Can a Lawyer Request a Credit Report?

A person's credit report isn't a public document. Rather, the contents of the report, which lay out a person's credit history, are only available to people who have a legitimate business interest in viewing it. This can include a person's creditors, potential employers and landlords. Whether a lawyer can review it would depend on the reasons that the lawyer wished to look at it and whether they constituted a legitimate reason.

Credit Report

A credit report is maintained by a credit reporting bureau, a company that collects information from public records and private creditors about a person's lending habits. This report isn't available to most outside parties. However, the credit reporting bureau shares the report with an individual or a business if the party can present a reason why having access to this report would affect his business.

Legitimate Business Interest

The term "legitimate business interest" isn't well defined. However, this definition does prohibit people from looking at other people's credit reports out of curiosity. A lawyer, therefore, isn't given special access to a person's credit report because he's a member of the legal profession. Rather, he must have a legitimate reason, either for his own business or for a client, to check the report.

Lawyers

There are various scenarios in which a lawyer might be allowed to check a person's report. If a lawyer was preparing to extend a person legal services with the promise that the person would pay him after the services were completed, the lawyer may wish to check the person's credit rating first. This would give the lawyer an idea of whether the person was likely to pay him back or not.

Client

A lawyer might also be allowed to look at a credit report as a means of providing better legal representation to his client. If the client has a legitimate business interest in knowing the contents of the report in a matter with direct relevance to the case for which he hired the lawyer, then the lawyer could legally access the report. For example, if the creditor was bringing a debt case against a debtor, the lawyer would have grounds to look at the debtor's credit report.

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Budget & Money Saving Ideas

The actions you take today to improve your monetary situation contribute to your financial security in the future. To that end, any idea that could increase your savings and tighten up your personal budget is at least worth considering. Explore a few budget and money-saving ideas that could help you achieve more of your future financial goals.

Use a Mobile Budgeting Tool

Oftentimes, when you're on the run, you can make the mistake of diverting from your budget. For instance, you might overestimate what you have available to spend at the grocery or clothing store for the month. To avoid overspending or mismanaging your funds, it helps to have the details of your budget handy even when you're not at home. To that end, consider signing up for or downloading a mobile budgeting tool if you have a compatible cell phone. With a mobile budgeting tool, you can access your budget details from your cell phone and make spending or budget adjustments where needed.

Envelope System

Implement the envelope system to help control your spending. The envelope system seeks to manage the amount of money you spend monthly by forcing you to use cash only. At the beginning of every month, place a set amount that you wish to spend on certain items, such as dining out, clothing and entertainment, for that month into individual envelopes. If you run out of money in a specific area, you must wait until the next month to replenish it. The envelope system helps discipline you to spend within your means.

Shop Online

One way to save money is to comparison shop online. In many cases, you will find the items you need online for cheaper than what you would pay in a physical store, even with shipping included. Author Robert Pagliarini suggests contacting a web store representative to ask for a discount once you have a full shopping cart. Websites like Nextag, Pricegrabber and Shopzilla allow you to type in what items you need and receive a listing of prices around the web. You can also find less expensive items for sale on online auction websites.

Cut Unnecessary Costs

Another money-saving idea is to reduce all of your unnecessary bills. Begin with bills whose payments that vary each month, or variable bills. If you check your budget, you will likely find that the majority of your variable bills are ones that you could probably reduce in some way. For instance, to lower your electric and water bills, replace all of your lightbulbs with energy-efficient varieties and take shorter showers. You can also cancel your non-essential accounts, like cable service, and purchase less expensive entertainment options as another way to reduce unnecessary costs. If possible, reduce the calls you make on your cell phone so that you can downgrade to a less expensive plan.

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How to Rescore Your Credit History

Bad credit can kill your chances of getting a loan for a home or car, not to mention being able to open a credit account. What's worse, sometimes what is bringing your credit score down is inaccurate information on your credit report. If you think this is the case with your credit score, then you need to correct it as soon as you can. The sooner your credit is rescored and improved, the better chance you will have to get the loan you need.

Instructions

1

Review your credit history. You can get a free copy of your credit history annually from the three major credit bureaus -- Experian, TransUnion and Equifax. Look over the reports for errors and outdated information. Makes sure addresses and credit limits are correct. Make sure accounts you don't use anymore have been closed. Check to see if the outstanding balances are correct.

2

Contact the creditor. The bureau will have a procedure for correcting errors, but the easiest way will be to have the creditor correct it. Make your case to the creditor. If it is an obvious error, he or she may correct it on their own.

3

Collect proof of any errors. Gather documentation to prove that the credit report is in error. This might include canceled checks, old bank statements or account statements from the creditor. If the creditor acknowledges an error, he should be willing to provide you with a letter explaining the error. You can use the letter to get the credit bureau to make a correction.

4

Submit information to the credit bureau. If you submit the information, send a letter explaining the problem, a copy of the credit history with the error circled and a copy of your proof. If the creditor provided you with a letter admitted fault, include that as well. Though this method can still take a while to resolve, it will probably be faster than simply relying on the creditor to update your information in their system. Send the information with a return receipt requested.

5

Keep paperwork. Have a paper trail. Keep emails and letters pertaining to the matter. If you make phone calls, list the date and time and who you spoke to.

6

Follow up on the rescoring. Once you have waited the time limit the bureau said it would take to correct the error, look for confirmation. If you don't receive a confirmation letter, email or phone call, contact the agency yourself and ask for the status of the correction. Don't be surprised if correcting the mistake will take at least 30 days. That is how long they have to conduct an investigation and let you know the results. In some cases and if you have the documentation and letter or correction from the creditor, a rapid rescorer can get your credit history corrected in a few days.

7

Ask for a rescored report to be sent to any company that has requested your credit history in the previous six month.

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Does a Credit Score Lower When Pulled for a Mortgage?

Shopping for the right mortgage is an important part of home buying. A lender will inform you of the amount of loan that you can afford, and of the interest rate and terms that you will have. Not all loans are the same, so it's important to inquire with several mortgage companies before you find the right loan product for you. When you approach the lenders, they will pull your credit history and score to determine the financial risk that you pose. In doing so, it may or may not lower your credit score, depending on the timing of the requests.

Credit Score Calculations

Your credit score is based on a number of different factors, such as your history of bill payments, the amount of credit that you carry, the length of time that you have had your accounts, the type of credit you use, and recent credit granted. Part of your score, under the criteria for recent credit, is how often your credit report is requested by companies. That affects your score because you are seeking to increase the amount of money that you owe, which makes you a higher risk for lenders.

Hard Pull

When you apply for for a mortgage, it is implied that you are asking a lender to pull your credit, and you also give permission on the loan application for the lender to do so. This type of request initiated by you is known as a hard pull, and your credit score normally drops a few points, depending on the credit bureau, each time you have a hard pull on your record. Credit bureaus realize that it's wise to shop around for the best loan, though, so there is an exception to the impact on your score when such requests are made within a short period of time. All of the hard pulls made in about a two-week period of time are counted as only one inquiry, which has a minor impact on your score.

