How to Obtain Credit Using an EIN

You may be familiar with your credit report and how your financial history is presented there. A score is assigned in your credit report based on how you handle your financial accounts, and your credit report and score serve as a statement of your ability to handle debt. In addition to a personal credit report, business owners can establish business credit. The credit agencies for businesses are: Dun and Bradstreet, Experian Business, Equifax Business and Business Credit USA. Accounts are reported as trade credit transactions. The accounts are reported using the business name and your federal tax identification number (FIN), also known as an Employer Identification Number (EIN). There are a few steps you can take to establish your business credit score and profile.

Instructions

1

Visit the IRS website (see Reference section). Read about the EIN number and when ready, apply for your EIN online.

2

Complete the application process. Make sure you double-check your entries for accuracy. Pay close attention to the spelling of the business name. At the completion of the application, you will be given your EIN number immediately. Print this information and keep it in your company records.

3

Register for a Dun and Bradstreet number. (See Reference section.) Once you are registered, your business will be listed in Dun & Bradstreet's database and will be visible to banks and lenders.

4

Register for any business licenses you may need for your state. Contact your local government offices to determine if you are required to obtain any specific licenses for your company.

5

Open a bank account in your business name. You will need to take your EIN number as well as copies of any licenses you obtained through your state.

6

Establish phone service in the business name. Even if you have a home business, you need to open a phone line in the business name. When you apply for business credit, this is often a requirement.

7

Apply for a secured credit card in the business name. Also, Staples, Office Depot and Dell computers are all companies known to give new business owners a small line of credit. Make all payments on time, and after six months, you will be able to apply for other business credit.

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Help Me Improve My Credit

Other than your Social Security number, your credit score might be the most important number you possess. A low credit score can negatively affect your life in a number of ways -- the interest rate you can get on a home mortgage, what type of credit cards you are eligible to carry, even the type of job you can land -- so you'll want the best score possible. If you are saddled with a low credit score or want to improve your existing score, there are ways to increase that number.

Build Credit

Your credit history is an important part of your credit score: If you don't have any history, your score will suffer. To get started on the right path, open up an account with a credit card company or with a bank offering a secured credit card. According to MSN Money, good alternatives can be found at lending institutions such as Citi, Orchard Bank and Public Savings Bank. You don't have to carry a balance to build a credit but you should use the card once or twice to show lenders that you have the ability to incur debt and pay off your debts just as quickly.

Resolve Credit Card Debt

The opposite of having no credit history is having too much credit card debt. An important variable in determining your credit score is the amount of debt you are carrying. According to MSN Money, paying off or paying down your debt on revolving credit -- such as credit cards -- can help raise your credit score. When evaluating credit risks, many lenders look at how much available credit you have on each card. Red flags are raised when those percentages are above 30 percent of the available credit, so paying down the debt should be a major priority.

Curb Your Spending

Your spending habits, especially when it comes to revolving credit, can get you in trouble, too. Even if you pay off all your bills each month, if you are racking up massive bills that are pushing your debt near the limit of your credit cards' available balances, then you need to change those habits. Your credit score, according to "The Washington Post," is greatly influenced by the amount of available credit you have at your disposal. If you are constantly spending to the limits of that credit, your score will suffer. Raising that score means paying down the debt and maintaining balances between 10 and 30 percent of the available credit -- a move that requires you to alter your spending habits but could pay off by raising your score by 70 points or more.

Argue Errors

Errors happen and, when they happen with factors that could lower your credit score, you have an obligation to yourself to report those instances. Typical errors, according to MSN Money, are issues such as late payment and collection notices that do not belong to you, reported balances that are lower than they actually are and open debt that has actually been closed. These mistakes can greatly affect your score, so you'll want to get them rectified and off your books.

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What Law Covers Credit Reporting?

Congress passed the Fair Credit Reporting Act in 1970 and has since amended it to protect consumers from unfair credit reporting practices. The law works to ensure that the information included on your credit report is accurate and consistent between each of the three major credit reporting bureaus in the United States, including Experian, TransUnion and Equifax. The law also elevates identity theft crimes to felony level and improves the ability of a consumer to prove he is the victim of identity theft.

Rights

The Fair Credit Reporting Act requires anyone who denies you credit because of information on your credit report to inform you of your reason for denial, as well as offer you a free copy of your credit report. The law also entitles consumers with the right to a free annual credit report from each of the major credit bureaus. The Federal Trade Commission encourages consumers to use the annual report to search for inaccurate or inconsistent content.

Time Frame

Your creditors may not report old or outdated information to the credit bureaus. Consumer reporting agencies must remove negative collections, foreclosures and delinquent account information after seven years. Similarly, the law subjects bankruptcies and charged-off accounts to longer terms, capping the reporting time frame for such occurrences at 10 years.

Privacy

Your credit report contains information used by potential lenders to determine your credit worthiness. The Fair Credit Reporting Act limits who has access to view your report to those with a valid reason. In addition to potential lenders, your insurance company, landlord and employer can also obtain a copy of your credit report, though you must personally grant an employer access to your information via written consent.

Credit Report

The law entitles you to a free copy of your credit report every 12 months. To obtain your free report, you can call 1-877-322-8228, or mail an annual credit report request form to Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281. Your credit report is also available online, but beware of websites that advertise free credit reports, but require you to make additional purchases in order to obtain your report. Instead, visit the Annual Credit Report website (see Resources), a service of the Federal Trade Commission, to ensure access to a free credit report. Remember that you will only receive a copy of your credit report and not your FICO score, which you must pay for.

Disputes

The Fair Credit Reporting Act provides consumers with the right to protest inaccurate information. By law, each consumer reporting agency must investigate disputed information on your credit report and must remove information found as fraudulent or incorrect from your credit report within 30 days. If you suspect that you are the victim of identity theft, you can report the crime to each of the credit bureaus and place a temporary freeze on the opening of future credit accounts. Additionally, you may request up to two free credit reports within the 12 months following reports of identity theft on your credit report.

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How to Build Better Credit

The number one key to better credit is to pay your bills on time. Creditors love people who can be counted on to never miss a payment. A steady record of on-time payments for 12 to 24 months can give your credit scores a significant boost. Many people seeking better credit look for quick fixes, but long-term approaches to managing finances generally offer the best results. You can build better credit on your own, or seek help from a nonprofit credit counseling agency. The agencies often offer free financial literacy classes.

Instructions

1

Get copies of your credit report--regularly. The reports are available for free from the website Annual Credit Report. It was established by the three credit bureaus to offer free reports as required by the Fair Credit Reporting Act. You are entitled to three reports every 12 months, including one each from the credit bureaus--TransUnion, Equifax and Experian. By ordering one every four months you can check your credit for free all year.

