How to Dispute an Old Utility Bill on a Credit Report

Potential creditors, employers and landlords use information found on your credit report to evaluate your fiscal responsibility. This information can include credit card accounts, loans and even accounts with utility companies. If your report contains negative information from a utility bill that you believe is incorrect, you can dispute that information with the credit bureau that prepared the report; if they are unable to validate the debt, it will be removed from your report. There are three major credit bureaus, and they operate independently of one another, so you'll need to file a dispute with each bureau that reflects the inaccuracy on your credit report.

Instructions

1

Visit the online dispute website for the credit bureaus that reflect the utility bill on your report (see Resources). Select the option to begin an online dispute.

2

Fill out all of the required information, including your full name, telephone number, Social Security number, email address and current mailing address. You may also be asked to provide your previous address to verify your identity.

3

Enter all of the information that you have available regarding the utility account, including the company name, address and account number.

4

Include an explanation of why you're disputing the account. If you have previously paid off the account, then include specific dates and amounts if you can remember them. Preview your dispute to make sure that all information is accurate, then submit the online form.

5

Wait for a response. The credit bureau will contact the creditor and ask it to verify that the debt is valid. If the creditor is unable to do so or if it doesn't respond within 45 days, the listing will be removed from your credit report. You will be notified via email and may also be notified via regular mail.

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How Often Can You Get a Copy of Your Credit Report?

When it comes to credit reports, credit history and credit scores, consumers may feel overwhelmed by the volume of information and advice available. Mastering the basics, including how often you can obtain a copy of your credit report, can help you avoid potential risks, such as identity theft, while addressing debt issues.

Purpose

Your credit report contains information about the amount of debt you've accumulated, your payment history and types of accounts you opened, including installment loans (such as student loans) and revolving accounts (such as credit cards). Lenders use your credit history to help determine the level of risk involved in issuing you a loan. With your permission, landlords may look at your credit report to evaluate the likelihood that you'll pay rent on time, and potential employers may view your credit report to judge how well you handle finances. Obtaining your credit report can help you identify whether anyone has taken out credit lines in your name or whether lenders have listed incorrect information that could be hurting your score.

Free Copies

All consumers may access free copies of their credit report every 12 months from the three nationwide credit reporting bureaus: Equifax, Experian and TransUnion. AnnualCreditReport.com is the only outlet authorized to provide free credit reports to consumers. You can request a copy of your credit report by phone or mail or online. Spacing out your credit report requests among the three bureaus enables you to get a free copy every four months, reducing the likelihood of identity thieves using your account for an extended period without your knowledge. Some consumers prefer to access all three credit report copies at once to compare information, because reports may differ based on the information received by bureaus to formulate the credit history. Phone or mail requests may take 15 days to process; online requests for credit reports may be completed immediately.

Other Scenarios

You can get copies of your credit report in other scenarios. Federal law grants consumers the right to access credit reports if adverse actions have been taken against them because of information contained in the report. For example, if your auto loan application was denied because of negative information contained on your credit report, you are entitled to obtain a copy of the report to contest the negative mark, if desired. Unemployed individuals may request a credit report copy for the purposes of job-hunting. Welfare recipients also can request a free credit report copy. Victims of identity theft or fraud may also access credit report copies for free.

Credit Tracking

If you want additional copies of your credit report, you may order them from the credit bureaus, but you should expect to pay up to $10.50 per copy in 2011, according to the Federal Trade Commission. Alternatively, you may pay for credit tracking or monitoring services offered by various companies. Although credit tracking services don't provide additional copies of a consumer's credit report, they notify you when a new activity or item has been posted to your report.

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If You Pay Off a Bank Loan, How Long Does it Take to Report it on Your Credit Report?

Once you finally pay off a loan, you may be happy to have that burden off your shoulders -- and the credit boost that should come with it. You will probably have to wait at least a few months for the account to register as paid off on your report. If it has no history, it may never hit your credit report.

Identification

After making that last payment on your bank loan, the lender usually reports the account as "paid as agreed" by the end of the month. The credit rating agencies may receive the information electronically whenever the lender sends it in, but it generally takes 90 days for the data to hit a credit report, because of the time it takes to update agency databases.

Considerations

Lenders usually report information every month, such as whether you paid your bill on time and the amount on the account. If the creditor has yet to report any information on the account, there is a chance he chooses not to report to the credit agencies or only certain ones. Another possibility is that the lender or credit agency has erroneously reported the account to another person's credit report.

Contact the Lender

Give the lender some time to update your report. When the account does not show up as "paid as agreed" after 90 days, contact the creditor and ask if he can update your account. If the lender does not report to the agencies, you are out of luck. Only a reporting mistake requires the creditor to send in a new form.

Tip

Some lenders may be slow to act on your request to update your account. File a dispute with the credit agencies if an unresolved account causes you trouble, such as if you are late on your last payment and the account is considered delinquent. This could also spur the credit agencies to update your account faster, because the agencies must investigate a complaint within 30 days.

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Derogatory Information on Credit Reports

Derogatory information on your credit report can cause a lending institution to deny your application for a loan legally. This negative information can include bankruptcies, late payments and high amounts of debt. Three credit bureaus keep information about your credit history: Experian, TransUnion and Equifax. Derogatory information can stay on your credit report for up to seven years, but bankruptcies can stay on a report for 10 years.

Impact

Derogatory information on your credit report will do more than just lower your credit score and lessen your chance of being approved for a loan. Those with bad credit are more likely to be denied to live in a rental property because derogatory information on a credit report could lead to the fear of missed rent payments. Employers that run credit checks on new applicants may not extend job offers to those who have bad credit because of the belief that those with derogatory information on credit reports are more likely to engage in fraudulent activities or steal from the company.

Disputing Inaccurate Information

The Federal Trade Commission (FTC) states that you have the right to dispute derogatory information on your credit report made in error per the Fair Credit Reporting Act. This derogatory information can include claims that you paid your bill late or went over your credit limit when you did not. To dispute inaccurate information, write a letter to the credit bureau that states the error you found, along with a copy of your credit report and proof that you are correct. Examples of proof you can submit include receipts or bank statements.

