How to Change a Credit Score Online for Free

Most consumers want to make sure their credit score is as high as possible. A high credit score makes you more attractive to lenders and can help you get insurance or a job. If your credit score is low, you can change it by checking information online and filing disputes when appropriate. By removing negative information through the online process, you can improve your credit score.

Instructions

1

Fill out a request for a free copy of your credit reports. You can get one at no cost annually from TransUnion, Equifax and Experian if you go through the proper website (see references).

2

Check carefully through each of your credit reports and make a list information that will bring your credit score down. Typically this includes late payments, charged-off accounts, judgments and other items related to slow payment or not paying a bill at all.

3

Go through the list and identify any items that have grounds for dispute. A credit bureau must remove information that is incorrect or cannot be verified. By having this information removed, your credit score will increase.

4

File a dispute for each item that you believe is incorrect or that the credit bureau will not be able to verify. They will have to investigate each item you specify and let you know the outcome. If the item does prove to be incorrect or if the creditor does not verify it, it will be taken off your credit report at the end of the inquiry. Usually this is completed within 60 days.

5

Get another copy of each of your credit reports to make sure the appropriate items have been removed. If any of them are still showing up, notify the credit bureau, refer to the results of the investigation and ask them to remove the items in question immediately.

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Can a Creditor Punish Me for a Dropping FICO Score?

A FICO score dropping like a rock is a nightmare for any lender or borrower, but current creditors usually have few weapons to punish your poor lending habits. Do not take this as carte blanche to fall behind on payments; if a falling FICO score is due to a negative item, it could cost you an account and/or your mortgage.

CARD Act Rules

Before 2010, credit card companies could raise your interest rate for defaulting on an account with another creditor -- called universal default. The CARD Act of 2010 overhauled the credit card industry and essentially eliminated universal default rate hikes. However, credit card companies can close your account when you miss payments on any other loan -- a common reason for a FICO score to drop -- and require immediate payment of the balance. This could cause you to default on the closed account and further drop your credit score.

Mortgages

In 2010, mortgage giant Fannie Mae issued a new rule that any creditor who resells its mortgages must perform a second credit check before closing on the property. If your score sees any significant drop or change in your creditworthiness occurs, the mortgage provider must resubmit the application to Fannie Mae. This might mean paying a higher interest rate on the mortgage or losing the mortgage completely, according to Smart Money.

Refinancing

Refinancing is taking out a new loan to pay off an old one. If you had a high FICO score when you took out the loan but now have a low one, refinancing might be impossible, which could end up costing you money, especially if interest rates have dropped significantly since the original application. This happens because you must apply for a refinance loan like you would any other credit.

Tip

A drop of a few points probably won't concern anybody. You can see a drop in your score due to quirks in the FICO scoring system. This sometimes happens when new lenders have a good score, but then see a drop when the FICO model lumps them in with older borrowers who have much better and longer credit profiles. The real problems start when you miss payments or default on a debt, so run a credit check on yourself and review any negative items. Remember, even if the lender cannot do anything to "punish" you now, future loans will probably be more expensive.

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Grants for Minority Women With Bad Credit

There's a common saying in the American South: "There's always so much month left at the end of the money." And as prices on everyday items continue to rise and the financial situations continue to look bleak, many people are looking for ways to supplement their income or receive financial assistance, either through loans or grants. There are several types of grant programs available, and minority women looking for grants have several places to begin their search.

Don't Let Bad Credit Stop You

Although the grant application process is often grueling and extensive, many people's fears of the process are often unfounded. One of the most common misconceptions is the role that credit scores play in the applications process. Although there are many factors to consider, credit history is usually not a deciding factor for most granters. On the contrary, if the credit ratings are a result of certain types of financial hardships, they can strengthen your application. Of course, this detail needs to be evaluated for each individual grant for which women apply.

Ethnic- and Location-Based Grants

Two categorizations for grants for minority women are ethnicity and location. There are grants available for African-American, Asian, Hispanic and other minority groups. These can be further segmented to residents of certain states, especially those states and regions that are looking for ways to stimulate business growth and expand their business communities. The background information on each individual grant will let you know what the granter is looking for.

Business, Education and Personal Improvement Grants

There is also grant money available for minority women who are looking for ways to better their social standing and living conditions. Various programs offer money for housing assistance, care of children and older adults, and health care. One of the largest pools of money is for minority women to continue their education and enroll in secondary education programs.

Where to Look for Grants

The Foundation Center is one of the largest and most well-known resources for funding of all types and is a good place to begin searches for these grants. The United Negro College Fund offers college assistance for African-American women. Grants.gov is another good place to search for programs that are sponsored by the federal government. Local organizations and foundations also can be a great resource for smaller grants. Talking to foundations and nonprofit organizations in your region that deal with your area of interest is a step in the right direction as well.

Keep at it

Above all, it's important to understand that grant funding is highly competitive and subjective, so apply for as many as possible. And always have a Plan B.

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How to Update Addresses With the Three Credit Bureaus

According to the FTC, more than 9 million people are affected by identity theft in America. Having an up-to-date address on all of your credit reports can protect you against any form of identity theft. Follow these steps to update your address through the credit bureaus.

Instructions

1

Gather all three of your credit reports. You can obtain your credit reports from Transunion.com, Experian.com and Equifax.com. You can also send a letter requesting your credit report to the credit bureaus or call each credit reporting agency directly.

2

Write a letter to the credit bureaus informing them of your new address. Include a copy of your drivers license, social security card, and a utility bill or lease with your new address, which will verify your identity with the credit bureaus.

3

Determine if you can change your address online. If you obtained your credit report by going to the credit bureaus online then you may be able to change your address online.

4

Mark your calendar 30 to 45 days from the date you sent the inquiry to change your address. Credit bureaus have that much time to respond to an update or dispute on your credit report. The three credit bureaus will send you an updated copy of your credit report showing your new address.

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How to Check a Credit Rating in Australia

In Australia, keeping a check on a credit rating is important as credit scores determine whether a lender will approve a credit facility and also the amount of credit at your disposal. The method that agencies use for calculating a credit rating in Australia is similar to that in the U.S. They use a point-based system, and the higher the points the better your chances of obtaining credit. Poor or incorrect credit ratings may mean applications for credit facilities may be declined. Obtaining your credit report on a regular basis will ensure that you are fully aware of what a lender will see. All organizations offering credit in Australia use the official credit reference agencies as their central source of information when credit is applied for. They use it to work out whether you are likely to maintain payments and whether you are in a position to afford them.

Instructions

1

Get your credit report by applying online; it's the fast and simple way. There are several official online credit reference agencies that allow you to check a credit rating in Australia. The Resources Section provides two links for the more popular agencies: Dun & Bradstreet and Veda Advantage. Everyone resident in Australia is entitled to obtain a free report. This is generally a condensed version but will provide the most important aspects of your credit rating. If you want to have a detailed report, then you will need to pay for it. The cost varies by credit reference agency, so best to check each website for the best deal. If you feel you will want to check your report on a regular basis, go for the subscription method. You get your first quarter's report for free, then you need to pay A$9.99 quarterly.

2

Click on the credit reference agency of your choice. To check a credit rating in Australia, you need to enter personal details about your identity and residency so have this information to hand. Ensure you type these in accurately. Incorrect information will delay the procedure and, if choosing a paid version, could mean you will have to pay again. You will need to enter previous addresses if you have only been at your current residence for a short while.

3

Click on "Continue." If you have chosen to check your credit rating in Australia by opting for a detailed report or a subscription report you need to enter your payment details. Both those listed in the Resources Section take payment by Visa, Mastercard or Pay Pal. If you have chosen the free standard report you will be taken to a screen asking you to mail two forms of personal identification. They must be originals.

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Click on Submit" or "Continue." You will receive confirmation of your request. The free version will be mailed to you upon receipt of the identification details and will take about 10 days or so. If you have chosen the detailed report, it should be dispatched in one business day. Some agencies allow you to check your credit rating report online. If available, you will be asked to enter a user name and password. Once set up you can view your report. Confirmation will be sent to your mail box.

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Ways of Identity Theft

Understanding the various ways someone can steal your personal information is key to protecting yourself from identity theft. Your Social Security number and account numbers for bank accounts and credit cards can fall into the wrong hands. Some thieves are sneaky and know how to acquire your information by means of rummaging through trash. While other thieves play on the innocence of their victims and acquire this information after building a trust.

