What Is Credit Protection?

When you apply for a loan, a credit card and certain kinds of services, lenders and vendors check your credit report. Having a low credit score may disqualify you for credit products and result in you paying higher rates for various services. Credit protection involves keeping your credit score high and taking measures to prevent certain events from negatively impacting your score.

Credit Scores

When you fall more than 30 days behind on loan payments, creditors report your delinquency to the credit bureaus. This causes your credit score to drop. Other events that negatively impact your credit score include filing for bankruptcy or going through a foreclosure. If a fraudster commits identity theft and runs up debt under your name, it also causes your score to fall. A creditor giving the credit bureaus inaccurate information about your payment history can cause your score to drop as well.

Credit Protection Laws

Federal and state credit-protection laws exist to ensure fair treatment for consumers regardless of information on their credit reports. The 1969 Consumer Credit Protection Act has strict rules on how companies can gather and share information about your credit history. Under federal credit protection laws, you have the right to a free credit report from each of the major credit bureaus every year. The 1970 Fair Credit Reporting Act requires credit bureaus to correct any errors on your credit report promptly that may have harmed your credit score. Other credit protection laws, such as the 2009 Credit CARD Act, limit the ability of creditors to charge punitive rates when you fall behind on payments with other lenders.

Credit Protection Insurance

Homeowners often fall behind on their mortgage payments because of a job loss or an accident that prevents them from working for a time. You can cover yourself against a loss of income by taking out credit protection insurance whenever you take out a loan. You pay for the insurance either upfront or on a monthly basis. If you lose your income source, the insurer covers your loan payments for a specified number of years. This enables you to both avoid foreclosure and prevent a reduction in your credit score.

Credit Protection Monitoring

Creditors make monthly reports to credit bureaus. Although you are entitled to a free credit report from each bureau, you only get a free report once a year. This means if you become a victim of fraud, it may go unnoticed for months. However, various companies offer credit protection monitoring services. This involves the firm checking your credit report monthly and telling you of any changes on your report. This means you can spot fraud and mistakes faster and prevent your score from dropping.

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How to Improve My Credit Score Free

How to improve credit score free. Having a good credit score is important so credit score improvement is a big topic.
If you want to buy a house, a car, just about anything - you need to have a good credit score you get a low interest rate on your loan, or to even get accepted in the first place. Improving your credit score can be pretty easy.
Here is how to easily improve your credit scores.

Instructions

1

Credit score repair. How to improve credit score quickly:
Two things:
Use a credit card wisely
Check credit score: use an online credit score report to to make sure you do not have bad credit.

2

Get a credit card. Your purpose for this should be to improve credit score - NOT to go on a shopping spree and max it out. If you mindset is right, this will work. If you view your credit card as a means to go on a shopping spree, this will not work, and you will end up with debt and a poor credit score.

3

Make a SMALL purchase each month, say $10. A small amount so that you can easily pay it off each month, to improve your credit score.

4

Pay off your credit card each month when the bill is due to improve your credit score report.

5

Your credit score will build and improve with time as you continue to keep it paid off and you will improve credit score fast.

6

Another important aspect: Doing a free credit score check.
"Whats my credit score. I want to check my credit score" you might be wondering. You have 3 credit scores. Everyone is entitaled to one FREE credit scores check every year (and it is NOT the "freecreditreport.com" guys you see on TV) and it is available at Annualcreditreport.com. See the direct link in the "resources" section below. Check credit score at that website. Check your credit score

7

Check out the resources in the "resources" section below for more information on improving your credit score.

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What Your Credit Score Should Be

You are highly unlikely to have the perfect credit score, but don't worry, because you are not alone and you have a good chance of receiving all the same benefits as someone with perfect credit. Ideally, you want the highest score possible, but you can settle for a few dozen or more points less.

Highest Score Possible

The FICO scoring system is the most dominant risk model in the consumer credit industry and has a maximum score of 850, so you should aim for that. At 850, you are theoretically the least risky customer a lender can have. Unfortunately, getting there is nearly impossible, because something usually drags down your score. To get an 850, you would probably have had to successfully pay off dozens of loans over several decades without missing a payment. Even then, you may not get an 850 due to something such as applying for a loan in the past year.

