you have limited credit history. Remember that the interest rate will be higher but used regularly and paid off monthly means no interest is payable. This will build your credit history.

4

Open a checking account. Use checks or debit cards to make purchases. Banks report to credit reference agencies so keeping an active and wel- maintained account will build your credit history.

Obtaining a small pre-agreed overdraft occasionally can build your credit history. Overdrafts are usually very short-term loans. Borrowing the money and ensuring that it is paid back prior to the agreed date will improve your credit history. It shows you can be trusted.

5

If you have no credit, get a pre-paid credit card. There are many such cards available. Check which ones offer to help build your credit history as not all do. Use the card regularly and keep it topped up.

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Does Having a Checking Account Improve a Credit Score?

Checking Accounts Are Not Factors in Credit Scores

A regular checking account will not improve or decrease a credit score. Credit scores are calculated based on credit payment history, amounts outstanding, credit history and types of credit. If a checking account includes overdraft protection or if the account has a credit card attached, timely payments will improve a credit score.

Opening Checking Accounts Can Impact Credit Scores

Opening a checking account can negatively impact a credit score if the bank makes a "hard pull" credit inquiry. "Hard pulls" are most often used to qualify a consumer for credit, but banks can do a "hard pull" upon opening a regular checking or savings account. "Soft pulls" will not impact a credit score; hard pulls typically reduce a credit score five points for six months.

Bottom Line

A checking account with overdraft protection or a credit card attached can impact a credit score. Positive payment history of credit accounts will improve a credit score. Check the bank's policies regarding hard or soft credit inquiries before opening a checking account.

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Online Credit History Report

In 2011, getting a credit report requires only a computer and willingness to enter your information into an online form, but consumers had to pay for their report until the passage of the Fair and Accurate Credit Transactions Act of 2003 (FACTA). Online credit history reports are the quickest way to review your credit profile, but they do not provide the entire picture needed to see your credit as a lender views it.

Getting Your Report Online

The three major credit reporting bureaus in the United States -- Equifax, Experian and TransUnion -- created AnnualCreditReport.com in 2005 as a centralized location for consumers to acquire their credit reports from all three agencies. This is the only way to receive your reports for free. Other websites that try to sell you a report or make you sign up for additional services are trying to sell you something you are entitled to for free.

Misconception

FACTA requires the major bureaus to furnish your credit report, not provide you with your credit rating. The credit rating agencies can still charge consumers for their FICO score -- a formula created by the Fair Isaac Corporation that predicts the chance of default on a loan. Some services, even one from the Fair Isaac Corporation, offer to estimate your score based on a few major areas, but the FICO formula has dozens of variables so only purchasing your FICO gives your true rating.

Features

Your online credit report contains the same information as one you would receive by mail or over the phone. It lists any loans you have had in the past seven years or ones you are still paying off and their balances. Also included is any demographic information you provide on applications, inquiries into your credit history and public judgments, such as bankruptcies and tax liens. Not included are rent payments, medical information or banking history. Some creditors do not report all three agencies or any at all, so each report will have different information -- making it vital that you pull your report from each agency.

Tip

You can monitor your credit for free throughout the year by spreading out your three free credit reports in four-month intervals, suggests MSN Money. When you type in "AnnualCreditReport," watch for spelling as a single typo could send you a scam website that asks for your credit card information to access your report. Print your reports for later reference and exit your browser after viewing your report so nobody can gather your personal info, especially if you use a public computer.

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How Can I Get Something Moved From a Negative on a Credit Report to a Positive?

In life, people often try to turn negative things into a positive, but this rarely happens with credit reports. Once a negative hits your report it remains a negative for most of its life. Few, if any, negative items can improve the creditworthiness of a borrower.

Identification

You usually cannot turn a negative item to a positive; you can only dispute it and have the agencies remove it or wait for it to stop negatively affecting your credit history. Collection accounts, for example, do not improve your credit report even if you pay it, so you must wait seven years for it to be eliminated from your report.

Considerations

Technically, all items on a credit report are only "potentially" negative because a black mark that normally lowers a credit score can raise it. This might happen, for example, with an installment account. You need at least one installment and one revolving line of credit to have a good mix of credit -- worth 10 percent of your score. It might be better to have an installment account with a delinquency than no installment accounts at all if the boost to the "mix of credit" outweighs the negative on the account. The Fair Issac Corporation, FICO, model does count installments once the borrower pays off the entire balance.