2

Review your current report for inaccuracies and delinquent accounts, such as accounts showing as past-due, charged-off or assigned to collection agencies.

3

Write a letter to the credit bureau at its address on the credit report to challenge inaccurate information. The credit bureaus sometimes make mistakes, and someone else's delinquent credit card account may be showing on your file. Clear that up by pointing it out to the credit bureau. Federal law requires the bureaus to correct inaccurate information within about 30 days of being notified.

4

Make payments to bring all your existing accounts current. Even one account showing 30 days behind can cause your credit scores to drop.

5

Resolve other negative entries including charge-offs, collection items and judgments. Charge-offs are delinquent accounts that were closed by the creditor because you stopped paying. Collection items generally are charged-off accounts that were sold to debt collectors. A judgment is a monetary award won in court after a debt collector wins a lawsuit against you for not paying your debt. These negative entries are very damaging to your credit, although their impact will lessen over time. Despite that, you should contact the creditor or debt collector for each account to work out a payment plan.

6

Pay down your existing accounts until you owe no more than 30 percent of your total credit limits. That's the level of credit utilization creditors like to see, according to "Businessweek" magazine. Maxing out your cards can indicate that you are too reliant on credit. Also, the website Bankrate says you should keep your total credit limit to no more than 20 percent of your household income. That means if your household income is $40,000 your credit lines should total $8,000 or less. That can be hard to do if you already have a home equity line of credit, which generally offers large credit lines. However, you should certainly try to stay within the guidelines with your credit cards and other unsecured debt.

7

Open new credit card accounts and never miss a payment--but don't add more credit than your household income can support. The new accounts, such as department store cards or credit cards, can help you add positive payment histories to your credit reports and lift your scores.

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How Long Can Closed Items Show on My Credit Report?

Closed items on a credit report may include old credit card accounts or paid-off loans. In some cases, keeping these items on your credit report is beneficial because it helps to establish a long-term credit history. In other cases, removing negative items can boost a credit score. After pulling a current copy of your credit report, inspect it for closed items to remove and improve your score.

Credit Reports

Credit bureaus collect and report data from public records and credit providers. The credit bureaus report this information on a credit report. The credit report is available to potential lenders upon your approval or for a soft inquiry. A soft inquiry allows creditors to determine credit eligibility prior to your making a request.

Negative Information

Potentially negative items remain on the account for up to seven years. This includes late and missed payments. Public records, including liens, Chapter 13 bankruptcies and foreclosures remain on a credit report for up to seven years. Tax liens remain on a credit report for up to 15 years if unpaid, or seven years if paid. Chapter 7, 11 and 12 bankruptcies remain on a credit report for up to 10 years.

Positive Information

Unlike negative credit information, most positive data remains on a credit report indefinitely. This positive data helps establish your long term credit history. Some paid, closed accounts will remain on your credit report for 10 years unless you request them removed.

Requesting Removal

You can submit a request to the credit bureaus to have data removed from your credit report after any mandatory time frames. To do so, file a report with the credit bureaus directly through the credit bureau's website.

Check Credit Report

Each year, you have the ability to obtain one free credit report from each of the three major credit bureaus -- TransUnion, Equifax and Experian. After requesting the credit bureaus remove closed accounts, obtain a copy of these credit reports to verify this. It can take up to 60 days for this update to occur. To obtain a free copy of your credit report, contact AnnualCreditReport.com, the only website approved to provide a free annual report.

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How do I Dispute Inaccurate Information on a Credit Report?

By law, credit-reporting agencies must investigate information on your credit report that you report as inaccurate. You are entitled to investigation updates and written confirmation of the company's findings. Errors will be removed from your credit report.

Disputing Errors

Contact the credit-reporting company about the error. Experian credit agency permits online dispute submissions. However, the Federal Trade Commission recommends sending a registered letter to the credit agency detailing the error. Include copies of documents supporting your claim.

Process

Within 30 days, the credit-reporting agency contacts applicable creditors about the error. Creditors perform an investigation and notify the credit-reporting agency of their findings. After reviewing information from all parties, the credit-reporting agency sends you a copy of its decision.

Obstacles

If a credit-reporting agency does not find an error, contact the creditor directly via registered mail and request proof of their findings. The credit-reporting agency is obligated to send you creditor contact information.

Considerations

If the dispute is not resolved to your satisfaction, you may have a note placed on your credit report reflecting the dispute.

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What Is Tier III Credit?

In a world where credit is king, your credit rating and tier level can have a significant impact on your ability to secure loans for mortgages and cars, how much interest you pay on such items, and your capacity to get credit cards or lines of credit. Having Tier III credit, which is considered below average, it may be challenging to obtain credit. Lenders view this as a slippery slope -- either they'll improve their credit or it will deteriorate further.

What Is Tier III Credit?

In accordance with the way the Fair Isaac Corporation, or FICO, credit model determines credit levels, if you have Tier III credit, your credit score falls somewhere between 560 and 619. The national average is 692, according to the credit rating agency Experian. Although Tier III is not the lowest tier, it's not that much better; in fact, it places you right on the cusp of slipping into an even lower credit tier. To put these figures into context, those classified as having a Tier IV rating have a poor credit score of 500 to 559, while individuals with Tier I, or excellent, credit have FICO scores of between 720 and 850.

Common Characteristics of Those with Tier III Credit Scores

People with Tier III credit often have less than five years of credit history; high credit card balances; a history of late loan, mortgage or credit card payments; a bankruptcy that occurred at least two years ago; and also may have some accounts in collections. What's more, economic recessions, such as the one occurring from 2007 to 2009, wreak havoc with many Americans' finances, affecting their ability to make payments on time and increasing the likelihood they'll incur more debt. This is unfortunate, because a full 65 percent of what determines your FICO credit score includes your payment history, which makes up 35 percent, and outstanding debt, which makes up 30 percent.

Effects on Credit and Loans

While Tier III credit does not automatically disqualify you from obtaining credit, mortgages or auto loans, it does make it harder and more expensive. For example, you might qualify for a credit card, but your interest rates will be higher than those with better credit. As for home and auto loans, your FICO ranking will impact the amount a lender will let you borrow, and they will most likely require you to make a higher down payment, as well as saddle you with higher interest rates. Generally speaking, the higher your credit score, the lower your monthly payments will be.

Finding Your Credit Score

Before you decide to apply for an auto, personal or mortgage loan, you should learn what your credit score is. By law, the federal government mandates that every American may obtain a free copy of their credit report from all three of the major credit reporting agencies -- Equifax, Experian and TransUnion. Each company applies a different set of criteria to determine your FICO credit score, so it's not uncommon for your credit rating to vary slightly. In such cases, the potential borrower typically uses the middle figure when making their lending decisions.

