Credit Fix Facts

Developing and maintaining a solid credit history is important if you want to get credit for various life needs, like buying a home, car or even getting insurance. When your credit history shows problems, it is important to take steps to fix them as soon as possible.

Errors on Reports

A significant number of credit reports have errors, according to the U.S. Public Research Interest Group. A 2004 study found that 80 percent have errors and a quarter have errors so serious that it could affect someone's ability to get credit. A credit report error could range from a wrong address to a creditor reporting incorrect information.

Fraud Alerts

In some cases fraud may occur in which an unauthorized party opens an account in the consumer's name, and that information is reported to credit bureaus. In this case the consumer must contact the creditor to identify and fix the fraud report. The consumer can call the credit agencies to place a fraud alert on his report to prevent the issue from occurring again. The fraud alert lasts for 90 days at first; then the consumer can extend it for up to seven years.

Scams

Consumers must beware of credit repair scams. Some companies promise a quick fix to credit issues and a boost to credit scores. Some scammers promise to remove negative information from credit files right away. But according to Gail Hillebrand, an attorney for the nonprofit Consumers Union, "Anyone who promises to get accurate information less than seven years old off a file is lying." Other companies falsely promise to provide the consumer with a brand new credit file, but that is also a lie.

Suggestions

The only way to fix a credit report is through information gathering, disputing errors to credit bureaus, and changing credit or debt management habits. The consumer must maintain accurate records for his financial accounts and access his credit report regularly to identify and then solve problems. To fix bad credit, the consumer must pay off his debts and submit on-time payments going forward.

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Can Dropping an Authorized Person Hurt My Credit?

Dropping a person authorized to use your credit card -- meaning the person does not pay the bill or have legal liability to ever do so -- won't help your credit, but it can be one of the best ways to preserve your rating. In general, authorized users present a huge liability to the primary borrower, and lenders often ignore authorized accounts.

Identification

Although an authorized user's credit rating can benefit from piggybacking on your account, dropping him will have no effect on your credit rating, according to Maxine Sweet of Experian. The only thing jointly held or authorized accounts affect is reporting. When you own the primary account, the credit bureaus report the account history on your credit history and the authorized user's.

Benefits

Because the authorized user can spend money on your limit, he presents a significant threat to your credit score. If the authorized user were to max out the credit limit and skip out of town, for instance, you would have to pay the bill. If you could not afford at least the minimum monthly payments, late payments and any delinquent accounts further erode your credit rating. Also, you have no legal recourse against an authorized user to recover payment for charges he made.

Considerations

Friends and family often help each other build a good credit score by adding each other as authorized users. However, authorized accounts may not help a person build a credit history. Lenders often ignore authorized accounts because the user has no need to pay, so it is not an indicator of the debtor's willingness to repay debt. Also, the credit reporting bureaus can weed out fraudulent accounts, such as when someone pays a person with good credit to piggyback on their account.

Tip

Do not close the account after dropping the user. You want as much unused credit available to you as possible, and closing an account stops lengthening your credit history. If you want to help out an authorized user, consider buying him a prepaid debit card. If he needs to start building credit, you can direct him to a secured credit card and help him pay for the security deposit required for such an account.

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How to Obtain an Individual's Credit Report

Credit reports show the financial history of an individual regarding their debt payments. You may only obtain an individual's credit report if you have a legitimate interest or are granted permission. A legitimate interest would be a parent checking a minor child's credit report to make sure his identity had not been stolen; lenders and employers can check someone's credit report with her permission if she's applying for a job or a loan.

Instructions

1

Request permission from the person whose credit you want to check. This should be put in writing in case of a future dispute.

2

Collect the necessary information required to check his credit, including his current address and Social Security number.

3

Request a copy of a credit report from one or more of the three major credit bureaus (TransUnion, Experian and Equifax).

4

Notify the person if any information in her credit report negatively affects your decision to hire her or grant her a loan. You are legally obligated to state what in the credit report caused you to turn her down so that she can dispute any inaccuracies in her report if the information you found was incorrect.

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Services That Rebuild Credit

The Credit Repair Organizations Act provides the legal definitions and regulations that apply to services that rebuild credit. The enormity of the credit crisis has led to the formation of several companies that prey on consumer vulnerability and ignorance of their rights and protection under the law. Consumers can protect themselves and save money by knowing what to look for in companies that promise to rebuild credit.

Better Business Bureau Rating

With so many companies promising credit repair services, it is important to know if a company has a good reputation. Reputable companies are most often Better Business Bureau (BBB) members in good standing and with high ratings. The bureau grades organizations based on the number of complaints about their services and how the complaints were resolved. BBB representatives will explain company ratings to consumers requesting information.

Types of Services

Organizations that rebuild credit only provide services to clean up credit ratings, scores or histories and help consumers obtain new credit. They cannot misrepresent their services, make false claims or promise to create a new credit identity. According to the Federal Trade Commission, credit repair companies that promise to erase bad credit, bankruptcies and liens, or create a new identity, are not truthful and most likely operating a scam. No individual or company has the right to have accurate information removed from a credit report, including negative credit information such as liens and bankruptcies.

Contractual Obligations

The Credit Repair Organizations Act specifies that a contract with a credit repair service will have the company's name and address, a detailed description of the services, how long it will take to realize the results, any guarantees offered by the company and the cost of services. The company or individual providing credit repair cannot perform any services without a signed contract and must complete a three-day waiting period after signing before performing any services. At any time during the waiting period the consumer can cancel the contract without paying any fees. Do not sign a contract with a company that promises to start immediately or that does not provide the required information on the contract.

Rights Disclosure

A reputable company will inform consumers of their rights and tell them what they can do for themselves free. The Credit Repair Organizations Act requires companies to provide a separate, written disclosure of the consumer's rights before a signing a contract.

Payment Policy

The Credit Repair Organizations Act specifies that credit repair or rebuilding services cannot charge a customer until the promises specified in the contract have been completed. Any company that requires upfront payment, in full or part, is in violation of federal law, and may also be in violation of specific state laws regulating credit repair companies. Furthermore, credit repair organizations must disclose the total cost to the consumer in a contract.

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My Credit Is Horrible: What Can I Do to Fix It?

While it will take years to remove all bad history from your credit report, you can recoup most of the damage relatively soon and you won't need to spend thousands of dollars to get there. Fixing a credit score is a situation where intuition usually proves correct: just pay your bills on time. You can take some actions to speed up the rebuilding process.

