2010 ~ Personal Finance and Money Management

Wednesday, December 29, 2010

Consumer Credit Rating Agencies

2:48 AM No comments

Consumer reporting agencies buy and sell personal information about individuals and use it to assign credit scores that rate their credit worthiness. They do not decide whether to extend an individual credit, but, rather, provide the credit score to companies and banks so they can determine if they should grant credit approval. Credit agencies also offer services to individuals pertaining to understanding and maintaining a good credit score. There are three leading credit-reporting agencies in the United States that also work globally. These companies are Equifax, Experian and Transunion.

Two brothers, Cator and Guy Woolford, established Equifax in 1898. Equifax is the largest consumer-reporting agency in the United States. In the twenty-first century, the company specializes in portfolio management, decision-making technology, fraud detection, marketing tools and credit intelligence. Equifax employs approximately 7,000 people throughout North America, Latin America and Europe; their headquarters is in Atlanta, Georgia.

This company began as a division of an automotive and electronics company known as Thompson Ramo-Wooldridge Inc. In 1984, it was the largest credit-reporting agency in the United States. As of 2010, Experian has upwards of 5,500 employees in North America, earns more than $2 billion in revenue annually and maintains credit information on more than 215 million individuals in the United States. Experian focuses on community involvement and supports more than 100 organizations every year including The Heart of Experian, We the People, Supporting the People, and Together We Can Make a Difference. Experian's North American headquarters are located in Costa Mesa, California.

A rail-car leasing establishment known as the Union Tank Car Company created TransUnion in 1968. As of 2010, it serves consumers and businesses in 25 countries on five continents, with its main headquarters located in Chicago, Illinois. TransUnion serves more than 10,000 businesses across the globe and holds more than 500 million records for consumers worldwide. TransUnion specializes in marketing devices, risk management, collections management, and fraud and identity management. TransUnion describes their company vision as a desire to be recognized best in class and to build stronger economies worldwide. Currently, they are involved in various community organizations aimed at helping individuals achieve their personal financial goals by offering credit information and education. These organizations include Operation Hope, Junior Achievement, Community and Individual Development Association, and Community and Individual Development Association City Campus.

How to Report to Experian, Equifax and Transunion

7:03 PM No comments

Reporting accounts to the three major credit bureaus (Transunion, Equifax and Experian) requires that you open a paid account with all three. Once you have accounts with the credit bureaus, you can submit relevant documentation supporting the existence of outstanding accounts or debts. Anyone submitting such information is bound by the Fair Credit Reporting Act (FCRA) to provide accurate information.

Instructions

Gather all relevant documentation about the outstanding account or debt. You will need to supply the social security number, full legal name, date of birth and all relevant information about the status of the account. You will also need to include a copy of the contract establishing the account and a record of payments or nonpayment.

Sign up for memberships with Equifax, Transunion and Experian. Each has slightly different processes for reporting an outstanding account, but each has similar forms you will need to fill out.

Fill out the reporting forms for each of the three credit bureaus, including documentation relevant to the outstanding account or debt. Accounts that appear on all three credit bureaus are more challenging to dispute successfully. There are no fees for reporting additional accounts.

Request a copy of your credit report at least 30 days after you have reported the new account to ensure that the entry has been added correctly.

Average Cost to Get All 3 FICO Scores

7:56 PM No comments

The three major credit bureaus -- TransUnion, Equifax and Experian -- and the Fair Isaac Corporation, or FICO, as it is also known, report consumer credit scores. Creditors, lenders, service companies and landlords use your credit score to determine your creditworthiness.

As of March 2011, both Experian and Equifax offer a three-bureau credit report and scores product for $39.99. For $10 less, TransUnion offers a three-bureau credit report and scores product for $29.95. FICO offers a $49.95 credit report and score product that allows you to manage your three FICO scores and credit reports (FICO, Equifax and TransUnion). If you just want to access your FICO score and credit report, you can do so for $19.95.

Credit report and score products offer instant online access to your credit reports as well as your personal credit scores from all three major credit bureaus. Find out your credit risk level and what factors raise and lower your scores on each credit report. For example, paying your credit balance on time every month raises your scores.

Credit monitoring services offer daily monitoring of your credit reports and scores. Sign up to receive text and email notifications of changes to your credit reports and scores. Compare your credit scores to the national average or utilize free dispute and fraud support with your subscription. All three major credit bureaus offer credit monitoring services for fees ranging from $14.95 to $16.95. FICO offers a credit monitoring service for $14.95 per month.

For a free credit score from one of the three major credit bureaus, sign up for one of the numerous free trial offers that are available through the major credit bureaus and cancel within the trial time to avoid fees. Frequently, you must provide a credit card number to participate in a free trial offer.

The Annual Credit Report website allows you to request, view and print your credit reports for free once per year. Your credit reports do not come with your credit scores; however, knowing what information is documented in your credit reports is just as important as knowing your credit scores.

California Free Credit Report Law

7:42 PM No comments

The Fair and Accurate Credit Transactions Act of 2003 (FACTA) amends the Fair Credit Reporting Act (FCRA) enforced by the Federal Trade Commission (FTC), requiring the nationwide credit bureaus to provide all consumers, upon request, an annual free copy of their credit report. The three major consumer reporting companies, Equifax, Experian and TransUnion, process requests for free annual credit reports at AnnualCreditReport.com. These Acts, being federal in jurisdiction, cover not just California but all states and U.S. territories.

As of March 2005, consumers in California are entitled to receive free reports annually from all three credit reporting agencies. Consumers have the option to order free reports from all three nationwide reporting companies at the same time or spread their requests out over the course of a year. The law allows one free report from each company on an annual basis within the calendar year.

Consumers have the right to obtain three independent copies of their credit report within a calendar year, know who has received a copy of their report, dispute inaccurate information, prevent credit bureaus from using their information for marketing purposes, and complain to the appropriate agency or even file a lawsuit.

Experian provides information solutions to organizations and consumers by focusing on customer relationships and aiding organizations in building the strongest and most profitable bond between the two. Empowering as well as encouraging consumers to understand, manage and protect their personal information and assets is another one of their objectives. Experian has worked with more than 50,000 clients in financial services, telecommunications, health care, insurance, retail and catalog, automotive, manufacturing, leisure, utilities, e-commerce, property and government. Their U.S. headquarters is located in Costa Mesa, California.

TransUnion is an information solutions company that builds its reputation as a business intelligence partner and commerce facilitator. TransUnion offers financial products and services that enable customers to manage risk and capitalize on opportunities. With the use of technology, paired with extensive analytical capabilities, TransUnion works to prevent fraud crimes and facilitates credit transactions between businesses and consumers. Its headquarters is located in Chicago, Illinois.

Equifax provides business customers with marketing solutions. The company also offers consumers simple options for buying products and/or services, as well as advice into the management and control of personal credit. Its corporate headquarters is in Atlanta, Georgia.

How to Clean Up Your Credit in Illinois

4:55 AM No comments

According to Illinois Attorney General Lisa Madigan, it is possible to repair your credit in Illinois, but do not expect overnight success. Citizens can take control of their finances by seeking help from local nonprofit credit counseling firms and engaging in their own credit repair. Madigan advises against the use of so-called credit repair firms, charging up to $1,000 or more for their services.

Instructions

Visit Annual Credit Report online to instantly view and print your credit report from one of three nationwide credit bureaus. Click "Request Report" on the homepage to begin, or order by phone by dialing 877-322-8228. The credit bureaus--TransUnion, Equifax and Experian--offer free reports, as required by law.

Schedule an appointment with a nonprofit credit counseling agency in Illinois. Popular options include the Consumer Credit Counseling Service (CCCS), which has agencies across Illinois. Check your telephone directory for the CCCS agency nearest you, or ask other community organizations for a referral. For help in Chicago with finding a nonprofit credit counselor, contact the Chicago Urban League or the American Red Cross of Greater Chicago. In Champagne, contact Habitat for Humanity or the Champagne chapter of the Salvation Army. The Urban League, Habitat for Humanity and Salvation Army have branches in most cities in Illinois. Banks and credit unions can also offer suggestions.

Take your credit report to the counseling session. Most services at the nonprofit agencies are free, and you can expect your counselor to offer a free analysis of your report. Together, you may find inaccurate information that can be removed from your credit report by writing letters to the credit bureaus. The counselor can also recommend a plan for cleaning up other items on your report. The plan may include prioritizing the delinquent accounts on your report and creating a budget for paying them off based on your income and living expenses.