Identity Theft

If, after reviewing your credit report, you find derogatory information due to someone opening a line of credit or using your credit card without your authorization, contact your local police department at its nonemergency phone number so an officer can file a police report. Contact the credit card company, as well, so it can freeze the unauthorized account, prohibit further spending and work toward resolving the matter. The FTC states you also can contact your state attorney general or local consumer affairs office for assistance.

Raising Your Credit Score

If you have derogatory information on your credit report because of missed payments or high amounts of debt, you can be proactive about the situation. You can raise your credit score and improve the information on your credit report by creating a budget that allows you pay off your debts without incurring more debt. Remind yourself of the dates your bills are due by writing the information in a calendar. Stop making payments with credit cards and pay for all your purchases and bills with cash, a check or debit card.

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What Does it Mean to Have to Get a Background Check for a Job?

A background check is a review of a person's past actions, with an eye toward their reputation and honesty. Background checks differ in their depth, sophistication and instrusiveness. In its shallowest form, an employer may fact-check an applicant's resume to determine if it is accurate. On the other end of the spectrum, employers may conduct a credit check and a criminal background check. For jobs in the security industry or with top-secret clearances, investigators may contact neighbors and other acquaintances.

Credit Checks

Employers must ask for permission from an applicant before obtaining a "consumer report." These include credit reports. If the employer obtains one, it must notify you in writing before any adverse action is taken. This is a pretty broad provision of the law. For example, if the employer decides not to hire you based on what is contained in a consumer report, it must notify you before the action is taken and give you a copy of the report. They must also follow up after the action is taken, according to the Federal Trade Commission.

Specialty Reports

Background checks may include other types of reports. Driving records may be available in some states. According to privacyrights.org, some payroll services also sell salary data to employers, a feature that allows them to check whether employees are inflating their previous salaries in hopes of getting a big raise at a new job.

Public Records

Bankruptcies, divorces, civil lawsuits and criminal cases are all part of the public record. Many of the consumer reporting agencies cull these records and make them available to employers for a fee. But employers can conduct their own review of public records by simply going to the local courthouse and conducting a search. If an employer performs its own background investigation, it does not have to disclose that fact.

Confidential and Prohibited Information

There are several categories of information that will not appear on a background check, including medical information, educational records and some military records. Though bankruptcies may appear on a consumer report, employers may not discriminate against people who have filed for bankruptcy. Bankruptcies must be removed from reports after 10 years. Civil suits, federal tax liens and accounts in collection likewise cannot appear on a consumer report after seven years.

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What Are the Secrets for Credit Repair?

Credit-repair companies imply that there are secrets to fixing bad credit. They make elaborate promises, but the Federal Trade Commission (FTC) warns that most of these are false. There is no way to wipe out legitimate negative items on your credit report or legally create a new file. You do not need a credit-repair firm because you can use your legal rights and knowledge of how FICO and other credit score providers calculate your number to make your own repairs.

Erase Negative Items

You cannot erase bad entries on your credit reports if they are accurate. Dayana Yochim of the Motley Fool website states that around 80 percent of credit files have errors ranging from incorrect spellings to wrong payment dates. Any small glitch is grounds for a dispute under the Fair Credit Reporting Act (FCRA). Creditors often do not respond to credit bureau requests to verify disputed entries, so the negative information gets erased. The FTC advises ordering free credit reports from annualcreditreport.com, which lets you request them every 12 months. Find every possible mistake and use the dispute forms on the credit reporting agency websites to challenge them.

Bring Payments Current

Audit your accounts and bring any late payments current. FICO, the biggest credit-score company, explains that delinquent bills payments are very damaging to credit records. Create a plan to make all future payments on time, which continually improves your score. Make a budget that allows you to pay at least the minimum amount due each month and mail your checks early or arrange for electronic funds transfers to prevent forgotten or late payments.

Lower Your Debt

FICO warns that high debts lower your credit score. Your credit is slowly repaired as you pay down your biggest balances. The secret to efficient debt reduction is putting more money toward high-interest accounts, according to Bankrate columnist Lucy Lazarony. Very little money goes toward the actual balance if you only pay the minimum requirements on those accounts. Pay as much as you can to reduce the principal more quickly.

Get Help

The FTC warns against using credit-repair companies but explains that credit-counseling firms can help you create a workable budget or debt-management plan. Such agencies meet with you in person, online or over the phone to evaluate your situation and the best ways to salvage your credit. Credit counselors often negotiate with creditors for balance or interest rate reductions and create debt management plans to help you pay off your bills within a set time frame. The on-time payments and declining balances repair your credit over time.

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Ways to Build Credit If You Don't Have Credit

Auto lenders, mortgage lenders and some insurance companies will request your credit history before doing business with you. No credit history or score can trigger a rejection or an extremely high interest rate. Fortunately, there are ways to get around no credit history. Building credit is key to proving to lenders and creditors that you're responsible and worthy of good financing deals. Consider a few ways to build credit from scratch.

Quick Credit Report

If you're a young adult looking to quickly build your credit history, ask one of your parents to include your name and Social Security number on one of their credit cards to give you an instant credit history. This method has its risks and benefits. Because your parents are likely long-term credit card users, adding your name to one of their older accounts in good standing can provide a quick high score because of the length of their credit history and their good payment habits. On the other hand, if your parents do not manage credit well, their lateness and high outstanding debts can bring down your score.

Secured Credit Card

Open a new credit account without the help of parents or another adult by applying for a secured credit card with your personal bank. These accounts can help you establish credit and even rebuild credit after a bankruptcy. Simply visit your bank branch and inquire about secured cards. Ask about the security deposit and other requirements to open the account. Deposits between $300 and $500 are typical, and your deposit determines the credit limit on the card. According to MSN Money, 12 to 18 months of a good payment history often results in the conversion to an unsecured credit card, wherein the bank refunds your deposit.