Check Reports

You can have great borrowing habits, but errors can do significant harm to your credit. Check your own credit for free via AnnualCreditReport.com, obtaining reports from all three consumer credit reporting agencies. Review report details on every account, including balances due. When the creditor reports what seems like a minor mistakes, such as a lower than normal credit limit, this can hurt your score because it looks like you are using a higher percent of your available credit than you really need.

Personal Repairs

The credit bureaus themselves can tell you how to repair your credit, so you do not need to spend thousands on a company to give you free information, according to the Federal Trade Commission. A credit repair company can only benefit you if you have lots of errors or need to deal with creditors, but you do not have the time or ability to handle this on your own.

FICO Score

Look at the factors in the FICO score -- the only one that truly matters in the consumer credit industry -- for what goes into your score and compare it to your report. When you have lots of missed payments, calculate a budget that lets you meet the minimum payment each month. This may mean giving up luxuries, such as cable TV and takeout meals. Most of what you need to do is just pay down existing debt balances and do it on time. When you have collections or charge off accounts, paying them does not improve your score beyond lowering your debt load.

Credit Profile

Your credit report may have no record of some of your credit accounts. When you see an omission, send in statements from the account and proof of payment, such as a canceled check to the credit reporting bureau. The bureaus do not have to add the account, but they often do. Update the demographic information in your profile. Demographic data does not impact your credit score, but lenders want to signs of a stable life, such as staying at the same job for years, a listed telephone number and current residence.

Advanced Tactics

Find someone with a good credit history to add you as a joint account holder. The good history on the account transfer to your profile too. You can open a new account to start building good credit history, but this comes with some drawbacks. New accounts lower your average account age and usually come with a hard credit check, which lowers your score a few points. Since you have bad credit, you can probably only find a secured account backed by a deposit. (ref 5 and 6)

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Can I Get a Secured Credit Card If I Am Filing for Bankruptcy?

As part of the preparation for filing bankruptcy, you might think you should take out a secured credit card account before the bankruptcy destroys your credit. While using your credit before it is completely wrecked seems sensible, taking out any line of credit before bankruptcy could be a bad idea. Consult a bankruptcy attorney to determine how the bankruptcy court sees this action.

Identification

The question is not whether you can get a secured credit card before bankruptcy -- you can get a secured card at nearly any time because the security deposit makes this an extremely low risk to the lender -- but how the bankruptcy court will view the action. Your bankruptcy judge might consider the application for new credit right before bankruptcy irresponsible and an attempt at fraud, especially if you use the account to purchase luxury items.

Considerations

How a bankruptcy views a secured card taken out before bankruptcy depends in large part on when you apply for it. Usually, credit card purchases within 90 days cannot be discharged. If the purchases include luxury items or attempt to tie cash up into an account, the courts might view the transactions as fraud. This could negate your entire case.

Solution

Instead of taking out a secured account before filing for bankruptcy, do so after bankruptcy. Your bankruptcy likely will not matter to creditors as they market secured accounts to those in bankruptcy and other people trying to build credit.

Legal Advice

Always seek legal advice before filing for bankruptcy. Each bankruptcy case has unique characteristics that will determine if obtaining a secured account is appropriate, and only a lawyer can give you the proper answer. He might even find a way for you to avoid bankruptcy altogether. Creditors, for example, sometimes agree to settle on a debt for much less than what the borrower owes for fear of losing it all to a bankruptcy discharge.

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What Is an Acceptable FICO Score?

A FICO credit score that is acceptable to one lender might not be acceptable to another. One lender might extend credit to anyone with a score above 680, while another lender might use 700 as the cutoff score.

Considerations

Different credit situations often have different credit score requirements. For example, a mortgage-type loan might require a different FICO score than an auto loan.

Acceptable Scores

FICO credit scores range from 300 to 850; the higher the score, the better. According to MyFICO.com, most lenders consider a score above 750 to be excellent and around 700 good. A score close to 650 is considered a fair score.

Unacceptable Scores

A FICO score below 600 is considered a poor score. Anyone with a score below 600 is considered a high credit risk and is likely to be denied credit. If credit is granted, it will probably be at a higher interest rate.

Features

Most people have FICO scores in the 600s and 700s.

Fun Fact

MyFICO.com reports that the average FICO score for people in the United States is 723.

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At What Age Should You Start to Build Up Your Credit?

As far as credit scoring is concerned, the best thing you can do is start building credit as soon as possible, even if you are a young child. Theoretically, you could build enough credit as a child to get a mortgage and car loan at the age of 18. However, building credit at a young age leaves you open to the pitfalls of inexperienced borrowers.

Credit Score

The standard credit scoring model counts the length of credit history for 15 percent of a borrower's score. The sooner you start building credit, the quicker you can maximize this category and have the best chance at getting a low rate on a loan. Also, assuming you never miss a payment while building a credit score young or carry a large balance, you probably have much more positive payment data than a borrower of a similar age.

Benefits

You will probably move out of your parent's home at some point. Many of the luxuries and necessities you want require a good credit unless you can accept paying hundreds of dollars in security deposits. Landlords and utility companies, for instance, usually run a credit check to determine if they want you as a customer or need a deposit. Employers factor credit reports into their hiring decisions.

Potential Downside

Negative items affect your credit history for seven years or more, except for credit inquiries, which only stay for a year. Defaulting on an account when you are young could prevent you from obtaining credit later in life, such as after graduation when you may need it the most. You could wrack up significant debt and spend years paying it off and end up spending much more than the actual cost of the goods in finance charges.

Tip

If building credit at a young age concerns you and you are under 18, ask your parents to add you as an authorized user on an account. This is the best option for a teen, because you do not legally owe the debt or receive the bill. However, ask your parents for advice on managing credit so you can handle an account on your own when you become an adult. Borrowers under 21 must have a cosigner on their account to get a credit card or prove they have some consistent income.

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How to Request Removal of Paid Balances on a Credit Report

Part of keeping a good credit score involves checking it periodically and correcting errors that the Credit Reporting Agency (CRA) has recorded. The CRA (Experian, Equifax, or TransUnion) receives reports on your credit behavior from credit card companies, utilities, landlords, and other bill collectors. If you are late on a bill but do pay it, it is possible that the payment has not been noted by the CRA, so you may need to request that the error be removed.

