Errors on a Credit Report and How to Fix Them

You received your credit report and are baffled by what you see… you know you’ve paid that credit card and are certain you never had you loan go to collections. Many people seem to think that the credit bureaux’s system is infallible; unfortunately that is simply not the case. In fact, it has been reported that over 25% of credit reports have errors. Why you may ask, simply put it is a matter of organization. The three major credit agencies do not communicate with each other and some financial institutions and lenders will only send reports to specific agencies. With the addition of simple human error and imperfect nature of the reporting system, errors frequently occur. If after reviewing your credit report you find any errors or inconsistencies you should report it and open a dispute with the CRA (Credit Reporting Agency).

The CRA and the the Community of America Credit, they must investigate your claim within 30 days of your report. Once you open a claim the information in question is taken off your credit report until it can be proven to be accurate (with in 30 days, if they cannot prove that it is accurate within a 30 day period the information is removed anyway).

The CRA will also contact the other CRA’s to inform them of the error. and request  credit audit report Here are the steps to take in order to fix any mistakes with your credit report (Be patient, credit agencies aren’t the most customer friendly institutions and take their sweet time when processing such requests)

Here are the steps to take in order to fix any mistakes with your credit report (Be patient, credit agencies aren’t the most customer friendly institutions and take their sweet time when processing such requests)

First off go back in your own documents (or get it from your bank or revenue agency etc) and find any all information to support you claim.

Keep track of all the calls, documents, letters etc. Note the time/date and who you spoke to. Make sure you photo copy and documentation and never send the originals.

Now you start writing. Write the CRA a letter explaining your claim and provide copies of any supporting documentation (make sure you include your full name and address). Include a copy of the report and highlight the inaccurate information and request that the information be corrected. When you mail the letter get either a return receipt or a tracking number so you’ll know when it’s received.

After that letter is off, send one to the party in question that supplied the inaccurate data to the credit bureau in the first place. Repeat the steps above.

Wait for 30 days. The CRA is has a period of 30 days to review your claim (from time of receipt). If you haven’t heard back from them in a reasonable amount of time, call them (note the date, time and the customer care reprasentative number at Equifax).

If you get a letter back stating that the changes have been made you’ll also get a new copy of your credit report. There are times when a  private credit lender may be able to provide proof to the CRA that the information was accurate. If that happens the CRA will put it back on your credit report and you will have to deal with the credit lender and reopen your dispute with the CRA. More information may be fund at Evergreen Credit.

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Free Credit Report and How Credit Reports Work

It is however best to get a 3 in 1 credit report. That way you can verify that all the information the credit bureaus report is accurate (as they do not share the information on your credit report and collect the information separately).

Please note that it is wais to receive more than just an annual credit report, though there is fee it is very slight. Absolutely free credit reports are available once a year.

To get your free online credit report, simply go to 1 of the 3 credit bureaus and request a copy of your credit report (go to Equifax free credit report)

Let’s take a closer look at credit reports:

The second you summit your application for a credit card, mortgage or loan of any kind the first thing a lender is going to do is pull up your credit report (from one of the three agencies like the Experian credit report agency). If the credit report says your in good standing, chances are you’ll be approved, if however the credit bureaus report comes back with a bunch of late payments,  debt collections or that you’re in a tone of debt, you aren’t as likely to be award the credit product. Your credit report plays a huge roll in your financial world and can impact many other areas of your life, as such you really should take the time to make 100% certain that the credit report is accurate (Yes, mistakes can and do happen all too frequently), understand why it says what it does and find out what you can do about it.

Let’s take a glance into a credit report and take a look at: who has the ability to access it, what information it contains, who maintains that information, where you can get a hold of it and how to protect it against the credit fraud epidemic affecting so many people.

Your credit report shows whether or not you pay your bills, if you’ve ever had a bill or debt brought to a collection agency, if you pay any loans or credit cards on time and how much you owe in debt. All of the information is plugged into a formula that generates a numbered rating or credit grade that lenders use in order to decide if they should lend you money.

When a lender retrieves your free credit report from the credit bureau (such as Experian credit report agency) it doesn’t automatically pop up with a check mark or an x it simply outlines your credit history and credit score based on available information (another good reason to check your credit report yourself, don’t forget you can view credit report free) it is then up to the lender to make the final decision. Different lenders will have their own criteria that you must meet based on the type of credit you are applying for.

It is safe to say that anyone that offers a type of lending service or credit product has the ability to access your credit report. These are also the same people that routinely send (or rather the credit bureau’s system gathers such information on their behalf) that information to the credit bureau. You the consumer above all else have access to view credit report free and you can get credit reports instantly online. This is extremely important as there is a common misconception about the involved of the actual individual and their credit rating. Most people think that the banks credit card companies and the credit bureau make the final decision regarding your rating however you have the ability at any time to pull up your Experian credit report (for instance) and challenge anything on it, whether it is incorrect information, an unjust collection, inaccurate payment history or worse yet fraudulent credit activity. 

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Credit Terms, Glossary of Terms

The following are credit terms that you will find in any letter of credit terms.

A

Account Condition

Indicates the present state of the account, but does not indicate the payment history of the account that led to the current state. (i.e. open, paid, charge off, repossession, settled, foreclosed, etc).