Installment Loans

Installment loans such as a car loan can help you build credit if you don't already have credit. There are ways to get a car loan with no prior credit history. You can ask your parents to co-sign an auto loan agreement. The lender uses their credit history to help determine approval, but you're responsible for the monthly payment. Another approach involves getting a car loan on your own from a privately owned dealer that provides in-house financing to help people with bad credit. The negative side to this method is a higher rate on the car loan, and these dealers may not report to all three credit bureaus. Only buy from a dealer that will report your good payment history to the bureaus on a regular basis.

Building a Good Score

Acquiring financing and credit to help build your personal score is the first step. To keep a good score and easily qualify for the best rates in the long run, practice excellent credit habits. This includes paying all your creditors and bills by the due date each month, and controlling debt by only charging what you can afford to pay off each month. Credit inquiries can hurt your score, so only apply for new credit when necessary.

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How to Fix a Really Bad Credit Score

According to myFICO, your credit score is composed of five factors: payment history (35 percent), the amounts that you currently owe (30 percent), how much new credit you have or have recently applied for (10 percent), the kinds of credit you have (10 percent), and how long your credit history is (35 percent). These factors can have different importances in your score, depending on your personal situation. The lower your credit score, the fewer credit offers you will have and the higher interest you will pay. Credit scores of less than 680 are considered sub-prime, and they mean higher interest rates for borrowers. Whatever your score, if you can raise it, you will probably be able to get credit on better terms.

Instructions

1

Go to AnnualCreditReport.com (see Resources section) to get a free credit report from the three major credit reporting bureaus. You are eligible for a free report from each of the three once a year.

2

Check the reports for negative information, such as payments missed. If you see errors in the report, follow the instructions to report them to the bureaus and get them corrected.

3

Pay your bills on time. If you keep accounts current, over time this will raise your score.

4

Pay off whatever balances you can, and spread your credit debt across several accounts if possible. The less percentage of your total credit availability that you use, the better your score will be. You also can improve your score by having several accounts at 25 percent of the credit limit, rather than one account at 75 percent and two idle accounts.

5

Keep balances on your credit account down, and keep unused accounts open. The unused credit can help your score. In addition, older credit accounts increase the longevity of your credit even if you are not using the card, so they are worth keeping open.

6

Refrain from applying for new credit, which can put a dent in your score.

7

Seek a dialogue with your creditors if you are having trouble keeping up. Often they can work with you to make an arrangement that will help you avoid missing payments and will help you keep up with balances.

8

Try working with an online credit calculator, available from bureaus that help you track your credit. Although the algorithms that determine you score are proprietary, a credit calculator can give you an idea of how much various actions would alter you score.

9

Find a lender that works with rapid rescoring if you need a small credit score bump in a hurry--for instance, if you are applying for a mortgage. There are fees for this service, but it can register payments and improvements in your credit almost immediately, which could put your credit score over the threshold for a lower interest rate.

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What Are the Causes of a Low FICO Score?

The FICO score is an important measurement used by lenders in determining whether a person is a good credit risk. Credit mismanagement over time causes a person to develop a low FICO score and results in less available credit and higher interest rates.

Identification

The FICO score is a mathematical calculation that serves to predict whether a person is a good financial risk. According to myFICO.com, the FICO score is calculated by looking at the following five categories of a person's credit report: payment history, amounts owed, length of credit history, new credit and types of credit used.

Evaluation

FICO scores range from 300 to 850. The median FICO score is 725 while a good FICO score is considered to be above 760. A low FICO score is considered to be any score below 620.

Cause

The FICO score takes into account credit behavior over time. There are several factors that could cause a person to have a low FICO score, including not paying debt on time or in full, an unfavorable debt-to-credit ratio and having several new credit accounts at the same time.

Significance

Lenders use the FICO score to determine whether or not a person is granted credit and at what interest rate they will pay for it. It is commonly used to qualify applicants for credit cards, auto loans and mortgages. A low FICO score increases the chances that a person will not be approved for credit or will pay a higher interest rate on new credit.

Opportunities

The best way to improve a low FICO score is to manage credit responsibly over time, according to Bankrate.com. Taking actions such as paying down credit cards, using older credit cards and disputing negative information on a credit report may also improve a person's credit score.

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The Objective and Importance of Credit Ratings

Anytime that you apply for credit, whether it be for a credit card, auto loan or home loan, a lender will review your credit report and determine your credit rating. The higher your rating, the more likely you are to qualify, as well as to nab higher loan amounts and lower interest rates. A high credit rating can offer you a degree of financial freedom that those with a low rating may never see.

Home Loans

Your credit rating will most likely determine whether or not you become a homeowner. Home loans, home equity loans and re-financing are only made available to those with a good credit rating.

Renting

Your credit rating may also impact your ability to rent. When a landlord conducts a background check, he often looks to your credit rating before determining whether or not to approve your application.

Credit Cards

Nowadays, having at least one credit card is almost a requirement. A good credit rating will not only ensure that you can get a credit card, but it may qualify you for instant credit with low interest rates. There are a number of credit card perks for those with a good credit rating.

Purchasing

Some businesses won't accept anything but credit cards. Without a high credit rating and the ability to get a credit card, you may be missing out. For example, many airline companies only accept credit cards on board the aircraft.

Saving Money

A high credit rating may save you thousands each year in interest and other fees.

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How to Raise a Credit Score Instantly

A good credit score determines many factors in our lives. Credit scores are increasingly being used to evaluate consumers in more ways then just qualification for loans. Life and auto insurance companies are using credit scores to determine policy rates. Credit scores determine loan interest rates. Employers are using credit scores as a factor of employment. Raising credit scores is, generally, a process that takes several months; but there is one method that can boost credit scores instantly. The method is reducing your credit utilization to under 30 percent of your credit limits.

Instructions

1

Review your credit report and note the date your creditor reports the account to the credit bureaus. If your credit report only shows the month and year, contact the creditor and ask what day of the month the creditor reports the account to the credit bureaus.

