June 2008 ~ Personal Finance and Money Management

Monday, June 30, 2008

How Long Does a Negative Item Stay on Your Credit Report?

6:17 PM No comments

Credit reports are made up of virtually every credit-related action a person takes, the Federal Reserve Bank of San Francisco explains. This includes everything from obtaining new loans and credit cards and paying them on time, to missing payments on existing accounts, to having a car repossessed or filing for bankruptcy. Negative actions bring consequences such as difficulty getting accounts, but there are limits on the time bad items can appear on credit reports.

Negative credit report items are things that show up on TransUnion, Equifax and Experian reports because of financial mismanagement. Some are minor, like occasional late payments. Skipping payments is more serious, and Liz Pulliam Weston of MSN Money warns that lenders often charge off such accounts after six months of nonpayment, adding another blemish to the report. Court actions such as lawsuits by creditors, tax liens and bankruptcies are also bad.

Delinquency-related items and public records of financial judgments stay on credit reports for seven years from the date of the first late or skipped payment, according to the Experian credit bureau. Unpaid tax liens show up for 15 years, but they disappear in seven once they are satisfied. Chapter 7 and 11 bankruptcies, the two most common types filed by consumers, remain for 10 years. Entries are automatically deleted from credit bureau files when the appropriate time period ends.

Negative items have a cumulative effect on a consumer's ability to open credit accounts or borrow money. One or two late payments or old collection accounts do not carry much weight if the recent records are all good. Numerous recent negatives warn lenders that the person may be overextended and unlikely to repay new debts. Loan and credit card applications are likely to be turned down or offered with excessive interest rates. The FICO credit score firm states that bad credit report entries also impact a consumer's three-digit credit score, which indicates likelihood of repayment and is used by many lenders to evaluate applications.

Consumers have a right to check their credit reports at no cost so they can see how many negative items the files contain. Ordering the reports through annualcreditreport.com is recommended, according to the Federal Trade Commission (FTC), because it is the only government-authorized site from which to order.

Some negative items get erased before the end of the reporting period. Any entry that contains erroneous information is a candidate, according to the FTC. Bad credit items simply need a misspelling, incorrectly reported amount, wrong date or other minor issue to be disputed under the Fair Credit Reporting Act. Disputes can be done online at no charge on the credit bureau websites. Each bureau has 30 days to investigate the challenge. If the lender does not respond or cannot provide verification that the entry is correct, the bureaus are forced to erase the item immediately.

The Impact of Credit Cards on a Credit Score

5:26 AM No comments

Credit scores comprise a number of key factors, including payment history and credit-utilization ratios. Credit cards play a key role in determining your score, and responsible use of them over time can significantly increase your score. Conversely, late payments or consistently being at or near credit limits are tangibly detrimental.

Credit utilization is among the principal determinants of a credit score. With low balances, banks and other credit providers can generally assess that a consumer is not overextended and can responsibly handle additional debt. On the other hand, high balances compared to credit limits represent a red flag, and suggest that a cardholder may be tapping available credit by necessity rather than choice. The impact on a credit score is less apparent if only one out of five cards carries such a balance, but if most or all cards are maxed out, credit scores immediately decline.

A consumer may reasonably wish to take out two or three credit cards. Perhaps one offers a particularly low interest rate, another is an affinity card, and still another comes with attractive benefits. However, credit providers question the necessity for an individual to have six, seven, ten cards or more. Such widespread credit usage suggests a problem and increases the chances that a cardholder may run into difficulties.

There is no substitute for a pristine payment history over time. This demonstrates responsible credit usage and a pattern of financial behavior quite attractive to lenders. While loss of a job or medical problems can negatively impact payment history and thus credit scores, their impact is relatively minor if addressed within months rather than years. Since credit cards remain among the most ubiquitous sources of credit, they are often the ones tapped most extensively and creditors closely look at their payment patterns.

What to Do When You Have a Repo on Your Credit Report?

11:43 PM No comments

Car financing is a secured loan because your vehicle acts as collateral. Most contracts let the lender take back your car as soon as the loan goes into default. You have no right to prior warning, and the finance company does not have to take you to court first. You lose your ride, and the repo also goes onto your Experian, Transunion and Equifax credit reports.

Your vehicle repo goes into your credit files, where it looks bad to other lenders and lowers your credit score. Sometimes the repo is not reported correctly, which gives you an opportunity to potentially remove it. Order your credit reports for free (see Resources). Check everything, including payment and repossession dates, amount owed and payment delinquency dates. You have the right to dispute any mistakes. The repo is erased if the lender is unable to verify the reported data within a month.

A repo stays on your Experian, TransUnion and Equifax credit reports for seven years from the date of the initial loan delinquency if there is no mistake to dispute. This bad mark hurts you most in the first few years, but you offset its effects by rebuilding your credit in other ways. MyFICO, the Fair Isaac scoring company site, identifies paying down large debts and making all payments by the due dates as two critical items for a good credit score. Focus on those two activities after the repo.

Your vehicle repo should disappear on its own when the seven year reporting time concludes. Check your credit reports to be sure, and file disputes with credit bureaus still reporting it after the allowable period. All effects on your credit score stop once the repo is gone.

You may be able to prevent a repo by talking to your finance company as soon as you know that you cannot make a payment by the deadline. The lender may agree to let you pay late for one month or change your due date so it aligns with your paychecks. Sometimes the delinquent payment can be added to your last loan payment. Ask for any agreement in writing if it involves a change to your contract.

Refinancing With a Low Credit Score

5:46 PM No comments

You could save your home or open up resources for other needs through a refinance loan, but if you have a low credit score this is probably is not possible. Credit scores are a huge factor when a bank underwriter sets your interest rate. Refinancing may be an option to save money when you have a low score, but only if you improve your overall financial picture.

A borrower can get a loan with a low credit score, but probably not with one less than a 500 to 520, according to Bills.com. Even at these scores you will likely have to go to a "sub-prime" lender that specializes in mortgages for people with bad credit. These rates, however, are the highest in the mortgage industry, so it may not save money to refinance at this point. One of the few ways refinancing could help a person with a low credit score is if the new loan lowers your monthly payment. This would only happen if the lender lengthens the repayment schedule, thereby giving you more time to pay off the loan.

Mortgage providers look at more just a pure FICO score calculation to set loan rates. The lender might offer better rates if you significantly improve your debt-to-income ratio -- debt obligations divided by monthly income. In the mortgage industry, lenders like to see a DTI less than 36 percent. You could also offer to pay down a large portion of the home; 20 percent is a "good" down payment.

Your best shot at receiving a refinance loan and saving money in the process is improving your score before you apply for a loan. Disputing errors on your report and backing up your claim with evidence, such as bank statements, is the fastest way to boost your score, but does not help with legitimate problems. Thus, the most effective way to raise your score before refinancing is paying down debt and paying bills on time.

Assess why you need to refinance. If you frequently miss payments, look for ways to cut spending out of your monthly budget. At the very least, go to mortgage providers and see what an officer thinks of your financial picture and whether refinancing makes sense. The worst that can happen is they tell you refinancing won't help.

What Is a Good Fico Credit Score?

11:49 AM No comments

A good FICO score is one that exceeds 700. Any amount above that number is generally sufficient to qualify for the lowest available rates on most types of loans, but it is not a one way ticket to being able to take out extraordinarily large loans-your income will have a more significant effect on that.

Maintaining good credit can be even more challenging than building it up. When your credit score gets that high, even a single error in bill payments can send the score dropping with stomach-churning speed. If you are afraid of losing your credit score, it can be a good policy to set up automatic bill payments for all of your obligations to ensure that everything is paid, even if you don't remember to do so. This requires that you maintain an adequate bank balance, but also eliminates the risk of human error.