Dispute Process

Creditors can make mistakes when updating your account with the credit bureaus, or the agencies might cause the errors themselves. You could, for example, pay a bill on time and the creditor or agency erroneously reports it as a missed payment. In this case, you can dispute the item with either party -- preferably the credit bureau -- and have them update the account. Most credit reports contain some kind of error, but they are usually inconsequential, such as an employer for which you never worked.

Tip

Never assume that you can dispute a negative item or that a negative might help your score. If you have a negative item on your account, build a positive payment history to outweigh some of its effects. On-time debt payments and a reduction of debt over several months will get you back on track to excellent credit once again.

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What Does Settled Mean on a Credit Report?

It may be legal to settle your debt for less than what you owe, which is what "settled" means on a credit report, but it might mean trouble for you. Settling your debt may be better than filing for bankruptcy, but you should know all the ramifications of settling as well as how to avoid being ripped off.

Settling Consequences

When you settle your debt with your lender for less than what you owe, your lender reports this information to the credit-reporting bureaus. When you want to take out a loan in the future, apply for a job or rent an apartment, the person who reviews your credit report will see that you settled a past debt. This sends up a red flag, or a warning, to the lender that you might not be a good risk, and the lender might turn you down or charge you a high interest rate.

Lowered Credit Score

Not only will lenders see that you settled a debt when they view your credit report, but your credit score will be lower because of the settlement. Lenders do not typically settle with you unless you are behind on your payments. If you are making your payments each month, the lender has no reason to settle. But if you are behind in your payments, some lenders would rather settle with you than not receive anything if you file for bankruptcy. However, once you are late on your payments, your credit score drops. Payment history makes up the largest percentage of your credit score, 35 percent.

Working With Lender

When you negotiate with your lender to settle your debt, you can ask the lender to report this favorably to the credit-reporting bureaus. Your creditor can mark any account that is late to show that the account is in good standing, according to Bankrate.com. Before you give your lender any settlement money, you could request a written statement that will show how it intends to list your account on your credit report. Your lender does not have to agree to this, but it doesn't hurt to ask.

When Settling Backfires

If you do try to settle your debt, it could backfire on you, and your creditor could sue you. A lender does not have to agree to settle with you. The lender could decide to sue you for the amount you owe. The only way to avoid a bad mark on your credit report if that happens is to pay your debt in full. If the lender does accept your settlement, the Internal Revenue Service considers any amount you did not pay that is more than $600 taxable income. The IRS will not settle with you or forgive your debt.

Warning

Beware of debt settlement companies. In theory, these companies are supposed to negotiate your debt with your creditor. But in practice that doesn't really happen, says Katie Porter, a bankruptcy law professor at the University of Iowa, in an MSN Money article. You are supposed to be putting money in an escrow account with the settlement company, but many times the company is simply withdrawing fees and not settling your account. In addition, once your creditor discovers you are working with a debt settlement company, the creditor often escalates your account or sues you, at which point the settlement company may drop you as a client.

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Does Delinquency on Rent Payment Affect Your Credit Score?

Delinquent payments can significantly impact your credit score if the creditor reports the delinquency. Many commercial lenders, such as banks and credit card issuers, automatically report delinquent payments to at least one credit bureau. Commercial rental agencies typically report a delinquency on your rent payment. Independent homeowners may not report the rent payment delinquency; if the issue is not reported, the late payment will not affect your credit score.

Delinquency Definition

In a standard credit agreement, payments are not considered delinquent until they are past due for over 30 days. Rental agreements may define delinquency differently, allowing the renter only five to 15 days before the rent payment is considered delinquent. The rental agency, property owner or landlord may report the rental payment to the credit reporting agencies as delinquent in accordance with the terms of the rental agreement. For example, if your rent is due on the first of the month, and your contract states that the payment is delinquent as of the fifth of the month, a payment made on the sixth of the month can negatively affect your credit score.

Credit Reporting Laws

The Fair Credit Reporting Act (FCRA) stipulates that all consumer credit reporting agencies list accurate account information for a specified time frame. A delinquency on your rent payment must be reported in accordance with the rental agreement. In addition, the delinquency may remain on your credit report for seven years. Payment delinquencies affect the payment history portion of your credit score calculation, which is the most significant factor.