Trash Scavenging

Most people throw away credit card statements after paying the bill, or they may toss old bank statements in an effort to clear clutter. Sadly, placing these sensitive documents in a trash bin, and then placing the trash bag in a public trash receptacle increases your risk of becoming a victim of identity theft. A dishonest person may swipe a trash bag from a trash receptacle and then rummage through the bag looking for your personal information. Shredding documents before placing them in the trash helps protect your identity.

Online Purchases and Billpay

The computer and Internet conveniently let you pay bills and manage your accounts online. Inputting your personal information into a company's website can put you at risk for identity theft. But there are ways to protect yourself. Always inspect websites before entering your information and check for security logos such as lock box or the VeriSign symbol.

Phishing Techniques

"Phishing" is the term used to describe people who play on your innocence in an attempt to get information such as your Social Security number, bank account number or credit card number. A dishonest person may send an unsolicited e-mail or contact you by telephone. He may offer a service or claim to represent your bank or credit card company. To verify your identity, he might ask for your account numbers. Never give out this sensitive information. Delete e-mails or hang up the phone and contact your bank or credit card company immediately to report the incident.

Credit Report Monitoring

Taking extra precautions to protect your personal identity lowers your risk of becoming a victim. Still, someone may get her hands on your information and attempt to open several accounts in your name. Protect yourself and sign up for credit report monitoring. This low-cost service alerts you if someone (including yourself) applies for credit using your name and Social Security number. It's an easy way to stop identity theft.

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Can I Build Credit Using My Debit Card As Credit?

When you swipe your debit card at a store, you usually have the option to select whether you want to run it as a debit or a credit transaction. Unfortunately, using a debit card will never affect your credit report or credit score, even if you select the credit option.

Personal Identification Number or Signature

The main difference between selecting debit and credit when using a debit card is the method in which the transaction is processed. If you select debit, you enter your personal identification number, or PIN, and the transaction is processed very quickly. In addition, you can choose to get cash back from the store instead of visiting an ATM. On the other hand, if you select credit, you sign the receipt or keypad and the transaction is processed through the credit card company whose logo appears on the debit card, which takes a few extra days. Either way, the funds are deducted from your checking account and you do not receive a bill in the mail like you would with a credit card.

Costs

Some banks charge fees to debit card holders who select "debit" anywhere other than a bank-owned ATM. This is because the bank wants to earn money from the transaction. The bank charges merchants a much higher fee per transaction for signature-based credit purchases than for PIN-based debit purchases, so the bank encourages customers to opt for the credit purchase. In addition to costing you in bank fees, entering your PIN can make you more vulnerable to identity theft because someone in the store might see your number.

Credit Report Effects

Using a debit card never affects your credit score, even if you select the credit option and sign the receipt like you would with a credit card. This is because your credit score only considers accounts in which you borrow money and repay it. When you use a debit card, you are just using your own money, regardless of how the transaction is processed.

Building Credit

If you want to build credit by swiping plastic, you will need to use a credit card occasionally. You do not have to carry a balance on your credit card in able to build credit. Instead, you just need to pay your bill on time every month and keep the amount owed each month low in relationship to your credit limit. Another way to build credit is to make regular payments on an installment loan, such as a student loan, auto loan or mortgage.

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How to Remove Incorrect Information From Your Credit Report

Incorrect information can make it onto your credit report and wreak havoc on your credit score if it's not caught -- and removed -- as soon as possible. Because of this, it's important to check your credit report from each of the main credit reporting agencies on at least an annual basis, or more often if you suspect suspicious activity or are preparing to make a large purchase (such as a car or house) in the next 12 months.

Instructions

1

Identify the incorrect information on your credit report. You can't go around removing any negative information from your credit report just to increase your score; credit scoring agencies will only remove information that is incorrect. So if you find a credit account that you never opened or that is in someone else's name, for instance, you can dispute the listing to have it removed. You can also request to have duplicate listings removed, which won't necessarily improve your credit report but might help to clear confusion from potential lenders who could see duplicate listings as multiple credit accounts.

2

Submit your dispute to the credit bureau. Claims of incorrect information can be made online at each of the credit reporting agencies websites (see links in Resources section), or you can retrieve their mailing addresses and phone numbers from their websites and file your claim by mail or phone. Be ready to provide identifying information, such as your social security number, a description of the incorrect information and any documentation that proves your case.

3

Watch your mailbox for a written confirmation from the credit bureau. The credit reporting agencies have 30 days to look into your request and remove any incorrect information. Once the investigation is complete, the bureau will send you a written report of their findings by mail. If any changes have been made, they will include an updated copy of your credit report.

4

Appeal any unsatisfactory decisions. If the bureau did not remove information that you are certain is incorrect, follow up with a written explanation, including copies of any supporting documents, such as written communication with your creditor or a statement showing the correct balance. If the information is correct but you have a good reason for the negative mark on your credit, consider sharing that reason in a written explanation as well.

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How to Fix a Poor Credit Rating

Fixing a poor credit rating is a top concern for people who want to qualify for a mortgage loan. However, the desire to purchase a home shouldn't be the only reason to improve a bad credit score. A good rating (700 or higher) proves that's you're capable of managing your finances and debts. Lenders and credit card companies reviewing your application will take note of your level of responsibility and offer the best finance deals.

Instructions

1

Reduce the balance on your credit cards. Write checks or make online payments for more than the asking minimum payment on credit cards. Paying a higher amount helps knock down the new interest charges and principal balance. Use money from savings, employment bonuses or tax returns to help eliminate debt.

2

Avoid late payments to help improve a poor rating. Begin raising a poor credit score with on-time monthly payments for vehicle loans, student loans, mortgages and credit cards. Delinquent or late payments hurt your rating. Record due dates to avoid missing a payment.

3

Get an annual credit report and review for accuracy. Monitor your personal credit report and dispute errors that can reduce your credit rating such as the reporting of wrong account information. Yearly reports are available free from Annual Credit Report. Order and view reports via the Internet.

4

Pay off judgments, collection accounts and other delinquencies. Settle past due or old accounts by contacting these creditors and making plans to pay off the balances. Request removal of this negative information from your personal report upon satisfying the debt.

5

Rebuild credit with a secured credit card after a bankruptcy. Don't live with a poor credit rating after a bankruptcy. Contact your local bank and apply for a secured credit card to begin re-establishing your credit history. Security deposits and setup fees are typical with secured accounts.

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From How Far Back Can Credit Information Be Reported?

Your credit report is a snapshot of your financial management history, showing both positive and negative aspects of your ability to manage credit. If your credit isn't perfect, you might suffer in the short term; but over time the negative marks will drop off your credit report, enabling you to start anew. The various parts that comprise your credit report are reported for varying lengths of time.

General Account Information

Your credit report shows all of your open credit accounts, including the terms of your agreements, your interest rates, payment history, current balance and credit limits. Closed accounts are also detailed if the last payment on the account has been made within the past 10 years and the account was paid in full and as agreed.

Negative Information

Most people are primarily concerned with negative information when they review their credit reports, and with good reason. Negative marks on your credit file can be reported for up to seven years, over which time your credit score will suffer. This information includes late payments and any accounts you've closed out while not paid in full -- for example, a credit card that was charged-off or was settled for less than the outstanding balance.

Bankruptcy

Bankruptcy is the most glaring negative item you can have on your credit report; therefore, it carries the most severe punishment. Should you file for bankruptcy, this will remain on your credit report for 10 years. During this time, it will be very difficult to obtain new credit or purchase an automobile or house.

Inquiries

Each time you apply for credit, or your credit report is pulled with your consent, an inquiry indicator is placed on your credit report. This inquiry remains for the two years following the credit pull. Inquiries are used to determine how much credit you're seeking; a high number of inquiries sends a message that you may pose a significant credit risk, which hurts your credit score.

Disputing Your Credit Report

In 2004, Brian Dakss reported on CBS News.com that 79 percent of credit reports contained errors. If your report contains errors, you may be paying a long-term price for something that isn't your fault. You are entitled to one free credit report from each of the three credit bureaus each year; these reports do not count as inquiries on your report. Review your reports for errors and contact the respective bureaus if you notice any errors. If your appeals are successful, the errors will be removed and your credit score will better reflect your actual credit worthiness.

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Can Debt Collections Less Than $100 Be Reported to the Credit Bureau?