Another reason to review your credit standing annually is to look for identity theft, which would definitely result in a lower credit score. Signs of theft you might find on your credit report include credit cards that you didn't open and high balances on cards you rarely use.

Improving Your Credit Tier

If you discover that you have a Tier III rating, there are actions you can take to repair your credit. For instance, you can immediately pay off any accounts that are in collections. You may also turn to a credit counseling or restoration company if you need help resolving your credit problems. Once you clear all collections, it's important to get them removed from your report by working with each reporting agency. And, if you discover identity theft, you can begin to remedy the situation by alerting each company to the problem and taking the steps necessary to dispute fraudulent information.

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How Does Your Credit Score Affect Whether You Get a Job?

Your credit score not only is a determining factor in being approved for a home , your dream car, or the cost of your auto insurance, it also can affect whether or not you are hired for a job. Employers use a number of methods to determine the right applicant, and a credit score can be very revealing to the type of person they are hiring.

A Growing Trend

According to "The New York Times," more businesses are adding credit scores to their hiring criteria. Because of the Enron scandal, background checks that include credit scoring have become more popular amongst employers who want to make sure they're hiring honest individuals. According to Prudential Appleseed Realty, a good credit score is anything above 680. Apparently this number and above assumes that these consumers are more apt to pay their bills than those with a lower score.

Type of Industry

If you are seeking employment in any finance or securities industry your credit score often will be factored in being hired for the position. Considering you are dealing with money in these industries, proper money management is essential. Therefore, having a high credit score informs the employer that you have good budgeting and money management skills. To have a high credit score, your bills must be paid on time or ahead of time, and you have not incurred more debt than you can handle. This kind of employee is necessary in a position that requires suggesting what your clients should do with their money. The attitude of a person with a higher credit score shows they are prudent, and consistent. These are skills that are required in the banking, finance, and securities industry.

Responsibility

Employers reviewing your credit report are looking for liens, bills that all are 120 days past due and lawsuits, to name a few. Employers looking for these criteria are assuming that those who pay their bills on time and have clean records with no lawsuits or liens are more responsible individuals. If a job in which you are applying requires a lot of responsibility, they would choose someone they feel is more responsible with their finances in the past with other creditors as opposed to someone that is not. Their consensus is how you handle your money is directly proportional to your character.

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Credit Reporting Guidelines on Discharged Accounts

Discharged debts must be reported to the credit reporting agencies a certain way and for a certain period of time. When you file a petition for bankruptcy protection, you will usually receive a discharge at the end of the bankruptcy. Any debts which are discharged means you no longer have to pay them. Creditors are prohibited from trying to collect on debts that have been discharged.

Time Frame

When a debt is discharged through the bankruptcy court, it will remain on your credit report for a period of seven years from the date your bankruptcy was filed. If a discharged debt shows up on your credit report after the seven-year time frame has elapsed, contact the credit reporting agency by written correspondence and have them correct this information for you.

Zero Balance

Any debt that is discharged should be reported on your credit file with a zero balance. Discharged accounts should not reflect a past due amount. If any account is reported incorrectly on your credit report, contact the credit reporting agency and dispute the item. Send a letter to the reporting agency and let them know the debt has been discharged and should be reported as such.

Types

Some of the debts that are usually dischargeable include medical bills, personal loans, credit cards, business debts, repossession deficiency balances, leases and judgments. There should be a notation on your credit file that indicates a debt has been discharged.

Active

Discharged debts should not show up on your credit file as active accounts because they will continue to accrue late payments, which will damage your credit score by lowering it. Credit scores can range from 300 to 850, and are used by lenders to determine the likelihood that someone will default on a loan.

Credit Report

Get a copy of your credit report every year. There is a website you can visit that will allow you to order a copy, free of charge, from all three credit reporting agencies--TransUnion, Experian and Equifax. You can put your request in writing, order online or you can request copies over the phone. If you go online to order a copy, you will also be able to see a copy of your report online. Checking your credit file periodically will allow you to see if there are reporting errors.

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Quickest Way to Establish Credit

You may have seen an ad from a credit repair company claiming you can get an instant credit history. This is somewhat true, but the quickest way to establish is risky and not truly necessary. Most people will have to establish credit by taking a loan with less than desirable terms.

Joint Accounts

Joint accounts are the quickest way to establish a credit history and the easiest way to obtain credit, because someone with acceptable credit has already received approval for a loan -- you just put your name on it. This comes with a major drawback: you become liable for the balance on the account and if the primary holder misses a payment, you too receive a negative item on your report.

Secured Credit Card

You might find a creditor willing to issue a credit card without you any credit history. Some lenders target people of college age with low limit cards. The 2010 CARD Act, however, restricts access to any type of credit for people under 21 unless they can prove they have an ability to pay on the limit. People of all ages will probably have an easier time obtaining a secured card. Secured credit cards require the borrower to put a deposit equal to the limit in a separate account, which the bank draws from in case of default.

Alternative Credit

If you cannot obtain any type of credit, you might be able use a credit history not reported to any bureaus. Before the use of credit scores, lending decisions were based on informal judgments, such as canceled checks. When you have monthly bills, such as rent or utility payments, you can bring in receipts from those bills to a creditor and they must consider this, according to Wells Fargo.

Warning

Avoid credit repair companies or counselors that claim they can give you a credit profile with good credit history. Some tactics they use might include stealing the Social Security number of a deceased person with good credit. Either way, using a credit profile that does not belong to you is illegal regardless of whether you perform the action.

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Does Cancelling a Cell Phone Plan Hurt Your Credit Score

Most cell phone plans are sold as part of a contract, in which the purchaser of the plan agrees to use the company's service for a set amount of time at a set price and, in return, the company agrees to provide a number of services. Canceling one of these may have several negative effects, but hurting your credit score is not one of them.

Features

Most cell phone plans last only a set amount amount of time, usually from six months to several years. At the end of this time, the customer can choose to renew the plan or choose a new plan. However, in most cases, the customer can choose to cancel the plan partway through. This is done by notifying the company. The cancellation may take effect immediately or at the end of the current billing cycle.

Effects

Canceling a plan has several effects. In most cases, a person who cancels a plan loses the right to the use of their current cell phone number. This means that the person must choose a new phone number from a selection provided by the company from which they purchase their new plan. Also, many companies charge a penalty for canceling a plan early, often as much as several hundred dollars.

Considerations

Canceling a plan has no effect on a person's credit score, as most companies have clauses in the cell phone contract that allow the person to cancel the contract. However, actively canceling a contract is not the same thing as failing to pay the amount owed the cell phone company, causing the cell phone company to terminate service. If a company terminates service over an unpaid bill, it may hurt your credit score.

