How to Get My Credit Scores From All Three Companies at No Cost

Congress enacted a law so that individuals may access their credit reports from all three credit reporting agencies, Experian, Equifax and TransUnion, annually at no charge. This ability to monitor your credit affords individuals the opportunity to not only take charge of their financial life, but also to monitor their reports for potential identity theft or fraudulent activity. Consumers often confuse this law with the right to receive free credit scores annually. Currently, there is no law that provides credit scores from all three credit reporting agencies for free; however, you may receive your credit score for free, usually as an incentive to do business with a certain company.

Instructions

Obtaining your Credit Score from Experian

1

Go to Experian.com. As of October 2010, you can obtain your Experian credit report and score for $1. Click "Get Your Credit Report and Score."

2

Fill out personal information to verify your identity, so that Experian can retrieve your credit report and score. Then click "Submit and Continue."

3

Create a user name and password and enter your social security number, date of birth and mother's maiden name to serve as verification information.

4

Enter payment information. This discounted report and credit score includes a seven-day trial membership in the Triple Advantage program, which monitors your credit reports and scores. As of October 2010, this service costs $14.95 monthly and is charged each month after the trial period.

5

Cancel at the end of the free seven day trial period if you simply wanted to receive the one report and credit score.

Obtaining your Credit Score from Equifax

6

Go to Equifax.com.

7

Click on "Get Your Scores & Reports."

8

Pay $12.95 a month if you want to purchase Equifax's Score Watch, which continuously monitors changes in your FICO score and notifies you when a change occurs. As of October 2010, there were no free credit score promotions.

Obtaining your Credit Scores from TransUnion

9

Go to TransUnion.com. Click on the "Click here" button under "Get your FREE Credit Score."

10

Enter your personal information to verify your identity so TransUnion can obtain your credit report and score.

11

Review information about the free trial for True Credit. Click "I Accept" once you have read the terms and conditions of the free trial. As of October 2010, the free trial is a seven day free trial period that allows you to get your credit report and credit score for free. At the end of the seven day trial, you will be charged $14.95 a month for the credit monitoring service.

12

Cancel at the end of the free seven day trial period if you simply wanted to receive the free credit report and score.

Read More

How to Earn 5 Points on Your Credit Score

Your credit score affects your ability to get credit and to get the best rates on your loans. Sometimes, you just need to earn five points on your credit score to put your score into the "excellent" category, or at least move out of the "poor" zone. Fortunately, you can improve your credit score fairly easily. The quickest way to fix your credit is to correct any mistakes that are showing on your credit history. If you don't have any errors, improving your financial management will do the trick.

Instructions

Fixing Credit Errors

1

Look over your credit report for errors. Order a free copy of your credit report from the official government site, www.annualcreditreport.com. This will not show your score, but you can view your credit history. It will detail all of your accounts, the amount of money you owe, the amount of the original loan and whether or not you pay on time. It will also show if a company has looked into your report, which happens when you apply for credit. Look for errors like open accounts that should be closed or unauthorized inquiries.

2

Send a certified letter to the credit agency or agencies that are reporting the error. Write a letter that details the mistake. Be sure to include your name and social security number so that the company matches it to the correct credit report.

3

Verify that the errors have been fixed and your score has improved. You should receive a letter from the credit bureau after 30 days explaining the resolution. You can then order a copy of your credit report and double check that things look good.

Improving Financial Responsibilty

4

Pay all your debts on time. An on-time record plays an important role in determining your credit score, so simply making sure that you are never late can result in a gradual credit score increase. Send payments as soon as you receive the bill to be sure that your creditors receive the bill on time. Challenge any late notices that are sent in error.

5

Decrease the debt that you have. Decreasing your debt increases your available credit, which also improves your credit score. Apply all extra money to your debts so that you can pay them off as quickly as possible.

6

Diversify the types of accounts you have. You should have a mixture of the two types of accounts--fixed term loans, like a student loan or mortgage, and revolving debt, like a credit card.

Read More

How to File a Complaint About My Credit Report

A credit report is a documented record of a consumer's payment history regarding bills with creditors, banks, and other financial institutions. Child support and student loan payments may also appear on a credit report. Credit reports are administered by three major agencies: Experian, Transunion and Equifax. In addition to receiving credit reports from these agencies, you can also contact them with complaints.

Instructions

Procedures

1

Obtain copies of your credit report free of charge from each of the three major credit agencies by visiting Annualcreditreport.com or by calling 877-322-8228. Have the following information available: your name, address, Social Security number and date of birth. Prepare to answer questions for security purposes, such as the amount of your mortgage payment or your previous address.

2

Make notes of erroneous information on any of your credit reports once you obtain them. Write a letter listing all the facts and explain in detail why you dispute the information. Include any evidence, such as copies of receipts, canceled checks and bills, to support your point. Request that these items be removed from your credit report.

3

Make a copy of your letter and store it in a safe place. Send the original letter by certified mail to the appropriate credit agency, to ensure that the credit bureau receives it and to be sure of the date the company receives it.

4

Wait at least 30 days to hear from the credit bureau regarding your complaint. Check the credit report sent back to you to ensure that any misinformation has been deleted or corrected.

Read More

The Value & Importance of Knowing Your Credit Report

When lenders reject your requests for credit and you pay more for services than other consumers and do not know why, you probably have a poor credit score. You should run your own credit report even if you never plan to use credit, because non-creditors can still use a credit report to legally weed out customers. Just pulling your report can make you a better borrower.

