Help for Clearing a Credit Report

Creditworthiness is crucial to obtaining home and auto loans, as well as receiving decent rates on insurance. It is important to have a decent score and to do this, some modifications may need to take place. If your credit report is spotty, there are a few things you can do to improve it.

Examine Credit Report

Get a copy of your report from all three major credit bureaus: Experian, TransUnion, and Equifax. Look carefully at all three reports to determine where your score needs to be improved. If your debt-to-income ratio is too high, you need to attempt to lower it. If you owe a significant debt and your line of credit is almost maxed out, this will lower your score. Pay down these debts as soon as possible to see a quick increase in your score.

Be sure that all credit accounts listed are yours. Sometimes mistakes happen and you should dispute them immediately if they occur. If erroneous information is sent to a bureau or it is entered under an incorrect social security number, you may suffer the consequences. Contact the credit bureau immediately to file a dispute. You will have to send them a detailed letter explaining what the error is and why it should not be on your report. Also, contact the source of the error. Find out why they reported you to the bureaus if you feel that the reason is false.

Debt Consolidation

There are many companies that can help you manage your debt by combining all of your debts into one low monthly payment. This works out well for those with a lot of debts that are accruing late charges, interest charges, and other penalties due to an inability to pay. A legitimate credit consolidation agency will work on your behalf with your creditors to help reduce your payments to something you can afford. Many of these agencies are partially funded by creditors, so they are usually willing to work with debtors who use this type of assistance. As long as you are making an effort to pay off your debts, most creditors will make note of this on your report and will not continue listing you as delinquent.

Remember, there are plenty of agencies that claim to help you with your credit score but they are not legitimate. Do your research online before choosing an agency because this can save you a lot of money and frustration. They should be registered and in good standing with the Better Business Bureau. If they are not, do not use them. Read as many testimonials as you can when researching a debt consolidation agency. If others view an agency positively, it may be a good operation.

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What Does Tier 3 Mean on a Credit Report?

Most people's credit scores fall into the top two tiers, which are the highest scores, but the average credit score lies in the third tier as of 2011, because many people with below-average scores have such poor credit that they drag the national average down. Having a credit score that falls into the third tier probably won't prevent you from obtaining credit, but it likely will cost you thousands of dollars more for a loan than someone in the excellent score range.

Identification

In a typical credit score bracket, the third tier usually includes scores between 675 and 699, according to Personal Finance Strategy. Credit scoring tiers are not standardized, so each lender sets his own credit scoring tiers. Across the board, tier three means you have a "fair" or average score. The third tier, however, almost never goes below a score of 620.

Effects

If you fall into the third tier of credit scores, you can expect to pay about half a percentage point more for a mortgage than someone in the upper tier, according to the Bankrate website. This may not seem like a lot, but it can become a significant amount of money in the long term. On a $1,000-a-month mortgage payment, for example, an extra 0.5 percent would mean an extra $50 a month, $600 a year or $18,000 over the length of a 30-year mortgage term. On unsecured lines, the difference will be greater.

Credit Crisis

With the housing bubble bursting in 2008 and the following credit crisis, being in the third tier is more costly in 2011 and might make you too risky for a lender to offer you credit. Before 2008, a score of 620 was high enough for you to get a mortgage at close to the best rate. In 2010, a 680 score was often the cutoff between prime and sub-prime--borrowers who receive worse rates. Thus, it is critical to get a score above 740 to secure a home mortgage loan at an affordable rate.

Tip

Review your credit report to determine the elements that are preventing you from entering the top tier. Disputing errors provides an immediate boost if the dispute results in the elimination of negative data. Credit scores have many variables, but paying bills on time always has a beneficial effect on your score.

If you plan to take out a mortgage, expect to pay a premium when purchasing a home in a depressed market even if you have an excellent credit score, according to the Bankrate website.

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Does Car Repossession Affect Your Credit?

According to the U.S. Department of Labor, the unemployment rate for October 2010 was 9.6 percent, with 14.8 million people collecting unemployment compensation. When money is tight, people usually choose to pay for the essentials first: housing, utilities, food and medicine. Depending on the type of car loan you have, car repossession may occur as soon as the first missed payment is beyond the grace period, which varies by state.

Drawbacks for the Lender

Car repossession is usually a last resort for banks and loan companies. They earn a profit when you make your car payment every month, especially if you have purchased an expensive car with a five-year loan. Banks and loan companies incur several expenses when they repossess a vehicle, and there's no guarantee that they can resell it quickly or for enough money to cover the loan amount.

Features

Car loans often include more than the purchase price of the vehicle as part of the monthly payment. Loans may also have liability insurance and personal injury protection added on to the amount due. Falling behind on a car payment with this type of arrangement is a double blow to the vehicle owner. The late payment is reported to the credit bureau, and the car insurance is canceled and reported to the department of motor vehicles in his state of residence.

The Facts

Car repossession does affect your credit. You're defaulting on a loan, and the information stays on your credit report for seven years from the date of your last payment. Car repossession is a major black mark on your credit and lowers your credit score considerably. The lower credit score makes it more difficult to qualify for credit in the future: Loan companies may only offer terms with high interest rates and expensive fees.

Significance

Car repossession on your credit report can prevent you from renting an apartment or getting a job. Additionally, if you have cash or financial responsibilities in your current job, your employer may think negatively about you if you have bad credit. Your employer can choose to transfer you to a lower-paying position without financial responsibility or even fire you if you live in a state with at-will employment laws. Utility companies run your credit when deciding whether to require a deposit.

Considerations

You have to do whatever is best for your family situation, even if it means returning the car to the bank. Although car repossession is a negative mark on your credit report, a statement explaining the reason, such as job loss, may be sufficient for a potential landlord or employer who's reviewing your credit report.

Warning

Car repossession may not wipe the slate clean. If the vehicle is in poor condition or otherwise can't be sold, then you're still responsible for the balance of the loan. You also have to pay all fees for processing the repossession. The bank or loan company can get a court judgment against you; this also goes on your credit report.

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Can Credit Bureaus Report Medical Bills?

A medical emergency can turn your world inside out in more ways than one. Even if you have great health insurance, chances are good you will have an outstanding balance after your insurance company pays. Failing to adhere to the terms of a payment plan or ignoring the bill can have a negative effect on your credit rating for many years to come.

The Facts

Credit bureaus can and do report all information they receive from creditors on your credit report, including medical bills. If you have an outstanding balance and do not pay, all your doctor or health care agency needs to do is send your account to a collection agency, who then most often will report your past due account to one or more credit bureaus. Medical bills make up 52.2 percent, the largest of all collection agency accounts credit bureaus receive, according to the Federal Reserve Board.

Effects

Whether you pay right away or not, once a delinquent medical bill is in your credit report it will remain there for seven years. Unfortunately, an unpaid medical bill affects payment history and total debt, two of the important scoring sections in your credit report. Payment history counts for about 35 percent of your credit rating and total debt counts for about 30 percent. The longer this debt remains unpaid, the greater effect it will have. If you pay right away, however, it will still count against you, but the passage of time will reduce its effects.

Restrictions

While provisions in the Health Insurance Portability and Accountability Act of 1996 give creditors permission to report medical bills to credit bureaus, the Fair and Accurate Credit Transactions Act of 2003 provides you some measure of protection. Provisions in this act state that credit bureaus cannot violate your privacy by disclosing information in your credit file that identifies your health care provider or discloses the nature of the treatment. In addition, creditors cannot base credit decisions on medical information in your credit file, but they can use negative information as part of an overall process of determining whether you qualify for credit.

Prevention/Solution

Do not ignore outstanding medical bills, even if you expect your insurance company to handle them in full. Review medical bills to make sure the charges are accurate and stay in contact with your insurance company and health care provider. When you know the amount for which you are responsible, talk to your health care provider and try to set up a payment plan if the balance is more than you can afford. Monitor your credit report and if a medical bill appears in your credit file, pay it as soon as possible or file a dispute if you believe the bill contains errors. A final step you can take to lessen damage to your credit report is to add a consumer statement of 100 words or less to your credit file explaining your situation.

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Does Looking for a Mortgage Affect Your Credit?

Credit scores mean a lot in the mortgage industry, because a few tenths of a percent can add up to thousands of dollars on these large loans. Unfortunately, the act of looking for a mortgage usually lowers your credit score. However, the credit reporting bureaus give you a break on the damage of a credit inquiry if you "rate-shop."

