February 2009 ~ Personal Finance and Money Management

Saturday, February 28, 2009

Advice on Identity Fraud

7:44 PM No comments

Identity fraud can happen to anyone; however, taking steps to protect your information can stop you from becoming a victim. The consequences of identity fraud include denials for credit, and it can take several months or years to clear your name and remove fraudulent information off your credit report.

Paying attention to your credit accounts and checking your report regularly helps you catch signs of identity fraud early. Every consumer can acquire free reports each year from Annual Credit Report. Take advantage of this free opportunity and keep a close eye on your personal file. Unfamiliar accounts and reporting errors can ruin your chances of qualifying for a mortgage or auto loan because negative information (regardless of legitimacy) lowers your credit score.

Signing up for credit report monitoring is another way to stay on top of your credit report. These services closely monitor your credit activity, and opening an account in your name raises red flags and the service automatically sends email alerts.

Credit card companies may detect identity fraud before you do because they monitor credit activity. Making a large purchase or using your credit card in another state may prompt a call from your credit card company. They'll verify the legitimacy of charges and investigate unknown activity. But sometimes, identity fraud falls through the cracks, which is why you need to carefully read account statements each month and regularly check your statements online.

Giving someone access to your personal information can contribute to identity theft. Thieves and con artists have a way of appearing trustworthy or honest. They may telephone your home or send emails requesting personal information such as credit card numbers or a Social Security number. Do not fall for their tricks. Regardless of how legitimate a request may seem, keep sensitive information private. This advice extends to online purchases. Legitimate online retailers will have a security logo or lock box on their website to ensure a safe transaction. Only purchase from websites that feature a secure logo.

You may prefer a clutter-free environment and choose to discard bank statements and credit card statements at the end of each month. While discarding unnecessary paperwork helps keep a clutter-free space, inappropriately discarding of sensitive information puts you at risk of identity fraud. Use a paper shredded to completely destroy private paperwork.

How to Build Credit If No One Will Give You a Chance

2:14 AM No comments

Credit is a important part of our consumer-driven society. In most cases, you need a positive credit history to finance a car or a house. It can also have an impact in other ways; many insurance companies use credit scores as a factor in determining premiums. In order to establish credit, you'll need to acquire credit. Most of the time, in order to acquire credit, you need some credit. This is a difficult situation for many people. There is no fail-safe way to establish credit overnight; however, there are a number of things you can do to establish credit when you have none.

Instructions

Save a large down payment. A large down payment (40 percent or more) will help you qualify for financing on purchases, such as cars or other merchandise. The loan becomes lower risk with a large upfront investment, which increases the chances of a lender making an exception. Establishing an installment account, such as an auto loan, will be a big step to building a credit profile.

Consider a secured credit card or a secured loan. Secured cards and loans won't help you if you need the extension of credit to improve your finances; however, it will establish an account and set you on the right path. With secured credit cards, you pay an upfront deposit to secure your account; the amount of the deposit becomes your credit limit. Secured loans work in the same manner; usually the money is placed in a specialty account, where it cannot be accessed until the loan is paid off.

Ask family or friends to help. Just because a creditor won't give you a chance, doesn't mean those close to you won't. If you have family members or friends with excellent credit, ask them to help you out by co-signing for you. The account will be reported to your credit report as a joint account; however, it will help you establish a credit history.

Ask the credit reporting agencies for help. Credit reporting agencies (Equifax, Experian and TransUnion) compile credit profiles for consumers. They receive their information from creditors, such as finance companies and credit card companies. While most creditors report account histories to the agencies, some do not. If you've ever had a positive account that went unreported, contact the credit reporting agencies and ask them to add the accounts for you. In most cases, they will, as long as the information is verifiable; however, a fee will probably be involved.

Can Unpaid Taxes Affect a Credit Score?

6:45 PM No comments

Your credit score provides lenders with a risk-based assessment tool on which to judge your applications for goods or services. Lenders, however, aren't the only ones that need access to your credit history. Insurance companies, utility providers and some employers also run credit checks on consumers. The lower your credit score, the more difficulty you will have finding financing for large purchases and obtaining new lines of credit. Derogatory entries on your credit report, such as unpaid tax debts, negatively impact your scores.

Unlike other creditors that report to the credit bureaus, government agencies do not hold a reporting contract allowing them to report tax debts directly to the bureaus. Instead, a government agency, such as the Internal Revenue Service, can file a lien against you for any tax debt you owe. If your tax debt is federal, the lien attaches to all your financial assets and real estate automatically. State laws vary regarding when and how state governments file tax liens.

Once a government agency files a tax lien against you, the court records the lien. The credit bureaus regularly scan online court records for new information. Thus, after the court officially records the lien, it will appear in the credit bureaus' searches and subsequently show up within your credit file as a derogatory public record.

The Fair Credit Reporting Act notes that most negative information entered on your credit report can remain there for no longer than seven years and 180 days. Unpaid tax debts are one of the few exceptions to this rule. A delinquent tax lien can linger on your credit record for up to 15 years. If you pay off the tax lien, however, the credit bureaus will delete the negative entry after seven years.

Although tax liens are always derogatory, there is no way to estimate how much damage a tax lien will do to your credit scores before it appears on your credit report. The credit bureaus calculate individual credit scores using a closely guarded formula that takes all your credit report's financial data into consideration. Because of this, a tax lien could devastate one consumer's scores while causing only minor damage to another's. As a general rule, the higher your credit scores are, the more derogatory entries hurt your scores.

Neglecting to pay off a tax debt doesn't guarantee that your credit will suffer. The government will notify you of an impending lien before filing it -- giving you the opportunity to pay off the debt in full or make payment arrangements with the state tax board or the IRS. After you pay off your tax debt, the government has no reason to file a lien against you, and your credit score will remain unaffected.

How to Dispute an Equifax Report

6:03 PM No comments

Many companies use credit reports provided by Equifax to approve people for loans or credit. Errors can be made on these reports as a result of incorrect reporting or fraud. These errors can damage a credit score and make obtaining a loan or credit difficult. Incorrect items on a credit report can be disputed online, by mail, or over the phone. A dispute is not guaranteed to be successful, but with proper proof most incorrect items can be removed.

Instructions

Navigate a web browser to the Equifax Online Dispute webpage. Fill in the requested information and click the submit button at the bottom of the page.

Supply a copy of any requested documentation by fax or direct mail.

Wait 30 to 45 days for the investigation process to take place. Equifax will report the results of the investigation and any changes through email.

Download and print the Equifax mail in dispute form (see Resources). Alternatively, writing a letter would suffice, as long as it includes the specific items to be disputed, the reason for dispute and any supporting documentation.

Mail the completed form or letter by certified mail to:

Equifax Information Services, LLC

P.O. Box 740256

Atlanta, GA 30374

Wait 30 days while the credit dispute investigation is conducted. Any changes to the report will be mailed after the investigation is completed.

Call Equifax at 800-846-5279. Credit agencies often update their phone numbers. Should the number be updated, the new number will appear on credit reports.

Provide the 10-digit report confirmation number located at the top of the credit report. Report the item and reason for dispute.

Mail or fax any requested documentation. Wait 30 to 45 days for the investigation of the disputed claims. Equifax will provide notice of any changes as a result of the investigation. Notice will be provided by email, mail, or phone, as requested in the dispute phone call.

Does a Short Sale Show on a Credit Report?

7:28 AM 1 comment

A homeowner who cannot pay his mortgage may opt for a short sale as a way to avoid foreclosure. A short sale occurs when the property is sold for less than the outstanding loan, and the mortgage company forgives the remaining debt. Homeowners may believe that a short sale will have less impact on their credit than a foreclosure, but in fact a short sale does turn up on your credit report and will lower your score.

