April 2010 ~ Personal Finance and Money Management

Friday, April 30, 2010

About Credit History

6:44 AM 1 comment

Credit reports are a good indication of how a person handles his finances. Creditors report late payments, delinquent payments and even satisfactory payments to credit reporting agencies so companies can determine if the person is worthy of more credit. A credit history is also used as a way to determine if a person will be a trustworthy tenant, homeowner or car owner. That is why they are so important when applying for a loan and even a job.

Credit reports with a large number of negative reports will prevent a person from getting a loan or financing. When you are late paying your bills or if you have too much debt compared to your income level, your credit report will be detrimental when trying to find financing for a car, home or another big purchase. Even if you do get financing, you will be paying a much higher interest rate than those with decent credit. In some cases, your credit report may also be used to determine if you are a good candidate for certain jobs. Many auto insurance companies are also using credit reports to determine if a person is either responsible or irresponsible with their money because they are likely to transfer those habits to their driving skills.

There are several myths and misconceptions surrounding credit reports and credit history. For instance, many people think paying off all their bills will instantly improve their credit score. This isn't true. Credit reports are monitored for years and it takes seven to 10 years for negative items to get removed, depending on the negative item. As a result, your credit history shows your financial habits over the last several years and your score will be affected until those negative pieces of information are removed.

Another major misconception about credit reports is that you can pay someone to clean up your history. This is only true in instances in which false claims and reports were made on your credit reports. However, if you have negative claims on your credit history, it's difficult and even impossible to get those items removed for several years. They may be able to get it removed for a short period of time, but those items will be placed back onto your report once it's verified as legitimate.

There are three main credit reporting agencies: Equifax, TransUnion and Experian. Some creditors only report to one of these agencies while others may report negative or positive items to all three bureaus. They serve the same purpose and potential lenders or creditors usually check all three before making their final decision.

Creditors can benefit from credit reports because they can determine if a person is a good financial risk before loaning him money or financing his purchase. This helps consumers in general because the companies do not need to pass those losses onto other customers. People with respectable credit reports also benefit because they can finance large purchases, get credit cards and be approved for loans for a variety of reasons. They also receive lower interest rates for good credit scores, which can save them thousands of dollars over the terms of the loan or financing.

Credit reports are comprised of many considerations regarding a person's financial and personal history. When looking at your credit report, you'll find several pieces of information that you may not have even known were available. For instance, you'll likely see all of your previous addresses listed on your credit report as well as many of your former jobs. In addition to that, you'll find sections that list the account numbers you have with your creditors and the amount of money that you owe each one. Also, the contact information is listed with each creditor so you can contact them if there is inaccurate information on your report. Finally, you'll see your status with each creditor. It will show how late you are with payments, if your account has been "charged off" or if you are in good standing with the company.

How to Build Your Credit Score Fast

12:57 PM 4 comments

Having a high credit score means you don't have to worry about being approved for loans and credit. And the higher your score, the lower your interest rates will be. Anyone can get control of their finances and raise their credit score over time, but if you're trying to borrow right now, then chances are you don't have much time to lose. Luckily, there are a couple of tips you can follow that should help bump your score up fast.

Instructions

Check your credit report. Make sure there are no mistakes on it, and see what kind of outstanding negative issues you have that are bringing your credit score down. Everyone is entitled to one free credit report each year from each of the three credit bureaus -- Equifax, TransUnion and Experian. Get your reports from the Annual Credit Report website (see Resources), and check the reports from all three bureaus.

Write a dispute letter if you find a mistake on your credit report. Send the letter to the credit bureau whose report contains the mistake; if more than one report has a mistake, write to more than one credit bureau. Ask them to investigate and remove the mistake from your credit report. Send copies of any proof you have that the negative information is really a mistake; investigations are usually done within 30 days.

Pay all of your bills on time from now on. One of the best ways to show you're a responsible borrower is to make on-time payments. This doesn't apply to just your credit cards either -- you need to pay your rent or mortgage, electric bills, water bills, auto loans, insurance and everything else on time too. If you're behind on any payments, pay those past-due balances off.

Get an installment loan, like an auto loan or a personal loan from the bank, to show you can handle different kinds of credit. Installment loans are different from credit cards, because they are paid back over a period of time. Credit cards are what is known as revolving credit, which means you can keep reusing them; installment loans like mortgages are just paid back in payments.

Make big payments on your credit cards. To see a jump in your credit score, reduce the amount of debt you have as fast as possible. Use that personal installment loan you got from the bank to pay off your credit cards to less than 30 percent of their credit limit.

Stop using your credit cards. Revolving debt means you can just keep spending the money you're paying on the card balances. If you stop using the credit cards, then every payment you make actually goes toward reducing your debt.

Does Rental History Reflect on My Credit Report?

9:01 PM 1 comment

Although a potential landlord might pull your credit report to check up on your financial responsibility before renting to you, your credit report does not usually show past rental history. If a potential landlord wants information on your previous rental history, he will ask for the name and phone number of your past landlords and call them.

In most cases, your rental history will not appear on your credit report at all. This is because landlords need to pay a fee to report information to any of the three major credit bureaus---TransUnion, Experian and Equifax. Landlords will typically not go through the trouble of reporting your rent payments to the credit bureaus. However, you might be able to find the occasional landlord who does report your rental history, in which case you should be very careful to make payments on time.

If a landlord turns a delinquent account over to a collections agency in an effort to collect your unpaid rent, this will appear on your credit report. This is because collection agencies report to the credit bureaus. Avoid having an account go to collections by paying your landlord the rent that is due, even if you are past the due date.

Your landlord might report your rental history to an agency that specializes in collecting tenant payment history. These agencies provide reports to prospective landlords so they can check up on whether a tenant has a history of paying on time. Under the Fair and Accurate Credit Transactions Act, you are eligible to get a free report each year from any company that maintains tenant history reports.

Because your rental history is not an effective way to build a positive credit history, you should have at least one or two accounts that will appear on your credit report. Student loans, auto loans, mortgages and credit cards are a few of the most common types of accounts to appear on your credit report. Make payments on time every month and keep the amount of debt on your credit cards low to build a good credit score.

What Is a Person's Credit Score & How Is it Determined?

2:23 AM 1 comment

The Fair Isaac Corporation, also known as FICO, created the algorithm use to convert your financial history into your credit score. This credit score gets used by creditors as they decide whether to issue you credit.

The credit score identifies the risk of a person defaulting on a future loan. According to the Fair Isaac Corporation, the credit score does not show whether a person will be a good or bad borrower.

The FICO credit scoring model uses five weighted factors in figuring your credit score. Your payment history accounts for 35 percent, amounts owed counts for 30 percent, length of credit for 15 percent and your mix of credit and credit applied for recently each count for 10 percent.

Financial institutions, such as banks, report information about your debt accounts, such as loans and credit cards, to the credit bureaus. The three major credit bureaus in the United States are Experian, TransUnion and Equifax.

Which Is Worse for the Credit Score: Many Late Payments or a Foreclosure?

1:46 PM 3 comments

In 2009, 5.4 million Americans were behind -- called default -- on their mortgage payment, but as many as 20 percent of them were "planned," according to the Wall Street Journal. This happens because it can be in a homeowner's best interest, financially and for a credit score, to walk away from a home rather than struggle to make monthly mortgage payments.

Whether late payments or a foreclosure is worse for your credit score depends on how many months late you are. Being late by 30 or 60 days won't affect your credit score much once you become current again. Having a payment late by 90 days is much more serious and lowers a credit score 70 to 135 points, while a foreclosure does 85 to 160 points of damage, according to CNN. The 90-day late payment, however, makes future late payments much more serious.

Even though foreclosure is worse than several late payments in the short term, it might be better for your score's long-term health to accept foreclosure. Bad items stay on a credit report seven years. Struggling to pay off a mortgage and constant late payments might mean you will never be able to get a score back into the excellent range.

If your lender sells your home but the selling price isn't enough to pay off the mortgage, most states allow lenders to pursue the borrower for any remaining balance . This could mean letters and phone calls asking for the deficient balance or a lawsuit that might include wage garnishment or a liens against other property. A lien or any other public judgment continues to count against your credit score.

Creditors hope to avoid foreclosure, because it often means the bank takes a loss. Once you become late on your payments, you can use that as leverage to negotiate a lower monthly payment or a deferment. This hurts your credit score, but could make life less stressful. If you have not yet defaulted on your mortgage, you can probably refinance -- switching your mortgage with a new one at a lower rate, suggests Liz Weston of MSN Money Central.