Identification

Looking for a mortgage hurts your credit once you consent to a credit check. Credit inquiries take between zero and five points off of your credit rating under the FICO system, according to the Fair Isaac Corporation. Although individual inquiries rarely make a difference to a lender, accruing more than six inquiries in a year is a serious negative item, because many inquiries might mean you are desperate for extra credit.

Rate Shopping

You can reduce the effect of mortgage credit applications by rate-shopping. If you submit all of your applications within a 14-day period, the credit bureaus count all of the inquiries as one inquiry. If your lender uses the latest FICO scoring software -- FICO 08 as of 2011 -- the rate-shopping window extends to 45 days, according to FICO.

Personal Credit Checks

Before you even consider getting a mortgage, you should perform a credit check on yourself, also called a "soft credit check." A personal credit check never damages your credit rating, and lenders can never see how many times you look at your own report. You may find mistakes on your credit report that you can dispute, and if the credit bureaus validate your claim and erase the negative entry from your credit report, your credit rating should rise.

Tip

The best way to ensure all of your mortgage applications meet the rate-shopping window deadline is to submit them all at the same time. Also, ask each lender which FICO formula it uses. If the lender uses an old version of the FICO system, you only have 14 days to submit other applications. Therefore, you should apply for other credit accounts, such as credit cards, well before or several months after you apply for a mortgage.

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How Can Applying for an Apartment Affect a Credit Score?

Applying for an apartment can have an adverse affect on your credit score if youre not informed. By understanding what happens when a leasing agent requests your credit score, youll be better prepared to minimize that affect. Depending on your particular situation, you may not be affected at all.

Credit Inquiries

The leasing agent will ask for authorization to check your credit report whenever you submit an application for an apartment. When your credit report is checked, a hard inquiry is performed. Hard inquiries have a negative affect, although minimal, on your credit score. Such inquiries occur whenever you put in an application for new credit. Conversely, a soft inquiry has no affect on your credit score and does not show up when your credit report is reviewed. Viewing your own credit score and companies offering you credit without your requesting it are examples of soft inquiries.

Apartment Hunting

You likely will apply at a number of properties when you go apartment hunting. If you do so within a two-week period, credit agencies typically will consider all the credit report requests as one hard inquiry. It is useful to have your credit report on hand during your apartment search. Leasing agents still may require you to allow them to get their own copy, but if there is anything on your credit that might disqualify you, the leasing agent knows beforehand and will not need to perform an unnecessary hard inquiry.

Hard Inquiry Affect

A hard inquiry typically reduces a persons credit score by five points. Someone with a healthy score and robust credit history may not be affected at all by a hard inquiry from apartment hunting, whereas someone with little credit history or bad credit may be see his credit score impacted by more than five points. Either way, a hard inquirys impact lasts between six to 12 months and is removed from your credit report after two years.

Limiting Inquires

The credit reporting agencies understand you are shopping around looking for a good deal when you have a number of credit inquiries from apartments. However, it would be a bad to have an apartment manager pull your credit report when youre applying for a car loan and credit cards. They would show up as multiple inquiries.

Understanding Credit

Credit scores are broken down into five categories: hard inquiries, types of credit accounts, length of credit history, debt-to-credit-limit ratio and payment history. Hard inquiries account for only 10 percent of your credit score, while payment history accounts for 35 percent. While keeping hard inquiries to a minimum is a good idea, keeping your bills paid on time will have a greater affect on your credit score.

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Can a Lawsuit Affect Your Credit Report?

A lawsuit is simply a set of allegations and does not affect your credit report when initially filed. Theoretically, a debtor could receive a dozen lawsuits with none of them impacting credit reports. However, if a judge agrees with the allegations in the lawsuit, the debtor could notice significant negative changes to his credit reports.

Considerations

The possible effect on credit reports depends a lot on the type of lawsuit. A civil lawsuit over fruit from an orange tree falling into a neighbor's yard may force the judge to simply decide who should keep the oranges. The outcome of that type of lawsuit would not affect credit reports. But an allegation by a credit card company that the debtor failed to pay a $5,000 credit card bill could have a major impact on a debtor's credit report.

Records

Damage to credit reports from lawsuits occurs when the judge issues a ruling that is unfavorable for the debtor, such as a monetary judgment. Researchers paid by the credit bureaus collect certain information from court records and furnish it to major credit bureaus such as TransUnion, Equifax and Experian. The credit bureaus then list the information on credit reports.

Impact

In most cases, damage to credit reports and credit scores occurs long before a lawsuit. Creditors filing lawsuits to collect a debt usually do so months or even years after closing the account for nonpayment. Well before the lawsuit the debtor's credit report is hurt by negative information provided by the creditor, including late payments, account closure and charge off, and assignment of the account to a debt collector as a collections account. Those events are very damaging for credit , and so are judgments. Judgments show that a debtor failed to pay an account as agreed, and that the creditor filed a lawsuit to force the debtor to pay. Judgments remain on credit reports for seven years. A recent judgment can make it impossible to qualify for loans at reasonable interest rates.

Bankruptcy

A bankruptcy listing has the most negative impact on credit, and some people battling lawsuits eventually file for bankruptcy to escape bank or wage garnishments. Bankruptcy filings remain on credit reports for a minimum of 10 years.

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Can a Co-signer in a Home Purchase Affect Credit Scores?

People buying a home sometimes use a co-signer on the mortgage. A co-signer is a person who agrees to be responsible for the debt in the same manner the owner is liable, though the co-signer isn't always entitled to own or use the home. Using a mortgage co-signer may affect your chances to obtain a home loan, or the interest rates offered, though the co-signer doesn't directly influence your credit score.

Credit Score

Each person's past history with using credit gets reported on that person's credit report. Credit score companies then use this information to determine the person's credit score, a numerical representation of their past credit history. Though credit scoring companies use different factors to determine the score, they typically use five key factors in the calculation: payment history, amount of outstanding credit, average length of credit lines, number of new credit lines and the types of open credit lines.

Co-signers

A co-signer on a loan, be it a home loan or any other, is someone who signs on and guarantees to the lender that should the loan signer fail to make the loan payment the co-signer will. A co-signer, therefore, is simply added security for a lender. Co-signing a loan doesn't directly impact the original borrowers credit score, though it can indirectly impact it.

Indirect Effects

If a borrower uses a co-signer to secure a home loan, being approved for the loan will impact the borrower's credit score. In general, acquiring more credit tends to lower a score initially. However, as the borrower makes regular payments and proves she is able to repay the loan on time, her credit score typically increases. A co-signed mortgage, therefore, may lead to an initial score decrease but can lead to a later increase.

Subsequent Acts

Like any loan, a home loan with a co-signer can lead to a credit decrease in some situations. A single late payment, according to Yahoo Finance, can lower a credit score between 60 and 110 points. If you and the co-signer are unable to make the payments and the lender forecloses on the home, this can lower your credit score between 85 and 160 points.

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Where to Find Credit Check for Tenants' Information

Many landlords use credit checks to screen and select tenants. Credit checks are available from several sources, including tenant screening and background investigation services.

Credit Check

A "credit check" is an evaluation of an individual's credit report, which includes information about the individual's debts as well as her payment history. Credit reports also include information about bankruptcies, evictions and judgments.

Tenant Screening

Most landlords screen their tenants before offering them a lease. The screening may include a criminal background check, verification of the tenant's employment, contacting previous landlords, as well as a credit check.

Sources

Property management companies and tenant screening services often have direct accounts with one of the major credit bureaus. There are also online credit report and background check services that landlords can use on their own.

Rental Application

The landlord will need a potential tenant's permission to run a credit check. Most rental applications will have a clause that authorizes a landlord to pull the applicant's credit report.

Warning

The Fair Credit Reporting Act requires a landlord to inform tenants and potential tenants if she uses a credit report to take an adverse action. If a landlord denies an application, requires a co-signer or demands an extra security deposit because of an applicant's credit history, she must send written notice explaining this.

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How to Raise My Credit Score Over 700

Credit scores determine almost everything when it comes to receiving credit. Those with the highest scores get the lowest interest rates, which, on things like mortgages, can add up to tens of thousands of dollars over the life of the loan. It therefore behooves most people, especially those with lower scores, to take measures to improve their credit. It does take time and effort, but a high credit score can pay off in the long run.

Instructions

1

Check your credit report. Fraudulent charges or incorrect information can have serious effects on your credit, so make sure your credit report is free of these.

2

Bring all delinquent accounts current.

3

Lower your debt-to-credit ratio. This means paying off as much debt as you can, without acquiring new debt or losing available credit. An excellent debt-to-credit ratio is 10 percent.