When you complete a short sale, the mortgage company is almost certain to report this event to the credit bureaus. It will show up on your report, but it will not be labeled as "short sale." The wording varies, depending on what is reported, but it may be called a "redemption," a "pre-foreclosure redemption" or a "settlement."

The appearance of a short sale on your credit report will have a negative effect on your credit score. You could expect a foreclosure to lower your score anywhere between 85 and 160 points. The higher your score before the foreclosure, the bigger the hit. A short sale can affect your score by a very similar amount. According to Fair Isaac, the company that produces FICO scores, the range for a short sale is the same as that for a foreclosure.

If you have had a positive relationship with your lender, and have cooperated well over the short sale, it may be possible to ask the company to report the sale to the credit bureaus as "paid as agreed." This will mean the sale will have no negative effect on your credit. It's rare for a lender to agree to this, but it's worth asking.

If you have managed to minimize your delinquency ahead of the short sale, this will also help. Most people who go through a foreclosure have usually had at least 90 days of delinquency on their mortgage payments ahead of the foreclosure itself, so their credit scores have already gone down significantly. If you can swiftly arrange a short sale before your delinquency gets to that level, you will be able to minimize the damage to your credit score.

How Does Adding a Home Equity Line of Credit Affect Your FICO Score?

7:13 AM No comments

A home equity line of credit (HELOC) can impact your credit score. If you already have lines of credit such as credit cards, adding another line can affect your score. It is important to use the home equity line of credit properly to prevent a drop in your credit score.

A home equity line of credit can appear like a credit card on your credit report. If you spend the entire amount of the credit line, it looks like a large amount of utilized credit on your report. Credit utilization is the amount of used credit compared to the total amount of available credit. A high balance will significantly lower your credit score.

When used properly, the home equity line can improve your credit. Since home equity lines of credit appear like credit cards on a credit report, use it to your advantage. Obtain the highest amount of credit you are approved for to boost your total amount of available credit. Use only what you need and it will show a lower balance-to-limit ratio.

A home equity line of credit should only be taken if you can make the payment commitment. The line of credit is linked to your home. If you are unable to repay the line of credit, you are jeopardizing your credit and your home. Borrow only what you can comfortably afford.

How to Interpret an Experian Credit Score

5:31 PM No comments

A credit report details your financial history, including the balances on all your credit cards and loans and your tendency to pay balances in full when they're due. The Experian credit reporting agency compiles this information to produce a credit score between 300 and 850. The higher your score, the more likely it is that lenders will give you low interest rates when you borrow money.

Instructions

If your Experian credit score is below 550, lenders will likely consider your credit very poor. It is almost impossible to borrow money with credit scores in this range.

If your credit score is between 550 and 679, lenders will likely consider your credit acceptable. If they lend you money, it may be at one of their higher interest rates.

If your credit score is between 680 and 850, lenders will consider your credit to be very good. They will lend you money with low to moderate interest rates and agreeable terms.

Credit Scoring Tools & Techniques

3:54 PM No comments

Your credit scores can be an important component of your financial picture. It's an indicator of how worthy you are to potential lenders for credit accounts, and a higher score can save you a lot of money through lowered interest rates. Understanding how credit scores are calculated and learning about techniques and tools for improving your score may be the difference between debt and financial independence.

It used to be there was only one main credit score, your FICO score, designed by the Fair Isaac Corporation and based on the familiar 300 to 850 scale, with 800 being the best. These days, there are new scores and ranges offered by the major credit reporting bureaus, but your score is still based on the same criteria: (1) payment history, (2) amounts owed, (3) length of credit history, (4) new credit, and (5) types of credit used. Together, your payment history and your amounts owed total about 65 percent of your score, while the other criteria only make up about 10 percent to 15 percent each.

Because the most important criteria determining your credit score is your payment history, to improve your credit score, you need to make at least your minimum payments on all of your open lines of credit every month. If you are unable to make your minimum payments, you should call your lenders and ask them about adjusting payments to stay current.

The second major factor determining your credit score is amounts owed to your creditors. Generally, the less you owe your creditors, the higher your score will be. Make it a point to pay off as much as you can to your lenders each month to lower your debt load and raise your score.

The length of credit history is a third factor in your credit score. The longer your accounts have been open and active, the better the score. To keep your score high, avoid closing your oldest accounts, whether you use them or not.

New credit tends to adversely affect scores. A high proportion of new credit lines to old accounts, or too many recent inquiries on a report can cause a credit score to go down. Limit the number of new accounts you open at a time.

The two main types of credit accounts are revolving accounts, such as credit cards, and installment loans, such as car loans and mortgages. Credit scores typically improve with a balance of these two kinds of credit. Too many credit cards and no installment loans can adversely affect your score.

A number of companies out there are claiming to improve your credit score with their monitoring services. For some people, especially those who have experienced identity theft or other kinds of fraud appearing on their credit reports, these services might be appropriate, but for the majority of consumers, a free yearly credit report is the only tool necessary for monitoring credit and improving scores. These can be obtained by phone, by mail or online from each of the three major credit reporting bureaus, Equifax, Experian and TransUnion.

A credit report will give you a picture of your credit, and give you the chance to dispute any incorrect entries on your report. Fixing these errors may raise your score. In addition, you have the option to add personal notes to your credit report, which lenders may take into consideration when offering you credit.

Pre-Approval Process & Its Effect on Credit Score

3:05 PM No comments

Initial credit preapproval has no effect on your credit score because you did not initiate the process. A bank or other lender bought your information from the credit bureaus and extended the offer based on its prescreening. You do cause some credit score impact if you choose to accept the offer because the lender will then do a credit check on you.

When a lender orders a list of consumers meeting certain criteria it determines which people qualify for preapproval, Fox Business writer Jeremy Simon explains. The TransUnion, Equifax and Experian credit bureaus sell such lists so credit providers can target individuals. Preapproval is no guarantee of acceptance, but you are likely to get the credit card or loan as long as your financial situation did not change significantly in a negative way, such as a bankruptcy or bad debt lawsuit, within the past month or two.

Credit scorers draw data from your credit reports, but they do not consider everything. The initial preapproval process generates a soft inquiry, which does not count in scoring formulas because it does not represent an actual credit application. You change that if you redeem the offer, which gives the lender permission to do a hard inquiry. This more-detailed check of your credit report causes a dip in your score because you are actually seeking a new account.

Accepted preapproved credit offers have minimal impact on your credit score unless you recently made a flurry of applications for other accounts. Numerous hard inquiries within a short time are bad for your score, the MyFICO scoring website warns, because more than six boost your likelihood of filing bankruptcy by eight times. A single inquiry for redeeming preapproved offers drops your score by no more than five points. You can safely accept preapproved credit if you were recently rate-shopping for a car, home or other big-ticket item, even if you filled out several applications, because scorers consider them all as a single inquiry.

Preapproved credit can devastate your credit score if it leads to identity theft. Criminals fish discarded preapprovals out of trash cans and steal them from mailboxes. They get credit cards or loan checks in your name, charge up the card or keep the money and never make a payment. Your credit reports reflect the bad debt until you realize that you were victimized and report the problem. You can stop preapproved-credit offers through OptoutPrescreen.com, the Federal Trade Commission advises, which eliminates the potential theft problem.

Can a Private Mortgage Go on a Credit Score?

8:04 AM No comments

You sometimes can get a mortgage at a discounted rate if you obtain a private mortgage, but this arrangement rarely improves your credit score. A private mortgage involves a loan agreement between two parties, such as if a parent were to offer a loan contract to a child. This is unlike a traditional mortgage, which originates from a bank or some other financial institution. However, subsequent potential lenders may not accept the payment history on a private mortgage as a legitimate predictor of the borrower's behavior.