Instructions

Removing Inaccurate Information

1

Request a free copy of your credit report at annualcreditreport.com, by calling 1-877-322-8228, or by filling in the Annual Credit Report Request Form and mailing it to: Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348 5281.

2

Review the report for inaccurate information.

3

Report the errors to the CRA (Experian, Equifax, or TransUnion) in writing, and to the person or company that made the inaccurate report.

4

Send the letter by registered mail, marked "return receipt requested," noting the incorrect information, and providing photocopies, not originals, of all receipts or paperwork that supports your position. Ask for the information to be removed or corrected.

5

Include a copy of your credit report with the disputed items clearly marked.

6

Wait for a reply. The CRA has 30 days to investigate the complaint. If a mistake was made, they will notify the creditor and then coordinate in correcting the error. The CRA will send you a new copy of your credit report, which does not count as one of your free yearly reports.

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Does a Paid Collection Hurt Your Credit?

Unpaid debts do not go away even if your creditors write them off. Banks and other lenders often write off accounts that go unpaid for 180 days, because of the tax benefit. Lenders often sell accounts to collection agencies who can hound you for repayment and sometimes sue you, as well as adding a negative item to your credit report.

Effects

A collection account is very hurtful to your credit, even if you pay it off, because lenders still see that you had an old bill placed with a collection agency, which means you defaulted on the original account. Paying off the account does not automatically change a collection account's damaging effect on your credit score.

Benefits

Paying off a collection account has some benefits, even if it does not improve your credit rating. Taking care of the bill stops annoying collection calls and letters. Payment prevents the possibility of a lawsuit and keeps the debt from being resold to a new collection agency.

Alternative

Collection agencies sometimes agree to remove the account from your credit reports if you pay it off. First off, try offering less than what you owe. Debt collectors purchase charged-off accounts for much less than their face value so they still make money with a discounted settlement. Get a signed agreement showing that the collector agrees to remove the account in exchange for your payment. Your credit will still suffer, though, because the original charged-off account remains on your credit report.

Warning

Beware of paying debt collectors who hound you about old accounts on which your state's statute of limitations has expired. They can seek repayment but cannot sue you for the debt, and they cannot call you if you tell them to stop in writing. These bills are called "zombie debts" because they are technically "dead" even though scavenger agencies tries to get money out of them. Making any payment, or even promising to do so, is dangerous because it restarts the clock on the debt, opening you up to several more years of collection attempts and potential lawsuits.

Time Frame

Collection accounts, whether paid or unpaid, do not stay on your credit reports forever. The credit bureaus eliminate them from your records seven years from the date you stopped paying, according to the Federal Trade Commission website. Removed entries no longer hurt your credit because they are not visible to lenders or credit scorers.

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What Does a Security Alert on My Credit Mean?

The number of identity theft victims dropped 28 percent between 2009 and 2010, but the decrease was mostly due to a lack of large-scale security breaches, according to a report by Javelin Strategy & Research. Fraud by people the victim knows, however, went up 7 percent. One way to add extra protection to your credit profile is a security alert. Security alerts on credit reports are a way to ask creditors to double-check the identity of borrowers suspected of using stolen data.

Identification

A security alert on your credit report means you might be a victim of identity fraud and the lender should take extra precaution to verify your identity. Usually, this means requesting a drivers license and Social Security card. The major credit bureaus share security alerts, so you only need to ask one agency to grant your request. The credit bureaus do not place security alerts unless you initiate such an alert.

Effectiveness

As of 2010, there are no hard and fast rules as to how a lender must go about verifying the identity of someone with a security alert on his credit profile. Lenders often ignore a warning on a report, according to MSN Money Central. This is why some security experts, such as Michelle Jun, a staff attorney for Consumers Union, suggest placing a freeze on your credit report, which prevents lenders from viewing it unless you give explicit permission.

Time Frame

The credit bureaus put a security alert on your report for 90 days. If you want to keep it on your profile, you must call and renew it quarterly for as long as you need the alert to remain in effect. Victims of identity theft who have a police statement can request an fraud victim statement. With such a police report, you can ask the credit bureau to place an extended fraud alert on your report. This asks lenders to call before granting credit and lasts for seven years.

Tip

Military personnel can request an alert that lasts as long as they serves on active duty. They can also receive an extended fraud alert without proving identity theft. Even if you use a security alert, a freeze or signing up for credit monitoring might be a wise move, because thieves might just wait to use your information or you could forget to renew the alert.

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How to Monitor Your Credit Rating

Regularly monitoring your credit rating is an important step to assuring your financial health. A good credit rating can give you better interest rates on car loans, home loans and personal loans, and your credit rating is looked at by everyone from a potential landlord to a potential employer. Monitoring your credit rating also lets you see whether your identity has been stolen or compromised. At first, monitoring your credit rating will take an hour or two. But after that you'll have to spend only a few minutes every couple of weeks to stay on top of it.

Instructions

1

Purchase a full credit report on yourself. Although everyone is entitled to a free credit card report a year from AnnualCreditReport.com, purchasing a full report will give you the most detailed information. You can purchase a report from each of the main credit agencies, Experian, TransUnion, and Equifax, each of which will give you a separate score.

2

Read your credit report carefully and verify that all the information is correct across all three reports. Make sure that your most recent address is listed, and that all previous addresses are correct. Check that all the credit accounts shown as open or closed are ones you know you opened or closed throughout your credit history. If you see incorrect information on any agency's report, contact that credit agency to dispute it.

3

Make a list of all the things that could be hurting your credit. Too many accounts open, a low debt to open credit ratio, delinquencies, or even a short credit history or too few accounts open can harm your credit. Most credit-reporting tools will show you what could be hurting your rating and give you tips on how to improve it. Concentrate on the things that affect your credit the most, such as too much debt and delinquencies, and plan ways to improve those areas.

4

Sign up for a free credit-monitoring tool. There are few available online that will send you reminders to check your credit score. You can also schedule it in a personal calender. Optimally, you want to check your credit every six weeks or so, but twice a year will be enough. You don't have to look at a full credit report each time you check your credit score, but credit-monitoring sites will allow you to keep track of how your score might look and will give you information such as total accounts, length of history, payment history, open credit, and hard credit inquiries.

5

Continue to run your credit report at least once a year. Make sure you pay your bills on time, and don't open more credit accounts than you need. You will see your credit score improve over time.