4

Stop applying for cards. When you apply for a credit card, it's called a "hard inquiry," and too many of these will have a negative impact on your credit score.

5

Make all payments on time.

6

Wait. Some negative reports on your credit report can only go away with time. For instance, most late payments take seven years to leave your credit report.

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How Much Does Paying a Debt Affect My Credit Score?

Keeping a clean credit report is very important because lenders will consult your report, and the credit score based on it, before granting you credit. Paying your bills on time contributes towards a high credit score, and that makes every aspect of your financial life easier. Paying off debt is an important part of that equation.

Paying Credit Cards

Paying down credit card balances is an excellent way to boost your credit score. The lower your outstanding balances compared to the total amount of credit available to you, the better your score. Your available credit-to-debt ratio accounts for 30 percent of your FICO score. In general, try to keep your outstanding balances below 30 percent of your available credit. A maxed-out card can drop your credit score by between 10 and 45 points depending on how good your original credit was. The best ratio is zero --- use your cards, but pay them off every month.

Paying Other Unsecured Debt

If you have medical bills or other types of debt, it is also important to pay these, and the most crucial aspect is timing. Your history of paying debt on time counts for 35 percent of your credit score. Do everything you can to meet any payment schedule that's been set up, so that your creditor does not report you as paying 30, 60 or even 90 days late. Late payment has a marked negative effect on your credit. If you have excellent credit with a score of 780, a 30-day late payment can drop your score, temporarily at least, by 100 points. If you cannot meet a payment schedule, call and negotiate with your creditor rather than have a default reported to the credit bureaus. Many creditors will be willing to work with you if you are in earnest about paying off your debt.

Paying a Debt in Collection

If things have gone so far that your debt has been handed over to a collection agency, proceed with caution. At this point, the damage has already been done to your credit score. Any debt in collection will remain on your report for seven years, whether or not you pay it off. Do not be tempted to settle the debt for less than the value with the original creditor. This can actually ding your score further by between 45 and 125 points, depending on your overall score. Your best option may be to contact the collection agency and offer to pay the debt in full, if the agency will then have the record of it removed from your credit report. Not all agencies will do this, but some will.

Secured Loans

If you have a mortgage, car loan or other secured debt, the most important aspect of managing this type of debt is paying on time. Mortgage companies won't hesitate to report late payment to the credit bureaus, and a note of late payment on a mortgage is very bad for your score. If you want to accelerate your payments to pay a loan off early, this can also help.

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Does Rent Improve Credit?

Your credit report allows companies to gauge your financial standing and financial worthiness. Information on your credit report can determine whether you are approved for automobile loans, mortgages, credit cards, and apartment rentals. Traditionally, rental history would only affect credit reports negatively; if a renter did not pay rent, outstanding move-out damages or was evicted, landlords could then report this to the credit bureaus, where it would reflect on a credit report as derogatory information. In 2011, this standard practice began to change with a new program introduced by Experian, one of the credit bureaus.

Factors in Credit Score

According to the Fair Isaac Corporation, the company responsible for creating the FICO scoring model for credit reports, your credit score consists of five factors: payment history, length of credit history, amounts owed, new credit and types of credit used. Payment history accounts for 35% of your score and amounts owed counts for 30%. Length of credit history is 15% of your credit score with new credit and types of credit used both accounting for 10% of your score.

Why Rental History Was Not Factored In

All of the information regarding your credit accounts are provided to the three major credit bureaus, Experian, Transunion and Equifax, by your creditors. For example, your credit card company regularly updates the specific information for your account with the three credit bureaus. Landlords have traditionally not had the means or system to provide this type of updated information to the credit bureaus, because credit bureaus have considered rental history to be non-traditional forms of payment history.

Non-Traditional History

Non-traditional history generally refers to your payment history for debt such as utility services, cell phone bills, insurance premiums and apartment rent. Because these are not types of revolving credit line like a credit card or consumer loan, non-traditional history has not typically been included in a consumer's credit file prior to 2011.

How Apartment Rent Can Help Credit

Beginning in 2011, Experian became the first credit bureau to include rent payment history in its credit reports. As your positive rental payment history is reported to Experian, it may have the potential to improve your credit scores. This only applies however, to landlords or management companies that choose to send the information to Experian through a program called Experian RentBureau. You may want to ask your current or prospective landlord if he participates in this program.

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Who Can Legally View Your Credit Report?

Your credit report is a vital part of your personal finances as its contents show your creditworthiness and can determine whether you will be able to get a business loan, receive financing or even possibly get hired for a job. Many different groups and individuals can legally view your credit report as long as you first provide them with the permission to do so.

History

The Fair Credit Reporting Act was signed into law in 1970 to streamline the credit reporting process and define which people and organizations can gain access to someone's credit report. It allowed outside organizations such as debt collection agencies or creditors to view your credit report. It also stipulated that, in most cases, you must first provide authorization before anyone can see it. A study conducted by the Public Interest Research Group revealed that nearly 80% of all credit reports have at least one piece of inaccurate information which led to the Fair and Accurate Transactions Act being signed into law in 2003. The act allows citizens to challenge information on their credit report quickly and easily.

Function

Consumer reporting agencies gather information about your debts and monthly payments. The agencies then forward their findings to a credit bureau. The credit bureau then analyzes the information to create your credit report and decide on an overall credit score. The consumer reporting agency then retrieves the finalized report and makes it available for individual citizens or organizations for viewing. A viewing of the report can determine if you have good enough credit to be provided with a service that you have to pay back over time...or simply to check your level of monetary responsibility.

Types

There are many different groups that can legally view your credit report. When you apply for a new job, your potential employer can check your credit report to see if you have a history of missing payments to determine if you will be responsible on the job. Banks and car dealerships can check your report when deciding if you are eligible for a loan. Insurance companies will also check your credit report when you apply for a new plan. Some private individuals can view your credit report with your permission when they are considering employing you.

Considerations

An organization must always see a government issued I.D. and have your written consent on a legally binding document to view your credit report. Most companies will view your credit report through a consumer reporting agency's Website, but they are also given the option to have a physical copy mailed to them. Negative information about your credit, such as missed payments, defaults on loans, bankruptcy, or having your bank account involuntarily closed by the bank will remain on your credit report for between seven and ten years.

Benefits

You can always legally view your own credit report at any time which you should do regularly to see if there are any discrepancies or inaccuracies that need to be corrected. You can also check your credit score to see how good your chances are of receiving financing for a large purchase or a new line of credit.

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Can a Property Tax Lien Affect My Credit Score?

Someone's property taxes are generally not of much interest to creditors, except in the extreme case that a homeowner fails to pay and the local government attaches a lien to the property and eventually seizes it to retrieve the amount owed. This can adversely affect the homeowner's credit score.

Property Tax Lien

A lien is a legal claim on an asset, in this case a home, that allows the lienholder to take possession of the asset if the debt owed, in this case taxes, is not paid. The property can then be sold to cover the unpaid taxes.

Credit Score Effects

According to Bills.com, although a property tax lien is often for far less than the mortgage, it can still have a significant negative effect on a credit score. A person's FICO score is based on numerous financial factors, especially legal actions against a debtor's assets. A tax lien shows that a borrower is having trouble meeting his obligations.

Long-Term Effects

The long-term effects of a property tax lien can be significant. Even if debtors gather enough funds to pay off the taxes and keep their houses, the lien action may show on their credit report for years. A paid-off lien will show up on a credit report for seven years, while an unpaid lien can last up to 15 years,according to Experian, one of the three major credit bureaus.

Bankruptcy

In some cases, filing for bankruptcy can lead to discharge of the debt, but the lien may remain. Title companies will notice this legal action and you will not be able to sell your house until you pay off the lien, regardless of your discharged debt. The bankruptcy will have a severely negative effect on your credit.

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How do I Remove a Negative Inquiry on a Credit Report?

A good credit score is essential. Most likely, you already know the basics. Pay your bills on time, avoid having too many revolving accounts and keep your debt to income ratio low. Many people don't realize that every time they apply for a line of credit, they are potentially harming their credit score. Creditors are likely to frown on a report with too many inquiries. Luckily, there are steps you can take to remove negative inquiries and restore your credit score.

Instructions

1

Obtain a copy of your credit report. As stated in the Fair Credit Reporting Act (FCRA), you are entitled to a free copy of your credit report from each of the major credit bureaus, Equifax, Experian and TransUnion. You can get this free copy by visiting annualcreditreport.com or by calling 877-322-8228.