Consumer Pull

Pulling your own credit report does not negatively impact your score. You have a right to a free annual credit history report from each of the three major credit bureaus: Experian, Equifax and TransUnion. Your credit score is not included in these reports, but you usually have an opportunity to purchase your score when you are requesting your report. When you start shopping around for a new mortgage, but are not sure how much you will need or the type of loan you want, ask lenders if they can use your copy of your credit report to give you loan information, such as interest rate and terms. Later, when you choose the lender you want to use, that lender can formally pull your credit report and score at that time.

Soft Pull

Receiving offers for new credit in the mail is usually a result of a lender pulling your credit score without your permission. Also, your existing creditors regularly check your history to ensure that you are being financially responsible and will continue to pay your bills on time. These third-party credit requests are known as soft pulls and do not impact your credit because they were not initiated by you.

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Credit Scoring & Its Effects on the Availability & Affordability of CR

A three-digit number that has a significant impact on your life, your credit score may determine whether you can afford to take that vacation, replace your car or redecorate your home. Understanding your score, how it is calculated, and how it is used can help you plan and make informed financial decisions.

Credit Scoring Systems

Credit scoring systems vary from one institution to another, although there are significant similarities in terms of the information that is factored into a score. Following a complex analysis of account conduct and borrowing profiles across a broad sample of customers, a credit scoring system allocates points for characteristics that are prevalent in good payers and deducts points for information that is indicative of poor payment performance. When you apply for credit, the scoring system draws on the information held on your credit file and scores you according to your payment history, the amount of your available credit, balances owed, length of credit history, new credit and the types of accounts held.

Credit Decisions

When making credit decisions, lenders will consider your credit score as well as other factors such as your employment history and income. These additional factors may be built into the lender's own scoring system or considered alongside the score derived from your credit file. According to Bankrate Inc., myFICO claims that 90 percent of lenders use the FICO credit score as part of the decision-making process. FICO scores range between 300, the highest risk to lenders, and 850. Although lenders are likely to apply different cut-off scores, the higher your score, the greater your chance of obtaining credit.

Pricing Decisions

A customer whose credit score is too low for one lender may be accepted by another, but at a price. Lenders price for risk. If they take on customers with lower scores, they pitch interest rates high to compensate for delinquencies. Individual lenders apply different rates across their portfolios, reserving their best rates for those with the highest scores. Bankrate Inc. suggests that only those with credit scores of above 740 qualify for the keenest mortgage rates. Credit card companies typically offer a range of cards, with charges and benefits applicable to different credit score bands; and a customer with a mediocre credit score can expect to pay $5,000 more interest on a $25,000 auto loan than one with a good credit score, according to Liz Pulliam Weston of MSN Money.

Considerations

Whether or not you are looking for new credit, it pays to maintain a good credit score. Make all your payments on time and avoid maxing out your credit cards, reducing balances whenever possible. Existing lenders periodically review your credit score and may seek to implement rate increases if your score has declined. If you are seeking new credit lines, use the myFICO score estimator to determine your approximate score; you can then search for lenders who provide credit to customers in your score band and compare available rates. The Bankrate website has facilities that allow you to search according to your credit score.

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Can Having a Short Sale Prevent You From Renting an Apartment?

When your mortgage balance is higher than your home value and you can't afford the difference, the lender will sometimes agree to a short sale. In this situation, you sell the home and the lender takes the full sale price and forgives the remaining balance of your mortgage. Although this sounds like a good deal, having a short sale on your record can make it difficult for you to find another apartment or home to rent.

Effects on Credit

A short sale usually appears on your credit report in the same way as a foreclosure. Even though you initiated the short sale, you still failed to follow through with repaying your mortgage as agreed and the bank still wrote off a loss. The only exception is if the lender did not report that a balance was forgiven. Depending on how high your credit score was before the short sale, you could see your score drop anywhere from 100 to 160 points. This is in addition to the credit score damage caused by any missed payments before the short sale.

Effects on Rental

Most apartment companies check applicants' credit histories as part of the tenant screening process. If you apply for the rental after your short sale, the apartment company or property manager will see this on your credit report and might not allow you to rent the apartment. This is because credit problems in the past are a strong predictor of problems in the future. However, if you find an apartment you can rent without going through a credit check, the short sale should not affect your chances of renting the new place.

Timing

If you know you will be going through a short sale soon and need somewhere to live after that, apply for the apartment rental before your short sale is finalized. That way, the credit check will not show the short sale and you will be more likely to qualify for the rental.

Tips

If your short sale was due to a circumstance beyond your control, such as declining property values followed by a relocation, or high medical bills that caused you to fall behind on payments, mention this. Explain to the apartment rental office, property manager or potential landlord why you had to settle for a short sale on your house and why you do not anticipate further financial problems. Especially if you kept up with your payments leading up to the short sale, the landlord might be willing to overlook the short sale and rent to you.

Solutions

Even with a short sale on your credit report, you can sometimes offer additional security for a landlord to get an apartment lease. One option is to have someone with good credit cosign the lease with you. That way, the apartment company can legally pursue this individual for payment if you fail to pay your rent. Another option is to offer to put down a larger security deposit than usual. If you can provide an extra month's rent, this gives a cushion so the landlord will not lose as much money if you fail to pay rent.

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Does Reporting a Credit Card Stolen Lower Your Credit Score?

Thieves can purchase credit card numbers on the Internet for as little as 40 cents, according to a 2008 report on the Slate website. Perhaps more important, the theft can ruin the cardholders credit score. Reporting a credit card stolen can lower you score, depending on what course of action you take. As long as you keep the account open, your score should stay the same. Not reporting a stolen credit card and allowing unauthorized users run up a large amount of debt has many negative ramifications.

Identification

Calling up a credit card company to report a stolen card won't hurt a credit score. However, you can damage your score by closing your account permanently, because you lose available credit and, therefore, raise your credit utilization ratio. The credit utilization ratio is the amount of your outstanding debt relative to your total credit limit, and it makes up a significant portion of your score. Keeping the account, but getting a new number won't hurt your score, because card issuers usually just transfer the history from the stolen card to the new account, according to the Bankrate website.

Considerations

Upgrading an account after reporting a card stolen could lower a credit score when the customer requests the upgrade, because the issuer might run a hard credit inquiry. Hard inquiries hurt credit scores by about five points, because they indicate a need for new credit. If the credit card company offers an upgrade with the account transfers, the customer's score won't be affected by a hard inquiry.

Tip

A hard inquiry has little effect on whether you can get credit. If the upgrade to your credit card account includes a significant increase in your credit limit, that will lower your credit utilization ratio, which may offset the loss of credit score points and may raise your score. To help determine whether a stolen card may affect your score, you can check your credit report online. You can receive one free report from each of the three major bureaus (Experian, Equifax, TranUnion) each year -- or a total of three reports every 12 months.

Prevention

A way to stop a stolen card from lowering a score is to prevent the theft. Only shop at secure websites, which begin with "https." One phishing scam involves emails purporting to come from a credit card issuer claiming you must re-enter card and financial details at a fake website to keep the card active. If a website allows you to store your card number for future use, you should decline this option.