Request regular detailed credit history reports. This will allow you to correct any errors as they happen, rather than later. Order credit reports either every month or every three months so that you can ensure the information is reported accurately. If you need to dispute an item, have all the relevant paperwork in your possession before you contact the credit reporting agency. You can even sign up for the myFICO program via the company's website. The service provides instantaneous updates on your credit report.

Once you have a good FICO score, many options open up to you that would not be available otherwise. It's far easier to start a business if you have a good credit score, as it gets you access to many low interest small business loans. If you invest, it makes it far easier to get personal loans that you can use to leverage your investments. It also becomes far easier to get approved for low interest mortgages and car loans. The best credit card rates become available to you as well.

If you have managed to get your credit score above 700, there isn't much need to work very hard to push it much higher. Once your score exceeds 775, the vast majority of lenders will not treat you differently no matter how much you improve your score. If you want to improve your attractiveness to lenders, it would be wiser to expend effort to reduce your debt to income ratio or to pay down existing debts.

Individuals with a good credit score get access to credit cards with very high limits and very low interest rates. In addition, these cards have the best reward programs available that are easier to take advantage of thanks to the low interest rates. Credit card companies virtually never reduce the credit lines of customers with good credit, helping to increase your ability to plan for the future. This creates further incentives for you to continue using credit cards, even as you have likely demonstrated your ability to pay off your balance in full every month. Platinum credit cards available to people with good credit scores often also have additional perks, like airline club membership, discounts to many restaurants and special deals on a variety of consumer products.

What Are My Rights As a Credit Card Consumer?

11:40 AM No comments

As a credit card consumer you do have certain rights. The Federal Trade Commission outlines these rights as a means to protect you against unfair treatment by credit card companies. It imperative to know your consumer rights, and the steps to take if your rights are violated by a card company.

Credit reports show your credit card activity. Credit card companies frequently send updates to the three credit bureaus. They submit information such as your credit limit, available credit and account standing. If you pay the account as agreed, this information helps boost your personal credit rating. As a credit card consumer, you have the right to know what your credit card companies are reporting about you. Ordering a free credit report yearly from Annual Credit Report is key to reviewing your credit history and creditor remarks.

Applying for a credit card will either result in an approval or rejection. If a credit card company rejects your credit application, you have the right to know the reasons behind the rejection. The Federal Trade Commission also states that credit card companies and other creditors cannot deny your application due to factors such as sex, color of skin, age, religious beliefs or income source. Credit card applications do inquire about monthly income and income source. Card companies cannot reject your application because you receive government assistance.

The Fair Debt Collection Practices Act protects you against unfair or abusive treatment by the hands of debt collectors. Being behind or delinquent on bills will prompt telephone calls and letters from creditors and collection agencies. While these companies can contact you to collect a debt, there are limits to their actions. Debt collectors do not have the right to contact you at work, call your home after 9 p.m., make threats, falsify information and they have stop contact if you request this in writing.

Consumers have the right to take legal action if a credit card company violates their consumer rights. Keeping a record of harassing letters and recording telephone conversations with debt collectors can help prove unfair and abusive treatment. Consumers have up to one year to file a lawsuit for violated rights, and if found guilty of an offense, a court may require the debt collector to pay the consumer $1,000 plus the costs of their court fees.

Does Maintaining a Credit Card Balance Hurt Your Credit?

11:18 AM No comments

You may think that maintaining a credit balance should not affect your credit rating under the logic of "nothing gained and nothing lost," but a consistent balance can hurt your credit rating. If you maintain a really high balance, you can cause even more damage. You do not have to pay off the balance in full to reduce its damage.

A significant part of the "amounts owed" category -- worth 30 percent in total -- of your credit rating comes from the portion of your credit limit you use, or your credit utilization ratio. A single maxed-out credit card can take more than 45 points off your credit rating, and a high utilization ratio across all accounts does even more damage, according to Ellen Cannon of Bankrate.com. Ideally, you want a credit utilization ratio of lower than 10 percent. Because lenders report the balance on your last statement to the credit bureaus, paying off the bill but constantly keeping a high balance still hurts your credit score.

The FICO credit scoring formula gives you points for paying off balances in full every month or takes away points if you keep a balance on your credit cards. Also, any outstanding debt negatively affects your credit rating. This is especially true of credit card debt because it is unsecured debt, so there is less motivation to pay it off than a mortgage backed by your home.

Carrying any type of debt poses the risk that you forget to pay the bill on time. A single missed payment can drop your credit score by over 100 points, according to Les Christie of CNN. On the other hand, you do not want to cease use of the account. The FICO formula ignores accounts once you stop using them for more than six to 12 months.

Although you should pay off your credit card balance in full each month, you can lower your credit utilization ratio without touching the balance by asking your lenders for a higher credit limit. Many credit card companies will raise your limit without a credit check. If the lender wants to perform a credit check, you may want to forgo asking for a limit increase, because each inquiry takes a few points off your credit score and six or more are a serious derogatory event, according to the Fair Isaac Corp. Also, if you are prone to keeping a high balance, having extra credit available may drive you deeper into debt.

Do Student Loans Affect My Credit Score?

10:06 PM No comments

A student loan can boost or harm your credit score, depending on how you manage it. A solid repayment record benefits your score, while a history of late payments or default causes significant damage. Student loan lenders are usually willing to work with borrowers facing problems, so don't hesitate to call them. Doing so can save your credit rating.

Credit scoring is a method of helping creditors determine a credit applicant's creditworthiness: A high credit score suggests that the applicant manages credit well and has the ability to meet his financial obligations. Companies that sell credit scores use different criteria in their computation, but get the information used in score development from an individual's credit reports, public records and other consumer data sources. Since student loan lenders and services report a student's loans and repayment history to the credit bureaus, an individual's student loans do have an impact on her credit score.

Credit scoring systems, such as FICO and VantageScore, factor the amount of money you owe, sometimes called your "debt load," into your credit score. If you owe a lot of money, this can damage your score. However, a student loan can also contribute to the "depth" of your credit history by adding to the mix of credit types (including credit cards and charge accounts) included on your report.

Student loan companies regularly report your payment history to the credit bureaus. If you don't make minimum payments, pay late, or stop paying your loan entirely, your credit score will go down. On the other hand, a track record of on-time payments boosts your score and looks great to lenders, landlords and employers. Plus, the longer you hold an account, the more positive it is for your score, and since student loan terms are often 10 or more years in length, your score will continue to benefit as you meet your loan payment obligations.

If you owe student loans guaranteed by the federal government, you can minimize the risk of damage to your credit by taking advantage of the various repayment options available to you. If your monthly loan payments are more than you can handle, you can choose a different payment plan that allows you to spread your payments out over a longer time period. If you are unemployed or facing a financial crisis, you can also request a deferment or forbearance on your payments while you regroup. Do this before you miss a payment, and you will preserve your credit.

Why Do I Need a Credit Report?

3:41 PM No comments

Your credit report can help you determine how much you owe or whether you can get a loan--you can even find out who else has been requesting your credit information. A credit report can also help you determine if you have information on your file that should not be there.

By reading your credit report, you can determine if your creditors are reporting your payments correctly. When you make your payments on time they should not be reported late.

A credit report can be used to help you dispute those items which should not be there. A credit reporting agency has 30 days to investigate inaccurate or incomplete information on your credit file.

When creditors reject your credit application because of your credit file, you can review your credit report to see what they are talking about. Sometimes a rejection can occur because of bad credit. It can also be a result of insufficient credit and too much credit.