Ask about financial literacy classes in Illinois. The classes typically include guidance for repairing your credit and may be available from your credit counselor in Illinois. You can also check with a branch of Alliant Credit Union, the largest credit union in Illinois. In 2009, the credit union launched the Alliant Credit Union Foundation, an organization devoted to improving financial literacy for people living in markets served by the credit union. Contact the credit union by calling 800-328-1935.

What Consumers Need to Know About Credit

8:37 PM No comments

Whether you realize it or not, your credit history has a significant impact on your life. When you apply for a credit card, loan, rental property or insurance, businesses will evaluate your credit information before approving your application. Certain employers even check applicants' credit reports. By staying informed about credit and how it affects you, you can make the best decisions possible for building a maintaining a positive credit history.

Your creditors submit regular reports to the credit bureaus, Experian, Equifax and TransUnion. The credit bureaus then compile these reports into a credit file in your name. Every time you make a payment to your current creditors, open up a new account or pay off a debt, this information appears in your credit report.

Your credit score is a number that represents your lending risk. Although several types of credit scoring methods exist, most businesses rely on the FICO score developed by the Fair Isaac Corporation when evaluating consumer credit records. FICO scores range from 350 to 850 with higher scores indicating a lower lending risk.

Whenever your credit report gets pulled for review, a credit inquiry noting the review appears within your file. The credit bureaus categorize credit pulls as either "hard" pulls or "soft" pulls. Hard pulls, such as those performed by mortgage lenders and credit card companies, have a slight negative effect on your credit scores. Soft pulls, such as those employers perform or that occur when you review your own credit, do not affect your credit scores.

The Fair Credit Reporting Act gives each consumer the right to pull and review one free copy of his credit report each year. By taking advantage of your right to periodically pull and review your credit reports, you can identify credit errors and incidents of potential identity theft that adversely affect your credit scores and take action to correct the problem.

Credit reporting is not a flawless process, and information providers sometimes report inaccurate information to the credit bureaus that then appears on your credit report. The FCRA gives you the right to file a formal dispute with both the information provider and the credit bureaus in order to have the error investigated and corrected. You can file a dispute with the credit bureaus by phone, by mail or online.

While paying all of your bills on time helps you maintain a good credit history, timely payments are not the only factor that influences your scores. You can build a higher credit score by keeping the balances you owe low and maintaining both installment accounts, such as loans, and revolving accounts, such as lines of credit. Maintaining active accounts for long periods of time also boosts your credit scores, since the age of your oldest account determines the length of your credit history which, in turn, accounts for 15 percent of your overall credit score.

How Quickly Does a Credit Score Go Up?

5:13 PM No comments

Your credit score is a constantly fluctuating number between 300 and 850 that credit reporting agencies assign to you based on your credit history, and which lenders use to evaluate you as a borrower. Seemingly harmless activities, such as applying for new credit, can lower your score, and it can take years to recover the lost points. The good news, though, is that you can raise your credit score using proven methods.

When you apply for new credit -- such as an auto, mortgage or school loan or a credit card -- the creditor reports your information to the nation's three leading credit reporting agencies: TransUnion, Experian and Equifax. These agencies keep track of what types of credit accounts you have, how much credit is available to you and whether you make payments on time. Using this information, each agency gives you a credit score, generally between 300 and 800. Most people have scores above 700, which creditors prefer for low-interest credit, but the average credit score is 692 as of 2011.

Your credit score helps creditors decide how much they can benefit from lending to you. If your credit score is 820, for example, creditors are likely to offer you loans at relatively low interest rates because they think you're likely to repay the loan on time. On the other hand, if your credit score is 580, for example, creditors are less likely to approve you for loans, and those that do are likely to charge you higher interest rates as they perceive you as a financial risk. Actions that lower your credit score are the same as those that make lenders wary of lending to you. They include shopping for multiple new credit accounts in a relatively short period of time, carrying a lot of debt relative to your available credit, missing or late payments and a short credit history. Every time you or a creditor inquires about your credit history, it lowers your credit for two years; when you miss a payment, it lowers your score for seven years; and when an institution takes legal action, such as a tax lien, it can lower your score for seven to 15 years.

Though raising your credit score significantly can take more than a decade, you need only do the opposites of the actions that lowered your score in the first place. First, request your credit history and credit score from one of the three major credit reporting agencies. This costs between $1 and $39.95 as of 2011. Contact the agency if you spot any errors in the report, as this can raise your credit score. Use your credit report to determine what actions have lowered your score, whether making late payments, missing payments or having a high debt-to-credit ratio, for example. Your payment history makes up 35 percent of your score and your debt-to-credit ratio makes up 30 percent, so pay your bills on time and keep credit accounts open after you pay them off to improve these. When you shop for new credit, do so within a 14-day period to minimize the effect of creditors' inquiries on your credit score.

Companies often claim they can raise your credit score, no matter what lowered it. Such claims are typically the sign of a scam, according to the Federal Trade Commission. The companies that make these claims commonly encourage customers to engage in illegal activities, such as using an employer identification number instead of a social security number to hide a low credit score. Avoid such companies to save yourself time and potential legal issues. Though it's not always a quick process, you can repair your own credit score.

How to Raise a Credit Score 200 Points

10:55 AM No comments

A low credit score makes it difficult to buy a house or get a loan for school. Your low credit score can even prevent you from getting the new job that provides the income to get out of debt. So how do you break the cycle of debt and raise your credit score? You can raise your credit score by as much as 200 points with research and an understanding of credit ranking. Your credit score will improve if you work with your creditor, pay the bills on time and lower your debt.

Instructions

Obtain a copy of your credit report. Purchase a 3-in-1 credit report with FICO scores from a credit reporting agency such as TransUnion or Equifax. A 3-in-1 credit report gives you a report from all three major credit bureaus. Request FICO scores for all three reports to get complete information on your credit score ranking. Figure out your credit status. Credit scores range between 850 and 300. For creditworthiness, you want to keep your credit score above 700. Credit scores below 500 are considered higher risk by credit card companies and lenders.

Challenge any inaccurate details in your credit report. Draft a letter correcting the information and send it to the credit reporting agency that sent you the report. Keep a copy of the letter with your records.

Compile all of your personal financial records. Review your income, savings, debt and taxes. Decide how much money you can use to pay down credit cards with large balances and high interest rates. Write a list of credit cards to either pay off or reduce the balance.

Consult with a certified financial planner about your financial situation. Ask for advice on how to improve your credit score.

Pay your bills on time. Late payments can result in higher interest rates, shorter grace periods and a lower credit score.

Call your credit card companies and request larger limits. When a credit card company increases your limit, it demonstrates your positive payment history, which improves your credit score.

Pay down the balance of credit cards that are at their limit. Keeping cards close to their limit has a negative effect on credit scores. You want to keep all credit card balances below 30 percent of their limits.

Request a letter of deletion from a collection agency after you have paid off the debt. After a collection debt is paid, the account activity date is reset like a new line of credit. You may need the letter of deletion to prove that you paid the debt on the account if it is challenged in the future and protect your credit score from further damage.

Consolidate your debt to pay it off faster. Transfer the balance of a higher interest rate credit card to a lower interest rate card. Ask your credit card company about balance transfer deals. Some credit card companies offer low interest rate balance transfer deals to their customers. Getting rid of debt will improve your credit score.

Use a home equity line of credit to pay off your debt. Home equity loans often allow you to access a large sum of money at a low interest rate. Since your house is used as collateral, only get a home equity loan if you can make the payments on time.

Request another credit report six months after you have worked on improving your credit score. You should see a substantial improvement in your credit ranking.

Do Inquiries Hurt Your Credit Score?

3:14 AM No comments

Lenders, employers, insurance companies and landlords all have good reasons for wanting to review your past credit history. Whenever a business requests a copy of your credit report from the credit bureaus, a credit inquiry appears within your file noting the request. In some cases, credit inquiries can damage your credit scores.

Soft credit inquiries are those that, although recorded in your credit file, do not affect your credit scores. Employers and insurance companies conduct soft credit inquiries. Whenever you pull your credit report for review, you also conduct a soft inquiry. The credit scoring systems do not take soft inquiries into account when determining consumer credit scores, because soft credit inquiries indicate a need for general information that is not directly connected to a new or old debt.

Unlike soft inquiries, hard inquiries, such as those made by credit card companies, mortgage lenders and collection agencies, have a negative effect on your credit scores. Although each individual's credit score fluctuates to a different degree depending on his credit information, when a business performs a hard inquiry, most hard inquiries only drop credit scores by five to seven points.