The major credit bureaus -- TransUnion, Equifax and Experian -- cannot report most private mortgages on your credit history. Your credit score is calculated based on data in your credit history, so a private mortgage would have to appear on your credit report to improve your credit rating. The bureaus only report data they can verify, and private mortgages typically are not reported by the bureaus because the parties in a private mortgage could abuse the system with phony accounts. If you had a private mortgage with a verified payment history, such as canceled checks and a notarized contract, it is possible one of the bureaus may report it, but it's unlikely. If you obtain a loan from a real estate broker, he might have an account with the major bureaus if he has enough accounts, in which case he could report loan payment data and, thus, affect your credit score.

Alternative credit bureaus would likely report the payment history on your private mortgage if you furnished evidence of monthly payments. Unlike the traditional bureaus, alternative bureaus accept any account it can verify if you agree to pay a monthly fee for the administrative costs of verifying an account to the agency. Creditors may at least consider an alternative payment history if you do not have a traditional credit record. However, the information on the major bureaus' credit reports carry much more weight.

The lender of the private mortgage might be able to report it to the bureaus using a credit reporting service. This type of company helps businesses establish an account with the bureaus and sometimes list debts on behalf of their clients. In general, a credit reporting service only reports delinquent debts, so it probably would not boost your score as a borrower.

You and the lender should consult a real estate broker that specializes in private mortgages, which are usually called hard-money loans or trust deeds. For instance, most hard-money lenders charge a high interest rate, and some states, such as Pennsylvania and Ohio, have laws that make the foreclosure process lengthy and expensive, so lenders are hesitant to approve a private mortgage unless you already have good credit. If you make an agreement between you and your friend, consult an attorney, because the lender must charge at least the government lender rate for the contract to be valid.

Will My Credit Score Go Down From Declaring Bankruptcy?

6:44 AM No comments

A FICO credit score ranges from a low of 300 to a high of 850. The higher the credit score, the better. A high credit score can qualify you for a lower interest rate on loans and zero percent interest on credit cards. Negative items on a credit report, including bankruptcy, can impact that score and your financial health.

A bankruptcy is a court proceeding that allows consumers and businesses to either repay their debts or eliminate them completely. Five kinds of bankruptcy are the most common. Chapter 7, referred to as liquidation, occurs when a consumer is legally relieved of all responsibility for his debts and must surrender nonexempt property as a result. In Chapter 13 bankruptcy, a consumer restructures his debt and agrees to repay the creditor over a period of time set by the courts. Chapter 11 is used by wealthy individuals or corporations to reorganize debt and remain in business. Chapter 9 is similar to Chapter 11 except it's for municipalities only. Chapter 12 is filed by farmers and fisherman to reorganize debt and makes payments over a three-year period.

According to MyFico, 35 percent of your FICO score reflects how well you pay your bills. This percentage takes into account late payment of debts but also other derogatory payment occurrences, such as judgments, charge-offs, tax liens and bankruptcy. A bankruptcy indicates a failure to honor a number of financial debt obligations and will lower your credit score by approximately 160 to 220 points, according to the Electronic Privacy Information Center. How much a score drops depends upon the other factors present on the report.

Credit report rights are governed by the Fair Credit Reporting Act (FCRA). Under the FCRA, negative accounts can only remain on a credit report for up to seven years. There are exceptions, however, and bankruptcy is one of them. When it comes to bankruptcy, discharged Chapter 12 and Chapter 13 fall under the standard reporting time frame of seven years; however, Chapter 7, Chapter 11 and non-discharged Chapters 12 and 13 bankruptcies can remain on the report for up to 10 years.

Although the FCRA limits the amount of time a bankruptcy can appear on a report, that doesn't mean the consumer is therefore free of the bankruptcy's effects on her financial life. According to financial expert Dave Ramsey, a bankruptcy can negatively impact you for a lifetime, not just seven years. Loan applications often ask an applicant if he has filed for bankrutpcy at any point in her life, not just in recent years. Some employment applications ask this question as well. If you've filed bankruptcy, this may prevent a business or employer from doing business with you or hiring you for a position. If you lie about it to receive a loan, this could be considered fraud.

A bankruptcy can lead to a poor credit score. There is a market of subprime lenders that provide loans and credit cards to consumers with damaged credit. These credit products often come with terms that are less favorable than those offered by traditional lenders. Subprime credit may have a higher interest rate, which means you pay more for that extension of credit over time. Also, beware of companies that offer to repair your credit. According to the Federal Trade Commission, this could be a scam. Under the FCRA, credit bureaus are not required to remove accurate data from a credit report, even if that information is negative.

What Is a Good Beacon Score?

11:13 PM No comments

Beacon scores were the name that Equifax used when it issued credit scores using the older Fair Isaac Corporation scoring algorithm. However, when the scoring model was changed to generate NextGen FICO Scores, Equifax began to call its scores Pinnacle scores. Pinnacle scores are calculated the same way FICO scores are.

Scores range from 300 to 850, with the highest scores being the best. About 13 percent of the population has a credit score of 800 or more, while about 14 percent have a credit score below 600. The median score is in the low 700s.

The most common use for Pinnacle scores is for lenders to determine whether or not to offer a loan. If your Pinnacle score is below 500, it will be virtually impossible to get a loan. Even those with scores below 600 will have difficulty getting a loan. The best interest rates will be given for people who have scores above 760, according to Bankrate.com.

The Pinnacle score uses information found in your credit report to calculate your credit score. The exact formula is not revealed but there are five factors that make up the score. The first factor, payment history, makes up 35 percent of this score. This section takes into account how well you've paid your debts and whether or not you have defaulted on any money you owe. The second factor, your balances owed, accounts for 30 percent of your score. This looks at how much money you owe and how much of your credit lines you are using. The third factor, the length of your credit history, determines 15 percent of your credit score. The fourth factor, your mix of credit, looks at the different types of credit you've used and makes up 10 percent of your score. The fifth component, how much credit you've recently applied for, also accounts for 10 percent of your score.

The best way to improve your credit score is to pay all of your debts on time since your payment history accounts for 35 percent of your score. If you can't pay your creditors as you have agreed, contact them to ask for an adjustment to your payment schedule. Most creditors will work with you within reason because if they have to use a collection agency they will have to pay a fee and they will lose more money than if they make a small adjustment to your payment schedule. As soon as you are able, get all of your accounts current, even if that means you make only the minimum payment on each one.

If you find that there are errors in your credit report, write a letter to the credit bureau explaining the error. Make a copy of your credit report and circle any information you believe is incorrect and include copies of any documentation you have to support your claim. Credit bureaus must start an investigation of your claim within 30 days of receiving it so you will usually know within two months whether your claim has been upheld or denied.

Lenders Taking Low Credit Scores

8:13 PM No comments

The three major credit bureaus use the FICO algorithm, which takes into account payment history, types of credit, debt owed and recency of credit, to determine a person's credit score. Having a good FICO score -- 640 or above according to The Credit Scoring Site -- can be crucial in gaining access to loan financing, including car and mortgage loans. Additionally, individuals with scores below 640 often pay higher interest rates. However, a few loan options are available to individuals with less-than-perfect credit.

Independent auto dealerships, often called "buy-here, pay here" dealers, typically extend auto loans to individuals with less-than-perfect to bad FICO scores and credit histories. These dealerships, which typically sell low-price used cars, process their loans "in house," avoiding third parties such as banks and credit unions, allowing them to get around the typical credit score requirements. However, these dealers ask extensive questions on an individual's financial situation and will not allow a person to purchase a vehicle he cannot afford. Additionally, these dealers often require a substantial down payment before issuing a loan to an individual.