You can get a free copy of your credit report, once a year, from AnnualCreditReport.com. This website allows you to receive a copy from all three credit reporting agencies, which are Transunion, Experian and Equifax.

You can use your credit report to add favorable credit ratings which don't usually get reported according to MSN Money. You can use a credit report to run a complete tally on your total outstanding debt. This will help determine if your personal records are accurate. All three credit reporting agencies may not have the same information.

How Does a Credit Bureau Work?

12:22 PM No comments

Although all people are created equal, a person's credit rating can quickly determine how worthy they are in the eyes of lenders. If your credit rating is not particularly impressive, you can have a difficult time acquiring a loan, and when you do, the interest rate can be higher than desired. Credit bureaus are the organizations responsible for acquiring credit information, which is then available for a variety of uses.

When you apply for a credit card, loan or another form of credit, you are required to provide personal information, including your name, address, employer and annual income. If the company approves your application and this is your first line of credit, then the process of submitting information to the credit bureaus begins.

Credit card companies and other lenders employ credit reporting agencies, or credit bureaus. When you apply for credit, lenders want to know what level of risk they would take by loaning money to you. In order to do this, the company must send in all of your personal information which you supplied on your application. The credit bureau is then able to give the company information about you based on how you handled credit previously.

Credit bureaus are kept updated on all of your transactions, as well as the status of your payments and your payment history. Credit bureaus are also able to access your public records, such as court records, as part of their portfolio that they keep on each individual credit card consumer. This comes into play when you apply for subsequent credit, since that is when your prior credit payment history and transactions come into play.

The three largest national credit bureaus are Equifax, Experian and TransUnion. Most large credit-based companies give your information to all three credit bureaus. As a consumer, you are allowed to receive one free credit report per year. If you want a second copy of your credit report within a year, you will usually need to pay a fee.

On your credit report, you can see all the information that credit bureau has tracked. Your credit report also shows your credit score. The credit bureaus use your past payment history, amounts owed, length of credit history, new credit and types of credit used to determine your credit score, dubbed your FICO score. Scores range from 300 to 900 with most people falling in the 600 to 800 range. If you don't pay a creditor, your score drops. On the other hand, if you pay your creditors regularly and promptly, you can expect your credit score to rise. It's important to keep your payments timely and your credit score high in order to get large loans, such as a mortgage loan, in the future.

What Is a Credit Risk Score?

12:19 AM No comments

A credit risk score is a three-digit number that lenders use to determine how creditworthy you are. It's the result of a complicated formula that takes into account the information contained in your credit report.

Credit scores range from 350-850. The higher the score, the more creditworthy you are. A score of 720+ is considered to be good. Only 12 percent of Americans have credit scores above 800.

The exact formula used to calculate a credit risk score is secret. What is known is that it includes your borrowing history, your payment history, how much of your credit line you're using, how often you apply for credit and other factors.

It's hard to overestimate the importance of your credit score. Individuals with low credit scores have a hard time borrowing money. If they are approved for a credit card or a loan, they must pay an extra high interest rate. People with low scores can be turned down for insurance policies and even jobs.

There are three credit bureaus: Experian, TransUnion and Equifax. Each bureau uses a slightly different formula to calculate the credit score. Therefore, every person has at least three different credit scores.

If you want to raise your credit score, make an effort to keep up with all monthly payments. Do not max out credit cards or loans. Do not apply for too much credit in a short period of time. Do not cancel credit cards as soon as you've paid them off.

Quickest Way to Raise Your Credit Score

6:44 PM No comments

Having a low credit score while in the market for life or auto insurance, a mortgage, auto loan, credit card, or even a job will make you acutely aware of how drastically a low credit score can affect you. A low credit score can cause denial of credit, high interest rates, higher rates on insurance, and even the loss of an employment opportunity. There are many tactics used to raise credit scores, but only one that works within a few days. This tactic involves reducing your credit utilization.

Instructions

Order your credit reports and review each one.

Order a recent copy of your credit report. Purchase the credit score. Review each entry and write the date the account was reported to the credit-reporting agency. If you cannot see the exact date the account was reported, call the creditor and ask for the date.

Calculate 30 percent of each credit line.

Focus in on your loans and credit card accounts. Note the credit limit and determine what 30 percent of that number is. If you have a Visa with a $5,000 credit limit, take 5000 and multiply it by .30. The result is $1,500 dollars. Repeat this process on each of your accounts.

Make payments to all accounts with a balance greater than the 30 percent figure. The payment should be made two to three days prior to the date you have previously listed for each account and should reduce the balance to less than 30 percent of the credit limit.

Check the credit report to verify changes.

Wait until the day after the creditor reports the new balance and re-order your credit report and score. Verify the balance is correct and notice the increase in your credit score. If you prefer, wait until after all the payments you need to make are paid and then re-order your credit report and score.

How to Advise Creditors to Not Call You at Work

6:32 PM No comments

Some creditors prefer to contact you at work simply because it is a reliable way to reach you. Employers commonly consider a call from a creditor a personal call; taking one at work, is unprofessional and takes away from company time. The logical solution to this problem is to clearly communicate to your creditors that they cannot contact you at work anymore.

Instructions

Ask the creditor representative for his full name, company name, department, phone number and address before beginning your conversation. Write down this information for future reference.

Inform the creditor that he is calling you at your place of business and you are not permitted to receive these calls any longer.

Ask the creditor to cease and desist from calling you at your job immediately. Refer him to your home number instead or ask the creditor to send you correspondence regarding your account via mail or a personal email account. A creditor is more likely to stop this behavior if it would put you in danger of losing employment, which would not help the creditor's goal to collect the amounts due.

Send a cease and desist letter to the creditor representative via certified mail restating what you have communicated over the phone. Specifically refer to your conversation (include the date and time) during which you asked him to cease calling you at work.

How to Repair Your Credit Report Instantly

4:51 AM No comments

Having a credit report with a good credit score is an important factor in many areas of our lives. Insurance companies use credit reports and credit scores as a determining factor for policy rates. Loan interest rates are based on credit scores. Many employers are reviewing credit reports and scores as a condition for an offer of employment. If you have a credit report with a low credit score, there is a step you can take to raise your credit score instantly.

Instructions

Purchase your credit report and score. If you have a recent copy of your credit report, you can use that. Take a pen and make note of the date your lender reports the debt to the credit agency. Call the lender and ask what day their company reports accounts to the credit agency if the date is not shown on the credit report.

Circle the credit limit on each credit card account. Calculate what 30 percent of the credit limit is. An easy way to do this is to take the credit limit and multiply it by .30. Write the amount down.

Arrange to make payments on all accounts two days before the lender reports to the credit agency. Make a payment large enough to bring the balance below 30 percent of the credit limit. This is the figure you have previously written down.

Pull your credit report after the date you have noted the lender reports. You should make sure the balance is shown correctly and check the rise in your credit score.

How to Remove Derogatory Credit Information From Your Credit Report

1:24 AM No comments

When you go to get a loan the first thing they look at is your credit score and if it is low then there may be some negative items on the report that need to be disputed and removed.

Instructions

First you need to request a copy of your credit report because this way you can check on the items that are there to make sure they are accurate.

Next you want to dispute all the items that you feel are incorrect so that you will be able to remove them. The credit bureau has 30 days to verify if it is accurate and they fail to do so then they must remove the negative item by law.

Finally always make sure that you pay your credit cards on time and do not miss any payment then you will be assured that you credit score will remain high.

How to Fix a Credit Report Manually

2:14 AM No comments

The Fair Credit Reporting Act requires each credit bureau to provide you with a free credit report at least once a year. If you seen an error on your credit report, you should contact your credit reporting company in writing and dispute the error. Credit reporting companies are usually required by law to investigate your claim within 30 days of receiving notice, according to the Federal Trade Commission.