Identification

From a purely mathematical perspective, knowing your credit history is likely to save you money on loans, because you will know to rebuild your score before applying for an account. The actual cost of bad credit depends in part on how much debt you use and which services you buy, but Liz Weston of MSN Money Central suggests that the average person with bad credit pays over $200,000 more just for loans than someone with a high score; good credit is usually anything above 680.

Other Considerations

In the U.S., the trend in 2011 is for more companies to run credit checks, because how you handle debt says a lot about your character. Rental car companies, for example, won't rent a car without a credit card unless the customer has good credit, because people with bad credit tend to make risky decisions and may not be able to pay off damages to the vehicle. Utility companies and cell phone providers use credit checks to determine if they need a deposit from you or if you qualify for certain services.

Cost

The federal government requires the national credit bureaus to furnish one credit report each year for every citizen. Also, you can check your report for errors. If the bureaus report false data, you should file a dispute, because your credit report may be the only thing that creditors know about you. Thus you might have a tarnished reputation with some companies, which could hurt you if you ever need emergency funds.

Tip

Go to the Annual Credit Report website if you have not already. It is the only place to get a completely free credit history. You might also want to purchase your FICO score, because most lenders use the FICO model when setting rates. If you just want to know your credit report tier, you can use a free FICO score estimation tool. Also, work to clean up negatives on your report. The credit bureau report will identify bad items or threats to your score, such as a high level of debt.

Read More

Who Can Report to a Credit Agency?

You have to meet certain qualifications to report to a credit reporting agency. Once you are approved to report, you can submit a test trial to make sure your data is received appropriately. If you decide to provide information, you can choose which credit reporting agencies you report to. Once the information is submitted, the agency will download it into its system.

Requirements

In order to transmit information to a credit reporting agency, you have to be a business and have a business license. You also need to have designated office space for business purposes.

Application/Agreement

To submit information, you have to get a membership application from the credit reporting agencies you want to report to. Return the application along with a signed data furnisher's agreement.

Site Inspection

Sometimes the credit reporting agency will perform a site inspection to make sure you have designated office space.

Metro 2 Format

The data you submit must be sent using a Metro 2 format. If you need help converting you data, you can contact a credit reporting servicing company to perform this task (see Resources).

Transmission

Your data will be sent using a secure HTTP connection. After submitting the information, contact the credit reporting agency to make sure it received your data. There are three credit reporting agencies that you can report to (see Resources).

Read More

Does Your Credit Score Drop When You Buy a Home

Buying a new home can impact your credit score, but only if you take out a mortgage to help pay for it. If you pay cash for a home, your credit score will not be affected because you have not requested any new credit such as a mortgage, nor has your debt level changed.

Inquiries

When you apply for a mortgage, your potential lenders will pull your credit score as part of the loan application process, resulting in an inquiry on your credit report. This will lower your score. However, the FICO scoring model counts all mortgage inquiries within a 45-day period as one inquiry.

Debt Levels

When you take out a mortgage, you significantly increase the amount of money you owe. However, since you took out a mortgage, the impact will be smaller than increasing your unsecured debt levels, such as with credit cards.

Payment History

Over time, your credit score can rebound if you make timely payments for your mortgage. In addition, having a mortgage increases the types of credit you've used, which will help your credit score.

Read More

How to Build Credit in the USA

You can easily establish credit in the United States. Credit cards are among the easiest ways to get started, and they are available from a number of banks and other lending institutions. Depending on your credit background, employment and income, the initial credit line could range from a few hundred dollars to more than $10,000. Opening a credit card account and establishing a positive payment history can lead to other forms of credit, such as signature loans, auto loans and mortgages.

Instructions

1

Fill out an application for a credit card. You can find numerous credit card offers online or compare offers at creditcards.com.

2

Consider a secured credit card if your request is denied because you lack a credit history or for some other reason. Check sites like creditcards.com for secured cards or type the phrase into an Internet search. With a secured card, you'll be required to place cash in a bank account, and generally your credit line will be 50-100 percent of that amount. The deposit will be held as collateral while you use the card, so the acceptance rate on these types of cards is extremely high.

3

Establish a positive payment history with your new credit card. After a few months, open a second credit card account, and establish a good payment history with it as well.

4

Branch out several months later by opening other types of credit card accounts, such as gas cards and department store cards, and be sure to maintain an outstanding payment history.

5

Stay well below the credit line on the cards. This will indicate responsible financial management and potentially boost your credit scores.

6

Monitor your credit scores by pulling your credit reports annually. The federal Fair Credit Reporting Act requires that U.S. consumers be entitled to a free credit report each year from all three major credit bureaus: Equifax, Trans Union and Experian. Don't apply excessively for credit because this could cause your score to drop. Use the credit cards you've received to grow your scores, and add new credit lines as warranted.

Read More

Does Paying a Credit Card With Another Credit Affect Your Credit Score?

Intuitive logic says that you probably can avoid paying credit card debt and prevent damage to your credit by shifting balances between different credit card accounts -- most people call this a balance transfer. While you can do this for a while, it could eventually damage your credit rating. Used wisely, a balance transfer helps you pay down debt faster than if you kept the balance on the original account.

Finance Charges

Most credit card companies charge a fee -- often 3 or 4 percent of the balance -- to transfer a balance. Also, the new card could have a higher interest rate than the old card. The fee and higher rate increase your balance at a faster rate. The amount you owe creditors counts for 30 percent of your FICO rating, so you want to limit outstanding debt. Keep performing balance transfers every month without tackling the balance and your outstanding debt will only grow.