The Federal Housing Administration, a federal agency designed to increase homeownership and improve housing conditions across the United States, issues FHA loans to borrowers with less-than-perfect credit. Unlike many low-credit-score lending options, FHA loans feature relatively low interest rates and 3.5 percent down payment amounts. However, as of January 2010, a borrower must have a credit score of at least 580 -- just below the "good" range -- to qualify for a 3.5 percent down payment FHA loan, although those with lower credit scores can still qualify for FHA mortgages with higher down payments.

Payday loan organizations issue cash advance loans to individuals with full- or part-time employment. These loans typically include a term of two weeks or until an individual's next payday. These companies do not usually run credit checks, meaning individuals with low credit scores can obtain financing. However, payday loans often feature very high interest rates, sometimes as high as 400 percent APR, according to a January 2011 article in The Motley Fool, an online personal finance magazine.

Pawn brokers allow individuals to obtain loan financing by offering up a piece of valuable property. Since the property secures the loan, pawn brokers rarely perform credit checks, allowing people with low credit scores to obtain pawn financing. However, pawn loans often include high interest rates and finance charges. Additionally, borrowers who fail to pay back pawn loans lose their pawned property, although failing to pay a pawn loan will not have adverse credit effects or lead to collection action.

How to Check a Credit Report in India

1:57 PM No comments

Your credit report in India is important. It is responsible for opening or closing lines of credit and used by all lenders when assessing your suitability for credit. It is important to check your credit report in India regularly. Your credit report enables you to assess areas where improvements could be made and to get errors, which could be negatively affecting your credit score, rectified. It is only recently that checking a credit report in India has become possible.

Instructions

Apply to check a credit report in India in writing. It is the only way. The report is only available from Credit Information Bureau (India) Limited. Click the link in the Resources section. Click "Download Request Form." A new window will open. Print the request form.

Complete the request form accurately. Several forms of identification are required to check a credit report in India. They must be originals. You must have a passport, voters' identification paper or a Permanent Account Number (PAN). This is a plastic card, similar in size to a credit card, and has a 10 alphanumeric digits embossed on it. The card is issued by the tax department of India. Additionally you must include originals of your latest electricity, telephone or bank statement.

Get a demand draft application from your bank to check your credit report. A demand draft is the most common way that Indian banks use to transfer money. Complete the application form and purchase a demand draft for Rs 142 (this includes all taxes, fees and return mail charges as of 2010). The demand draft must be made payable to the Credit Information Bureau (India) Limited, payable in Mumbai. It is nonrefundable.

Place the original proof of identity documents, demand draft and request form in one envelope. There are two ways to mail it: Speed Post to P.O. Box 17, Millennium Business Park, Navi Mumbai-400 710 or Courier to Credit Information Bureau (India) Limited, Hoechst House, 6th Floor, 193 Backley Reclamation, Nariman Point, Mumbai-400 021. Your identity will be verified and your report mailed to you.

What Does a Credit Report Listing a Grid Code G Mean?

12:21 PM No comments

Understanding your credit report is an important part of managing your personal finances. Credit reports often appear cryptic, but the various alphanumeric codes indicate important parts of your financial status -- including some, like code G or "collections," that could have serious repercussions if neglected.

Code G, found in the "consumer payment history" section of an Experian credit report, means that at least one account is in collections. This code is applied if the loan -- possibly a credit card, car loan or line of credit -- is so far past due the lender felt it necessary to turn the file over to a collection agency.

Consumer payment histories remain on a credit report for two years. If you know your accounts are all paid up and the code G is there in error, call your lender and your credit bureau immediately.

Your credit rating will drop significantly if an active collection notice remains on your report.

Americans are entitled to receive a free credit report from their credit bureau once a year. Equifax, Experian and TransUnion, the three main American bureaus, jointly provide this service through annualcreditreport.com. Canadians have a similar entitlement, if they ask their credit bureau in writing.

Checking your own credit report generally doesn't affect your rating or score. Frequent inquiries by lenders can give the impression you are hunting for credit and may be noted on your report.

How to Get Closed Accounts Removed From a Credit Report

12:40 PM No comments

Protecting and improving your credit score is one of the soundest financial courses of action you can undertake---but it requires vigilance on your part. Often, credit agencies don't update information on your credit report quickly or accurately, and it is up to you to ensure that things like closed accounts are removed from your report. It's not difficult to get closed accounts removed from your credit reports, but the process can be confusing. This step-by-step tutorial will walk you through removing closed accounts.

Instructions

Request copies of your credit report from the three major credit agencies: Equifax, TransUnion and Experian. To request copies, you can use AnnualCreditReport.com or contact the agencies directly (see resources below). When requesting reports, you'll be asked to provide some personal information for security reasons---this can include your date of birth, your social security number or your most recent two to three home addresses.

Sit down with the three credit reports and save the form that was enclosed by each to file disputes (if there are no dispute forms, don't worry---we can create letters in Step 4).

Read each credit report carefully. Look not only for information on your closed accounts, but any other information that may be out-of-date or incorrect. Circle or highlight anything that that is incorrect. To be removed, closed accounts must be older than 7 years.

Report any closed accounts (or other errors) on each company's dispute forms that came in your report. If you did not receive forms, you can draft a letter instead. Be sure to include your name, address, social security number and date of birth, as well as much information about the closed account as you have available.

Submit the forms or letters either electronically or by mail. Use the most current address for the agency, as provided on your credit report.

Wait for a decision. Each credit agency has 30 days to investigate each dispute and make a decision. You will be informed by mail or email, depending on the agency.

How to Raise Your Credit Score Without Credit Cards

11:27 AM No comments

It is generally known that if you use credit cards wisely, you can help raise your credit score. However, if you have no credit cards, other methods can be just as effective. You have several other options at your disposal to raise your score.

Instructions

Pay your bills on time. Your bill paying history impacts your credit score; thus, paying late or having a debt that goes to a collection agency will negatively affect your score. Timely payments establish a proven track record of managing debt, and can help to raise your credit score. If you are having trouble paying your bills, contact the company you owe and try to negotiate a payment plan.

Make sure your credit report is accurate. Under the Fair Credit Reporting Act, you are entitled to a free annual copy of your credit report (see Resources). Inaccurate information on your credit report may be affecting your credit score. If you do find a mistake on your report, send your dispute in writing to the credit bureau reporting the error. Make sure to include any documentation necessary to back up your claim, such as payment receipts and more.

Pay off existing debts. If you have any existing loans or balances on credit accounts, focus on reducing the amount you owe. High outstanding debts negatively affect your credit score. Reducing your debts will help raise your credit score over time.

Apply for a share secured loan through a bank or credit union or at least consider the possibility. The amount of the loan is based on the total amount of money you have in your designated share account. Essentially, you are backing up your own loan using your own money as collateral. Share secured loans were basically designed as a way for people to establish credit without using credit cards; therefore, they can be a great way to raise your credit score. Make sure the credit union or bank is reporting the loan to the major credit bureaus so it is included in your credit history.

Look into other forms of loans you can acquire. These may include peer-to-peer lending groups, groups of investors that loan money, usually at a higher interest rate than regular banks and lending institutions. The loan requirements are often not as strict and can be a good alternative if you have little to no credit. Again, make sure the loan is being reported to the major credit bureaus.

Keep in mind that the purpose of the loan is not to get in over your head with debt but to establish a record of repaying debt, which will help raise your credit score. Make sure you can comfortably pay off any loans within a reasonable amount of time.

Cosign someone else's loan. This makes you responsible for the person's loan; thus, the payments will be reflected in your credit history. However, this can be risky if the debt is not paid or payments are missed. Only use this option if you are sure the borrower can safely repay and that you can repay yourself if the borrower defaults. Be sure you can verify that timely payments are being made.

How to Remove Collection Accounts From Credit Report

6:54 PM No comments

Every negative item that you are able to remove from your credit reports will raise your credit score. As your credit score goes up, you will be eligible for loans with better interest rates. Collection accounts that are older than seven years will usually be removed from your credit reports whether you take action to remove them or not. Recent collection accounts will remain on your credit report for up to seven years, so it will benefit you to take the time to challenge the account and have it removed as fast as possible.