The credit bureaus understand that, in order to locate the best rates on a loan, individuals must shop around to a variety of different lenders. Because lenders must pull your credit report before providing you with an accurate loan quote, numerous hard inquiries may take place before you find the right loan to suit your needs. In order to prevent consumers from suffering extensive credit damage while loan shopping, the credit bureaus give consumers 45 days in which to freely shop for the best rates without incurring a hard inquiry beyond that of the initial lender.

Upon pulling your credit report, lenders can not only review your past debts and payment information, they can also review any hard inquiries other businesses have made. Lenders cannot, however, view any soft inquiries on your credit report. Although soft inquiries appear when you review your credit history, these records are only available to you -- not to any third party. Reviewing an applicant's recent credit inquiries helps lenders determine the risk he presents to the company, since applying for multiple credit cards over a short period of time or having inquiries from a collection agency indicates that the applicant could be in financial distress.

The Fair Credit Reporting Act or FCRA notes that a business or individual can only access a consumer's credit history with permissible purpose. If it lacks permissible purpose, a company must obtain your permission before pulling your credit files. Although hard inquiries do not typically have a significant impact on your credit scores, you can demand that any company that conducted an inquiry without your permission or without permissible purpose remove its inquiry. If the company fails to do so, the FCRA grants you the right to file a lawsuit against the inquirer.

How to Subscribe to Credit Bureau Reports

7:11 AM No comments

Check your credit bureau reports regularly. Three credit reporting bureaus offer the reports: Equifax, Experian and TransUnion. Credit bureau reports may vary, so its best to have access to all three. You can monitor for errors and look for ways to improve your credit rating. You can get free or reduced price credit bureau reports on a trial basis. To continue to check your reports, you will need to pay a subscription fee.

Instructions

Apply online to your choice of credit reporting bureau: Equifax, Experian or TransUnion. Its the quickest and simplest way to subscribe to credit bureau reports. Your reports are available to view online whenever you want after you have completed the application process.

Get all three credit bureau reports from TransUnion. You get a 30-day free trial. Its $14.95 a month following the trial. Click the TransUnion link in the references section. Click See Your Credit Scores Now. Enter your details in the online application form. Accuracy is important. Check the box at the bottom of the application form to accept the free trial. Read the terms and conditions. Click I Accept. Complete your payment details. Your card will not be debited during the free trial. It is used for identity verification purposes. Click Submit then review you application. Click Continue. Set a login name, password and password reminder. Click Enter. Access your credit bureau reports online.

Get all three credit bureau reports from Equifax. You can view your credit bureau reports for $4.95 for the first month. Subsequent months are $14.95. Click the link in the references section. Click Get Started. Complete the application form and click Continue. Complete further personal details, click continue, and enter your payment information. Click Submit. Wait for your identity to be verified. Check your application details. Create a login name and password. Click Enter. View your credit bureau reports online.

Go to Experians website (see References) to get your three credit bureau reports. Take the trial subscription for seven days at a $1, then its $14.95 per month. Choose Experian Credit Report and Score,and click Order now. Complete part one of the application process. Click Submit & Continue. Complete part two of the application form and click Submit & Continue. Select your payment method and enter your card details. Click Continue. Review your application form. Click Submit. Enter login details and password. It may take up to 48 hours after submitting your application before you can start to monitor your credit bureau report. Your Equifax and TransUnion credit reports can be viewed in four days following your application submission.

How to Improve Your Credit Score in Three Business Days

11:25 AM No comments

Improving a low credit rating doesn't typically occur overnight or within a few days. Creditors update individual credit files, and a consistent routine of paying bills on time and keeping debts low results in a better rating over time. However, there is a way to quickly boost a bad rating. Some creditors offer rapid rescoring, wherein they'll update your credit file immediately if you detect an error or pay off your balance. Rapid rescoring benefits anyone who needs an immediate credit score boost to qualify for financing.

Instructions

Talk to your lender to see whether it offers rapid rescoring. Not every lender provides this service. If it offers rapid rescoring, ask whether you can get your score improved in three business days.

Pay the fee associated with rapid rescoring. Unfortunately, rapid rescoring isn't a free service. Expect your creditor or lender to charge a fee for quickly updating your credit file. The average fee is $50.

Check credit file. Creditors may mistakenly report a higher credit card balance or erroneously report an account as delinquent. Notify your creditor of mistakes on your credit file that reduce your rating. Ask the creditor to update your file with the bureaus and remove erroneous information. Other errors can include unknown liens, collection accounts and judgments. Quick correction of these errors can help boost your credit score.

Pay off debt. Maxed-out credit cards or high balances on your credit cards also lower your credit rating. Use extra cash to completely pay off your balances.

Credit Checks & Identity Theft

7:03 PM No comments

Identity thieves use your personal identification to impersonate you in various financially damaging ways. They do everything from opening credit accounts to obtaining identifying documents in your name to using your Social Security number for employment. Credit checks can tip you off when someone has stolen your information. You can then prevent future credit checks for fraudulent accounts.

There are two main types of credit checks. The first is done by individuals such as landlords, and by businesses such as credit card issuers and loan companies, to screen you for a business purpose. It could be part of the application process for a new apartment or credit account.

The second type of credit check is done by you. The Fair Credit Reporting Act gives you free annual access to your three credit reports from TransUnuion, Equifax and Experian, the Federal Trade Commission advises. You can review them for mistakes or simply to keep track of what information banks, loan companies and other businesses will see when you fill out applications. They must be ordered from AnnualCreditReport.com, the official federally mandated site.

A credit report should list prescreening inquiries and credit inquiries initiated only by you through an application, and you should recognize all the current accounts. Any other activity could signal identity theft.

For example, you might see a number of inquiries by companies with whom you've never done business. You also could see credit accounts you did not open. Most likely their payment history will be delinquent because they were opened by a thief who spent as much as possible, then abandoned the account.

Identity theft hurts your credit score because anyone who does a credit check will see the fraudulent accounts. A company will think you are a poor credit risk if it sees unpaid accounts. It has no way of knowing you are totally unaware of those bills. It also might reject you for having too many inquiries on your credit history, if the criminal filled out a large number of applications trying to open as many accounts as possible.

You can get free credit reports only once a year, but identity theft can happen at any time. The Privacy Rights Clearinghouse recommends stretching out your free reports by ordering one every four months. Immediately file a fraud alert with all three bureaus if you find something suspicious during one of your regular reviews, USA Today financial columnist Sandra Block advises.

Each bureau's website has forms and phone numbers for reporting suspected fraud. Call any unfamiliar companies that have done inquiries or opened accounts, to confirm the activity was done by an identity thief. Fill out a police report and provide those companies with copies so they do not hold you liable for any bills. Dispute the relevant accounts with the credit bureaus so they will be removed from your reports.

Consumer advice guru Clark Howard cites a credit freeze as a powerful way to prevent identity theft-related credit checks. You pay a small fee to freeze your credit with the three reporting agencies. No one can access your history to consider an application, or for any other reason, unless you give a special password or personal identification number. This effectively keeps criminals from opening new accounts in your name, because loan providers and credit card companies can't see your credit history to complete their applications. You are eligible for a free credit freeze in some states if you are already an identity theft victim.

Does it Hurt Your Credit Score When a Store Cancels Your Card Due to Inactivity

4:31 PM No comments

If you have credit cards that you haven't used in years, you may one day find that your account is closed due to inactivity. Having an account closed by a creditor can be a nuisance if you are in the process of building your credit. When your store card is canceled, this can result in positive and negative impacts on your credit.

Your credit score is determined by five major factors: payment history, amounts owed, length of credit history, types of credit and new credit. When a creditor closes your card due to inactivity, your card is generally open over an extended period of time. The length of your credit history helps your credit score each month. Also, credit scores are positively impacted when consumers have a high amount of available credit. This is due to the influence on your credit utilization ratio.

Your credit utilization ratio is the amount of credit you have available versus the amount of debt you owe. With cards open with no activity, you usually have more credit available to you, causing your score to increase. Once a store closes your credit card, your credit score decreases because your credit utilization ratio has increased. Typically, your credit utilization ratio should be less than 30 percent. You can determine your new credit utilization ratio using the total amount of credit you have available after your account closes and the amount of debt you owe on all your credit cards.

Not all accounts closed due to inactivity have zero balances. Accounts with an existing balance may become bad debt once the account is closed by the creditor. If your account is closed by a creditor while it is in bad standing, the account will be negatively reflected on your credit report. If there is a remaining balance on your account, it may be sent to a collections agency. Pay any collections debt promptly to avoid an influx of calls from collections agents.