2

Make note of each credit card limit and the balance on each account. Determine the dollar amount that represents 30 percent of each credit card limit. If you have a Visa card with a $900 credit limit, 30 percent of $900 is $270. According to ComeBackCredit.com, keeping your balances under 30 percent of the credit limit offers the maximum benefit to your credit score.

3

Make a payment to the creditor two to three days before the date the account is reported to the credit bureau. Your payment should bring the total balance on the account less than 30 percent of your credit limit.

4

Re-order your credit report after the creditor reports the new balance. Verify that the new balance is being reported and take note of how much your credit score increased.

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Will Early Mortgage Payoff Negatively Affect Credit Rating?

Mortgages are usually the largest loan for a borrower, but paying it off might not be the best thing for your credit score or your money. Paying off that mortgage now could drop your score enough that it takes you out of the best credit score tier and make loans, such as a future second mortgage, more expensive. However, you must consider how much you can save by paying early.

Identification

Paying off a mortgage may or may not negatively affect your credit rating. There are so many factors that go into the FICO score calculation that nothing is for certain. You may even see a slight boost to your score, because you eliminated a large amount of debt from your credit profile. If you see a boost in your score, it probably won't be by much.

Considerations

The algorithm used by the credit reporting bureaus gives far less weigh to eliminating secured debt, like a mortgage, because of the low risk to the lender. Instead, most of the benefit of a secured installment loan comes from the good payment history and adding length to your credit profile. If this is your only installment loan, your score should drop, because you do not have a good mix of loans. The credit score formula derives 10 percent of the calculation from the borrower managing several types of loans at once.

Other Debt

In general, mortgages have the lowest annual percent yield of any type of loan. Instead of paying down the mortgage, you could divert those funds to a more expensive debt, such as a credit card. Eliminating credit card debt usually raises a score much more than an installment loan. Also, this is a more efficient use of your money. You should pay off debts with the highest APY first, not the account with the highest balance.

Tip

If your mortgage is your only significant debt, consider the savings by paying it off early -- it could add up to tens of thousands of dollars. Also, review your investments as mortgages have interest rates that lag behind the return received on certain investments, such as, stocks. It makes fiscal sense to put money in stock with an expected return of 10 percent, rather than on a mortgage that only costs six percent annually. By investing, you prevent the possibility of your credit score dropping and earn a better return.

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Why Does My Credit Score Keep Changing?

Your credit score is a measurement of how well you manage credit. It takes into account how much credit you have, how long you have had credit, how much debt you have and whether you pay your bills on time. Because of this, it changes over time as new information is added to your credit report and as old information drops off.

Calculating Your Score

The Fair Isaac Corp. weighs different aspects of your credit use to produce its proprietary FICO score, which is the most commonly used credit score. The FICO scoring model gives the most weight to your payment history -- 35 percent -- and to the amount you owe to creditors -- 30 percent. It assigns lesser weight to your credit history, types of credit and how much new credit you obtain. The MyFICO website cautions, however, that this is a general scoring model and certain aspects may be count more or less depending on your situation. For example, opening a new account may have more of an effect on your score if you have a limited credit history.

Positive Information

If you have good credit habits, your credit score will increase over time. Paying all your bills on time is one good way to increase your credit score. Another is to keep your debt levels low, especially in relation to how much available credit you have. Another important step in increasing your credit score is to ensure there are no errors on your credit report. You are entitled to a free credit report annually from all three major credit bureaus, and you should utilize this benefit. Dispute any errors you find in writing and provide copies of any supporting documentation you have.

Negative Information

There are a variety of things you can do that will lower your credit score. Not paying your bills on time and carrying too much debt are the biggest. Also, opening too many credit card accounts, applying for several loans and closing accounts -- especially those you have had for a long time -- can all ding your credit score. Serious credit problems, such as bankruptcy, foreclosure and accounts sent to debt collectors, can lower your credit score by more than 100 points in some cases.

Considerations

The fact that your credit score changes over time is not necessarily a bad thing. If you have made some late payments or gotten yourself into debt, it's easy to get your credit score back on track, because your more recent credit history carries more weight. Even serious credit issues, such as bankruptcy or foreclosure, have less of an effect over time and eventually drop off your credit report altogether. Conversely, it's good to keep in mind that any credit misstep can hurt your score, no matter how good you've been in the past. In fact, for certain credit problems, such as bankruptcy, the higher your score is, the farther it will fall.

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What Would Cause Your FICO Score to Drop?

Your FICO credit score can drop for several reasons. Fortunately, most are preventable if you effectively manage your money and understand how the credit score formula works. Building a good credit score and history is tough enough when you follow all of the rules. There are some ways that your credit score can decline -- once these are on your report, particularly the more negative items, it makes increasing your score even more difficult.

Too Many Credit Inquiries

Each time you apply for a credit card, open a bank account or even ask for a credit line increase on your credit card, the creditor checks your credit score. These small pings to your account, when excessive, can lower your credit score by a few points. These inquiries drop off fast, but too many at once looks like you are trying too hard to obtain credit.

High or Over-the-Limit Balances

While it is good to use credit in an effort to build your FICO score, using too much credit will harm this number. Credit scores are partially based on your debt utilization ratio -- that is, how much in terms of a percentage of your available credit is being used. It is best to never use more than 50 percent or less of your available credit lines to keep your credit score from going down. Naturally, if you are over the limit, this suggests an above 100 percent debt utilization ratio, and that is frowned upon even more.

Late Payments

A big chunk of your credit score depends on you making timely payments on all of your credit and loan accounts -- as well as your cell phone, TV and electricity bills. One of the fastest ways to see your credit score drop is to not pay your bills on time. When you start falling 30 days behind on a scheduled payment, this behavior will be reported to the credit bureaus.

Reduction or Closing of Credit Lines

Creditors have the right to reduce your available credit line and if this happens, it will make your debt utilization ratio increase in terms of percentage points. Creditors do this to limit their exposure. They will likely do this if they feel you are a higher-risk customer or are not using your available credit line that much. Similarly, closing out the credit line for this reason or just to be done with the account will further reduce your overall available credit and raise your debt utilization ratio.

