Options To Avoid In Credit Repair And Buillding

If you are looking for a solution to help repair your credit report then you will find that there are many financial companies more than willing to offer you money. But this will take you further deep into the debt as they require you to put your car or home up against the money they offer. But borrowing money is not the solution to this problem.

Most of the companies are offering a secondary mortgage against your home, and often the interest rates out outrageous. Most of the companies offer secured loans, but few of them offer unsecured loans. This is not an option for repairing your credit.

Another option you want to avoid is taking out a tax refund loan. This solution will get you fast cash, but the fees for this type of loan are often high. Another type of loan you want to avoid is the payday loans. Payday loans are loans against your paycheck. Payday loans require that you write a cheque for the amount of loan to repay as well as the amount that you will pay the lender for borrowing the money.

Pawn Shops are also a bad area to start in building your credit. Most Pawn Shops will take your merchandise, pay you half in some cases of what it is worth, and give you a certain amount of time to purchase your merchandise back before they sell.

Often there are interest rates on the loans provided by the business. It is certainly a way to loose all your belongings and halt you from repairing your credit. We can also take a look at debt consolidation. Although debt consolidation is much better than bankruptcy, it is not a solution for repairing your credit. Unfortunately most of the debt consolidation companies will charge high interest rates, or high monthly fees to use their services. The best solution then is if you have a few extra dollars call your creditors directly and see if you can get them to negotiate a monthly installment that meets your expectations. This will provide you the time you need to find a solution for getting extra cash to pay off your debts. In some instances you can negotiate with your creditors and they may offer a lower amount than you owe so that you can repay the bills.

The downside with getting creditors to accept a payoff for less than you owe, is that you may be paying the IRS more in taxes. If the creditor writes off what you owe, or else settle for a lesser amount than what you owe, it is often reported to the IRS. Of course it seems like a no win situation when it comes to repairing credit, and working to rebuild your credit rating, but in the long run the rewards are sitting waiting for your arrival. Anytime you make efforts to repay back what you owe another individual or company, is rewarding when your self-esteem, self-confidence and other essential human necessities are restored. None of us like to owe money to anyone, but some of us have no choices at times.

Many NGO’s or debt counselors are working towards helping people to clear their debt by giving more feasible and achievable solutions. They help in making you understand your credit report and often help you to decide how much is to be paid and how much each month you can afford to repair your credit and build your credit rating.

Do It Yourself Credit Repair

Most of us believe that by hiring an agency for repairing our bad credit will be faster and easier, but to our surprise it might cost you both more money and longer time. Instead try and fix your own credit by following few simple steps and see the quick results.

Repairing your own credit takes time, and definitely takes patience. You first need to contact the credit reporting agencies in writing requesting your credit report. You are entitled by Federal Law to a free credit report every year. There are three main credit-reporting agencies that you will need to contact. The bureaus information can be located by running a search on the internet for “Credit Reporting Agencies” or looking through you local phone book. Include the following in your written correspondence with the credit agency.

1. Written request for a copy of your credit report (You are entitled to one free credit report a year).
2. Include a copy of your state ID.
3. Send proof of your current address if it is not current on your ID.
4. List your last known addresses for the past 5 years.
5. Include a copy of your social security card.
6. Sign the document

Allow at least 4-6 weeks to receive your credit report(s). If you have already received an annual credit report from an agency and are not entitled to the free yearly report, you may also use any denial letter of credit within 60 days of its receipt. If you receive a letter denying you credit, make a copy and enclose it with your written request for a copy of your credit report.

Once you receive your reports from all of the agencies, review each report for accuracy and differences. Design a spreadsheet or written log to track the differences. Do not hesitate to make use of disputes or accounts that are invalid. If you find anything on your report that is worth disputing, most agencies allow you to file an official dispute via their website.

Your credit reports should include contact and account information for each creditor.