Creditors seek borrowers who demonstrate the responsible use of credit. This means repaying debt over a short period of time and avoiding maxing out your credit card. Ironically, not using your card is not a sign of responsible credit use. Not charging your card makes it difficult for a credit card company to judge how you handle debt payments. Charging small amounts to your credit card and repaying the debt in a small amount of time can help build your credit score.

What Steps Should You Take to Rebuild Your Credit After Bankruptcy?

10:48 AM No comments

Bankruptcy is sometimes inevitable when a person has no other way to meet financial obligations. It provides debt relief, but looks bad on credit reports, because lenders see it as a warning that the person may not be fiscally responsible. There are certain steps that help repair the damage over time.

Consumers usually file Chapter 13 or Chapter 7 bankruptcy. Chapter 13 means the creation of a repayment plan that runs from three to five years, while Chapter 7 wipes out most outstanding debts completely. Both pull down credit scores and remain on a person's credit records for seven to ten years, according to Bankrate columnist Liz Pulliam Weston.

Credit accounts are necessary in order to rebuild a post-bankruptcy credit score. It is not impossible to open new accounts immediately after bankruptcy, but it is challenging and more costly. People must often open secured credit card accounts in which they deposit money into a bank account to guarantee repayment. The credit line is equal to the deposit, and payments are reported to the credit bureaus just like an unsecured card. Some lenders specialize in providing unsecured cards to people with poor credit or recent bankruptcies, but they usually impose high fees and interest rates. It may be necessary to temporarily open this type of account to rebuild credit until a person qualifies for traditional accounts again.

FICO recommends rebuilding a perfect payment history on all new accounts because payments make up 35 percent of a consumer's total score. The bankruptcy will affect this area, but it has less impact as time passes if the latest records are positive. People with recent bankruptcies should be careful not to build up too much new debt. Different types of accounts, like revolving credit and installment loans, look better than just one type, but they will hurt the score if the amounts are too high. Consumers should also monitor their TransUnion, Experian and Equifax credit reports to make sure positive information is being reported and that there are no negative mistakes. By federal law, everyone is entitled to free yearly reports from annualcreditreport.com.

It takes time to improve post-bankruptcy credit to a level that qualifies a person for easy credit and favorable terms. According to Pulliam Weston, it takes about a year or two of proper credit management to raise a score enough to get credit cards and loans with good interest rates or to qualify for a mortgage.

Scammers often try to take advantage of people with bad credit. They offer loans or credit cards to people with recent bankruptcies, but ask for up-front fees for insurance, paperwork processing or other bogus reasons. The loan or credit card never materializes and the scammer disappears. The FTC advises consumers to never give money in anticipation of getting a credit card or loan.

What a Credit Rating Score of Excellent or Good Means

5:04 PM No comments

When you apply for a car loan or mortgage, your lender will most likely run a credit check on you. You may be given your credit rating as "excellent," "good," 'fair" or "poor," while not being given your FICO or credit score number.

In order to understand the meaning and financial implications of your credit rating, you must take into account and understand your credit score number, your credit history and the methods used to calculate your score.

Instructions

Frequently opening new credit card accounts may lower your credit rating.

Understand how your credit rating and FICO score are determined. There are five considerations that factor into your credit score. Thirty-five percent of your score is based on your previous credit performance. Your current level of debt counts as 30 percent. Fifteen percent is attributed to the length of your credit history. Ten percent is afforded to the variety of your credit experience and another 10 percent to your attempts to obtain new credit (this includes credit checks).

Connect your rating to your credit score. If your credit rating is "excellent," your FICO score is 750 to 850. A "good" rating entails a FICO score of 660 to 749. A "fair" rating is between 620 and 65 and a "low" rating is 350 to 619.

Link your credit score to what it means for you financially. If your credit rating is excellent and you have little debt, you will receive the lowest loan interest rates available. If you fall within the "good" category, you should be able to obtain loans rather easily, but your interest rates will be a bit higher than those given to someone rated as "excellent."

With a "fair" rating, it will be more difficult to obtain a loan, and you are likely to pay hundreds more dollars per month than someone with excellent credit. Those with a "poor" rating will most likely not obtain loans, or will obtain them only at extremely high interest rates, and sometimes from rather unscrupulous and predatory companies. "Poor" ratings can also negatively impact insurance rates.

The best way to completely understand your credit rating, of course, is to obtain a copy of your credit report.

You can do so by contacting one or all of the three major credit bureaus: Equifax, TransUnion, and Experian. You may also obtain a TrueCredit 3-in-1 Credit Report, which includes data from all three credit bureaus and allows you to compare and contrast data while finding potential discrepancies between reports.

How to Run a Credit Check on a Person

8:54 PM No comments

If you're lending someone money or letting an apartment it makes sense to want to perform a quick credit check first to get a payment history. After all, how someone has paid off creditors in the past is a good indication of how they will make payments in the future. Running a credit check on someone is not difficult but you will need the right information.

Instructions

Review the Fair Credit Reporting Act or FCRA (15 U.S.C. 1681). This requires written consent before seeking the credit report of an individual.

Obtain his Social Security number. You also will need the full name and address of the person's credit you wish to check.

Contact a national credit reporting agency. There are three national credit rating agencies: Equifax, Experian and TransUnion. Write a letter to one of the bureaus or make request online. In the letter, explain why you need the report, list the person's name and Social Security number. The cost of each report is around $12.

FICO Credit Score Calculation Information

11:05 AM No comments

The FICO credit score uses an algorithm created by the Fair Isaac Corporation to convert your financial history into a three-digit number that represents the risk you pose to lenders. The better your score, the more likely you are to be approved for a loan with favorable terms.

The FICO score uses five weighted factors. How you've paid your bills accounts for 35 percent of your score. How much you owe accounts for 30 percent of your score. Your length of credit counts for 15 percent of your score. Your recent applications for new credit and the types of credit you've used each account for 10 percent of your score.

Only credit information from the past seven years affects your credit score, with limited exceptions. Inquiries only affect your credit score for one year and chapter 7 bankruptcy stays on your credit report for 10 years. Newer credit information affects your credit score more than older information.

The FICO score does not take into consideration your age, race, marital status or where you live. In addition, your employment information, such as your employer, salary and length of employment, do not affect your score.

How Fast Do Credit Scores Decrease?

7:17 AM No comments

Credit scores are a like a stream of water--fluid and ever changing. Throw a big rock in it and you will see a big splash. When negative information hits a credit report, it can be a huge wave or a small ripple. What is certain is that your score will drop immediately if you have new negative data.

You usually do not see a decrease at all in your credit score unless you miss a payment or apply for credit. If a negative item or account hits your report, the score decrease will be immediate, because the FICO score is biased toward negative data. A single missed payment, for instance, drops your score 40 to 110 points if you have average credit, according to Les Christie of CNN Money.

Once you mishandle an account, negative data does not appear on your credit report immediately. The credit bureaus have billions of pieces of information to add to their databases each year, so it can take up to 90 days to change your report, but updates usually happen in as little as 30 days, according to Bills.com.

Negative items have the most impact the first day they appear on your credit history. With each passing day, the importance of negative data lessens. After two or three years, old incidents are far less important than fresh ones, and some lenders might not consider any history older than two or three years. Thus it usually takes no more than four years to recover from even the most serious incident, such as filing bankruptcy, according to Liz Weston of MSN Money Central.

Check your credit reports frequently, and if possible, run your credit score, too. If you see a consistent decrease in your credit score, review your accounts for potential delinquencies or negative accounts that do not belong to you. As long as you pay bills on time and do not rack up debt, your credit score should increase. Some of the most common problems that cause a decrease are maxing out a credit limit and falling behind on monthly debt payments.

Does Your Cable Bill Affect Your Credit?

6:26 AM No comments

A credit score is an extremely important part of an individual's financial identity. The importance of a credit score understandably makes many consumers wary about being late on mortgage and car payments, but there are many who also worry about everyday bills, such as cable and utility bills. While the latter type of bills are not as directly tied to your credit score, they can still affect your credit.

For lenders, a credit score determines your reliability as a borrower of money. The lower your credit score, the more risky a lender's money is in your hands. There are a variety of credit scores issued by various credit rating agencies. One of the best known scores, the Fair, Isaac FICO score rates credit on a scale of 300 to 850.

Because credit scores are used largely by creditors to determine a potential borrowers worthiness to take out credit, the most important sources of credit information tend to come from instances in which credit has been extended to an individual, such as with a car loan or a home mortgage. If a borrower has a history of being late or defaulting on these kinds of payments, it is statistically likely he will do so again.