When you don't pay off a balance that you owe and your debt isn't secured by collateral, your creditor has little choice but to turn the debt over to a debt collector. Not all unpaid debts turned over to collection agencies amount to hundreds --- or even thousands --- of dollars. Creditors also turn over smaller debts, such as library fines, to collection agencies for recovery.

Facts

Most debt collection agencies report consumer accounts to the credit bureaus. No law restricts collection agencies from reporting all of their accounts --- even small ones. Thus, even if a debt seems insignificant, if a creditor turns it over to a collection agency, there's a good chance that the debt will end up on your credit report.

Significance

The purpose of FICO scoring is to provide lenders with a risk assessment tool with which to evaluate credit and loan applicants. Large collection accounts have a significant derogatory effect on an individual's credit scores because they indicate financial irresponsibility. A small collection account, however, is much more likely to result from a debt a consumer forgot about or wasn't aware of rather than one he simply couldn't manage. The FICO '08 credit scoring formula, released in early 2009, doesn't include collection accounts for debts less than $100 when calculating consumer credit scores.

The lack of a credit penalty for small collection accounts prevents lenders from considering you a greater risk than you actually are based on your credit scores. Lenders still see the collection account on your credit report, however, and take it into consideration.

Time Frame

A collection account remains on your credit report for the full amount of time mandated by the Fair Credit Reporting Act (FCRA), regardless of how much you owe. The FCRA dictates that credit bureaus must remove the debt from your credit report exactly 7 1/2 years from the date you made your last payment to the original creditor. You have the right to dispute the account with the credit bureaus if you suspect it's incorrect. A successful dispute results in the credit bureaus removing the collection from your report before the reporting period on the account expires.

Considerations

Although collection debts less than $100 don't impact your credit scores, they're often more difficult to remove from your credit history. Individual debt collectors work on commission; this provides them with incentive to do whatever is necessary to convince you to pay. Some debt collectors agree to remove collection accounts from your credit files in exchange for payment. Unfortunately, when the debt is small, a debt collector has little incentive to modify your credit history if you agree to pay off your debt.

Warning

Collection accounts that start off small can grow over time. If your agreement with the debt's original creditor permitted it to charge interest on the debt, the Fair Debt Collection Practices Act allows the collection agency to also add interest charges to the unpaid balance. Thus, a debt for less than $100 can grow to exceed $100 if you don't pay it off. Once the debt exceeds $100, it severely damages your credit rating --- and paying off the debt doesn't change this fact.

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Why Does My Credit Score Fluctuate in a 60 Day Period?

Subtle changes in your overall credit report will cause your credit score to fluctuate. Creditors are required to report changes to your account every 30 days, and sometimes it takes up to 60 days for your score to reflect those changes.

Significance

Your credit score is an indicator to any lending agency of the likelihood that you will repay debt; the higher the credit score, the better the odds of repayment. The goal for the consumer is to have the highest credit score possible.

Function

The credit score is a numerical representation of the information contained in your credit report. Any time a change is made in the information listed on the report, the number is affected. However, for a large change to be made in the score, there must be a significant change in the report itself.

Misconceptions

Many consumers assume that on-time payment of bills automatically results in a high credit score. This is not necessarily true. Factors such as length of time since most recent account opening, balance versus available credit, and number of trade lines can all negatively or positively affect a score.

Considerations

If a large change has been made to your credit history, such as the payment of a debt in full, it can take more than 30 days to reflect on your credit report and score. The lending institutions are required to notify the credit bureaus once a month, and the scores are updated once a month. However, if the timing of the notification happens after the score has been updated that month, the score will not be updated until the following month.

Prevention/Solution

Keep a constant watch on your credit, and try to rectify any errors as soon as possible. Be responsible in your credit choices, and keep your credit card balances low to keep the highest scores possible.

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Cheapest Way to Get All Three FICO Scores

Your FICO scores, also known as your credit scores, are important, as they help creditors and others determine whether you'll make your payments in a timely fashion. Credit scores are determined by each of the three credit reporting bureausTrans Union, Equifax, and Experianwhose calculations are based on Fair Isaac Corporation (FICO) methodology. However, their numbers differ somewhat. You can obtain these scores from several sources, but only one offers the best, no obligation deal.

Credit Bureaus

You can purchase your credit scores directly from the three credit reporting bureaus by visiting their websites for that information. However, you may find that you'll have to cut through a maze of other information including credit monitoring services, 3-in-1 credit reports, and other products. Once you find how to obtain your credit score, make a note of that price. It is available elsewhere, so keep reading.

MyFico.com

The company who developed current credit scoring methodology, Fair Isaac Corporation, lets you buy your Experian, Equifax, and Trans Union scores directly from them. But just like the credit bureaus, they have a lot of other products they want to sell for you, making it difficult to find your scores. When found, you'll wonder if what they're offering to you is the best price. It isn't, so please keep reading.

AnnualCreditReport.com

The Federal Trade Commission (FTC) thanks to an act of Congress requires that Equifax, Trans Union, and Experian offer to American consumers one free copy of their credit report annually to them on demand. As a result of the law, the three credit reporting bureaus formed a website to make credit reports available to consumers for free. That site is AnnualCreditReport.com. Credit scores, however, are extra. But, they're also offered for a lower price than what you can get directly from the credit reporting bureaus or from the Fair Isaac Corporation. This is where you want to go to get your free credit reports and pay the least for your credit scores.

Tips and Warnings

You can get your credit score for free if you apply for a mortgage. Your lender will tell you your score when offering you a loan. Watch out for free sites that claim to offer free credit scores or free credit reports as they often include strings with their offers. According to the FTC, Other websites that claim to offer free credit reports, free credit scores, or free credit monitoring are not part of the legally mandated free annual credit report program. Most aren't illegal but consumer advocates warn against them.

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Credit Reports Explained

Credit reports are a compilation of data about an individual's financial history. This report includes a list of all credit accounts such as credit cards, mortgages and auto loans.

Who Produces Credit Reports?

Credit reports are created by consumer reporting agencies, also known as credit bureaus. The three largest credit bureaus are Experian, Equifax and TransUnion.

What Are Credit Reports Used For?

The information found in credit reports is used to calculate your credit scores. These are used by lenders to determine how creditworthy you are and whether to offer you a loan or not.

Who Can See Your Credit Report?

Your credit report can be requested by lenders considering issuing you a loan, your employer, insurers, government agencies and anyone who has a business interest in your credit history.

How Often Can You View Your Credit Report?

You are entitled to view your credit report free of charge once every year. You may purchase additional copies of your report if you wish.

How Long Does Information Stay on Your Credit Report?

Information usually remains on the report for seven years after the event. One exception is personal bankruptcy, which stays on the report for 10 years.

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Information Needed for a Credit Check

Many people run their personal credit reports for their own records. Employers will often run a credit check on job applicants, and landlords do so for new tenants. The three major credit bureaus, Equifax, Experian and TransUnion, require specific personal information in order to perform a credit check.

Social Security Number

Your Social Security number is the information credit bureaus use to identify you. Every credit application requires a Social Security number. Creditors and utility companies report all accounts open under your Social Security number to one or all of the three credit reporting bureaus.

Current Address

You must have a current address in order for a credit bureau to run a credit check. If you have been at your current address for less than two years, you must provide your previous address as well.

Other Identifying Information

You also must submit a date of birth and full name to run a credit check. If you are a landlord running a credit check on potential renters who are hesitant to give out their Social Security numbers, often a date of birth and full name is sufficient.

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Does It Hurt My Credit if Several Reports Run While Car Shopping?

Auto lenders will often view your credit report prior to offering you an auto loan. The information in your report determines your FICO credit score, which runs from 300 to 850. This information will impact the terms of your auto loan, including the interest rate that you may be charged and whether or not you are required to submit a down payment. It's important to understand how your credit is impacted when multiple auto lenders pull your credit report.

Inquiries

An inquiry occurs whenever someone views your credit report. There are two types of inquiries: A hard inquiry occurs when you apply for credit. The lender will view your credit and this review is recorded on your credit report. A soft inquiry occurs when your credit report is viewed for reasons other than an application for credit, such as when you view your own report or when the report is viewed by a company with which you already have an account. Soft inquiries also appear on your credit report.