Credit Utilization

How much of your credit limit you use -- credit utilization ratio -- can drain your FICO rating of 45 or more points, according to Ellen Cannon of Bankrate. Transferring a balance to an account with a lower limit drives up the utilization ratio on that card. For example, if card 1 has a $1,000 balance and a $10,000 limit, it has a utilization ratio of 10 percent. Transfer that to card 2, which has a $2,000 limit, and the account has a utilization ratio of 50 percent. On the other hand, you improve your credit utilization ratio by transferring a balance on a low-limit card to a high-limit account.

Opening a New Card

If you open a new card, you cause additional damage to your credit rating because you lower the average age of your accounts. The length of your credit history counts for 15 percent of a credit rating. Also, the inquiry related to the new account causes up to five points of damage and can make other negatives on your credit history look worse.

Maximizing Balance Transfers

In general, you should perform a balance transfer only when it is part of a larger plan to pay off your credit card debt. Look for credit card offers with a 0 percent balance transfer offer. These often last for 18 to 24 months. The reprieve from finance charges allows you enough time to pay off the balance. Once you pay off the debt, don't close accounts, because you lose the limit on the card for your credit utilization calculation and, if it is your oldest account, you lose points in the length of credit history category.

Read More

What is the Safest Way to Check Your Credit Rating?

Your credit report contains sensitive information, including your Social Security number and your date of birth. If your report were to get into the wrong hands, it could be a disaster; you could end up a victim of identity theft. With so much misinformation on the web, it's difficult for consumers to determine the proper way to check their credit rating. Multiple ordering options, including online, mail and telephone can confuse one further. The safest way to check your credit rating is by using trusted sources to obtain your report.

Where to Order Report

Catchy advertisements promising "free" credit reports frequently appear on television, but these promotions often come with a catch, warns the Federal Trade Commission (FTC).

The companies promoting the material are service providers, or middlemen. This doesn't guarantee you'll be ripped off, but using a middleman increases your chances.

Rather than deal with a middleman, order your credit report and score directly from the source--one of the three major credit agencies: Equifax, Experian or Transunion. Each agency provides reports directly to consumers; if you're ordering from a middleman, the report ultimately comes from one of the agencies anyway.

As far as free reports go, you are entitled to one every 12 months by federal law; you are also entitled to a free report if you've been denied credit within the past 30 days. The credit agencies established an organization specifically for this; it's called Annual Credit Report. You can access your free annual report from all three agencies directly.

Delivery Options

Order your credit report by phone, not online, recommends Bankrate.com. Ordering online opens the door for security breaches. From 2006 to 2008, a massive online credit card theft scheme left approximately 130 million credit card owners victims of identity theft, according to The New York Times.

Each credit agency has a telephone ordering system; this is also true of the joint-service Annual Credit Report. Your report will be delivered by mail, if you choose to order by telephone.

Nevertheless, many believe online transactions are relatively safe. If you choose to check your credit rating online, do so using the website of one of the major credit agencies. Double-check check the URL spelling; a small typo in the web address could lead you to a phishing site. Some are set up to replicate trusted websites.

Read More

Does Checking Your Credit Affect Your Credit Score?

All inquiries or credit checks show up on a credit report, but not all inquiries will affect a credit score. Some credit checks will only be visible to you when requesting a copy of your own credit report. Personal credit report requests, employment checks and pre-approved offers are some of the inquiries that do not affect a credit score.

Self Checking

Checking your own credit will not affect your credit score. The inquiry for your personal credit report will not show up when potential lenders request a credit check.

Outside Inquiries

Outside inquiries made by potential lenders can affect a credit score. Credit applications resulting in numerous credit inquiries can lower a credit score. These inquiries are visible to lenders and remain on a credit report for 2 years.

Pre-Approved Offers

Credit card companies and banks often send out pre-screened offers with teaser rates as a marketing strategy. These pre-approved or pre-screened offers do not affect your credit score.

Employment Credit Checks

Employer credit checks will not affect a credit score. Employment inquiries will only be visible to the consumer when he requests a copy of his credit report.

Open Account Inquiries

When a person has an account with a lender, the company will occasionally check the person's credit report to review their score. These open account inquiries do not affect a credit score.

Read More

Credit Implosion & FICO Involvement

FICO scores, also called credit scores, help a lender determine whether they should take the risk of lending to a particular borrower. The higher the FICO score, the more likely a borrower will be approved for a loan or credit. The score ranges from 300 to 850, with scores over 650 considered very high and favorable.

FICO Definition

Created by the Fair Isaac Corporation, the FICO score forms the numeric portion of a credit report. The FICO model uses complex mathematics to weigh the risk of lending to a particular consumer. The score examines a consumer's payment history, types of credit, credit history length, and the amount of new credit on file.

Subprime Loans and FICO

Subprime loans provided the fuel to the credit crisis. Subprime loans were created for those who couldn't qualify for a better prime loan. The lender pays additional fees for the risk involved in such an arrangement. One qualification of a subprime loan is a lender FICO score of 650 or lower.

FICO Subprime Predictions

According to an article in The Regional Economist, the FICO scores of borrowers did not help predict the large number of subprime loan delinquencies that created the credit crisis. Higher FICO scores prior to the loans did not equal a lower default rate in that group.

Read More

Wiil Paying Off a Credit Card in One Lump Sum Hurt My Credit Score?