Instructions

Send the credit reporting company that you got your credit report from a letter in writing listing what you think is inaccurate. Enclose a copy of your credit report and circle the items that you want to dispute. Include copies of documents that can back up your claims, but never send originals. State your name and address and explain why and which errors on your credit report you want to dispute in detail. Ask the credit reporting company to fix or remove these errors as soon as possible in your letter.

Send your letter by certified mail with the "return receipt requested" option at the post office. This helps keep a record of what you've sent to the credit reporting company about your dispute.

Wait for the credit reporting company to give you the results of its investigation in writing. It must also provide you with a free copy of your credit report after the investigation is complete. If it agrees that an error was made, it will change or remove the error from your credit report.

How Does Refinancing Your Mortgage Affect Your Credit Score?

9:03 PM No comments

For most people, buying a home without a mortgage is impossible. Fortunately, getting a home loan to purchase, build or renovate real estate is a common process. However, what might have been the best possible mortgage when you bought your house, or last refinanced, may no longer fit your needs or financial goals. Refinancing a mortgage is a way to get new terms and payment options that suit your current situation better. However, when it is your home on the line, or a big real estate-based investment, it is important to get all the details right. How your credit is affected by refinancing is one of those important details.

When your current mortgage no longer meets your needs, getting a different mortgage is desirable. However, getting a loan that big requires big collateral. The real estate the mortgage will be used for is the perfect collateral, however it is already pledged as collateral to the original mortgage. Refinancing is the process by which the existing loan on the real estate in question is paid off with the proceeds of the new loan which simultaneously acquires the real estate as collateral.

The biggest debt for many people is the mortgage on their house. Credit scores are based upon numerous factors in your credit history, including the types of loans and their amounts. Changing one of the largest of these accounts can make a big impact on the formula used to calculate a credit score.

Companies use credit scores for many purposes, including determining whether or not to issue credit to you and on what terms. In addition, many companies check your credit score to help determine things like insurance rates, whether or not to rent to you, and even in deciding whether or not to hire you.

Although the exact formula for calculating a credit score is a secret, a generalized explanation of the process has been published by Fair Issac, the company that provides the most widely used credit scores. The main elements that make up a person's credit score are Payment History, Amounts Owed, Length of Credit History, New Credit and Types of Credit Used.

Some of the elements are unaffected by refinancing. Both mortgages count as the same "type" of credit, so there no substantial change there. Likewise, unless the mortgage itself was the longest lived credit account, this element is not changed either. Payment history is, likewise, not substantially affected. While the old account counts as a paid-in-full creditor, the new account counts as a never-paid creditor. The remaining elements can be very much affected by a refinance.

The credit score factors affected the most by a mortgage refinancing are Amounts Owed and New Credit. If the amount refinanced is equal to the original remaining mortgage amount, then the total amount owed overall does not change. However, there might be a small downward adjustment in your credit score because the new loan will now have a higher proportion of balance to loan amount. If you took out cash, resulting in a bigger loan, that would also cause your credit score to drop. Conversely, if you paid some of the principal with other funds, then the resulting smaller loan would cause the credit score to increase.

A new mortgage represents a very big adjustment to the New Credit factor. Even though there was a mortgage before, it was a different loan with a different creditor. This results in a small downward movement in credit score. However, this effect is typically short lived.

Although credit scores are based upon the current data reported in your credit report, many of the factors that go into calculating a credit score are calculated over a longer time period. For example, payment history is not just a function of whether or not accounts are current today, but rather what their status has been over several years. Likewise, formulas based on amounts owed and amounts remaining take into account more than a single day. As such, the effects on your credit score may occur over a period of time. Additionally, the negative effects of things like New Credit are lessened as the credit line ages.

Typically, the only real long-term effect of refinancing a mortgage comes from the amount of the new mortgage. Over time, the negative effects of having new credit fade away as a function of time. Other effects are eventually overcome by the positive effects of good payment history on both the new mortgage and other loans. The only lasting impact comes from either increasing or decreasing the total amount of debt by getting a larger or smaller loan.

How to Clear Settlements on a Credit Report

3:28 AM No comments

Settlements let you clear up old debts for less than the original account balance. Creditors usually accept less than the face value on old debts that were charged off after several months of non-payment. This activity does not automatically help your credit report, though. Other lenders can still see that the account was severely delinquent, even though it was eventually paid. You must clear settlements from your reports by negotiating special terms with the creditors before you send any money.

Instructions

Calculate a realistic amount that you can afford to pay as a settlement, based on your current income and financial responsibilities. Many creditors are willing to accept less than what you originally owed, according to Steve Bucci, Bankrate's Debt Adviser columnist. Make a lump sum offer and be prepared to negotiate. Do not commit to paying more than you can really afford.

Tell the creditor that you want its credit report entry totally wiped from your records when you make your payment. Bring up this stipulation before you send any money because that is when you have the most leverage. The creditor may deny being able to change your credit report, but Melanie Sullivan, a writer for the Military Money financial website, explains that it does have the ability to make a change or stop reporting a negative entry.

Ask the creditor to send you a written agreement prior to sending in your payment once you have reached a mutually acceptable deal. You cannot easily enforce an oral promise, but a written copy gives you leverage if the creditor does not follow through with altering its entry on your credit report.

Order your three credit reports from Experian, Equifax and TransUnion to ensure that the creditor follows through by clearing the account after your settlement. The Federal Trade Commission (FTC) website advises getting them from annualcreditreport.com because this site gives you free copies from all the bureaus once per year. Read each report to see if the relevant entry is deleted.

Dispute the settled account if it still appears on any of your credit reports after you fulfill your part of the bargain. The FTC website recommends doing this in writing. Enclose a copy of your letter from the creditor promising to get rid of the item and ask the credit bureaus to clear it from your records. The credit bureaus have 30 days to investigate your letter and remove validly disputed data.

What Is Included in a Credit Report?

7:15 AM No comments

A credit report is a document regarding you and your financial transactions as they apply to your ability to borrow and pay money back on time. Every time you seek a loan or credit card, the lender will get a copy of your credit report from Equifax, Experian or TransUnion.

Every credit report includes your full name, your current address and any past addresses. If your employer name is available, this is also noted.

Credit reports also include your Social Security number and birth date. When available, a telephone number is also noted.

Every time you apply for credit, it is noted as an inquiry on your credit report. The document shows how many times you have applied for credit.

Every credit card or loan company to which you owe money is reflected on your credit report. It also notes whether you make your payments on time or pay 30 days or more late, and it also shows the year each account was started.

If you have accounts in collections, such as old credit cards, medical bills and utility bills, this information is included in your credit report. It also notes the year the original debt was incurred.

Can a Company Take Information Off a Credit Report?

5:21 AM No comments

Credit card companies and other lenders can and sometimes do remove information from credit reports. Generally that happens when the company corrects negative information that is inaccurate. There are other instances as well.

The Fair Credit Reporting Act is a federal law governing how credit information is collected and distributed. Companies issuing credit and reporting to the nationwide credit bureaus must abide by the act.

The Fair Credit Reporting Act makes it unlawful for lenders or the nationwide credit bureaus to report inaccurate information about you. You can force a company--or the credit bureaus--to remove inaccurate information by writing a letter to the creditor or the credit bureau.

The Fair Credit Reporting Act also prohibits companies from reporting incomplete information about your credit. Companies can remove incomplete information from your report and substitute information that is more complete. For example, you may have defaulted on a credit card after you stopped making payments, forcing the creditor to close your account and accurately listing it on your credit report as "charged-off." Later you paid the full amount owed, but the account was never updated to show a "paid charge-off" status, which provides more complete information. The act gives you the right to force companies to provide complete information showing the most current, accurate status of your account.