Cable bills, like rent on an apartment, utility bills, parking tickets and any other number of routine payments, are not actually extensions of credit. Cable and utility companies do not normally report late payments to credit agencies. However, this is not always the case. Some companies will report to credit agencies sooner than others, and it is not always easy to tell which ones report and which do not.

When a cable bill goes unpaid, many companies will send the unpaid account to a collection agency, which will take over the bill-collection efforts. Unpaid bills are almost always reported to credit rating agencies by collection companies. These types of unpaid bills will certainly affect your credit.

Is Your Credit Score Affected When You Run It Yourself?

6:24 PM No comments

Most of the financial decisions you make in your adult life influence your credit score. Say you apply for a new credit card, or ask your current creditor to increase your available credit limit. The credit bureaus will add that information to your credit report and use it to decide on your credit score. But, some things do not have an effect, such as pulling your own credit score.

The credit bureaus use information from your credit report to factor your credit score. All of the information in your credit report goes into five categories. Each category makes a percentage of your three-digit credit score. The number of credit inquiries, or credit pulls, you have makes up 10 percent of your score. How well you paid your bills in the past makes up 35 percent of your score. How much debt you carry makes up 30 percent of your score. How long you have had a credit history accounts for 15 percent, and the different types of credit you have used makes up 10 percent, according to the Fair Isaac Corporation.

The credit bureaus keep a record of any time you or someone else accesses your credit scores. The records fall into two categories, hard pull or soft pull inquiries. For example, when you apply for a loan or credit card, the bank will pull your credit scores from the credit bureaus, which results in a hard pull inquiry. The credit bureau will then list the hard pull inquiry on your credit report. Several hard pulls can lower your credit score. The credit bureaus consider you pulling your own credit report as a soft inquiry. A soft inquiry does not appear on your credit report and will not affect your credit score.

Under the Fair Credit Reporting Act, every consumer has the right to get a free copy of his credit report from Equifax, TransUnion and Experian once every 12 months. The three credit bureaus use the Annual Credit Report website to issue the free reports. You can order a copy of your report online, by phone or by mail. However, the credit report does not include your credit score. You can order a copy of your credit score online through the Fair Isaacs Corporation website, MyFICO.com.

You should check your own credit report and credit score often. Checking your credit score will show you what lenders see and give you an idea of where you stand in terms of creditworthiness. Your credit report will show the factors that made up your credit score. Occasionally, the credit bureaus will report errors on a consumer's credit report. Checking your credit report will allow you to catch and correct those errors, helping to improve your credit score.

Are Bank Accounts Listed on Credit Reports?

3:40 AM No comments

Bank accounts can be a good representation of how responsible you are, but they do not show up on credit reports. This does not mean that bank accounts cannot affect your credit score or creditworthiness. A poor banking history could give banks good reason to reject future applications for an account.

Credit agencies leave bank accounts off credit reports because they do not correlate to whether a person is more or less likely to pay a loan back on time. The only time a bank account affects a credit score is when the account comes with overdraft protection. Overdraft protection is a small line of credit to buffer against going over your limit. Banks usually run a credit check to grant this type of service, which will hurt your score by about five points.

A consumer's banking history can still affect his credit and financial life, because consumer reports can list banking habits. The most commonly used consumer report in banking is the ChexSystems report. ChexSystems only contains bad information, so if you have a file in their database, the bank will probably reject you. Since 80 percent of banks use ChexSystems, finding a bank that does not check this database will require a lot of effort and luck.

Whether or not you have a ChexSystems report or a trade line on your credit report, banking history can still factor into a lender's decision to extend a line of credit. Credit applications often ask if you have any bank accounts and for how long. Also, banks might ask questions about your banking history when you apply for a mortgage or car loan.

You can add an explanation for any negative information on your ChexSystems report, suggests Carreon and Associates. Instead of asking for overdraft protection, you can link other bank accounts. If you go over your limit, the bank can withdraw extra funds from a linked account. You need some kind of insurance against a bad check, because bouncing one could lead the bank to pursue legal recourse. A public judgment will count harshly against your credit score.

How to Get Rid of Triple Advantage

7:49 AM No comments

Triple Advantage is a program offered through FreeCreditReport.com. Triple Advantage allows customers to see information from all of their credit reports for free within the first 7 to 9 days. However, if you do not cancel your account before the trial ends, you will be automatically charged for membership on a monthly basis. Since few people want to continue this service long term, it is important to get rid of Triple Advantage before you are billed for a service you will never use.

Instructions

Call FreeCreditReport.com's toll-free customer service number at (888) 829-6560. Unfortunately, this is the only method currently available to get cancel Triple Advantage.

Wait to be connected to a representative. This can take around 5 minutes during peak hours.

Tell the customer service representative of your intentions to cancel your membership. You will then be prompted for your Social Security information and mother's maiden name. If you do not remember this information, other questions about your account will be asked.

Give your reason for requesting a cancellation of membership and listen patiently as the representative details the benefits of Triple Advantage. This may pay off, because often you will be offered membership at a discounted price.

Check your email address used to establish the account for confirmation of cancellation. If confirmation is not received within 24 hours, call the toll-free number again.

How to Fix a Credit Score Legally

1:18 AM No comments

You may be desperate to fix your credit score when it's low, but the Federal Trade Commission (FTC) warns you must beware of scams. Deceptive companies offer to raise your score for a price. They take your money and do nothing or try illegal tactics that can get you into trouble. Fortunately you can fix your credit score legally on your own by exercising your rights under the federal Fair Credit Reporting Act. Your score will go up if you follow the law and focus on the factors that influence it the most.

Instructions

Pay all of your credit accounts and loans by the due date. Thirty percent of your overall score is calculated based on the promptness of your payments, according to FICO, the largest credit score compiler. You will raise your damaged credit score steadily with every on-time payment.

Review your Equifax, TransUnion and Experian credit reports. You are entitled to all of them for free every year though the Fair Credit Reporting Act. They must be obtained through AnnualCreditReport.com, the official federally affiliated site. It lets you order them online or through a toll-free phone number.

Dispute every negative mistake you find. The law gives you the right to do this and requires credit bureaus to erase the information if it is not confirmed within 30 days of your challenge. The credit bureaus provide online dispute forms, but the FTC recommends sending a detailed letter to each bureau through certified mail and requesting return receipts.

Pay as much money as you can toward your credit card accounts. Low balances bring your score up, according to FICO. You won't make much headway paying the minimum amount due because most of the money is applied to the interest. Any extra money brings down the principal balance.

Hide your credit cards so you will not use them unless absolutely necessary while fixing your credit score. You'll undo your positive efforts if you keep making charges until your balance reaches the credit limit. Put your cards in a place that is difficult to access and commit to leaving them alone unless there is an emergency.

How to Add Rent Payments to a Credit Report

8:45 PM No comments

Your credit report shows a detailed history of your financial past. Creditors report your payment history, how much credit you have available and your total debt. Not all creditors report your information to the credit bureaus, especially small and private companies, such as your landlord. However, you can request your landlord add your rent payments to your credit report, which could increase your credit score.

Instructions

Collect copies of personal checks or bank statements that prove your history of rental payments.

Ask your landlord in writing to report your payment history to the three credit bureaus, Equifax, TransUnion and Experian. Attach proof of your history of rental payments and provide your landlord with contact information for each credit bureau.

Write a letter to each credit bureau requesting that they add your rent payments to your credit report. Include a copy of your lease agreement, as well as proof of your rental payments. Send the letter to the credit bureaus via certified mail.

Order a copy of your credit reports 30 to 45 days after the credit bureaus receive your letter. You can order a free copy of your credit report from each bureau once a year through Annual Credit Report. Verify that the credit bureau added the requested information. Follow up with the credit bureaus by telephone or mail if they did not add your rent payments.

How to Fix Your Credit With Clark Howard

4:58 PM No comments

Clark Howard is the host of the Clark Howard Show, a nationally syndicated radio program dedicated to saving money and fiscal responsibility. One problem he has advised his listeners on in the past is how to fix their credit scores. Clark has mentioned that improving your credit score requires a combination of things that are ultimately very easy to do. Among them are paying your bills on time, finding out your credit score, and correcting possible errors on your credit report.

Instructions

Visit annualcreditreport.com and click on the "Start Here" tab. According to Clark Howard's Web site, annualcreditreport.com is the best place to check your credit score for free.

Fill out the personal information page with your name, address, date of birth, and Social Security number.