Organize all of your debt and creditors. Most debts older than 7 years old will or may not appear on your report, if this is the case, leave them alone, do not dig around for them.

Most creditors after 7 years of not having any contact with you will write off the debt, some may continue their pursuit to locate you, either way, don’t open the Pandora’s box if the account isn’t listed on your credit report.

Take it upon yourself to contact each creditor to make payment arrangements, most are willing to work with you, some may make your task very difficult. If a creditor is being difficult, feel free to ask for his or her supervisor or speak with someone else. Expect some creditors to be rude and unwilling to work with you, do not feel discouraged, and just ask to speak with someone else. Offer a settlement amount. Write down details of the conversation as well as the person’s contact information every time you speak with a creditor.

It may take up to 6 months to feel like you are making any progress at all on your credit with your payment arrangements but rest assured that your credit will fall into place within a year.

It is very important that while you are paying your creditors, when you mail in your payment, that you pay by check or money order and keep all of your receipts. Always include a SASE (self-addresses stamped envelope) with your payment and request a receipt for the payment from the creditor.

Stay focused on your goal to get out of debt and keep track of all your activity such as payments, contact with the creditors, their names, extension, time and date you spoke with them and list any details of your conversations and arrangements. . You will or may receive several credit offers, throw them away as you do not want to add more to your bad credit.

Importance Of Having A Good Credit Report

Maintaining a good credit rating is important in today’s society. As our society is becoming more business oriented, to achieve your both personal and professional goals and having a clean lifestyle a good credit report plays a very vital role. Since with technology all the things have been interlinked so maintaining a transparent credit report has become very crucial for survival.

Why is it important to have a good credit? Establishing and maintaining good credit is vital if you plan to do any of the following:

1. Apply for employment
2. Rent an apartment
3. Open a bank account
4. Setup an account with public service or the telephone company

It used to be that establishing good credit was important only if you planned to buy a home or car, but not anymore. The simplest task, such as applying for employment could very much mean that you need a good credit.

Having bad credit could impede your ability to survive. This is sad to say, but it is a proven fact that people have been turned down top quality job positions just because of their credit rating despite the fact that that particular job could be exactly what a person needs to fix their credit. That’s a scary catch twenty-two don’t you think?

Ok, I’m caught in that scary catch twenty-two, what should I do?

Start by requesting a copy of your credit report in writing. You are entitled by Federal Law to receive a free annual credit report. There are three major credit-reporting agencies that you need to contact, you can run a search on the internet or find their information in a phone book. If you have already received a credit report for that year, you may also use any letter of credit denial by sending in a copy of that letter within 60 days of its receipt with your written request. Be sure to include a copy of your state issued ID, proof of your address and your last known addresses for the past 5 years. It is very important to include a copy of your social security card.

Unbelievably, your credit report is public information to anybody where you are asking for a line of credit. Any time you apply for employment, an apartment, or attempt to make a big purchase, you are asking for credit and permitting the potential creditor to view your credit report. Although your credit report does not reveal a personality diagnose, it may just as well, considering it is through your credit report how others (potential creditors) will perceive what kind of person you are. Businesses look into your credit report and determine by your ability to pay and follow through on your promises what kind of person you are.

Do you adhere to your promises? Are you stable, do you follow through on payments? You may be a good person, you may even be the most considerate and compassionate person alive; however, if your credit report shows a late payment or no payment on an account at all, your entire being could be perceived as not reliable, unstable and untrustworthy. Prepare yourself to deal with a lot of paper work and phone time once you are ready to repair your credit.

Repairing your credit history may seem like a tough job but it can be as easy as writing a letter or making a phone call. A good credit report will always help you in having a better quality of life. So take some time out and learn about how to improve your credit report today.

How To Repair Credit Score To Over 750

Do It Yourself Credit Repair Tips

Don’t despair if you find yourself with a less than desirable credit score and credit history.  You are human and can make mistakes.  It’s natural.  The key to this is recognize that your spending habits are out of control, your credit has been damaged, and then vow to never get yourself back in the same situation after you have gotten your credit repaired.