Considerations

Inquiries remain on your credit report for up to two years. A soft inquiry does not impact your FICO credit score, but a hard inquiry may. How any inquiry impacts your score depends upon the other information present on your report. According to FICO, one inquiry may not damage your score but if it does, it may drop your score by fewer than five points; however, multiple inquiries in a short window of time may result in a larger hit to your credit score. When calculating your score, FICO only considers hard inquiries from within the previous 12 months.

Rate Shopping

When consumers shop for large purchases, such as a car or home, it isn't uncommon for them to apply to more than one lender in an effort to obtain the best rate. FICO calls this rate shopping and makes an exception for it when calculating your score. If you apply to several auto lenders within a two-week period, FICO will consider those multiple inquiries as one single inquiry. This will reduce the negative impact of those inquiries on your credit score.

Federal Law

The Fair and Accurate Credit Transactions Act (FACTA), an addendum to the Fair Credit Reporting Act, gives each consumer the right to order one free credit report each year from the main credit bureaus: Equifax, TransUnion and Experian. Inquiries tell you who has accessed your credit file, so it's important to check your report at least once a year. If you notice inquiries that are unfamiliar to you, not only can this potentially impact your credit but it could also mean you are the victim of identity theft. To order your free report, visit the official site established under FACTA: AnnualCreditReport.com.

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Will Paying Off All Debt Be Good for My Credit Score?

Many factors go into determining your credit score. One of these is total debt. The amount you owe counts for approximately 30 percent of your credit score. Paying down that debt will raise the score. However, paying off all debt will not necessarily give you the score you want. Be careful not to do more damage than good.

Credit Scores

A credit score is a three-digit number that tells lenders whether you are a good bet. The lower the score, the riskier the borrower. Credit bureaus calculate credit scores based on the information provided to them by lenders. Every time you borrow money, it will affect your credit score. Every time you miss a payment, your score will drop. A high credit score will make it easier to borrow money at a lower interest rate.

Paying Down Debt

Thirty percent of your credit score reflects how much you owe and what percentage of your credit line you are using. Paying down debt will improve your debt-to-credit ratio and raise your credit score. However, it will not erase any negative information on your credit report. Positive information counts for a lot less than negative information. Making payments on time is important, but it's what you should be doing, anyway. Missing payments is considered very bad and will hurt your score quicker than making payments will improve it.

Settling All Debt

Paying off all your debt can have a positive effect on your credit score, but you have to do it right. Don't automatically cancel all your credit cards once you've paid them off. The length of your credit history accounts for approximately 15 percent of your credit score. If you cancel your oldest cards, your history will be shorter. This will hurt your score. Instead, use the cards once in a while to keep them active, but pay off the balance in full each month. That way you'll maintain your credit history without paying interest.

Raising Your Credit Score

There are other ways to improve your credit score. The quickest is to fix any errors you find on your credit report. It can be something small, like a typo, or something bigger, like a long-settled account that still shows that you owe money. Either way, it could be hurting your score. Get a free copy of your credit report from annualcreditreport.com. Go through the report line by line and look for errors. If you find one, file a dispute with the credit bureau. The bureau will investigate and remove any negative information that you can prove is inaccurate. This can raise your score in as little as 30 days.

Warning

Many companies promise to raise your credit score by 100 points or more in a matter of weeks. Don't believe them. The only way to do that is to erase negative information from your credit report. This is almost impossible, unless the information is inaccurate to begin with. If it is incorrect, you don't need to pay someone to fix it. You can do it yourself.

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How to Clear My Credit With Self Credit Repair

Having bad credit hurts your chances of getting a loan. Even if you are able to get a loan with bad credit, you're likely to pay higher interest rates. Undoubtedly, it's better to improve your credit score. Advertisements on television and the radio try to sell you solutions for bad credit, but you can also clear your credit with self credit repair. It requires patience, dedication and fiscal responsibility, but the results are well worth it.

Instructions

1

Know where you stand. It's important to check your credit report at least once a year. This allows you to see what your score is. It may not be as bad as you think, or it may be worse. Knowing your credit score is an essential first step in getting started on the road to credit repair.

2

Remove inaccuracies on your credit report. In some cases, a low credit score may be partially caused by mistakes or inaccuracies on a report. For example, your report may show an account that was closed a long time ago as open or may show a lower credit limit than you actually have. Be sure to go through your credit report with a fine tooth comb. If you see mistakes on it, you must notify the credit bureau to have them removed. If you can provide proof, such as the cleared check that shows you paid off a debt, it may expedite the process. Expect a response within six weeks.

3

Pay your bills on time. The timeliness with which you pay bills is a big factor in your credit score. You should always pay your bills on time, as potential creditors can see exactly how often you were late in paying your bills.

4

Decrease your debt. Another factor that goes into your credit score is your debt-to-credit ratio. This is how much debt you owe as a percentage of the total amount of available credit you have. If you decrease your debt, you'll be able to improve your credit score.

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Can Credit Be Rebuilt While in Bankruptcy?

Filing for bankruptcy can have a significantly negative impact on your credit rating. Depending on your credit rating before filing, scores can drop between 100 and 300 points as soon as the bankruptcy becomes part of your credit report. Credit can be rebuilt while in bankruptcy, if you follow a few responsible money management techniques.

Definition

Chapter 7 and Chapter 13 are the two primary types of personal bankruptcy. Chapter 7 employs a liquidation of assets to pay creditors. Chapter 13 involves a structured repayment plan combined with the elimination of unaffordable debts to help consumers reclaim good financial well-being. It is important to take steps to rebuild credit immediately after a Chapter 7 bankruptcy and during a Chapter 13 bankruptcy.

Timing

A consumer's credit rating reflects his financial strength at a specific point in time. By law, filing bankruptcy may be listed as part of a consumer's credit file for up to 10 years. However, the negative impact of a bankruptcy on a credit rating decreases over time.

Payments

One of the best ways to begin rebuilding your credit rating during or after a bankruptcy is to make your bill payments on time. Payment history impacts a credit score by 35 percent. One month of on-time payments is a start, but it takes between six months to one year of consistently paying your bills on time to improve your credit rating.

Credit Cards

Another way that credit can be rebuilt after or during bankruptcy is to obtain and responsibly manage a credit card. A mix of credit is 10 percent of the overall credit rating calculation. A mix of credit includes installment loans and revolving credit. An unsecured credit card may be out of reach for consumers with a recently filed bankruptcy, but secured cards and merchant cards are an option. The key is to obtain a credit card that reports payment information to the three credit bureaus. Secured cards are backed by consumer's cash deposits and many involve application and usage fees, but they report on-time payment information to credit bureaus. Merchandise cards, gas cards and department store cards are often easier to obtain than bank credit cards. No matter what type of card you select, pay the bills on time.

Debt

Outstanding debt is 30 percent of a credit rating calculation. Outstanding debt is the ratio of what is owed against the available credit line. Keep the balance on your new credit card low, and your credit-to-debt ratio will be high. For example, if you have $500 of available credit, only use $100 to $200 at a time. Pay off the balance on time each month to show responsible debt management.

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How Long Does it Take to Erase a Bad Credit Record?

Bad credit is financially limiting because lenders shy away from people who have a history of not paying bills in a timely manner and other problems. Diane Moogalian of the Equifax credit bureau explains that most negative records do not last forever. Time erases them once the standard reporting period expires, and consumers can sometimes get them erased sooner.

Definition

A bad credit record means different things for different people, but the commonality is that they all have negative items that give them low credit scores. FICO, the biggest credit score company, explains that this includes delinquent or missed payments, accounts that are turned over to collection agencies, court actions such as judgments or liens, bankruptcy, vehicle repossession and foreclosure. The more of these items a person has, the worse the credit score is impacted.

Time Frame

Most negative items stay on a person's credit reports for seven years from the last activity date, according to Moogalian. This includes account histories, repossessions and foreclosures. Bankruptcy sticks around for 10 years, while unpaid tax liens stay on the record until they are satisfied. Then they drop off in seven years. Positive items stay on indefinitely.

Effects

Items only affect credit records while they appear on a person's credit reports. People with very bad financial backgrounds who turn themselves around will have a clean slate in seven years unless they filed bankruptcy. FICO recommends starting to repair bad credit immediately by getting all payments current and maintaining modest account balances and credit limits. Every positive action helps erase some of the negative items' impact.