Credit Score Calculation

Potential lenders view delinquent payments as negatives on a credit report, but your overall score calculations include more than your payment history. Consumer credit agencies weigh payment history as 35 percent of your overall credit score. Your credit-to-debt ratio weighs in at 30 percent, the length of time youve held credit accounts equals 15 percent, a variation of credit accounts makes up 10 percent, and new credit accounts factor in at 10 percent. Other factors such as judgments and bankruptcies play a role in your overall credit score.

Consumer Options

If a rent payment delinquency, or other negative item, is reported to any of the three credit reporting agencies incorrectly, you can file a dispute to have the entry removed. Experian, TransUnion and Equifax simplify dispute filing with a web-based system; visit each companys website to dispute incorrect negative information. A rent payment delinquency is not accurate if it occurred more than seven years ago or if it is not in accordance with your rental agreement.

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The Recession Has Ruined My Credit, What Can I Do?

From 2006 to 2009, 5.4 million more people entered the worst tier of borrowers -- called "sub-prime," according to Kathy Chu and Sandra Block of USA Today. Sub-prime borrowers either cannot acquire loans at all or they pay the highest rates the lender charges. While the sting of the "Great Recession" may last for years, you can rebuild your credit score within months.

Cleaning House

Review your budget and debt obligations. You must be able to meet your current debt obligations before moving onto more advanced credit repair tactics, such as taking out new loans, according to Tara Bernard of The New York Times. If you still have nagging credit card debt or cannot find a job, contact your creditors about a reprieve. The credit card company might agree to lower your interest rate or cancel some of your balance. Whatever the negotiation, get the creditor to agree in writing to report the account as "paid as agreed" to creditors.

Check Credit Reports

Rebuilding your credit score in general and fighting the effects of the recession share many of the same strategies. First, check your credit reports from Annual Credit Report, which is the only site to offer truly free credit histories. Your reports detail problem areas, such as missed payments and another major factor in bad credit -- errors. In the confusion of defaults and write-downs, your lender may accidentally report an account from someone else. You can dispute anything with bureaus -- creditors must report accurate information as well as verify an account -- but prepare your claim with evidence, such copies of your identification and account statements.

Open New Accounts

You must build new positive payment history to expedite your credit repair. Although most banks cut borrowers' limits in 2009 and 2010, some still want to extend credit to bad credit borrowers. Ideally, you should go after an unsecured card -- some lenders created credit card designed for people with low scores after the recession, so approval for these cards depends more on income than on credit history. If you cannot find an unsecured card, lenders usually offer a secured card, which requires a deposit on your credit limit and charges more in interest and fees than an unsecured card. Ask any potential creditor if it reports to all three national credit bureaus.

Warning

Creditors cut limits on millions of accounts, amounting to hundreds of billions of dollars in lost access to credit. Credit card companies target all demographics, even borrowers with low debt levels and good payment histories. If a creditor cut or cuts your limit, closing your account is the worst response for your credit score. The FICO score algorithm weighs your outstanding credit to total credit limit heavily. Closing an account raises your credit utilization, because you lose some available credit. Instead, pay down as much credit card debt as possible or ask the lender to reinstate your old credit limit.

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How to Write a Letter to a Credit Reporting Agency

In some situations, we must contact one of the credit reporting agencies--Equifax, Experian or Transunion--by mail. Disputing the validity of an account is a common reason, as is requesting a copy of your credit report. Like any other important correspondence, a letter to one of the credit reporting agencies should be typed, rather than handwritten.

Instructions

1

Type the letter in a common, easy to read font, such as Times New Roman or Arial. Avoid themed fonts; they are difficult to read.

2

Provide enough information to identify yourself, including your full name, address, security number and date of birth.

3

State your request with clarity; get right to the point. Avoid long, drawn-out letters. If you are writing to dispute an item, include the creditor name, account number, date reported and balance.

4

Include photocopies of required documents. If you're requesting a copy of your credit report, you'll need to include a copy of your state ID or driver's license and a utility bill showing your name and address.

5

Review the letter for accuracy. Correct grammatical errors and misspellings. Print the letter, and then sign the bottom.

6

Mail the letter via certified or registered mail. Both options allow you to verify receipt of the letter and establish a time stamp.