2

Determine the type of inquiries on your report. Inquiries are located toward the end of your report. If you apply for a new credit card or loan, the finance company must run a credit check to determine your eligibility. This type of inquiry is considered a "hard pull inquiry" and can affect your score. A "soft pull inquiry" is when an existing creditor checks your credit to see if your credit has changed. This type of inquiry does not affect your credit score.

3

Find the creditor's address. You must directly contact the creditor who placed the inquiry on your report. The addresses should be listed on the credit report. If not, you may need to do some research. Look for the name of the creditor and search the web for a mailing address.

4

Prepare a letter requesting the creditor remove the inquiry. If you do not recognize an inquiry, you are entitled to dispute the inquiry. According to the FCRA, if you did not authorize the business to pull your credit report, the inquiries are not authorized to appear on the report. Notify the creditor that you wish to challenge the inquiry. Request proof of your authorization to run a credit check. If they are unable to provide documentation of your approval to obtain a copy of your credit report, request they remove the inquiry from your report. Keep copies of all letters you send. If you do not receive a response, contact the credit bureaus and file a dispute through them. Notify the bureaus that you contacted the creditor and received no response. Inform them of the fraudulent activity appearing on your credit report.

5

Wait for a response from the credit bureaus. The credit bureaus have 30 days to investigate from the date they receive your complaint.

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Does Modifying a Loan Ruin Your Credit Score?

If you are a homeowner faced with foreclosure, you may be able to modify your mortgage as a way to remain in your home. While a modification should make your loan more affordable and provide a way to keep your home, you should be aware of how the action will appear on your credit report and how it might affect your score.

Before Modification

If the modification has been prompted by late payments or a default of 30 or 60 days, this negative information has already been reported to the credit bureaus and it will affect your score. Late payments on a major loan such as a mortgage can ding your score significantly, especially if you had good credit before.

Modification

The modification will be reported to the credit bureaus. However, there is no standard form of words that deals with modification, and how it appears on your report may vary. It could be reported as a settlement or charge-off of the original loan with a new account being opened. Or it may be termed as a change to the loan balance and the payment terms of the old loan. The latter will have considerably less of an effect on your credit score

Negotiation

If you have built up a good relationship with your lender, and you have cooperated well over the modification, it's a good idea to ask how the lender intends to report the change on your credit. Lenders have discretion as to how the wording will appear on your report, so ask if the company will report it as a modification rather than a settlement and new account. Ask for this in writing.

Rebuilding

The report of your modification will remain on your credit for seven years. However, the effect will fade with time. If you keep up regular, timely payments on the new loan, that will go a long way toward repairing your credit and mitigating the effect of your modification.

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Why Doesn't an Equifax Report Include the Score?

When you ran your Equifax credit report, you probably did not see your credit rating. Equifax acted legally, despite federal free credit report laws. As of 2011, you must purchase your credit score until the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act bill, which introduced regulations in the financial sector to reduce predatory lending, takes effect. In the meantime, you can sometimes receive free credit scores from your creditors.

Identification

Equifax does not include credit scores with its credit reports unless you purchase the score as an add-on. In 2011, the Fair Credit Reporting Act only requires the major credit reporting bureaus to let you see your credit file. Your credit score calculation is the result of an equation that depends on your credit file. Thus, credit scores do not fall under the act.

Dodd-Frank Bill

Congress included a provision in the Dodd-Frank bill that lets consumers see their FICO credit score for free. In general, the Dodd-Frank bill requires creditors to reveal the credit score used to deny loan requests or take "adverse action." As of May 2011, federal regulators have yet to enforce the bills because they cannot decide how to implement these rules for lender, insurance company, landlord or employer. For example, employers check credit reports on applicants but do not look at their credit scores. Once the Federal Reserve Board and the Federal Trade Commission accept the proposed Dodd-Frank regulations, you can start receiving your free credit scores.

Considerations

The score provided by Equifax is not necessarily the score you want to use to judge your creditworthiness. Most lenders that employ a credit scoring model prefer the Fair Isaac Risk model. Equifax sells a score like the FICO model called a "BEACON" score. Subtle variations between the FICO and Equifax models result in an unknown effect on your score, so your BEACON score might be the same or wildly different than your FICO score. (ref 3)

Tip

Equifax and the other credit bureaus run promotions from time to time that let you see your credit scores for free or a small charge if you use one of their new services, such as credit monitoring, for a trial period. The Fair Isaac Corporation also sometimes runs promotions that give away free FICO scores if you sign up for trial offers. Alternatively, you could just ask a creditor to reveal your scores after he runs a credit check. Once the Dodd-Frank bill goes into effect, a creditor must automatically reveal your FICO score if it rejects you for a loan or service based on your credit.

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How to Improve Your Spouse's Credit by Adding Them to Your Credit Accounts

Does your spouse have a low credit score, or one that could use some improvement? If you have a line of credit in your name, your spouse can improve his credit by doing what is called "piggybacking" in the credit industry. Piggybacking is when you use your own good credit history to help another individual. All your spouse has to do is jump on your back and enjoy the ride to a higher credit score.

Instructions

1

Enter your spouse's name, Social Security number and contact information on your credit application as an authorized user or joint user. By entering your spouse as an authorized user, it means he is authorized to use your credit line but is not responsible for payments. If you add your spouse as a joint user, then both of you will be equally responsible for ensuring the bill gets paid on time. If you have already established a line of credit, contact your creditor and ask that your spouse be added to the account.

2

Refrain from giving your spouse access to your credit card if he is known to have poor spending habits. Although she is not using the credit card, her credit score will still benefit from your credit account.

3

Make purchases, as normal, with your credit accounts.

4

Submit your monthly payment on time in order to avoid late fees and negative items on your credit report. As you make your payments on time and handle your credit responsibly, your spouse's credit score will begin to increase, just as if the line of credit was solely his. This occurs because when your crediting company makes their report to the credit bureaus, your name and information along with your spouse's name and information are reported.

5

Avoid being careless with your credit line. If you are careless with your credit, it will negatively affect your spouse's credit since she is listed as a user on the account.

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Does a Hard Hit Reduce Your Credit Score?

Many consumers have the perception that checking your credit always hurts your credit score. In reality, some types of credit checks can hurt your credit slightly, while other inquiries have no impact. Understanding the difference between hard and soft credit inquiries can help you avoid damage to your credit score.

Hard vs. Soft Inquiries

When it comes to inquiring about your credit, a hit or inquiry comes in one of two forms. Some hits are considered soft inquiries, while others are considered hard inquiries. A soft inquiry is one in which you are not trying to obtain credit. For example, an employer credit check is one type of soft inquiry. A hard inquiry involves applying for some kind of credit. For instance, when you apply for a new credit card, this is a hard inquiry.

Why Hard Inquiries Are Important

When you apply for credit, this can lower your credit score because it could indicate financial trouble. According to the University of Connecticut, people with six or more credit inquiries are eight times as likely to file for bankruptcy. If you have financial problems, you may be more likely to seek out credit. Because of this, the credit bureaus look at several hard inquiries as a negative.

Multiple Inquiries

A single hard inquiry can lower your credit score by one to five points, according to Bankrate.com. When you shop around for the best interest rate, the credit scoring model typically only counts that as one inquiry. For example, the FICO system disregards any credit inquiries within 30 days of getting a mortgage. This means that if you simply shop around for the best rate on a mortgage or auto loan, it should not hurt your credit.

Considerations

When you apply for credit, the hard inquiry stays on your credit report for two years. Depending on the credit scoring model, the credit inquiry may be visible for longer than two years. If you are not shopping around for the best rate, getting multiple hard credit inquiries can hurt your score. Try to bunch your credit inquiries together within the same month instead of spreading them out over a longer period.

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How to Boost a Credit Rating Fast

If you're having trouble securing a car loan, home loan or credit card with a low interest rate, a higher credit rating may help your cause. Calculated with such factors as how much credit you're using, the amount of time since your last credit application and how long you've had established credit, a credit score can be improved with a few simple strategies. Consider these tips to boost a credit rating fast.

Instructions

1

Check your credit score by requesting a free credit report annually from one of the reporting agencies-Experian, Equifax and TransUnion. You can also get a copy of the credit report online through AnnualCreditReport.com. Inspect the report for anything odd in the payment history, accounts and balances.

2

Resolve any issues that show they've been "settled" or "paid as agreed" on your free credit report if you've never had any disputes that have gone to collections. Similarly, resolve any current disputes immediately before they're turned over to a collections agency, which can immediately reduce your good credit score. Ensure the business will remove the dispute from your credit report once you've paid the bill.