Considerations

People with very bad credit sometimes are unable to get new accounts to build new records when their old ones were closed by the lenders. Liz Pulliam Weston explains that they may need to start rebuilding their records with secured credit cards. These cards require a monetary deposit, which guarantees repayment. The bank extends a credit limit equal to the deposit, and the account history shows up on the card holder's credit reports. Other lenders will eventually extend credit if the person maintains a positive history for at least a year.

Solution

Certain items on a bad credit record can be erased immediately. Dayana Yochim of the Motley Fool financial website explains that any mistake in a credit report entry gives a consumer the right to dispute it. Everyone can get a free TransUnion, Experian and Equiax credit report every year from Annual Credit Report, according to the Federal Trade Commission. The bureaus take online disputes through their websites and are required by the Fair Credit Reporting Act to investigate them within 30 days. Often the lenders do not respond, which forces the bureaus to remove the questionable items. This instantly cleans up part of the credit records.

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How to Type a Letter to Dispute Negative Items on Your Credit

If an inaccurate or incomplete item is documented on your credit report, your credit report and score can greatly suffer, especially if an incorrect judgment or credit account is left unresolved for an extended period of time. Correct your credit report as soon as possible by typing a formal, professional letter of dispute. Type the letter and send it via certified mail to guarantee delivery. Once your letter is received, the Fair Credit Reporting Act ensures that it will be investigated and resolved.

Instructions

1

Obtain one free copy of your TransUnion, Experian and Equifax credit reports from Annual Credit Report's website (see Resources). Review your reports for negative items you wish to dispute. The same item may not appear on each credit report so only dispute inaccurate or negative items that actually appear on your report. Creditors sometimes report to different bureaus on different schedules.

2

Type the date at the top left-hand corner of your letter. Identify yourself with your full legal name on the next line. Skip down one more line and type your current address, city, state and ZIP code.

3

Address the letter to the "complaint department." Skip down one line and type the name of the consumer reporting agency. Type the company's address over two lines, starting with the street address and then the city, state and ZIP code.

4

Add a form salutary line such as "Dear Sir or Madam."

5

Type your dispute. Be specific and list the facts of your complaint. List each item in dispute one by one and describe what you believe is inaccurate or incomplete about them. Name the item as a credit account, judgment or personal information and note where it is documented on your credit report. Include the name of the information provider and account number in your letter.

6

Note that you have provided supporting documents including receipts, payment records and court documents, along with the credit report containing the items in dispute. Be sure to circle or highlight the items in dispute on your credit report.

7

Request an immediate investigation, and ask that each disputed item is corrected and updated on your credit report in a timely manner. Request a corrected credit report, and ask that written notification be given to each person or company that viewed your credit report in the last six months.

8

Sign and print your full name.

9

Close your letter with a list of any attached documents.

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How Long Would It Take to Repair Credit After Forbearance?

Your mortgage is secured by your home, which means that the lender can foreclose and seize the house if you stop making payments. Mortgage delinquencies also hurt your credit because 35 percent of your credit score comes from the promptness of your payments, according to the FICO scoring firm. Forbearance gives you some relief, but it takes time to repair your credit after mortgage troubles.

Definition

Forbearance is an action by your mortgage holder in response to late payments. The lender delays its right to foreclose on your property, subject to completion of a plan to bring the payments up-to-date, according to Bankrate real estate adviser Steve McLinden. Lenders usually extend this offer once you fall at least three payments behind. A typical deal includes a temporary payment suspension or acceptance of a reduced amount for a limited time. You must catch up your payments after the agreed-on time period.

Effects

Your credit is hurt immediately by the late payments leading up to forbearance because lenders continually send updated information to the Experian, Equifax and TransUnion credit bureaus. Lenders usually limit forbearance to people with temporary financial hardships like unemployment, medical issues or emergencies, according to McLinden, so your rating drops even further if those circumstances make you late on other bills. Soon you have trouble qualifying for any other loans or insurance policies.

Repair With Disputes

Your credit report likely contains some mistakes, as the MSNBC Red Tape Chronicles reports that error rates are as high as 25 percent; disputing them is the fastest way to repair your credit. Federal law lets you file disputes with the credit bureaus for any inaccuracies and makes the bureaus handle these issues in 30 days. Use AnnualCreditReport.com to get free credit reports, which the Fair and Accurate Credit Transactions Act lets you do once per year, and search every negative account for mistakes. Send written dispute notices to each credit bureau detailing every error you find. The bureaus have 30 days to confirm the data, or they must remove it. Creditors often fail to respond, which means those negative entries get purged from your credit reports, boosting your credit rating within a month.

Rebuilding Credit

The only way to directly offset the credit damage from forbearance is to rebuild your payment history, since it has such a strong influence on your credit score. Pay all of your bills by their due dates once you get your mortgage and other accounts caught up. Channel extra money onto credit cards, as FICO explains that balance reduction is another effective credit repair strategy. Your rating improves in six months to a year if you manage to keep all your accounts current during that time.

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Does Having Too Much Credit Hurt a Credit Score?

If you are closely monitoring your credit, one item to watch is the amount of available credit you have, as well as the number of open credit accounts. A copy of your credit report can tell you where you stand.

Significance

Having too many open accounts may hurt your credit score, as it indicates the possibility that you might take on much more debt than you're currently carrying. If you're in this situation, you should avoid opening any new credit accounts.

Considerations

It is not a good idea to start closing open credit accounts. This reduces the ratio of credit used to the amount of total credit available, which can hurt your credit score. Shutting old, unused accounts can also hurt your score, as this makes your credit history appear to be shorter.

Prevention/Solution

If you are concerned about raising your credit score, the best way to accomplish this is to continue to pay down your balances. This demonstrates your ability to handle credit and reduces your amount of debt.

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Frequently Asked Questions About Identity Theft

Identity thieves hope to gain access to people's personal and financial information in an attempt to defraud them of money and data. Many types of identity theft exist, with much of the crime instigated on the Internet; however, some thieves still steal identities by old-fashioned burglary and scam techniques. Many identity theft specialists work to invent new and smarter ways to combat identity theft, including high-tech devices such as iris scanners that can prevent access to items based upon a quick scan of the eye's iris. A few key questions can determine if you run the risk of identity theft.

How Does Identity Theft Happen?

Identity thieves steal personal information by using a wide variety of techniques. Old-fashioned techniques include burglary and rummaging through the garbage of potential victims to locate information such as Social Security Numbers and bank account data. Thieves also employ more modern techniques that include the use of storage devices to steal credit and debit card numbers while the card is being processed during a purchase. This technique is called skimming. Computer hackers and email phishers steal identities by illegally gaining access to personal computers and by sending emails with links that prompt the recipient to enter personal and financial information.

How Can Identity Theft Be Prevented?

Consumers should take care when prompted to provide their personal or financial information. Banks will not ask account holders for their account numbers when making an outbound call, as the institution already has that information on file. When consumers receive such a call, they should immediately hang up and not provide any information to the caller. Consumers should also provide as little information as possible on items such as personal checks, as these can be lost or stolen. The more information that an identity thief has, the greater his chances at stealing an identity. Always shred important and sensitive documents before placing them in the garbage to ensure that those rummaging for information cannot gain access to the data contained in the document.

What Should Be Done If An Identity Is Stolen?

Consumers victimized by identity theft should immediately contact a local law enforcement agency and file a police report. A police report may be required by those creditors that desire proof of the crime. The victim should also contact the major credit reporting agencies to place a fraud alert on the victim's credit report. This alert will safeguard against new credit accounts being opened in the victim's name. In addition, victims should contact the security department of each creditor that the identity thief opened accounts with to alert them of the crime committed against the assumed account holder.

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Mistakes to Look for on Your Credit Report

If you want to borrow money, take out a credit card or get a cell phone contract, the lender will run a credit check before deciding whether you can be trusted to repay a debt. A credit report tells potential lenders how credit-worthy you are. It includes a history of your borrowing and repayment activity from the past seven years. Mistakes on your credit report can damage your credit history, lower your credit score and make it difficult and expensive to borrow money.

Getting a Copy of Your Credit Report

Everyone is entitled to a free copy of his credit report once a year. You can request copies of your reports from the three main credit bureaus - Experian, Equifax and TransUnion - via Annualcreditreport.com. This is the only website authorize to issue free credit reports on behalf of the bureaus. Be careful to avoid the many impostor sites used by unscrupulous people to steal your financial details. Alternatively, you can get copies of the reports directly from the bureaus by going to their official websites.