Choose the credit bureaus from which you would like to receive a credit report. Clark Howard recommends selecting all three: TransUnion, Experian, and Equifax.

Click the "Next" tab and wait to be rerouted to the TransUnion Web site.

Read over the page of offers on the TransUnion Web site. Clark Howard recommends clicking on the tab that reads "No Thanks."

Examine your TransUnion credit report for errors. Missed payments will be highlighted in red and orange boxes while on-time payments will appear in green boxes. If you find an error, submit a dispute to TransUnion.

Save or print out a copy of your TransUnion credit report for your records.

Click "Return to annualcreditreport.com" and you should be redirected to the Experian Web site.

Bypass the offers on the Experian site and click on the "Annual Credit Report" tab.

Review your Experian credit report for errors. Should you see any errors, submit a dispute to Experian and await a response.

Save or print out a copy of the Experian credit report for your records.

Click on the "Return to annualcreditreport.com" and visit the Equifax Web site.

Decline the offers presented to you and click on the credit report tab.

Read over your Equifax credit report for errors. If any errors are present, you may submit a claim online to the Equifax Web site.

Save or print out a copy of your Equifax credit report for your records.

Does it Affect Your Credit Rating When You Close a Credit Card Account?

3:17 PM No comments

Your FICO credit rating gives potential lenders an idea of how you repay debt and what kind of financial risk you may be. All aspects of your credit history, including closing a credit card account, can affect your credit rating.

Having too many credit card accounts can hurt your credit rating. But closing an account can never raise your credit rating, and will lower it in most cases, according to MSN Money.

Your credit score takes into account how much credit you have available and what percentage of it you're using. So when you close a credit card account, you decrease the amount of available credit you have. That in turns increases the percentage of credit you're using.

Part of your credit rating is based on the average age of your credit card accounts, so closing an account you've had for several years could slightly affect your credit rating. The old account information usually stays on your credit report for 10 years, but will drop off sooner if the credit card company deletes the record. When the account drops off your credit report, it decreases the average age of your accounts.

The Credit Risks of Entering a Debt Management Plan

1:28 PM No comments

If you struggle with debts you can't manage on your own, credit counseling is an option. Credit counseling organizations may use debt management plans to help you get back on your feet financially. Through a debt management plan, your credit counselor works with your creditors to lower balances, eliminate fees or reduce interest rates. Each month, you must pay a preset amount to the credit counseling agency, which then distributes payments to your creditors. In certain cases, however, debt management plans can prove detrimental to your credit rating.

A reputable credit-counseling agency's goal is to help you get out of debt --- not to preserve your credit rating. By negotiating settlements with your creditors, credit counselors can eliminate a portion of your debt and make your financial burden easier to bear. Settling a debt for less than you owe, however, has a considerable negative effect on your credit scores, as it indicates that you didn't satisfy your original contractual obligation to pay off the debt in full.

If your creditors agree to the debt management plan your credit counselor proposes, they may update your credit report to reflect the fact that you're currently enrolled in credit counseling. While this doesn't directly affect your credit score, lenders who pull your credit report see that you participated in a debt management plan. Although all lenders view credit counseling differently, some may view your past debt problems as a risk factor of future default.

Reputable credit-counseling agencies work to get the best deal possible for you, but this sometimes involves destroying your credit in the process. Credit counselors know that your creditors are more likely to agree to reduced payments and lower balances if your account isn't current. Thus, debt management plans may involve withholding your monthly payments from your creditors until your account falls into delinquency and the creditor is more willing to negotiate.

At 35 percent of your credit score, your payment history is the single greatest factor contributing to your credit rating. The more payments a credit counseling agency withholds from creditors, the lower your credit rating plummets.

Not all credit counseling agencies are legitimate. Certain companies charge such high fees that consumers can't keep up with reasonable payments to their creditors. Still others set consumers up with debt management plans, only to vanish several months later with their clients' money without ever negotiating with their customers' creditors.

Falling victim to a scam places your credit at risk because you're robbed of funds that could have been applied to your outstanding debts. Not only do the missed payments damage your credit rating, but you're left unable to catch up on your obligations to your creditors due to your financial loss. The National Foundation for Credit Counseling maintains a list of reputable, licensed credit-counseling organizations around the country to help consumers avoid scams.

What is an A1 Credit Rating?

11:43 AM No comments

The term A-1 or A1 credit is a rating of financial strength of companies and other entities issuing bonds and other forms of debt. The exact meaning of the term varies, but is a general indication of financial strength.

Standard & Poor's uses the term A-1 when rating an insurer's ability to meet debt obligations in the short term. A-1 indicates that the insurer has a strong ability to meet its debt obligations. A-1 is the highest rating that Standard & Poor's issues for short-term debt.

Moody's uses the term A1 to indicate the safety of long-term (over one year) credit obligations. Moody's uses the term A to indicate obligations with low credit risk. In addition to the letter grade, Moody's adds a 1, 2, or 3 to the letter with 1 being a higher grade and 3 being a lower grade. An A1 grade is in the upper portion of the medium grades. Moody's rating scale runs from the Aaa (the highest) to C (the lowest).

Consumers should use the ratings scores from institutions such as Standard & Poor's and Moody's when making investments or purchasing insurance. The ratings can be used to compare different companies to determine which are stronger and less likely to default on their obligations.

How Long Can Credit Information Remain on a Credit Report?

11:30 PM No comments

For many individuals, credit is an important part of life. Before financing is extended, credit reports and credit histories are checked. The information that is on those reports will be used to determine whether or not an individual is creditworthy enough to have credit extended to them. For this reason, it is important to check credit reports on a periodic basis to make sure that the information on them is accurate and not out-of-date.

Whenever an account gets opened, credit history begins. This account can be for a home loan, refinancing or a credit card account. Whenever any kind of activity takes place, it gets recorded on the credit report. This includes both payments that are made on time, as well as payments that are late. When a credit report is viewed, the entire history of all the accounts will be visible. Information on the credit report can also be from accounts that have been defaulted upon and accounts that have been closed.

The length of time that information can remain on a credit report varies. In the case of Equifax, one of the three major credit reporting agencies, accounts that were paid according to the original contract stay on file for up to 10 years. Accounts that were not paid off according to the contract remain on file for seven years from the date that there was last activity logged onto the account. Accounts that are submitted by collection agencies also remain on file for seven years from the date there was last activity recorded.

Judgments stayed filed for seven years from the date that the judgment was filed, regardless of whether or not the judgment was paid off. Paid tax liens will be found on file for seven years from the date they were paid, but unpaid tax liens have no time limit. They can remain on the credit history indefinitely. In the case of bankruptcies, these can vary. Chapter 7 and 11, as well as any non-paid Chapters 12 and 13, will be on file for 10 years from the filing date, while Chapters 12 and 13 that have been paid off will remain on file for seven years.

It is important to monitor credit reports on a regular basis, as inaccurate information can cost money. Under Federal law, each of the three major credit reporting agencies -- TransUnion, Experian and Equifax -- have to provide a free copy of an individual's credit report, when requested, once a year. Checking to make sure that there is no outdated information to be found is important.

To prevent inaccurate information from remaining on a credit report, it must be disputed. Any inaccurate or outdated credit information found on a report should be reported to the reporting agency immediately. Documentation will have to be provided to substantiate the dispute, and if it is cleared up, a new credit report will be provided at no charge, with the new information added to it.

How Much Does a Missed Mortgage Payment Affect a Credit Rating?

4:24 PM No comments

Missing any credit payment will negatively impact your credit score. However, missing mortgage payments can have a larger and more profound impact on your credit history.

Timely payments make up more than one-third of your total credit score. Missing or falling behind on a mortgage payment can decrease it by as much as 100 points, according to MSN Money writer Liz Pulliam Weston.

Late or missed mortgage payments can be hard to reconcile because your lender will charge you late fees and penalties. If you continue to miss payments, your lender may start foreclosure proceedings. Losing your home to foreclosure or voluntary giving it back to the lender can cause your credit score to drop 200 to 300 points.

Even if you make your next scheduled mortgage payment after missing one, your lender will continue to report you to the credit bureaus as being late. That's because your payment will be applied to the past due amount, meaning you will become past due again for the current month. To avoid this scenario, you must pay both the past due and current amounts, as well as any late fees and penalties.

Many mortgage companies offer assistance to homeowners who have fallen behind or who have missed a mortgage payment, if they can document a hardship, such as a job loss. If you are in this situation, you need to call your lender immediately to discuss your options

Does an NSF Affect Your Credit?