3

Get each credit card balance under thirty percent of the available credit line. Start with the credit card that has a balance closest to the credit limit and move onto the next once you've paid the first down below thirty percent. If you pay your credit cards off each month, try not to charge more than thirty percent on them each month since the amount of the balance may affect your credit score regardless of when you pay it off.

4

Call your credit card companies to check your credit limits when trying to boost a credit rating fast. If they've changed your credit limit without notifying you, it may look like you're charging the maximum amount each month. Consider asking to have your credit limit raised if you routinely charge (and pay off) the same amount each month.

5

Continue to use older credit cards to establish your long credit history for a good credit score rather than closing them. Note that older accounts won't be given as much weight toward a good credit score if they're seen as inactive accounts.

6

Try not to apply for new credit cards or transfer balances to a single credit card with a low credit limit if you're trying to boost a credit rating fast. The longer you can go between applying for credit, the better, and it's also better to have small balances scattered across several cards than a large balance close to your credit limit on a single card.

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Credit Rating Benefits

Credit ratings help individuals access loans, housing and employment opportunities, as well as better insurance and interest rates. Alternatively, they help financial and lending institutions learn about an applicant's credit worthiness. MSN reports that a credit rating can also tell about an individual's ability to act responsibly and honor agreements.

Rental Housing

Before renting an apartment or home, it is common for property owners to review a prospective tenant's credit rating. Credit ratings show an individual's payment history with creditors and service providers, such as cell phone and electric companies. An applicant who has a good bill payment history is more likely to be approved to rent a property because he is more likely to pay the rent on time.

Home and Auto Loans

Financial institutions also use credit ratings before giving a prospective home owners or car buyers a mortgage or auto loan. In this case, a lending company may verify an individual's income, cash assets, payment history and credit score to make sure he has enough money to afford the mortgage or car payments, and can make those payments as scheduled. Additionally, a good credit rating can give an individual a lower interest rate, which will reduce the total amount of money spent on financing a home or car.

Employment

It is common for an employer to check an applicant's credit history before offering her a job. Often, this practice is part of the company's background investigation. The Biz Press, a website that provides information about running a business, reported that nearly 50 percent of companies in June 2010 ran credit rating checks on applicants. A good credit rating can make an applicant appear more attractive to a prospective employer because, according to The Biz Press, the individual appears more reliable and trustworthy.

Insurance Rates

When purchasing an insurance policy, it is common for an insurance company to run a credit check on a customer. According to MSN, the better the credit rating the cheaper the insurance premium will cost. Insurance companies have found that those who have better credit ratings are statistically more responsible, make premium payments on time, are safer and are, therefore, less of a risk. Because insurance companies base their premiums on statistical information, a good credit rating can help an individual secure a better policy premium.

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How Many Points on Your Credit Score Is Paying Off a Judgment Worth?

Leaving your debts unpaid will result in your creditor reporting your missed payments to the credit bureaus. Stop paying altogether and your creditor will give up trying to collect from you and sell the debt to a collection agency. Both missed payments and collection accounts hurt your credit score, but they aren't a creditor's only alternatives for damaging your creditworthiness. A creditor can also seek a civil judgment by filing a lawsuit against you. While paying off a judgment demonstrates to lenders that you took responsibility for your unpaid debts, it does not increase your credit scores.

Payment Effects

A judgment is an inherently negative item that can remain on your credit report for up to 20 years, depending on your state of residence. Because a judgment on your credit record has inherently negative connotations, paying it off does not lessen the negative impact it has on your credit scores. After you pay off the judgment, however, your creditor will update the judgment record to reflect your payment on your credit report.

Benefits of Payment

Although paying off a judgment doesn't boost your credit rating, it carries other financial benefits. For example, your creditor cannot garnish your wages, attach liens to your property or levy your bank account for a judgment you already paid. In addition, paying the debt lowers your overall debt liability, making you a better financial risk when applying for future loans.

Considerations

A financial record only impacts your credit score if it appears on your credit report. Once the judgment expires, the credit bureaus will delete it from your file and your credit score will improve. Many consumers mistakenly believe that paying off a negative credit entry will result in the credit bureaus deleting the entry. In reality, a negative entry on your credit report remains for the full federal reporting period. When removing collection accounts from a credit report, consumers sometimes pay the collection agency and, in return, the collection agency contacts the credit bureaus and removes the negative report from the debtor's credit record. This does not work with judgments. Judgments are reported to the credit bureaus by the court -- not the creditor. The creditor does not have the authority to remove the judgment on its own.

Improving Your Credit

While paying a judgment doesn't remove it from your credit report or net you additional credit points, you can still improve your credit rating. Paying your current creditors on time every month demonstrates to future lenders that you are reliable while simultaneously salvaging your credit scores. Maintaining low debts and a balance of both loans and credit cards also helps you build credit points -- even if your credit report is tarnished from a previous judgment.

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Problems With Facing a Credit Freeze

A credit freeze is a hold that individuals can place on their credit accounts preventing anyone, including themselves, from opening new lines of credit in their name. Every state in the United States allows this process, although some only allow it after identity theft. Even though there are benefits there are also problems with the process.

Cost

A credit freeze almost always costs something unless you have been the victim of identity theft. Forty three states allow individuals who have not had their identity stolen freeze their credit, either temporarily or permanently. The other states only allow credit freezes when identity has been stolen. These states include Arkansas, Hawaii, Kansas, Mississippi, South Dakota, Texas and Washington. In the states where it is permissible to freeze your credit at any time, the fee ranges from $5 to $20 for each of the three credit companies Experian, TransUnion and Equifax. Many states also require a similar fee when lifting the freeze.

Lending

The main drawback of a credit freeze is that you cannot open any other lines of credit until the freeze is lifted. The credit line could be for anything. House, car, personal loan, business loan, store financing, credit cards, student loans and any other line of credit cannot be opened during a freeze. The credit freeze generally lasts for a specified period of time, but sometimes the freezes are in place until you personally lift the freeze. This can be a huge drawback for your life, especially if you have unforeseen circumstances that make the opening of a line of credit a necessity.

Identity Theft

Even though a credit freeze can help stop identity theft, it will not prevent it. If someone steals your identity, they can still use it to create damage in your name, even if there is a credit freeze on your name. Identity thieves can use other methods to make purchases or commit crimes in your name. In general, however, a credit freeze goes a long way toward stopping identity theft, as most thieves only want the credit they can get in your name.

Lifting the Freeze

Another problem with facing a credit freeze is lifting the freeze. In addition to the fee that you usually have to pay, there are other complications to the process, as well. First you have to obtain a special pin number from each of the credit bureaus. Sometimes this number is issued when you freeze the account, but other times it is a separate transaction. The pin number is usually only good for a certain number of days. After you give the number to the credit bureau, it usually takes several days for the lift to go through. This can be a hassle with time sensitive transactions, such as a house contract.

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What You Need to Fix Your Credit

Bad credit not only causes higher loan interest rates, it also affects your ability to rent an apartment, get a phone line and in some cases, land a job. A credit score represents your credit history and potential credit worthiness with a numerical value. Those with a poor score or bad credit history can fix their credit with some time and hard work.

Bills

You cannot fix your credit score until you begin paying your bills on time. All the changes in the world cannot erase negative payment history with a creditor. Sometimes this means re-evaluating the budget and cutting out unnecessary expenses to pay necessary creditors in a timely fashion.

Credit Card Debt

Good history with revolving credit card accounts helps credit scores. The ratio between the amount of credit card debt to the total credit card limit, however, also affects the score. Try to keep each credit card balance below 30 percent of its limit, states MSN Money. When only considering credit scores, paying down cards closer to their limits trumps paying down high-interest cards.

Avoid

Along the same lines, some people like to consolidate their credit card balances onto one lower interest rate card. If raising your credit score represents the most important present goal, consolidation actually harms your credit score because you want smaller balances on several cards as opposed to a large debt-to-credit ratio on one card. Also, avoid applying for new loans or credit cards when trying to raise your credit score. Unless you have no credit cards, applying for new accounts can lower your credit score, according to MSN Money.

Mistakes

Some credit problems happen because of mistakes on the credit report. If this happens, contact the creditor with the error and get a letter in writing stating the correct information. Then send that letter to the credit bureau for an investigation. If the credit bureau deems the information mistaken, it will fix the credit report, which sometimes increases your score.

Beware

Some companies try to take advantage of people with poor credit. They claim to erase bad credit and remove bankruptcy information forever from a credit file. The Federal Trade Commission recommends ignoring these false claims because they scream Scam." True credit repair takes months and hard work. No legitimate agency makes claims that sound too good to be true.