Congratulations on saving enough money to pay off your credit card balance in one lump sum; the benefits go beyond avoiding finance charges. Your credit score should improve, maybe even dramatically. In general, paying off revolving debt is a far better indicator of your creditworthiness and character than an installment loan.

Identification

While nothing is a guarantee in the FICO algorithm, paying off even just a few hundred dollars in credit card debt could be boost your score. The FICO model treats paid revolving debt as an accomplishment even better than a paid installment loan. If you pay off thousands of dollars in credit card debt in a lump sum, expect a huge boost, because total debt counts for 35 percent of a score.

Further Benefits

Paying off credit cards gives a double boost to your score, because you also lower your credit utilization ratio or the percent of your credit limit left unused. You should keep all cards -- individuals and in total -- below 30 percent utilization. With a complete payoff this goes to zero, so you maximize the points for this category. Maxed-out card alone can do 45 points in damage, according to Bankrate.

Misconception

The credit bureaus report whatever the credit card company puts on your statement as the last balance, so even if you pay the entire balance and make no further charges, you must wait until next month for your report to reflect a zero balance. This also means you do not have to carry a balance for the creditors to update your report -- a common credit scoring myth.

Tip

You must use your card every few months or the creditors won't update your report and the bureaus assume the account is dormant. Nobody knows how often you must use a card for it to remain active, but six months is usually the maximum time you can go without activity. This is not the same as carrying a balance. You should always pay the balance before the grace period so you do not incur finance charges on the balance.

Read More

Can I Buy My FICO Credit Score?

The Fair Isaac Corporation created the credit scoring system that is commonly used in the lending industry today. Your FICO score is one of the most important numbers in your life as it can affect interest rates, loan approvals and even rental deposits. If you want to access your FICO score, you will most likely have to pay something to see it.

Credit Score vs. Credit Report

When you pay your bills, open or close accounts or do anything else in your financial life, chances are the information will be reported to the credit bureaus. Credit bureaus use this information to compile a credit report on you. The information in your credit report is used to calculate your credit score. While your credit score is based on your credit report, it does not necessarily come with your credit report. You can get a copy of your credit report without it saying anything about your credit score.

Credit Score Calculation

Your credit score is calculated using information off of your credit report. The formula for the FICO score is weighted towards certain factors. For instance, 35 percent of your FICO score is tied to your payment history. If you pay your bills on time, this boosts this portion of your score. Another 30 percent of your score is based on the amount of debt that you have while 15 percent is the length of your credit history. The amount of new credit that you have and your credit mix make up 10 percent each of your score.

Paying for FICO Score

Although your FICO score does not come with your credit report, you can pay to see it by If you want to see a copy of your FICO score, you can go to the Fair Isaac website. On the website, you can choose from a number of different credit score and credit report packages. For example, you can pay for the FICO standard package which entitles you to one credit report and credit score from the credit bureau of your choice.

Discrepencies

When you pay for your FICO score, you will see a score that is calculated with the help of the basic FICO formula from credit bureau information. The credit score that you see may not necessarily be the same exact score that mortgage or auto lenders see. Credit scores are calculated using different formulas and in some cases, the scores you see may be higher than what the lender sees. This is part of the nature of the credit scoring system and you have to simply use the information to the best of your ability when you receive it.

Read More

Steps to Establish Good Credit

Establishing a good credit score creates numerous finance opportunities; and once a lender or creditor takes note of your good credit habits, it is more likely to approve your application and offer you top-notch interest rates on loans and credit cards. It takes time to establish a good credit rating, and adhering to some basic tips can quickly put you on the right path.

Control Spending and Debt

Excess credit card use can bring on high outstanding balances on your credit cards, and your credit score will suffer if you are unable to rein in your spending. There is a correlation between debt and credit scores, and according to MyFICO.com, outstanding debts or the amount you owe make up 30 percent of your credit score. Paying down debt and limiting credit card usage help you establish and maintain good credit.

Timeliness

Timeliness, which refers to when creditors receive your monthly payments, makes up 35 percent of your credit score. This is the largest contributing factor to credit scoring, and establishing good credit requires consistently paying all of your creditors by the due date. Waiting until the last minute to mail payments can increase the chances of a late arrival. Do not procrastinate and pay early to avoid late payments.

Types of Credit Accounts

The types of credit accounts in your name also play a vital role in establishing a good credit history. Diversifying credit makes up 10 percent of your score, and credit scores factor in the types of accounts you manage. Establishing good credit calls for a mixture of credit, such as a couple of credit cards, an installment loan (student or auto) and perhaps a mortgage loan on your credit file.

Canceling Credit Accounts

Canceling credit card accounts may seem logical if you are trying to simplify and pay off credit card debt. Understand the correlation between the length of your credit history and credit scores. The longer your credit history, the better, and the length of your history makes up 15 percent of your personal rating. Credit scores factor in the age of your oldest credit account, and closing out or canceling an older credit card can reduce your overall history and bring down your rating.

Beware of Inquiries

There's no penalty for checking your own credit report. However, credit scores will dip if a lender or creditor reviews your report. Only submit credit applications if absolutely necessary, such as when applying for an auto or home loan.

Read More

Low FICO Score Credit Risk

A low FICO (Fair Isaac Corp.) credit score can be a real problem when you want new credit. Because every lender will check with some credit bureau to discover what kind of credit score you have, a low score could cause you to be rejected quickly, or at least to have to pay high interest and pay back the loan quickly.

