Can I Add My Good Payment History on a Private Loan to My Credit Report?

About 50 million Americans have no credit history but have regular payments that they meet, according to information at the Microbilt Corporation website. Some alternative credit agencies exist that allow consumers to self-report payments to build credit. Although reporting successful payment of an informal or private loan between friends or family might seem like a crafty tactic to improve your credit, this information is unlikely to be accepted by an agency.

Identification

Self-reporting payments to an alternative credit agency does not mean you can add whatever information you like. A self-reporting agency, such as PRBC, usually only accepts payment data related to utilities, rent or a contractual obligation, such as a cell phone or insurance plan. PRBC must be able to verify the accuracy and legitimacy of the information, which would be difficult to do with a private loan between two individuals.

Alternative to Self-Reporting

Instead of self-reporting to the credit bureaus, you can go directly to lenders. People without a credit history sometimes bring in old receipts and canceled checks for monthly bills, such as rent, to prove their creditworthiness. Lenders, however, will probably only factor nontraditional data into a credit application if you lack a credit history with the major bureaus.

Are Alternative Scores Worth It?

Reporting a private loan to the credit bureaus would be out of the question -- even minor lenders cannot afford the monthly subscription costs and equipment required by the major bureaus. Self-reporting services charge between $20 and $30 per month to report one bill. The credit you build with these services, however, is not nearly as widely accepted as the traditional FICO score. In 2010, there was a push to include nontraditional data in credit scores. The FICO Expansion score, for example, includes information from PRBC databases.

Tip

Even if you decide to report a private or other nontraditional payment to a self-reporting agency, Dr. Don Taylor, columnist for BankRate.com, recommends a secured credit card to start building your traditional credit report. Secured credit cards are far easier to get than the standard unsecured credit card, because they require collateral on the line of credit. Secured accounts report to the credit bureaus and can turn into an unsecured line if you build a track record of using the card responsibly.

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Does a Short Sale Have the Same Effect on Your Credit as a Deed in Lieu of Foreclosure?

When you realize that you cannot afford your home, its time to start doing damage control to preserve your credit rating, but there is little you can do to keep a high rating. Choosing between a short sale and deed in lieu of foreclosure is like picking your poison. Even though a short sale might be a little less damaging than adeed in lieu of foreclosure, both can turn you into a subprime borrower.

Identification

A short sale and deed in lieu of foreclosure have roughly the same effect on your credit score, according to Les Christie of CNN. However, the actual effect depends on how your lender reports the account. A short sale might have less of an impact because the lender probably reports the account as "settled" rather than foreclosed. For instance, on a score of 780, a settled account does between 105 and 125 points in damage, and a foreclosure 140 to 160 points, says Ellen Cannon of Bankrate.com.

Considerations

Most lenders won't consider either option until you start missing payments, which essentially means you have to trash your credit rating before you can attempt a short sale or deed in lieu of foreclosure in most cases. Once you have several negative items on your credit rating, especially 90-day late payments, your credit rating is so low that a short sale, a deed in lieu of foreclosure or a foreclosure has little effect on your rating. For example, if you have a FICO rating of 680, a settled account can do as little as 45 points in damage, according to Cannon.

Reporting Time Limit

The national credit reporting bureaus can report a short sale or deed in lieu of foreclosure for seven years after the lender closes the account. However, short sales can take up to a year to complete, while a deed in lieu of foreclosure happens within three months. The faster you can close on the mortgage, the sooner you can start rebuilding your credit rating.

Recovery

Conceding your mortgage to the bank is probably better than the other options: foreclosure and bankruptcy. For instance, you might have a deficiency balance left over after a foreclosure, which could mean you need to declare bankruptcy to eliminate it. A bankruptcy usually stays on your credit history for 10 years. Negotiate with the bank on how it will report the account. Ideally, you want the bank to report the mortgage as paid in full, but you will probably have to accept a status of "settled." Once you complete the short sale or deed in lieu of foreclosure, you can start repairing your credit by taking out a secured credit card or other entry-level account and paying the bill every month. Also, tackle any other outstanding debts.

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Can an Account Go on a Credit Report Without Notification?

Credit reports contain some demographic information and work history, but the Federal Reserve Bank of San Francisco explains that the bulk of the information focuses on your credit accounts. The Experian, Equifax and TransUnion credit bureaus have records of all your accounts and credit-related activity for the past seven to 10 years.