Account number

The unique number assigned by a creditor to identify your account with them. Experian removes several digits of each account number on the credit report as a fraud prevention measure.

Accounts in Good Standing

Credit items that have a positive status and should reflect favorably on your creditworthiness.

Adjustment

Percentage of the debt that is to be repaid to the credit grantors in a Chapter 13 bankruptcy.

Annual fee

Credit card issuers often (but not always) require you to pay a special charge once a year for the use of their service, usually between $05 and $500.

Annual percentage rate (APR)

A measure of how much interest credit will cost you, expressed as an annual percentage.

Authorized User

Person permitted by a credit cardholder to charge goods and services on the cardholder’s account but who is not responsible for repayment of the debt. The account displays on the credit reports of the cardholder as well as the authorized user. If you wish to have your name permanently removed as an authorized user on an account, you will need to notify the credit grantor.

B

Balloon Payments

A loan with a balloon payment requires that a single, lump-sum payment be made at the end of the loan.

Bankruptcy and Credit Report Code

Federal laws governing the conditions and procedures under which persons claiming inability to repay their debts can seek relief.

C

Capacity

Factor in determining creditworthiness. Capacity is assessed by weighing a borrower’s earning ability and the likelihood of continuing income against the amount of debt the borrower carries at the time the application for credit is made. While capacity may be considered in a credit decision, the credit report does not contain information about earning ability or the likelihood of continuing income.

Capital one card bill

Bills detailing charges and the minimum amount owing on monthly.

Chapter 7 Bankruptcy

Chapter of the Bankruptcy Code that provides for court administered liquidation of the assets of a financially troubled individual or business.

Chapter 11 Bankruptcy

Chapter of the Bankruptcy Code that is usually used for the reorganization of a financially troubled business. Used as an alternative to liquidation under Chapter 7. The U.S. Supreme Court has held that an individual may also use Chapter 11.

Chapter 12 Bankruptcy

Chapter of the Bankruptcy Code adopted to address the financial crisis of the nation’s farming community. Cases under this chapter are administered like Chapter 11 cases, but with special protections to meet the special conditions of family farm operations.

Chapter 13 Bankruptcy

Chapter of the Bankruptcy Code in which debtors repay debts according to a plan accepted by the debtor, the creditors and the court. Plan payments usually come from the debtor’s future income and are paid to creditors through the court system and the bankruptcy trustee.

Charge-Off

Action of transferring accounts deemed uncollectible to a category such as bad debt or loss. Collectors will usually continue to solicit payments, but the accounts are no longer considered part of a company’s receivable or profit picture.

Credit unions Times

A not for profit org established to keep other creditors in check.

Civil Action

Any court action against a consumer to regain money for someone else. Usually, it will be a wage assignment, child support judgment, small claims judgment or a civil judgment.

Claim amount

The amount awarded in a court action.

Closed Date

The date an account was closed.

Co-maker

A creditworthy co-maker is sometimes required in situations where an applicant’s qualifications are marginal. A co-maker is legally responsible to repay the charges in the joint account agreement.

Consumer Credit Counselling Service

A non-profit organization that assists consumers in dealing with their credit problems. Consumer Credit Counseling Service has offices throughout the United States that can be located by calling 800 388 CCCS (2227).

Co signer

Person who pledges in writing as part of a credit contract to repay the debt if the borrower fails to do so. The account displays on both the borrower’s and the co-signer’s credit reports.

Credit Limit/Line of Credit

In open-end credit, the maximum amount a borrower can draw upon or the maximum that an account can show as outstanding.

Credit items

Information reported by current or past creditors.

Credit Report

Confidential report on a consumer’s payment habits as reported by their creditors to a consumer credit reporting agency. The agency provides the information to credit grantors who have a permissible purpose under the law to review the report. Mini credit reports contain less information.

Credit Scoring

Tool used by credit grantors to provide an objective means of determining risks in granting credit. Credit scoring increases efficiency and timely response in the credit granting process. Credit scoring criteria is set by the credit grantor.

Creditworthiness

The ability of a consumer to receive favourable consideration and approval for the use of credit from an establishment to which they applied.

D

Date filed

The date that a public record was awarded.

Date of Status

On the credit report, date the creditor last reported information about the account.

Date Opened

On the credit report, indicates the date an account was opened.

Date resolved

The completion date or satisfaction date of a public record item.

Delinquent

Accounts classified into categories according to the time past due. Common classifications are 30, 60, 90 and 120 days past due. Special classifications also include charge-off, repossession, transferred, etc.

Discharge

Granted by the court to release a debtor from most of his debts that were included in a bankruptcy. Any debts not included in the bankruptcy – alimony, child support, liability for willful and malicious conduct and certain student loans – cannot be discharged.

Disclosure

Providing the consumer with his or her credit history as required by the FCRA. Experian provides consumer credit report disclosures via the Internet, by U.S. Mail or in person at our office location in Santa Ana, CA.

Dismissed

When a consumer files a bankruptcy, the judge may decide to not allow the consumer to continue with the bankruptcy. If the judge rules against the petition, the bankruptcy is known as dismissed.

Dispute

If a consumer believes an item of information on their credit report is inaccurate or incomplete, they may challenge, or dispute the item. Experian will investigate and correct or remove any inaccurate information or information that cannot be verified. Experian gives consumers the option of disputing online or they may call the telephone number on their credit report for assistance.