Credit Score

According to the Fair Isaac Corporation, the inventors of the modern credit score, a person's credit score is composed of a number of factors. Among these is the person's credit history -- his record of paying back loans -- and the amount of debt he currently has outstanding. The more debt a person has out and the less consistently he repays loans, the lower his score will be. If a cell phone is forced to seek the payment of a debt from a customer, this will likely negatively affect the customer's score.

Misconceptions

While canceling a cell phone plan won't hurt your score, starting one up might ding it a bit. When a person has a credit check run against him, it temporarily lowers the person's score. Many cell phone companies run credit checks against customers before issuing phones.

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Do Default Judgments Go on Credit Reports?

If you receive notice that one of your creditors has filed a lawsuit against you and do not respond to the notice, the court will assume that you agree with the complaint levied against you. It will grant your creditor a default judgment for the amount it requested. The judgment will then appear within your credit history and negatively impact your credit score.

Facts

After the court grants a judgment, it records the ruling in the county's public record database. A judgment appears on your credit report in one of two ways. If your county courthouse participates in the Public Access to Court Electronic Records (PACER) program, the credit bureaus will pull the judgment record from the online database and subsequently update your credit report. Regional credit bureau representatives also periodically review records from county courthouses that don't participate in the PACER program to properly update consumer credit reports.

Significance

Any public record that appears within your credit file negatively affects your credit score. Because each individual's credit report contains unique information, however, estimating the damage a judgment will do is difficult. As a rule, the higher your credit rating was prior to the default judgment, the more damage your credit score will take after the credit bureaus update your credit report.

Time Frame

The amount of time a default judgment remains on your credit report depends on how many years your state allows creditors to sue consumers for unpaid debts. According to the Fair Credit Reporting Act, if the remaining statute of limitations for debt collection in your state exceeds seven years, the judgment will remain a part of your credit history until the statute of limitations expires. If the remaining statute of limitations is less than seven years, the seven-year reporting period stands.

For example, if the statute of limitations for lawsuits in your state is 10 years and a creditor sues you after one year and obtains a default judgment, the judgment would remain on your credit report for another nine years -- until the original statute of limitations expired.

Misconceptions

Some states allow creditors the option to renew judgments and enforce them for a longer time. California, for example, has a 10-year enforcement period for civil judgments. Provided a creditor renews the judgment before the enforcement period expires, it may continue to pursue the debtor for an additional 10 years. Many consumers believe that when a creditor renews its judgment, the judgment will appear on their credit report for a longer time. This is not the case. Judgments only remain for seven years or the remainder of your state's statute of limitations. Thus, renewing a default judgment doesn't cause it to linger on your credit report for a longer time than it would otherwise.

Considerations

You have the right to contest a default judgment. If you're successful, the court will overturn its original ruling in favor of the creditor and, in the process, overturn the judgment itself. Should this occur, notifying the credit bureaus of the new court ruling will result in the judgment disappearing from your credit report. Each state has differing laws regarding permissible reasons to contest a default judgment and time limits in which you may do so.

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A Credit Card Company Closed the Account: How Does This Affect My FICO?

Lenders use FICO scores calculated by Fair Isaac Corp. when determining how much of a lending risk you present to the company. If a credit card company closes one of your accounts, your FICO score suffers in a variety of ways. According to the Fair Credit Reporting Act, the closed credit card account will remain a part of your credit history for seven years from the date your credit card provider canceled the account.

Facts

Credit card companies have little reason to close your credit card account unless you stop making payments on the card. After 180 days pass without your making a credit card payment, the company will likely charge off the debt and cancel your account. The late payments leading up to your account cancellation have a significant impact on your credit rating, as your payment history accounts for 30 percent of your FICO score. The charge-off itself has an additional negative impact.

Features

Although the exact FICO scoring formula remains a closely-guarded trade secret, a high debt utilization ratio damages your credit rating. Your debt utilization ratio is the amount of money you owe on your credit accounts measured against your available credit limit. When a credit card company closes your account, your available credit limit disappears while your balance does not. This lowers your total debt utilization ratio and, in turn, lowers your FICO score.

Time Frame

On its website, myFICO.com, Fair Isaac Corp. notes that the length of your credit history accounts for approximately 15 percent of your total FICO score. If your closed credit card account was one of your oldest accounts, its loss shortens the length of your credit history -- adversely affecting your credit score.

Considerations

The fact that the account was closed by your credit card company and not by you will be noted on your credit report. Although this fact does not directly impact your FICO score, it can impact whether or not a lender chooses to provide you with new credit. Any lender that pulls a copy of your credit report can see that a previous credit provider closed your account. This is a red flag to many lenders, as it indicates that you neglected to adhere to the terms of a previous credit agreement.

Prevention/Solution

Some credit card companies will agree to reopen your closed account if you can submit immediate payment or your credit report demonstrates that you have practiced responsible debt management in the time since the company closed your account. If you successfully negotiate with the credit card company to reinstate your original account rather than allowing you to open a new one, doing so will mitigate some of the damage to your credit rating.

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Do Credit Reports Follow You Internationally?

Moving to another country can prove tempting if you are in debt or have a poor credit history. Two to four percent of student loan debt is held overseas, presumably to avoid repayment, according to CNN. No international credit reporting agency exists, but moving out of the country does not guarantee that you can start anew.

Identification

Your credit information can follow you across borders if your home country and new residence share information. Two of the major credit reporting agencies in the U.S. -- TransUnion and Equifax -- also have offices in Canada. Europe, however, does not use credit scores and instead relies on your current salary and situation, such as other debt obligations and family history, according to Credit Report Sort.

Considerations

You cannot always flee a bad credit history by moving to another country. When applying for citizenship in your new homeland, the immigration office will review your past. If it appears as though you are fleeing your home country due to debt or poor financial management, they could reject your application for naturalization, according to FreeScore.com.

Function

As of 2010, your score cannot translate from one country to another because each country has its own standards for calculating a credit score, according to CreditFamily.com. Also, each country uses its own identification number. The U.S., for instance, uses a Social Security number, while Canada has a Social Insurance number. If your credit history transfers abroad, the new credit agency will calculate their score based on information from your home country.

Warning

Moving out of the country with good or bad credit can hamper your financial freedom in your new country. If your credit report does not follow you, you will need to start from scratch. You will most likely have to take out a secured credit card -- one where you use collateral against the line of credit. Keep in mind that if you decide to return to your country, you will still come back to your old credit score.

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Will It Hurt My Credit Score If I Request an Increase in My Credit Limit?

The data in your credit report are divided into five separate categories and are used to determine your FICO credit score, named for the company that created it. Depending on the length of your credit history, which accounts for just 15 percent of your credit score, the importance given to each category can vary. It may not hurt your credit score if you request an increase in your credit limit, depending on your specific data in the five categories.