Significance

Low credit scores can affect several areas of your life, not just your ability to get credit. "A fair chunk of employers want to examine your credit history before offering you a position or a promotion. Blotches there--repossessions, collections, high credit card balances--could cost you the job you want," Liz Pulliam Weston wrote for MSN Money. Other things hampered by a low credit score include the abilities to get an apartment and good insurance rates.

Types

A credit score is determined by the things that are reported in it. It is always changing, and whether it goes up or down depends on how you handle your financial matters. Things that change it are the timeliness of payments (35 percent), how much debt you have (30 percent), how long you have had credit (15 percent), new credit (10 percent), miscellaneous (10 percent).

On a scale of about 300 to 850, a good credit score is considered to be above 700. A low credit score is anything below 600.

Effects

A low credit score can mean that you will not be able to get good terms on many kinds of credit. Although it will not mean that you cannot get credit at all, it does mean that people with better credit scores are paying lower interest rates.

Considerations

If you have a low credit score and don't know why, you might have problems with identity theft, or there could be serious errors on your credit report. Problems such as bankruptcies, liens, suits and wage attachments stay on your report for at least seven years, and bankruptcies stay there for 10 years.

A low credit score can be raised over time, but that will take consistency on your part. The best thing you can do, says MyFICO, is to make your payments on time and always for at least the minimum amount.

Warning

There are many agencies that claim to be able to fix your credit score. The Federal Trade Commission warns that they are usually scams. "These companies, commonly called credit clinics, don't do anything for consumers that consumers cannot do for themselves at little or no cost," according to the FTC. "Beware of any organization that offers to create a new identity and credit file for you."

Read More

Can Poor Credit History Affect Adoption?

Adopting a child involves a lot of paperwork, time and sometimes money. Although adoption agencies look into many different facets of hopeful adoptive parents' lives, some people wonder whether poor credit affects their chances of getting a child. Some adoption agencies do run credit checks on prospective parents, but the score doesn't weigh as heavily as current financial status. Although adoption agencies may question poor credit, it doesn't necessarily prevent an adoption.

Borrowing Money

Some adoptions cost thousands of dollars. For an expense this high, often people take out a loan to cover the costs. If someone has poor credit, this could prevent them from obtaining a loan, and prevent them from adopting a child, unless they find other ways to fund the adoption.

Solution

Poor credit doesn't always prevent people from obtaining an adoption loan. Sometimes lenders ask for a co-signer or additional information from the co-signer to lend money, according to the A Child Waits Foundation.

Financial Health

Adoption agencies care more about your current financial health than your previous spending habits. Sometimes a poor credit report indicates poor financial health, but not always. Adoption agencies often ask for employment verification, proof of life and health insurance, federal tax returns, mortgage and debt information, and monetary asset verification, according to the website Adoption Media LLC.

Read More

How to Increase a Credit Score at Experian

A credit score is the way to estimate the person's creditworthiness. The FICO credit score developed by Fair Isaac Corporation is a number between 300 and 850, and reflects how good your credit history is. Experian is one of the three credit reporting agencies in the U.S. that collect and summarize personal and business credit related activities. Experian can provide your credit report and score by request. The credit score is largely affected by two factors: the payment history and the amount of debt especially on revolving credit card accounts.

Instructions

1

Navigate to AnnualCreditReport.com (see Resources). Note that by the law you are entitled to get a free credit report (but not the credit score) from each of the three credit agencies once a year.

2

Click "Request Report." Then enter your name, address, Social Security number and date of birth, and click "Continue." Then select "Experian" and click "Continue." You will be redirected to the Experian website to obtain the credit report. Note that you can also get the Experian credit score for a fee ($5 to $15).

3

Check the credit report for accuracy. Discrepancies such as extra accounts or incorrectly reported late payments would negatively affect your credit score. Use the online form (see Resources) to dispute incorrect information in your Experian credit report.

4

Make credit card and loan payments on time. This is a key condition to increase your credit score.

5

Calculate the ratio between an outstanding balance and the credit limit for each revolving credit card account using the formula Ratio = 100 x balance / credit line. For instance, if the credit limit on your card is $7,000 and the balance is $4,500, then the ratio is 100 x 4,500 / $7,000 = 64.3 percent.

6

Repay your debt to bring the ratio to 30 percent or below for each credit card. Note that it is not necessary (and often impossible) to pay off all credit card debt, but reducing it as instructed is quite feasible and important for the credit score increase.

7

Avoid consolidating your debt on one credit card account. The consolidation likely will significantly increase the balance-to-credit limit ratio and hence negatively influence the credit score.

8

Avoid closing credit card accounts with a zero balance. Note that the ratio "total debt (all accounts) / total credit line (all accounts)" is yet another factor that determines your credit score. Accounts with a zero balance obviously decrease that ratio and hence increase the credit score.

Read More

How to Dispute a Credit Score With the Credit Rating Systems

All of the information that appears on your credit report, with the exception of the information used to identify you, will impact your credit score in some way. The credit bureaus have separate credit rating systems used to calculate your score. If, while examining your credit file, you discover that your score is much lower than it should be, there is a good possibility that your report contains errors. You can dispute the error and your inaccurate score with the credit bureaus and request that the inaccuracies be investigated.

Instructions

1

Request your formal credit reports from the credit bureaus: Equifax, Experian and TransUnion. With the exception of Experian, you can opt to purchase a copy of your credit reports at any time. The Fair Credit Reporting Act also entitles you to one free credit report per year from each credit bureau. The government-approved website to request your yearly consumer credit reports is AnnualCreditReport.com.