How Much Can You Raise Your Credit Score by Paying Down Balances on Credit Cards?

4:18 AM 2 comments

If you carry large debts on your credit card, your credit score will suffer. Having a low credit score will make it difficult for you to open a new credit card, get a loan or find a home mortgage. Carrying a balance on your credit cards will also cost you more in interest fees. By paying down the balance on your credit cards, you can improve your credit score.

The Fair Isaac Corporation reports that your total debt accounts for 30 percent of your overall credit score. Your total debt includes any balances you carry on your credit cards and the interest those debts accumulate. Your debt ratio also includes amounts you own on personal loans, auto loans and mortgages. If you have any unpaid credit accounts in collections, those debts will count towards your total overall debt as well.

Paying down your credit card debt will improve your credit score. How much improvement depends on your current credit score, amount of debt and other factors that affect your credit score such as your payment history. For example, if you have reached your available credit limit on more than one credit card and you pay down the balance on each, you will likely see more of an improvement than someone who paid down a small balance on one credit card. Paying down your credit card debt will also save you money on interest.

Lenders consider your available credit limit when deciding whether to extend you a loan. Ideally, you should keep your total debt below 10 percent of your available credit limit. However, reducing your debt to 30 percent of your available credit limit will still help improve your credit score, according to MSN. Start by paying off the debt on any card you have maxed out. Next, pay down the debt on the credit card closest to the limit. Repeat this process until you pay down all of your credit cards.

Credit card companies charge off any debt you do not pay. Typically, the company will send your debt to a collection agency. The debt will then show on your report as a collection account. By paying off these collection accounts, you will lower your total overall debt. However, the collection account will stay on your report for seven years, according to the Fair Isaac Corporation.

Steps to Clear a Credit Report

9:15 PM 2 comments

Clearing up your credit report and removing negative information helps you get financing with a lender. The information on your credit report can either make or break a loan deal, and your credit determines the interest you'll pay on a loan. Follow these steps to clean up your report and get your application approved.

You can't clear up your credit report without first knowing the contents of your personal file. Getting copies of all three of your credit reports can reveal what lenders are saying about you. Annual Credit Report makes viewing your credit history easy, and you can get one free report from all three bureaus yearly using this online source. Once you have your report in-hand, pay attention to your status with each creditor and look for negative information such as late payments, collection account or high credit card balances.

Creditors report accounts that are 30 or more days late. Clear up your report and reverse late payments by paying your bills before the due date. If your credit report reveals a late payment, but you can't recall forwarding a late payment, contact your creditor to investigate the discrepancy. Creditors make mistakes, and the sooner you bring mistakes to their attention, the sooner they can update your file and remove errors. Tips for getting payments to creditors on time include signing up for automated payments or paying bills a week or so before the due date.

Collection accounts can leave a mark on your credit file for up to seven years. Talk with the creditor or lender who sent your account to collections. Ask if they will consider removing the collection account if you pay off the debt in full. Some creditors will accept this arrangement and remove past due accounts after receiving a payment to pay off the debt. Get all arrangements in writing, and check your report after a few months to make sure creditors complied with the agreement.

Creditors report a multitude of information associated with your credit account such as the date opened, account status, credit limit and account balance. High account balances on your credit report can harm your credit score. Since the information on credit reports determine your FICO credit score, paying down your balances on credit cards and other debts helps build a strong score. Good ways to pay down debt include using cash instead of credit, making larger payments, and cutting back on needless spending.

Do Debt Collectors Report to Credit References?

2:09 PM 3 comments

A credit reference is a bank, credit union or other lender that has loaned you money. The creditors maintain detailed information about your payment history and provide monthly reports to major credit bureaus such as TransUnion, Equifax and Experian. Debt collectors usually report to credit bureaus and not directly to credit references.

Some creditors employ their own debt collectors as part of an in-house collections team. MSN Money reports, that credit card accounts are usually closed and listed as charged off after falling six months behind. Other credit accounts such as auto loans and mortgage loans are closed sooner. Charged off credit cards are initially assigned to internal debt collectors but may later be sold or assigned to an outside firms. Some debt collectors specialize in purchasing old debts for pennies on the dollar.

Debt collectors usually notify credit bureaus about defaulted accounts now listed for collection. The credit bureau then updates the account to show it as a "collection account." Collection accounts are negative credit events and cause credit scores to drop. Some lenders, such as home mortgage companies, refuse to approve credit applications with collection accounts. Approval is possible after removal or payment of collection accounts.

Credit repair firms advertise that they can remove collection accounts in about a month. However, the Federal Trade Commission reports that the information remains on credit reports for seven years and cannot be removed unless it is outdated or wrong. Damage to credit scores is greatest when the collection account is first added, with the impact diminishing over time. People with multiple collection accounts may find it difficult or impossible to qualify for credit cards and loans at reasonable interest rates.

Negotiation sometimes allows for removal of collection accounts from credit reports. The Fair Credit Reporting Act allows creditors and debt collectors to update previously posted credit information or to remove it. Some debt collectors may agree to so-called "pay-for-delete" arrangements allowing removal in exchange for payment in full. However, some creditors and debt collectors have firm rules against this.

Credit Scoring Methods

9:04 AM 2 comments

In most cases, when you apply for credit at a bank, store or other business, the business pulls your credit report and your credit score. The business get your credit report from one of the big three credit reporting agencies: Equifax, Experian or TransUnion. The business also obtains your credit score from either the Fair Isaac Corporation (FICO) or the credit reporting agencies via VantageScore. The credit score is a shortcut method for the business. The credit report gives your entire credit history, from your first loan or credit card through your current balances. The credit score distills that entire credit history into a single number or letter grade. In many cases, when a business needs to make a quick decision on whether to grant you credit, it will base its decision on your credit score.

FICO has been the most widely used credit-scoring method. It's generally considered the industry standard, although it has a more recent competitor, VantageScore. To arrive at its scores, FICO measures, in order of importance: Whether you have paid your accounts on time; how much debt you currently have; how long you have been using credit; whether you're currently applying for a lot of credit; and other minor factors, such as whether you've had many different types of credit--including credit cards, lines of credit and loans. FICO weighs these factors and awards you a score from 300 to 850. A higher score means businesses consider you a better credit risk. Specifically, a FICO score of 850 means creditors don't see much risk in lending you money. They believe you will pay them back. On the other hand, businesses believe the likelihood you won't repay them goes up as your FICO score goes down. Most businesses won't grant credit to someone with a FICO score of 300.

Traditionally, all three major credit reporting agencies have used FICO to generate credit scores for sale to their customers. FICO scores generated by the credit reporting agencies may differ from each other and from that generated by FICO, because each agency may collect different credit information about you. Equifax's Score Power includes your credit report and an Equifax-calculated FICO score called BEACON. TransUnion's FICO score for its customers is called TransRisk. Experian's in-house FICO score is called Experian Fair Isaac Risk Model. But Experian also created its own PLUS score, which considers the same factors as does the FICO but weights each item differently. Experian's PLUS score measures the frequency with which you've been applying for credit; how many credit accounts you have; your payment history; and how much you currently owe on all accounts. PLUS awards a score between 330 to 830. A higher score means you are a better credit risk. Experian believes PLUS is easier to understand than FICO and measures recent changes to your credit history and spending habits more accurately.

In 2006, the three credit reporting agencies released VantageScore, a new credit scoring method to compete with FICO. VantageScore measures credit history factors similar to FICO. In order of importance, VantageScore measures your payment history; how much credit you're using compared to how much credit is available to you; how much total debt you owe; the length of your credit history; how many recent inquiries you've made for new credit and accounts; and how much credit you have available to you right now. VantageScores are determined numerically, ranging from 501 to 990, but are reported alphabetically. The higher, the better. So 901 to 990 = A, 801 to 900 = B, 701 to 800 = C, 601 to 700 = D and 501 to 600 = F.

The credit reporting agencies all now report VantageScore. But they still report all the other scores, too.