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An Easy Way to Build Credit

It is important for young adults to establish a good credit history so they can show lenders their good financial standing when it comes to making larger purchases, such as a vehicle or home. A good credit history not only helps when it comes to financing options, but can also make a difference in auto insurance rates, renting an apartment and getting a good job. Although building good credit is not necessarily difficult, it does take time.

Instructions

1

Get a student credit card. Some credit card companies offer college students credit cards despite their lack of a credit history. If you get a student credit card, use it to make a couple of small purchases occasionally, and pay the balance in full when the bill arrives.

2

Open a bank account. Some banks and credit unions have banking options for students, which allow young adults to open an account with less money than is usually required of a new customer. After having money in the bank for a period of time, you may receive credit card offers from the bank itself. If you qualify for a credit card through your bank, use it sparingly and pay the balance in full when the bill arrives.

3

Piggyback. If your parents have good credit, see if one of them will add you to a credit card account as a joint account holder. Your parent's good credit will reflect well upon you. Another way to piggyback on someone else's good credit is to have a person with good credit co-sign a loan for you; the loan will show up on your credit report.

4

Apply for store credit cards. It may be easier to get a store credit card than one through a major finance company. A store credit card will not impact your credit score as much as one through a major finance company, but it is a simple way to start building credit and opening doors to future financing options you may not qualify for otherwise.

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When Can a Chapter 7 Be Removed From a Credit Report?

There are two types of consumer bankruptcy, according to the Federal Trade Commission. Chapter 13 bankruptcy allows the filer to keep most possessions, but it also requires repayment of many bills. Chapter 7 bankruptcy is more drastic, and both types remain on credit bureau files for a long time.

Definition

The FTC explains that Chapter 7 bankruptcy is a court action that liquidates most of a person's assets and discharges almost all of their debts. Filing for Chapter 7 bankruptcy stops utility shut-offs, wage garnishments, repossessions, foreclosures and collection agency harassment. The eventual court discharge does not eliminate certain bills like child support, alimony, taxes and certain student loans.

Time Frame

Chapter 7 bankruptcy remains on a person's credit records for 10 years, according to the FTC. It shows up every time a lender or other company or individual orders a copy of that person's TransUnion, Equifax or Experian credit reports. Consumers are allowed to file Chapter 7 bankruptcy every eight years, and each case remains on their credit reports for a full decade.

Effects

Bankruptcy is a serious blemish on a credit file, according to the Bankrate financial website. A Chapter 7 filing shows that the consumer totally defaulted on the debts. Bankrate explains that this does not completely stop that person's ability to get credit. It makes the process more difficult and usually means paying an inflated interest rate to offset the lender's increased risk.

Solution

Chapter 7 bankruptcy may stay in a credit file for ten years, but Liz Pulliam Weston of MSN Money explains that its effects diminish over time for consumers who rebuild their post-bankruptcy credit. Lenders look at the entire credit report but put more weight on recent transactions. Smart consumers focus on careful credit use, including limited spending and making all payments on time. Pulliam Weston states that those who cannot get traditional credit cards to rebuild a good history can open secured accounts. Secured credit cards require a deposit for collateral and extend a credit limit equal to the deposit.

Alternatives

The FTC advises that there are alternatives to Chapter 7 bankruptcy. It advises creating a strict budget or contacting creditors and bills collectors to set up workable payment arrangements. Consumers who cannot create plans on their own can work with non-profit credit counseling agencies. These agencies assess the individual's situation and either create a budget or set up a formal debt management plan. The plan often involves negotiating with creditors to reduce balances or interest. The person's credit records eventually recover if plan payments are made on time, and previous negative records drop off the file in seven years.

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How To Build a Good Credit Rating Fast

If you build good credit, doors will open for you. Unfortunately, it seems as if these days you have to have credit in order to build more. Hopefully these tips will set you on the path to building good credit quickly.

Instructions

1

Apply for a credit card. Even numerous applications won't hurt you, since you have no credit score yet. Getting a credit card with no credit is much easier than getting one with bad credit.

2

Keep a high debt to limit ratio. This simply means don't charge very much on your card once you get one. Keep your purchases around 10 percent or under the limit on the card. This will help you build the maximum amount of credit points each month, which will in turn build your credit score rapidly.

3

Make your payments on time. Making just one payment 30 days late can cripple your new credit score, but establishing a record of on-time payments -- even if the payments are small -- will quickly boost your credit score. Always be sure to pay on time or, better yet, pay early.

4

Maintain only a few credit cards. Having more than three credit cards this early on can hurt your score because it gives you too much revolving debt -- even if you are paying on time.

5

Apply for a small bank loan using funds in a savings account to guarantee the loan. The bank may "freeze" your collateralized funds, and this is normal. This will give you a record of repaying installment debt along with revolving debt, which will boost your new credit score even more.

6

Remember your student loans. Many, many people have student loans. If you are included in this and you have already begun to pay yours back on time then you are already building good credit.

7

Do not drop old credit cards. Your credit score is based partly on the age of the accounts you keep in good standing, so don't close a credit card account, even if you never use it.

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Can a Bankruptcy Account That Omits Information Affect My Credit Score?

If you're applying for a loan, turning in an application for rental housing or shopping for new insurance, your credit score plays a significant role in your approval. Positive entries, such as a credit card you use responsibly and make regular payments on, improve your credit score. Negative information, such as a bankruptcy, lowers your credit score.

The Bankruptcy Record

When you file for bankruptcy, the bankruptcy record shows up in the section of your credit report reserved for public records. The bankruptcy trade line contains such information as the amount for which the court found you liable, the value of your assets, the bankruptcy case number and your available exemptions. The very fact that a bankruptcy appears on your credit report damages your credit score regardless of whether the information in the trade line is accurate or complete.

Considerations

The Fair Credit Reporting Act notes that all consumers have the right to fair and accurate credit records. You can dispute trade lines on your credit report that reflect incorrect or incomplete information. Thus, if the trade line for your bankruptcy is missing information, you can dispute that entry with the credit bureaus and demand that the credit bureaus report the missing data. The credit bureaus contact the court that holds your bankruptcy record and request the omitted information. If the court does not comply or does not respond to the request, the credit bureaus remove the bankruptcy from your credit files.

Time Frame

A past bankruptcy won't haunt you forever. The credit bureaus legally can leave the bankruptcy on your credit report only for a maximum of 10 years. The type of bankruptcy you file also plays a role in how long the record remains a part of your credit history. If you filed under Chapter 7, the record remains for the full 10-year reporting period. If you filed under Chapter 13, however, the credit bureaus delete the bankruptcy record after seven years.