Instructions

Payment arrangements stop your lenders from reporting new negative information to the credit bureaus.

Call your lender and make payment arrangements. Recent collection accounts cannot be permanently removed from your credit reports until they have been paid.

It is always best to get financial agreements in writing.

Request that lenders report positive payment to the credit bureaus, stop reporting the negative information, or agree not to validate the negative information when you challenge it. Get the agreement in writing.

The three credit bureaus are TransUnion, Equifax and Experian.

Visit annualcreditreport.com and get a copy of your credit reports. Make sure you get one credit report from each of the three credit bureaus.

Your credit reports are your responsibility.

Use the dispute system at each of the credit bureaus to dispute the collection accounts. It will take the credit bureaus 30 to 45 days to confirm information. If the credit bureaus cannot validate the debt, then the collection account will be removed.

There are a many valid reasons to dispute collection accounts.

Continue making payments with your lenders and re-challenge the collection account if the credit bureaus verify it. You may need to challenge collection accounts multiple times before you are able to have them removed. The older a collection account is, the easier it is to have it removed.

How to Get Your Credit Score by US Mail

9:28 PM No comments

Under the Fair and Accurate Transactions Act, U.S. consumers are entitled to one free credit report per year from each of the three credit reporting companies. TransUnion, Experian and Equifax are the only three authorized credit reporting companies. While the free credit reports are available online, it is possible to receive them via U.S. mail.

Instructions

Visit AnnualCreditReport.com. This is the only website that's authorized by the three credit reporting companies to provide this service. Click on the "request your report through the mail" link.

Download the mail request form. It opens in Adobe Reader. Print off the document.

Complete the form. Provide your Social Security number, date of birth and current mailing address. If you've been at your current address for less than two years, provide your previous mailing address as well. Indicate which company's credit reports you want to receive. You can choose to have only the last four numbers of your Social Security number shown on the report.

Mail the form in a No. 10 envelope to the address provided at the top of the sheet. The process takes about 15 days, after which the reports are sent out by U.S. mail.

Removal of Hard Credit Inquiries by a Collection Agency

5:02 AM No comments

Hard credit inquiries appear at the bottom of your credit report and are added each time you apply for credit. For example, if you apply for a mortgage, auto loan or credit card, the hard inquiry will appear after the lender checks your credit. Debt collectors do not extend credit and should not be making hard inquiries against your credit. Illinois Attorney General Lisa Madigan reported on her website in July 2010 that everyone has the right to to have unauthorized hard credit inquiries removed.

Instructions

Get a copy of your Experian credit report. According to Madigan, of the three nationwide credit bureaus, only Experian lists the addresses of companies making hard credit inquiries. The only way to have the inquiries removed is to write the companies directly. The credit bureau will not remove the inquiries unless directed by the company that initiated the inquiry. Get a copy of your Experian report for free from the website Annual Credit Report (see Resources). The credit bureaus all offer free credit reports through the site as required by the Fair Credit Reporting Act.

Find the hard inquiries that you wish to dispute. Also look on the report for the names and addresses of the companies that initiated the inquiries. Write letters to each of the companies. Tell the companies that you did not authorize the credit inquiry and that such an inquiry without your permission is a violation of the Fair Credit Reporting Act, a federal law. Tell the company to send you proof that you authorized the inquiry, or have the inquiry removed from all three of your credit reports within 30 days. Ask the companies to notify you that the inquiries have been removed if they cannot provide documentation that you authorized the inquiry.

Send a second request after 30 days if the company does not respond to your initial request. If that doesn't work, have an attorney send a letter after 60 days.

How Long Do Soft Credit Inquiries Stay on Credit Reports?

8:45 PM No comments

As you pull a copy of your credit report, you may be alarmed by the number of credit inquiries there. Credit inquiries appear on a credit report whenever a potential lender requests a copy of the report, usually to determine if the lender should extend credit to the individual. Inquires can hurt your credit score, but only hard inquiries do. For that reason, it is important to understand the differences between these inquiries.

A hard credit inquiry occurs when you request credit from a lender and the lender then requests a copy of the credit report. A soft credit inquiry occurs when the lender checks the report for other reasons. In many instances, soft credit inquires occur to pre-approve a consumer for a line of credit. Another reason for these occurs when you request a copy of your credit report.

Hard credit inquires remain on a credit report for two years from the occurrence of the inquiry. Soft inquiries stay on a credit report for at least a year.

While hard credit inquiries do lower a credit score, especially if there are numerous entries, soft credit inquiries do not. Because you did not initiate these credit inquiries from lenders or obtain them for your own use, these inquiries have no bearing on your credit score.

Although it is possible to dispute inquiries through the credit bureaus, it is difficult to prove the action did not take place. It is difficult to disprove your request for credit as well. In situations where you are unsure where the inquiry came from, contact the lender listed on the report to learn more. The lender's name and contact information is on the credit report.

You can take steps to limit how many soft inquiries occur on your credit report. To do this, contact each of the three credit bureaus by mail or by visiting OptOutPreScreen.com. This service will allow you to opt out of all credit and insurance pre-approval offers at one time.

How Does Going Bankrupt Affect Your Credit?

9:16 AM No comments

The word "bankruptcy" carries a stigma, but this is not always a fair perception. Many people file for bankruptcy because of unavoidable problems like job loss, divorce or serious medical problems. Sometimes it is the only way to handle a heavy debt load, but it takes a toll on a person's credit score.

Consumers normally file one of two different bankruptcy types. Chapter 13 is a debt reorganization that lets people keep certain things like their houses and cars. They make a payment plan that spreads the debt over three to five years. Chapter 7 gives consumers a clean slate by wiping away most of their debt, although it does not get rid of child support, alimony or student loans. Both of these court actions look bad to future creditors.

Bankruptcy appears on a person's credit records with the TransUnion, Experian and Equifax credit-reporting bureaus for seven to ten years. Late payments, collection accounts and other unpaid debt show up for seven years. Creditors take these things into account when considering loan and credit card applications. Bankruptcy and delinquencies carry less weight as time goes on if the person's current credit history is good.

Bankruptcy is always a very negative item on a credit report because creditors see it as a sign of bad financial management. FICO, the largest credit score company, says its impact on each person's score is different, depending on prior history. People who previously had good credit experience the worst impact, while those with low initial scores have only a modest drop. The number of accounts included in the bankruptcy also influences the credit score impact. People with a recent bankruptcy often have difficulty getting new credit or pay higher interest rates to offset the perceived risk.

Even though bankruptcy hurts a person's credit score, most people who have to file Chapter 7 or 13 actions already have bad credit, according to Southern Arizona Legal Aid. Bankruptcy adds to those negatives but gives them a chance to rebuild their score with a manageable repayment plan or erasure of their former debt, so it is often the best long-term option.

Recovery from bankruptcy's effects can begin as soon as the legal process is complete. Liz Pulliam Weston, an MSN Money columnist, advises reviewing your credit reports to make sure accounts discharged in the bankruptcy are not showing up as open and delinquent. AnnualCreditReport.com provides free yearly reports with no purchase obligation.

Pulliam Weston recommends starting to rebuild a good record with a secured credit card. Anyone can get this type of card because it must be guaranteed with a monetary deposit. The issuer will usually convert it to a regular credit card after 12 to 18 months of regular payments. Many lenders will give an auto loan to consumers after bankruptcy because the vehicle secures it, but they charge very high interest. The loan can be refinanced later.