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How Much Will My Credit Go Up if I Dispute a Tax Lien & Then It's Deleted?

Tax liens can obliterate even the best of credit scores for decades, and you will probably still have to pay back your tax obligation plus interest and fees. Removing a tax lien should increase your credit score by several dozen points. Although you need to pay the tax when due, if you pay the lien immediately, future creditors should never know about it because of a 2011 IRS rule about removing tax liens and levies.

Identification

The credit scoring system in the U.S. punishes a credit rating the most when a borrower shows a complete inability or unwillingness to repay a debt, so that the creditor takes heavy-handed collection methods, such as filing a lien. Negatives have a greater effect on good scores than on poor credit histories. If you have at least average credit -- a 680 or better -- you can expect a drop of 100 points or more after the tax lien appears on your credit report, John Ulzheimer, president of consumer education for SmartCredit.com, told the website MainStreet.

Time Frame

The credit reporting bureaus will not remove a tax lien just because you dispute it, only if it legitimately does not belong to you. As long as you owe the tax debt to the government, the Internal Revenue Service puts tax liens on public record. Even if you pay a tax lien, it can remain on a credit report or up to seven years, according to Maxine Sweet, Experian's public education officer..

2011 Changes

In February 2011, the IRS announced changes to how it would handle tax liens -- taxpayers can request the IRS withdraw the lien as soon as they pay it back. This is essentially a pay-for-deletion deal for consumers. As of May 2011, it is still unclear whether the new regulation refers to all tax liens or just those issued after the regulations passed in February. However, there are some reports that the regulation is retroactive, according to Ulzheimer.

Tip

If you see a tax lien that does not belong to you or you paid off the lien, you should dispute it with the credit bureaus. However, first ask the IRS to remove the lien by filling out Form 12277 -- Application for Withdrawal of Filed Form 668(Y), Notice of Federal Tax Lien. Once the IRS agrees to remove the lien, send a copy of the notice to each credit bureau that reports the item.

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Three Steps to Boost Your Credit Score

Your credit score is one of the most important elements of your financial background. It can affect issues such as your eligibility for credit cards and the interest rate assessed on your mortgage. Generally, lenders perceive a credit score above 700 as good. If you need to bring your credit score up, three financial strategies can help you boost your credit score quickly.

Pay Your Bills Right Away

It's critical that you start paying your bills by their due date. Late payments lower your credit score, and your credit score drops even further if the late payment issue is sent to a collections agency. Few things have a greater impact on your credit score than late payments, and Kiplinger financial magazine reported in 2010 that your ability to pay on time constitutes 35 percent of your total score calculations.

Lower Your Credit Usage

When your credit score is calculated, the percentage of the available credit you use is taken into consideration. Your score is impacted negatively if you use the majority of your available credit every pay period. Raise your score by cutting back on your credit usage or by paying off your credit card balances constantly. Keep in mind that this number is constantly changing. For example, your credit score is lower before your credit card balance payment is due, and it rises once you pay off your credit card, which increases the ratio of your available credit relative to the credit you've used. On average, people with very high credit scores--760 or higher--only use 7 percent of the credit they have available each month.

Check Your Credit Report for Errors

Errors in your credit report, such as incorrectly reported late payments or wrong names that may connect you to debt that's not yours, can lower your score. Fixing the errors is simply a matter of filing a correction form with the credit agency. You can order a free credit report once every 12 months by dialing toll-free 877-322-8228. The report is mailed to your home. Review it to make sure all the information listed is correct. If it's not correct, follow the instructions on the report to fix any erroneous details.

Other Strategies

There are additional ways to raise your score and keep it high. This includes not opening new lines of credit that you don't need, because your credit score takes into account the total "age" of your credit accounts. Your credit score is lowered when the average "age" of your accounts is reduced, and that "age" reduction typically more than offsets any credit score gain that would be made from lowering your debt percentage by increasing your available credit. Additionally, your credit score improves if you have several forms of credit, including revolving debt such as credit cards and installment debt such as a mortgage. This shows creditors you can handle a range of credit types.

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If a Civil Judgment Is Placed Against You, How Many Points Is Your Credit Score Affected?

If you do not pay your credit card bills or other unsecured debts, such as old utility bills, the creditor may sue you in court to get a civil judgment against you. Civil judgments are unhealthy for your finances, as they allow creditors to request wage garnishment as well as affecting your credit for the next seven years.

Factors

Bills.com reports that judgments affect your credit more if you have other derogatory information in your credit history than if the only negative mark is the judgment. For example, if you have several collections accounts in addition to the judgment, the judgment may severely lower your credit score. If your credit is perfect other than the judgment, the judgment will not affect it as much.

Removing Judgments

If a court issues a judgment against you, you may be able to mitigate its effect on your credit by settling the judgment. However, in many states you must do this before the judgment is reported to the credit bureaus; otherwise, the judgment will remain on your credit even though you paid it off. If you pay off the judgment before it is reported, in some states this nullifies the judgment and stops your creditors from reporting it.

Default Judgments

If you do not come to court on your court date, the court usually sides with the plaintiff because you were not there to present a defense. This is known as a default judgment. Default judgments have the same effect on your credit as other judgments. However, if you wish to vacate, or nullify, a default judgment against you, you must show a good cause for missing your court date as well as present evidence that you do not owe the money the creditor is seeking.

Legal Counsel

If a creditor sues you, it is often best to consult an attorney. Your attorney can advise you as to your best course of action and negotiate with the creditor on your behalf. You should also consult an attorney if you are attempting to vacate a judgment to find out if it is possible to do so and what procedure you must follow in order to remove the judgment from your credit history.

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Excellent Credit Ratings

When it comes to your financial life, perhaps no number is more important to you than your credit score. Credit scores are determined by summarizing your credit history and financial decisions. If you have an excellent credit score, it can significantly improve your financial situation and give you benefits that those with lower ratings cannot obtain.

What is an Excellent Credit Rating?

A credit rating is typically synonymous with a score that is calculated using the formula from the Fair Isaacs Corporation, which is known as a FICO score. The scoring system that is used by the major credit bureaus starts at 300 and goes to 850. In today's lending market, an excellent credit score would usually need to be at least 750.

What Does an Excellent Score Do for You?

An excellent credit score can help you in a number of areas in your financial life. When you apply for a loan, you should have no trouble getting approved as long as you have some kind of income. Besides making it easier to get approved, you can also get the best interest rates available. When you apply for a loan, you may also not have to provide as much documentation. You can even get lower rates on your insurance premiums with an excellent score.

Getting an Excellent Score

If you do not have a great credit score currently, it does not mean that you cannot get one in the future. The credit scoring system is dynamic, and your score changes frequently. If you want to bump your score up to a higher level, you should start making all of your payments on time, as this is one of the most important variables when calculating your score. You should also try to pay off any credit balances you have, such as credit cards or store accounts.

Improving Great Score

Once you get to a certain point with your credit score, it is pointless to continue trying to improve it. Lenders do not give you any better of a rate once you get up into the excellent threshold. For example, once you get up above 760 points, you do not need to spend your time trying to get up above 800 because it will not save you any money on interest or make it easier to get approved for a loan.

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Quickest Way to Rebuild Credit

Credit may need to be rebuilt for a variety of reasons: from a string of delinquent payments resulting in account closures or collection agency involvement, to court judgments, repossessions or even bankruptcy. FICO, the major credit score company, advises that the quickest way to rebuild credit is to demonstrate you can use it responsibly. It is difficult to open new accounts after a personal financial meltdown, but it is possible to get credit cards once again and use them to rebuild strong credit reports.

Instructions

1

Save up at least $200 to $300. Banks do not want to open accounts for people with bad credit unless they have a repayment guarantee. Your savings can be used as security for your new credit card so you can start to rebuild a good record.

2

Review secured credit card offers. Your current bank or credit union may offer secured cards; otherwise, many other banks provide these accounts. The Credit Infocenter credit repair site suggests finding a bank that offers secured credit cards with no application fee and reasonable interest charges. The account should convert to a traditional credit card after you make on-time payments for 12 to 18 months, and the activity should be reported to the TransUnion, Equifax and Experian credit bureaus.

3

Open the secured credit card account with the most favorable terms and use it regularly. Demonstrating financial responsibility is a huge factor in rebuilding your credit, and FICO explains that card use and on-time payments have a major influence on your score. Make modest charges that you can easily pay off within a few months.