How Long Can Bankruptcy Information Be Reported by a Consumer Reporting Agency?

3:00 PM No comments

Because a bankruptcy is a public record, by law it must appear on your credit report. The length of time your bankruptcy remains on your report is based primarily on the type of bankruptcy filed, rather than any subjective decision by the credit reporting agencies. The effect that your bankruptcy has on your overall credit may vary depending on the creditor reviewing your report and the length of time since you filed.

Of all chapters of bankruptcy, Chapter 7 stays on your credit report the longest. The reason is that Chapter 7 is a "total" bankruptcy, in which the court allows you to walk away from your debts. The Chapter 7 bankruptcy process lasts only three to six months on average, and you do not have to pay your creditors back any of your debt if you satisfy all requirements. As a result, Chapter 7 has the greatest negative effect on your credit scores, according to credit reporting agency Experian, and it stays on your credit report for 10 years.

Chapter 13 bankruptcy isn't as damaging to your credit rating as Chapter 7, mainly because of the structure of Chapter 13. Chapter 13 bankruptcy requires the development of a repayment plan to pay off as many debts as possible over a three-year or five-year period. Instead of not paying back any debts, as in Chapter 7, the court may require you to pay back all your debts in Chapter 13. The determination is based on the amount of your monthly disposable income. If you can afford to make payment in full, you must. Whether you pay back all or just some of your debt, the credit reporting agencies will show your Chapter 13 filing on your credit report for seven years, three years less than a Chapter 7 bankruptcy.

Banrkuptcy typically damages your credit score more than any other single item on a credit report. Its duration adds to its negative effect. Generally, delinquent accounts fall off your credit report before your bankruptcy, because late payments and other derogatory marks appear on a credit report for no more than seven years. Because most debtors make late payments before they file bankruptcy, even if you file Chapter 13 bankruptcy, these accounts generally fall off your report first. By the time your credit report no longer reflects your bankruptcy, it will be free from other types of derogatory information -- unless subsequent financial activity resulted in new negative information on your credit report.

The effect of a bankruptcy on your credit report can vary. If you need credit in the immediate aftermath of filing bankruptcy, you are unlikely to obtain it, because you represent a financial risk for lenders. As time goes by, the effect of your bankruptcy generally decreases, particularly if you show a stable credit history after your bankruptcy discharge. However, some lenders will be reluctant to extend you credit during the entire seven-year or 10-year period that your bankruptcy appears on your credit report.

Does Doing a Quitclaim Deed Hurt Your Credit Score?

1:31 PM No comments

A quitclaim deed transfers your interest in a property to someone. It is typically used by friends, relatives and spouses. It states that you agree to convey your interest in a property, if you have any interest, but it does not state that you, in fact, have an interest. Deeds are not reported to the credit bureaus, so they have no affect on your credit score. Computers calculate your score using a number of factors, including your credit history, the amount you owe on each card compared to your credit line, and the type of credit you use, such as revolving and installment credit, plus credit from finance companies. They also consider when each account was opened.

The three major credit-reporting agencies in the United States are Experian, TransUnion and Equifax. Not all creditors report to all three credit bureaus, so the information found in each of your files will be slightly different. The three bureaus use the same proprietary program to determine your FICO credit score. Since each agency will have slightly different information in your file, your credit score from each agency will usually be slightly different.

If you have a mortgage loan appearing on your credit report, it will have more of an effect on your credit than a credit card or an installment loan. If you transfer your interest in property with a quitclaim deed or any other type of deed, it records at your county recorder's office. It will not appear in your credit report, and it will not have any effect on your credit score.

Review your credit report on a regular basis. If you want to see your report, but you are not concerned about your credit score, you can obtain a free copy from each bureau once a year. If you rotate your request every four months, you can get an up-to-date copy of each report each year. Free reports are available at the AnnualCreditReport website. You can find out what your credit scores are from several commercial websites. Some of the sites will give you a free trial to review your scores, but if you do not cancel, you will have to pay for the service.

If you pay your accounts on time and limit the amount of credit you use to a maximum of 30 percent, you will usually maintain a good credit score. Of course, if you have a major credit event such as a bankruptcy or a foreclosure, you can expect your score to drop. Foreclosures remain on your credit report for seven years, and bankruptcies remain for 10 years. If you make your payments on time, your score can return to an acceptable level. Any negative credit reported will drop your credit score immediately, but it takes several years of good credit history to offset the negative.

Can I Remove Charge Offs From My Credit Report?

6:01 AM No comments

A charge-off on your credit report is one of the most detrimental entries you can receive (second only to bankruptcy). Just one negative entry on your credit report is enough to drop your credit score significantly. Rehabilitating these entries on your report is the first step to rebuilding your credit worthiness.

A charge-off occurs when an account is seriously past due. The account will be reported to the credit bureaus as unpaid when it is 30, 90, 120, 150 and 180 days past due. At 180 days past due, the entry on the credit report will be changed from "past due" to "charged-off." A charge-off declares the creditor of the account deems the account a loss. Charge-offs will remain on your credit report for seven years, and paying the account will not remove it from your credit report. However, a paid charged-off account entry is less detrimental to your credit report than a charge-off itself.

To help speed the process of the removal of a charge-off account on your credit report, it should be paid in full immediately. Before paying the account, send a letter of removal to the creditor of the account asking that they remove the entry from your credit report within 10 days of receiving payment for the balance of the account. Require the creditor to respond to your letter in writing, stating that it agrees to remove the entry from your credit once it receives payment. Once you have the company's written promise to remove the entry from your credit report, send payment for the account.

Check your credit report for duplicate entries of the same account from different collection companies. Debt collection companies have a habit of selling and reselling delinquent accounts. Every time your account switches hands, a new entry on your report may be created. If duplicate entries are found, dispute them as soon as possible with the credit bureaus to have them removed.

It may take some time to have charge-offs disappear from your credit report. While you are waiting for a resolution, continue paying all current accounts on time and paying down any loans or credit card debt you may have. Keeping your current accounts in good standing will help you rebuild your credit score and your credit worthiness in the future.

How to Get Rid of a Judgment in Oklahoma

1:34 PM No comments

If a court finds that you failed to pay a debt, it may award a judgment to your creditor. It is a legal confirmation that you owe the debt and provides the creditor with several avenues to pursue collection. If you live in Oklahoma and believe that you do not owe the money or that the judgment was issued in error, then you may file a legal motion to vacate in order to get rid of, or void, the judgment. If you provide adequate cause in the motion, the judge will provide you the opportunity to appear in an Oklahoma court and present your case. Be prepared to defend yourself on the merits of the claim.

Instructions

Prepare your argument. Numerous ways exist to present your case. A common argument is that the creditor never properly served the documents to you Another is that the debt was paid in full, which you can demonstrate with documentation. A further argument is that the statute of limitations expired. If the judgment was issued in a court outside Oklahoma, which is considered a foreign judgment, then the judgment expires after three years. If the judgment was issued by an Oklahoma court, making it a domestic judgment, then the judgment expires after five years unless it is renewed by the creditor.

File your motion. Inform the court clerk that you want to file a motion to vacate a judgment. The clerk will answer all your questions and even help complete the forms. Once the paperwork is in order, the court will notify you of the upcoming court date.

Notify the creditor. Determine whether or not the court will take care of notification or if you must hire your own process server. Serving the notice is essential if you hope to prevail in your case.