How to Have a Bad Debt Charge Off Removed From Your Credit Report

8:32 AM 1 comment

If you have a bad debt charge off reported on your credit report, you may have to wait it out. First, you can try to take action though. If you believe the report is being made in error, you can contact the credit bureaus. The major credit bureaus all have a process you can use to challenge erroneous reporting on your credit report. This process removes the offending reports and can restore your credit rating. If you believe your debt is valid, you can try to negotiate directly with your creditor to have the charge off removed.

Instructions

Contact the credit bureaus. Experian, Transunion and Equifax all maintain a credit report about your credit worthiness. You must obtain your report from these institutions.

Obtain a copy of your credit report by calling 1-877-322-8228, visiting the website set up for offering your credit report or sending an annual credit report request form to: Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281.

Review your credit report to find any erroneous information. While a charge-off is one item that you're looking for, there may be others that you can dispute too.

File an official dispute either through the website of the credit reporting bureau or write a written dispute and mail it to the credit bureau.

Gather all of your financial data and the amount of money you owe to the creditor. It's best to have all of the information sitting in front of you so that you can make a negotiation over the phone.

Contact the original creditor that charged off your debt. If the debt is charged off, do not deal with the collection agency as the original creditor is responsible for reporting the charge-off.

Negotiate a payment to the creditor to repay at least a portion of the debt in exchange for a removal of the charge-off. The more money you offer the creditor, the more likely you are to have the creditor work with you. However, there is no guarantee that the creditor will remove the charge-off.

How Does the Credit Bureau Know My Income to Compare to My Debt?

5:33 AM No comments

Credit reports contain information pertaining to the credit utilization of consumers. Credit or FICO scores are not affected by debt-to-income ratios. Credit bureaus gather consumer information and keep records of employment history, but not wages. Lenders gather income information directly from consumers on credit applications and compare it with credit reports to determine debt-to-income ratios.

Equifax began gathering consumer information in 1913. TransUnion became the second major credit reporting agency in 1968 and Experian became the third in 1996. Fair Isaac Company and Equifax established credit or FICO scores in 1989 to rate borrowers' creditworthiness. In the 1990s Experian and TransUnion began using the FICO scoring system. In 2000, Experian started its own scoring system and in 2003 it made credit reports available to consumers. FICO began allowing consumers to view credit reports created by TransUnion and Equifax in 2003.

Credit scores offer lenders a standardized formula by which to ascertain the creditworthiness of loan applicants. Credit scores enable banks to set benchmarks on which to base underwriting guidelines. Using historical payment history data, lenders can hedge risks in lending by estimating the likelihood of borrowers defaulting on loans. Consumers who use credit responsibly benefit from credit score-based pricing on products ranging from car loans to credit cards.

Lenders provide the major credit bureaus with monthly updates that detail credit utilization, payments and existing loan balances. When borrowers are more than 30 days late with a payment, the lender notifies the credit bureau and the late payment remains on the credit report for up to seven years. When consumers notify the credit bureaus of errors on their report, the bureaus investigate claims within 30 days and corrections are made within 90 days.

Payment history is the most significant factor used in credit reports and accounts for 35 percent of the FICO score. Thirty percent of the FICO score is comprised of the ratio of outstanding balances relative to available credit. Lower credit utilization leads to higher scores. Length of credit history accounts for 15 percent of the score and types of credit and new credit, which includes the number of credit inquiries, each account for 10 percent.

When banks calculate debt-to-income ratios, they calculate the total amount of all the monthly payments on a credit report and divide it into the applicant's gross monthly income. Most lenders allow maximum DTI ratios of 41 percent for mortgages and between 30 and 40 percent for other types of loans. Home equity lines of credit with no balances are reported on credit reports; banks calculate what the monthly payment would be if the line was maxed out and use that figure as part of the DTI equation.

How to Check Your Credit Score Without Paying

2:28 AM No comments

It's good to know your credit score. Lenders check your score each time you ask for a line of credit. The higher your score, the more likely you are of being approved for credit. Check your credit score regularly. Over time, you can track whether your score is improving. If it's falling you can take steps to rectify it. Most credit reporting bureaus charge to access your credit score but it is possible to check your credit score from all three credit reporting bureaus without paying.

Instructions

Apply online to TransUnion to check your credit score without paying. The process is fast. You get to see your credit score from TransUnion, Equifax and Experian by taking a 30-day free trial.

At TransUnion.com, click "See Your Credit Scores Now." Enter your personal details in the application form accurately. Click "I Accept." Enter your card payment details. No payment will be taken. You can check your credit score without paying during the free 30-day trial. Your card details are used to help verify your identity. Click "Submit." Your application and payment details will be checked. Your application details will be displayed. Review them carefully then click "Continue."

Check your email box. Click on the TransUnion link to login. Enter a password and password reminder. Click "Enter." Now view your credit score from all three bureaus free for 30 days.

How to Obtain a Perfect Credit Score

2:20 AM No comments

A credit score can range from 300 to 850, but, according to Bankrate.com, a credit score above 825 is rare. According to MSN Money, lenders offer the best rates to borrowers with credit scores of 740 or higher. Created by the Fair Isaac Corporation, a credit-scoring company, your scores are checked during many transactions, from the setting of insurance policy premiums to evaluation of job applications. If your credit is already tarnished, you may need a longer time to reach a perfect score because late payments and other negative listings can stay on the credit report for up to 10 years.

Instructions

Use your available credit by charging purchases to a credit card or getting a loan. Demonstration of a responsible use of credit helps you to build a good credit score -- something that a cash-only lifestyle will not do. Show your responsible use of credit by using a major credit card issued by American Express, Discover, MasterCard or Visa; a retail store credit card is not sufficient.

Pay credit-card balances in full each month, if you can. Not carrying a balance can help to boost your score to the 800 or higher. If you must keep a balance, spread it out over multiple cards instead of having a large balance on one card. Doing this keeps your credit utilization ratio low, which promotes a high credit score. MSN Money recommends a utilization ratio less than 10 percent. For an installment loan, such as a car loan, make your monthly payments on time, because late payments damage your credit score.

Stop applying for new lines of credit. Too many inquiries can lower your credit score. Inquires remain on your credit report for two years. Instead, keep open current lines of credit, because closing accounts also can have a negative effect on your credit score.

Monitor your credit reports regularly to watch for inaccuracies, which can damage your credit score. AnnualCreditReport.com enables consumers to receive free annual credit reports. If you see something incorrect on your credit report, follow the credit bureaus dispute process to request its removal.

Wait for negative items to fall off your credit report. Generally, a negative item appears on your credit report for seven years. The exception is a Chapter 7 bankruptcy, which stays on your credit report for 10 years. As negative items age and are removed from your credit report, your credit score will improve.

What Can I Do to Build Up Credit?

5:56 AM No comments

Your credit score helps lenders to determine whether to approve or deny you credit. The higher your credit score, the easier it is to obtain new credit. If you have a low credit score due to bankruptcy or other financial difficulties, or if you're just beginning to establish your credit history, there are several things you can do to give your credit score a boost.

If you're having trouble getting approved for a major credit card or store card, you may consider applying for a secured card instead. With a secured credit card, you deposit a certain amount of cash with the card issuer, which serves as your available credit line. The initial credit limit is typically very low, usually no more than a few hundred dollars. By making purchases with a secured credit card and paying the balance off each month, you can begin to establish a positive credit history. Depending on the card issuer, you may eventually be able to convert to a regular unsecured credit card.

Late or missed payments can cause your credit score to take a significant hit. According to myFICO, 35 percent of your credit score is based on your payment history. If you have multiple late payments, significantly delinquent accounts or accounts that have gone to collections, these negative marks can remain on your credit history for up to seven years. If you have past due bills, take action to bring these accounts current. Once your accounts are up to date, take some time to establish a system for paying your bills. Paying your bills on time or early cannot remove negative remarks from your credit but it can lessen their impact over time.