How to Remove Charge Offs

9:55 PM 4 comments

A charge-off occurs after a debt becomes delinquent for an extended period. When a creditor lists a debt as a charge-off, it means he is declaring it uncollectable. There are accounting and tax benefits for a creditor to declare charge-off delinquent debts; the process is common and debts are routinely charged-off after as little as six months of delinquency. Debts that are charged-off are also filed on a consumer's credit report, where it can remain for up to seven years. Debts that are charged-off are still legally valid and can be collected. But there are ways to attempt to remove charge-offs from a credit report.

Instructions

Contact the original creditor. After a debt is charged-off, it is usually sold to a collection agency, if the collection agency is paid, the charge-off will remain on the consumer's credit report. You must contact and negotiate with the original creditor to have any chance of removing a charge-off from your credit report.

Ask to speak to someone in the finance department who has the authority to remove charge-offs from credit reports.

Persuade the creditor to remove the charge-off in exchange for payment of the debt. Know in advance the total amount of the debt and how much time will be needed to completely pay it off. Being able to pay off the debt in a single payment immediately will provide the most negotiating leverage.

Ask that the account be listed as "inactive" or "closed" as a last resort if the creditor will not remove the charge-off.

Get a copy of any agreements in writing. If possible ask that the person to mail or fax you a copy of the terms that were agreed upon. If this is not possible, get the contact information of the person who agreed to the terms, write up the terms of the agreement, send a copy to their mailing address and request a signed copy be returned. Do not make any payments until a signed copy has been returned.

Pay off the debt following the terms agreed upon, after you receive a signed copy of the agreement stating that the charge-off will be removed after payment in full.

Request an updated credit report from each credit reporting bureau to ensure that the charge-off was successfully removed. By federal law, U.S. citizens can request one free credit report from each bureau annually. See the resources section.

How to Check Credit Worthiness

9:40 PM 3 comments

Knowing your credit worthiness can help you obtain financing and protect against credit card fraud. Many lenders will not lend you money if your credit is in poor or even average standing. Poor credit worthiness leads to difficulty when you apply for car loans, mortgage loans, utility service and insurance. Checking your credit worthiness can also alert you if you've been a victim of credit card fraud because you will see if your credit score has plummeted for no apparent reason.

Instructions

Request a free credit report through AnnualCreditReport. The federal government mandates that each person is entitled to one free credit report each year. AnnualCreditReport is a centralized site created by the three major reporting agencies. It provides a free report for any consumer who has not received a free report in the past 12 months.

Request credit scores directly from the three major consumer credit reporting companies, if you have already used the free service within the past 12 months. TransUnion, Equifax and Experian all gather credit information from your bank, utility companies and other creditors. You can request a report online or through the mail. All three companies charge a fee for providing a credit report.

Obtain a FICO credit report. FICO credit scores are the most widely used. Several credit categories make up your FICO score, including payment history, amounts owed, length of credit history, new credit and the types of credit you have used. Many lenders use your FICO score when they are deciding whether to approve you for a loan. You can obtain your FICO score online for a fee.

Why and How to Get Your Credit Report and FICO Score Regularly

1:06 AM 3 comments

Your credit report and credit score have a big impact on your life. It affects your ability to get a loan and the rates you'll pay when you get one. Looking at your FICO score and report regularly ensures that there are no mistakes and allows you to identify potential fraud. Catching these early will allow you to correct the problem quickly. Additionally, knowing your credit score can help you determine whether it's time to apply for a loan--if your score is close to the next tier of rates, it's best to wait until your score improves.

Instructions

Visit AnnualCreditReport.com. This is the official website to get a free copy of your credit report. Other sites require you to join a credit monitoring program in order to obtain your report and scores. While this site does not provide a free credit score, it will allow you to see your reports from the three credit bureaus.

Select your state from the drop-down box in the middle of the page and click the "Request Report" button.

Enter your personal information into the fields. Click the "Continue" button.

Select the credit bureau or bureaus whose reports you want to see. Click "Next" and "Next" again on the next page. This will take you to the website of one of the credit bureaus.

Confirm your identity with the credit bureau. The process varies slightly at each site, but you'll be asked questions to verify your identity, such as identifying past addresses.

View your credit report. After you've confirmed your identity, you will see a link to your credit report.

Pay to receive your score, if you desire. Your free credit report only shows the information on your report. You will have to pay a small fee if you want to know your actual score.

How to Cancel Privacy Matters

6:49 AM 2 comments

Long before The National Bureau of Economic Research released data showing that the U.S. economy had entered a recession in December 2007, identity theft was a major problem for U.S. consumers. Bad economic times have since led to an increase in identity theft. In order to decrease the chances of becoming victims of identity theft, many people have subscribed to Privacy Matters, a credit monitoring and identity theft protection company. However, many people are finding that the $19.95 fee is too much to deduct from their paychecks, which might have shrunk or even disappeared. As a result, many are canceling their membership with Privacy Matters.

Instructions

Determine which type of service you have. Privacy Matters offers two types of packages. Privacy Matters 1-2-3 allows you to obtain and access your credit report and scores from all three credit bureaus. Privacy Matters Identity notifies you when a new account is opened in your name or when an action such as change of address or phone number is reported to the credit bureau.

Find your membership number. This will make it easy for the representative to access your record. However, they can look up your account information using other information such as your phone number and Social Security number.

Call Privacy Matters to cancel your membership. Each program has a different contact number. For Privacy Matters 1-2-3, call 1-877-993-6264. For Privacy Matters Identity, call 1-888-840-6301.

Request email or written confirmation of your cancellation. Many members have reported that they were charged the monthly fee even after canceling.

How Does a Paid Settlement Affect My Credit?

11:35 AM 1 comment

When you are long overdue on debt payments, creditors will sometimes accept a settlement, which is a payment that does not cover the full amount you owe. Although a settlement allows you to get rid of a debt without paying it off in full, it also damages your credit score.

An account that appears on your credit report as a paid settlement will hurt your credit score. The number of points it will take off depends on what your credit score was before you settled. The higher your score was, the more points you will lose. FICO, which provides the most common credit scoring formula, estimates that someone with a credit score of about 780 before the settlement would lose 105 to 125 points. Someone with a credit score of 680 to begin with would lose only 45 to 65 points.

Negative items, including paid settlement accounts, can stay on your credit report for up to seven years from the time when the account was closed. If you settle an account with the original creditor, it will stay for seven years after the settlement date. However, if you settle an account with a collections agency, it is seven years from when the original account was sent to collections. Therefore, it might not be a full seven years after you pay the settlement. For example, if you stopped paying an account in June 2009, it went to collections in December 2009 and you and settled it in March 2011, it will stay on your account until December 2016.

Creditors will be wary of lending to you when you have a settlement on your credit report. This is not only because it lowers your credit score, but also because it indicates that a creditor did not receive full repayment. If you have settled a debt before, you are more likely to do it again, and creditors lose money on settlements. When you do receive credit, the settlement is likely to cause you to pay a higher interest rate than you would have without the settlement.

When keeping your credit score high is extremely important to you, one option is to negotiate for the creditor to report the account as "paid as agreed" instead of a paid settlement. In this situation, you will probably have to pay a slightly higher amount, but the benefit to your credit score could save you far more in the future by securing lower interest rates for you. When you negotiate for a "paid as agreed" notation, get the agreement in writing before you pay anything.

Are You Entitled to a Free Credit Score?

8:59 AM 2 comments

Credit scores are a critical factor in your financial life. Using a complex algorithm, credit bureaus establish credit scores that creditors use to determine the likelihood you will repay your debts after borrowing money. Information in your credit report is used to determine your score. By law, you may view a free copy of your credit report from each of the three major credit-reporting agencies each year. However, the law does not include the right to view your credit score at no charge.

The Fair Credit Reporting Act states that consumers are allowed one free credit report per year from each of the three major credit-reporting bureaus: Experian, TransUnion and Equifax. In addition, credit bureaus are obligated to remove information from your credit report that is inaccurate or false. Removing derogatory information from your credit report can improve your credit score. Once your credit report is updated after a dispute, you receive a copy of your credit report at no cost. However, your credit score is not included with this information. The Fair Credit Reporting Act protects the information in your credit report, but does not give you the right to view your credit score.

Several options exist that allow you to view your credit score at no cost to you. For example, when you shop for a car or mortgage loan, lenders access your credit score. You can request to view your credit score to assess whether or not you are receiving a fair interest rate. Mortgage lenders do not always use credit scores from all three credit bureaus. Find out which credit bureaus the lender uses so that you know where your score originated. If you want a copy of your score for your records, request that the lender print out a copy of your credit score for your review.