Appear in front of the judge. If the creditor fails to appear or is unable to disprove your claim, then the judge will rule in your favor. Present your case clearly and concisely. Present the facts, and avoid becoming emotional in front of the judge.

Notify the collector if the judgment is dismissed. The court will provide you with a document showing that the judgment was dismissed. Send copies to all collection agencies that contacted you and to the credit bureaus so they will remove any mention of the judgment from your credit report.

Can Your Credit Score Go Up After Bankruptcy?

1:22 AM No comments

Filing for bankruptcy can be damaging to your credit report, but in certain situations, it can actually improve your chances of getting credit again in the future. While the act of bankruptcy itself can lower your credit score, some people will actually notice an increase in their score after filing for bankruptcy protection.

For those with good credit scores, bankruptcy can be particularly damaging. According to MSN, filing for bankruptcy can lower your credit score by as much as 240 points if you have a credit score of 780 or higher. For those with a credit score of 680, it may only affect your credit score by as much as 150 points. This shows that if you have a lower credit score to begin with, it will do less damage.

Filing for bankruptcy may not affect some consumers because they already have negative items on their credit reports and are simply scraping by. These consumers already have credit problems because they have late payments and high credit account balances. Since these items can already damage your credit, bankruptcy is not likely to do much more additional damage. At that point, your score is already so low that a bankruptcy will not decrease your score much, if at all.

While some consumers notice a decrease in their credit score after filing for bankruptcy, other individuals notice an increase in their scores. This typically happens when large credit balances are wiped out. One of the important factors that is considered when calculating a credit score is the amount of debt that you have in relation to the available credit. If all of your debt is wiped out, this improves your financial ratios and can slightly bump up your score.

Over the long-term, filing for bankruptcy can also help your credit score. While it may lower your score temporarily or only result in a slight increase, the long-term implications may be more pronounced. If you have a large amount of debt that you would not be able to pay off on your own, filing for bankruptcy can give you a head start on rebuilding your credit. By using your credit sparingly and making on-time payments, your credit score can be rebuilt.

Does Overdraft From Savings Hurt Credit Score?

4:46 AM No comments

An overdraft on your checking or savings account can cause you credit problems, but in most cases it won't hurt your credit score. Credit scoring companies such as Fair Isaac -- the company that originated the FICO credit scoring system -- don't look at overdrafts when scoring you, but there are other situations in which overdrafts could play a role.

Your credit report includes a list of your credit accounts and details of each account; information from collection agencies; and public information such as bankruptcies, foreclosures and judgment liens filed against you. Thirty-five percent of your FICO credit score is your payment history; 30 percent is the amount you owe; 15 percent is the length of your credit history; 10 percent is based on the number of new credit accounts and credit inquiries; and 10 percent on the type of credit used, such as mortgage loans, car loans, credit-card bills and other forms.

Your credit score is based on information in your credit report, scored and ranked by credit agencies. Information about your overdrafts doesn't usually go into your credit report, so there's no way for them to affect your score. This assumes you pay off the overdraft in a reasonable time. If you leave the money unpaid, the bank could eventually turn the debt over to a collection agency. In that situation, the overdraft information will turn up on your credit report and could affect your score.

Even if your overdraft doesn't hurt your credit score, it can still hurt you. If you're applying for a loan, the lender may order a consumer report as well as a credit report, particularly if you're too young to have much of a credit history. A consumer report provides information about your banking history and any problems with your accounts. If your accounts are in good shape, this can help you land credit, but it could be a drawback if you have serious overdraft problems.

Even if your credit score survives intact, overdrafts from your checking or savings account will trigger penalty fees. If it happens on a regular basis, the fees -- often $20 or $40 -- could add up to a substantial financial blow. You can protect yourself by having the bank withdraw money from your savings account when you overdraw checking or by setting up a line of credit to cover both accounts. Covering checks from your savings account won't show up on your credit report, but the credit line will.

How to Repair Damaged Credit Quickly

7:46 AM No comments

Repairing credit can be difficult after a job loss, bankruptcy or other financial setback. Tenacity and conscious money management are needed to get back on track. The FICO score is affected by payment history, amount owed, payment history length and new credit applications. There is no magic formula for rebuilding a FICO score, but there are some proven methods that will help rebuild your score in about a year.

Instructions

Obtain your credit report for free by requesting it at AnnualCreditReport.com (see Resources section) or at 877-322-8228. Review the report, and notify the credit agency immediately of any errors.

Apply for a secured credit card to start building a credit history. Credit history determines 35 percent of the FICO score.

Bring any late payments current. Late payments diminish a score; being current raises it.

Make payments on time every month to build a solid credit history.

Pay down large balances first. Being maxed-out causes credit scores to slip. Debt-to-credit ratio is 30 percent of the FICO score.

How to Self-Repair Credit

9:05 AM 1 comment

Legitimate credit repair doesn't have to come in the form of a specialist who takes your money for their magical credit-fixing services. Instead, there are many things you can do to repair your own credit, and the process may be even faster than the formalities that business-repair centers and specialists must go through. Additionally, many of the ads you see for places that can clean up your credit instantly are actually scams that leave you even further in a pool of debt. Take the initiative to begin fixing your own credit and start living a more debt-free life.

Instructions

Request a copy of your credit report from each of the three major credit-reporting companies: Experian, Equifax and TransUnion. These agencies are required to provide you with a free copy of your report upon your request every 12 months. These agencies have a central "umbrella" website whereby you can fill out your request online, or you can print out a form from the website and mail it in so that the reports will be mailed to you. You can also call the central site free of charge to make your request that the reports be mailed to you.

Annual Credit Report Request Form

annualcreditreport.com

1-877-322-8228

Search through your credit report with a fine-tooth comb for errors. Unfortunately, mistakes and incorrect reporting are a rather common occurrence on credit reports and nobody knows the validity of a debt better than you. If you find errors, it is your sole responsibility to dispute them by contacting the company that reported the claim, as well as the credit reporting agency. In some instances, the company who made the mistake will fully cooperate and send a letter to the credit reporting agency so that the error can be removed. Other times, you need to obtain proof and submit a claim to the credit reporting agency as a means of dispute. Once your claim is investigated, the credit reporting agency is obligated to notify you in writing within three days of their decision.

Call the companies with whom you have outstanding valid debts. Many businesses will greatly reduce the amount you owe, particularly if it is an old debt. If you are unable to pay the amounts owed, even at a reduced fee, ask what other options are available. Payment arrangements can often be broken down into monthly or bi-weekly terms at a more affordable pace. Negotiate by asking that excessive interest be removed. Many people are able to repair their own credit by taking the same actions that other organizations charge excessive fees for. Communication with debtors, as well as the credit reporting agencies, is the single largest factor in repairing your credit.

What Happens to My Credit Score After a Foreclosure?

2:28 PM No comments

Sometimes foreclosure is inevitable. Unfortunately, the aftermath of a foreclosure affects more than just where you live--it also affects your credit score, and can do so for years to come.

A foreclosure on your credit report tells lenders you've defaulted on a loan, and are therefore a risky proposition when it comes to loans and credit. "Foreclosures are among the worst things that can happen to a person's credit scores; only bankruptcy is worse," says MSN Money's Sally Herigstad.

Your credit score will go down after a foreclosure; exactly how much it will drop depends on several factors, including your credit score before the foreclosure. The higher your credit score, the more drastic the comedown, but regardless, expect your credit score to drop between 85 and 160 points.

Although your credit score can rebound as long as you use credit wisely after a foreclosure, expect it to take at least seven years for your credit score to completely recover.

The Steps to Repair Your Credit Score

9:33 AM No comments

Fixing your credit score is a process and it takes time to build a good score. But despite the process, a good credit rating is worth the effort. People with high credit scores can receive favorable rates and terms on home loans or automobile loans, and a good rate may qualify you for lower rates on insurance policies.