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Instruments for Credit Enhancement

Credit scores as reported by the Fair Isaac Corporation are snapshots of a borrower's ability to repay a loan at the moment the score is ordered. However, even a borrower with the worst possible credit score can use credit to enhance his profile and his score will improve over time when properly used. A variety of credit instruments exist to assist those who need help; the key is using these instruments responsibly.

Credit Cards

The easiest way to enhance your credit profile is through the responsible use of a credit card. Several programs and cards exist to build or rebuild your credit history. Before you apply for a card, check your credit score first, the website myFICO.com can help. Once you have your score, review your options. You may need to apply for a secured card first; secured cards require a deposit. Unsecured cards don't require a deposit, but are more difficult to get. FICO's website provides an impartial list of credit card providers with interest rate and fee information clearly listed.

Installment Loans

Installment loans are instruments that have are paid in full over a predetermined period of time. Interest may be fixed -- meaning, the payment never changes -- or adjustable. Adjustable loan payments float up or down depending on the direction interest rates go. Common installment loans are mortgages, auto loans and student loans. They are more difficult to secure than credit cards, but are instruments for enhancing your credit profile. Auto and student loans are easier to secure because lenders often have less stringent borrowing requirements. As a result, each can be a good springboard to a mortgage.

Utility Bills and Rent

Utility bills and rent payments are not considered credit and timely payments do not affect your FICO profile. However, defaulting on a utility or rent payment can negatively affect your credit if the account goes to a collection agency, because collectors do report your information to FICO. Consumers have the right to report timely rent and utility payments to FICO on their own using the self reporting tool. Be advised that a lender may not consider this information when you're applying for a loan.

Using Credit to Enhance Your Profile

The best way to enhance your credit is to manage loans responsibly. This means always paying your bill on time. If you can't pay it in full, make a plan to pay it in installments over as short a time as possible; not only will you save money, you will improve your score. Never apply for too many loans at once, and keep old credit lines open even if you're not using them. Keep your total credit balance below 50 percent of your available credit. The credit bureaus review all of these factors when calculating your score; higher scores are better because they equal lower interest rates and loan flexibility.

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How to Fix Bad Credit With a Credit Repair Kit

Many companies advertise they can repair your credit score or improve your credit rating by selling you its services or a "credit repair kit," but the Federal Trade Commission warns consumers not to fall for likely scams. Attorneys for the FTC report they've never seen a totally legitimate credit repair operation. The reality is, there is not a quick fix when it comes to a person's credit rating. Instead of paying money for a repair kit, individuals can improve their credit score on their own, but it takes time and effort.

Instructions

1

Monitor your credit report. Take advantage of the free yearly credit reports offered by each of the three major credit reporting agencies. Make sure the information reported about your accounts is correct on each report, and dispute any errors by following the directions included on your report. Notify the agencies if your personal information, including the name of your current employer, is incorrect. Even small errors can affect your credit score.

2

Make notes of any negatives reported about your accounts, such as delinquencies or "charged off" statuses. Contact each creditor and ask if it's possible to have those notations removed if you have paid or can agree to pay on time for six months or longer. Inform your creditor of your intentions to improve your credit worthiness, and ask if they have any advice or payment programs that would assist you in doing so. Request a lower interest rate or to have annual fees waived. Follow up with a letter of request in writing to the address printed for "general inquiries" on your billing statements.

3

Make payments on time, and pay more than the minimum due on high-balance credit cards or loans. Refrain from using your credit cards or applying for more credit cards or loans until your debt-to-income ratio improves. Keep your credit card accounts open, even if you manage to pay them off.

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What is Needed for a Credit Check?

Checking your credit report for erroneous information is vital to achieve or maintain a good credit standing. Maybe you are venturing into a business deal and need to check your associate's credit worthiness. Whatever the reason, here's what is needed to acquire a credit check.

Reasons

Credit checks are required for mortgage, auto and credit loan approvals. Employers run credit checks as part of the hiring or promotion process. Landlords will use credit reports to determine the ability to pay rent. Consumers should periodically check their credit reports for adverse information.

Procedures

Anyone acquiring a credit report on an individual must obtain written permission. Employers and landlords are subject to provide applicants with a written notice stating that information included in a credit report can be used to take adverse action.

Personal Information

You will need the full name, date of birth, Social Security number, address, and previous addresses if the consumer resided fewer than 3 years at the current address.

Account Information

At least two loan accounts will need to be verified, as well as the creditor's name and the payment amount.

Access

The Fair and Accurate Credit Transactions Act allows consumers to attain a credit report for free once a year for all three credit bureaus. In some states such as Georgia, you can receive two free credit reports a year.

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Credit Report Analysis

If you want to take out a mortgage, car, personal or business loan, you need to know the basics of credit reports and credit scores. Lenders today look at your credit score when determining whether to loan you money. They also look at it to determine the interest rates they will charge you. Knowing credit report basics can help you boost your credit score and qualify for the best interest rates when borrowing money.

Three Credit Bureaus

Bankruptcy filings will dramatically lower your credit score.

Three credit bureaus--TransUnion, Experian and Equifax--compile credit reports on you. These reports detail the way you handle your money. If you miss a credit-card payment, it will show up on your credit reports. If you file bankruptcy, that will show up too.

Credit Score

With a low credit score, you might not qualify for a mortgage loan.

Your credit score is created from the information in your three credit reports. Lenders look at this score when determining whether you are too risky to qualify for a loan. According to Fair Isaac Corp., the company that invented the credit score, a score under 620 is considered risky by lenders.

Top Scores

A good credit score means you'll pay fewer dollars on interest each month.

Borrowers with credit scores of 720 or higher will qualify for the best interest rates, according to the Fair Isaac Corp. This can result in significantly lower monthly loan payments.

Obtaining Your Credit Report

You can order free copies of your credit reports.

You can see copies of your three credit reports for free. Logon to the online home of AnnualCreditReport.com. Once here, you can order one free report from each of the three credit bureaus every 12 months.

Don't Fall For Scams

Pay your bills on time to improve the information on your credit reports.

Don't listen to any company that tells you it's possible to boost your credit scores overnight. You can only raise your credit scores by changing the information on your credit reports. Pay your bills on time. Cut your revolving debt. Close unused credit-card accounts. There are no quick fixes for low credit scores.

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The Florida Credit Limitation Reporting Statute

Florida has statute of limitations governing how long debt collectors may pursue you in court for a debt that you did not pay. The statues are designed to keep people from being worried forever about being sued over an old debt.

Time Frame

In Florida, debt collectors have four years to file a lawsuit against you for a delinquent credit card debt and five years to sue you for a debt resulting from a promissory note or contract. Florida law gives debt collectors up to seven years to collect on a judgment previously won in court.

Ramifications

Debt collectors lose a powerful advantage---the right to sue---once the statue of limitations runs out. Most debts cannot be listed on credit reports for more than seven years, and in Florida the statue of limitations begins expiring after four years. Someone in Florida with, for example, an 8-year-old debt could simply refuse to pay it.