Most credit score resources require a paid subscription. However, some websites display your score at no charge to you. For example, CreditKarma and Quizzle allow you not only to view your credit score, but also to monitor your score over time. Sign up for a free credit score monitoring service that does not require a credit card. Any website that asks for your credit card may require a fee after a trial period. Read the fine print to determine whether you will be billed or charged for a membership with the website.

Viewing your credit score is not a right, but it can be achieved for free. To confirm you are getting an accurate picture of your credit rating, purchase a credit score from one or more of the three major bureaus for comparison purposes. If you receive different results, you can cancel your free account without penalty. Credit scores are updated monthly, which means that even if you view your score today, it may not be accurate in a few weeks when creditors report new information about your credit accounts.

Marriage & Credit History

1:03 AM 3 comments

Your credit report details your financial history as reported to credit bureaus by past and current lenders. Credit bureaus apply a score based on your lending history and potential creditors use the score to determine your creditworthiness. How marriage influences your credit history and score depends whether you plan to merge accounts, jointly acquired debts and state laws.

There are no joint or combined credit reports. Each report lists an individual's separate lending history regardless of marital status. However, how you combine your finances after marriage may affect both credit reports. When this happens, one spouse's credit score may drop or increase depending on the other spouse's credit history and current financial situation.

Applying for or opening joint loans or credit cards reflects on both credit reports. Adding your husband to an account or being added to one of his also changes your credit report. Additionally, the Fair Isaac Corporation credit scoring model treats authorized users on credit cards the same as account holders. Generally, authorized user status does not make you liable for the debt as you didn't enter into a contract, but account usage will affect your score.

If you live in a community property state, you and your husband are both responsible for debts and assets designated as "community property." Generally, community property laws do not apply to debts and assets acquired before you married. Community property does not combine your credit histories, but it may affect future lending.

Normally, creditors only use the applicant's credit information when deciding loan or credit card approval. Some large loans such as mortgages may require access to both credit reports prior to lending. If you live in a community property state, creditors may request both credit reports prior to lending and both scores determine loan rates. Lenders commonly check both credit reports for loans when both incomes are used on the application.

If your credit is less than favorable while your husband has stellar credit, adding your name to a loan or credit card in good standing often improves your credit history. Adversely, if you add your husband to an account or allow him authorized user status on a credit card with a poor repayment history or a high balance compared to the available credit, his credit score may drop.

How to Check Activity on Your Credit Report

8:07 AM 1 comment

A credit report tracks an individual's history of making timely payments on debt obligations. According to MSN Money, more than 30 million people struggle with credit issues that make getting credit difficult. Regularly checking activity on your credit report allows you to correct inaccuracies and catch identity theft.

Instructions

Order a free credit report. Every consumer can order a free credit report every 12 months, according to the Federal Trade Commission (FTC). You can order a free credit report online from all three credit bureaus (see Resources).

Review information on your credit report. Review the credit report for inaccurate late payments and accounts that aren't yours. Also, look for inaccurate addresses and employers that don't look familiar. These inaccuracies could be a sign of credit fraud, according to the FTC.

Correct inaccurate information. If you find inaccurate reports of late payments, contact the reporting bureau. Each credit bureau--Experian, TransUnion and Equifax--offers online dispute forms on their websites. Be prepared to provide supporting documentation such as canceled checks or copies of statements that support your dispute. Most credit bureaus process these requests within 45 business days. If the claim is approved, the inaccurate information will be removed from your credit report.

Consider signing up with a credit monitoring service. These services notify you if there are changes to your credit file. An inquiry on your credit file or opening of a new account may trigger a notification. These notifications can be sent directly to your email. All three credit bureaus offer these services, which typically costs $20 or less each month.

Credit Score Limitations

8:37 AM 1 comment

Credit scores are created from information included in your credit report. Each month, your creditors report information on how you manage your account to the three major credit bureaus. Creditors use your credit score to assess whether you are a low-risk or high-risk borrower. However, credit scores have limitations. Creditors cannot report any personal information to the credit bureaus.

The Fair Credit Reporting Act gives consumers the right to know what's in their credit report. The information in your report reveals whether or not you are likely to repay your debt. For example, credit reports contain information on your accounts in good standing, late payments or any legal filings such as bankruptcy or judgments against you. The information in your report determines your credit ranking. Though your name, address and employment information is included in your report, the inclusion of any other personal information in your report is illegal.

The purpose of eliminating personal information such as race and gender in your credit report is to prevent discrimination. Consumers are protected under the Equal Opportunity Credit Act and Fair Credit Reporting Act from discrimination based on the information included in their credit files. Creditors cannot ask questions related to your familial status, religion, national origin or sexual orientation on your credit application, which means this information is not reported to the major bureaus or included in your credit score.

Salary information helps lenders determine whether you can afford to repay your debt. Credit scores do not reveal salary. Instead, creditors request salary information on your credit application to use as a deciding factor when issuing credit. Your credit score might reveal that you are unable to repay a debt while your income suggests the opposite. For example, if you have liens, judgments or large amounts of consumer debt relative to your available credit, your credit score decreases. However, you may have the income to support repaying your balances and judgments in full. Credit scores, however, are unable to reflect this fact.

Though credit reports reveal a large amount of facts about your financial history, they do not reveal your personal character. People fall behind on payments and accumulate debt for a number of reasons, including a death in the family, loss of job or unforeseen medical expenses. These instances are beyond a consumer's control and reveal little about whether the applicant is usually willing to repay his debts. Credit scores also often are inconsistent, which prevents creditors from gaining an exact assessment of your credit habits. Not all credit bureaus report information identically, which can mean an applicant can fare better at one credit bureau than another.

Does a Post Office Box Show Up on a Credit Report?

11:49 AM 62 comments

While a post office box, or P.O. box, might seem like a fairly insignificant thing in the world of lending, it can have a significant impact on your ability to gain credit and your credit score. However, just owning a P.O. box does not immediately affect your credit rating. Instead, it may show up as a delinquent account or part of your demographic information.

The major credit reporting bureaus -- TransUnion, Equifax and Experian -- do not report P.O. boxes as an account on consumer credit reports. P.O. boxes do not involve a creditable account, even if you pay for space with an installment agreement. The only way it can show up on your credit report is if you do not pay your bill and the U.S. Postal Service sends the account to a collection agency.

The credit bureaus list your address based on whatever you claim to creditors. Thus, your credit report might show your current address as your PO box number. A PO box number might cost you a loan. Creditors look at your address history to make an informal judgment about your stability as a person. Using a P.O. box instead of a street address might seem suspicious or insinuate that you tend to move around a lot unless the P.O. box appears as an address on a business credit report.

Alternative credit bureaus report any account with a verified payment history, even a P.O. box. You have to sign up for an alternative bureau's subscription service, which costs about $30 in at the time of publication, because the USPS does not report accounts to any bureau. Creditors do not have to consider an alternative credit history, but some, such as the Federal Housing Administration, look at alternative histories.

You can report a P.O. box by proxy when you put the account on your credit card. While the bureaus do not list individual purchases, you can, for instance, use a credit card account just to pay your P.O. box bill. The bureaus then report positive history on the card -- assuming you pay on time and the creditor reports to the bureaus.

If You Get Married Does That Affect Your New Wife's Credit Score

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Your credit score is very important for securing future loans and low interest rates. The widest used credit scoring formula is the formula developed by the Fair Isaac Corporation, known as the FICO score.

Simply getting married does not affect your credit score or your wife's credit score. The FICO credit scoring formula does not consider your marital status.

Only joint accounts that you have with your spouse will affect your spouse's credit score. For example, if you open a joint credit card, that account will affect both of your credit scores. However, if you open a new credit card without your wife, that will not impact her credit score.

The credit bureaus never combine credit scores for two people; each person always has her own score. This way, if a marriage ends, each person will continue to have his or her own score.

Why Is My TransUnion Score Higher Than Equifax?

10:50 PM 1 comment

Despite matching information on your TransUnion and Equifax credit histories, there may be a noticeable difference in scores from them. More than likely, your TransUnion credit score is higher than your Equifax score because of different information gathering channels. The difference in scores, however, may not matter much to lenders.