Charge Offs/Repossession/Foreclosure/Bankruptcy

Sometimes, walking away from a credit card balance, car or home may seem like your only option -- and this activity is happening more and more. While this may be a big relief, having items like these reported on your credit report will significantly lower your score and remain for up to seven years. Filing for bankruptcy is even worse in terms of the long-lasting impact on your credit score.

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How to Get Credit Questions & Answers for Free

The Internet makes it easy to get your credit question answered quickly for free. Some broadcasters' free videos, through TV websites or YouTube channels, are dedicated to answering emailed questions about credit reports, scores and loans. The wealth of information online about the credit industry continues to grow, making it easier to find answers to your questions.

Instructions

1

Think carefully about your credit question and consider what source would be best for answering it. If the question is regarding credit as it relates to home financing, then it may be a good question for a real estate expert who answers credit questions online. For example, author Gerri WIllis responds to readers' emails through CNNMoney.com.

2

Insert your question word for word into a search engine such as Google. You may find your answer immediately in the top results. If not, simplify your question or make it more precise. Consider the question: "Should I pay off credit card debt with money I have in a CD?" Change it to a more general question such as: "Should I pay off a credit card with savings?"

3

Ask your question by emailing an expert who does Q & A articles or broadcasts over the Internet. Also, some publications still have letters to the editor, columnists or qualified experts.

4

Visit a forum that deals with the subject matter of your question. Depending on how common it is, the forum may already have a thread of users responding to it. If not, post the question and soon there will be a wealth of responses to it from users all over the world. Forums aren't always the best source of information, as there is seldom any regulation, verification, or filtering done by managers, but users will often point you in the right direction if nothing else.

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Reasons for Credit Repair

There are sound reasons to worry about your credit score and to improve a low rating. Credit scores carry a lot of weight, and your three-digit number can affect your financing options. Instead of living with a bad credit score and anxiously applying for credit, improve your rating and rest assured knowing that you qualify for the credit that you deserve.

Credit Approvals

Most adults apply for credit at least once in their lives. They may need credit to buy a house, get an installment loan, finance an automobile or apply for another line of credit. A history of bad credit as revealed on credit reports can stop a credit approval. Lenders rarely approve credit to someone with a history of late or skipped payments. Paying on time and avoiding delinquencies and collections increases creditworthiness.

Interest Rate

Every loan acquired has an assigned interest rate, which is what borrowers pay their financial institution for supplying the funds. Interest rates affect monthly payments and most borrowers are interested in ways to get the lowest rate possible. A good credit history is key to not only being approved, but also securing the lowest interest rate on a loan. People with good credit acquire better rates because they've demonstrated excellent credit habits, and lenders feel that they are less of a risk.

Employment Opportunities

Seeking employment in certain fields may prompt a credit check by potential employers. Those hiring for government jobs and jobs within the banking or finance industry generally look for people who know how to manage their finances, which is usually evident by a good credit rating. Repairing your credit can open the door to new opportunities, whereas a low credit rating may persuade an employer to select another applicant for a position.

Insurance Premiums

Insurance companies have also joined the credit check bandwagon, and some use credit scores to determine monthly premiums on insurance policies. Maintaining a good credit history can help you score a lower monthly premium on your auto or homeowner's insurance policy.

Peace of Mind

Repairing your credit can provide a measure of peace. Sleepless nights and constant agitation can result from harassing telephone calls from creditors and threatening collection letters. Moreover, if unable to manage outstanding debts, credit problems can trigger bankruptcies or home foreclosures.

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How to Obtain an Individual Credit Rating in the U.K.

Credit ratings give guidance to a lender on the risk of lending money to you. Three credit reference agencies operate in the U.K.--Equifax, Experian and Callcredit. These are private companies that gather personal and financial history on you.. They sell this information to would-be lenders. Data held by agencies is either in the public domain or you have previously agreed to its release, usually on credit applications. The Data Protection Act entitles you to see information held about you within 28 days of applying.

Instructions

1

Ask for a credit reference report frequently to ensure credit will be available if and when you want it. Do this at least once a year. A good credit status means that more companies will be willing to lend to you, and you can shop around for the best deal.

2

Visit the Experian, Equifax and Call Credit websites and request reports from all three companies. Each company may hold slightly different information about you. You can receive a report for free--with strings attached--or pay 2 to each agency.

3

Obtain a free report by completing the company's registration form online. You will be asked for your credit card details and, after a free trial, automatically subscribed to the agency's more-detailed, paid-for service. Avoid paying by cancelling your subscription as soon as possible and within the time limit specified.

4

Complete and print an application form from each agency's web site if you choose to pay 2 for your report, . Post it with a cheque or postal order. The agency may--on a case-by-case basis--ask for further proof of your identity.

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Recommended Credit Score

Your credit score is a number that summarizes your credit risk as a borrower. By far the most frequently used scoring system is the FICO score, used by all three major credit-reporting agencies: TransUnion, Experian, and Equifax. FICO scores range from 300 to a perfect score of 850. As with most things in life, perfection is rare. You should know what credit scores lenders recommend so you can spot problems and work to build your own score if it's too low.

Excellent Scores

Most lenders recommend a FICO credit score of at least 700. That's considered good and it's reasonable. Credit Scoring says the average credit score is around 725. A score of 760, 770 or even higher is excellent. At this level, you can finance a home or car and obtain credit cards with little trouble. Additionally, the higher your score, the lower the interest rates you are likely to pay on borrowed money.

Midrange

Lenders generally will extend credit to persons with scores of 620 to 690, according to the Credit Scoring website. However, a FICO score under 700 indicates you present some risk as a borrower. As a result, you can expect to pay higher interest rates, especially if your score is close to 620.

Subprime

Any FICO score under 620 is subprime. It is a poor credit score and definitely not recommended. Lenders such as mortgage providers Fannie Mae and Freddie Mac usually do not extend credit if you have a subprime credit score. Those lenders who do extend credit charge significantly higher interest rates to offset the added risk. There are a few exceptions. For example, if a person has shown good credit management in the recent past, the Federal Housing Administration will accept scores as low as 580.