Warning

Statues of limitations can be reset in Florida and all other states. A partial payment on an old debt in Florida could completely reset the clock, giving debt collectors at least four additional years to file a lawsuit.

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Does Making Interest Only Payments Impact My Credit Score?

Your credit scores are partly based on your level of debt as a percentage of your available credit. Generally, having high balances leads to lower credit scores. Therefore, making interest-only payments each month can have a negative effect on your credit score because your credit utilization level remains consistently high.

Credit Utilization

Credit utilization accounts for about 30 percent of your credit score. Typically, if you only utilize about 30 percent of your available credit card balance you get the highest score. Credit bureaus view people who have consistently high balances as credit risks because the failure to pay down the debt may indicate that the borrower has limited income. However, if you have a small balance on your credit card and choose to make interest-only payments it should not have a negative impact on your score.

Expense

Credit card companies send you a monthly statement requiring a minimum payment sufficient to cover the monthly interest. You can keep your monthly expenses low by only paying the interest each month, but if you pay more than the interest due, the surplus funds reduce your principal. This reduces your interest charge for the following month. Even paying a small amount to principal each month can save you a significant amount of money in the long run.

Missed Payments

When you miss a debt payment or only manage to make a partial payment, your creditor reports the delinquency to the credit bureaus. Payment history has an even bigger impact on your score than credit utilization, as it accounts for 35 percent of your total score. Missed payments can stay on your credit file for up to seven years and are more harmful to your score than high balances. Ideally, you would pay more than the minimum due every month, but you should not over-stretch yourself financially by paying extra one month if you run the risk of missing your next payment.

Other Considerations

Several other factors impact your credit score in addition to payment history and credit utilization. The average length of account history accounts for 15 percent of your score, while the number of new accounts and credit inquiries account for 10 percent. You receive high scores for having long established credit accounts and low scores when you open large numbers of new accounts at one time. Credit bureaus also reward you for diversity, as the type of accounts you currently use accounts for 10 percent of your total score.

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How Settled Accounts Affect Credit Scores

When you fall behind on your debt payments, your creditors can notify the credit bureaus about the delinquent debt, causing your credit score to drop. When you "settle" a delinquent account, the creditor agrees to accept a payment for less than the balance owed and writes off the remainder of the debt. Settled accounts have a negative impact on your credit score.

Character

Lenders check your credit report to get a snapshot of your character. If your credit report shows that you have a history of failing to pay off your debts, lenders are unlikely to approve you for any new credit products. When you settle an account, you pay less than you originally agreed to pay when you took out the loan. Therefore, settled accounts reflect badly on your character from a credit underwriting perspective.

Score Factors

Credit bureaus determine your credit score by looking at data related to a number of different factors. Settled accounts negatively impact the portion of your score that relates to payment history and payment history as a whole accounts for about one-third of your overall credit score. Each account remains on your credit report for up to seven years after the last account activity. Consequently, a settled account could impact your ability to borrow money for years to come.

Time

While negative credit events remain on your report for up to seven years, your recent credit activity has more of an impact on your score than events from several years before. If you pay your current liabilities on time, this has a positive impact on your score. You can also improve your credit score by keeping low balances on your revolving credit lines and making sure you do not apply for credit too frequently, as frequent credit applications are seen as a sign of desperation. Therefore, while you cannot remove the settled account from your report, you can offset some of the harm it causes by improving your current credit management.

Considerations

Delinquent debts have a negative impact on your credit score, so by settling a debt, you do not worsen your score. In some situations you may even cause your score to rise very slightly. When you settle an account, you no longer have to contend with phone calls and letters from collection agencies relating to that particular debt. You also avoid the possibility of your creditors taking legal action against you in order to collect the debt. Therefore, settling a debt can have a positive impact on your life even if does not always help your credit score.

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The Best Way to Establish Credit

Your credit is your reputation for repaying your debts, which allows you to spread payments over time rather than paying for something up front because the lender can trust you to pay it back. Your credit builds slowly so it is beneficial to start accumulating a positive credit history as soon as possible so when you need to borrow a large amount of money, such as a car loan or home mortgage, lenders will see your positive credit history and be willing to loan you the money.

Check Your Credit Report

Even if you have never had credit before, you may still have a credit report because of credit bureau errors or identity theft. If this is the case, you should contact the credit bureau and challenge all of the incorrect information on your credit report. You can order a free credit report each year from the three main credit bureaus: Experian, Equifax and TransUnion (See resources).

Applying for Credit

When you apply for a credit card, many cards will ask if you have a checking account, savings account or both before extending you credit so you have set up these accounts in advance. According to MSN Money, one of the easiest times to get a credit card is when you are in college because credit card companies are willing to take more risks because of the potential for your parents to pay your bills if needed and your increased earning potential in the future. If you cannot get a regular credit card, consider a secured card. When looking for a secured credit card, choose one that has a low or no annual fee, can be changed to a regular credit card in the next year or two and will report your payments to all three credit bureaus. You can also consider asking someone with established credit to put your name on their credit card because you will receive credit when the card is paid on time. However, you become liable for the debt and any late or missed payments will also be recorded.

Building Your Credit

Use your credit regularly but limit the amounts that you spend. You must have at least half a year of credit information before you can have a credit score calculated. MSN Money recommends that you use no more than 30 percent of your credit limit on your credit cards. Also make sure that you make your payments on time because 35 percent of your credit score is based on your payment history. You do not have to carry a balance and pay interest on your credit card to establish credit so it is best to only charge what you can pay off each month.

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Why Do Medical Bills Affect Your Credit Scores?

Even if you've always managed debt responsibly in the past, future lenders or creditors may deny new applications you submit due to unpaid medical bills that appear on your credit report. Leaving medical bills unpaid has a derogatory effect on your credit scores -- rendering you a much higher lending risk for businesses and threatening your ability to qualify for other goods and services such as insurance, housing and utilities.

Credit Reporting

Not all medical debts impact your credit scores. If you or your insurance company pay off your medical debt while the account remains with the original health-care provider, the debt will not appear on your report and influence your score. This is true even if you submit payment late. Doctors, hospitals and other health-care service providers rarely, if ever, file direct reports with the credit bureaus.

If you do not pay your medical debt at all and the health-care provider turns your account over to a third-party agency for collection, however, the account will likely appear on your credit report. Unlike doctors and hospitals, collection agencies report delinquent accounts to the credit bureaus.

Considerations

Unlike other forms of delinquent debt, unpaid medical bills do not necessarily mean that an individual mismanages debt. Consumers cannot predict when or if they will suffer a medical emergency and, for those without insurance, debts incurred due to medical treatment can prove financially devastating.

Even if a doctor or hospital quotes a patient a cost estimate prior to rendering services, the quote is merely an estimate and may not accurately reflect the cost of treatment. Because consumers cannot always know what their medical care will cost before agreeing to treatment and the fact that treatment in certain situations is not optional, some lenders overlook medical collections -- or assign them lesser importance -- when evaluating applications.