Credit Report Compilation

The credit bureaus do not notify you when they add accounts to your credit reports, and they are not required to check your files for mistakes or possible fraudulent activity. The Federal Trade Commission (FTC) website advises that you have a legal right to see what is on your reports every year. Experian, Equifax and TransUnion jointly run the annualcreditreport.com site, which gives you no-cost copies of your files every 12 months upon your request. You can compare your reports each year to see what data has been added and which former accounts have disappeared.

Accuracy

Dayana Yochim, a Motley Fool financial website writer, warns that about 80 percent of credit reports have mistakes, with incorrectly reported payment delinquencies being the most frequent. Your accounts may also show errors such as the wrong balance, credit limit or opening date. You may even have former accounts on your files that are past their reporting time frame, which the FTC explains is seven to 10 years, or accounts that belong to a different person with a similar name.

Disputes

You should monitor your credit reports diligently, because you are not notified when accounts are added. The FTC explains that the credit bureaus are legally bound to investigate mistakes when you find them and make a dispute. The Fair Credit Reporting Act gives them a month to investigate and fix the issue, and it also requires them to notify you of any changes made in response to your complaints. You get new no-cost credit reports that reflect the corrections and deletions.

Warning

Although Experian, Equifax and TransUnion do not notify you when they add accounts to your files, debt collectors may tell you they will make an entry on your reports if you do not pay a certain bill. Beware of "zombie" debt collectors who buy former debts that are "dead" because they are outside the statute of limitations. You cannot be sued for these debts, and they are not supposed to be added to your credit reports. The NOLO legal reference website warns that unscrupulous collectors threaten to add them anyway, and sometimes follow through by lying to the credit bureaus about the account date. This tactic is illegal, and you can dispute such accounts with the bureaus if you find them on your reports.

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The Best Way to Get Out of Debt & Raise My Credit Score

When you are drowning in debt, your quality of life can suffer. It can put a strain on your family and lead to stress, worry and arguments. When you have too much debt, your credit score drops and you may not get the loans for which you apply. Or, if you do get a loan, you will probably have to pay a high interest rate. Chances are that you did not get into debt overnight, so it may take you a while to get out of it. But, it is possible to get out of debt and raise your credit score.

Best Way

The best way to get out of debt and raise your credit score is to pay down your debt and stop using your credit cards. If you try to settle or negotiate your debt for less than what you owe, your credit score will suffer because the lender tells the credit-reporting agencies that you settled your debt. This is a bad mark on your credit report, resulting in you having difficulty getting future loans.

Function

To pay down your debt, do all you can to make more than the minimum payment. The minimum is typically only 2 to 3 percent of your balance. If you only pay that, you prolong your debt, and you rarely become debt free. The longer you have the debt, the more you pay in interest. If you write down everything you spend in a week, you will see certain luxuries that you can eliminate, such as going out to lunch or buying coffee in the morning. Everything you save on luxury items can go toward your debt. Giving up luxuries while you are paying off debt isn't fun, points out information from the Motley Fool website, but neither is fearing bill collectors each month.

Strategy

Since your goal is to get out of debt and raise your credit score, you should start paying off cards that are maxed out or close to it first. The two biggest factors in your FICO credit score are payment history and amounts owed. Paying your bills on time accounts for 35 percent of your credit score, and amounts owed accounts for 30 percent. The amounts owed category includes your credit utilization ratio, which is the amount of available credit you actually use. It's best to keep your credit utilization below 30 percent. When deciding which cards to tackle first, pay off the ones that are closest to their limit.

Raising Money

Some ways to raise money to pay off debt are to cash out your savings and investment accounts, borrow against your life insurance or your 401k or borrow from family or friends. If you hate to cash out your savings, consider the amount you are earning on your savings compared to the amount you are paying in debt interest. If you realize that you are losing money by keeping your funds in savings, use your savings to pay your debt. Once you are debt free, you can build your savings again.

Borrowing against your life insurance could work if the interest is below what you are currently paying on your debt. Be sure to pay back your life insurance. If you borrow from your 401k, you will have to pay that back within 5 years. Only borrow from friends and family if you are certain you will pay them back. Otherwise, you will burn relationships.

Potential

If you own a home and have equity in it, you could take out a home equity loan or home equity line of credit and use that to pay off your debts. The interest you pay on a home equity loan or line is tax-deductible and the interest is typically lower than what you pay on credit card debt. Be careful not to use your credit cards while you are paying off the home equity loan. You can lose your house if you miss your home equity loan payments.

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How to Dispute an Inaccurate Transunion Report

Over the course of a consumer's credit history, irregularities and erroneous information will arise. Having negative account status inclusions, or what is known in legal and credit reporting circles as "trade items", is inevitable due to the large volume of credit card account holders and revolving credit providers. Should you find an inaccuracy being reported by the credit bureau TransUnion, the mistake can be removed.