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How to Make Payments on a Hospital Bill to Avoid a Bad Credit Report

The only bills that affect your credit report are those that get reported to the credit bureaus. Hospitals and other medical providers handle billing in-house and generally do not report bills to credit bureaus. However, if you are delinquent on your payment, the hospital might send the bill to a collection agency. At this point, the collection agency reports it to the credit bureaus and it will lower your credit score. To make matters worse, even if you pay it then, the collection account continues hurting your score for seven years. Avoid this by paying your hospital bill before it goes to collections.

Instructions

1

Confirm your mailing address with the hospital before you leave when you receive the treatment. This will ensure that you receive your bill in a timely fashion and can address payment before the hospital sends it to a collection agency.

2

Pay the full amount of the bill at once if you can afford it. This is the best way to ensure that it is all taken care of on time and will not hurt your credit.

3

Call the billing department at the hospital if you need to work out a payment plan. The phone number should appear on the bill you receive in the mail.

4

Discuss the bill with the customer service representative and determine the amount you will need to pay each month.

5

Ask for the address to send your payments to. You also might be able to set up an automatic monthly payment from your credit card or bank account. This helps ensure that you never miss a payment.

6

Mail the payment of the agreed amount to the hospital's billing department each month. Send the payment at least a week before it is due to ensure that it has time to be applied to your account.

7

Call the hospital before the payment is due if you don't have enough money for that month's payment. Explain the situation and ask if you can lower your payment amount or delay payment this month without penalty. In most cases, as long as you express a genuine desire to make payment promptly and stay in touch, the hospital will continue to hold onto your bill and it won't affect your credit.

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Ways to Dispute a Credit Report

While your credit report is a useful tool for lenders to determine your credit worthiness, it is not infallible. Incorrect information does get recorded in your report, which is why it is important that your get your free annual copy of your credit report and review it for information that is incorrect and negatively affecting your credit score.

Collect Information

To correct an error you find on your credit report, you are going to have to show the credit reporting agency and the lender what the error is. They won't simply take your word for it that there is a problem. You need to collect all the supporting documentation you can find that makes your case. This might be bank or credit card statements, canceled checks or letters received about the problem. Make copies of all of this information, because you are going to have to send it to the credit reporting agency no matter which method you use to dispute an item on your credit report.

Dispute Personal Information First

You should have the credit reporting agency correct any errors that you find in your personal information first. It could be the report lists an old address as your current one, it has your name spelled wrong or it transposed some of the numbers in your Social Security number. Make sure this information is right, because it may be cause of any problems that you find with your account information. Once you have the correct personal information, the other problems may straighten themselves out.

Mail

Writing a letter about the item or items you are disputing is the preferred way to submit a dispute with a credit reporting agency. Write out a letter fully explaining what you are disputing and attach the letter to copies of supporting documentation you have. Do not send any original documents. Also, attach a copy of your credit report with any of the incorrect entries circled. The letter should be sent via certified mail with a return receipt requested or at least a delivery confirmation. This will protect you if the credit agency says that they never received your dispute.

Telephone

Disputing an item using a telephone is more involved. Once you call the credit reporting agency, you are going to need a confirmation number to speak with a customer service representative. This is the 10-digit number found at the top of your credit report. You should also have all of your documentation supporting your position in front of you so that you can refer to it easily. You may still need to fax your documentation to the customer service representative after speaking with him.

Online

You can go to the credit reporting agency's website and initiate an online dispute. You will need your 10-digit confirmation number and copies of all of your supporting document with pertinent items in them circled. When you explain your dispute, make sure you do a thorough presentation, making reference to your supporting documents as need be.

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How to Get a Credit Privacy Number for Free

You have the option of locking down your credit report so that no one can access it without your express permission. The only exception to the credit freeze are companies with whom you already have a business relationship. When you initiate a credit freeze, you receive a credit PIN number that you can use to unlock the report. When a business wants to request your credit report, you give them the PIN number so they can unlock the report. In most cases you have to pay for a security freeze, but if you can prove that you are the victim of identity theft the credit reporting agencies freeze your account for free.

Instructions

1

File a police report with your local police station if you are the victim of identity theft. Make a copy of this report.

2

Make copies of utility bills, bank statements or insurance bills that contain your name and current address. Copy a personal identification card, such as a government ID or driver's license.

3

Type a letter containing your name, address, any previous addresses from the past two years, Social Security number, contact information and police report number. Include a comment that you are requesting a security freeze on your credit report due to identity theft. Enclose your documentation and letter into an envelope together.