Legal Relief

The Fair Credit Reporting Act allows all collection accounts, whether paid or unpaid, to remain on an individual's report for seven years. A bill introduced in July 2009 by former U.S. congresswoman Mary Jo Kilroy, the Medical Debt Relief Act, petitions to have medical collections removed from consumer credit reports within 30 days of being paid or settled. As of March 2011, the bill has passed in the House of Representatives but the Senate has yet to vote on the proposal.

Preventing Credit Damage

Preventing your health-care provider from sending your medical bills to a collection agency is the best way to protect your credit report and prevent credit damage. According to The New York Times, patients should talk to their health-care providers and ask for a discount or negotiate a payment plan. Doing so helps keep the cost of medical care manageable and out of collections.

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How to Get Free Credit Reports Without Signing Up for Service

Keeping track of your credit report records and scoring is an essential part of good financial planning and financial responsibility. While many commercial companies offer paid credit monitoring service, national credit reporting regulations make it possible to get free credit reports without signing up for a paid service. To do this, understand the ins and outs of the credit agency and know the difference between the public and private companies.

Instructions

Background

1

Understand how credit reporting works. There are three major, nationally regulated credit reporting agencies that share information: TransUnion, Experian and Equifax. Based on the information contained in these reports, an independent company, Fair Isaac Corp., creates a rating score known commonly as the FICO score that is meant to indicate an applicant's worthiness to receive credit. Each of the main reporting agencies must give every person in their systems one free credit report each, but since Fair Isaac is a private company, its report information must be purchased.

2

View one of your free credit reports online. Go directly to the websites for the three reporting agencies or access all three through www.annualcreditreport.com. You will need to verify personal information in order to prove your identity, but you will not be asked to pay in order to see your report.

3

Save a copy of all electronic reports. Either print paper copies, save the information on your screen using a print screen function or save the website as an HTML file. You can only view each report once without paying, so it's important to save the information for reference between annual checks.

4

Get a hard paper copy of a credit report in the mail. If you prefer a hard copy, each website includes instructions for requesting your reports through the mail. You may either write a hard copy letter requesting the reports or you can request a hard copy online.

5

Stagger your three free viewings throughout the year. If you want the ability to monitor your credit on an ongoing basis, check one of each of your free reports every four months.

6

Find a business that offers free FICO monitoring. If you want free FICO monitoring, in addition to viewing your national agency credit reports, look for a financial institution that offers free FICO monitoring to its customers. For example, many credit unions will keep their customers' informed about this rating.

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What Is a Perfect Beacon Score?

Perfect Beacon scores are so rare that even high-level executives that work for the credit agencies sometimes have never seen one. Achieving Beacon score perfection, however, is not feasible nor beneficial to the average borrower. Most of the time, you can get the same perks as a person with a perfect score with a much lower rating.

Identification

The Beacon score is basically the same thing as the FICO score -- synonymous with "credit score" for most people. The Fair Isaac Corporation helped Equifax developed the Beacon score, so the formula and range are extremely close. As of 2011, the maximum Beacon score is 850 and the lowest is 300.

Is It Achieveable?

For the vast majority of the public, a perfect Beacon may not even be possible. The credit rating agencies have 10 different scoring models, each for a specific demographic, such as people new to credit or with a previous bankruptcy. Also, you would have to tailor your credit report to the variables in the Beacon formula, which are unknown and a trade secret as of 2011. Just getting above an 800 usually requires several decades of credit management, according to American Public Media.

Benefits

If you somehow achieved a Beacon score of 850, you probably would not see any benefit other than bragging rights. Even in tight lending markets, such as after the housing crisis of 2008, creditors lump anything over a 750 to 770 in the same category. Anything over a 700 is still considered a very good score.

Tip

Entering the highest tier of scores and getting the best rates usually requires nothing more complicated than paying bills on time, using no more than 35 percent of your credit card limit and applying for loans only when you need credit. Some people avoid credit inquiries by co-signing on a account, such as adding a spouse's name to an installment loan. Applying for cell phone contracts and apartment credit checks affects score, so try to limit hard inquiries to two or fewer per year.

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How to Fix Your Credit History Fast

In a society run by money and credit, having a good credit history is important for obtaining loans for your home, car, business or personal uses. Credit scores are used by banking institutions, landlords, rental companies, employers and car dealerships as criteria to determine whether to lend you money or rent to you. If you have a bad credit history, there are ways to raise your credit scores fast so you can be approved for that new car, home or loan.

Instructions

1

Sign up with a credit history service to access your credit report and search for account and payment errors. Finding unpaid balances that you have paid, unauthorized spending from identity theft or collections and charge-offs over seven years old can repaid your credit history in two to four months. Report discrepancies to your local bank or go online to the Annual Credit Report website to file a claim. Credit history companies charge a monthly service to provide you with credit scores from major bureaus and to access your credit reports.

2

Pay your bills on time. If you have trouble remembering your bill payment due dates, write them on a calendar or insert a reminder in your cell phone. Paying your revolving loans and keeping your credit card balances low can help you raise credit scores.

3

Keep unused accounts open. Closing your account within a year could potentially lower your credit score, while lengthening your credit history by keeping your account open can improve your low-credit history. Use your inactive accounts occasionally for inexpensive purchases so you can pay off balances easily every month to improve your credit history.

4

Cut back on unnecessary spending, such as shopping, eating out, vacations and personal "gifts" for yourself, to pay your debts. Debts stunt your credit rating and can prevent you from obtaining future loans from banking institutions.

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Tricks to Improve Credit

Credit is a big part of American life. Consumers must undergo a credit check when applying for any type of credit, such as a mortgage loan or credit card. Consumers also must submit to credit checks when renting an apartment or seeking employment. Having good credit is important to a successful financial life. There are ways to improve your credit standing and thereby improve your chances of realizing that success.

Pay Bills on Time

How you pay your bills accounts for 35 percent of your FICO score, according to the Fair Isaac Corp., inventors of the FICO scoring model. Late payments will lower your score. The later the payment, the more adversely it affects your credit. Accounts that are charged-off or sent to collections will continue to negatively impact your credit and credit score even if they are later paid. The same applies to judgments and tax liens. These items are a matter of public record and indicate to lenders that you were not able to honor your financial obligations. If you want to improve your credit, get current if you aren't. The sooner you catch up on past due payments, the less damage to your credit. Additionally, pay all bills on time each month. If you are having problems making a payment, speak to your creditor and try to work out a payment plan before the situation becomes dire.

Pay Down Balances

30 percent of your FICO score is based upon how much you owe. Your credit score takes into account the amount of available credit that you have and how much of that credit you're using at any given time. Paying down balances and keeping them low improves your score. If you max out your credit cards, you exceed the amount of your available credit on that card and your score will take a hit. Also, as you pay down installment-type loans, such as mortgages and car loans, your score will improve as well because it decreases the amount of your overall debt load. Be careful when taking out new credit cards and initiating balance transfers. This may actually lower your score. The goal is to pay it down, not just move it around.