Your TransUnion score might be higher than your Equifax score because of different information on file, since some of your lenders may not report to both bureaus. Equifax or TransUnion may not know about some public records, such as a court judgment, that normally count against your credit score. One company might have mixed some of your accounts with another person's, especially if you use different versions of your name on credit applications, such Bob instead of Robert. Also, the bureaus may update their records at different times.

The credit bureaus have slightly different scoring systems. Most lenders use the FICO scoring system set up by Fair Isaac Corp. The scores calculated by TransUnion and Equifax are close, but not quite the same as a FICO score. Equifax and TransUnion also have slightly different policies on reporting certain items. TransUnion, for instance, reports dismissed Chapter 13 bankruptcies for seven years, while Equifax reports this for 10 years. But for the most part, Equifax and TransUnion report the same information.

Most people see variation among the scores from the three national credit reporting bureaus, so lenders know and account for this. Some lenders might average your scores from all three, or, more commonly, use the middle score. Unless you have more than a 50-point difference between your TransUnion and Equifax scores, this variance is unlikely to affect your ability to get credit.

It couldn't hurt to run your credit report from TransUnion, Equifax and Experian for potential errors. Consumers are legally entitled to a free report from each bureau every year through the Annual Credit Report website (annualcreditreport.com). Look for omitted items and incorrect details on accounts. A wrong credit limit, for example, could change the figures showing what percentage of your credit limit you've used -- known as credit utilization. If you dispute a fact and win, the agency must report the correct information to the other bureaus.

Does a Student Loan Consolidation Help Your Credit Score?

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Student loan consolidation can affect the repayment terms of the loans involved in the consolidation as well as the credit score of the student consolidating the loans. How that credit score is affected depends largely on the type of student loans involved in the consolidation and how long the loans existed before being consolidated.

Several factors make up your credit score. Each affect your credit score by a certain percentage, which is determined by the national credit-reporting bureaus. Your payment history affects your total credit score by 35 percent. Your outstanding debt is responsible for 30 percent. The length of your credit history accounts for 15 percent. Recent inquiries about your credit affect your score by 10 percent. Finally, the types of credit on your credit report affect your total score by 10 percent.

A college student who has only federal Stafford loans could face up to eight separate unsubsidized and subsidized federal loans upon graduation. These loans have no payment history when you graduate, which doesn't look very good on your credit score. Federal student loan consolidation can help your credit score in two ways: your payment history and the total number of open lines of credit. Consolidation effectively pays off your student loans and creates a single new loan. Now, you have a payment history showing you paid all those loans off, which elevates your credit score.

Private student loan companies are not required to offer you loan consolidation like companies holding federally secured student loans. Student loan consolidation from a private lender is largely based on your credit score, which may make consolidation right out of college difficult. You may be required to have a cosigner when first applying to consolidate private student loans. With timely payments on your consolidation loan, your lender may allow you to remove the cosigner and carry the loan on your credit alone.

In addition to helping your credit score, student loan consolidation has several other benefits. Consolidation often lowers your monthly student loan payment because it brings multiple repayment terms under one term of repayment. Loan consolidation also locks in the interest rate on all loans involved in the consolidation. The new rate is determined by taking the weighted average of all loans involved in the consolidation and applying that average to the new loan. This new rate can save a graduate thousands of dollars in fees and interest payments over the life of the loan.

Explanation of the Fair Isaac Score

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The FICO score was created by the Fair Isaac Company. A FICO score, also known as a credit score, is a tool based on algorithms and statistics used by creditors to determine the creditworthiness of customers and helps to determine the likelihood that a debtor will default on a loan. Relying on the FICO score helps lenders determine how much risk a customer poses when borrowing money. Accurately assessing a customer's risk is paramount in helping to eliminate bad debt. A number of factors are used when calculating a FICO score.

Your payment history carries the most weight when it comes to calculating your FICO score. The payment history of a particular credit file, contributes 35 percent to the creation of a FICO score. When you pay your debts on time you help put yourself in position to have a good credit score. Whenever payments are late your score can decrease, which causes you to pay more for credit products in terms of finance charges. Your payments will be larger as well. If there are judgments, collection accounts, liens, bankruptcies or foreclosures, your credit score will decrease substantially. These items can remain on your credit file for 7 years and some bankruptcies for 10 years. The longer bad credit is on your file the less of a negative impact it has.

The amount of debt you have as well as your credit usage contributes 30 percent to the formation of your FICO score. Accumulating a lot of debt will decrease your credit score. If you use more than 30 percent of the available credit you have access to, your credit score will begin to decrease. Paying down your debt will decrease your usage and help increase your score.

The longer you have been on file with the credit reporting agencies the better. The length of your credit history contributes 15 percent to the creation of your FICO score. If you close one of your older credit accounts after you pay it off, you are eliminating a portion of your credit history. This account will no longer contribute to your credit history, and it will lower your credit score.

New credit accounts contribute 10 percent to your credit score. If you open too many new accounts your credit score could decrease. A lot of new accounts decrease the median age of all your credit accounts. Only open accounts you need. Never try to manipulate your credit score by increasing your available credit with new accounts.

Your credit file should be a combination of different types of credit accounts such as credit cards, auto loans and mortgage loans, which helps to increase your score. It is especially beneficial for your credit score if you have credit card accounts as part of your credit portfolio, which you are managing effectively.

How to Rebuild Personal Credit

10:41 PM 1 comment

The best way to rebuild your credit is to start paying your bills on time month after month. A consistent record of on-time payments for 12 to 24 months will help improve your credit score and indicate to creditors that you have recovered from past credit problems. Along the way, there are other measures you can take, including establishing new credit accounts. New credit accounts are possible even if you are just now recovering from your past credit problems.

Instructions

Make payments to bring all your active accounts current. Also, resolve any issues still remaining from past credit troubles. Satisfy any judgments or liens, and pay off any accounts that were charged off by credit card companies or other lenders.

Apply for a secured MasterCard or Visa credit card. Secured credit cards are generally easy to qualify for because you are required to place money in a savings account as collateral. The amount on deposit becomes your credit line, and the card company reports your payment history to the credit bureau. By opening the account and paying on time each month, you'll instantly create a positive credit line. Open a secured savings account at your bank or credit union. After several months, open a second secured credit card account.

Apply for an installment loan from your bank or credit union using additional money in your savings account as collateral. Secured installment loans are also easy to qualify for because there is no risk to the lender. If you default on the loan the bank takes the money from your savings account. Deposit the proceeds from the loan into your checking or savings account and direct the bank to automatically draft your payment each month. That will make sure that your payments are on time and prevent you from misusing the money from the loan.

Apply for unsecured credit after about a year. Start with gas stations or department store cards. Later, apply for an unsecured MasterCard or Visa. Keep your balances low, which can also boost your score, and avoid taking on too much credit. Paying a small number of credit accounts on time while maintaining low balances is all you need to rebuild your credit.

How to Dispute Things on Your Credit

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Equifax, one of the United States' largest credit reporting agencies, documents the credit histories of over 200 million consumers, making over 2 billion updates monthly. Inevitably, errors happen. If you discover erroneous records or data on your credit report, take steps to initiate the removal of such data from your credit history. Contact all three credit bureaus (Equifax, TransUnion, Experian) with the dispute to clear all incorrect histories.

Instructions

Send a dispute letter via certified mail with return receipt to each credit bureau listing the error. Be very specific as to what you are disputing, include copies of proof you have to support your case. Ask the bureaus to initiate an immediate investigation. The credit bureaus generally have 30 days to investigate and respond.

Wait 30 days, then send a demand letter ordering the bureaus to remove the information from your credit report since it has exceeded the 30-day limit. Include a copy of the original dispute letter and a copy of the return receipt you will have received via mail. Repeat in 15 days if you do not receive a reply.

Contact the creditor directly with a new dispute letter, asking for verification of the negative information and proof that it is correct. According to the Fair Credit Reporting Act, the original creditor must verify the information or have the bureau remove the information from your report. Repeat with a demand letter in 30 days.

Check your credit report weekly to monitor status of the disputed item.

Wait for the credit bureau to contact you with the results of the investigation. If information is corrected, a new copy of your credit report will be included. If not, you have the right to include a 100-word explanation describing the dispute on your credit report.

The Best Way to Build Credit

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Building credit is something almost everyone should think about. Your credit history can affect multiple areas of your life, from the interest rates you receive on mortgages and car loans to your ability to achieve gainful employment. Unfortunately, building credit takes time, and it can be difficult to get your foot in the door if you wait too long or allow negatives to build up on your credit report before you have any positives. Here are some good ways to build credit no matter what your circumstances.