The Fair Credit Reporting Act (FCRA) establishes guidelines for consumer credit reporting. A key provision of the act allows consumers to dispute inaccurate or incorrect information. The FCRA also entitles consumers to a free copy of their credit report from each of the three major credit reporting bureaus annually. Checking your credit report regularly can help eliminate errors and avoid damage to your credit score. If you find incorrect or inaccurate information, the FCRA allows you to initiate a dispute with the credit reporting bureau. If the investigation finds an error, the reporting bureau must remove it from your credit report.

Building good credit takes time and patience. While there are a number of companies that advertise credit repair services, they often turn out to be illegitimate. If you plan to contract the services of a credit repair company, contact your local Better Business Bureau and the attorney general's office in your state to check for consumer complaints. If you're having trouble managing your debt, you may need to consider speaking with a certified credit counselor to get help with your financial situation.

Consumer Credit Reporting Agencies

8:29 PM No comments

When a landlord, employer or loan officer asks you for permission to run a credit check, he will usually use the services of a consumer credit reporting agency. These agencies collect information about your financial behavior from numerous sources, including your creditors and court records. Because the information that they collect and provide to others is so sensitive, there are numerous state and federal laws that govern their business practices.

In the United States, the three largest consumer credit reporting agencies (also known as "credit bureaus") are Experian, TransUnion and Equifax. When you give an individual or company permission to check your credit, they will almost always be looking at a credit report from one or more of these three companies.

Federal laws govern the ways in which credit reporting agencies do business. The most significant laws include the Fair Credit Reporting Act (FCRA) and the Fair Credit Transactions Act (FACTA). These laws regulate who has access to your credit report, what you can do to challenge wrong information, how long negative information can remain on your report, and gives both recourse and protections to victims of identity theft.

Some state laws place additional restrictions on the use of consumer reports as well as the information that can be placed on them. Two good examples of state law that offer consumers additional protections are California's Investigative Consumer Reporting Agencies Act (ICRAA) and the Consumer Credit Reporting Agencies Act (CCRA). Under the ICRAA, consumer reports are restricted with a few exceptions, such as how long a criminal conviction can be reported. The FCRA has no such restrictions. The CCRA requires employers to notify employees each time they run a credit or background check, unless they are investigating employees for wrongdoing. Under the FCRA, once an employee gives an employer permission to conduct a credit or background check, the employer does not need to notify the employee if it later requests additional reports.

In addition to the three major consumer credit reporting agencies, there are several other consumer reporting agencies that specialize in specific types of information. For example, ChexSystems monitors a consumer's banking behavior and can let a bank know whether an individual has a past history of bouncing checks. MIB Group is an insurance reporting agency that keeps records of an individual's use of health insurance. Central Credit reports on gambler's debts. According to the FCRA, a "specialty" consumer reporting agency's reports are used by its clients to make decisions about housing, employment or insurance; these agencies are subject to FCRA rules.

Because credit bureaus rely on third party information to compile their reports, wrong information can make its way into your file. Federal law requires that each of the major credit reporting agencies provides you with a free copy of your credit report on an annual basis. If you are turned down for credit, housing or employment on the basis of your credit report, you are entitled to another free copy of your report. If you find that your credit report has errors, contact the credit bureau that issued the report and request an investigation. Keep in mind that it can take weeks, even months, to remove bad information from your credit report. If you are planning to apply for a new job, rent an apartment or apply for a loan, check your credit as early as possible before completing an application. Doing this can help prevent nasty surprises and give you a chance to have any errors removed.

Easy Ways to Repair Credit

4:58 AM No comments

Applying for credit and being denied by a lender often signals a weak credit score. Your credit score says a lot about your ability to manage debt and credit wisely, and lenders use the information in your credit report to determine whether you're eligible for loans, credit cards and other lines of credit. Fortunately, bad credit is fixable and you can repair credit without professional help.

Paying bills on time every month is one method of repairing a poor credit history. Lenders and creditors extend credit with the hopes that you'll repay the debt. People who fulfill their end of the agreement receive positive remarks on their credit report from lenders and a higher credit rating. Future lenders reviewing your credit will take note of your good payment record and readily extend a line of credit.

Carrying a balance on your credit card doesn't destroy your credit rating. On the other hand, maxing out your credit cards and carrying high balances from month to month does have a negative impact on credit scoring. Paying off new charges with the arrival of each new statement is key to avoiding debt and keeping a good credit rating. Aim to keep credit card balances below 30 percent of your credit limit.

The majority of creditors regularly report to the bureaus, and if you have late payments or collection accounts, this information will appear on your credit report and lower your credit rating. Repairing credit involves reversing bad habits and working with lenders to remove negative information from your report. Rather than send a payment late or skip the payment altogether, speak with your creditor to arrange a different due date or ask to skip your payment for the month. What's more, if you have collections or judgments, make efforts to pay off these debts. In return, the creditor may delete the negative notation from your credit report.

Never assume that the information in your credit report is entirely accurate. Mistakes are common, and another person's negative information can surface on your personal report. The best way to avoid credit reporting mistakes is to check your report at least once a year. Annual Credit Reports gives every consumer a free copy of their report once a year, along with contact information for creditors and the bureaus so you can dispute errors or mistakes.

How Much Does an Eviction Affect a Credit Rating?

4:39 AM No comments

A person's credit rating is based on a number of factors that credit rating agencies consider indicative of the likelihood that a loan will be paid back on time. In some cases, your credit rating may be lowered if you have been evicted from your apartment.

According to the California Tenant Law website, the three major credit reporting agencies, Equifax, Experian and TransUnion, will include an eviction notice on a credit report only if the landlord was awarded a money judgment by a court of law. Otherwise, the agencies will not know about it.

There is no section for "evictions" on a credit report, explains VideoCreditReport.com. However, there is a section for public records, under which a legal judgment ordering you to pay your rent could appear and harm your score. This depends on a number of factors, including the rest of your credit history and how much money you owe.

An eviction will be reflected on your credit report under certain circumstances, warns Experian.com. If you were evicted because you owe money for rent, the collection account generated by this incident will show up on your credit report for seven years and hurt your rating.

Does Settling With Debt Collectors Affect My Credit Score?

7:48 PM No comments

Debt collectors sometimes try to pressure consumers into settling an account by claiming that doing so will improve their credit rating, and this may be true -- somewhat. A settled collection account probably does not improve your score as much as you think, or it may lower your credit score. In some cases, settling a collection account is unnecessary and has a null effect on your credit rating.

The status of a collection account does not matter in the FICO scoring system. Settling any account damages your credit rating a few points, but the real damage is done by the presence of the collection account. Settling a collection account counteracts some of the damage from settled debt because it eliminates debt from your credit history. The amount of debt you owe is 30 percent of your FICO credit rating, so settling a collection account with an unpaid balance of thousands of dollars can boost your score dozens of points.

Even though a collection account may have a marginal effect on your credit rating, settling an account can help your chances at a loan approval. Lenders do not always look at just your credit history with a FICO score calculation. It may make informal judgments about data on your report. If the banks sees a paid collection account, it may consider that an honorable deed that outweighs a poor credit score, according to MSN Money.

A collection account only stays on your credit history for seven years, but does less and less damage each year. However, it looks better if you paid off a collection account years ago than you settled a collection account a few months ago, because settling an account right before an application appears as though you only agreed to settle to get a loan.

Pull a credit report on yourself from AnnualCreditReport.com. You can run a report from Experian, Equifax and TransUnion once a year for free. Look for the collection account. If it is older than seven years, the credit bureaus cannot report the debt, so paying on it does not help your credit rating. If the debt is seven years or older, you probably do not have to legally pay it anyway, because the statute of limitations likely passed as long as you haven't made any payments in the last seven years.