2

Identify any information that the credit bureaus' rating system counts as derogatory and that you suspect may be inaccurate. Derogatory information lowers your credit score. Even if you are not sure if the debt is legitimate or not, you still have the right to dispute the debt and request an investigation. The most common forms of derogatory information are collection accounts and evidence of late payments to creditors.

3

Compile any evidence you have proving that the negative information is inaccurate. If the errors have impacted your credit score to the point where you have been turned down for credit, gather evidence of this as well to demonstrate to the representative who reviews your dispute how the credit bureau's errors have negatively impacted your life.

4

Write a letter of dispute and mail the letter, along with your evidence, to each credit bureau that is reporting the errors you are disputing. If you do not have supporting evidence, you may request an investigation of the inaccuracies online or by phone.

5

Allow each credit bureau 30 days from the date your dispute is received to investigate your claims, review your evidence and remove the errors from your credit report that have resulted in the credit rating systems assigning you an incorrect score. After 30 days you will receive a written copy of the results of the investigation.

Read More

Where Can I Calculate and Obtain My Credit Score?

A credit score is a 3-digit number that can be from 300 to 850. The higher the number, the better your score. The score is a measure of your credit risk, which creditors look at it when determining whether to extend credit, and at what interest rate. It gives them an idea of how likely you are to pay your bills on time.Your credit score will vary between credit reporting agencies. This could be based on different information that each agency has or could be based off of a slightly different calculation method. A creditor will often average the three scores, or take the middle score when determining credit worthiness.The exact calculation they use isn't shared with the public, but the criteria they use is available They generally use 22 different pieces of information in 5 categories to determine the score.

Instructions

1

Thirty-five percent of the rating is based on payment history. If you consistently pay your bills late, or stop paying bills completely, this drags your score down considerably. The score also takes into account how recent late bills are in your history. While items stay on your report for 7 years, more recent late payments affect your score more than older late payments.

2

Thirty percent of the rating is based on the amount of debt carried. How much do you owe for your mortgage, car loans and credit cards? Having credit cards at their limit is detrimental to your score. It is recommended to keep your credit cards at 25 to 50 percent of their limits for the best score rating.

3

Fifteen percent of the rating is based on length of credit history. A person with no credit, or only a very recent credit history will score lower than individuals who have had credit accounts for multiple years. The more history you have, the more creditors have to look at to determine your future habits.

4

Ten percent of the rating is based on the types of credit used. Creditors like to see a mix of installment loans and revolving credit accounts when determining a score. While it's not important to have many different accounts, it is important to have different types of accounts in your credit history.

5

Ten percent of the rating is based on new credit. If you open up a handful of new credit cards in a short period of time, it will lower your score.

6

While you cannot calculate your exact score by yourself, you can purchase your credit scores from each agency. It is a good idea to do this before getting any big loan, so you are prepared and knowledgeable about your score. You can purchase your scores for $6.95 each from the three credit reporting agencies when you request your free annual credit report from Annualcreditreport.com. You can also purchase scores from Myfico.com. Each score will cost $14.95, or you can purchase all three for $44.85.

Read More

Does it Affect Your Credit When You Refinance a Mortgage?

When you refinance a mortgage it does have an affect on your credit score, but for many people, refinancing has very little lasting impact. A lender checking your credit score, the removal of the old mortgage and the creation of a new loan are all factors that have a direct impact on your credit score.

Credit Checks

Lenders check your credit report at either Equifax, Experian and TransUnion when you apply for a refinance mortgage. Whenever a creditor checks your credit report, the credit bureaus take note of it and every credit check has a negative impact on your score. However, an occasional credit check has a minimal impact so your score only suffers significantly if you apply for loans at several different lenders and each one checks your credit score within a relatively short space of time.

Account History

The average length of account history accounts for 15 percent of your overall credit score. If you are refinancing a mortgage that you have had for over a year, it causes the average length of account history to lower. If you are paying off a mortgage that you have had for several years and you have very few other open credit lines, it may cause your score to drop fairly substantially in the short-term.

New Accounts

New accounts are bracketed together with credit inquiries so when your new loan shows up on the credit report it has a small but negative impact on your score. The credit inquiry to approve you for the loan and the creation of the loan as a credit product are treated as two separate events for credit reporting purposes, and the two combined could knock a few points of your score. Additionally, a new account lowers your average account history so it hurts your score in more ways than one.

Other Considerations

If you choose to lower your overall debt payments by consolidating credit card debt and car loans into a refinance mortgage, it can have a major effect on your score. Aside from lowering your average length of credit history, you also suffer because 10 percent of your score looks at the type of credit you use. If you do not utilize different types of credit, your score falls. Finally, a new loan has a 100 percent level of utilization until you pay down the principal, and credit utilization levels account for 30 percent of your credit score. If you pay off and close other loans with low utilization levels, you hurt your overall utilization score.

Read More

How to Remove Collection Notices From My Credit Report

Having collection notices listed on your credit report can have a negative impact on your overall credit score. Even when the collection items are valid, you can still attempt to have them removed from your report. If the collection items listed are not valid, you can have the credit bureaus remove them. If the items are valid, you can try and negotiate the removal of the items with the collection agencies. Another approach is to dispute the items with the credit bureaus and hope they don't verify them. If the collection agency fails to verify the information within 30 to 45 days, the information will be removed from your report.