Your credit report and score contain information about your payment history on loans, credit cards, utility bills and other items. This information helps lenders determine whether or not you are creditworthy and adjust the interest rates they offer you on loans and credit cards accordingly.

Your credit score consists of several factors, including the length of your credit history, number of accounts, different types of accounts, number of negatives/late payments, age of negative items and credit utilization ratio. The exact formula for figuring your credit score is top secret, but your payment history and utilization have the biggest influence, along with the length of your credit history.

Building credit takes time. Since you cannot legally enter into a contract until age 18 in America, it is difficult to start building credit until you turn 18. Credit cards are generally very easy for young people to acquire while they are in college, and if used responsibly can be an excellent way to begin building solid credit. Keeping your oldest accounts open and in good standing is important, so unless you are worried about identity theft or have another excellent reason for closing old accounts, keep them open so they continue to contribute to your credit score.

For young adults who are not in college or others with no credit history, credit cards may be somewhat harder to come by. Luckily, there are many other types of accounts that can help build credit, and having a variety of different types of accounts on your credit report helps your score. Car loans, mortgages, store cards, secured credit cards and cell phones/other utilities are all good ways to build your credit. Those who have no credit history may find it difficult to obtain low interest rates on loans, so procuring a store card, secured credit card or a cell phone (in your own name) first may help build your credit and allow you to qualify for lower interest rates on subsequent loans.

Having a long credit history and multiple accounts is only good for your credit if you maintain an excellent record of paying your bills on time. Late payments will kill your score no matter what else you do to build it. The best way to repair a score that has been damaged by late payments is to allow them to age and eventually fall off your credit report.

Difference Between Credit Plus Score & FICO Score

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The Plus score and the FICO score are two of the most commonly used credit indicators. These scores indicate an applicant's creditworthiness and the likelihood that they will receive favorable loan terms.

PLUS scores are issued exclusively by Experian using Experian Decision Analytics, while FICO scores are issued by each of the three major credit bureaus using methods developed by the Fair Issac Corporation.

PLUS scores range from 330 to 830, and FICO scores range from 350 to 850. A higher score signifies a lower level of risk associated with extending credit.

Your PLUS and FICO scores will likely not be the same. Scores are calculated using data obtained from your credit file with that agency. The information on file with each agency may differ, leading to possible discrepancies in scoring.

The FICO score is the score typically used by lenders when making lending decisions. However, each lender has individual strategies and methods to determine level of risk, which may include looking at PLUS scores.

Knowing and understanding your credit rating helps avoid surprises when applying for credit. In addition, credit scores are now commonly utilized when applying for an apartment or even obtaining employment.

How to Add Lines to Your Credit Profile

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Lenders use your credit report when deciding to extend you a new line of credit. Your credit report also helps determine your interest rates and if you can receive a credit line increase. Keeping your debt low, paying your bills on time and applying for credit responsibly will help you build a good credit report. However, many creditors, such as gasoline companies, local retailers, wireless providers and utility companies do not often report payment information to the credit bureaus. By requesting that companies report positive information on your credit report, you can lengthen your positive credit history and increase your credit score.

Instructions

Write a letter to the creditor requesting that they inform the three credit bureaus, Equifax, TransUnion and Experian of your account status. Include your full name and account number in the letter.

Mail the letter certified mail to the customer service department.

Order a copy of your credit report from each credit bureau after 30 to 45 days. By law, you can receive a free copy of your credit reports once a year through Annual Credit Report.

Review each report for the updated credit file on your account.

Write a dispute letter to any credit bureau not listing the account. Inform the credit bureau that you are requesting they investigate the account and add the missing information. Include a copy of your credit report, a copy of the letter you sent to the creditor and any proof you have of the account such as bill statements or copies of checks.

Order a second copy of your credit report from any credit bureau that was not reporting the account after 30 to 45 days to verify the bureau added the account information.

Can Buying a Car Help Build Credit?

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Higher consumer credit scores indicate that you are a good credit risk to potential lenders. Not only will a good credit rating help make you eligible for a loan, it can help lower interest rates on loans and lower insurance premiums. One way to build a good credit rating is to take out a loan or open a charge account and make timely payments. Qualifying for an installment loan and buying a car is one way to help build your credit score.

Most car loans are installment loans, with the principal credit balance being reduced with each monthly payment. Buying a car through an installment loan gives you fixed and equal monthly payment amounts for the life of the loan. Your credit score calculations weigh the types of credit that you use as 10 percent in the overall credit score calculation. You can build your credit faster if you have a mix of both installment credit accounts and revolving -- credit card -- accounts.

One of the primary factors credit reporting agencies consider when calculating a credit score is the ratio of the amount of debt that you owe to the amount of credit that is available to you. In terms of an installment car loan, the initial credit amount is constant, but the outstanding debt portion is lowered with each monthly payment. As time passes, each monthly payment you make will positively impact the outstanding debt portion of your credit rating. Outstanding debt ratio accounts for 30 percent of the overall score in a typical credit score model.

The best way to build a good credit score is to pay your bills on time. After buying a car, make your monthly installment payments before or by the due date to receive a positive entry on your credit report from the lender. A consumer's payment history impacts 35 percent of his overall credit score; it is the single largest factor that credit reporting agencies consider in their calculations.

The longer you make timely payments on your car installment loan, the better your credit will be. Building good credit takes at least six months of a positive payment history. The length of time you have your car loan will also impact your credit rating. Potential lenders prefer to lend money to consumers who have a long history of positive credit accounts. The length of your credit history can impact your overall credit score by 15 percent.

Truths & Myths About Your Credit Score

7:04 PM 1 comment

Your credit score is a number between 300 and 850 that reflects your credit risk. It gives lenders a snapshot of how likely you will be to repay the loan they are considering giving you.

This is a common myth. Your score is not affected by you checking it. It is minimally affected when you apply for new credit accounts.

Yes, this is true. However, you do not have to purchase a monthly credit monitoring package to get it. You can pay a small one-time fee to www.annualcreditreport.com, when you get your free credit report.

Often this is not the best way to improve your score. Pay your bills on time, lower your balances and reduce the number of credit card accounts you have.

False; you can improve your score by taking proactive action like paying down credit cards and paying every bill on time.

Age, gender, race, and marital status are not included in your credit report all. It is only credit-related information.

TransUnion Credit Information

3:34 PM 1 comment

TransUnion, a global credit reporting service, maintains its company headquarters in Chicago. As of 2010, the company reported and stored approximately 500 million consumer credit histories and serves businesses and consumers in countries like Chile, Russia, Zimbabwe and Singapore, in addition to the United States, Canada and Mexico.

TransUnion originally established itself as the parent company of a railroad car leasing enterprise in 1968. One year later, the company turned its focus to credit reporting when it purchased the Credit Bureau of Cook County which kept over three million consumer credit files in 400 filing cabinets. This acquisition spurred TransUnion to become an innovator in automated consumer reporting updates and the initial creation of online storage for credit reporting information that financial clients could access nationally.

TransUnion provides businesses and consumers with access to their credit reports. These reports contain information on credit cards, student loans, car loans and home mortgages. Information that consumers can access on a TransUnion credit report includes account balances, credit limits, account status and information about late payments or delinquent accounts. Consumers can order one report that specifically shows the information that TransUnion has on file or a combination report that shows information from TransUnion, Experian and Equifax.

A consumer credit score is a number that takes into account payment history, debt to credit limit ratio, number of accounts, late payments and number of credit inquiries a consumer has within a seven- to 10-year period. TransUnion reports this score by using the VantageScore system. VantageScore uses a numerical scale ranging from 501, the lowest possible score, up to 990 which is the highest possible score. The VantageScore system also reports a corresponding letter grade of A to F, to assist consumers in seeing exactly where they stand in terms of creditworthiness.

In addition to providing credit reporting information, the company created a real estate division in the 1990s that continues to offer prospect marketing, residential loan origination and closing services, and post-closing loan management services. In 2002, TransUnion bought TrueCredit.com, expanding the company's service offering to include credit monitoring services, identity theft protection and credit score monitoring for TransUnion, Experian and Equifax.

TransUnion provides consumers with assistance regarding filing a dispute about information on their credit report and information regarding credit card fraud. The company offers free consumer educational videos on credit topics through their website in addition to offering a free monthly email newsletter.