Fix Your Credit

If you have had credit problems and your credit score is lower than what lenders recommend, there are specific steps you should take to raise it. HSH Associates says that paying your bills on time is the most important factor affecting your credit score. You also want to pay down excessive debt, especially unsecured debt like credit cards. Avoid frequently applying for new credit or closing old accounts. Monitor your credit report, the basis for your credit score. The law entitles you to a free copy of your credit report from each major credit-reporting agency once each year. Review your credit report regularly. If you find errors, contact the credit bureau and have them corrected.

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Tips to Fix Your Credit After Bankruptcy

Individuals file bankruptcy as a means of debt relief. Oftentimes debt payments become overwhelming and a person's income doesn't allow him to pay off his creditors. To give these persons a fresh start, a judge may grant relief and discharge debts, wherein the person is no longer liable for certain debts. While a bankruptcy can ease the burden of debt, going through this process damages credit scores. It is, however, possible to fix credit after bankruptcy.

Secured Credit Cards

Applying for an unsecured credit card shortly after a bankruptcy to begin rebuilding your credit history may end with a denial letter in the mail. Rather than apply for unsecured credit cards, go to your bank and talk to a representative about secured credit cards. They work the same as other credit cards, the only difference being that the issuer requires a security deposit, setup fee and annual fee. Security deposits are in the $500 range, and your bank will determine your credit limit based on your deposit amount. As you make payments on the secured card, the bank will report your positive payment history to the credit bureaus, which helps fix your credit after bankruptcy.

Bad Credit Loan

Including an installment loan with a secured credit card can also help boost your low score after a bankruptcy. Some lenders will not give you a loan with a recent bankruptcy on your record. The key is locating lenders who specialize in sub prime or bad credit loans. Get an auto loan with a "no credit check" auto dealer, or apply for a small personal loan and use personal property as collateral.

Payment Record

Acquiring a loan after bankruptcy is only the first step to fixing your credit after a bankruptcy discharge. Adding points to your credit score and undoing the effects of a bankruptcy requires making timely payments on these new lines of credit. Late payments or skipping your monthly installment payments has the opposite effect and damages your score further.

Debt Amounts

Huge debts likely paid a role in your bankruptcy. Fixing credit after bankruptcy also entails keeping debt low and only financing items that you can afford. Accumulating excessive new lines of credit equals higher minimum payments each month, and if you are unable to afford these payments you'll start to repeat history and begin missing payments. Pay off your credit card each month to avoid high debts, and review finances before taking out a loan.

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How Can I Check My Credit Rating Online?

Your credit rating affects many areas of your life. If you apply for a new credit card or loan, try to take out an insurance policy or even apply for a job, your credit rating can affect your chances of success. Because of this, you should check your credit rating before applying for credit, insurance or employment. You can do it online through a free and simple process, then correct any errors before you proceed with your application.

Website

Use the official Annual Credit Report website, www.annualcreditreport.com, to ensure you get free reports online with no obligation. The law entitles you to one free copy of your credit report each year from each of the three credit bureaus: Experian, Transunion and Equifax. Be sure to order your credit report from each bureau's official website or you might end up inadvertently signing up for paid services. The Federal Trade Commission has received many complaints from people who accidentally visited commercial websites and signed up for free credit reports that obligated them to purchase credit monitoring or other unwanted services.

Verification

You will need to provide personal information to prove your identity when you request a credit report online. In addition to the usual demographic information, such as your name, address and Social Security number, you will have to answer a financial question. Typically it involves one of your current accounts and asks information that only you would know, such as your mortgage holder and payment amount. Providing this information will verify your identity and give you online access to your report.

Disputes

You can review your credit reports online to see the information that goes into calculating your credit rating. You may find incorrect negative information that is affecting your credit rating, such as late payments or charged-off accounts. You have the right to dispute this information with each of the credit bureaus. If the bureau cannot verify the information, it must be taken off your reports. This will raise your credit rating.

Frequency

Even if you are not trying to open a new account or undertake another activity that can be affected by your credit rating, it's a good idea to monitor your credit reports regularly. Consumer advocate Clark Howard recommends getting a copy from one of the bureaus every four months. For example, get a copy from Equifax in January, Transunion in May and Experian in September. Since you are entitled to a free yearly copy from each of the bureaus, this will allow you to monitor your credit rating throughout the year at no cost.

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How to improve your credit score immediately and easily

This easy step can quickly and safely help you to raise your credit score.

Instructions

1

Find your credit cards and call the number on the back to find out your total credit limit and current balance for every card and write it down.

2

For each card, take your total credit limit and divide by your current balance.
Ex:
Visa card total credit limit: $10,000
Visa card current balance: $9,500

Take 9,500/10,000 = .95 or 95%

3

All credit cards you have that are around 80% or above, are potentially damaging your credit score. The 3 main credit bureaus see how maxed out your credit cards are and deduct points if your credit card balance is equal to or close to your total credit limit on that particular credit card. By paying down your credit card, below 80%, you can improve your credit score. You can also acheive below 80% by raising your credit limit.

4

Now that you know which cards are above the 80%, you should either pay down the current balance, or call the credit card company and speak to a representative to raise your credit limit.

5

If you need to raise your credit limit by $4,000 to go below the 80% threshold, ask for a raise of $8,000. Usually, if the credit card company will not raise your credit limit to the full amount, they will still try to raise it to some smaller amount, so it's always best to ask for more of a credit limit raise than less.

6

After you successfully go below the threshold of 80% on all of, or most of your credit cards, you should see an increase in your credit score. The time amount that you will see the increase will vary depending on each credit bureau's criteria.

7

Congratulations! You have just taken the first step to raising your credit score!

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What Is R1 & I1 in the Credit Report?

The credit reporting industry sometimes uses what seem like "secret codes" on your report for the status of an account. R1 and I1 are the most critical codes to build your credit score, and you should aim to have an many of these as possible. Although these mean you are a good borrower, do not let them lull you into a false sense of security, however.