1:00 AM No comments

An NSF check is a check written on an account that has non-sufficient funds to cover the check. Banks may refuse to open a new account for you because they use a service called ChexSystems, which reports such activity. Lenders check with the Experian, Equifax and TransUnion credit bureaus, which do not directly report NSF checks, but your credit may still be affected indirectly.

Your credit reports show all your current credit-related accounts and old accounts going back at least seven years. Entries include branded credit cards and cards from gas stations and retail stores, loans, mortgages and equity credit lines. Your reports list your payment history for every account, as well as such actions as charge-offs, transfers to collection agencies, court judgments for debt and bankruptcies. The credit bureaus do not list your checking account activity, so your NSF checks do not show up. Your credit score comes from the report information, so bounced checks do not affect it.

Merchants to whom you write bad checks may turn them over to collection agencies if you do not respond to demands for payment. Debt collectors can add such accounts to your credit reports, so collection agency information related related to NSF checks can affect your credit if it gets reported to the credit bureaus. Collection accounts fall into the payment history category, which accounts for 35 percent of your credit score total. Such accounts can legally show up on your reports for seven years.

Collection agencies may decide to sue you for NSF checks if your state's laws allow them to do so, and if the owed amount is high enough to make it profitable. Judgments happen when you get taken to court and the judge rules in the debt collector's favor. These actions are public records that show up in court files and eventually get added to your credit reports. They make you look bad to lenders who review your credit reports. Judgments also become part of your payment history and pull down your credit score for the seven years they can legally be included in your records.

You may create court records because of a bounced check if charges are filed against you and you are found guilty of an NSF-related crime. Many states have criminal penalties for making payments with bad checks, and Steve Bucci of Bankrate.com warns that court records of convictions can show up in background checks forever. Lenders generally limit themselves to credit checks, but employers may check both your credit reports and your background, so the NSF check could cost you a job.

What to Do About Wrong Information at Credit Reporting Agencies

7:15 PM No comments

Your credit report reflects every aspect of your credit management, good and bad. So if any information is wrong and reads negatively on your credit report, you may have a hard time obtaining a mortgage, car loan or even getting a new job. The Fair Credit Reporting Act allows consumers to dispute incorrect information on their credit reports, and in turn the reporting agency must review your request within 30 days.

Write an explanation of what appears wrong on your credit report. Be as specific as possible, and include copies of any documents (court papers and bank statements, for example) you have to back up your claims. If you're dealing with multiple errors, provide separate paragraphs or bullet points detailing each error on your report. At the top left corner of your letter, provide your full name and address. Below that, write the address of the reporting agency. At the bottom of your letter, write a list of the documents you've enclosed.

The credit reporting agency must contact you with a decision, usually within 30 days. If the reporting agency agrees that your information is inaccurate, it must notify all three major credit reporting agencies to have your information changed. For a fee, you may request that the agency sends a statement of the changes on your report to anyone who received your credit report in the last two years.

You can request that the credit reporting agency includes your dispute letter in your credit report for future lenders or employers, but you may have to pay a fee for this service. If you need additional help in dealing with a credit reporting agency, call the Federal Trade Commission at 877-382-4357.

To keep your credit report accurate in the future, take advantage of the one free annual credit report allotted to you by the FCRA. Simply go to annualcreditreport.com to request one free copy of your report every year from one of the three leading credit reporting agencies: Experian, Equifax or TransUnion. Review your report to make sure your information is up-to-date and your accounts haven't been subjected to identity theft.

How to Get Arrears Off of a Credit Report With a Modification in Pennsylvania

2:33 AM No comments

The Pennsylvania Department of Public Welfare Bureau of Child Support Enforcement collected and distributed $1.38 billion in payments owed by noncustodial parents in the fiscal year that ended Sept. 30, 2010. Another $1.13 billion in payments were in arrears, or overdue. If you are in arrears, your county's Domestic Relations Section will report your past-due balance to credit reporting agencies until you pay or prove the report isn't accurate. A modification to a child-support order doesn't resolve the amount unpaid. You must provide proof of any accompanying adjustment in the overdue amount to the credit reporting agencies to remove arrears from your report.

Instructions

Find your county's DRS office by using the agency's online office locator.

Petition your county DRS office for a modification of your child-support order if you meet any of the common causes in Pennsylvania law -- your income has decreased, the custodial parent's income has increased, the child has been emancipated or you have reached a private agreement with the other parent.

Attend the DRS office conference that is scheduled for you. Bring any information that the DRS may request.

Agree upon a modified amount of support with the other parent at the conference or let the DRS enter an order. Appeal the order if you aren't satisfied.

Download a copy of your credit report from AnnualCreditReport.com, which is maintained by the three major credit bureaus, or directly from the websites of Equifax, Experian and TransUnion. Contact the agencies using their online dispute services if outdated arrears information appears on your reports. Provide a copy of the modification addressing arrears if needed.

What Does No Information in a Credit Bureau Mean?

4:49 AM No comments

The only way to establish a credit history is to apply for and use credit. If you don't have a history of using credit, you won't have a credit report. Without a credit history, you may find it difficult to make major purchases, such as a home or a car, making establishing credit a wise financial move.

Credit bureaus are receive and keep track of information about your use of credit. Many businesses submit information about your applications for credit, your payment history, and your credit limits to these bureaus. Each bureau then develops a report that lists your credit accounts and applications, making the reports available to any business or individual who has a legitimate business need to check your credit.

If you don't use credit often, or at all, you aren't alone. Many people prefer to manage their finances on a "cash-only" basis. While this is certainly a responsible approach, it also means that you aren't developing a credit history. If a potential creditor (such as a mortgage lender) requests your credit report from the credit bureaus, the bureaus may have very little, if anything, to include in your report. This can happen even if you did use credit in the past, but your former creditors no longer report your information to the bureaus. Unfortunately, without a credit history, many lenders won't be able to accommodate your need for a loan or credit, even though you've always paid your bills (in cash) on time.

Establishing credit can be difficult, but there are a few things that you can do to develop a good credit history, even if you've gone through most of your adult life without credit. Apply for a credit card at a retail or department store: Many of these stores only require that you have a credit history free of bankruptcy or recent charge-offs in order to qualify. Another option is to apply for a secured credit card. A secured credit card requires you to open a savings account into which you deposit an amount of money that can be used as collateral against your credit limit. Finally, if you've ever had a private loan or line of credit with a company that does not report to credit bureaus, ask if the individual or company is willing to report your payment history to the credit bureaus.

The Fair Issac Corporation, originator of the FICO credit score, now offers a new type of credit score based on "alternative credit data," such as information gathered from banks, landlords, and utility companies. Called an "Expansion Score," this type of credit rating is new, but may be of some use to people who don't have a long track record of using credit.

How to Report Changes to Credit Bureaus

9:24 PM No comments

A credit report is a summary of your financial history--current and past credit accounts, how much money you have borrowed and how well you pay your bills. Many lenders and merchants use credit reports to determine an applicant's creditworthiness. So, it is important that your credit report contains accurate information at all times. However, it is up to you, the consumer, to make sure that your credit report is up-to-date. Learn how to properly report changes to the credit bureaus.

Instructions

Order a copy of your credit report. You will need to obtain your credit report from all three major credit bureaus--Experian, TransUnion and Equifax. In most instances, you can order your credit report online--if the credit bureaus can verify your identity and you do not have a security freeze or fraud alert on your account. Visit AnnualCreditReport.com to obtain a free copy of your credit report from each bureau once a year.

Review all three credit reports. Read through your credit reports very carefully and verify that all of your personal details and account information is correct. Make a list of any inaccurate, incomplete or outdated items that you find on your credit reports.

Submit a dispute form to the credit bureaus. You will be required to complete a separate dispute form for each item that needs to be updated. You may choose to submit the dispute form online, over the telephone or via postal mail. Visit the appropriate credit bureau's website to obtain the dispute form.

Wait for the credit bureaus to contact you. It can take anywhere from 30 to 45 days before you receive a response from the credit bureaus--depending on the nature of the dispute. The credit bureaus must properly investigate each disputed item by contacting the creditor and verifying the information in question. However, each credit bureau will contact you individually with the results of its investigation.

Check your credit report for updates. Give the credit bureaus at least 30 days to update your credit report. After 30 days, order a recent credit report from the three credit bureaus. Make sure that all disputed items have been updated with the appropriate information.