E

ECOA

Standard abbreviation for Equal Credit Opportunity Act.

End-user

The business that receives the report for decision making purposes that meet the permissible purpose requirements of the FCRA.

Equal Credit Opportunity Act (ECOA)

Federal law, which prohibits creditors from discriminating against credit applicants on the basis of sex, marital status, race, color, religion, age, and/or receipt of public assistance.

Equifax

One of the three national credit reporting agencies, headquartered in Atlanta, Ga. The other two are Experian and TransUnion.

Experian

One of the three national credit reporting agencies, with U.S. headquarters in Costa Mesa, CA. The other two are Equifax and TransUnion.

F

Fair Credit and Charge Card Disclosure Act

Amendments to the Truth In Lending Act that require the disclosure of the costs involved in credit card plans that are offered by mail, telephone or applications distributed to the general public.

Fair Credit Billing Act

Federal legislation that provides a specific error resolution procedure to protect credit card customers from making payments on inaccurate billings.

Fair Credit Reporting Act (FCRA)

Federal legislation governing the actions of credit reporting agencies.

Fair Debt Collection Practices Act (FDCPA)

Federal legislation prohibiting abusive and unfair debt collection practices.

Finance Charge

Amount of interest. Finance charges are usually included in the monthly payment total.

Fixed Rate

An annual percentage rate that does not change.

G

Generation Identifier

Generation identifiers are Jr., Sr., II, III, IV, etc.

Geographical code

This information is received from the Census Bureau and represents the state, Metropolitan Statistical Area, county, tract and block group of the reported address. This code is similar to a ZIP CodeTM.

Grace period

The time period you have to pay a bill in full and avoid interest charges.

Guarantor

Person responsible for paying a bill.

H

High balance

The highest amount that you have owed on an account to date.

I

Instalment Credit

Credit accounts in which the debt is divided into amounts to be paid successively at specified intervals.

Investigation

The process a consumer credit reporting agency goes through in order to verify credit report information disputed by a consumer. The credit grantor who supplied the information is contacted and asked to review the information and report back; they will tell the credit reporting agency that the information is accurate as it appears, or they will give us corrected information to update the report.

Investigative Consumer Reports

These are consumer reports that are usually done for background checks, security clearances and other sensitive jobs. An investigative consumer report might contain information obtained from a credit report, but it is more comprehensive than a credit report. It contains subjective material on an individual’s character, habits and mode of living, which is obtained through interviews of associates. Experian does not provide investigative consumer reports.

Involuntary Bankruptcy

A petition filed by certain credit grantors to have a debtor judged bankrupt. If the bankruptcy is granted, it is known as an involuntary bankruptcy.

Item-specific Statement

Offers an explanation about a particular trade or public record item on your report, and it displays with that item on the credit report.

J

Judgment Granted

The determination of a court upon matters submitted to it. A final determination of the rights of the parties involved in the lawsuit.

L

Last Reported

On the credit report, the date the creditor last reported information about the account.

Liability amount

Amount for which you are legally obligated to a creditor.

Lien

Legal document used to create a security interest in another’s property. A lien is often given as a security for the payment of a debt. A lien can be placed against a consumer for failure to pay the city, county, state or federal government money that is owed. It means that the consumer’s property is being used as collateral during repayment of the money that is owed.

Line of Credit

In open-end credit, the maximum amount a borrower can draw upon or the maximum that an account can show as outstanding.

Location number

The book and page number on which the item is filed in the court records.

M

Mortgage Identification Number (MIN)

Indicates that a loan is registered with Mortgage Electronic Registration Systems Inc., which tracks the ownership of mortgage rights. This number will follow the homeowner throughout the mortgage.

Most Recent Date

The date of the recent account condition or payment status. This date is also the balance date.

N

National Debt

The history of national debt, the debt the that country has and the amount on average that each resident of the nation has in debt.

Notice of Results

If your investigation results in information being updated or deleted, you may request that we send the corrected information in your credit history to eligible credit grantors and employers who reviewed your information within a specific period of time. If your investigation does not result in a change to your credit history, results will not be sent to other lenders.

O

Obsolescence

A term used to describe how long negative information should stay in a credit file before it’s not relevant to the credit granting decision. The FCRA has determined the obsolescence period to be 10 years in the case of bankruptcy and 7 years in all other instances. Unpaid tax liens may remain indefinitely, although Experian removes them after 15 years.

Opt In

The ability of a consumer who has opted out to have their name re-added to prescreened credit and insurance offer lists, direct marketing lists and individual reference service lists. Consumers who have previously opted out of receiving prescreened offers may have their names added to prescreened lists for credit and insurance offers by calling 1 888 5OPTOUT (1 888 567 8688).

Opt Out

The ability of the consumer to notify credit reporting agencies, direct marketers and list compilers to remove their name from all future lists. Consumers may opt out of prescreened credit and insurance offer lists by calling 1 888 5OPTOUT (1 888 567 8688).

Original amount

The original amount owed to a creditor.

P

Payment Status

Reflects the previous history of the account, including any delinquencies or derogatory conditions occurring during the previous seven years (i.e., Current account, delinquent 30, current was 60, redeemed repossession, charge-off – now paying, etc.)