4

Mail the security freeze request to Experian at P.O. Box 9554, Allen, TX 75013; TransUnion at P.O. Box 390, Springfield, PA, 19064; and Equifax at P.O. Box 740256, Atlanta, GA, 30374. A separate request must be sent to each credit reporting bureau. Once the bureaus receive your request, they will confirm the validity of the police report and security freeze request. Once your account is frozen, the companies send you a PIN number to unfreeze your credit report with, if needed.

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How to Clear Your Bad Credit History

You can clear bad history from your credit report by writing letters to the credit bureaus. However, don't expect to completely wipe the slate clean. According to the Federal Trade Commission, only incorrect or outdated information can be cleared from your report. That means that most bad credit information will remain on your report for at least seven years under the terms of the Fair Credit Reporting Act. But cleaning outdated or inaccurate information is an important start as you recover from past credit troubles.

Instructions

1

Order a copy of your credit report. Reports are available for free from the website Annual Credit Report (see Resources), which was established by the nationwide credit bureaus to offer reports as required by the Fair Credit Reporting Act. View and print the report from the homepage or follow instructions on the page to order by telephone or mail.

2

Review your credit report for accounts that are outdated, according to federal guidelines. Information that is positive can be reported forever, but negative information must be removed after seven years--10 for bankruptcies. Write a letter challenging any outdated information and mail it to the credit bureau. Request that the information be removed from your report within 30 days. Send the letter to the credit bureau at its address, which you'll find on the credit report.

3

Find information on the report that is inaccurate. By law, this information also must be removed within about 30 days of you contacting the credit bureau. Send a letter challenging the inaccurate information and state why the information is wrong. Wait 30 days for the credit bureau to respond to your letters as it clears the information.

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How to Improve Your Credit Score With a Secured Loan

The effects of a poor credit rating stretch far beyond difficulty qualifying for new loans and lines of credit. Your ability to qualify for insurance, some forms of employment and housing all rest on your credit history. Even if you don't struggle with bad credit and simply want to give your credit score a boost, a secured loan can help you accomplish that goal. Because secured loans require collateral, they are less risky for lenders and easier for consumers to qualify for -- making a secured loan a clear benefit to those with imperfect credit histories.

Instructions

1

Purchase your FICO scores. Your lender will evaluate your FICO scores when you apply for a secured loan. Purchasing your scores yourself helps you see where you stand ahead of time. You can buy your FICO credit scores directly from the Fair Isaac Corp. through the company's website, myFICO.com.

2

Call the banks and credit unions in your area that offer secured loans. Ask about the institution's credit and income requirements. Compare these requirements to your own income and FICO scores before you apply. Make a list of potential lenders most likely to approve your secured loan application based on your income and credit history.

3

Apply for a secured loan with each of the financial institutions on your list. After evaluating your application, each company will inform you of the interest rate you qualify for and the terms of the loan. Compare the different loan products and select one that carries a reasonable interest rate and repayment terms that fit your budget.

4

Pay down your credit card debt with the loan funds. A portion of your credit score rests on how high of a balance you carry in relation to the spending limit on each card. The lower your credit card balances, the higher your credit rating.

5

Pay off any collection accounts on your credit report with any remaining loan funds. Although paying collection accounts neither positively or negatively affects your scores, paid debts make you appear more responsible than unpaid collections.

6

Repay your secured loan over time. The very fact that you have a secured loan helps your credit because the types of debt you carry account for 10 percent of your overall credit score. Lenders want to see that you have experience managing a variety of different debts. In addition, each time you make a payment on the loan, your lender updates the loan's status on your credit report. More recent activity carries a greater weight with the scoring system that old entries. Thus, each time you make a timely payment your credit report will reflect the payment and your credit rating will benefit.

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What Type of Credit Do You Need to Lease a Car?

A person's credit score -- a credit reporting bureau's measurement of his creditworthiness -- affects a person in a number of different areas of his life. In addition to affecting the interest rates that the person is able to receive on loans, a credit score will often also affect the terms that the person can receive on a leased car. With a higher credit score, the person can expect to pay less money.

Leasing

When a person leases a car, he is, in effect, being extended a form of credit in the form of the use of the car. Car leasing companies generally want to lend to people who are financially responsible and who are not likely to refuse to pay their lease. Therefore, many leasing companies will look at a person's credit score when determining the rates the person must pay.