How to Rebuild Credit After a Chapter 7

1:13 AM No comments

The filing of a Chapter 7 bankruptcy is a way a consumer can eliminate his debts to the detriment of his creditors. To rebuild credit is to ask new creditors to give you another chance; however, your bank may not agree to assume any risk on your behalf. The beginning stage of rebuilding credit after Chapter 7 requires credit cleanup, time, diligence and money.

Instructions

Go to annualcreditreport.com and request your yearly free credit reports. Read through these to make certain all accounts that were in the bankruptcy are listed as discharged. If not, send in your bankruptcy papers to each bureau and have them correct your reports. You can do this by calling the consumer use phone number given on each of the three reports. When the corrected reports come back to you, check them for accuracy.

Schedule an appointment with the bank or credit union you use for your checking and savings accounts. Ask the banker about a secured credit card. This is a credit card (line of credit) account that is secured by your savings account. The bank will place a hold on your savings account and give you an open line of credit for all or part of the savings account balance. Your payment history on this account will be reported to the credit bureaus.

Use the secured credit card, but do not allow the balance to exceed more than 30% of its maximum limit since the purpose of this card is to build credit and good scores. It will take six months of payment history before this new account will affect your credit scores.

Make 12 months of timely payments. After this, the bank will most likely release your savings account from its hold and may raise your credit limit.

Build your credit carefully. If you need to buy a car, talk with your banker. You will probably need to make a down payment, but it is best to have a mix of account types in building credit, so a car loan can do your report good as long as you pay on time.

What Happens to Your Credit When Your Car Is Repossessed?

4:33 AM No comments

If you can't afford to pay cash for a car, then you may consider taking out an auto loan to cover the costs. A loan is a credit-based transaction and how you handle that credit obligation will appear on your credit report. Failure to make payments on a car loan can lead to a repossession, so it's helpful to learn how a repossession affects your credit.

When you obtain a car loan to purchase a vehicle, the car serves as collateral for the loan. The lender of that loan expects payment based upon the agreed-upon terms. If you fail to pay the amount due, the lender make take possession of the car. This is called a repossession. Repossessions can be voluntary, where you turn in the car yourself after realizing you can no longer make the payments, or involuntary, where the lender hires a tow truck to come pick it up.

Both voluntary and involuntary repossessions are listed on your credit report as a repossession. A repossession is one of the most devastating items to have on your report. Your credit, or FICO, score ranges from 300 to 850 and 35 percent of that score measures how well you pay your bills. A repossession shows that you failed to honor a credit obligation and thus it will lower your FICO score. How much your score drops depends upon the other factors present on your report.

Although your credit score will drop once a repossession appears on your report, the damage to your credit isn't permanent. As the repossession gets older, or ages, it will have less of an impact on your credit score. According to MyFico, making on time payment on all of your debts will cause your score to increase over time. Also, another 30 percent of your FICO score is the amount of debt you have. Reducing your overall debt load will gradually help raise your score as well.

Even if a lender repossesses a car, that action doesn't terminate your legal responsibility to repay the debt. The lender will auction off the car in an effort to recoup some of the monies owed. The difference between what the lender receives at the auction and the outstanding amount of the loan is called the deficiency. You are responsible for the deficiency and as such, the lender will seek to obtain payment from you. The lender may turn the debt over to a collection agency or sue you in court to obtain a judgment against you for the deficiency amount. A judgment may allow the lender to garnish your wages or seize funds in your bank account.

Does Credit Restoration Work?

8:50 PM No comments

A credit score is a vital statistic for any American in modern times. More than just a risk analysis for creditors, your score could determine whether you get a job and how much you pay for utilities, a cellphone and cable service. You may have noticed ads for credit restoration services that promise to clean your record. These can work, but are not necessary to rejuvenate your credit score.

Credit restoration works, and legitimate credit repair companies have a few weapons at their disposal to help you out. The credit restoration service may go through your report with you and look for common errors, such as an incorrect posting date on a collections account, and dispute the mistake with the credit bureaus. The bureaus must investigate all serious claims and remove any negative item if they cannot verify its authenticity. They might also settle with a creditor to have a delinquent account removed in return for a full payment on the debt.

While credit restoration is real, you do not need to hire a company to this work for you. Disputing errors with the credit agencies is a free service. You can also negotiate personally with lenders to delete a bad item. Some restoration techniques only you can do, such as adhering to a budget to reduce overspending.

Unless you have several mistakes on your credit report or can negotiate bad accounts off your credit report, credit restoration is not an overnight fix. Negative incidents, such as payments that are late by 90 days or more, tend to weigh more heavily than positive data, especially if they are recent. It is not out of the realm of possibility, however, to see an appreciable boost to your score in a few months if you start restoration now.

You can start your own credit restoration plan by setting up automatic bill paying with your online bank account and putting as much money as possible toward your existing debts. Part of rebuilding credit involves using credit, so you may need to apply for a new loan. Do not, however, apply for too much credit if you are a new borrower, because several new accounts will lower the average age of your credit history.

Why Are My Credit Scores So Low?

9:36 PM No comments

Your credit report and subsequent credit score reflect your lending and payment history. While more severe financial setbacks -- such as bankruptcies, foreclosures and charge-offs -- may lower your score significantly, credit bureaus calculate your score based on numerous factors over years of lending history. Additionally, damaging information hits higher scores harder than lower credit scores that already reflect past financial difficulties.

Your payment history influences credit scoring more than any other factor. Late payments and, more importantly, how long the account is delinquent lower your score significantly. The more accounts reflecting missed or late payments, the faster your score drops. Late payments may stay on your credit report for up to seven years. The impact of late or missed payments does fade over time, so older delinquencies lower your score less than newer late payments. Additionally, adding positive payment information helps you recover from the negative influence of a previous poor payment history.

Major payment delinquencies aside, overall debt compared to your available credit has the second biggest impact on your credit score. Having loans or credit cards with balances near the credit limit indicates financial difficulties or potential difficulties to lenders. As your total debt accounts for 30 percent of your credit score, maintaining high balances may lower your score considerably even if you have a perfect payment history.

Generally, your credit report only reflects your payment history. However, if you have a joint account with another person, his account usage does influence your credit score. Having "authorized user" status on a credit card also affects your credit score regardless of your obligation to pay the debt. Excluding couples living in community property states and joint account holders, your spouse's lending history generally does not affect your score.

Double reporting of negative information, inaccurate reporting or just simple clerical errors may result in a lower credit score, since it is calculated based on the information in your credit report. You can have negative information erased from your credit report if the information is inaccurate. Check your credit report regularly for errors -- federal law allows you one free credit report from each of the three credit-reporting agencies annually as long as you order the reports from annualcreditreport.com. Contact the credit bureau and the lender to have inaccuracies corrected.

Credit types and credit inquiries influence your score to a lesser degree. Generally, credit scores increase with a mix of credit types reflecting your experience with a range of lending types. Reduce potentially damaging credit inquiries by spacing new credit applications rather than opening or applying for numerous loans or credit cards within a short period.

Wednesday, December 29, 2010

Equifax

Experian

TransUnion

Sunday, December 26, 2010

Instructions

How to Report to Experian, Equifax and Transunion

Saturday, December 25, 2010

Pricing

Benefits

Credit Monitoring Services

Free Trials

Annual Credit Report

Friday, December 24, 2010

California/Federal Free Credit Report Law

Consumer Rights Contained in the Law

Consumer Reporting Company: Experian

Consumer Reporting Company: TransUnion

Consumer Reporting Company: Equifax

Thursday, December 23, 2010

Instructions

Wednesday, December 22, 2010

Credit Reports and Scores

Credit Inquires

Credit Monitoring

Fixing Errors

Maintaining Good Credit

Sunday, December 19, 2010

Understanding Your Score

What Lowers Your Score -- and For How Long

Raising Your Score

Credit Repair Services

Instructions

Soft Inquiries

Hard Inquires

Loan Shopping

Lender Evaluation

Permissible Purpose

Saturday, December 18, 2010

Instructions

Thursday, December 16, 2010

Instructions

Wednesday, December 15, 2010

Definition

Considerations

Effects

Prevention

Solution

Tuesday, December 14, 2010

Positive Impacts

Credit Utilization Ratio

Good Standing

Responsible Credit Use

Definition

Considerations

Process

Time Frame

Warning

Monday, December 13, 2010

Instructions

Saturday, December 11, 2010

Instructions

Friday, December 10, 2010

Factors

Time Frame

Misconceptions

Identification

Lag Time

Considerations

Tip

Credit Rating

Extensions of Credit

Cable Bills

Collection Agencies

Thursday, December 9, 2010

Your Credit Score

Credit Score Inquiries

Ordering Your Score

Tips

Identification