Permissible Purposes

There are legally defined permissible purposes for a credit report to be issued to a third party. Permissible purposes include credit transactions, employment purposes, insurance underwriting, government financial responsibility laws, court orders, subpoenas, written instructions of the consumer, legitimate business needs, etc.

Personal Information

Information on your personal credit report associated with your records that has been reported to us by you, your creditors and other sources. It may include name variations, your driver’s license number, Social Security number variations, your date or year of birth, your spouse’s name, your employers, your telephone numbers, and information about your residence.

Personal Statement

You may request that a general explanation about the information on your report be added to your report. The statement remains for two years and displays to anyone who reviews your credit information.

Petition

If a consumer files a bankruptcy, but a judge has not yet ruled that it can proceed, it is known as bankruptcy petitioned.

Plaintiff

One who initially brings legal action against another (defendant) seeking a court decision.

Potentially Negative Items

Any potentially negative credit items or public records that may have an effect on your creditworthiness as viewed by creditors.

Public Record Data

Included as part of the credit report, this information is limited to tax liens, lawsuits and judgments that relate to the consumer’s debt obligations.

R

Recent balance

The most recent balance owed on an account as reported by the creditor.

Recent payment

The most recent amount paid on an account as reported by the creditor.

Released

This means that a lien has been satisfied in full.

Report Number

A number that uniquely identifies each personal Experian credit report. This number displays on your personal credit report and should always be referenced when you contact us.

Reported Since

On the credit report, the date the creditor started reporting the account to Experian.

Repossession

A creditor’s taking possession of property pledged as collateral on a loan contract on which a borrower has fallen significantly behind in payments.

Request an Investigation

If you believe that information on your report is inaccurate, we will ask the sources of the information to check their records at no cost to you. Incorrect information will be corrected; information that cannot be verified will be deleted. Experian cannot remove accurate information. An investigation may take up to 30 days. When it is complete, we’ll send you the results.

Request for Your Credit History

When a credit grantor, direct marketer or potential employer makes a request for information from a consumer’s credit report, an inquiry is shown on the report. Grantors only see credit inquiries generated by other grantors as a result of an application of some kind, while consumers see all listed inquiries including prescreened and direct marketing offers, as well as employment inquiries. According to the Fair Credit Reporting Act, credit grantors with a permissible purpose may inquire about your credit information prior to your consent. This section also includes the date of the inquiry and how long the inquiry will remain on your report.

Responsibility

Indicates who is responsible for an account; can be single, joint, co-signer, etc.

Revolving Account

Credit automatically available up to a predetermined maximum limit so long as a customer makes regular payments.

Risk Scoring Models

A numerical determination of a consumer’s creditworthiness. Tool used by credit grantors to predict future payment behaviour of a consumer.

S

Satisfied

If the consumer has paid all of the money the court says he owes, the public record item is satisfied.

Secured Credit

Loan for which some form of acceptable collateral, such as a house or automobile has been pledged.

Security

Real or personal property that a borrower pledges for the term of a loan. Should the borrower fail to repay, the creditor may take ownership of the property by following legally mandated procedures.

Security Alert

Statement that is added once Experian is notified that a consumer may be a victim of fraud. It remains on file for 90 days and requests that a creditor request proof of identification before granting credit in that person’s name.

Service Credit

Agreements with service providers. You receive goods, such as electricity, and services, such as apartment rental and health club memberships, with the agreement that you will pay for them each month. Your contract may require payments for a specific number of months, even if you stop the service.

Settle

Reach an agreement with a lender to repay only part of the original debt

Source

The business or organization that supplied certain information that appears on the credit report.

Status

On the credit report, this indicates the current status or state of the account.

T

Terms

This refers to the debt repayment terms of your agreement with a creditor, such as 60 months, 48 months, etc.

Third-Party Collectors

Collectors who are under contract to collect debts for a credit department or credit company; collection agency.

Trade line

Entry by a credit grantor to a consumer’s credit history maintained by a credit reporting agency. A trade line describes the consumer’s account status and activity. Tradeline information includes names of companies where the applicant has accounts, dates accounts were opened, credit limits, types of accounts, balances owed and payment histories.

Transaction fees

Fees charged for certain use of your credit line – for example, to get a cash advance from an ATM.

TransUnion

One of three national credit reporting agencies. The other two are Experian and Equifax.

Truth in Lending Act

Title I of the Consumer Protection Act. Requires that most categories of lenders disclose the annual interest rate, the total dollar cost and other terms of loans and credit sales.

Type

This refers to the type of credit agreement made with a creditor; for example, a revolving account or instalment loan.

U

Unsecured Credit

Credit for which no collateral has been pledged. Loans made under this arrangement are sometimes called signature loans; in other words, a loan is granted based only on the customer’s words, through signing an agreement that the loan amount will be paid.

V

Vacated

Indicates a judgment that was rendered void or set aside.

Variable Rate

An annual percentage rate that may change over time as the prime lending rate varies or according to your contract with the lender.

Verification

Verifying whether data in a credit report is correct or not. Initiated by consumers when they question some information in their file. Credit reporting agencies will accept authentic documentation from the consumer that will help in the verification.

Victim Statement

A statement that can be added to a consumer’s credit report to alert credit grantors that a consumer’s identification has been used fraudulently to obtain credit. The statement requests the credit grantor to contact the consumer by telephone before issuing credit. It remains on file for 7 years unless the consumer requests that it be removed.