Limit New Credit

New credit makes up 10 percent of your credit score. FICO rewards periodic new credit that appears on your credit report. However, taking out too much new credit within a short span of time may reduce your score for two reasons. First, another 10 percent of your score is length of credit history. Each new account that you open decreases the overall length of your credit history and may lower your score a bit. Secondly, each time you apply for credit, the creditor places an inquiry on your credit report. Too many recent inquiries indicates to lenders that you are seeking a lot of credit because of financial difficulties. For the best score, only apply for new credit when you need it. Avoid taking out credit at the retail checkout just to save a few dollars. It may do more harm than good.

Dispute Errors on Your Credit Report

Errors on your credit report can lower your credit score. Under the Fair Credit Reporting Act (FCRA), consumers have the right to dispute inaccurate information on a credit report. The credit bureaus are required to investigate your request and must either remove or correct any erroneous data within 30 days. You may file a dispute at the website of the credit bureau, by phone or mail. Before filing a dispute, you will need a recent copy of your credit report. In 2003, Congress enacted the Fair and Accurate Credit Transaction Act (FACTA), which gives consumers the right to obtain one free credit report each year from the three major credit bureaus: Experian, Equifax and TransUnion. FACTA established a website specifically for this purpose: annualcreditreport.com. You can also order the report directly from each bureau's website, by phone or mail.

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How to Remove Paid Liens From Your Account

Liens against you seriously affect your credit score and your ability to receive a new line of credit. Paying the lien off as quickly as possible is the best way to repair your credit, but even paid liens remain on your credit report for as long as seven years. There is a way to remove paid liens from your credit report: file a dispute with the credit reporting agency. You will need to obtain copies of your credit report from the three credit reporting agencies (Equifax, Experian and TransUnion) and to draft a dispute letter if you want to remove paid lines from your account.

Instructions

1

Go to www.annualcreditreport.com. This is the only site (as of 2010) that allows you to receive a free copy of your credit report from each of the three credit reporting agencies. You can receive one free copy from each agency per year. If you already received a copy of your credit report during this year, you will have to pay for the information.

2

View and print each of your three credit reports by selecting your state, requesting a report, and filling in the necessary information at annualcreditreport.com.

3

Locate entries on your credit reports that show the lien has been paid. Note the year: if it has been more than seven years since the last activity on that account, the lien should have been removed automatically. If less than seven years has passed, you can try to remove it from your report by drafting a dispute letter.

4

Draft a dispute letter. Include your name and contact information. In the first paragraph, explain why you are disputing the information (such as the lien is over seven years old or because it has been paid off). Attach copies of your credit report with the letter.

5

Gather proof that you lien is paid off. Add this proof to your letter. This is not required, but it may help your chances at getting the lien removed from your report.

6

Send your dispute letter to the appropriate credit agency. For example, if you found the paid lien information on a report from Equifax, send the dispute letter back to Equifax. Visit Equifax, Experian and TransUnion on the Internet to send the dispute over the Internet.

7

Wait 30 days. Credit agencies have a month to correct the information and to send you a letter regarding what actions they took to your account (if any). Agencies might not remove the lien because seven years have not past or because they cannot verify the information contained in your letter. If they reject your dispute due to an inability to verify information, try to resubmit the dispute letter addressing the agency's concerns with proof.

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How do I Get a Free Copy of My Credit Report If I Am Denied Credit?

Your credit report contains information on how you have paid your past and current debts as well as finance-related legal information regarding judgments and bankruptcies. It is vital that this information is accurate and up-to-date since many lenders approve or deny an application based on the data found in the report. If a lender denies you credit, the Fair Credit Reporting Act (FCRA) gives you the right to a free credit report from the credit reporting agency that provided the information.

Instructions

1

Deterine if you are within the time frame to receive a free copy of your credit report. The FCRA only allows free credit reports to people who have been denied credit within 60 days of the request.

2

Find the contact information of the credit reporting agency that supplied the information. Such information includes a mailing adress, phone number and website and is usually located at the bottom of the denial letter.

3

Choose a contact method and request you free report. This process varies depending on credit agency and method of contact but, generally you will have to provide personal information such as your name, Social Security number and address, as well as information about your denial such as the creditor name and date of denial.

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The Advantages of Having an Excellent Credit Score

Credit scoring systems are a product of the late 1950s, based upon the model of the Fair Isaac Company's FICO score. Such scores are designed to evaluate a person's history of managing credit, and are referenced by lending companies for the purpose of minimizing credit risk. People who are deemed to be excellent credit risks enjoy numerous benefits, particularly low interest rates on substantial loans.

Credit Accessibility

Doors swing open for consumers who consistently demonstrate that they are capable of managing credit responsibly, whereas they shut in the faces of people who pose undue credit risk. For people who have yet to establish credit, lack of accessibility to credit hampers their ability to leverage financial opportunities. Likewise, people who have proven incapable of managing credit responsibly are usually denied whenever they submit an application for a line of credit. People who pose little credit risk, however, are able to access new lines of credit with relative ease. In fact, they are usually showered with incentives just for opening new credit accounts.

Competitive Rates

Low interest rates on home loans, car loans, personal loans and even credit cards are less difficult to secure by consumers who enjoy excellent credit scores. Attractive credit offers are typically qualified with extensive fine print, emphasizing that competitive rates are contingent upon a lender's stamp of approval. In most cases, people with high scores are approved for these advertised offers, and can afford to buy better quality cars or larger homes. By contrast, people with low scores receive less appealing offers in place of those advertised, and are forced to pay higher interest rates and receive smaller loan offers to purchase homes and autos.

Convenience

Most lenders are eager to loan money to a person whose FICO score is unreproachable -- 760 and above. Consequently, these individuals encounter fewer challenges than those with lower scores when they seek to borrow money from financial institutions. Such is not the case for people with low credit scores, as they are usually required by lenders to wade through higher volumes of paperwork to borrow money. Utility companies also customarily require them to pay deposit fees before being granted service, and insurance companies reason that people who fail to pay their bills on time are more likely than those who do to file claims. So, people with high credit scores benefit by not having to pay high insurance premiums on the basis of their stable financial conduct.

Job Market

An unblemished FICO score permits a job applicant to stand apart from a crowd of competitors in the eyes of a prospective employer. A person's ability to handle money often influences the scope of his employment opportunities. Since employers seek reliable employees, many employers run credit checks on prospective workers during the early stages of the hiring process. A poor credit score may prevent a person from receiving employment at state or local agencies, and may hinder a person's access to supervisory positions.

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What Is the Timeframe for Removing Negative Credit Information?

You usually have nearly a decade to remove negative information from your credit report. In some cases you can wipe negative data from a record in a matter of hours. Removing negative data usually requires proving an error on the credit bureau's part or waiting until it stops reporting it. If you find a legitimate error, you should dispute it immediately.

Credit Report Disputes

The Fair Credit Reporting Act gives the national credit bureaus 30 days to investigate a consumer dispute and either uphold the negative item or remove it immediately. Some cases can take longer than 30 days when the situations warrant extra time, such as an extremely complex case that requires verifying lots of information. In highly unusual dispute cases, it takes years to resolve a case.