Checking For Errors

Once you have the report, go through it carefully. What may seem like a small typo can still hurt your score. Lenders are wary of inconsistencies. Check that your name, address, date of birth and Social Security number are all correct. If they are not, contact the bureau immediately to dispute the incorrect information. It may be harmless, but it can also be a sign of identity fraud.

Erroneous Accounts

Make sure you recognize all the accounts on your credit reports. Don't just check the names of the lenders; check the account numbers, as well. Fraudsters sometime open accounts in other people's names, leaving the victims in a financial mess. If you see that on your report, contact the bureau immediately. It can take years to recover from identity fraud.

Outdated Information

The information on your credit report must be up to date. If you've paid off a credit card and closed it, the report should reflect this. Negative information, such as missed payments and charge-offs, stay on your report for seven years. After that, they are erased. Bankruptcy can stay on your report for 10 years. If you find old information that should have fallen off your report by now, contact the bureau directly, who will investigate and fix the mistake. You may need to provide proof to support your case, such as canceled checks.

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How to Improve a Credit Rating in Canada

Improving your credit score is a task you can start on immediately and see results no matter how dire your credit situation. Even in situations where a credit score is at the lowest possible score, you can mitigate the damage and begin to get ahead of the situation. Canadian law requires lenders and creditors to report to the credit agencies accurate and complete information. This law can help remove incorrect items from your credit report, which can improve your credit score. There are other steps you can take that also can help you begin to rebuild your credit situation.

Instructions

Paying your Bills

1

Pay your bills before the due date. If possible, pay the bill immediately upon receipt. Getting in this habit will allow some leeway should you run into any issue that throws you off schedule.

2

Send more than the minimum payment due. If possible, make a payment large enough to keep the balance between 1 and 20 percent of the credit limit. The lower your balance, the higher your credit score will be.

3

Find out the date your lender reports payments to the credit bureau and make sure your payment is received prior to that date. Your credit score is adjusted with each credit reporting and making a payment before this date will keep your balance reporting amount at its lowest.

Dispute Items on Your Credit Report

4

Order a copy of your credit report. Canadian law affords you the right to dispute any item on your credit report. Carefully review your credit report. Look for incorrect balances, incorrect dates, incorrect statutes or any other item not reported correctly. Circle any item in question.

5

Write a letter of dispute to the credit agency in question. Your credit report will list the address to mail your dispute. Your letter should include your name, Social Insurance Number, date of birth, and address. Include a copy of your driver's license and a utility bill. List each item in detail and give a reason for the dispute. Keep your reason simple and brief and ask that the item be removed from your credit report.

6

Mail the letter with a delivery confirmation and allow 30 days for the credit agency to investigate the dispute. If a lender fails to verify the item in question, the credit agency will delete the account from your credit report. Each negative item that is successfully removed from your credit report should result in an increase in your credit score.

7

Review any documentation sent back to you from the credit agency. You may dispute the item again if you are sure an error has been made and was not corrected. Include any additional information you may have that will support your stance.

Add Positive Credit

8

Review your credit situation. You should have a minimum of three positive credit accounts reporting monthly. A mixture of revolving credit and installment credit is best.

9

Evaluate your credit score and the requirements for qualifying for a credit card if you have less than three revolving credit accounts. If you are unable to qualify for a credit card due to your credit score, open a secured credit card.

10

Make your payments on time and keep your balance on the account between 1 and 20 percent of the credit limit. Allow six months to pass and review your credit score to see the increase.

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Do Debts Against the Estate Affect an Heir's Credit Report?

Generally, debts do not affect an heir's credit report unless the heir was legally responsible for the debt prior to the death. Heir debt liability depends on the account type, where the heir lives and his relationship to the deceased. Debts against an estate are taken from estate proceeds. If estate assets cannot cover the debt and there are no legally responsible debtors, the accounts are written off as a loss.

Community Property States

Delinquent accounts may be reported on the surviving spouse's credit report. If you are the surviving spouse, and you live in a community property state, you are jointly responsible for debts and assets accrued during the marriage. Additionally, jointly held secured debt in one or both names may be foreclosed upon or repossessed if payments stop. Community property states include Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin. Alaska residents may be subject to community property laws if they opted into the agreement.

Joint Accounts

Excluding community property rules, unless you are a joint account holder or you co-signed for an account, you as the heir are not responsible for the debts against the estate. Authorized credit card users are not the same as co-signers, but the account information may end up on your credit report. You can have the information removed by contacting the creditor and requesting your name be removed as an authorized user.

Considerations

Lenders and debt collectors are not fussy about how they are paid as long as the debt is settled. Creditors may contact heirs and family members in an attempt to collect on the deceased's debts. If you are not legally liable for the debt, do not claim responsibility for it. You may send a certified letter telling the lender that you do not want to be contacted regarding the debt. Lenders cannot contact you again unless it is to notify you of legal action against you.

Correcting Credit Report Errors

Dispute credit report errors by writing to the credit-reporting agency with proof of the mistake. The agency must investigate your claim and remove inaccurate information. Additionally, send the same information to the lender and request proof of your financial responsibility and request that the lender correct the information. If the investigation does not end in your favor and the information remains on your credit report, a notation will appear stating that you dispute the information.

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What Is a Beacon Score on a Credit Report?

Most people know the importance of their credit reports. They realize that a positive report will help them get loans and open credit card accounts, while one that is filled with negative information will keep them from being able to get credit. However, they are often unaware that many lenders look at their Beacon score to get a "snapshot" view of their creditworthiness. This score summarizes their credit history into a simple three-digit number what carries a great deal of importance in determining whether a lender will give them money or allow them to open an account.

Definition

A Beacon score is a three-digit number that reflects a person's credit history. A larger number indicates that a person has a good history, while a lower number means that they have had some financial problems that are showing up on their credit reports. The latest incarnation is the Beacon 09 score, which reflects a joint venture between the Fair Issac Corporation and the Equifax credit reporting bureau.

Range

The Beacon score can range from a low of 300 points all the way up to a maximum of 850 points. The higher a person's score, the better he appears as a credit risk to lenders who are reviewing the score. Any score over 720 is considered to be excellent, while 700 to 719 would be good. Scores between 675 and 699 are average. A score of 674 or below would be considered in the sub-prime or risky categories. This will impair a person's ability to get credit.

Calculation

Equifax calculates a consumer's Beacon score based on her credit history, primarily over the last 12 to 24 months. However, older information may also be taken into account. Factors that are considered include the number and type of credit accounts held by a consumer, how long those accounts have been open, and the payment history. If the consumer has been trying to open a large number of new accounts, this is also considered. Items like bankruptcies, foreclosures, repossessions, judgments and charge-offs will be taken into account as well.

Use

According to Equifax, the Beacon score is meant to be used by mortgage lenders. However, it can be used by any creditor looking to assess the potential risk in extending credit to a particular consumer, such as car dealers and their lending partners. The lender reviews a person's Beacon score to see whether it is high enough to warrant an extension of credit.

Influence

A consumer may be able to influence her Beacon score by checking her credit reports for any errors. Because the Beacon score is calculated based on her credit history, incorrect negative items will bring it down. Every American is entitled to a free copy of her credit report on an annual basis. If there are errors, they can be disputed by the consumer. If the credit bureau cannot verify the information with the reporter, it must be removed. This will lead to a higher Beacon score.

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Will Looking at My Credit Score Lower It?

Your credit score affects whether you can obtain credit and what interest rate you get, so keeping your score as high as possible can lead to significant savings. Although some people believe that getting your credit report or credit score lowers the score, this is not true. You can look at your credit score without changing it at all.

Soft Inquiries

When a party looks at your credit report or credit score, this generates what is called an inquiry. Soft inquiries are those you make and those that are made by landlords, cable companies or pre-screened credit offers. They do not lower your credit score at all. Some inquiries, called hard inquiries, affect your credit score because they were made in response to your application for credit.

Significance

If you are afraid to check your credit because you believe the myth that it will lower your score, you could actually end up hurting your score instead. This is because your credit score is based on the information on your credit report and this information can sometimes be inaccurate. If you do not discover inaccurate negative information, this information will still continue to affect your credit score. If, instead, you check your own credit and find that you have been a victim of identity theft or that one of your credit accounts is reporting a mistake, you can dispute the information and repair your credit score.