Voluntary Bankruptcy

If a consumer files the bankruptcy on his own, it is known as voluntary bankruptcy.

W

Wage assignment

A signed agreement by a buyer or borrower, permitting a creditor to collect a certain portion of the debtor’s wages from an employer in the event of default.

Withdrawn

This means a decision was made not to pursue a bankruptcy, a lien, etc. after court documents have been filed.

Writ of Replevin

Legal document issued by a court authorizing repossession of security.

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Credit Agencies / Bureaus

Credit Bureaus and How they Work. The credit bureaus are giant depositories of credit information regarding both consumers and business. Apart from the three major credit bureaus there are more than 1,000 other bureaus around the country that gather information regarding your credit standing straight from the lenders. Note: despite the fact the major bureaus collect the same information there are sometimes discrepancies from one bureau to another as they do not share information. It is for that reason that we typically recommend bureaus that deal with all the major credit bureaus in order to have a complete report that you can screen to ensure all the credit information is accurate.

By doing this you save yourself a lot of time and money (they tend to charge less). After testing several companies out first choice is: Each credit bureau collects the following information (though not necessarily in this order):

Credit Bureaus and How they Work

The credit bureaus are giant depositories of credit information regarding both consumers and business. Apart from the three major credit bureaus there are more than 1,000 other bureaus around the country that gather information regarding your credit standing straight from the lenders. Note: despite the fact the major bureaus collect the same information there are sometimes discrepancies from one bureau to another as they do not share information. It is for that reason that we typically recommend bureaus that deal with all the major credit bureaus in order to have a complete report that you can screen to ensure all the credit information is accurate. By doing this you save yourself a lot of time and money (they tend to charge less). After testing several companies out first choice is:

Each credit bureau collects the following information (though not necessarily in this order):

1. Personal information

-Your full name and previous names (if any)

-Your social security number

-Current address and previous addresses

-Phone number (s)

-Date of birth

-Current and previous employers

-Annual income

2. Your Credit history

-Banks accounts and credit products

-Mortgages

-Retail credit cards

-Other lenders credit products 

3. Credit Report Inquiries

-The amount of times in the past 12 months you have applied for credit or have had an inquires done (note, personal inquires into your credit don’t count against you, in fact it is encouraged)

4. Public records

-Legal or court judgments, such as child support cases

-Tax information (typically updated every time you submit your taxes)

-Bankruptcies

To demonstrate how it works lets look at the following example:

You walk into Sasks and apply for their in house credit card. They ask you to give some personal information (name address, how long you’ve lived there, previous address, income, employer, etc) they take that info send off (normally done instantly through the wonders of automation) to credit card company dealing with them, that company in turn contacts a credit reporting agency (also known as CRA) and either manually reviews your application (that’s pretty rare these days) or a program will automatically compare the information you have submitted with what they have on record and send back the okay, or not. If there are any discrepancies in credit report it will notify the lender as well if there is new information it will store it and added it to your credit report. If your application is accepted and you agree to the terms of credit it opens a channel from the lender to the CRA that records you activity and payment history thus becoming a part you credit file/report.

All of your credit dealings and transactions are reported monthly to CRAs by the lenders and merchants (like Veridian Credit) associated with you. The majority of the large creditors report your information to all three national credit bureaus. However some of the smaller lenders and creditors will send that information to one the major CRA’s like Eglin federal credit union. It is because of this that the information contained in your file may not be the same form one CRA to the other. Note that inconsistencies may also show up because CRA’s like Experian do not include an account that shows up on your report from TransUnion. This is of course why E Federal Credit Union always recommend that you get all three reports and review each one. Since that can be both costly and time consuming, you can get all three at the same time and have the comparison done for you for a third of the price you would have to pay of you went through the major CRA’s.  If you find  collections error credit report contact information is below.

Major CRA’s

Equifax: www.equifax.com #1

Equifax is by far the top and most comprehensive of the major CRA’s.

P.O. Box 740241, Atlanta, GA 30374-0241

To report fraud, call: 800-525-6285/ TDD: 800-255-0056 and write: P.O. Box 740241, Atlanta, GA 30374-0241

Experain: P.O. Box 2104, Allen, TX 75013

TransUnion: : P.O. Box 1000, Chester, PA 19022

To report fraud, call: 800-680-7289/ TDD: 877-553-7803 and write: Fraud Victim Assistance Division, P.O. Box 6790, Fullerton, CA 92634-6790

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Credit Advice Improving Your Credit Score and Rating:

Improving your credit score. So you’ve had a few problems with your credit lately and the last time you checked your credit score wasn’t the best. Now you’re wondering what you can do to repair the damage and improve your credit report. For starters, you’re not alone, there are more than 30 million people in the United States with credit scores low enough (credit score under 620) to make obtaining loans and credit cards with decent interest rate near impossible. On the other hand your credit is maybe alright, but you’d still like to improve your credit report score. The better your credit, the lower the interest rates you can score on mortgages, car loans and credit cards. Improving your credit report score is a very simple task. Follow the points listed below and before you know it your credit score will be tip top in no time:

Steps to Improving Your Credit Report and Credit Score:

1) Make sure the information contained on your credit report is accurate and up to date (it’s very easy to order a copy of you report from Equifax).