Instructions

1

Get a copy of your credit report. You can obtain a free copy of your credit report once a year from each of the three credit bureaus at the Annual Credit Report website. Review the report and take note of the collection notices you'd like to remove.

2

Dispute the negative items listed on your report. Dispute all the negative items whether they're valid or not because they will be removed either way if the agency doesn't verify it. To dispute the negative items, go to each of the credit bureaus websites and fill out the dispute forms. The three credit bureaus are Experian, Equifax and TransUnion. After you submit the forms, the collection agencies have 30 to 45 days to verify the items or they will be removed from your report.

3

Call the collection agency and negotiate to have the items removed. Tell the agent you're willing to pay a lump sum to have your account paid in full and removed from your credit report. Oftentimes, the lump sum can be a settlement amount and not the full amount. Try starting with $0.30 to $0.40 on the dollar for the debt. If the collection agency agrees to the terms, get a signed statement in writing of the deal and then pay the negotiated amount. If the agency fails to hold up their end of the bargain in removing the item from your credit report, you can submit a copy of the signed letter from them to the credit bureau and have the item removed.

4

Wait 7 years for the items to drop off your credit report. If you are unable to pay the debt and are unsuccessful in negotiating and disputing the items removal, you may have to wait for the collection to drop off your credit report. Be aware that this means 7 years from the first delinquency date; even if the debt changes hands and looks like a new debt, it must be removed after 7 years from the first delinquency on the original account.

Read More

How Does Lowering Your Balance on a Loan Affect Your Credit Score?

So you come into some extra money. Paying off debt is one of the smartest ideas because it will save you money on finance changes and helps your credit score. Which type of debt you pay off first can have an even more significant impact on your score than just lowering your total debt obligation.

Identification

Paying off any debt will positively affect your credit score no matter what amount you send to the lender. The amount of debt you hold falls under the "amounts owed" category of the FICO scoring equation. The FICO formula is a trade secret, so you cannot determine exactly how much the lowering of a credit card balance will affect your score. Just make sure your lender reports the change in your balance to all three major credit bureaus.

Which Loan to Pay Off

If you have multiple open loans, you should pay off credit card balances first to maximize your credit score. The FICO factors in how much of your line of credit you are employing -- called credit utilization -- which falls under the "amounts owed" category. The installment loan ratio shows your remaining balance vs. the original amount of the loan in the FICO formula, but this counts for less than revolving credit utilization.

Paying Debts Could Backfire

Before you pay off a debt, review its date to see if you still legally owe it. Each state limits the time frame for which a creditor or collections agency may collect on a debt. This is typically no more than five years for certain types of credit. After seven years, the credit rating agencies cannot legally report a collections account or outstanding debt. Paying an old debt renews the date recorded and lowers your score.

Tip

Eliminating credit card debt is usually the best way to boost a credit score because credit cards almost always have the highest interest rate, suggests the Motley Fool. You could shift money to your loan payments. Your savings account, for instance, would have to pay more than 18 percent interest to earn more money than paying off credit cards at 12 percent interest. Home equity loans, taking money out against the value of your house, have interest rates as low as six percent.

Read More

How to Get a Dismissed Bankruptcy Case Off Credit Report

Bankruptcy cases can be dismissed from court for a variety of reasons, including violations of rules and nonpayment of fees, among others. Unfortunately, a dismissal doesn't mean that the bankruptcy will be removed from your credit report. A dismissed bankruptcy case will remain on your reports for 10 years after the dismissal date. It's natural for consumers to want it removed, especially because the debts you included in the initial bankruptcy filing are not removed and you're still responsible for those debts. However, credit bureaus are not legally required to remove anything from your reports if it's true.

Instructions

1

Send a goodwill request to credit bureaus. The three big credit-reporting companies are Experian, TransUnion and Equifax. They aren't connected, so you'll have to ask each bureau separately. Write a letter to each and ask them to remove the dismissal on your credit reports. Be sure to include your full name, Social Security number and any paperwork that will help explain the case in your favor. At the end of your letter, ask that the credit-reporting agency to make the change within 30 business days and send you a corrected copy of your credit report.

2

Send your letter certified, return receipt requested through the United States Postal Service. Certified letters provide proof that your letter was sent and a return receipt proves that the credit-reporting agency received your letter.

3

Follow up if you don't hear back within a reasonable period of time. It may take more than one request, but eventually you'll receive a report with the bankruptcy information removed or they'll tell you why they are denying your request.

4

Work on rebuilding your credit in other ways. It's important to work on rebuilding your credit score no matter if the credit reporting agency removes the information from your credit report or not. Get a secured credit card to put a positive account on your credit report. Charge a certain amount each month on this secured credit card and pay it off each month, on time. Over time, the bankruptcy will mean less and less to your overall credit score and eventually it'll be removed from your credit report all together.

Read More

How to Write a Letter to Clear a Credit Report

Your credit score, a number generated using the information in your credit report, can have a dramatic impact on your life. It can determine whether you qualify for a mortgage, a credit card or a personal loan. It can also dictate the percentage rate and other terms of credit that is extended to you. Writing a letter to contest information in your credit report is the first step in correcting the information in your report and improving your credit score.

Instructions

1

Acquire a copy of your credit report from each of the three major credit bureaus: Experian, TransUnion, and Equifax. You have a right to receive one free report from each of these credit bureaus once a year. Go to annualcreditreport.com to request your free reports or call 1-877-322-8228. Provide basic information to prove your identity.