Credit Impact

The degree to which a bankruptcy damages your credit rating is unaffected by whether the trade line omits information about your case. While everyone's situation is different and there is no guaranteed way to determine how much credit damage you will suffer, an individual with a high credit score suffers greater credit damage than one with a poor credit rating. As the bankruptcy ages, however, it has less of a negative impact on your credit score. Thus, practicing positive debt management habits can help you improve your credit score before the reporting period on the bankruptcy expires.

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How to Use Rent Payments to Improve Credit

Improving a bad credit score is done by making loan or bill payments on time. This shows future creditors you are able to handle the repayment of funds based on your past credit history. Using your rent payments to improve your credit score is done by your landlord reporting those payments to a credit reporting service. While rent payments are not typically reported to a credit service, you can convince your landlord to do so by informing him of the steps involved.

Instructions

1

Inform your landlord that you want to improve your credit score and ask them to subscribe to a credit reporting bureau such as TransUnion, Experian or Equifax.

2

Tell the landlord to report your rent payments as alternate credit data on your credit reports. Inform them that once subscribed to a credit reporting bureau service, they can also report the rental payments of all tenants in the building if you live in an apartment complex.

3

Enroll in a credit monitoring service such as True Credit or Identity Lookout to track your rent payments and to make sure the data your landlord is inputting is accurate.

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How Does Being a Guarantor Affect Credit?

Your Credit Report

Guaranteeing a loan or credit card account for someone else has an effect on your credit report because you are taking responsibility for the account. When you co-sign to guarantee someone else's loan or account, you are agreeing to be 100 percent responsible for paying the debt if he defaults on the payments. Therefore, it will show up on your credit report just like any other account for which you are liable and will reflect the current status of the account and the payment history, whether it's positive or negative.

Positive Effects

If the person for whom you guaranteed the loan or credit card pays it as agreed, it will have a positive effect on your credit report, as well as on his. The account will show as "current," with an on-time payment history. Accounts that are being paid as agreed help to maintain a good credit score because they demonstrate financial responsibility, whether it's your own account or one that you have guaranteed.

Negative Effects

If the person for whom you guaranteed a loan or credit card defaults on the account, it will have a negative effect on your credit. When you co-sign, you are considered to be 100 percent responsible for the loan, even if you did not receive any of the money or never used the credit card in question. If you do not take over the payments or pay off the amount owed, it will count against your credit score in the same way that any other delinquent account would. You will also most likely receive collection calls if you don't make the payments, and you can be sued for the loan. If you lose in court, you'll have a judgment on your credit report which will bring down your credit score significantly. The creditor can even garnish your wages to get repayment.

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How Marriage Affects Credit Scores

Marriage can be scary for many reasons, including credit scores. The most common scenario is that one spouse has a less-than-perfect credit score, whether from some missed credit card payments in college or from something more severe such as bankruptcy. This leaves the other spouse concerned about whether these past imperfections will tarnish a carefully maintained credit report and score.

Separate Credit Scores

The act of getting married does not directly affect credit scores, because spouses continue to maintain separate credit reports and credit scores after marriage. This is because credit reporting is linked to a person's Social Security number, which does not change upon marriage.

Therefore, newlyweds don't need to worry about their own credit scores averaging out with their spouse's. Those who already have good credit scores keep those scores after marrying somebody with bad credit.

Joint Accounts

Joint accounts held in both spouse's names will appear on both credit reports. Therefore, if a spouse with bad credit is added as an authorized user on a credit card of the spouse with good credit, making payments on time will benefit the credit history and credit score of the spouse with bad credit. However, the opposite can also occur: Delinquency on joint accounts will hurt the spouse with good credit.

Separate Accounts

Spouses should maintain separate credit cards and checking accounts even after marriage, according to Investopedia. These separate accounts will help them to keep activity on credit reports, and--assuming payments are made on time--to maintain a good credit score. Having recent credit history is important in case one spouse needs to apply for a loan individually in the future.

Mortgages

If both spouses work, usually both should appear on a mortgage application to have enough income to be approved for a mortgage with a good interest rate. This is a case in which both spouse's credit scores come into play, because a bad credit rating for one spouse can hurt the chance of the couple getting a good mortgage.

If the primary breadwinner has good credit, it might be a good idea for that person to apply for a mortgage alone, an article on CNN Money suggests. However, making payments on this mortgage will not boost the credit score of the spouse who is not listed.

Benefits

Although marriage does not directly affect credit scores, married couples need to take their credit scores into account as they plan their financial future together. Someone with bad credit can benefit greatly by marrying someone with good credit who will be responsible for the joint accounts and boost the bad credit score. When both spouses have good credit scores, they can secure good interest rates on joint credit accounts.

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How to Raise Your FICO Score After Chapter 13 Bankruptcy

FICO is an acronym for the Fair Isaac Corporation. This is the company that created, according to the Home Buying Institute's Brandon Cornett, "the credit-scoring model that's most popular among mortgage lenders." FICO's system takes the information from a credit report and translates it into a number that can be used to evaluate your creditworthiness. When you file for a Chapter 13 bankruptcy, you are generally instructed to repay some or all of your debt under a court-approved repayment plan. If you complete the court-approved repayment plan, your Chapter 13 bankruptcy could come off your credit report sooner than a Chapter 7, which discharges all of your debt.

Instructions

1

Follow your court-ordered repayment plan. This will not only show those accounts as being paid (even if they are paid late) but will also show that you intend to make good on your debts. In addition, by following the plan, you can discharge the bankruptcy in as little as 7 years.

2

Pay all of your bills on time. This is important for anyone, but if you had a history of late payments before your bankruptcy, making an effort to pay them on time now will give you a chance at improving your score. According to Cornett, reestablishing a "pattern of responsible credit usage" will help you improve your FICO score for the future.

3

Get a new, secured credit card. A secured credit card is a card that you make a deposit on and then are given that amount as your credit limit. So if you put $500 on a secured card, you have a $500 limit. After a year or so, if you pay your balance off in full each month or make regular payments, you can "graduate" to a regular unsecured card.

4

Manage your money well. Seek a financial counselor if necessary. You will need to put a budget in place and schedule payments so that you don't miss them or make late payments. Consistent payments and a renewed effort at managing your financial life will go a long way toward continually improving your FICO score.