760 or Better

Most lenders realize a score of 850 is impossible, so they settle for less. The ideal reasonable credit score shifts over time. Since 2010, lenders consider a 760 the optimal score. A few years before, a 720 sufficed, but the credit crisis hit, so lending standards became extremely tight. Going beyond 760 probably won't get you anything other than self-satisfaction or a very minuscule interest rate reduction.

Considerations

You do not always need a score of 760 because lending standards vary between creditors and what type of account you need. Retail credit cards, for example, usually require far less than a 760. If you apply for a mortgage, a 760 gives you the best chance at the lowest rate. Shop around and find a lender willing to give the best terms for a score lower than 760.

Tip

Never stop trying to improve your credit score. Doing nothing but paying down debt and sending your monthly bills on time is probably enough to get you a great score, maybe even above 760, over time. Make sure you have at least one credit card and one installment loan, such as a mortgage or auto loan. Most important to maintaining good credit is having no negative items, such as missing payments, settling a debt, having an account in collections or maxing out a credit card.

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How to Repair a Bad Credit Rating

Your credit score acts as a rating that gives lenders a snapshot of your credit-worthiness. Leslie McFadden of the Bankrate financial site explains that it indicates your risk of defaulting on credit obligations within the next two years. The credit bureaus calculate scores, but McFadden cites FICO as the largest provider. Late payments and other negative credit report entries hurt your rating because FICO gets its information from those reports. You can repair your rating by cleaning them up.

Instructions

1

Request your Experian, Equifax and TransUnion credit files through annualcreditreport.com, the Federal Trade Commission or FTC recommends. The credit bureaus sell reports, but you are entitled to free copies once a year through the government mandated website.

2

Highlight every item that is hurting your credit rating. Every negative entry damages your credit score to some extent, whether it is a late payment, charged-off account, car repossession or home foreclosure. Court judgments and bankruptcies do serious harm.

3

Review the highlighted items for accuracy. The bad information itself does not have to be wrong. The entry simply has to contain some type of mistake. For example, the date of a late payment might be a few days off, or the name of the lender that repossessed your car might be misspelled. The FTC explains that you have a right to contest all inaccuracies.

4

Write letters to the three credit bureaus challenging every error on your reports. Ask them to investigate as they are required to do by the Fair Credit Reporting Act and to eliminate any items they cannot validate. Some of the creditors may not respond with corrected information, so those items are wiped from your reports.

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Check the credit bureau responses you receive after your disputes have been processed. The FTC explains that they must tell you whether they were able to verify the challenged items. They must also send corrected credit report copies that reflect any changes. See how many entries were erased, as your credit rating gets better with each negative item you were able to eliminate.

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I Need Help Fixing My Credit

Fixing your credit helps you get new credit with few hassles, and a good credit history is often required for mortgage loans. Several tips can help improve your present score. The highest credit score is 850. You can achieve an excellent score with smart credit habits.

Credit Utilization

High credit card utilization, which refers to carrying high balances on your cards, will hurt your personal FICO score. Credit is available to make purchases when in a bind. But relying on credit or lack of self-control can cause balances to increase. And if unable to manage these debts, your credit score will suffer. A low credit card utilization involves charging less than 30 percent of the credit limit. For example, a credit card with a $1,000 credit should have a balance no higher than $300.

Late Payments

Losing a job and having financial issues can trigger missed or late payments. Payment history makes up 35 percent of credit scores; therefore, it's imperative to avoid lateness and delinquencies. Plus, creditors and lenders charge a late fee for missing your due date, which can slowly increase the balance on credit cards. Do everything possible to pay by your due date, even if this means only paying the minimum. When this isn't possible, discuss repayment options with your creditor to avoid penalty. They may waive the payment for the month or extend the due date.