Get Your Score

Look at your credit score by ordering it through one of many websites authorized to provide credit scores to consumers. You can purchase your score through FICO, which is the company that developed the formula that calculates credit scores. You can also purchase your score from each of the credit bureaus that compiles a credit report for you: Experian, TransUnion and Equifax. If you would like to check your credit report but not the score, order a free report from each credit bureau through the Annual Credit Report website (see Resources).

Warning

If you would like to look at your credit score without lowering it, you must do so through a company that provides credit reports directly to consumers. Your credit score will decrease if you obtain it by applying for credit. For example, if you are shopping for a mortgage and your lender pulls your credit report and score to give you an interest rate quote, this will reduce your score. You can look at this copy of the credit score with your lender, but because the lender pulled the score, it will hurt your credit.

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What Do Companies Look for in a Credit Rating?

Your credit rating is dependent on the information in your Equifax, TransUnion and Experian credit reports. This trio of consumer credit reporting agencies gathers information about your employment, living arrangements, loans and accounts and makes it available to lenders, insurers and employers. These companies want to know if you are likely to pay back loans, to be a good insurance risk or to be a reliable employee. They look for certain things in your credit rating to get the answer.

Function

Your credit rating functions as a quick snapshot of your financial solvency. FICO, a major financial company, uses your credit reports to calculate a three-digit number known as your credit score. It tells lenders, insurers and employers whether you are financially stable or are having trouble handling your commitments. Those companies may make their decision based on your score, or they may review at least one of your detailed credit reports to determine your credit rating.

Factors

Companies look at various factors to come up with your credit rating. They are all related to your overall stability and financial health. Your rating is better if you have owned your own home and maintained steady employment for several years. High income also counts favorably. Lenders, insurers and employers want to see responsible use of credit, which means paying your bills promptly every month and not using all your available credit lines. They also like to see a variety of accounts, including credit cards and other revolving lines and fixed-term loans like mortgages and automotive loans. Your credit rating will be higher if you have been using credit for a long time because you've had more time to establish a history.

Effects

Companies may deny your insurance or employment application or refuse to open an account for you or refinance a loan if your credit rating is bad. You will not be able to get a house, car or credit card. This limits your financial prospects and can harm your rating even further, since credit applications are recorded on your reports. Your employment history will be negatively impacted if your bad credit prevents you from getting a good job.

Solution

You can improve your credit rating by focusing on the same things that FICO considers most strongly when coming up with your credit score. The single most important influence on your rating is whether you pay your bills on time or have delinquencies. You will also look better to companies if you pay down your highest balances. Don't apply for new loans and accounts unless they are essential, as too many inquiries will put a blemish on your credit reports.

Warning

Credit report inaccuracies can unfairly hurt your credit rating, and the Florida Public Interest Research Group warns that 70 percent of reports have some sort of mistake. Lenders, insurers and employers are all required to tell you which credit report they reviewed and why they turned you down, according to the Fair Credit Reporting Act. Their denial letter must also give instructions for getting a free copy for yourself so you can scrutinize it for errors. Dispute any you find with the relevant credit reporting agency, which will have a form for doing so on its website. It must send a corrected credit report copy to the company, and you can ask that your application be reconsidered because the original decision was based on false information.

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The Best Free Credit Score Sites

A credit score is an important number. Banks use a credit score to determine customer reliability in paying bills and will give out loans based on the credit score. Credit card companies will often deny a credit card if a credit score is not within a specific range. Buying a house or renting an apartment requires a credit check so that the owner or bank feels confident that bills are paid on time. Obtaining a free credit score is easy when using a credit score website that provides free services.

Identity Guard

Identity Guard is a credit service that provides a free trial for a credit score and credit report. The free trial is a one month, or 30 day, trial. After the free trial period, the service charges about 18 dollars a month. Identity Guard not only provides a credit score, but it provides scores from all three companies, which makes it an ideal choice when considering getting a score before applying for a large loan such as a mortgage.

identityguard.com

My Fico

My Fico provides an Equifax fico score. The website provides a free trial for 10 days before it starts charging about 13 dollars a month. The main purpose of the website is providing fico scores, so it does not have extra perks like some other websites provide.

myfico.com

Free Credit Score

Free Credit Score's website provides a free trial period for credit scores for one week or seven days. After the trial period, the website charges about 15 dollars a month. It provides an Experian Plus credit score and has the added perk of identity theft insurance that covers up to $50,000 in case identity theft occurs.

freecreditscore.com

True Credit 3 Bureau

True Credit provides all three credit company scores and has a one-week free trial. After the trial period, the company charges about 15 dollars a month. The main purpose of the website is credit score monitoring, so it does not provide extra services for customers.

truecredit.com

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How to Restore Credit Fast

To improve or restore your credit scores, you must initiate changes to your credit reports. While there are ways to gradually raise your scores, such as consistently paying your bills on time or maintaining a low debt ratio, taking steps to edit your current credit reports can quickly improve your scores. The three nationwide consumer reporting companies (Equifax, Experian and TransUnion) are required by law to provide consumers with a free copy of their credit reports once every 12 months. You should become more familiar with what's contained in these reports and understand what needs to be addressed.

Instructions

1

Call 1-877-322-8228 and order your free credit reports, or go to AnnualCreditReport.com and order online. You can also request a free credit report by mail. Print the Annual Credit Report Request Form (see Resources), complete the form, and mail it to Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281.

2

Inspect each credit report. Look for errors, items that should have been removed and items you might be able to change. After a specific amount of time, certain negative items can be removed from the report, yet sometimes they remain on the report after this time has elapsed. You'll need to take steps to remove the item.

3

Resolve outstanding negative items. If there are negative items on your report that are indeed yours, such as an unpaid doctor bill, you may be able to settle the dispute and have the item removed sooner. Even if the item is not removed, having it resolved will help improve your score. If you apply for a loan later on, you may be asked to explain negative items on your report. If that negative item has been resolved, it will look better.

4

Write a letter to the consumer reporting company and inform it of any inaccurate information in your report. The agency will investigate your claim; if you prove to be correct, the negative items will be removed, which can improve your score. Contact information for the three credit companies can be found at AnnualCreditReport.com.

5

Write a letter to any creditor that has included negative information in your report that you dispute. Creditors may have a special address where correspondence about such a dispute should be mailed. The creditor must file a notice of your dispute with the credit report company if another report is made.

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How to Cancel Credit Cards With No Penalty to Your Credit Score

When you want to cancel a credit card, consider the impact on your credit score. If you will be applying for a loan in the future, you should ensure that canceling the card will not decrease your credit score. The main way that canceling a credit card hurts your score is by increasing your credit utilization ratio -- which is the amount of debt you carry relative to your credit limit. The closer you are to your limits, the higher your credit utilization ratio becomes and the worse your credit score gets. When you cancel a card, you reduce your overall limit and can hurt your credit score unless you meet some specific conditions.

Instructions

Decrease Utilization

1

Pay off the credit card balance in full. If you cancel a card that still has a balance, it shows up on your credit report as having an equal balance and credit limit. This is called being maxed out, and it damages your credit score.

2

Add up your total credit limits across all cards. For example, assume the card you want to cancel has a limit of $4,000. Your other cards have limits of $2,000, $7,500 and $4,800. Therefore, your total credit limit is $18,300.

3

Add up your total outstanding balances on all your credit cards. Find these on your most recent credit card statements. For example, assume the card you want to close has no balance, but your other cards have balances of $562, $3,220 and $2,160. Your balances total $5,942.

4

Divide your total balances by your total credit limits to calculate your current credit utilization ratio. In this example, your credit utilization is 0.3247, or 32.47 percent.

5

Subtract the credit limit of the card you want to close from your total credit limit to calculate what your limit will be after you close the card. In this case, it will be $14,300.

6

Multiply your future credit limit by your current credit utilization to determine the maximum balances you can have to avoid increasing your utilization. For example, $14,300 times 0.3247 is $4,643.21.

7

Pay down the balances on the cards you plan to keep until they total no more than the number you calculated, which, in this example, is $4,643.21.

Cancel the Credit Card

8

Call the customer service phone number on the back of the credit card you would like to cancel.

9

Tell the representative you want to cancel the account. Confirm that your account has a zero balance, and if it does not, make any additional payments needed to reduce your balance to zero. Ask for confirmation of the cancellation by mail.