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How to Fix Your Credit in Dallas, Texas

Many local resources are available for credit repair in Dallas, Texas. Getting legal and ethical advice from a local source could help you improve your credit. That advice should not come from a for-profit credit repair firm, according to the Federal Trade Commission. The FTC, according to its website, has sought legal action against some Dallas credit repair firms promising to remove negative information from credit reports that is accurate and timely. The FTC says accurate information cannot be removed until it expires -- a minimum of seven years.

Instructions

1

Locate a credit counselor in Dallas approved by the U.S. Department of Housing and Urban Development. The counselors are knowledgeable about all legal and ethical methods for repairing credit. HUD-approved counselors in Dallas include Consumer Credit Counseling Service of Greater Dallas, Dallas County Community Action Action Committee, Dallas County Home Loan Counseling Center and Jordan Community Development Corporation. Many services provided by Dallas credit counselors are free.

2

Review your credit report with your Texas-based credit counselor. Get a copy of your credit report for free from AnnualCreditReport.com. This website is authorized by the Federal Trade Commission to offer free reports under the terms of the Fair Credit Reporting Act. Ask the counselor to point out negative information that could be hurting your credit, including accounts that are past due and accounts that have been closed and assigned to debt collection agencies.

3

Make payments to bring all your open accounts current. Also resolve any old delinquent accounts. Improve your credit as you make on-time payments each month while reducing your debt. Also ask the credit counselor for tips on avoiding credit problems again. Ask specifically about free financial literacy classes in Dallas and free foreclosure avoidance workshops if you are a homeowner.

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How to Report Accounts That Don't Belong to Credit Bureaus

Your name and Social Security number (SSN) may identify you, but your credit rating and supplemental report can verify your identity and prove your credit-worthiness for a loan or mortgage---even employment. Just as you want to ensure no one is using your name and SSN, you want to monitor your credit reports with all three credit bureaus (TransUnion, Equifax and Experian) and report any inaccuracies. Each credit bureau may have different credit information, so review each carefully and report (or "dispute") the inaccurate item to each credit bureau listing the inaccuracy on its report.

Instructions

TransUnion

1

Identify the accounts listed on your TransUnion credit report in error.

2

Launch the TransUnion "Online Dispute" form (see Resources) in your Web browser and click "First Time? Click Here" or click "Returning? Click Here" if you already have a TransUnion online account.

3

Enter the TransUnion report or file number listed on your current TransUnion credit report and your identity verification information (such as your current address and employer) when prompted. Click 'Next."

4

Enter the company name and account number of the item you are disputing as listed on your credit report, and enter the reason for your dispute--such as it is not your account, or you have paid the debt but it shows a balance. Click "Submit."

5

Save the completed form to your computer or print and save the hard copy for your records. TransUnion will contact the company of the disputed item and ask it to verify the information it reported. If the company is not able to verify the information as listed on your credit report, TransUnion will make the change you requested. TransUnion will notify you via email approximately 30 to 45 days from the date you submitted the dispute with the results of its investigation.

Equifax

6

Identify the accounts listed on your Equifax credit report in error.

7

Launch the Equifax "Online Dispute" form (see Resources) in your web browser and enter the confirmation number listed on your current Equifax credit report.

8

Enter your name, Social Security number, current address and email address, and retype the verification code displayed under "Code Verification." Click "Submit."

9

Enter the company name and account number of the item you are disputing as listed on your credit report, and enter the reason for your dispute--such as it is not your account, or you have paid the debt but it shows a balance. Click "Submit."

10

Save the completed form to your computer or print and save the hard copy for your records. Equifax will contact the company of the disputed item and ask it to verify the information it reported. If the company is not able to verify the information as listed on your credit report, Equifax will make the change you requested. Equifax will notify you via email approximately 30 to 45 days from the date you submitted the dispute with the results of its investigation.

Experian

11

Launch the Experian "Request an Investigation" form (see Resources) in your web browser.

12

Enter the Experian report number listed on your current credit report, select your state from the drop-down list, and enter your Social Security number and current ZIP code.

13

Review and agree to the Experian Terms and Conditions and click "Submit." An electronic copy of your current Experian credit report will display on a new screen.

14

Review your displayed credit report and click the blue "Dispute this item" button next to any item you believe is inaccurate. Select your reason for the dispute from the drop-down list. You may also enter additional information you believe supports the reason for your dispute. Click "Submit" when finished.

15

Save the completed form to your computer or print and save the hard copy for your records. Experian will contact the company of the disputed item(s) and ask it to verify the information it reported. If the company is not able to verify the information as listed on your credit report, Experian will make the change you requested. Experian will notify you via email approximately 30 to 45 days from the date you submitted the dispute with the results of its investigation.

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How I Can Clean Up My Credit?

Having good credit is an important part of life. Without access to credit cards, it can be difficult to get the most out of your pay, and poor credit can make it next to impossible to make major purchases like a house or car. Unfortunately, there are no quick fixes for bad credit, but with a little effort you can clean up your credit over time.

Monitor Your Credit Report

The first step to cleaning up your credit is getting a clear picture of the situation. Under federal law, you're entitled to receive one free credit report each year from each of the major credit reporting agencies. Other situations, such as if you institute a fraud alert, entitle you to additional free copies. To get started, get your free report from each of the reporting agencies and check for inconsistencies or errors. If there is an error on your report, send a letter detailing the mistake.

Pay Bills on Time

Once you have a complete view your credit picture, set up a budget that will allow you to pay your bills on time. Late payments and delinquent accounts are a major drag on your credit. If you have accounts that are just 30 or 60 days overdue, make at least the minimum payment on these accounts to prevent them from becoming more delinquent, and then keep up with the payments. If you have accounts that are further overdue, you may need to contact the lender and see if you can negotiate a realistic minimum monthly payment that will allow you to keep the account current. Set up payment reminders so you don't forget.

Reduce Balances on Revolving Credit

When choosing where to direct the bulk of your resources, pay down revolving lines of credit first, such as traditional credit cards. Large balances in revolving credit have a greater impact on your credit score than balances in a fixed or secured credit account, such as a mortgage or car loan. Once you pay down your revolving credit balances, keep them low by not using the credit or paying off everything you charge each month.