4

Order and review your credit reports to make sure your secured credit card information is being reported accurately. The Federal Trade Commission explains that the Fair Credit Reporting Act entitles you to free yearly credit reports through annualcreditreport.com. Your reports should show the account, including your credit limit, balance and payments.

5

Open new accounts occasionally as your credit reports improve. FICO advises that you need a mix of loans and revolving credit to maximize your score. You can find yourself in financial trouble yet again if you get too much credit, so limit yourself to loans and cards you need, like a second credit card for emergencies and an auto loan.

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Credit Check Guide

Landlords, lenders and prospective employers sometimes run credit checks on applicants to get a better understanding of their desirability as a tenant, borrower or employee. Credit checks contain different types of information adding up to a picture of your ability to manage credit based on your payment history, debt volume and other factors. Misconceptions about how to access, improve or correct credit check information abounds, so reviewing credit check guides helps you better understand how credit checks work.

Types

Credit checks fall into two categories: single credit bureau reports and three-bureau reports. Single-bureau credit checks reflect the financial information gathered from one bureau, either Equifax, Experian, or TransUnion. Ideally, financial information from all three bureaus should be the same, but it sometimes happens that the three bureaus have different information about the same person. Credit checks from all three bureaus will include your entire credit history.

Access

You're entitled to access your credit report free each year under the Fair Credit Reporting Act, enforced by the Federal Trade Commission. Accessing your credit report helps you prepare for outside credit checks, because you can identify and correct (or remove) incorrect information, or take steps to mitigate negative marks on your credit resulting from lapsed payments, collection agency referrals or other credit mismanagement errors. Running your own credit check helps you determine whether you're a victim of identity theft; if unfamiliar accounts or addresses appear on your credit report, someone may be illegally accessing your credit. If you'd like to run your own credit check, complete an online application at annualcreditreport.com. Otherwise, call 1-877-322-8228.

Credit Score

Some consumers access their credit report to learn their credit score, although the score doesn't appear in all credit checks. Your credit score reflects a variety of factors, including the volume of your debt, payment history, number of credit accounts opened and length of relationship with credit lenders. If you've managed credit well by maintaining long relationships with your credit card lenders, made on-time payments, paid your balance in full each month or paid more than the required minimum, you might have a high credit score. Missed payments, spotty relationships with lenders or delinquent debt may earn you a low credit score.

Risk

Frequent credit checks can hurt your credit score, since it can indicate that you're turning to numerous sources for additional credit in the form of credit cards, lines of credit or personal loans. When running credit checks through outside websites offering free services, you also run the risk of visiting imposter sites not affiliated with the U.S. government-sanctioned annualcreditreport.com. These websites may offer free credit checks, but require that you sign up for fee-related monthly services in exchange. Read online forms carefully before submitting to avoid surprise charges on your credit card bill.

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How to Raise a FICO Score 50 Points

Lenders use your FICO score to decide if you get a loan for a car or home or approved for a credit card. In some cases, the number can impact whether you will get a job. There are ways to raise your FICO score by 50 points or more, but the amount depends on how low your score was to begin with. A low score will increase faster than one in the medium range, but all scores will increase by following a few easy steps.

Instructions

Raising a FICO Score By 50 Points

1

Get your credit report. You credit score is based on the information attained on your credit report such as late payments, lawsuits and bankruptcies. The government has rules on how long an item can be on your credit for example bankruptcy will be on your report for 10 years, but occasionally a credit bureau will forget to take an item off or will have wrong information. You have the right to protest the bureaus and have these items taken off.

2

Reduce your credit card balances. One of the major factors in your credit score is your debt to credit ratio. If you have a large amount of credit and a large amount of debt, it can hurt your score. If you are able to substantially pay off your credit card debts, it will keep your overall credit high and your debt low. This will substantially raise your credit score.

3

Pay your bills on time. Your ability to pay bills on time makes up a whopping 35 percent of your credit score. If you are late, 30, 60 or 90 days it can substantially hurt your score. If you are behind on several credit accounts, get caught up as soon as possible. If you are 90 days late on several accounts one month and caught up the next month, then it may raise your score by as much as 50 points.

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How One Missed Payment Can Affect Your Credit Score

Your credit score affects how likely you are to qualify for loans and other forms of credit, and what interest rates are offered when you do get credit. Missing a payment can lower your credit score and make it more difficult to obtain credit in the future.

Effects

People who already have lower credit scores will not see as big of a hit from one late payment as those with higher scores. For example, someone with a credit score of 780 would lose about 90 to 110 points, but someone with a credit score of 680 would only lose about 60 to 80 points, according to the Fair Isaac Corporation.

Time Frame

If the missed payment has not yet been paid and the account is still reported as past due, you will see the biggest effect on your credit score. Your score should rise again as you make on-time payments on the account in the future. In addition, payments that are 90 or 120 days late will have a larger impact and affect your score longer than 30-day late payments.

Considerations

If the payment is not a full 30 days late, the lender may not have reported it to the credit reporting agencies yet. Call the lender as soon as you notice you have missed the payment and ask if the company can forgive it and not report it to the credit bureau.

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Does Paying My Loans Before They're Due Hurt My Credit Score?

Ironically, even though having little debt is associated with good borrowing practices, paying off loans early can hurt your credit score. Also, in some cases, keeping a debt may allow you to earn money through higher-yielding investments. However, as long as you manage debt responsibly and still use credit, any negative effect of eliminating a debt is probably negligible.

Identification

Normally, paying your debts before they are due does not hurt your credit score. Paying early usually means that you do not default on your debt and damage your credit rating with missed payments. Also, 30 percent of your FICO rating depends on your level of outstanding debt, so expediting payment on a loan increases your credit rating more than making minimum monthly payments.

When It Hurts

Paying off installment loans -- loans with a set payment schedule -- early can hurt your credit rating because the FICO system only counts active installment debt in your "mix of credit" category. In the latest FICO equation as of 2011, "mix of credit" is worth 10 percent, according to the Fair Isaac Corp. If you have a high rating -- above a 760 -- you can see a drop of up to 50 to 60 points when you have no installment debt on your credit report, according to the CreditNet website.

Keeping Accounts Active

If you want to keep your credit rating high, you need recent activity. Positive information, such as paid in full accounts, stays on your credit history for 10 years, but your past two years is the most important and best indicator of your risk. Thus, paying a mortgage off now may make it harder to acquire one in the future if you stop using credit. If you pay off a credit card and do not use for several months, the lender will report it as dormant, which hurts your credit utilization rate. For instance, holding $4,000 in credit card debt and having a $10,000 total limit gives you a utilization ratio of 40 percent. If an account with a $2,000 limit becomes inactive, your utilization ratio goes up to 50 percent.

Considerations

If you have credit card debt, you should pay it off and keep the account active by putting a small charge on it each month and paying that off, too. For loans with a low interest rate, such as a mortgage, pay off your higher-interest debts first, such as credit cards and auto loans. You may want to keep debt when you can use savings to invest in a more profitable vehicle. For example, it is more profitable to put $10,000 in a bond that returns 10 percent each year than putting the money toward a mortgage with a 5 percent interest rate. The presence of certain accounts associated with high interest rates, such as finance accounts, always hurt your credit rating, according to Experian.

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How Information Appears on Your Credit Report

It seems odd to know that when you meet with a bank, that encounter will go on a report with many other financial transactions. But lenders willingly share information because it protects the whole credit industry from people who don't pay their loans. With information provided regularly by creditors, credit agencies can almost instantly create a financial profile for most consumers.

How it Gets There

According to My Fico, a website produced by the Fair Isaac Co. that developed the matrix used for credit scores, lenders compile information on all their customers and how they handle their debts. Banks, for example, keep track of all their mortgage customers, auto customers and other installment or business loan customers. Regularly, usually once a month, they give this information to the credit agencies. Credit agencies don't keep a file on each person, rather they create a credit report when you or a lender ask for it. Then they cull all the information that's been given about you as well as any inquiries that have been made about you.

Accounts in Good Standing

When you have a credit account, the credit reporting agency lists when you opened the account, what type of loan it is, the original balance and the outstanding balance, the monthly payment, whether it is an individual or joint account, and the status of the account. Status might say that the account is still open and there are no late payments. If you closed it, there may be a note mentioning that the account was closed at the customer's request.

Potentially Negative Items

If there has been a court case against you because of a credit issue, the plaintiff in the case will be listed, along with the court where the case was heard, the claim amount, and the date the claim was resolved. With negative accounts in collections, the entry will say who the creditor is, the amount owed, and the date it became past due. With other accounts with blemishes, the creditor will list the date and number of days the payment was late, whether 30, 60, 90 or more; tell that the account was in collection or say that the account was closed.