FICO Score

A quick breakdown of the categories and their level of importance involved in calculating your FICO credit score is as follows: your payment history, 35 percent; the total amounts you owe, 30 percent; length of your credit history, 15 percent; newly acquired credit accounts, 10 percent; and the types of credit used, 10 percent. Any effect on your credit score due to a request to increase your credit limit falls under the "amounts owed" category, which makes up almost a third of your overall FICO rating. More specifically, an increase in your credit limit constitutes activity that could alter something called your credit-utilization ratio.

Credit-Utilization Ratio

The proportion of the credit lines you are using -- balances owing -- in relation to your total available credit is your credit-utilization ratio. The lower your credit-utilization ratio is, the better it is for your credit score. When considering you for a new credit account or loan, creditors and lenders prefer to see a credit-utilization ratio around 30 percent and no more than 35 percent. The FICO credit-scoring system is more concerned with how you manage your credit limits than how much available credit you have.

Increasing Credit Limits

If you have two credit cards with a combined available credit limit of $22,000 ($15,000 and $7,000 respectively) and you are carrying a balance of $6,000 on the card with a $7,000 limit, your credit-utilization ratio is only 27 percent. If you decide to cancel the card with a $15,000 limit and zero balance, the result is a jump in your credit-utilization ratio to 86 percent, which could put a ding in your credit score. On the other side of it, if you keep both credit card accounts and request an increase in your credit limit to $10,000 on the $7,000 card, your utilization rate drops to 24 percent, which may have a positive effect on your credit score.

Considerations

The FICO scoring system takes into consideration all the aforementioned categories, rather than the information found in just one or two of them. Your credit score is based only on the information found in your credit report. It may hurt your credit score if you request an increase in your credit limit and then proceed to raise your utilization ratio by using the additional credit. It is best to shoot for a credit-utilization ratio of 30 percent or lower for each of your credit cards, as well as your overall credit. Turning down an offer for a credit limit increase is better if it removes an unnecessary temptation and simplifies your finances.

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How to Settle a Charged-Off Repo Debt

For a variety of reasons, people can get in over their heads when it comes to car loans. And if they can't keep up with the payments, the lender will often repossess the card and sell it at auction in order to settle the debt.

That's not always the end of the matter for the original borrower, however. If the lender does not sell the vehicle for enough to cover the loan, they can come after the original purchaser for the difference.

Instructions

How to Settle a Charged-Off Repo Debt

1

Obtain copies of your credit reports from the three major credit bureaus. U.S. citizens are eligible to receive a free copy of their credit each year from the three major credit bureaus. You can find instructions on how to obtain these by visiting www.annualcreditreport.com.

2

Find out how much you owe on the charged-off repossession and who currently holds the debt. That information will be listed on your credit report or in correspondence you may have received concerning collection of the amount owed. In most cases, the original debt holder will have sold off the account to a collection agency. The collection agency most likely purchased the account for pennies on the dollar, and the older the debt, the more likely the agency will be to settle.

3

Offer to settle the debt for a lump-sum payment. If you owe $1,000 on the charged-off repossession debt, offer the collection agency an immediate payment of $500 in return for marking the account as paid in full and removing it from your credit report. If the collection agency agrees to settle for less than the full amount, get a copy of the agreement in writing before sending them any money. Pay by money order or cashier's check, and never give the collection agency electronic access to your checking or savings account.

4

If you can't come up with a lump-sum payment, offer to make a series of monthly payments. Don't be afraid to negotiate. Again, get any agreement in writing before sending money, and never give the collection agency electronic access to your checking or savings account.

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Does it Lower Your Credit Score Whenever You Get a Credit Check Done?

Heisenberg's uncertainty principle states that to observe a system is to disrupt it. Such is the case with certain kinds of credit checks -- checks made by an outside party of a person's credit report and score. In some cases, the credit checks can result in a person being knocked down a few points. However, other kinds of credit checks will have no impact on the person's score at all.

Credit Inquiries

Any party with a legitimate business interest in knowing the contents of a person's credit report can request a copy of it. Each time a report is checked, this is noted on a person's credit report, too, alongside the main entries regarding the person's credit history. Yet, only some of these inquiries, known as "hard" inquiries, will cause the person's score to go down.

Checks by Creditors

A check by a creditor to whom an individual has applied for credit is known as a "hard" inquiry. After an individual has applied for credit with a lender, the lender will typically check his previous credit history. This will cause a person's score to drop a few points because the credit reporting bureaus that maintain the credit report take this as an indication that person is looking to take on more debt, increasing his likelihood of default.

Checks by Others

Credit checks by everyone else are known as "soft" checks and will not cause a person's score to drop. These include checks by landlords determining whether to rent a tenant a property; employers weighing whether to hire a person for a job; and credit card companies trolling for new clients. These checks, while listed on the report, do not suggest a person is looking to take on new debt and do not count against his score.

Multiple Checks by Creditors

A person may worry if he is applying for a loan that checks by each of the lenders to whom he applies may cumulatively send his score plummeting. Luckily, it is the policy of credit reporting bureaus to count a number of similar inquiries -- say, inquiries by home loan lenders -- received in a short period of time as only a single check, with only a modest drop in the person's score.

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What Is the Difference Between a FICO Score & a PLUS Score?

Credit scores are important in the financial world, as they let lenders know which consumer they should and should not lend to. Two of the most recognizable credit scores are FICO scores and PLUS scores.

Distributor

FICO scores are distributed by the Fair Isaac Corporation, while PLUS scores are distributed by Experian.

Range

FICO scores range from 300 to 850, while PLUS scores range from 330 to 830.

Availability

FICO scores are available for consumers to purchase with their Equifax and TransUnion reports, while PLUS scores are available for consumers to purchase with their Experian, Equifax and TransUnion reports.

Benefits

Both scores are available for lenders to see to approve or deny your request for credit.

Types

Both scores have general scores, which consumers and some lenders purchase, and custom scores, which are recalculated for a specific industry or company.

Warning

Your FICO score and PLUS score may not be the same, even if they are purchased at the same time and based on the same report.

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How to Help Establish Credit

A good credit history will make it easier to qualify for good mortgage rates and to borrow money in the future. A credit score is based on payment history, the amount you currently have borrowed, and the amount of your available credit you are currently using. When you first begin to establish credit it may be difficult to find a bank willing to lend to you. There are ways to establish credit even if you cannot get a traditional loan.

Instructions

1

Apply for financing through a store. This type of financing is usually easier to acquire, since the store can take back the item if you default on payments. Look for an offer with zero percent financing and then figure out how much you need to pay each month to pay off the entire amount before the offer expires. Make the payments on time each month.