10

Write a letter to the credit card company stating that you called to cancel your credit card and would like a confirmation of the cancellation in writing. Include your name, address, account number and the date you called.

11

Send the letter to the address listed on your credit card statement.

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How to Get an Apartment with an Eviction on Your Credit

Finding a landlord to rent an apartment to you if you have an eviction on your credit can be a tricky situation. The best thing to do in all situations is avoid an eviction at all costs, pay your rent before you pay anything else. However, people are human and we do make mistakes from time to time. Fortunately, there are a couple of ways that you may be able to lease an apartment with an eviction on your credit. Let's take a look at some of these solutions:

Instructions

1

The first thing that you need to do is thoroughly understand how the eviction process works. Each state has different laws about how an eviction process, legally known as a Notice to Vacate, is meant to be handled within its jurisdiction. However, certain characteristics remain the same all over the country, they are:

1) The rent is due by the date stated on your lease. Contrary to popular belief, there is NO such thing as a required "grace period" for rental payments.
2) The most prevalent reason that landlords evict tenants is due to non-payment of rent, but there are a myriad of other reasons why a landlord can evict you.
3) If the landlord starts the evictions process by filing the necessary legal documents, an eviction will be placed on your credit...REGARDLESS to whether or not you settle up and pay the landlord. Even if your landlord allows you to stay after you've paid, the eviction will remain on your credit for seven years.

So, as you can see, having an eviction on your credit can be a very damaging and serious situation. If you have an eviction on your credit, you need to be aware of how somber the situation truly is, it can affect your standard of living for years to come.

2

After you have thoroughly understood the seriousness of the situation, you need to get prepared to face a lot of rejection. Unless you are very lucky, it will not be easy to get an apartment with an eviction on your credit. Grab a local apartment guide and pick out a couple of apartments that are affordable, and convenient. Call each one of them and let the leasing agent know about your situation, and ask them if they will be willing to work with you.

*Again, be prepared to hear a lot of no's in this step, most apartment complexes that are under the management of large management companies automatically discount applicants with evictions.
*Your first reaction here may be to just omit the fact that you have been evicted. This makes absolutely no sense because as soon as they pull your credit they will see it anyway, it is best to tell the truth up front...BEFORE you fill out the rental application. Why pay the application fee just to get denied?

3

Grab the newspaper and look in the classified section for affordable apartments. Again, you need to let them know up front about your credit history. With private owners or smaller apartment complexes, you may be able to get past the credit requirements if you let them know how you got into your situation. Be honest and up-front with them and tell them that you will never allow yourself to get in the situation of being evicted again. Smaller complexes and private owners usually have the ability to do what they want without having to answer to a large management company.

4

Get on Craigslist and check the rental classified ads in your area. In the search field put in the words "No Credit Check" and see what you get. You should be able to get a couple of leads therein.

5

Finally, the best option yet would be to hop into your car and drive around the neighborhoods that where you would like to live, and that you can afford. Look out for hand written or homemade "For Rent" signs and jot down the number. When you get home, you should call these numbers and ask them about the rental qualifications. DO NOT mention your eviction unless they tell you that they will pull your credit report.

You would be surprised at how many landlords do not even bother to check your credit. Although this list is getting smaller every year (the Internet has made the credit checking process very simple), there are still landlords that haven't caught up with the times. Also, if you come upon a rental unit with a hand made rental sign, chances are that the landlord uses rather simple methods, and there is a higher likelihood that they will not check your credit.

6

Again, getting an apartment with an eviction on your credit is not an easy task. But, if you work at it long enough, you will be able to eventually find a unit. Once you have found your next apartment, make sure that you follow all of the rules and regulations to the letter.

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How to Improve Credit to Buy a House

When it comes to purchasing a home, you need to obtain a mortgage to pay for the house. A mortgage is handed out by a bank or other financial institution where it is determined exactly how much money you can obtain. The companies and banks also determine what kind of interest rate your loan is going to have. The better your credit score is, the better your interest rate is going to be. In order to obtain a better loan rate, you need to increase your credit.

Instructions

1

Contact your credit card companies and have your limit increased. The amount of money you have available on your card can increase your credit score. However, once you obtain the credit increase, you need to make sure you don't purchase more.

2

Inspect your credit report. You can obtain a free report at AnnualCreditReport.com. Here you can see if there are any small bills, such as cable or phone bills, that have gone unpaid. These can be hurting your credit score but are easily fixed. Contact the company after you pay the bill and ask them to remove the information from your credit score.

3

Pay your credit card bills before the billing statement due date. If you wait until after your statement date there is going to be some build-up on the card (from purchased you made in the new billing period) that don't go unpaid. These can bring down your credit score.

4

Pay your monthly bills, including your gas, water, heat and cable bills, on time. However, there are many companies that now report your late payments to your creditors. This can take a hit on your credit score. Make sure to pay these off as quickly as you can to avoid any of these penalties.

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How to Get a Free Credit Report Without Tricks or Scams

The Fair Credit Reporting Act provides consumers access to a free credit report from all three credit reporting companies, including Equifax, TransUnion and Experian, annually. As of 2010, Annual Credit Report is the only authorized company that provides free credit reports, according to the Federal Trade Commission. Oftentimes, consumers think they're ordering a free credit report from a company only to find out later that she is required to pay for other services in order to get the free report.

Instructions

1

Decide which credit reports to access. According to the FTC, consumers can order credit reports from all three bureaus, including TransUnion, Experian and Equifax, or just a single bureau. By requesting reports separately, you can access your credit more frequently during the year. For example, you might request a report from Equifax this month, TransUnion in three months and Experian six months later. If you order all of the reports at once, you have to wait 12 months to get another free report.

2

Order a free credit report online. Annual Credit Report allows you to order free credit reports from all three credit bureaus. Have personal information handy, such as auto loan, mortgage and personal loan statements. To verify your identification, the company will ask you to confirm loan payments right down to the penny.

3

Order a free credit report on the phone. Call Annual Credit Report at 877-322-8228. The employee will ask you personal questions (such as loan payment amounts) to verify your identification. Once your identification has been confirmed, she will mail you a copy of your credit report.

4

Request a report through mail. The final option for ordering a free credit report is completed the Annual Credit Report Request form. This form can be downloaded from Annual Credit Report's website (see Resources). Complete the form and mail to P.O. Box 105281, Atlanta, GA 30348.

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Will Debt Negotiation Affect My Credit Negatively?

You may have seen or heard advertisements about credit card companies lowering the balance on credit cards that carry a high balance. If you think that this sounds too good to be true, you are, for the most part, right. Sometimes debt negotiation or debt settlement, meaning you pay less than what you owe, is your best option. However, it's important to understand the ramifications of doing so and to watch for for shady debt negotiation firms who may rip you off.

Credit Report Comments

Whenever you negotiate your debt with your lender for less than what you owe, your credit score suffers. According to Bankrate.com, your lender reports to the credit-reporting agencies that you "settled" your account, that the "debt settled for less than the full amount due," or the report reads, "partial payment accepted." The account will show that you don't owe any money, but the negative terms will be on your report in the comments section.

Loss For the Lender

Comments on your credit report associated with debt negotiation are as bad as having a charge off (where you don't pay your balance at all), a bankruptcy or a repossession, according to Bankrate.com. All of these actions ultimately result in a loss for the lender. If a lender loses money doing business with you, that sets off a red flag for future lenders.

Credit Score Suffers

Your credit score suffers from the debt negotiation process. Lenders typically do not negotiate your debt simply because you have a large balance. If you are making regular payments, there is no incentive for the lender to negotiate your debt down. If you start missing payments, the lender may be willing to negotiate. Missing payments, however, comes with consequences and lowers your credit score more than any other action. Payment history makes up 35 percent of your credit score.

Debt Negotiation Companies

If you are thinking about debt negotiation, beware of debt negotiation companies that advertise to negotiate on your behalf. Do not believe any firm that tells you that it can remove negative comments from your credit report, warns the Federal Trade Commission. You cannot remove negative entries on your credit report that are accurate. You can ask the credit reporting agency to correct errors, but not to remove a truthful event. Creditors have a legal obligation to provide accurate information to the credit reporting agencies, according to the FTC.

Warning

If you are successful in negotiating your credit card debt for less than what you owe, the Internal Revenue Service will consider any amount of money you save to be taxable income. If you are not successful in negotiating your debt, your credit card issuer could sue you for the balance.

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