2

Review the information that you find in each credit report carefully. The information can vary among the reports. Make note of any debts that you have already paid that still remain on the credit report, inaccurate dates, inaccurate values of debt, multiple entries for the same debt and any other information that is incorrect.

3

Write the date at the top of the letter, followed by your name and address on subsequent lines. Under your address, write "Complaint Department" on one line with the name of the credit bureau and its address on the following lines. Write an introductory phrase, such as To whom it may concern."

4

Write that you are sending a letter to correct inaccurate information in your credit report. Write a summary paragraph about the inaccuracy. For example, you might write that one of the accounts listed on your credit report is listed as open even though it is closed.

5

Write a separate paragraph for each error you found. Include the account number.

6

Request that the credit bureau perform a specific action. For example, ask it to remove the information from your credit report after conducting an investigation.

7

Close the letter politely, leaving room for your signature. Add a list of the documents that you are going to enclose with your letter to support your statements. For example, if an account was included in a previous bankruptcy, you should include documentation from your bankruptcy in which the account is listed. Sign the letter -- and then make a copy.

8

Gather the documents that support your statements -- and make a copy of each to include with your letter. You can also include a copy of your credit report and highlight the disputed items if you prefer.

9

Mail the letter and supporting documents via certified mail with return receipt. Keep a copy of the mail receipt for your records.

10

Mail a similar letter to each credit bureau with whom you have a dispute, as well as to the creditors who reported the inaccurate information. Include copies of your contentions. Inform the creditors that you are disputing the information that was reported to the credit bureau.

Read More

The Importance of Preventing Identity Theft

Each year, 9 million Americans fall victim to identity theft, according to the Federal Trade Commission. Once your identity has been taken, criminals can do most anything in your name, such as obtain credit cards, open other accounts--like utilities--and even commit other crimes. If you fall victim, it could take months or years to clear your name. You must stay vigilant in preventing identity theft, or it could ruin your life.

Personal

Your personal life is affected by identity theft. Once your identity is stolen, you might be arrested for a crime you did not commit. For instance, if you are pulled over for a routine traffic stop, and your name and Social Security or driver's license number is associated with a crime, you can be arrested and bear the burden of proving your innocence. If your personal information has been compromised, report it to the local authorities immediately. You will be able to send a copy of the report to creditors and your bank, and maintain one for yourself in the event that you are detained. Ensure that you protect your most sensitive information: Social Security number, mother's maiden name, bank and credit card number and your online account passwords.

Credit

Your credit history can be severely damaged if your identity is stolen. Fraudulent credit cards might be opened in your name, and criminals do not care about paying the bills or maintaining low balances. This could have serious implications on your credit score. Someone with a great credit history can see his credit score sink in just a few months. If this happens, it will be difficult for you to get financing through banks or credit companies.

Financial

If the debt incurred through identity theft is not reported within 60 days, you might be liable for repaying that debt. If this is the case, liens may be placed on your property, and your wages can be garnished until the debt is paid. According to FDIC Regulation E, an electronic funds transfer must be reported within two days to be completely clear of liability, save for the $50 fee. If you wait 60 days, liability is capped at $500. However, if the problem is not reported within 60 days, there is no mandated consumer protection.

Medical

In the worst-case scenario, medical identity theft could result in long-term injury or death (see Reference 3). If your medical identity is compromised, false information might be entered into your records. In other situations, it simply means refusal of insurance coverage, or an increase in your rates. If a pre-existing condition is falsely entered into your records, you might be denied medical insurance.

Future

The effects of identity theft might be long term or short lived depending upon the severity and type of the theft. If you fall victim of identity theft, monitor your credit reports for at least a year after it is resolved.

Use every means necessary to protect yourself from identity theft, such as keep personal information private. Scrutinize your monthly statements, and immediately report any suspicious activity. Also, subscribe to services such as LifeLock. They will work on your behalf to ensure your identity is safe.

Read More

Can I Be Denied a Job Because of My Credit Report?

When you are in the market for a job, you may be surprised to learn that your potential employer wants to pull your credit history. If you have been without work for a while, you may be nervous because of the problems you know are on the report. Before you begin job hunting, consider how your credit score could affect your ability to find employment.

The Reasoning

Employers may make an employment decision based on credit because they believe individuals who have credit problems or a large amount of debt may be more likely to commit fraud or steal from the company in order to repay debt. Others believe people who can handle their personal finances well are better, more responsible workers than those who cannot.

Types of Jobs at Higher Risk

Any employer can use a job applicant's credit history when making a decision, but some are more likely to do so than others. Those who are hiring people to work with money, like cashiers or bank tellers, as well as those who work in high-end retail positions, like jewelry stores, are more leery of employees with a history of credit problems because of the ease of stealing in these situations. Those hiring individuals to work with other people's money, like accounting or investment firms, want to see that employees can manage their own money well.

Applicant's Rights

An employer has the right to check your credit score but not without your permission. Under The Fair Credit Reporting Act, they must have written permission to order your credit report. Bankruptcy cannot be used against you in the decision, but other negative factors on your report can. If the employer chooses not to hire or promote you because of your credit information, they must tell you so and provide a copy of your report, information about your rights and contact information for the company issuing the report.

What to Do

If you have a poor credit history, consider purchasing a copy of your credit report before you begin job hunting. If the employer asks you to sign a waiver giving permission to pull your credit history, take the time to explain the situation surrounding the negative item. If the employer's main goal is to weed out irresponsible applicants, you will show your foresight and ability to act responsibly in spite of difficult circumstances, which could help your case.

Read More