Easy Ways to Bring Your Credit Score Up

10:23 PM No comments

Maintaining a high credit score (700 or higher) indicates a measure of responsibility. It takes great strength to resist the urge to use credit cards. With credit, it's possible to fulfill many desires. Uncontrolled spending can lower your credit rating and if you are unable to pay your minimum each month, you'll likely receive negative remarks on your credit report. But fortunately, there are ways to raise a low score.

Improving your payment habits can have a tremendous impact on your credit scoring. According to MyFico.com, on-time payments account for 35 percent of your credit score. Keeping this fact in mind, paying your credit cards and other loans on time can boost a low score and help you maintain a good rating. There are ways to ensure your payments reach your creditors before the due date. Consider mailing payments at least a week before the due date, or pay your bills online for immediate credit.

Your amount of debt impacts credit scoring, and building a score quickly can be as simple as eliminating debts. Paying only the minimum on credit cards is easy and rarely impacts personal finances. However, making small payments each month will not pay off a large debt. You need to increase payments or drop a lump sum on your debt each month.

Some consumers will experience a drop in their credit score due to creditor mistakes. Credit card companies and other finance companies regularly submit information to the credit bureaus. And occasionally, they inadvertently report wrong information. While it's possible to clear errors and get these remarks removed from your credit report, unknowingly having this information on your report can bring down your credit score. This can pose a problem when applying for a home or auto loan.

Having a good credit score makes you a good candidate for loans and credit cards, and department stores will tempt you with in-store charge accounts. While applying for preapproved credit card offers and charge accounts may seem harmless, each credit inquiry or application takes points from your credit score. Bring up your credit score and maintain a high rating by declining offers, and only applying for credit when absolutely necessary.

How to Improve a Credit Score After Debt Settlement

6:02 PM No comments

The credit improving and financial recovery process after debt settlement is much similar to recovering from some of your other major financial problems, such as bankruptcy, foreclosure or car repossession. And while improving your credit score at all three credit bureaus will require a little bit of your money, it will mostly require your time and effort, and time in general for records updates. Indeed, you can start your recovery process during debt settlement but leave your major work until after the fact so that you will not lose focus.

Instructions

Order your credit reports, if you do not qualify for the one free annual credit report, from each of the credit bureaus (Equifax, Experian, TransUnion) so that you can start doing some serious disputing. Find all creditors that show you are at least 30 days late, and compose a letter to each creditor that explains what happened during that time and ask for written forgiveness in the form of a never late on your credit reports.

Establish different lines of credit starting with a secured credit card that reports to all three credit bureaus. Secured credit cards will be funded 100 percent with your own money. If you want a $500 credit line, you will have to deposit that amount with the card issuer. This eliminates some of the financial risk that would normally fall upon a lender or creditor. Open no more than two new lines of credit.

Once you have established various lines or types of credit, keep the balances low on all new debt as well as other debt that may have not been taken care of by debt management. The balances should be from 10 percent to 30 percent of your balance.

Once those new lines of credit or credit not taken care of by debt management have started to report positive on your credit reports, pay all of the creditors on time and if possible before the due date.

Under normal circumstances, you would only order your credit reports maybe once a year. However, after doing a major cleanup, such as debt settlement, you want to order at least twice a year. A lot of creditors use sneaky tactics where they will reenter a balance as an example on your credit report whereas it should be zero balance or they will go back and report late when they agreed to a never late.

Does It Hurt Your Credit to Prequalify Online for a Real Estate Loan?

5:43 AM No comments

Obtaining a loan is a necessary part of buying a home for most people, and it makes sense to shop around for the best terms before committing to one. Prequalifying for a loan online lowers your credit score, but the effect isn't cumulative when you make several inquiries. As long as they are mortgage-related and are made in a short period of time, only one counts against you, and it usually doesn't do much damage.

Initiating a credit inquiry to prequalify for a loan adds a negative item to your credit report. It is different from an unsolicited inquiry by a third party seeking to determine your eligibility for a credit card or other promotional offer. Such soft inquiries have no effect on your score, but those you initiate yourself, or hard inquiries, represent an increased risk factor to the reporting agencies. Prequalifying for a home loan involves making a hard inquiry and accordingly has a negative effect on your credit score.

Credit agencies consider several factors when calculating your score. The two most important are your payment history and the amount you owe, together accounting for nearly two-thirds of your score, while new credit, which includes loan inquiries, accounts for only 10 percent. The number of inquiries you make is included in this percentage of your credit score, as well as the time that has elapsed since you made them. Thus, applying for several credit cards or personal loans in a short period of time could have a noticeable effect on your score, although the effect would gradually diminish over time.

Most home purchases involve a certain amount of shopping for the best mortgage, so the credit agencies typically regard multiple prequalification inquiries as a single inquiry. Once the agencies record the first inquiry, they ignore all others within a 30-day period, no matter how many you make. Versions of the scoring system vary. An older one uses a 14-day period while the most recent one uses a 45-day period, according to the Fair Isaac Corporation (FICO), which calculates the scores. Lenders choose which version of the system to use when determining your eligibility for a loan.

Although it depends on other factors in your credit report, the impact of rate-shopping on your credit score is usually minimal, according to FICO. Because it is considered a single credit inquiry, it typically lowers your score by less than five points. The effect may be more noticeable if you have a short credit history or few accounts open, or if your credit score is just above the threshold for qualification for a loan. However, factors such as your payment history and outstanding debts are more important than inquiries in assessing your creditworthiness.

How to Check My Credit History Online

12:16 AM No comments

Consumers are allowed one free credit report per year by law, according to the Federal Trade Commission. This free credit report is available on the website AnnualCreditReport.com, which is the only website allowed to give the free credit report. Consumers can quickly and easily access their credit report by providing basic information to the service. This credit report lists a consumer's credit history and provides him with an overview of his financial situation.

Instructions

Go to AnnualCreditReport.com.

Select your state from the drop-down menu in the middle of the screen.

Enter your full legal name, date of birth, Social Security Number and current address into the request form. List a previous address if you have lived in that residence for less than two years. Enter the security code as listed in the box in the bottom of the screen. Click continue.

Answer your security question to view your credit report online. You may be required to enter your credit card number at this time to further verify your identity.

Saturday, February 28, 2009

Credit Checkups

Considerations

Privacy Information

Warning

Instructions

Strategies

Friday, February 27, 2009

Tax Liens

Time Frame

Credit Damage

Preventing a Lien

Thursday, February 26, 2009

Instructions

Dispute a Report Online

Dispute a Report by Mail

Dispute a Report by Phone

Wednesday, February 25, 2009

How a Sale Is Reported

Effect On Your Score

Negotiating With Your Lender

Before The Sale

Poor Credit Utilization

Good Credit Utilization

Tips

Tuesday, February 24, 2009

Instructions

Monday, February 23, 2009

What Makes Credit Score

Raising your score

Tools for Improving Score

Definition

Considerations

Credit Score Impact

Warning

Identification

Alternative Credit Bureaus

Third-Party

Tip

Identification

Effects

Considerations

Expert Insight

Warning

Saturday, February 21, 2009

What is a Good Score?

How Scores are Viewed by Lenders

Factors for the Pinnacle Score

Ways to Improve Your Score

Correcting Errors

Independent Auto Dealerships

Federal Housing Administration

Payday Loan Organizations

Pawn Brokers

Friday, February 20, 2009

Instructions

Consumer Payment History Codes

Cleaning Up a Code G

Monitor Your Credit Report

Thursday, February 19, 2009

Instructions

Tuesday, February 17, 2009

Instructions

Monday, February 16, 2009

Instructions

Sunday, February 15, 2009

Instructions

Instructions

Friday, February 13, 2009

Types

Time

Affect on Credit

Disputing

Limiting Inquiries

Thursday, February 12, 2009

Definition

Time Frame

Effects

Considerations

Solution