Instructions

1

Order all your credit reports. Go to Annual Credit Report.com and order all three credit reports from TransUnion, Experian, and Equifax. These reports are free of charge and can be ordered once per year. Review each and cross-reference to see if the inaccuracy is appearing on other credit bureau's reports.

2

Gather all pertinent financial documents. Compile your credit card statements and bank statements and any receipts reflecting the trade item is inaccurate.

3

File a dispute with TransUnion. Visit TransUnion's website and navigate to the "Submit a Dispute" page. Select an option for filing a dispute: by phone, online, or by mail. Choose the mail dispute method to create a documented paper trail.

4

Mail the dispute form. Select either United States or Puerto Rico "Request for Investigation form". Download the PDF, complete it and mail it to: TransUnion Credit Report Dispute, P.O. Box 2000, Chester, PA 19022. Follow up by phone within 20 to 30 days at (800) 916-8800 to confirm receipt of your dispute.

5

Wait for a response. TransUnion will respond within 45 days by mail once your dispute is received, according to its website. Under federal law, if the trade item cannot be verified as accurate, it must be removed.

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How to Delete a Charge Off From Your Credit Report

Charge-offs are serious negative entries on your credit report. Credit card companies and other creditors will close your accounts and list them as charged off if you stop making payments. Charge-offs can cause your credit score to plummet, making it difficult or impossible to be approved for new credit. You can remove a charge-off by negotiating with the original creditor or challenging the information with the credit bureaus because it is inaccurate or outdated.

Instructions

1

Get a copy of your credit report from Annual Credit Report, a website established by the nationwide credit bureaus to offer free reports as required by the Fair Credit Reporting Act, a federal law. View and print the report directly from the site or follow instructions on the homepage for ordering by telephone or mail.

2

Find the charge-off on your credit report. Note the date that the charge-off was entered on the report. Federal law allows charge-offs and similar negative information to be reported on your credit report for seven years. If seven years have passed, write a letter to the credit bureau asking that the information be removed because it is outdated and by law can no longer be included on your report. Mail the letter to the credit bureau's address listed in the report and wait 30 days for a response.

3

Verify the accuracy of the charge-off. For example, perhaps someone else's charge-off was inadvertently listed on your report, or you actually paid the account in question. If the information is wrong, send a letter to the credit bureau asking that the information be removed immediately. By law, the credit bureau must remove inaccurate information. Wait 30 days for a response.

4

Contact the creditor if the information is current and accurate. Negotiate with the lender for an option called "pay for delete." This legal arrangement allows you to pay the full amount that was charged off in exchange for the creditor deleting the information from your credit report. Not all creditors will agree to such an arrangement because they believe it undermines the credit reporting process. However, this represents the only other honest way of deleting a charge-off, other than waiting for the information to become outdated or disputing it because it is wrong.

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How to Get a Copy of a Credit Report From AAA Credit Bureau

AAA Credit Bureau is a private credit reporting company that provides consumers with credit reports. In addition to credit reports, the bureau also provides criminal and eviction reports for landlords. Based in Arizona, the company has been in operation since 1990. The company mostly works with landlords to obtain potential tenant information before approving an application. The process for getting a copy of a credit report from AAA Credit Bureau is simple.

Instructions

1

Go to AAAcreditbureau.com to register. You will need to print and complete the membership agreement and FCRA/Security Access form.

2

Fax or email the forms back to AAA Credit Bureau along with proper identification. You will need to provide two documents to show that you own the rental property. You will also need to send one form of identification such as a driver's license, voided check or utility bill.

3

Gather key information to run credit checks on applicants. Have the applicants complete an application providing the necessary information to access their credit. You will need their full legal name, social security number, date of birth and address. The applicant will need to sign the application to grant permission for you to request their credit report.

4

Indicate in the fax or email the type of report you want. The company offers a basic credit report and full report. The basic report includes detailed account information, FICO scores, public record information, employment verification, alias and fraud alter search, amounts of debt and payment obligations and collection agency accounts. Along with the basic information, the full report provides you with eviction search, criminal search, terrorist organization link search and sexual predator search.

5

Fax or email the application and type of report to AAA Credit Bureau. If the request is received by noon, it will usually processed the same day. Customer service representatives are available to answer any questions or discuss report details.

6

Supply the applicant with the contact information for AAA Credit, if he is denied because of credit. The applicant is entitled to a free copy of their report.

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