How Long Do You Have to Initiate a Dispute?

So long as a piece of information remains on your report, the consumer can dispute its accuracy, according to the Federal Trade Commission. There is no need to dispute an item once the federal reporting limit expires. Most negative items fall off a report in seven years, while bankruptcy remains for up to 10 years and tax liens can stay indefinitely.

Considerations

Even when the consumer comes out of a dispute victorious, the negative item can remain for several more months. The credit bureaus have billions of pieces of data across millions of files, so it can take an extra month or two to update a report to reflect the removal of an item. However, the bureaus must send the consumer a copy of the updated report.

Tip

The fastest way to remove a negative item is through a rapid rescoring company. This type of service can remove a negative item within hours because rescore services have a close connection to the credit bureaus. Only lenders, such as banks, may use a rapid rescoring service, and the rescore service only agrees to remove items if the creditor concurs that the negative data in question is false. Thus you must complete an investigation before using a rapid rescore company.

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Who Regulates the Credit Agencies?

Credit agencies, also called credit reporting agencies or credit bureaus, issue reports on whether or not people pay their debts as agreed. These debts usually include credit cards and loans. In the United States, the federal government regulates these agencies.

Types

Equifax, Experian and TransUnion are the three major U.S. credit agencies. They keep information regarding people's bill-paying history and issue it to potential lenders upon request.

Time Frame

Late payments and unpaid accounts usually are reflected on a person's credit report for seven years, according to the Fair Credit Reporting Act, or FCRA.

Identification

The Federal Trade Commission is charged with ensuring that all credit agencies comply with the FCRA when dealing with citizens' financial data.

Basic FCRA Rights

Under the FCRA, a citizen may request an investigation if they believe a credit agency is reporting incorrect information (such as a late payment that didn't happen.) The credit bureau is then expected to promptly investigate the claim.

Other Assistance

In some cases, citizens may also enlist the assistance of their state's attorney general, or they may file a small-claims court lawsuit if they believe a credit bureau has deliberately violated their rights.

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What Does it Mean to Have a Bad Credit Score?

A person's credit scores show up in many different parts of her life. Of course, when she applies for a loan, credit card or mortgage the lender reviews the credit report and the credit scores. Other companies review a borrower's credit score, even without the borrower's permission. Employers often review an applicant's credit history as part of a background check, and insurance companies sometimes base a policy's costs on a credit history and credit score review. Knowing what a "good" credit score and what a "bad" credit score is and how to change them is important.

Credit Score Ranges

The three major credit bureaus companies are Equifax, TransUnion and Experian. These three companies use information provided by creditors, public records and other data to calculate a credit score, often called a FICO score. The credit score predicts how well a person will repay a debt in the future based on their past credit history. Experian's scores range between 330 and 830. Equifax scores fall between 300 and 850, while TransUnion scores are between 150 and 934. Each company uses its own formula for calculating credit scores.

Credit Score Classifications

Higher scores are better than lower scores. As credit markets change, guidelines for defining "good," "excellent" and "bad" credit changes. Typically, "excellent" credit begins at 740 or higher. Good credit ranges between 680 and 740. Average credit includes credit scores of 620 to 679. Credit scores less than 620 are usually considered bad. Some mortgage lenders will not lend to anyone with a credit score less than 620. Each lender defines "good" and "bad" scores differently.

Negative Credit Items

Many items drive credit scores down. These include late payments on current debt. Missing payments hurts credit scores immediately. As the late payment ages, its effects diminish but are still felt for 24 months. Creditors view the amount of credit used compared to the maximum credit line amount when determining scores as well. People who use their entire credit card limit usually have lower credit scores than those who use 30 percent to 50 percent of their credit limits. Other negative items such as bankruptcy, collection accounts, judgments and foreclosures severely lower a credit score.

Turning "Bad" to "Good"

Raising a credit score takes time and effort, but is achievable. Make every payment on time. Missed payments hurt credit scores, but payments made on time help credit scores. Pay down high credit card debt to less than 50 percent of the maximum credit line. Avoid paying off the credit card to drive up credit scores. Having too much credit available can hurt the score as well. Ideally, credit card balances should be between 30 percent and 50 percent of the total credit line. Keep older credit accounts and avoid opening new accounts, as the age of the accounts on your report is also important. Check your credit reports for errors regularly (at least annually) and take advantage of your free yearly reports.

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Does Paying off Credit Cards Every Month Improve Your Credit Score?

Your FICO credit score is based on the credit data contained within your credit report. The Fair Credit Reporting Act gives consumers the right to dispute inaccuracies in a credit report. This is the first step to ensuring that your credit score is as high as possible. If you use credit cards, it's important to understand if paying them off each month will help improve your credit score.

FICO Scores

Thirty percent of your FICO score measures how much debt you have. In the calculation of your score, it considers your credit utilization ratio. This is the difference between how much available credit you have versus how much debt you have. The higher the ratio, the more debt you have and the lower your score. The lower the ratio, the less debt you have and the higher your score. FICO scores run from 300 to 850 and the higher a score is, the better your credit.

Significance

To improve your score, keep balances low on revolving accounts, including credit cards. Paying them off in full each month, however, may not increase your credit score. Remember, FICO calculates your score based on the information in your credit report. According to FICO, depending upon when the card issuer updates the account with the credit bureau, your account may not report with a zero balance. The reported balance will be included in your credit utilization ratio and this may or may not raise your credit score.

Solutions

If you want to pay your credit card accounts in full each month and ensure that the account reports with a zero balance to the credit bureaus, pay the balance and avoid making any new charges during the following month, according to FICO. This will ensure that the account reports with a zero balance instead of the balance that exists at the time the card issuer updates the account.

Considerations

The largest factor in the calculation of your FICO score is payment history, which represents 35 percent. Making all of your payments promptly will improve your score over time. The higher your score, the more damage a missed payment can have. According to MSN Money, a single 30-day late payment can drop your score between 60 to 110 points. Plus, if you max out your credit card and the issuer reports that balance before you have a chance to pay it off, that could drop your score anywhere from 10 to 45 points.

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Will Paying Off a Collection Account Improve a FICO Score?

Paying off most varieties of debt demonstrates financial responsibility and, as such, benefits your FICO credit score. The credit scoring system treats paid collection accounts differently than debts you still owe to the original creditor. Thus, paying off a collection account may make you appear more financially stable but does not raise your FICO score.

How It Works

The FICO scoring formula is a credit scoring system originally developed by the Fair Isaac Corporation. FICO takes considers a multitude of factors when determining an individual's credit score--including how much he owes his creditors. By paying off a debt, you reduce your outstanding debt level and increase your credit rating.

Collection accounts, however, are inherently negative entries. The very presence of a collection account signifies that you defaulted on your agreement with a previous creditor. As long as the notation remains in your credit history, you suffer the derogatory effects. Paying off the debt does not have a positive impact on your credit.