2) Don’t apply for credit at least three months (90 days) before you apply for a mortgage or loan. You can raise your score by 10% by doing this.

3) Most importantly, pay all your bills on time (if your planning on applying for a mortgage make sure you have a glowing payment history six months prior to applying)

4) Obviously if you have anything in collections get it paid and taken off a.s.a.p.

5) Make a few extra payments to any credit products you may have (credit cards, loans etc.) and try to get the balance down (it looks better in the eyes of your lender and will help your debt to income ratio)

6) Again make sure to get a copy of your credit report to make sure all the information is accurate. Your credit score may be suffering because of an error or ill intent. Improve your credit report be checking it frequently.

7) When improving your credit report, make sure not open a number of new accounts in a short period of time. Opening a number of new accounts will lower your average account age, which will have a negative effect on your credit report score and also makes you look risky to credit lenders.

Improving your credit and raising your improved credit score is a simple. Only seek credit as required and don’t open credit for the sake of having credit. Keep your pre-existing credit and the balances on said credit as low as possible. If you do have a balance on a credit card, make sure to make your payment on time. Improving your credit report is that easy.  You may also be interested in learning about grants in order to pay off debts.

How Does Debt Consolidation Work

If you find that you’re unable to keep ahead of the bills consider consulting a professional they can go over how does debt consolidation work. Credit consolidation  and consumer credit counseling may be the answer to "how do I get rid of debt?" Tips on credit card consolidation:  talk to your personal banker for credit advice; ask if they think you would qualify for a loan to consolidate all your bills.  Typically creditors are more willing to give a consolidation loans as it helps everyone involved.  It works by taking all your credit and paying it off all at once with one loan that you must then repay. This saves a ton on interest and penalties and normally comes in at a much lower interest rate. In short it is one of the best ways to pay off debt.  With the cause of national debt so high, rest assured you’re not alone and there are people to help, like the Members first Credit Union.

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Free Credit Score Reports and How to Get Them:

Since you have access to your free credit report you’ll want to get all three free credit report from Equifax, TransUnion and Experian credit report agency. Despite the fact that you can receive a free credit report annualy it is wise to on top of your credit report and get regular updates. You should get updated copies regularly (that you can correct any errors, in fact, according to a study conducted by the Public Interest Research Coup in early 2001, over 29% of consumer credit reports were reported to have serious errors, those errors were responsible for the denial of credit, insurance, mortgages, etc.)

If you rely solely on a free credit report you risk being out the loop for 12 months, which is more than enough time for some pretty serious problems to occur. The moral of the story is simple, Yes it’s great that you can get a free credit report, but with all the fraud and errors on your credit report that can occur in a period of twelve month… one free credit report a year isn’t going to cut it.  The cost of the report is regulated by the FTC (Federal Trade Commission) to ensure that everyone has the opportunity to review their personal credit report (plus you get a free credit report).

Below is a list of the major sections found in your free credit report:

1- Personal Identification - Includes key identification information, such as your name, address and date of birth.

2- Social Security Number (SSN)

3- Consumer Statement - Allows you, the consumer, to add a brief comment about any information in your report

4- Credit Information - Provides details of your credit accounts and transactions and shows if payments are being made on time.

5- Banking Information - Includes information on your bank account and NSF cheque history.

6- Public Record Information - Contains information about secured loans, bankruptcies and/or judgments.

7- Third-Party Collections - Contains information about any involvement with a collection agency trying to collect on a debt.

8- Inquiries - Includes all organizations or individuals that have requested a copy of your credit report in the past year.

9- Mortgage information and the details about your existing mortgage(s) may appear in your free credit report; however, mortgage information is not used to calculate your credit score and is not reported by all lenders.

Your free credit report may also be viewed by individual business creditors that you have approached, such as: credit card companies, if your renting and renting through an agency the landlord may have access to your report or if you apply for a quick loan. Basically anyone that you apply to for credit (for the most part). A company can not just randomly request your credit report, they first have a permissible reason, as defined by the FCRA, and secondly your permission to pull up and view your report.

If you have every wondered how credit card companies and other creditors get your name and send you offers, it is through Experian credit report agency and the other CRA’s. Though they do not do an actual inquire the just get your name and current address. If you like many others find that a tad annoying you have the right to have your name and address removed from media lists (like telemarketers). 

Opt out by sending a letter to the major credit bureaus or by calling 1-888-5-OPTOUT (1-888-567-8688) toll free (the information is on the back of free credit report). This way your name will be removed from any lists, unfortunately you have to do this every 2 years, why? Ask them!

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Identity Theft and Credit Fraud

Credit fraud is most often a case of identity theft. When someone steals or assumes another person’s identity and impersonates that individual it is identity theft. This is done by gathering some basic personal information (name, current and/or previous address, employer, social insurance number, all in all information that can be found going through your mail). With that information in hand these individuals can get credit card in your name, they can get car loans or lease a vehicle, rent apartments, get a cell phone and involve your name in a number of criminal offences. Take to heart the following suggestions. By following these simple steps you’ll greatly reduce your chances of being the next victim of identity theft:

First make sure you get all 4 credit reports. Identity theft can have a devastating effect on your life and especially your credit score and standing. The average person checks their credit report annually, inside of the recommend monthly checks. For this reason identity theft typically take upwards to 14 months to be discovered. Unfortunately by that time it is often too late and chances are the thief will be nearly impossible to track down, leaving the victim with a huge mess to try and clean up. Despite the fact that in cases of identity theft and credit fraud the lenders absorb the losses, the damage to the victims credit score can take months or years to repair their credit.