2

Acquire a guaranteed credit card. Banks who offer this card require you to deposit money into a savings account, usually a certificate of deposit, to act as collateral for the credit card. If you take the money out of the bank, generally the remaining balance left on the card is due immediately. However, you may use the credit card in the same way you use a traditional credit card and make monthly payments and pay interest on the money.

3

Use a credit card offer you receive through the mail or apply online. Generally the terms on your first credit card are not as favorable, since you do not have an established credit history. The card may have a higher interest rate. Make the payments on time each month and try to pay off the balance in full each month.

4

Get a cosigner on a loan to help you establish credit. You may include a cosigner with almost any type of loan available to you, but many people do this with car loans. The cosigner will become responsible if you were to default on the loan, and it can negatively affect his credit as well.

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How to Freeze Credit on Deceased Persons

After the death of a loved one, you need to be attentive to many financial responsibilities, including closing out accounts and dividing the estate between heirs. One step that often gets forgotten is reporting the death to the credit bureaus. If you fail to freeze the credit report of the deceased person, an identity thief could apply for credit in that person's name and leave your family with even more responsibilities to deal with.

Instructions

1

Make three copies of the death certificate.

2

Write a letter that identifies the deceased person by name, addresses from the last five years, date of birth, date of death and Social Security number.

3

Write that this person has died, and that you would like the person's credit report to be closed with a notification of "Deceased. Do not issue credit. If an application is made for credit, notify the following person immediately: (insert your name and phone number)."

4

Request that the credit bureau send you an updated copy of the credit report after this change has been made. If you are not the spouse of the deceased, you must include a copy of your executorship papers to be eligible to receive the credit report.

5

Send a letter and a copy of the death certificate to each of the three credit bureaus through certified mail with return receipt requested. Their addresses are: TransUnion, P.O. Box 6790, Fullerton, CA 92834; Equifax Information Services LLC, Office of Consumer Affairs, P.O. Box 105169, Atlanta, GA, 30348; and Experian, P.O. Box 9701, Allen, TX, 75013.

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What Is Considered to Be a High Credit Score?

Credit scores, also known as FICO scores, have a tremendous effect on a person's financial life. They affect your ability to purchase a car or a home, apply for credit cards, get a job and even rent an apartment. FICO scores demonstrate a person's level of creditworthiness and, therefore, trustworthiness.

History

FICO is an acronym that is derived from Fair Isaac Corporation, which is the company that developed the system of credit scoring that the current FICO system is based upon.

Poor Credit Score

A score in the low 600s is associated with poor credit. A person with a score below about 620 is considered a high risk and is likely to have trouble getting any type of loan. In addition, interest rates for individuals with poor credit are much higher, increasing as the score lowers.

Acceptable Credit Score

Scores from the low 600s up to the high 600s are considered to have acceptable credit. These individuals will not have the benefits of the best credit, but they will not have as much trouble getting loans and will not have the worst interest rates.

Good Credit Score

Individuals who have credit scores that are in the 700 range and above are considered to be good credit risks.

High Credit Score

Credit scores above 750 are considered to be excellent credit scores. The individuals who have credit scores above 750 typically have low debt/income ratios, and no late payments on their credit reports. They enjoy premium interest rates and have no trouble getting loans.

Conclusion

Credit scores affect the ability of a consumer to get more credit, as well as her ability to pay off her current debt. As a credit score drops, interest rates go up and debt increases, which in turn lowers the credit score. Making payments on time and keeping debt-to-income ratios low is an excellent way to achieve a high credit score.

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How to Check Your Credit Rating in the UK

The three main credit reference agencies in the United Kingdom are Experian, Equifax and Callcredit. Each maintains information about your borrowing and credit history, compiled from the electoral roll, county court judgments and financial institutions. Their reports contain details of your past debts and payments, alongside public data such as bankruptcy or house repossession. This information is important and can follow you about your adult life. Lenders rely heavily on this when deciding to accept or reject your credit applications. It is a good idea to check your credit rating every year to 18 months to ensure the information is accurate.

Instructions

Request Your Credit Report

1

Request your 2 statutory credit report. By law, all three credit reference agencies must supply you with your basic credit report for 2 when requested. These are sent by post and, as of June 2010, online. Links to all three agencies are provided in the Resources section. You will need to provide your full name (plus maiden name, if relevant), date of birth, current address with postcode and former addresses for the previous six years.

2

Print off the Credit File Application Form on Equifax's website and send to Equifax at Equifax Ltd, Credit File Advice Centre, PO Box 1140, Bradford, BD1 5US. Alternatively, order your postal report online or apply for an instant online-only version. Equifax already offers instant statutory credit reports on its website; the others were slated to follow in June 2010.
Apply to Experian online, by telephone at 0844-481-8000 or print off its application form (available online) and send to Consumer Help Service, Experian Limited, PO BOX 8000, Nottingham NG80 7WF.
To request your statutory credit form from Callcredit, print off the application form on its website and post to Callcredit at Consumer Services Team, Callcredit Limited, PO Box 491, Leeds LS3 1WZ.

3

Seek out further information about your credit rating and credit score with a more in-depth report for a higher fee. The 2 statutory report simply provides a copy of the information banks and lenders have about you. A more detailed report from any of the three agencies will provide a full list of your credit agreements and often give ongoing access to your report. You can also sign up to find out your credit score, a numerical indication of how good or bad a lending risk you are considered to be. These are usually monthly subscriptions. Prices as of May 2010 are 6.99 a month for Equifax, 7.99 a month for Experian and 12 a quarter for Callcredit.

4

Take advantage of free trials. All three companies offer 30-day free trials on their websites with no obligation. Many consumers are signing up, checking their credit report and canceling before they are charged. Be aware, however, that Callcredit takes your first payment when you sign up.

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Can I Check Credit Reports From Closed Accounts?

Whether you want to buy a home, get the keys to that new car or put your kids through college, your credit history is an important factor. Good credit opens doors; negative credit closes them. That's why you should stay up-to-date on the contents of your credit report, even for accounts that have been closed for years.

Checking Your Credit

You can retrieve your credit report online, over the phone or through the mail. Your report is available immediately when you retrieve it through the internet, and takes up to 15 days when ordered through the mail or over the phone. You're allowed to pull your credit report for free once a year, says FreeCreditReport.com; otherwise, a fee is attached based on the type of service you order from one of the three credit bureaus.

Closed Accounts

You can check the status and standing of all your credit accounts on your credit report, including those that have been closed. Closing an account, whether you did it voluntarily or the account was closed due to a lack of payments, doesn't make the account disappear from your report. Its file, and all the information attached to it, remains available.