Credit Score

According to the automotive reference website Lease Guide, a person who has a score of 700 or higher can expect to get the best rates on a lease. However, a person with a score below 640 may have difficulty getting a lease. The person may be required to pay additional money in interest or fees, or he may not be allowed to lease a car at all if his score is too low.

Other Factors

A person's creditworthiness, in the eyes of leasing companies, is not defined entirely by his credit score. In addition, the company will likely also look at the person's financial situation, including the amount of income he has coming in and the amount of money he has in his bank account. A high income and lots of savings may help compensate for a low credit score, allowing the person to receive better rates.

Auto Insurance

In addition to the money that a person will spend leasing a car, a credit score will also affect the person's car insurance. Because car insurance companies set the price of premiums based on the relative risk of insuring a driver, many look at credit scores for policy holders as a means of measuring financial responsibility. A person with a superior score will be considered relatively low risk and will likely be give a lower rate.

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What Is a High Credit Score?

A credit score, also known as a FICO Score, is a rating of your personal creditworthiness based on a system developed by Fair Isaac. A high score range is 720 to 850. There are five factors involved in achieving a high credit score.

Payment History

Fair Isaac's credit scoring model dedicates 35 percent of your score to payment history. Including on-time payments, late payments and slow payments (payment received after the due date but before the grace period ends). For high score, payments should be made before the due date.

Amounts Owed

A full 30 percent of your score is how much you owe. The more a consumer owes against his credit, the less credit worthy he becomes because of his debt-to-income (DTI) ratio. Your DTI is calculated by dividing your credit and loan debts into your gross monthly income. For a high score, keep your DTI under 30 percent.

Length of Credit History

The amount of time that you have held any credit lines counts for 15 percent. Some credit experts state that if you close your oldest account, you are shortening your credit history. However, each account is reported for seven years since the date of last activity and account closure is considered account activity.

New Accounts

New credit makes up 10 percent of your score and is only related to new accounts that are opened.

Types of Credit

Types of credit make up 10 percent and are secured or collateral loans and unsecured loans such as a mortgage or car loan for the former and credit cards for the latter.

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What Do Negative Accounts Mean on a Credit Report?

No matter how many positive accounts a borrower's credit file contains, lenders probably will focus on any potentially negative accounts. A negative account on a credit report means the borrower mishandled the account, such as refusing to pay back a debt. After a period of time, these accounts will disappear or become positive again.

Identification

Negative accounts are those that include a current or previous activity that suggests you are a credit risk. This may include public records, which reflect serious financial failings, such as judgments, foreclosures, suits, wage attachments, bankruptcies, liens and past-due child support. Negative accounts also include debts in collection, debt settlements and missed payments on accounts. Accounts that reflect and inability or refusal to repay a debt or honor a contract are the most serious negative accounts.

Effect

The effect of a negative account on a credit score depends on the seriousness of the offense and other items on your credit report. Judgments, collections and settled accounts can reduce your score significantly. A settled account, for example, takes up to 125 points off of a score of 780, according to Ellen Cannon of Bankrate. A single missed payment may be a cause of concern for a lender, but the credit scoring system usually forgives a single delinquent payment as long as it does not become a habit.

Reporting Time Frame

Most negative accounts are removed from a report or return to positive status after seven years. Tax liens remain on a report for seven years, and unpaid liens stay there indefinitely if the credit bureaus choose to report it forever. Bankruptcies remain on your credit report for up to 10 years, although it may be just seven years after finishing the repayment plan of a Chapter 13 bankruptcy.

Tip

Review your credit report for errors, and submit a dispute to the credit agencies if you discover any mistakes. Some common errors include a negative account that's being reported after the federal reporting time limit has expired and having a collection agency report a newer date on an old account that should have been erased -- called "re-aging" an account. Regardless of possible errors in the report, consumers should focus on building a positive history on a current accounts. Most lenders care most about the past two years of credit history, and negative accounts and items become less important in the FICO credit scoring system after two or three years, according to credit expert Lita Epstein in "The Complete Idiot's Guide to Improving Your Credit Score."

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What Can I Do to Improve My Credit After Paying All of the Collections?

Paying off past-due collection accounts is a step in the right direction when trying to improve your credit rating and your financial situation. Having accounts in collections can damage your credit score. Once the accounts are paid off, you can take several steps to increase your credit scores again.