Other Tips

Even if you aren't using some of your credit cards or other accounts, don't close them expecting a bump in your credit score. The amount of debt you're carrying is evaluated against how much total credit capacity you have, so closing unused accounts will make your balances look larger. Conversely, if you don't have a lot of credit cards, don't apply for new ones you don't need because adding new lines of credit in a short period of time will lower your credit score. Over time, making payments on time and lowering your balances will boost your credit. In the meantime, continue to monitor your credit reports regularly.

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How to Raise a Credit Score Below 500

Your credit score is a number between 350 and 850 that indicates whether you are a good lending risk. If your credit report shows that you have a history of not paying debts on time, or if you have a recent bankruptcy or judgment against you, you may have a low credit score. A low score can prevent you from getting good interest rates on loans and credit cards--if you can get approved at all. A credit score below 500 is considerably low. The good news is that there are steps you can take to raise your credit score and build a good credit history.

Instructions

1

Evaluate your credit report. If you have recently been turned down for credit, you are legally entitled to request a copy of your credit report. You may also pull one free copy of your credit report from each credit bureau every year by visiting annualcreditreport.com.

2

Send a letter to any collection agencies you find on your credit report requesting validation of the debt. The Fair Debt Collection Practices Act states that a debt collector must provide written proof to you that the debt being reported on your credit report is yours. If the collection agency is unable to provide validation, it must remove the information from your file.

3

Check the dates on all accounts that have a negative effect on your credit rating. The Fair Credit Reporting Act sets a time limit for all entries except unpaid taxes. If a charge-off or collection account is more than 7 years old, it must be removed. If a bankruptcy is more than 10 years old, it must be removed. Report any obsolete credit report entries to the credit bureaus.

4

Dispute any additional negative entries that you do not recognize or that you are sure do not belong to you. You may file a dispute with the credit bureaus by mail, over the phone or online. The credit bureaus are bound by federal law to investigate each consumer dispute they receive--and remove the entry if it cannot be verified by the creditor that is reporting it.

5

Establish a record of on-time payments to your current creditors. Your payment history on your debts accounts for 35 percent of your credit score. By making your payments on time, every month, you will be steadily boosting your credit score.

6

Check your credit score again after six months. You should see marked improvement. It is unlikely that your score will still be below 500, but if it is, do not get discouraged. If you continue to demonstrate good debt-management skills and pay your debts on time, your credit score will soon climb to the point where you will feel confident, rather than apprehensive, when a lender attempts to pull your report.

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What Happens to My Credit Score If I Only Pay the Minimum?

In 2006, Congress enacted legislation that requires minimum debt payments cover interest and at least some of the principal balance -- a move to help consumers eventually pay off debt. Although minimum payments are the lowest amount you can pay and not be delinquent on your credit card debt, paying more than the minimum does not have a direct impact on your credit score.

Identification

Paying the minimum raises your credit score because the lender will report it as an on-time payment, according to Entrepreneur.com. This avoids your account going into delinquency. An overdue account would lower your score. If an account gets to more than 90 days overdue, it will drastically lower your score.

Effects

Paying the minimum balance is the most expensive way to pay off credit card debt. Making only minimum payments could mean you pay more in interest than the value of the principal over the life of the loan. Also, minimum payments boost your score at a much lower rate than higher payments. This is because the FICO credit scoring formula gives 30 percent weight to how much of your credit line you have available.

Potential

If you can only make the minimum payments on a credit card, the interest charges are too high and/or you have spent more than your income allows. You may have to take out more loans to help pay for essentials, which could lower your credit score by adding more debt to your credit history. By forcing a higher payment on yourself, you can reduce impulse buys and unnecessary spending.

Tip

Mint.com suggests only making purchases with a credit card when you know you can repay the principal in full at the end of the month. Consider making a balance transfer if you find a credit card with a zero percent teaser rate and no transfer fee. Credit card companies give up to 18 months of free interest for transferring balance.

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Free Places to Check Credit Scores

The American Fair and Accurate Credit Transactions Act (FACTA) defines a credit score as, "A numerical value or categorization derived from a statistical tool or modeling system used by a person who makes or arranges a loan to predict the likelihood of certain credit behaviors, including default (and the numerical value or the categorization derived from such analysis may also be referred to as a 'risk predictor' or 'risk score.'" MyFICO.com is the only legitimate source for obtaining a free credit score. FACTA also makes provisions for consumers to receive one free credit report per year from each of the three credit reporting bureaus.

MyFICO

A company named Fair Isaac developed the FICO credit-scoring model in the 1960s. MyFICO is the consumer division of this company, and also the only source from which you may receive your credit scores for free. However, to receive your free credit score, you must provide a credit card number and sign up for a free trial offer for myFICO's Score Watch service. If you do not cancel your subscription within a certain number of business days, the company will charge you.

AnnualCreditReport.com

American citizens are entitled by law, per FACTA, to obtain a free copy of their credit report once per year. AnnualCreditReport.com is the only centralized website FACTA sanctions for obtaining this information. Your free annual credit report contains a variety of information that may impact your overall credit score. However, credit reports do not list your credit score. Law requires the three main credit reporting bureaus in the United States to provide you with this information for a reasonable fee. However, no agreement exists as to what constitutes a "reasonable fee."

Credit Bureaus

Equifax, Experian and TransUnion (see Resources) are the three main credit bureaus in the United States. While AnnualCreditReport.com is the only source from which you can obtain free credit reports as per FACTA, you may also opt to go straight to the credit bureaus and request information from each. You may request copies of your credit reports, for a fee, either online or through the mail. You may request each individual credit report from each of these three companies, or request all three from one. However, you will usually pay an extra fee for receiving all three together.

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How to Remove Transferred and Sold Student Loans From Your Credit Report

If your student loan has been sold or transferred to another lender but your credit report has not been updated, you could face serious credit issues until you successfully dispute the mistake, especially if the transferred loan has also appeared on your report. If the lender and the credit bureaus don't respond to your dispute in a timely fashion, you may be able to sue your creditor to force them to update your report and pay for the damage to your credit reputation.

Instructions

1

Review your credit reports from all three credit bureaus (Experian, TransUnion and Equifax). In many cases, errors can appear on or more of the reports but not on others. File a dispute by mail, telephone or through their websites detailing your issue. They are required by the Federal Trade Commission to follow up within 30 days. They will request documentation from you supporting your dispute if necessary.

2

Send copies of your documents supporting your case to the credit bureau when requested. The letter that was sent to you informing you that your student loan was sold or transferred should be sufficient. Provide copies of bills from the old student loan owner and the new owner to further support your position.