Identity theft protection, steps to take:  Side note: You may want to consider enlisting the aid of credit/identity monitoring service. It saves you time and protects you 24/7 against fraudulent activates that could severely damage your credit score.  There have even been cases where people have been suded for debt that wasn’t there doing.

You’ll never have to worry about identity theft again.

Keep Your Credit Score Safe: Eglin Federal and Equifax suggest you keep the following in mind to prevent identity theft:

- Request monthly updates of your credit report (that way you can correct the problem before it goes to far)

- Carry only the identification and credit cards you need when traveling, whether locally or abroad

- Do not carry your cards in your chequebook

- If your chequebook is lost or stolen, call your bank and inform them of the cheque numbers missing

- Sign your credit cards in permanent ink as soon as you receive them

- When making a purchase, keep your cards in view at all times; ensure you take your card back as soon as a transaction swipe has been completed with your card

-Do not sign a blank charge slip

-Always save your receipts, never leave them behind

- Avoid saying your account number aloud so that others can hear

-Only provide your ID and credit card information over the phone to reputable companies when you have initiated the call

-If you receive a call from someone claiming to represent your credit card issuer and the caller asks for your account number, do not provide it - if the caller is employed by the issuer, they will already know your account information

- If your Social Insurance Card is lost or stolen, contact your employer or your local Human Resources Development (HRDC) office immediately

- If your Driver’s License is lost or stolen, contact your local driver and vehicle license issuing office and report it to your local police station

-Check your credit card and bank statements as soon as they arrive to ensure all charges gathered are correct

Keep statements in a safe place as they contain sensitive and personal information

What to do if you suspect or are a victim of Identity Theft:

As previously mentioned, the key to successfully minimizing the effects of credit fraud is to be both aware of what’s going on your credit report and should there be anything suspicious, to report it asap.

Follow the steps listed below:

-Contact the fraud division of the three credit reporting agencies in order to advise them on your current predicament and see what they can do. If they don’t do it atomically, ask them place a Fraud Alter on your account. That way should anyone attempt to apply for any form of credit in your name it will be flagged and the credit lender will have to take extra precautionary steps to verify your identity.

-The numbers for the Credit Bureaus fraud departments are as follows:

-Equifax: 800-525-6285

-Experian: 888-397-3742

-Trans Union: 800-680-7289

-Request they place a "fraud alert" on your file. This alert will warn lenders to be especially careful in authenticating identity of anyone claiming to be you. It will mean that you cannot open instant credit, for example, at a retail store. But that is a minor inconvenience in light of the damage identity theft can do.

-Go into your local police department and File a report with them. Make sure to keep an extra copy for your records, as you will need it when dealing with the credit bureaux’s and your lending institutions.

-Ensure that you get a hold of each and every credit lender that has a fraudulent account under you r name and inform them that identity theft has taken place and provide the necessary documentation to have them suspend and close the account.

-You will want contact 1-877-IDTHEFT, that’s: 1-877-438-4338 (The Identity Theft Toll-Free Hotline). This is the division of the federal government that collects information and can assist you when dealing with identity theft and other forms of credit fraud.

-Make sure you note all the dates, times and representatives names you have spoken to.

If that person or group of individuals  are caught committing credit or identity fraud the sentence and jail time can be harsh with a average punishment of 2-5 years and a maximum of 25 years.  

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Free Credit Consolidation Minimize Unintentional Damage to your Scores

3) Don’t transfer your problems! Obviously this is a hit or miss scenario. If you happen to come across a really good and low interest rate when you’re paying off a high rate or during a free credit consolidation, then it may well be in your best interest to transfer your balance as the money you save could be put to good use by paying off even more of the outstanding balance. Keep in mind the effect it will have, yes a lower rate is better when you’re paying off your debt, but when you take advantage of a balance transfer you may damage your credit scores.

Take a look:

Here is insightful advice from Don Sainechuck at the Coosa Valley Federal Credit Union: By simply opening a credit card or other product account it can lower your overall credit score by 5 points (some times more). This includes a balance transfer to a card with a lower rate and debt consolidation.

We ask Equifax and the Community America Credit union, this is what they said: “because the FICO model is heavily influenced by your "credit utilization ratio," the portion of your available credit limit you’re actually using. The formula likes to see a wide gap between your balances and your limits. Transferring a balance from a high-limit card to a lower-limit card makes it look like you’re closer to maxing out that second card and the scores can react negatively on your report on credit.”

So in short: FICO’s formula would, in general, prefer a balance of a $1,000 dollars on 5 cards over a balance of $5,000 on one card. Make sense??? Not!

To top it off, if you do transfer the balance from card to another, don’t close the other card (it will actually do more damage). By closing the old account it lowers the available amount of credit that FICO uses the personal credit scoring formula.

So to summarise:

1) Try to limit opening new credit accounts.

2) Don’t transfer your balances from card to card.