Deleted Accounts

If the account has been closed for over ten years, the information about it may have aged off your credit report. Closed accounts in good standing stay on your credit report for ten years, says Experian, which increases your credit rating. Poor closed accounts age off your credit within seven years of the time the account became, and remained, delinquent.

Removing a Negative Account

You can dispute a negative, closed account lingering on your credit report, says MyFICO. Simply file a dispute with the credit bureau you pulled the report from either in writing or directly online. The bureau then has 30 days to investigate the validity of the closed account. If an account is over seven years old and hasn't been removed, this is a great way to erase it and get your credit back on its feet.

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Factors Related to FICO Scores

FICO scores, often called credit scores or credit ratings, are numerical measures of your creditworthiness. These ratings, which range from 300 to 850, determine whether or not individuals can get home loans, car loans, credit cards or other types of credit-related financing. Additionally, some employers use FICO scores to determine whether or not to hire a candidate. Several factors influence FICO scores.

Payment History

Your bill payment history has the largest impact on your FICO score, according to the Fair Isaac Company, the corporation that designed the credit scoring algorithm. In fact, payment history accounts for 35 percent of your FICO score, meaning that making timely, full payments on your bills is crucial to maintaining a good credit score. For the purposes of credit ratings, payment history includes bills from credit cards, installment loans, home loans, car loans and student loans.

Amounts Owed

Amounts owed has the second-largest impact on your FICO score, accounting for 30 percent of the rating, says Fair Isaac. Your credit card balances and installment loans--including home and car loans--all affect the amounts owed factor. Generally, keeping credit card balances low is best for your FICO score, as is having little outstanding on the total amounts of your installment loans. Additionally, the number of accounts with balances you have also affects your FICO score.

Credit History Length

The total time since you opened your first account also has a significant affect on your FICO score, accounting for 15 percent of your rating, says Fair Isaac. Specifically, your FICO score takes into account the age of your oldest credit account from any category. Additionally, your FICO score takes into account the age of your oldest installment loan, credit card and revolving credit line.

New Credit

Applying for a lot of new credit can affect your FICO score, according to Fair Isaac. New credit, which accounts for 10 percent of your FICO score, factors in newly opened credit accounts and recent credit inquiries, all of which lower your credit score. On the other hand, newly establishing positive credit history after previous bad credit will raise your FICO score.

Types of Credit Use

Fair Isaac's algorithm favors individuals who have a wide variety of credit account types. In fact, types of credit accounts for 10 percent of your FICO score. To help maintain a high credit rating, you should have a good mix of credit accounts, including home loans, car loans, installment loans, lines of revolving credit and credit cards.

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Can a Credit Card Report on an Authorized User?

Unlike a joint account holder for a credit card, an authorized user gets to use an account, but is not responsible for bill. This type of account is often used for a child or anyone else who might need access to credit. You can also use this account to build your own or another person's credit.

Identification

As of 2011, the latest FICO score model---FICO 08---counts authorized users for credit scoring purposes, according to the Fair Isaac Corporation. However, this might change in the future. In the past, some credit-repair companies added people with poor credit to a credit card account with good history in return for money, so FICO disregarded authorized accounts for credit scoring purposes. The FICO 08 algorithm can weed out potential fraudulent authorized accounts better than previous year FICO models, so FICO decided to include them to help the millions of legitimate users build credit.

History

Prior to FICO 08, the Fair Isaac Corporation did not count authorized users, because of rampant abuse by credit repair companies adding customers to accounts with good history---usually strangers with no link to the primary account holder---and subverting the credit reporting system. FICO changed this with FICO 08 because 50 million people are legitimate authorized users, such as spouses and children of the account holder, thus hurting their ability to improve their credit score.

Considerations

Although Experian, Equifax and TransUnion dominate the consumer credit reporting industry, they are not the only credit agencies. Alternative agencies may not count authorized users or accept data about them from credit card companies. Creditors can also use their own proprietary formula and ignore certain accounts on a credit report, such as authorized accounts. Also, some lenders may not have upgraded to FICO 08 yet.

Benefit/Drawback

Someone with no credit history can start building good credit without applying for a loan or taking on the legal responsibility of owing credit card debt with an authorized account. On the other hand, an authorized user does not even receive the bill, so he damages his score if the primary account holder misses a payment. If the credit card issuer reports an authorized account, the authorized user can request the credit bureaus remove this from his file.

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How Long Is Debt on Your Record?

As you open new credit and loan accounts and incur debt, your creditors report the status of those accounts to the credit bureaus. The credit bureaus maintain these records on your credit files until the reporting period for each expires or you successfully dispute the account's validity. The credit reporting period varies depending on the type of debt you owe.

Credit Reporting Period

Section 605 of the The Fair Credit Reporting Act (FCRA) establishes the reporting period for each type of debt. With few exceptions, debts remain on your credit record for seven years and 180 days from the date you made the last payment on the account -- regardless of whether the account is in positive or negative standing. The seven-year reporting period applies to credit-card debts, loans, collection accounts and judgments.

Reporting Period Exceptions

Certain types of derogatory information remain a part of your credit history for longer than the standard seven-year reporting period. The FCRA allows evidence of previous bankruptcy cases, for example, to remain for 10 years. Unpaid tax liens are another exception to the rule. An unpaid tax lien can appear on your credit record for longer than any other item -- up to 15 years.

Credit Score Impact

Recent accounts command greater importance in the Fair Isaac Corporation's credit scoring system than older debts. Recent accounts include those that were recently updated by a payment. Thus, a credit-card account you pay each month influences your score to a greater degree than a vehicle loan you paid off five years previously.

This credit scoring method is beneficial for those trying to repair their credit scores after making past debt-management mistakes, since derogatory information has less of a negative impact over time. Once the credit reporting period expires and the credit bureaus remove a debt from your records, the account no longer has any impact on your credit scores.

Early Removal

In the interest of helping consumers maintain the most accurate credit information possible, the FCRA gives all individuals the right to dispute debts on their credit reports. If you discover an account you do not recognize or know for a fact does not belong to you, you can contest the debt's validity with the credit bureaus online, via mail or by telephone.

After the credit bureau receives your dispute, federal law provides it with 30 days to contact the information provider and investigate the account's validity. If the information provider does not respond to the request or acknowledges its error, the credit bureaus will delete the contested account from your credit record before the federal reporting period expires.

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What Your FICO Credit Score Affects

The Fair Isaac Company uses a numeric scoring method -- called an FICO score -- to determine your creditworthiness. FICO scores are assigned on a scale of 300 to 850 -- the higher your score the more credit advantages you will reap. Your FICO score has a direct bearing on the type of credit you will be able to get and the cost of that credit.