Account Inquiries

If you initiate a loan action -- meaning apply for a loan, credit card or mortgage -- and the company to which you made application then requests a copy of your credit report, the bureau will list that inquiry on your credit report. It will give the name of the organization, the date of the request and the status. If, however, another company --seeking to offer you credit or for some other reason -- initiates a report, those entries will not appear so that other creditors can see them. But if you ask for a copy of your report, those will appear on your copy.

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Who Can Request a Credit Report?

Credit reports consist of personal information such as addresses and date of birth as well as bill-paying history. Under the Fair Credit Reporting Act, both on-time payments to lenders like credit card companies and late payments can reflect on credit reports. In the United States, the three primary credit reporting agencies are Equifax, Experian and TransUnion; these businesses must comply with all federal laws regarding who can access a consumer's credit report.

Potential Lenders

When you apply for a credit card, auto loan, personal loan, mortgage loan or line of credit, you give the potential lender consent to view your credit report. Some lenders just check one credit report, while others, especially mortgage companies, will look at your reports from all three major credit reporting agencies. Every time a lender views your credit report, an "inquiry" posts to your file and remains for two years. Having too many recent inquiries on your credit report can make it much more difficult for you to get credit because lenders fear you applied for a lot of credit due to financial problems.

Insurance Companies, Landlords and Employers

When you apply for any kind of home or auto insurance policy, the company has the right under the Fair Credit Reporting Act to look at your credit report. People with poor credit ratings usually pay more money for insurance policies and some are denied coverage entirely. A similar rule applies to landlords and employers; landlords can deny housing or charge higher security deposits to people with bad credit. An employer can also deny a job or promotion if the applicant has a history of serious credit problems.

Current Creditors

Once you have a credit card, loan or insurance policy, the creditor can view your reports to ensure you haven't fallen behind on your other financial obligations. Also, if a business turns your account over to a collection agency, that company can view your credit reports to determine your assets and where you currently reside.

Your Access To Credit Reports

You are entitled to at least one free credit report each year, according to the Federal Trade Commission. But you must prove your identity through completing a series of multiple-choice questions about your accounts and address history or providing a copy of a government-issued photo ID. If you're denied a job or credit and already got a free annual credit report, you can request an additional copy of your report.

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Easiest Way to Establish Credit

Without a strong credit history, doing many of the basic things in life, such as buying a cell phone, establishing insurance or getting a job, can be difficult. Your credit score plays an even larger role in your ability to purchase a car or home, and can have significant financial implications in the way of interest rates and down payments. Building a good credit score is important to your financial well being and future investments. The task must be undertaken with discipline and care.

Instructions

1

Check your credit report to see what, if anything, appears on your report. You will be able to see both positive and negative aspects of your credit from this report, which is free once a year through Annualcreditreport.com. This will help you understand where you stand in the eyes of current and potential creditors. You should check your credit report at least once a year to review accuracy and understand how creditors view your history.

2

Obtain a checking and savings account, which lenders perceive as indications of stable finances. These accounts will also help you build financial history and a relationship with the bank or credit union.

3

Open a joint account with an individual with good credit history if possible. Having a co-signer on a loan or being a joint account holder on a credit card essentially allows you to borrow the other person's credit in order to establish your own. This is particularly helpful if you pay your loan and credit card payments on-time and in full, as it will boost both individuals' credit scores.

4

Apply for a credit card, whether secured or unsecured, to build a credit history. Use the card at least once every six months to keep it active. Be careful not to maximize usage of the card. Keep the balance at less than 30 percent of the credit limit for the card to have a positive impact. Ideally, the balance should remain at less than 10 percent or even be paid off, which still increases your credit score without putting you at financial risk. Department store or gas company credit cards are also great for boosting credit scores and are generally easier to obtain.

5

Obtain an installment loan, such as a mortgage, auto or personal loan, to diversify your borrowing history. The best place to start is with a small, short-term loan that is easy to pay off and does not have significant interest costs. This not only increases your score if paid in a timely and accurate manner, but also builds a relationship with your bank.

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How Frequently Credit Reports Are Updated

Your credit report is a dynamic document that is updated regularly by the credit bureaus. When you do something such as make a payment or open an account, this information eventually finds its way onto your report. How quickly this happens can vary from one case to the next.

Creditor Reporting

One of the the key factors to consider is how frequently your creditor reports to the credit bureaus. Credit bureaus typically update your credit report as soon as they receive information. However, they cannot do anything until they get the information from the creditors directly. Some larger creditors such as credit card companies update their records every month. Other smaller creditors and lenders might only update their files with the credit bureaus approximately once every quarter.

Changing Credit Score

Your credit score is calculated from information in your credit report. When the credit bureaus receive information, your credit score is typically updated very quickly after the changes are made to your credit report. This means that if you need your credit score to be raised, you usually have to wait on the creditor to provide the information. Then once this happens, the credit bureau can recalculate your score based on the new information.

Rapid Rescoring Service

In some cases, you may be able to get your credit report updated faster. By working with a rapid rescoring service, you can get your credit updated within two or three days. These are companies that charge a fee to communicate with the credit bureaus. They have relationships with credit bureaus and can get your credit score change very quickly. To work with one of these services you have to be in the process of trying to get a loan with a mortgage lender or some other kind of lender.

Contacting Credit Bureaus

If you get a copy of your credit report and you see that something is not accurate, you have the right to contact the credit bureaus and get it changed. Each credit bureau has a system for disputing items on your credit report. When you do this, you must also include some type of proof that the item on your credit report is not accurate. This can take three to four months to complete so it is best to plan ahead before you need to secure financing.

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How to Unsubscribe From Free Credit Report

So-called "free" credit report providers have come under fire by the the Federal Trade Commission, specifically because the reports are usually not free. If you've signed up for the Free Credit Report.com service and do not want to be charged anymore, you'll need to unsubscribe. There is no cancellation fee; you can unsubscribe at any time. However, you will not receive a refund for prior money paid.

Instructions

1

Gather the information relating to your Free Credit Report account. You may need your member number, which can be found on your billing statement; however, the customer service department should be able to verify your account by using your name, Social Security number and date of birth.

2

Call 1-888-829-6560 and speak with a customer-service representative. The customer-service hours of operation are Monday through Friday, 6 a.m. to 6 p.m.; Saturday and Sunday, 8 a.m. to 5 p.m. (Pacific Standard Time).

3

Tell the representative that you want to cancel your account and unsubscribe from the service. The representative may attempt to persuade you otherwise; hold your ground if you are serious about unsubscribing from the service.

4

Write down any cancellation or confirmation number that the representative gives you. Before getting off the telephone, verify with the representative that your account is canceled and that you will not be charged again.

5

Review your next bank or credit-card statement. Make sure that the company did not charge you for the service after cancellation.

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Does Unemployment Affect Credit Score?

A person's credit score is a calculation -- made using formulas developed by credit reporting agencies -- of an individual's creditworthiness. Credit scores have a number of uses. Although primarily used by lenders to determine if and at what rate to issue a borrower a loan, they may also be used by employers or landlords to make an estimate of an individual's reliability. Unemployment does not affect a person's credit score.

Unemployment Benefits

When a person loses his job, he may or may not be eligible for benefits issued by the government to the unemployed, colloquially referred to as unemployment benefits. These benefits are only temporarily provided to the worker while he looks for a new job. However, a public record of who is receiving unemployment benefits is unavailable. Therefore, credit reporting companies cannot learn who is receiving these benefits.

Credit Report

Credit reports -- the basis for credit scores -- include a variety of information about a person's financial status and credit history. However, credit reports include absolutely no information about a person's current employment or his income. Even if a credit reporting agency were to learn that a person was unemployed, it would not place this information in a credit report. Therefore, unemployment cannot affect a person's credit score.

Lending Decisions

Credit scores are determined using only information included within a credit report. If information -- such as the fact that a person is without a job or is receiving unemployment benefits -- doesn't show up on the report, it will not have any impact on the person's credit score. However, individual lenders may still ask about a prospective borrower's employment status and may still make lending decisions based on this information.

Considerations

Although being unemployed will not directly affect a person's credit score, it might indirectly affect it if the person goes deeper into debt due to his reduced income. If the person takes on too much debt or defaults on his debt, then his credit score will likely go down. Unemployment can make it difficult for the person to get out of this hole. making it an indirect cause of a bad credit score.

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