3

Contact both the old and new owners of your student loan informing them of your credit report error. Write them a letter and save a copy for your records. You can contact them by telephone, but insist that any agreement that you make with them regarding your credit report be put in writing.

4

File a lawsuit against the old owner of the student loan if they do not respond to your dispute in a timely fashion. A lawyer will determine what you are eligible to sue them for, but for a case such as this it will likely be covered by the Fair Debt Reporting Practices Act.

5

Submit a complaint to the FTC by mail if you lose your lawsuit and have compelling proof of the student loan company's errors. The FTC may be able to strengthen your case should you decide to sue the lender again or may otherwise assist you in resolving your credit report issue.

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Credit File History

A credit history contains more than just who you do business with, but where you live and possibly lawsuits that involved you as a defendant. This is why it is critical for you to keep your credit file as clean as possible and pay back any to whom you owe a debt. Also, more than just creditors want to see the data in your credit history.

Where Does it Come From?

Three national credit bureaus control the majority of consumer credit data in the U.S. The term "national" in this sense does not signify a federal government agency. The U.S. only has three companies that collect data from customers across the entire country. Local bureaus exist in 2011, but are far less important than the national bureaus and sometimes only serve their communities or the major agencies. Almost all data from the credit bureaus comes from credit applications and payment history on accounts, but the major agencies also incorporate public records, such as judgments for a bank levy, into their databases.

Importance

Just about anyone that does business with a consumer knows the importance of a credit history. Employers, for instance, look for financial data that indicates a lack of character or a threat to the company, such as a bankruptcy. Landlords and utility companies run a credit check, because they technical provide a creditable service, so they want people that will pay on time. Insurance company data suggests that people with good credit histories also tend to make less claims and careless decisions on the road.

Misconception

A credit history and credit score are two separate items, but both are just as important. Credit scores are a calculation of risk---the chance that you repay a debt on time---based on data in a credit history. Risk calculation can always change based on the formula in use, but credit histories remain relatively static. Consumers have three reports, one from each major agency, and only mistakes on the agency's part can lead to different reports and sometimes lenders not reporting all the bureaus. Lenders usually set interest rates based completely or partially on the credit score results.

Tip

Federal law requires the agencies to let consumers see their credit file for free once each year and sometimes more than that, such as when a lender or employer rejects an application based on something in the applicant's credit file. Consumers have the right to dispute information, so they should always complain to the agencies when they spot a mistake.

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How Long Can Something Remain on My Credit Report?

Lenders and creditors report your accounts, such as credit cards and loans, to the three major credit bureaus. The credit bureaus then organize the information into a credit report. Your credit report provides future lenders and creditors with a record of your recent financial behavior. The Fair Credit Reporting Act (FCRA) dictates the length of time that a given entry can remain as part of your credit history.

Open Accounts

As long as you keep a credit card account open and continue to use it regularly, it provides valuable information about your spending and payment habits. Thus, your credit card provider will continue to update your information with the credit bureaus for each month that you make payments on the account. The same is true for loan information. As long as the account remains open, it appears within your credit file. Once you close a credit card or loan account, however, the account information will disappear from your file after seven years.

Derogatory Entries

Most derogatory entries on your credit report --- such as credit card charge-offs, unpaid medical bills, collection accounts, foreclosures, late payments and repossessions ---will also disappear after seven years. However, some forms of negative information can remain for much longer. Bankruptcies, for example, can linger on your credit file for up to ten years, and defaulted federal student loans will appear on your credit report indefinitely. An unpaid tax lien can remain for up to 15 years. However, if you pay the tax lien, the credit bureaus will remove the record after seven years.

Disputes

The FCRA gives all consumers the right to dispute information in their credit reports that is either inaccurate or appears for longer than the federal reporting period allows for that item. You can file a dispute by mail, by telephone or online. If your dispute is successful, the credit bureaus will remove the item from your credit file, often before the reporting period expires.

Re-Aging

Some collection agencies deliberately report incorrect dates to the credit bureaus when inserting derogatory information on consumer credit reports. Doing so causes the account to remain a part of the individual's credit history for longer than federal law allows. This process is known as "re-aging," and it is illegal. In 2004, the Federal Trade Commission fined NCO Group, a national collection agency, $1.5 million for re-aging consumer accounts.

Considerations

Careful and regular monitoring of your credit report helps ensure that the information contained in your credit history is accurate and properly removed according to the FCRA's credit reporting laws. You can access one copy of your credit report from each credit bureau, free of charge, every 12 months. AnnualCreditReport.com is the only website approved by the federal government to provide consumers with annual free credit reports.

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How to Get a Higher Fair Isaac Score

The Fair Isaac Score (FICO) is a credit scoring module that was created in 1958 by Bill Fair and Earl Isaac. Fair Isaac Scores range from 300, being the worse credit you can possibly have, all the way up to 850, which is the perfect FICO score. If you have a low FICO score you will find it difficult to get approved for credit as well as a home. Some employers also look at your FICO score before offering you employment. If your Fair Isaac Score is low, all is not a total loss. By consistently following a few principles, you can get a higher score.

Instructions

1

Pay all of your bills on time. This means ensuring that the company or creditor receives your payment by the due date and not after the due date, even if a grace period is allowed. This rule also applies to utility bills, such as electric, water, and cable bills.

2

Avoid exceeding your credit limit on accounts that have revolving lines of credit. It is recommended by financial experts that only 10 to 20 percent of the credit line is used.

3

Ask a spouse or friend who has good credit to allow you to "Piggy Back" on one of their credit card accounts. Piggy Backing means that he will add your name to his credit card account as a joint user. When you are named on his account, whenever he pays his creditor on time it is also helping to boost your credit. At the same time, if he pays his bills late it will do more harm than good to your Fair Isaac Score.

4

Refrain from allowing a lot of creditors to pull your credit report. Each time your credit report is pulled, it will appear on your report. A lot of "Pulls" will lower your score.

5

Open at least one line of credit if you don't already have one. Make a small purchase monthly on the credit card to show that the account is active. Pay off the purchase in full at the end of each month. This reasoning for this is because having no credit can be just as worse as having bad credit. No credit means a lower Fair Isaac Score.

6

Pay off any outstanding judgements or collections for credit accounts. Request that the creditor report to the three major credit reporting bureaus, Experian, TransUnion, and Equifax, that the accounts have been paid off.

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