Tuesday, July 31, 2012

How to Read Your Credit Report?

Bad Credit can be depressing. The key is to take action. Even if you are down to a 500 credit score, understanding your starting point is a good first step toward raising your score.

Start by getting a copy of your reports. Credit scores are based on the information on file with the big three credit bureaus: Equifax, Experian and TransUnion. Every year, every consumer is entitled to a free report from the government operated site AnnualCreditReport.com. After your first report, you can purchase additional ones directly from the bureaus and resellers like myFICO. You are not penalized for pulling your own credit report.

Once you get a report, you will see it has several sections. It starts with Identifying Information:

Name - includes all variations under which you are known ("Robert", "Bob", "Bobby"), your Maiden Name, if applicable, even misspellings of your name during credit checks. Make sure these are names that apply to you
Current Address
Previous Addresses
Social Security Number
Date of Birth
Telephone Numbers
Drivers License Numbers
Spouse's Name (if applicable)
Current Employer
Former Employers
The next section is often Public Records. This is where you will find local, state and federal court action listings related to your paying, or not paying, financial obligations. Best case, this section is blank. If you are in trouble with your debts, it may not be. These are the items to tackle first if they are inaccurate as they hurt your credit score the most. Here you will find:

Tax Liens
Wage Garnishments
Overdue Child Support
Now on to Collection Agency account information. Here you will find any accounts sent to collections in the past seven years. Usually a listing will contain:

Collection Agency's Name
Amount Owed
Contact Information
The big section is Credit Accounts or Credit History. This is where an agency will list all your current and past credit accounts that were reported to credit bureaus. Generally this covers the last 7 years. If you had a Nordstroms card where the "date of last activity" was in 1985, it has probably been dropped from the listing.

Each account listed will contain the following information:

Creditor (aka lender, credit card company, etc)
Account number
Date of account opening
Name(s) of account holders
Total amount of loan or the highest balanced ever on a card
Remaining balance
Any set monthly payments like for a mortgage
Any minimum monthly payments like for a credit card
How well you paid - two part code
So what is this code? It has two parts: whether it is I for installment or R for revolving credit. Mortgages are installment loans and credit cards are revolving credit. It's better to have more I debt than R debt for a credit score, but how you pay it off it more important than both. Some credit bureaus use M for mortgages instead of I. The second component is a number between 1 and 9. Having a 1 is best and 9 the worst. Some bureaus put a C on accounts that are current which is positive like getting a 1.

The final section is inquiries; these reflect who has requested to see your report. There are two types: hard and soft. Hard inquiries are ones you initiate by applying for loans, credit cards, auto financing, etc. Soft inquiries come from current creditors monitoring your account and companies who want to send out pre-qualified offers to individuals. Here you are looking both for inaccurate information and super high numbers of hard inquiries. If there are hard inquiries that you didn't initiate, it could be a red flag someone is trying to use your identity.

The credit industry knows there are mistakes, misinformation, and errors in these reports. Each credit bureau has a process for making corrections. You will have to contact them and provide documentation using credit dispute letters. These are simple to write. Provide copies of supporting evidence of your claims. Keep copies of everything for yourself.

Friday, July 13, 2012

Try Our Credit Repair Secret Tips

Many people don't realize that if you have got a low credit score there are some credit repair secret tips that can help you undo the damage and increase your score. Debt collectors don't really want you to know these tips otherwise they would have less work, but you do have rights and debt collectors do have rules that they have to follow.

The first step you need to take to improve your credit rating is to make sure that all the negative points on your credit report are accurate. Quite often a small mistake on a credit report is what makes a person's credit score low. Request a copy of your credit report from all the three credit bureaus and go through the reports to make sure that there are no mistakes. If you do find a mistake you will need to contact the bureau immediately and in writing so they can investigate it and fix the error. You don't want inaccurate information being the cause of your low credit score so this is the first thing you need to rule out.

When are dealing with a credit bureau you need to keep your documents and details filed of all your communications. It is best to send them a letter by certified mail and keep a copy of the letter for your own records. The credit bureaus should investigate any inaccuracies and respond within 30 days but there may be times when your case might be misplaced or they just aren't on top of everything so you should always keep your own records.

Remember also that you are not a servant working for the credit bureau; this information greatly affects many aspects of your life so you need to be assertive when dealing with the bureaus. You should still be professional and polite but don't talk to them like you are asking them to do you a favor because it is more important than that. You want a mistake corrected and you may need to be assertive to get them to do it.

By law the credit bureaus have 45 days to respond to you but there are cases where it has taken longer. The process can sometimes drag on a little so don't expect the mistake to be fixed overnight, but if it does go on too long then you need to contact them to see what the holdup is.

At some time in the future you may want to buy a new home or a new car and may need to apply for a mortgage or a loan and you may not be able to if you have a bad credit score. Don't wait until the time comes to apply for that loan before you start worrying about your credit score, by then it will take too long to get it repaired. Start repairing your credit score now so that when you do need to apply for a mortgage or loan you will be able to without worrying about a bad credit rating.

To improve your credit score, and while you are waiting for any mistakes to be fixed, start practising some good credit strategies. Start paying all your bills on time and this includes your household bills as well as loan payments and credit card payments. Late payments on your bills and loans can really affect your credit score.

If you are will to devote some time and effort into repairing your credit score then you can successfully do so. It will take time and that is probably the biggest credit repair secret tip of all. But the sooner you begin taking steps to repair your credit the sooner your score will increase and you can start enjoying the benefits of having a good credit rating.