Identification

The "1" in a status code indicates that the account holder has never missed a payment and the alpha character abbreviates the type of debt. "R" stands for a revolving account, such as credit card or home equity line, and "I" is for installment loan, such as an auto or student loan.

Importance

Having revolving or installment accounts with anything other than a R1 or I1 usually hurts your credit score or at least does not improve it. Payment history accounts for 35 percent of your FICO score calculation. When lenders pull your report, they want to see several accounts in R1 or I1 status. An auto lender, for example, may hesitate to offer financing if you have I8 or a repossession on your report.

Considerations

Do not assume that having R1 and I1 accounts means you should not focus on improving your score or that you already have the best one. If you ever miss just one payment, the status on the account goes to R2 or I2. Also, in 2010, the best rates go to people who have a score above 760, according to Bankrate.com. Having a single R1 and I1 account may not be enough to get into the highest tier of scores.

Tip

The credit agencies do not always use status codes for their reports. Instead of "R1" or "I1" you might see a qualitative description, such as "paid as agreed" or "never late," according to Pat Curry of Bankrate.com. Also, compare reports from Equifax, Experian and TransUnion. They do not always have the same information on their reports or may contain errors.

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What Affects Your Credit History?

A credit history, as the name implies, is a record of a person's credit use. Lenders find it useful because it gives them an idea of how a consumer is likely to handle financial obligations in the future. Someone who always pays bills on time will probably continue to do so, while a spotty payer with many accounts and high balances has a higher chance of defaulting on loans and credit cards.

Definition

Credit reports contain consumers' credit histories. Equifax, Experian and TransUnion are three independent credit reporting agencies that compile and sell financial information on individuals. Buyers include banks and other lenders, insurance companies, human resources departments and others processing credit, insurance or employment applications, according to the Federal Trade Commission.

Factors

Many factors affect a person's credit history, such as the number and age of accounts, balances, credit limits and payment performance, according to FICO, the largest credit score provider. The history also lists creditor inquiries that happen when a consumer applies for new accounts. The reporting agencies include demographic information, such as employers and current and former residence addresses, which indicate a person's stability. For example, spotty employment or many moves within a short period might indicate problems, while a long-term residence and employer is a positive indicator.

Time Frame

A credit history goes back varying amounts of time, depending on the specific items. Positive entries can appear indefinitely, while the FTC states that most bad items must be deleted in seven years. Bankruptcy is an exception, remaining for 10 years. Items are no longer considered by FICO or lenders when they drop out of TransUnion, Experian and Equifax files after the allowed reporting period. Older items do not have as much influence as recent activity.

Considerations

Young adults must develop credit histories before they can qualify for major loans such as car loans and mortgages. MSN Money writer Liz Pulliam Weston explains that some save up money to get secured credit cards, which require a collateral deposit to guarantee the account. Gasoline companies and retail stores will sometimes extend credit to consumers without an established history.

Warning

Credit history is sometimes reported incorrectly by the agencies. Motley Fool financial site columnist Dayana Yochim warns that 80 percent of files have some erroneous negative data. Consumers can check their reports and dispute the mistakes, according to the FTC. The government provides a site, annualcreditreport.com, where consumers can order one free report each year for review from each of the three major credit bureaus. The reporting agencies all have online forms for challenges and are required by law to investigate within 30 days and purge or fix mistakes.

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How Do Home Affordable Refinance & Modification Programs Affect Your Credit?

Borrowers who wish to take advantage of the Obama Administration's Making Home Affordable mortgage relief program may find an unintended consequence: a hit to their credit scores. However, many factors affect the severity of the impact, and it is possible to improve your score over time. If you're struggling with your mortgage, don't let possible damage to your credit score stop you from considering these options.

HAMP

According to the Making Home Affordable website, the Home Affordable Modification Program, known as HAMP, will affect your credit. However, the extent to which your credit is affected depends largely on your personal financial history. If you have pristine credit and haven't missed any payments so far -- but are about to become delinquent -- you'll take a bigger hit, according to the St. Petersburg Times, possibly as much as 100 points. However, if you have several "lates" on your credit, the modification won't affect you as much. FICO, the Fair Isaac Corporation, worked with the federal government to develop a new description to assist homeowners participating in HAMP. Instead of noting payments as "partial," HAMP homeowners will have their mortgage accounts noted as "modified under federal government plan."

HARP

HARP, short for Home Affordable Refinance Program, allows homeowners who have Federal Housing Authority-backed mortgages to apply for a reduced interest rate. HARP does not affect credit, and does not depend on your current credit score. Applicants must be current on their loans. Although homeowners can refinance up to 125 percent of the home's value, they may not "cash out" or use the extra funds to consolidate debt. The additional 25 percent accounts for property value depreciation since the loan -- or loans -- was originated.

The Rationale Behind HAMP and HARP

According to the St. Petersburg Times, Treasury spokeswoman Meg Reilly noted that borrowers attempting to secure HAMP approval represented a material risk for lenders, and that risk should be reflected in the borrower's credit profile. Remember that under HAMP, original loan terms have been changed to suit a borrower's financial condition, similar to credit counseling. HARP, however, is a simple refinance program that works like a non-government sponsored refinance. The difference is that HARP applicants may borrow 125 percent of the home's value, and credit scores aren't a factor in the approval process; conventional borrowers hoping to refinance won't find these terms available to them anymore.

Understanding Your Credit

Borrowers who are concerned about a precipitous drop in their credit scores must remember that the FICO score is only a "snapshot" in time, according to FICO's website. Although many consumers believe that bad credit is a stain that can never be washed away, that's a myth. Making on-time loan payments -- especially on a mortgage, the best type of credit -- and keeping credit card balances low keeps 65 percent of your credit score happy. Your score could be as high as was prior to a modification in as little as a year. Unless you're applying for a loan, a slightly lower score won't cost you money, but government assistance will save you tons.