Types of Credit

Your FICO score will affect any type of credit you attempt to receive. Creditors who offer secured forms of credit -- small lines of credit which require a deposit -- will be more likely than other creditors to extend credit to someone who has a lower score. Auto loans could be difficult to receive for those will lower scores, depending on the age and value of the vehicle. A person with a lower FICO score will find it difficult -- if not impossible -- to secure a mortgage lender without at least a substantial down payment. By the same reasoning, those with good or excellent credit scores will be more likely to receive offers of credit from anywhere they seek it -- as well as other sources. Bottom line -- the better your FICO score, the more attractive offers of credit you will receive.

Interest Rates

The less of a financial risk you are rated by your FICO score, the better the interest rates will be attached to any credit you receive. Lower interest means less overall cost to you when paying back money you owe creditors. The greater the financial risk your FICO score poses, the higher the interest rates will be for you. That means you will end up paying more for a loan than someone with a higher score. Bottom line -- your FICO score determines how much interest a lender will charge you for loaning you money or giving you credit.

Explanation of FICO Ranges

FICO scores range from a low of 300 to an ultimate score of 850. Major lenders don't lend to individuals with a score under 500 because these consumers are considered "sub lenders", according to Suze Orman, financial guru. Starting at the bottom, the ranges are 500-579, 580-619, 620-659, 660-699, 700-759 and 760-850. Those with scores in the highest range -- 760-850 -- will receive the best credit offers, while lenders consider those with scores dipping below 600 greater financial risks.

Helpful Advice

If your FICO is not where you want it to be, there are some things you can do to improve it. Be aware that there isn't a quick fix, but you can take steps to gradually improve your score and achieve the financial goals you have in mind. Ways to improve your score include paying off excess credit, paying bills on time and keeping credit to a minimum -- one or two accounts. If you don't have any credit, you can open an account or two and make timely payments.

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The Best Ways to Improve Credit Rating

Almost everyone knows that when you seek to purchase a house or a car, the lending agency will review your credit score to see what your rating is. If your credit rating is lower than you would like it to be, there are some ways you can improve your credit rating that you can implement immediately.

Pay Bills on Time

This is one of the best steps you can take is to pay your bill on time. As a matter of fact, if you can mail your payment in seven to ten days prior, this will ensure that your payment is received on time and will not be delayed. Mailing the bill two or three days prior to its due date hoping it is received on the day actually increases your chances of the payment being received late versus on time.

Keeping Low Credit Card Balances are Essential

Another good step is to keep the balances on your credit card low. It is not against the low to have a balance that is lower than your limit. Work to get you balance 50% lower than your limit. This step alone could give you some breathing room when it comes to managing your household finances.

Remove Old Debt

It is always a great step to remove old debt. Knowing that you did not get into debt overnight, order a new credit report. Then develop a plan to pay off that old debt versus ignoring the debt. Pay off old debt one at a time so that you do not get into the problem of creating new financial strain by talking to more than one creditor at a time.

Limit the Number of Credit Inquiries

If you were not aware credit inquiries actually go against your credit rating by several points. The first step you can take in limiting credit inquiries it to stop applying for new credit card accounts. Second, when you are in department stores and they invite you to apply for store credit, you can decline and make your purchase in cash.

Help Available for Those with Poor Credit

For those that have poor credit and are interested in rebuilding their credit, they have the option of getting a secured credit card that reports to credit bureaus. Be sure and investigate what is the required deposit for a secured card. Also, there is the option of applying for a credit card that is specific for those with bad credit or no credit history.

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Does Having a Loan With a Co-signer Improve Your Credit?

If your credit history is not good enough to meet lending standards, one option is to get a loan with a co-signer. This is a person with good credit who agrees to sign the loan agreement as well. Because this person will repay the loan if you fail to do it, the creditor has enough security to allow you to borrow. Depending on how you manage the loan, it can help you build credit.

Initially Hurt Credit

Getting any type of loan will initially ding your credit, regardless of whether or not you have a co-signer. This is because a new loan counts against you in the parts of your credit score that consider new credit and your average age of accounts. In addition, each time the lender checks your credit in response to a loan application, this hurts your credit score. If you applied for a loan and were denied before applying with a co-signer, this will hurt your credit twice.

Potential to Benefit

The most important factor in determining your credit score is your payment history. If you don't have any loans, you can't have any payment history. Therefore, having a co-signer help you get your first loan gives you a chance to finally start building a positive payment history. If you pay on time every month, this will improve your credit. In addition, as you manage more different types of credit, including both credit cards and installment loans, potentially with co-signers, this will also increase your credit score.

Potential to Hurt Credit

A co-signer does not act as a guarantee that you will not damage your credit score. If you miss a payment, this will count against both you and your co-signer in the payment history portion of your credit reports. You are the one with primary responsibility until the lender gives up on you and demands payment from your cosigner. However, if you know you are in trouble financially one month and let your co-signer know before the payment is due, she might help you make the payment so neither of you see credit score damage.

Warning

Your actions with regard to your co-signed loan will not only affect you, but also your co-signer. This is great if you make payments on time because it will increase both of your credit scores. However, if you are irresponsible and miss a payment, it will lower both your credit score and your co-signer's credit score. Consider the weight of this responsibility before asking a loved one to co-sign. Especially if your co-signer wants to buy a house or a car soon, your irresponsibility could make it impossible for your co-signer to get a loan on his own.

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How to Dispute a Fraud With Equifax

If you suspect you're a victim of credit fraud, it's important to take action right away. Contacting credit bureaus, such as Equifax, and putting a fraud alert on your account, makes it very difficult for criminals to access your credit. There are also ways to dispute the fraudulent activity. Once your claim is approved, the information will be blocked from appearing on your credit report.

Instructions

1

File a 90-day fraud alert. If you suspect fraud on your credit report, contact Equifax at (800) 525-6285 and place a fraud alert on your account. This makes it very difficult for another person to access your credit.

2

File an identity theft report. People with fraudulent activity on their credit report should file an identity theft report, according to the Federal Trade Commission (FTC). This can be filed with your local police department. Once the report is filed, send it to Equifax to report the fraud. Once approved, the fraudulent activity will no longer display on your credit report.

3

Include supporting documentation. When sending your identity theft report to Equifax, make sure to include supporting documentation which proves your claim. This could be copies of forged checks or other evidence.

4

File an extended fraud alert. Placing an extended fraud alert on your account will make it difficult for fraud to occur in the future. These alerts last up to seven years. However, you must show a valid police report proving you were the victim of fraud.

5

Consider freezing your credit. According to the FTC, consumers can also freeze their credit. If a person is seriously abusing your credit, despite other safeguards, a credit freeze will remove access to your credit. Every time you want to access your own credit, you'll need to contact the reporting agency and prove your identity. Contact your state to freeze your credit (See Resources).

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