Rebuilding Credit History

Serious credit issues may call for completely rebuilding your credit from scratch. This can hold true after a bankruptcy or after having bills and other debts charged off or turned over to collections. Negative items of this nature stay on your personal credit report for seven to 10 years. But in the meantime, you can take steps to gradually improve your credit rating. Start with a secured credit card from a bank or a bad credit auto loan. Secured cards require a deposit, and bad credit loans have higher finance rates. While the terms aren't the best, managing these accounts with timely payments can add points to your score each month.

Credit Report

Clear up mistakes on your credit report and help fix your credit score. Mistakes don't occur on every credit report, but one major negative item reported in error can cause your personal score to drop. Order online from Annual Credit Report and view all three of your reports within minutes. This is a free service that every consumer can take advantage of yearly. What's more, Annual Credit Report places a clickable link on the website for disputing erroneous items.

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Do-It-Yourself Credit Repair Kit

Many companies offer to repair your credit for a fee, but you can do the same thing yourself at no cost. You are entitled to free copies of your credit reports each year, and you also have the right to dispute information and have certain negative items removed. You can easily prepare and use a do-it-yourself credit repair kit if you know your rights and the correct process to follow. It won't cost you anything, and you may be able to boost your credit score quite a bit.

Credit Reports

The first and most important item in your do-it-yourself credit repair kit is current copies of your credit reports. The law allows consumers to request a free credit report from Transunion, Equifax and Experian every year. You must use the official website to get these reports at no cost without any other obligation. They will provide you with the information you need to use the other items in your kit.

Negative Item List

You will use your credit reports to prepare the next item for your credit repair kit: a list of all the negative and questionable items. Challenging these items is the main part of your credit repair strategy. If these items are not correct, or if the credit bureau is unable to verify them with the creditor, they must be deleted from your report. Include incorrect items on your list, and also those that may not be easily verifiable. For example, if you have an old bill with a company that has gone out of business or merged with another firm, you can dispute that as well.

List of Dispute Reasons

You will need a list of dispute reasons to match up with your negative item list. According to the Credit Info Center, you can dispute items for a wide variety of reasons. These include:

Not your account
Wrong date for late payment
Incorrect account number
Incorrect amount, balance or credit limit
Wrong creditor name
Incorrect last activity date
Incorrect charge-off date
Incorrect account status
Incorrect high credit amount

Dispute Letter Template

You will need to file disputes in order to repair your credit. You should have a basic dispute letter template that can be adapted to specific disputes and used with each of the credit bureaus. You can file a dispute against negative items if they are incorrect or if you believe they cannot be verified. Your letter can say something like the following:

Dear (Credit Bureau):

I am disputing the following items on my credit report:

(Item), (Reason for dispute)
(Item), (Reason for dispute)
(Item), (Reason for dispute)

Use this format to submit online disputes on each of the credit bureau websites. They will investigate your claims and notify you of the results. Follow up in 90 days by rechecking your credit report to make sure that the incorrect and unverified items have been removed.

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How to Remove a 30 Days Late Mark on a Credit Report

Credit repair clinics may claim that 30-day late payments can easily be removed from your credit report, but the Federal Trade Commission says that's not true. The agency says there simply isn't any way for you to legally or ethically remove accurate, negative information from your credit report. That includes 30-day late payments. Missing even one payment can be a big deal. The Bankrate website says a credit score of 780 could drop by 110 points because of a 30-day late mark. Such a drop could mean the difference in the best rates on a loan and much less attractive offers.

Instructions

1

Contact your credit card company if your payment was posted after your due date, resulting in a 30-day late mark on your credit report. Explain why your payment was late and ask that the notation on your credit report be removed as a courtesy. To receive the goodwill gesture, you should be able to legitimately argue that your payment was posted late because of a reason you could not control, such as delayed mail delivery because of weather or mishandling by the card company.

2

Write a letter to the card company asking for a reconsideration if your request is turned down over the telephone. Or, write a thank-you note if your request was granted.

3

Get a copy of your credit report from the Annual Credit Report website to confirm that late payment was removed. Wait about 30 days after the goodwill request. If the request was denied, you'll have no choice but to wait seven years for the late payment to fall off your credit report. The Fair Credit Reporting Act allows accurate, negative information to remain on your credit report for a minimum of seven years.

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