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Laws in Kentucky for Medical Bills on Credit Reports

Both federal and state laws impact your rights regarding credit reporting. Most pertinent state laws are under Title XXX (Contracts) and Title XXXI (Debtor-Creditor Relations) of the Kentucky Revised Statutes (KRS), but to determine how the law affects your individual situation, it's necessary to consult an attorney. Medical debt is epidemic throughout Kentucky and across America. The 2007 Commonwealth Fund Biennial Health Insurance Survey determined that 79 million Americans have medical debt (61 percent of these had medical insurance at the time). A 2007 Harvard University study determined that 62 percent of the bankruptcies filed in the United States are due to medical debt.

Credit Score

Medical debt is factored in on FICO scores.

Many people believe that medical debt is not included in the calculation of FICO credit scores. They're wrong. In a hearing by the House of Representatives Financial Services Subcommittee on May 12, 2010, a representative from FICO, the dominant credit-scoring agency, admitted that collection accounts for medical debt are factored into the consumer's FICO score. You are entitled by law to get one free credit report from each credit bureau per year (a fee can be charged for more than that number); however, apparently this does does not necessarily apply to your FICO score. In 2009, Experian took the position that the access law does not apply to FICO scores. As of 2010, the law has not been clarified. Experian won't give you your FICO score at all---even if you're willing to pay for it. You can, however, get your TansUnion and Equifax FICO scores---but not for free.

Reporting

It's legal to report medical debt

Doctors and hospitals don't report directly to the credit bureaus; they turn unpaid accounts over to collection agencies, which report it. The law does not prohibit medical debt from appearing on your credit report as a "Collection Account" with the type of debt listed as "medical."

Statute of Limitations

After five years, a debt---including medical debt---must be removed from your credit report.

Medical debt is not treated differently than credit card debt in Kentucky. State law KRS 413.120 sets the statute of limitations for medical collection accounts to appear on your credit report at five years; the same as for credit cards.

Deleting Paid Accounts

The Medical Debt Relief Act of 2009 has yet to become law.

In Kentucky, collection accounts for medical debt can remain on your credit report for five years---even if you pay it. Your report must reflect that the account is paid, but it still has a negative effect on your credit score. Federal legislation has been introduced in Congress, HR 3421, called the Medical Debt Relief Act of 2009, to prohibit this. It would require that collection accounts for medical debt be removed from your report within 30 days of its being paid; however Kentucky Senator Mitch McConnell is on record as opposing it.

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Can a Mortgage Application Credit Check Lower a Credit Score?

When a person applies for a home loan, the lender will want examine the person's previous credit history. The person's credit rating -- a measurement of the likelihood that he will be able to pay back the loan -- will do much to determine the interest rate he can receive on the loan. However, a credit check made by a lender will generally slightly lower the person's credit score.

Features

According to the Fair Isaac Corp., the inventors of the modern credit score, when an individual applies for a home loan, he will generally authorize the lender to make an inquiry into his credit report. All inquiries made by lenders related to a borrower seeking credit will cause the borrower's score to drop slightly. The exact amount will depend on the borrower's credit history and it could drop by as many as five points per inquiry.

Considerations

Multiple related inquiries, such as multiple inquiries by different home loan lenders, will count as only a single inquiry if recorded within a short period. Depending on the credit scoring model, this "shopping" period can range from 14 to 45 days. However, inquiries that indicate a person is considering taking out multiple lines of credit in a short period will harm a person's score more.

Explanation

Although it may seem strange that merely having a lender check a score can lower a borrower's credit rating, the Fair Isaac Corp. explains that this is because these inquiries indicate that person is seeking to take out new lines of credit. When a person takes on more credit, this generally places him at a higher risk of default, causing his credit score to drop.

Misconceptions

Only inquiries that result from a person seeking to take out a loan or open a new line of credit will negatively affect credit score. Other kinds of inquiries -- such as inquiries made by an employer or a landlord -- will not affect the person's credit score. Similarly, if a person checks his own credit score, this inquiry will not cause the score to go down.

Solution

To protect his credit score, an individual applying for a home loan should apply to all the mortgage companies within the same week. This way, all the separate inquiries will be counted as only a single inquiry, limiting harm to the person's credit score.

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How to Fix Key Derogatory Items on a Credit Report for Free

Key derogatory items refer to any remarks on your credit file that lowers your score and makes it difficult for you to acquire a mortgage loan, credit card, auto loan or small business loan. These remarks include late payments, collection accounts, judgments and charge-offs. Fortunately, there are ways to remove derogatory items from your credit report and improve a low score. You don't need to hire an attorney or credit repair service. By making a few simple adjustments, you can fix your credit report for free.

Instructions

1

Pay off credit judgments. If failure to pay a creditor resulted in a credit judgment, contact the original creditor or the court system and express your desire to pay off the balance. In turn, ask the courts to remove the judgment from your credit report. Be patient. This isn't an immediate process and it can take up to three months to have a judgment deleted from your files.

2

Settle collection accounts. Creditors often hire collection agencies to handle past-due accounts. They report this information to the credit bureaus; and having a collections account on your report lowers your credit rating. Agree to pay off the past-due balance in full or set up a payment arrangement.

3

Order a copy of your credit report once or twice a year. Look for unfamiliar credit accounts, inaccurate information or any other error that can lower your credit score. Next, contact the creditor and ask it to remove the negative remark from your report. If it is uncooperative, write a dispute letter to the three credit bureaus.

4

Lower your debt-to-income ratio. Even if you pay your bills on time every month and have never missed a payment, carrying a high credit card balance lowers your credit score and some lenders won't approve your credit application. Create a budget and resolve to pay off debts. Rather than spend your disposable income on dining out, shopping and recreation, use this money to pay down your credit cards.

5

Write an explanation. Often, bad credit results from loss of employment, illness or other unexpected events. Fortunately, credit bureaus allow consumers to include a written explanation on their credit report. This gives you the opportunity to explain the reasons behind a derogatory item. Lenders take your explanation into account when evaluating your credit application.

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