What Does FICO Stand for?

1:07 PM 1 comment

Your credit score is a number that builds up in the background as you conduct your financial affairs. Creditors use this score to evaluate you for everything from credit cards to cell phone accounts. You should understand as much about your personal credit data as possible, including details like what the word FICO stands for in relation to credit scores.

The acronym FICO stands for Fair Isaac Corporation, an organization that computes and publishes credit scores for viewing by consumers and creditors. FICO is a trademarked brand name that represents the credit scores it generates for consumers and creditors. The Fair Isaac Corporation is one of the top analytics and decision-management product providers in the world. This is why many people use the terms "credit score" and "FICO score" interchangeably.

FICO scores range from a low of 300 to a high of 850, which is the best possible score. Creditors commonly deem a FICO score of 650 to 699 as moderate and 700 or better as a good-to-excellent score. About a quarter of consumers who have an open credit file have scores of less than 600 and the median FICO score for consumers is 732, as of 2010.

When creditors pull your credit file, they find three scores based on information from the three major credit bureaus -- Experian, Equifax and Transunion. The creditor takes the score that falls in the middle as the score to determine approval, interest rates and terms of the account for the applicant. So for instance, if you have scores of 585, 650 and 701, the creditor uses the middle score of 650 when evaluating your application.

If you're trying to boost your FICO score, you need time, patience and consistency. Dispute any incorrect data reported by creditors. If you have charge-offs or unpaid accounts listed on your report, call the creditor to negotiate a payment plan or settlement. When paid, the creditor updates the file with that information, which could boost your score. Continue to make on-time payments on all of your accounts if you want to improve your score over time.

How to Appeal a Bad Credit Rating

7:40 AM 1 comment

About 70 to 80 percent of credit reports contain errors that drag down the credit ratings. Such errors can lead to inability to get loans and credit cards. If you suspect that your credit rating contains errors, you may be able to correct them by starting a dispute. However, this process may take time, effort and a lot of patience. You will find it easier to resolve the problem if you have the financial documents to support your case.

Instructions

Get a copy of your credit report from each of the three credit agencies: TransUnion, Experian and Equifax. These reports have to be no more than 90 days old, according to Bankrate. By law, you can order a free copy from each credit bureau every 12 months.

Review all three credit reports. A credit report usually lists each of your accounts in the "Account Information" section. It contains details such as the type of account, the date you opened it, the balance you owe on the account and whether you missed any payments. Check for inaccuracies.

Call the company that provided the inaccurate information and explain the problem. The company may admit the mistake and update or correct it. The company may also provide you with the supporting document you need to resolve the problem with the credit bureaus.

Write a letter to each of the three credit bureaus. The bureaus let you file online disputes, but MSNBC advises against using these online forms because they encourage the bureaus to automate your dispute. Identify yourself by providing your name and Social Security number. Describe the inaccurate information and provide supporting documents. Include your contact details and send the letters by mail with return receipts.

Make two copies of your letter. Keep one for your record and send the other one to the company that provided the credit bureaus with the inaccurate information. Again, send the letter by mail and request a return receipt.

How to Report Debt on Credit Reports

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A consumer credit report helps businesses decide how risky it would be to extend credit to an individual based on the standing of his past credit accounts. If you have an uncollected debt, consider reporting it to a credit reporting agency. This will negatively affect that person's credit report and let other companies know that this person is credit risk. It can also help your collect that debt because to remove that debt from his credit report, that person will have to contact you.

Instructions

Gather all the information you have about your credit accounts, including contracts and receipts. Keeping accurate records is very important because they will help you prove that you are owed a debt in the event of legal action. Third-party credit reporting services also require documentation of your credit accounts.

Consider notifying the debtor that you will be adding his delinquent account to his credit report. Although this not required, it can be enough to spur the debtor into making some sort of restitution to you.

Report directly to the credit reporting agency if you have a high volume business. If you become a member of a credit reporting agency, you can report credit accounts for positive and negative activity. However, you must have at least 100 credit accounts to report to the credit reporting agency and be willing to submit the information in the proper electronic format. If you only have one or two credit accounts to report each year, this is not the option for you.

Hire a collection agency to report the delinquent account to the debtor's credit report for you. An added benefit is that the collection agency will also try to collect the debt for you by locating and contacting the debtor. Be prepared to pay a percentage of collected debt to the collection company in addition to any fees they may charge.

How to Remove Judgments From a Credit Report After Bankruptcy

2:42 AM 1 comment

A Chapter 7 bankruptcy discharges your debt obligations, but while the original accounts that judgment liens are associated with are paid off, the liens are not automatically removed from your credit report. A lien is difficult to work around, as you won't be able to sell real property without removing the lien from your credit report. A judgment lien whose original account has been discharged through bankruptcy can be removed, but you need a lawyer to do so.

Instructions

Gather the lien paperwork, your bankruptcy paperwork, the judgment and the original account paperwork together. Confirm that the original account the judgment lien is associated with is one of the debts that you discharged through your bankruptcy.

Contact and hire a lawyer or attorney specializing in credit law, liens or bankruptcy.

Request that the lawyer goes to the court the judgment was first granted in, not the court that you where filed bankruptcy. Tell the lawyer to file a motion to vacate with the court clerk. Provide the bankruptcy documentation to prove that the judgment lien was paid through a debt discharge.

Send the motion to vacate to the creditor to have the lien released. The creditor will send a release of the lien to you.

How to Resolve a WildBlue Cancellation Charge

7:35 PM 1 comment

Even if you don't need or want their service anymore, corporations can still require you to fulfill the terms of your contract. Cancelling a service before your documented contract is up can cost you. WildBlue, a company that provides high-speed Internet service prefers 2-year contracts, which means the cancellation charge can add up. Paying the remainder of the contract upfront can help you professionally resolve your cancellation.

Instructions

Calculate the number of months you have left on the policy. Start with the month of your first payment, add up the number of months paid, then subtract from 24.

Multiply the left over months by $15 to calculate how much you owe.

Call the Wild Blue corporate office. Tell them you would like to cancel and resolve your charges. The service representative can take the payment from the already provided payment plan or you can provide a different form of payment, such as another credit card or a check.

Ask the representative to send you a document stating that the service has been cancelled and that you have paid your bill in full. Keep this document on file, because some companies are notorious for claiming that you never called to cancel your service and did not pay your remaining balance.

Three Big Credit Reporting Agencies

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Credit reporting has existed for more than 100 years, evolving from handwritten notes kept by merchants to computer databases with instant access about consumer payment and borrowing history. According to the Federal Consumer Information Center, three credit reporting agencies serve the nation's businesses and consumers: Equifax, Experian and TransUnion.

The Equifax, Inc., 2010 annual report cited more than 200 million U.S. credit and 26 million small business files among its assets. Founded in 1898 by brothers Cator and Guy Woolford as the Retail Credit Company, it assumed its current name from the phrase "equitable factual information" in 1979, according the website FundingUniverse.com. Atlanta-based Equifax operates in 15 countries worldwide, including the U.S. Its stock trades under the symbol EFX on the New York Stock Exchange. The company's U.S. Consumer Information Solutions unit provides "ability-to-pay" information to retail, banking, automotive, credit card, telecommunications and insurance clients. The Equifax U.S. Commercial Solutions division offers what it calls "business intelligence" data for acquisition, purchasing and business-to-business lending decisions.

A merger of American firm TRW Information Systems & Services and Britain's CCN Group formed Experian plc in 1966. In its 2010 annual report, Experian claims to be the "primary provider of consumer credit information" to U.S. financial institutions. Headquartered in Dublin, Ireland, Experian serves retail, telecommunications, financial services, automotive and government clients in 90 countries. Experian owns 14 consumer credit bureaus worldwide.Its commercial database includes information on 40 million businesses maintained through the 10 business credit agencies it owns. Experian also operates an automotive information service that provides used vehicle history to dealers in the U.S., China, Italy and the Netherlands.

Chicago-based TransUnion, founded in 1968, has operations in 25 countries. The youngest of the national U.S. credit reporting agencies, TransUnion maintains 500 million consumer credit files worldwide. The company concentrates on three services: consumer, international and consumer. According to its 2010 press kit, the company's database included "every market-active consumer in the United States" as early as 1988. It launched TrueCredit.com, an online consumer protection and information service in 2002. TransUnion says it processes 2.1 billion "items of information" monthly to serve 300,000 customers worldwide.