Removing derogatory statements from your personal credit report can help repair your damaged credit score. Lenders often report negative information such as collection accounts or deficiency judgments after a repossession. Having this information on your report will bring down your score for up to seven years. On the other hand, addressing these negative items, and working with creditors to satisfy these debts can result in the removal of such negative items and a higher credit score.

Don't let your debts get out of hand. Consumer debt impacts credit scores, and fixing a damaged score involves managing debts and reducing your balances. Having a few debts will not hurt your credit score. However, if you continually max out your credit cards, exceed your credit limit or keep your credit card balances close to your credit limit, these actions will hurt your score. Creditors periodically update your credit report and list your balances on credit cards. The higher your balances, the lower your credit score.

Payment history is another big factor in credit scoring. In fact, of all the factors that influence your score, your payment history has the biggest influence---making up 35 percent of your score. Repairing your credit score starts with fixing the way you pay your bills. Late or skipped payments are extremely harmful. But you can repair damage by simply paying creditors on time.

Inquiries refer to credit checks performed by creditors when you apply for a credit card or loan. Applying for several credit cards back-to-back results in numerous inquiries. Creditors see numerous inquiries as a sign of desperation, and each inquiry reduces your credit score. If attempting to fix an already damaged credit score, hold off from applying for new lines of credit.

How Does Consumer Credit Counseling or Debt Effect Credit Rating?

5:01 AM No comments

Every payment you make or miss affects your credit score. Every account you open or close affects your credit score. Judgments, liens and bankruptcies all negatively impact your credit score and rating, but what about consumer credit counseling?

Having debt affects your credit rating. As long as the debt is paid on time and you maintain balances below a certain percentage of your net income, the effect is positive. When payments are late, not made at all, or the debt begins to creep over that percentage, the effect changes into a negative one. Your payments, total amount of debt to income, and types of debt all play into a calculation that determines creditworthiness.

Many consumers choose credit counseling over bankruptcy to resolve debt issues and protect their credit rating; however, credit counseling also has its impact on a credit rating. In a debt management plan, creditors often accept lower payments and a reduction in interest in exchange for regular payments. Because of this, consumers reported to be in a debt management plan will be viewed as less creditworthy to potential lenders in the future.

Creditors do not have to update credit reports to reflect that an account is "current" if a consumer enters into a debt management plan, thus late payments or charge-offs may continue to be reported on credit reports, negatively impacting scores and ratings.

Credit counseling agencies may not make payments to creditors in a timely fashion either, resulting in more negative information being reported.

Bankruptcy, while a last resort, offers consumers an option to discharge or pay debt and have laws surrounding what can be reported and what cannot, allowing the consumer to address debt concerns and have a finite date for when the negative items will be removed.

Does Having a Tax Debt Levied Against You Affect Your Credit Score?

1:08 AM No comments

The only way that the Internal Revenue Service files a tax lien or levy against you is if you are seriously delinquent on your taxes. If you're in a financial position where you can't afford to pay your taxes, you're probably already delinquent on other loans as well, such as credit cards, and your credit score has already fallen. Your score may decrease even more after an IRS lien or levy.

If you receive notice of an IRS lien or levy, it means the IRS is taking direct action to recoup some or all of the tax debt you owe. A lien is a claim against your personal property. If you ever attempt to sell or otherwise dispose of property with a lien against it, the IRS gets its share out of the proceeds before you receive anything. The IRS can't generally remove a lien until you satisfy your outstanding debt. An IRS levy is an even more direct assessment than a lien, as a levy authorizes the IRS to physically take money out of your bank accounts, wages and income tax returns. A levy may even allow the IRS to seize your property and sell it to pay your tax debt. All of these actions are part of the public record, meaning they can appear on your credit report.

Because a lien and a levy may both appear on your credit report, your score usually suffers if the IRS assesses either against you. IRS actions such as tax liens may have an even more negative effect on your credit report than other negative items, such as late payments, as an unpaid IRS lien remains on your credit report for a full 15 years. Negatives typically last only seven to 10 years. Even after you pay a tax lien, it remains on your credit report for an additional seven years.

You can avoid having to pay a number of debts by filing bankruptcy --- tax debts are one of the main exceptions to this rule. Except in the limited case of certain tax debts at least three years old, even if you receive a bankruptcy discharge, you have to pay back the IRS. If you manage to discharge your tax debts, the notation of your IRS lien or levy still remains in your credit report for an additional seven years. Coupled with your bankruptcy filing, the IRS levy continues to weigh down your credit score.

Although the IRS may be persistent in its pursuit of back taxes, like any creditor, its main goal is to get paid. If you can't afford to pay your taxes, you may be able to file an installment agreement with the IRS to pay your back taxes over time. One of the main advantages of an installment agreement is that it doesn't appear on your credit report, so it doesn't damage your credit score as an IRS levy would.

Can a Deleted Item Return on Your Credit Report?

12:33 AM No comments

Winning a dispute with the credit agencies or getting a lender to correct an error does not totally leave you in the clear. Deleted items can return to your credit report legally, sometimes because of human error. Ultimate responsibility for reinserted items goes to the credit agencies, who should warn you immediately when this happens.

A deleted item can return to your credit report -- known as a reinserted negative. This most likely happens when you dispute an item and win the argument; however, later that the credit bureaus realize the deleted item was in fact legitimate. When an agency reinserts a negative item, it must notify you within five days or else you can request a deletion of the reinserted item.

Whenever dealing with the credit bureaus you can consider the possibility of a lawsuit. Because the agencies automate most of the dispute process, there is a chance the bureaus might accidentally reinsert a deleted item even when you have ironclad proof that it does not belong to you. In one case, the bureaus mixed up the reports of two people with similar names multiple times and the plaintiff had to sue for each successful dispute.

If a disputed item reappears on your report, you probably do not need to threaten a lawsuit and quote the Fair Credit Reporting Act right away. Instead, reply to their notification of a reinserted negative item with a statement of why you feel this is an error and copies of evidence to prove your point. If the five-day limit has passed, you usually just need to quote the date the agency reinserted the item and how you never received notice of it.

Keep files on any interaction with a creditor or credit agency during the dispute process because if you go to court, you will need as much evidence as possible to win your case. Mail items with return receipt requested to guarantee that the bureau or creditor reads your dispute. Also, plan out future lending with the potential for the dispute process to take months. Some lenders may help you dispute a reinserted item if it gets in the way of your loan approval.

Consult an attorney should you come to the point of suing the credit bureaus. This article is not legal advice and an attorney can direct the proper way to pursue a case. Suing the credit bureaus can take years.

Why Does a Payday Loan Not Appear on My Credit File?

7:38 AM 1 comment

Payday loans are meant for people with bad credit, so payday loan lenders tend to avoid credit checks. This, however is double-edged sword -- you must use creditors that report to a bureau to help rebuild a poor credit history. If a payday loan does not appear on a credit file, it could be a good thing because payday lenders usually only report bad items.

If a payday loan lender does not perform a credit check, your payments will not show up on your credit report, according to LoanSafe.org. Some lenders that perform a credit check may report on-time payments to the credit bureaus, but they are not required to do so.

If you default on a payday loan, the lender could send it to a collections agency. The national credit bureaus frequently scan information on collections accounts, so it will eventually appear on your credit report as a negative item. Collections accounts are one of the worst items you can have on a credit report.

Even if a payday loan does not appear on a credit history, you can still use successful payment to gain credit. Showing lenders that you paid your payday loan on-time could prove to them that you can handle a loan. Also, the payday lender may increase your limit or reduce interest if you have a history of repaying your obligation.