Paying Collections

Although paying a collection account does not improve your FICO score, it demonstrates to lenders that you were willing to satisfy your debts as soon as you were financially capable of doing so.

Once you pay off the collection account, your credit report will reflect a "paid" versus "unpaid" collection. While lenders do not want to see any collection accounts on an applicant's credit file, paid collections are better than unpaid ones.

Paid Deletion

The only way to improve your credit rating by paying a collection account is to negotiate with the collection agency to remove the listing in its entirety instead of merely updating its status as paid. Because it is the collection account itself, rather than its unpaid status, that negatively impacts your FICO score, removing the entry boosts your credit rating. Not all collection agencies will agree to modify your credit history in exchange for payment.

Time Frame

Regardless of whether you pay a defaulted debt or leave it unpaid, the credit bureaus must remove any resulting collection accounts seven years from the date the original creditor reported the debt as 180 days overdue. Should you notice a collection account older than seven years on your credit report, the Fair Credit Reporting Act allows you to dispute the debt with each credit bureau as obsolete and request that the credit bureaus immediately remove the account from your credit history. Once the credit bureaus remove the account, your FICO score will improve--whether you paid the debt or not.

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Will Bad Credit Erase Off my Credit Report?

A person's credit report and attendant credit rating matter in a number of ways. Not only will his score be used by lenders as a means of determining what kinds of loans and interest rates he is eligible for, but often other parties, including many employers and landlords, will consult the score when determining whether to hire or lease to the individual. Negative items may last a long time on a person's report, but they will eventually be removed.

Late Payments and Unpaid Debts

When a person misses a payment on a debt or does not pay a debt at all, the negative item will be noted on his credit report. In these cases, the debt will stay on the record for up to seven years, during which time it will count against the person's credit score. However, its impact on the score may diminish over time. After a record is removed from a credit report, it can no longer impact a score.

Bankruptcies

Consumers can declare two different types of personal bankruptcies, Chapter 7 and Chapter 13. While a Chapter 13 bankruptcy, in which a person's debts and personal finances are reorganized, will stay on a credit report a maximum of seven years, a Chapter 7 bankruptcy, in which some debts may be dismissed and the person may have some of his assets seized, can stay on the credit report a maximum of 10 years. However, once it is removed, it, too, will no longer affect a person's credit score.

Credit Bureau Policies

The exact formula the companies that compile credit scores, called credit reporting bureaus, use to determine a person's credit score is a closely guarded secret. However, a credit reporting bureau may choose to remove a negative item from a person's record before it is legally required to, at which point it will no longer harm the person's score. Under what circumstances the credit reporting bureau will choose to do this are unknown.

Considerations

Sometimes, a debt will remain on a report for longer than it is supposed to. In such a case, the person can alert the credit reporting bureau to have the erroneous record removed. In addition, sometimes a record will last longer than seven years or a deleted record will return if there is a change in its status. For example, if the person pays up an old debt, its expiration date can reset or it can return to the report after being deleted.

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Can a Parking Ticket Affect Your Credit Score?

It may seem unfair, but a parking ticket for a $100 can turn an excellent credit score into an average one. Parking tickets do not automatically go on a credit history, but you take a huge gamble if you do not pay off your fine. In some cases, a parking ticket that goes on your credit report has no effect on your score. But if you don't pay, you could wreck your credit and eventually have to pay the fine, possibly plus interest, if the government sells your ticket to a collection agency.

Identification

A parking ticket can affect your credit score, but only if the government sells your debt to a collection agency. When any creditor sells your debt to a collection agency, the agency usually reports the account to the credit bureaus. Collection accounts can do as little 20 points of damage to more than 100 points' worth -- higher scores have more points to lose, so you can expect to lose points in the upper range of this spectrum.

Considerations

Not all collection accounts affect your credit rating. The FICO 8 scoring formula ignores any collect account with an original value of less than $100, according to Leslie McFadden of Bankrate.com. However, if a creditor uses an earlier version of the FICO system, the collection counts against your credit rating -- assuming the account appears on your credit history. Many governments do not sell accounts to collection agencies.

Time Frame

In general, governments try to collect on the ticket for 30 to 60 days after they issue it. Thus, you should use this time to save money to pay off the ticket. Some governments let you take defensive-driving classes to remove the ticket from your record. Also, it may be some time before FICO 8 becomes standard in the lending industry. As of 2010, there were only 1,000 banks using FICO 8, according to MSN Money Central.

Tip

You can always fight a parking ticket. You could hire a lawyer to review your case, but legal assistance may not be necessary or profitable, because parking tickets rarely go past a few hundred dollars and do not affect your insurance. Look for reasons why the officer may have issued your ticket in error. For example, maybe you parked in a spot after the city turns off parking meters, but the officer saw a wrong time on his watch.

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How to Change Your Credit Score

Your credit score is vitally important because it can affect your ability to get loans and credit cards. It may also be taken into consideration when you apply for a job or attempt to get insurance. If your credit score is low, you can steps to improve it. If you follow the steps properly, you may be able to boost your credit score enough to make you more attractive to creditors, employers and insurers.

Instructions

1

Request a copy of your credit report from each of the three major credit bureaus. You are allowed to get one free copy per year from Equifax, Transunion and Experian. You can make this request online through the Annualcreditreport.com website.

2

Review your credit reports for any inaccurate or unverifiable negative information. This might include accounts that are being reported as late when they are really up-to-date or bad debts through companies that have gone out of business and would therefore be unable to verify the information.

3

File a dispute with each of the credit bureaus challenging the incorrect information. They must investigate the matter and if they cannot verify the information they must remove it from your credit report.

4

Pay your loans and credit card bills on time. The longer you maintain an on-time payment history, the higher your credit score will be. If you are late on even one or two payments, it will go down again.

5

Keep your credit card accounts open by making a small purchase two or three times a year and paying off the balance promptly. Closing credit card accounts can actually bring your credit score down.

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How to Report Payment of Rent to the Credit Bureaus

A consumer credit report documents credit and loan accounts, judgments and collections along with personal information and statements about your credit history, which you can provide at any time for potential creditors, lenders and employers to review. An information provider must report credit information according to the guidelines set forth by each consumer reporting bureau. Any account that is in good standing and paid on time can help to boost your credit score and improve your credit history. While a landlord does not typically report rent payments on a credit report, you may be able to persuade your landlord to do so.

Instructions

1

Write a letter asking your landlord to subscribe to each of the three national credit reporting bureaus. Warn your landlord that subscribing to TransUnion, Experian or Equifax requires a fee.

2

Tell your landlord you wish to have rent payments reported as "alternative credit data" on your credit report. To encourage your landlord to comply with your request, explain that each subscription allows the rental company to report the rental payments of all renters in a building.

3

Remind your landlord that on-time payments are viewed favorably and can boost your credit score.

4

Emphasize your history with the rental company when making your argument. For example, state how many years you've been a tenant.

5

Check your credit report -- as needed -- to track your payments. Enroll in a credit monitoring service to track monthly changes to your credit report.

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