How to Get a Free Credit Report by Mail

9:36 AM 1 comment

Federal law allows you, as a consumer, to request a free annual copy of your credit report from each of the three main credit reporting agencies (Equifax, Experian and TransUnion). You can request your free credit reports through the web, phone or regular mail. Each method of ordering your report if secure -- if you choose to request via regular mail, you must compete a few steps in order to ensure your credit report is sent to you in a timely manner.

Instructions

Download the request form via the official free credit report site at annualcreditreport.com. You'll need to have an Adobe viewer to view the document.

Fill out the form completely. Be sure to choose which credit reports you want to receive -- you can opt to have your reports from all three agencies sent to you at once, or you can request one at a time.

Mail your request in a 10 size envelope to:

Annual Credit Report Request Service
P.O. Box 105281
Atlanta, GA 30348-5281

Your free credit report(s) will be mailed to you within two to three weeks.

Follow up. If you do not receive your free credit reports within a month, contact a customer service representative at 1-877-322-8228 to inquire. The representative will be able to check the status of your report(s) and let you know if there are any issues that prevent the mailing of your credit reports.

Warnings & Consumer Credit Counseling

4:22 AM 1 comment

Contacting a consumer credit counseling agency to help you get a handle on your credit and debt may sound logical if you are overwhelmed. Credit counselors provide a variety of services, such as negotiating better interest rates with your creditors and offering education on how to manage your credit better. However, there are dangers associated with this route.

Do research before selecting a company to manage your credit and debt. There are countless options available, and choosing the wrong type of consumer credit counseling agency can result in paying a setup free for the service, as well as a monthly service fee. Avoid fees by working with a nonprofit credit counseling agency. These counselors assess your situation for free, then provide a plan to improve credit and get rid of debt faster.

Some consumer credit counseling agencies lure consumers by promising to reduce debts by half, or settle debts for much less than the balance owed. Counselors do work with creditors to bring down your interest rate on credit cards and other loans. However, according to Expert Law, consumers should proceed with caution when agencies claim they can significantly reduce balances. Results are often exaggerated and promises undelivered.

Debt consolidation is an aspect of credit counseling, wherein agencies receive one payment from those enrolled in the program and then make payments to their individual creditors. This works if someone has a habit of paying bills late. Unfortunately, credit counseling agencies can also submit payments after the due date, which can trigger additional credit problems. Speaking with a counselor beforehand to ensure he has a record of due dates can help alleviate this problem. Consumers should also check the status of payments periodically with their creditors to ensure that counselors are doing their job properly.

Help from a consumer credit counseling agency can impact how other creditors view you. If submitting an application for credit in the future, creditors reviewing your credit history will see "third party assistance" and think twice before accepting your application. To creditors, getting assistance to manage credit and debt points to the inability to oversee your own finances.

How to Repair Bad Credit with a Partially Secured Credit Card

10:02 AM 1 comment

Secured credit cards require you to make a deposit into a bank account. Initially, the amount on deposit becomes your credit line and acts as collateral for the loan. Over time, you may become eligible for credit line increases without making an additional deposit. At that time the card becomes partially secured by your bank deposit. Fully or partially secured credit cards are excellent tools for rebuilding your credit when used wisely.

Instructions

Apply at your bank or credit union for a secured credit card account. If your financial institution doesn't offer it, ask friends who have such an account where they applied. Make the required savingsdeposit to secure your card.

Use the card for purchases and payments. Establish a perfect repayment history by never missing a payment or going over your credit limit. Staying well below your credit limit can show you're using your card responsibly and you are not desperate for credit. Also, making more than the minimum payment will lower your balance faster and provide another indicator that you are handling credit responsibly.

As for a credit line increase after several months of on-time payments. Continue using the card if you are denied and apply again for a credit line increase after several months. Avoid frequent requests for credit line increases. Your credit card company has a right to pull your credit report each time, and an excessive number of inquires over a short period of time could cause your score to drop. Generally, you'll want to avoid having more than a handful of credit inquiries each year.

Open an additional secured credit card account, if possible, and use it responsibly as well. The positive use of your credit will be reported to the three major credit-reporting bureaus -- TransUnion, Equifax and Experian. Over time, your credit scores should increase because of the responsible use of the secured credit cards. You can use the same bank or a different bank to open an additional secured account. Your credit reports will treat them as completely separate accounts, even if they are from the same lender.

Will Checking My Credit Lower My Beacon Score?

6:47 AM 1 comment

The Beacon score or credit score determines the probability that you will pay your bills on time and in full. Beacon scores are sometimes referred to as FICO scores, and both names are from the credit bureaus that developed the scoring. Keeping track of this important number is vital. Inquiries to your score are recorded and tracked on the credit report.

Every time that you, a creditor or potential lender checks your credit report, a record is created of the event. This record appears on the bottom of the credit report. There are two types of inquiries, soft and hard. A soft inquiry occurs when you pull your own credit report. Credit card companies also pull soft inquiries when marketing pre-approval offers. A hard inquiry happens when submitting loan or credit card applications. A hard inquiry is one that is triggered by the applicant; a lender cannot process a hard inquiry without your permission. There is a process to have non-authorized credit inquiries removed from your report.

Soft inquires do not affect the credit score. A consumer can pull their own credit score as many times as they wish without repercussions. Hard inquires affect the score slightly. These inquires are included in the calculation done for credit scoring. Usually they account for 10% or less of the overall score. Multiple inquires that occur in a 14-day span are counted as just one inquiry. This helps those who are car shopping or looking for a home and need to have their credit pulled several times. Multiple inquiries are rarely the reason that people are denied credit.

Recording the number of inquires a consumer has on the credit report allows potential lenders to see how often a consumer has applied for new credit. This can be a precursor to someone facing credit difficulty. Too many inquiries could mean that a consumer is deeply in debt and is looking for loans or new credit cards to bail themselves out. Another reason for recoding inquires is identity theft. Hard inquires not made by you could possibly be an identity thief opening accounts in your name.

Inquires are required to remain on the credit report for at least a year. Most creditors, however, disregard any that have been on the report for over six months. Hard inquires remain on the report for two years. Soft inquires only appear on the report that you request from the credit bureaus and will not be visible to potential creditors. Hard inquires appear on all credit reports. All inquires disappear from the report after two years.

Only individuals with a specific business purpose can check your score. Creditors, lenders, employers and landlords are some examples of approved business people. The inquiry only appears on the credit report that was checked. For example, if a landlord uses Experian to check the creditworthiness of an applicant, the credit check will only appear on Experian's report, not TransUnion or Equifax. To limit the number of soft inquires made on your credit report, contact the credit reporting agencies and request that they remove your name from marketing distribution lists.

Friday, April 30, 2010

Warning

Misconceptions

Types

Benefits

Considerations

Thursday, April 29, 2010

Instructions

Necessary Preparation

Fast Fixes

Wednesday, April 28, 2010

No Rental History

Collections Accounts

Alternative Reporting Agencies

Build Credit Report

Identification

Factors

Sources

Tuesday, April 27, 2010

Identification

Potential

Deficient Balances

Tip

Effects

Benefits

How to Pay Down Debt

Tips

Monday, April 26, 2010

Viewing Your Complete Credit History

Late Payments

Collection Accounts

Outstanding Credit Card Balances

Debt Collector Types

Negative Information

Credit Repair

Pay-for-delete Arrangements

Saturday, April 24, 2010

Friday, April 23, 2010

Instructions

Wednesday, April 21, 2010

Instructions

Instructions

Tuesday, April 20, 2010

Instructions

Stress-Free Cancellation of Privacy Matters

Monday, April 19, 2010

Number of Points

Time Frame

Effects

Potential Negotiations

The Fair Credit Reporting Act

Viewing Your Score for Free

Free Credit Score Resources

Considerations

Facts

Joint Accounts

Community Property

Obtaining Credit

Considerations

Saturday, April 17, 2010

Instructions

Friday, April 16, 2010

Fair Credit Reporting Act

Discrimination

Salary

Character

Thursday, April 15, 2010

Identification

Demographic Information

Self-Reporting Payments

Tip

Wednesday, April 14, 2010

Misconceptions

Considerations

Benefits

Tuesday, April 13, 2010

Credit Bureau Issues

Minor Factors

Considerations

Tip