You should negotiate with your lender about an installment plan or partial payment to avoid a delinquent account, suggests Bills.com. As of 2010, eight states reduce interest rates and force payment plans once payday loans reach a certain maturity date. If the lender won't deal or you do not live in a state that regulates payday loan repayment, save as much money as possible to pay off your loan or consider settling the account, because payday loans can have triple-digit annual percent rates.

What Is an Ideal Credit to Debt Ratio for Your Credit Report?

6:11 AM No comments

Fair Isaac Corporation maintains the formula that calculates the FICO score. This is a three-digit number ranging from 300 to 850 and is looked at as an indicator of the likelihood that you, as a borrower, will become 90 days or more past due on a loan within the next two years. The higher the score, the more likely that you will be current. Debt ratio is an important part of this score.

The FICO credit score is based on a number of factors. How many people have looked at your credit and how long you have had credit are two of the smaller influences. Two of the larger influences on your score are making on-time payments and the percentage of utilization or credit-to-debt ratio.

Most experts agree that using less than 30 percent of your available credit during any monthly billing cycle will help you to keep the highest possible FICO score. This means that if you have $10,000 in total credit lines on all of your credit card accounts, you should not have a balance of more than $3,000 at any time during the month. A less than 10-percent utilization ratio is even better.

The credit-to-debt ratio or utilization ratio accounts for a significant portion of your credit score. The FICO scoring model says that the credit-to-debt ratio makes up about 30 percent of your FICO score at any time. Paying down your balances to below 30 percent of the total available credit can have a large effect on your credit score.

Credit-to-debt ratios of 50 percent or more can significantly reduce your credit score. This effect gets worse as the utilization ratio rises. Banks view using a higher percentage of your available credit as a sign that you are not as financially stable, particularly if you have a few cards that carry balances almost at the credit limit.

Many people think that the credit-to-debt ratio in your credit report is based on your income. This is not true. Credit reporting agencies do not know your income and they do not consider income in their scoring models. Many lenders will ask for income and verification of your income when you apply for certain loans such as a mortgage. The bank then calculates your debt-to-income ratio based on the information you provide.

How Does a Deferred Educational Loan Affect Your Credit Score?

1:48 PM No comments

A credit score is a number, typically between 300 and 850, that lets lenders know at a glance how safe or risky a debtor is in using credit. Any time you take any action involving credit, this can affect your score. When you have a student loan and have that loan deferred, it will get listed on your credit report, but it typically does not lower your score.

Every consumer who has used, applied for or made credit payments has a credit report. These reports contain all your credit history, indicating such information as your history of payments, how many loans you have and what kinds of loans they are. Credit reporting companies take the information in your report and use it to calculate your credit score, a number that represents how good or bad you are at using credit. The scores themselves are meaningless and do nothing more than allow creditors to evaluate whether or not you are a good candidate for a loan.

Each company that calculates credit scores has its own method for doing so, though these companies typically assign various values to each factor in your credit report. For example, the FICO score, a commonly used credit score, is based on five factors, each making up a different percentage of your score. These factors and their percentages are payment history, 35 percent; amount owed, 30 percent; length of credit history, 15 percent; types of credit, 10 percent; and new credit, 10 percent, according to the My Fico website.

An educational loan deferment is when the lender allows the borrower to stop making payments for a set period. Student loan deferments are granted for a variety of reasons; if the student is currently in school or is out of school and experiencing economic hardship, a deferment can be granted, according to the Sallie Mae website. When your loan is in deferment, you are still obligated to pay back the money, but you do not have to make payments right then; thus, your credit score does not indicate that you have late payments. In general, this keeps your credit score steady and may even increase it the longer your report maintains no history of late payments.

In some situations, a borrower with an educational loan may opt to pay the interest during the deferment period. In this situation, the borrower continues to make payments even though the loan is in deferment and may end up lowering her score if she misses a payment. Student loans are like all other loans when it comes to credit scores, and missing a payment will always lower your score. Making timely payments, on the other hand, can result in your score going up.

What Defines a Good Credit Score?

9:22 PM No comments

A credit score is a very important number that affects many aspects of your life. It determines whether you can borrow money and the interest rate you will pay. A low score can make it impossible to buy a house or a car, get a credit card or sign a cell phone contract. It can even keep you from landing your dream job. A good credit score, on the other hand, can make your life easier.

A credit score is a three-digit number between 300 and 800. It tells lenders whether or not you are a safe bet. The lower the credit score, the more risky the customer. The score is a summary of the past seven years of your credit history. Lenders don't have time to read through the entire credit report. The score is useful shorthand that saves them having to decipher every line of the credit report.

Credit bureaus use complex, secret formulas to calculate your credit score. Each bureau uses a different formula to produce a slightly different score. They also have slightly different information to work with. Not every lender reports to all three bureaus. Still, if you have a low TransUnion score, it's unlikely that your Equifax and Experian scores will be significantly higher. All credit scores take into account your repayment history, your total debt, the length of your credit history and new credit applications, but they weight the information slightly differently.

Different credit bureaus have slightly different ranges for their credit scores. Most people's scores fall between 600 and 700. In general, a score of 700 and above is considered to be good. People with these scores are considered low-risk, therefore, they get better interest rates. A score below 600 indicates a high risk. If your score is below 500, you will have a hard time borrowing money, whether it's a mortgage, a credit card or a loan.

The easiest way to get your credit scores is directly from the credit bureaus. You can request the score by going to their websites. You will have to pay a fee each time. Alternatively, you can sign up for their credit monitoring services, which allow you to check your score any time. If you are in the process of applying for a mortgage, you can also get the score from the lender. The lender will be checking your score when deciding whether or not to lend you the money.

The easiest and quickest way to raise your credit score is to fix mistakes on your credit report. You can get a copy of the report free of charge from AnnualCreditReport.com. If you see a mistake on the report, such as a loan you don't recognize or a debt that you've paid off, file a dispute on the credit bureau's website. The bureau will investigate and correct any wrong information. Depending on the severity of the mistake, this can significantly raise your score. You can also raise your score by paying off some debt and making monthly repayments on time.

Monday, June 30, 2008

Description

Time Frame

Effects

Considerations

Solution

Balances Measured Against Credit Limits

Number of Outstanding Cards

Payment History

Sunday, June 29, 2008

Credit Reporting

Credit Rebuilding

Reporting Time

Prevention

Identification

Considerations

Improving Your Score

Tip

Significance

Function

Features

Effects

Benefits

Credit Reports

Credit Rejections

Outstanding Balances

What to Do If Rights are Violated?

Credit Utilization

Other Factors

Risk

Tip

Saturday, June 28, 2008

Credit Scoring and Student Loans

Student Loan Amounts and Credit Types

Student Loan Repayment History

Student Loan Management

Significance

Considerations

Effects

Types

Features

Thursday, June 26, 2008

Range

Features

Significance

Types

Prevention/Solution

Sunday, June 22, 2008

Instructions

Instructions

Instructions

Instructions

Saturday, June 21, 2008

Instructions

Friday, June 20, 2008

Function

Significance

How Credit Scores Are Calculated

Effects

Time Frame

Expert Insight

Instructions

Thursday, June 19, 2008

Basic Information

Identifying Information

Credit Inquiries

Creditor Information

Collections Information

Wednesday, June 18, 2008

Credit Reporting

Credit Disputes

Incomplete Information

Tuesday, June 17, 2008

Chapter 7 Bankruptcy

Chapter 13 Bankruptcy

Other Derogatory Marks

Effects

Credit Agencies

Deed Effect

Credit Report