3) Pay off/down your balance and debt or apply for a free credit consolidation. If you do take advantage of a lower interest card make certain you use the opportunity to reduce the balance, after all, less debt is good for your wallet as well as your credit scores. 

Before making any credit or financial move you should consult with a Veridian personal banker at the Langley Federal Credit Union.  If you would like more infomation see out other posts and Shell Credit

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Credit Scores and Grades

Ultimately your innovis credit report grade has an impact on whether or not you will qualify for credit and the interest rate you’ll receive. According to Members First credit union in Pensacola FL the difference between credit grades, credit score and credit rating is the following: A credit grade is a letter grade given from Prosper Borrowers system obtained your overall credit score based on your credit report. The grade is a letter that is indicative to your score. See the chart below to compare a credit score to grade.

The grading system is used to give lenders a good idea of your standing with out disclosing the exact number. Note that the Prosper system does not include anything below 520. A grade of HR means your credit score is 559 and lower which follows under the high risk category and anything lower than 520 is immediately disqualified and is considered bad credit. Having your credit grade pulled up does not have an impact on your credit score like a full inquiry would, instead it is considered a soft inquiry.

The difference of a Shell Federal Credit Union credit score and rating is really very little. In general they are used interchangeably and at first glance are the same thing. A credit score is typically calculated automatically from information gathered by the credit bureaus. The scoring method is an efficient way of dealing with a large volume for companies dealing with mass consumer credit applications (such as a credit card company) and as such, auto generated scores are used to automate and speed up the application process.

GNO federal credit union credit ratings are calculated manually and are based on your credit report, the lenders policy and analysis of the scenario. The big difference here is that it is done “by hand” and factors such as your relationship with the lender, income etc are able to be inputted in to the calculation. On average a credit rating are more general than there counterparts the credit score. Typically a rating will be in a categories such as A+ to D (not unlike a report card) whereas a score is a number (1 to 1000) that includes an unbiased approach and every bit of information available on you. More greatresources may be founnd with the North Carolina state employees credit unions.

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Credit Lenders

The following is a brief insight into how a potential lender interrupts your credit information via your credit report. Note: when applying for credit it is best to apply with a financial institution that you have a relationship with (checking account etc.)

Debt to income ratio:

One of the major factors in determining your credit worthiness is your debt to income ratio. Your debt to income ratio is a calculation based amount you make per year compared to the amount of debt you have and the minimum payments due each month. If you have debt ratio of 35% or higher, chances are you will not be approved for credit. Even at 20% some creditors may deny your application, others however may approve but charge you a high interest rate. Typically credit card debt is the worst form of debt where as a mortgage or car loan is still considered equity which works in your favour. In order to improve your chances for credit, either lower the amount of debt you have (pay it off, consolidate) or increase the amount of income you generate. As a rule lenders look favourably on a higher income, lower debt ratio and will give you a much better rate.

Available and Open credit:

So you managed to pay off your credit cards, YES! To the average person that would be enough. However so long as you have the ability to use that credit a lender will simply assume the amount that the card is entitled to as debt. It may seem unfair however, lender do this as a precaution. With to much readily available credit at your disposal it would be very easy to land yourself in over your head.

As a side note:

The CRA suggests that you hold on to your oldest credit card or credit product (revolving) as it has the most amount of history (hopefully all good). Don’t worry if you have more than a few credit cards, so long as you are able to pay them off; it actually reflect positively towards a healthy credit score. Do close the accounts and cards that you no longer use, as the more you have "laying around" the more likely you are to become a victim of Identify Theft (Please, don’t just cut up the card! Phone or go in and close the account in person).

The Balance on your Credit Cards:

If you have maxed out your credit cards it tells the lender that you need more money as you can’t afford to bring down the balance of your other credit cards…..not good. It should be standard practice to keep at least 25% of the amount the card is worth available at all times. You may consider getting rid ofdebt by consolidation.

Payment History:

It should go without saying that you must be making your minimum payments on time constantly (it is of course even better if you can pay more than what is due). Anytime you miss or forget about a payment it stains your credit report for at least 12 months for soft inquires and show up front and center in a full credit inquire. If at anytime you account is sent to a collections agency it stays on file for seven years and is a very bad sign to potential lenders.

Inquiries:

As you have read in the previous articles, every time you submit an application for a credit product the creditor will pull up your commerial credit report. This is called a hard inquire as the full report is being accessed by someone other than yourself. When you request you credit report nothing happens other than the fact that you get some peace of mind. Other inquires know as soft inquires may occur when you open a bank account or get a prequalification for a loan (like a mortgage). Anything more than 10 soft inquires or 5 hard in a period of 6 months or less will typically scare most lenders away.

Now that you have a better understanding of how a creditor will look at your credit report you should have an easier time with any future applications.

Buy Now Pay Later with No Credit Check:

Now when it comes down to buy now pay later no credit check, don’t be fooled!  These places may not check your credit rating but they are going to charge you through the roof for it.  Typically you’re looking at anywhere from 29-45% interest or higher.  So basically when looking at catalogs with instant credit anything  or free gift credit card etc, you order you will land up by paying almost three times the amount of the price….ouch.

Private Bad Credit Lenders:

First thing that should come to mind is a mob like loan shark…. in reality this is not often too far off.  Be very careful before ever going to a private bad credit lender, you land up biting off more than you can chew.

Next: NC sate credit Union

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