Make Regular Payments

One of the most effective ways for increasing your credit score is to make regular, on-time payments. Do this on all of your accounts, including utility bills, mortgages, car loans and credit cards. According to My FICO, 35 percent of your credit score is impacted by your payment history. This means that if you can develop a positive payment history, it will have a drastic effect on your credit score overall. Lenders will see your payment history when you apply for credit.

Look for Errors

When you want to increase your credit score, get a copy of the document from the three major credit bureaus, Experian, Equifax and TransUnion. Then look over your reports for any errors. For example, if you see an account on your profile that you do not actually have, this is a mistake which could be removed and boost your score.

Get a Credit Mix

Another way to enhance your credit score after paying off collections is to get a mix of credit. Having a mix of credit types makes you a more attractive borrower to lenders. For example, if you have a mortgage, a car loan, credit cards and store accounts, this looks better than if you only have one type of credit. When you balance multiple types of credit effectively, it shows that you know how to handle your money.

Use Credit Sparingly

When trying to boost your credit score, use your credit sparingly. This means that you should not go out and rack up large credit card balances. Try to keep your credit balances below 30 percent of their available limit. Try to pay off your balances when they are due instead of allowing them to grow.

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How to Increase Your FICO Score

Understanding you FICO score is the first step in improving it. Let's say you have a FICO score under 620. This means you will not be offered the best interest rates when applying for a loan and will pay significantly higher rates. People with a FICO score of 760 and above get the best interest rates, which mean they pay less. Your FICO score is based on a formula created by Fair, Isaac & Co, Inc. This formula includes proportion of balance to high credit on revolving accounts, types of credit used, insufficient length of credit history, number of accounts opened in last 12 months and number of recent inquiries. The following steps will help you improve your FICO score according to the formula the Fair, Isaac & Co uses.

Instructions

1

Opening too many accounts in a short amount of time lowers your FICO score. Spread it out through out the year when you open credit cards or apply for loans.

2

Don't cancel a credit card even though it is paid off. The amount of time you have with a credit card company increases your credit history and this is a good thing for your FICO score.

3

Increase your FICO score by retaining a line of credit larger than the amount owed. Keep credit card balances low. Keep debt 30% or less based on the amount of the line of credit on your credit card.

4

Keep it simple and PAY YOUR BILLS ON TIME! Avoid additional stress in your life by setting up auto pay or direct deposit to pay your bills on time each month. Automatic payment of monthly bills will help prevent late payments. Credit cards can increase an interest rate substantially from just one missed payment and this will lower your FICO score.

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How Can My Credit Scores Go Down?

Credit scores can fluctuate -- having a high score now doesn't mean you'll always have one. Different things affect scoring and making unwise credit decisions can cause a decrease in your score. A low credit score can stop credit applications or result in a higher interest rate on loans. For this reason, it's smart to understand what can cause your score to go down.

Timeliness

Credit scoring takes into account how well you pay your creditors. Calculations factor in your number of timely payments, late payments and other factors such as collection accounts and judgments. Paying your bills on time each month contributes greatly to a high credit score. Quite the contrary, missing several payments, sending payments late or completely defaulting on bills will lower your credit score.

Owing Too Much

Most consumers have debt, but if you carry high balances on your credit cards or max out your credit cards, your credit score is likely to drop. Good credit management includes keeping credit card balances less than 30 percent of the credit limit. Paying down credit cards to help widen the gap between your outstanding balance and your credit limit is a key way to help improve your credit score. Start making higher payments and limit credit card use. Only spend what you can pay off within a month.

Credit Report

Credit reports include information on every credit account you've held, and creditors use this information when considering approving applications for credit and loans. If mistakes appear on your credit report, these can bring down your credit score. Avoid this situation by ordering your credit report from Annual Credit Report once a year and review your personal file to ensure all information is accurate. Do not hesitate to contact creditors to dispute errors or mistakes.

Closing Accounts

The length of credit history is another factor influencing credit scores. For this reason, it's imperative to keep your oldest credit card accounts opened, even if you never use the account. Closing your oldest accounts reduces the length of your credit history and this one move can cause your credit scores to go down.

Inquiries

Occasionally applying for new credit doesn't have a significant impact on credit scoring. Repeatedly applying for credit cards or loans will eventually cause your credit score to drop because excessive inquiries can have a negative impact on scoring. Avoid a reduction in scoring by only applying for new credit when necessary.

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