First, get your credit report. Get one from all three agencies.  You get one free and then you’ll probably have to pay around $10 a piece for the other two.  It’s important to get reports from all three agencies so that you have a full picture of your credit history.

Some companies only report to one agency.  Some report to all three.  But if you are committed to repairing your credit, you need all three so that you don’t miss anything.

Then go over those credit reports carefully.  See the section above on how to read these credit reports.  Check to see that there are no errors such as a bill you’ve paid but that is still being shown as owed.

People at credit bureaus are human too and make mistakes just like you!  If you don’t call attention to these mistakes, no one else will.  We’ll cover correcting those mistakes a little bit later.

The next part involves pulling out those accounts that are delinquent and making a re-payment plan.  Unless you are declaring bankruptcy, you’ll still need to pay your debts and doing so can go a long way towards improving your credit history.  Creditors will see that you are doing the best you can to get back on your feet and this improves your credibility.

If all the bills are too overwhelming for you to consider paying back at once, just concentrate on one at a time.  Break them into pieces, contact the company and let them know you are trying to come up with a repayment plan and if there’s anything they can do to help you out.

These companies really just want their money in the long run, so they are going to be willing to help you.  Once that company is paid off, move on to the next one until everyone is paid off.

After that happens, it’s not like your credit is immediately pristine.  Late payments and charged-off accounts remain on your report for seven years; bankruptcies for 10.

Most creditors, however, look for a pattern of payment rather than focusing on one-time or rare occurrences.  That’s why consistent on-time bill payments will improve those blemishes.

As soon as you have paid off your creditors, then you can start all over again.  Follow the steps given above in the section about establishing credit.  Nothing can compare to consistent, on-time bill payments and responsible credit practices when it comes to repairing your credit.

Experts say the average time required to rebuild one’s credit to the point at which you can be accepted for a major credit card or small loan is approximately two years.

Here are some other things to consider when trying to repair your credit:

Pay down your credit cards. Paying off your installment loans (mortgage, auto, student, etc.) can help your score, but typically not as dramatically as paying down — or paying off — revolving accounts like credit cards.

The credit-scoring formulas like to see a nice, big gap between the amount of credit you’re using and your available credit limits. Getting your balances below 30% of the credit limit on each card can really help.

While most debt gurus recommend paying off the highest-rate card first, a better strategy here is to pay down the cards that are closest to their limits.

Use your cards lightly. Racking up big balances can hurt your score, regardless of whether you pay your bill in full each month.

What’s typically reported to the credit bureaus, and thus calculated into your score, is the balance reported on your last statement.  That doesn’t mean paying off your balances each month isn’t financially smart — it is — just that the credit score doesn’t care.

You typically can increase your score by limiting your charges to 30% or less of a card’s limit. If you’re having trouble keeping track, consider using a check register to track your spending, logging into your account frequently at the issuer’s Web site, or using personal finance software like Microsoft Money or Quicken, which can download your transactions and balances automatically.

Check your limits. Your score might be artificially depressed if your lender is showing a lower limit than you’ve actually got. Most credit-card issuers will quickly update this information if you ask.

If your issuer makes it a policy not to report consumers’ limits, however — as is the usual case with American Express cards and those issued by Capital One — the bureaus typically use your highest balance as a proxy for your credit limit.

You may see the problem here: If you consistently charge the same amount each month — say $2,000 to $2,500 — it may look to the credit-scoring formula like you’re regularly maxing out that card.

You could go on a wild spending spree to raise the limit, but a more sober solution would simply be to pay your balance down or off before your statement period closes.

Check your last statement to see which day of the month that typically is, then go to the issuer’s Web site about a week in advance of closing and pay off what you owe. It won’t raise your reported limit, but it will widen the gap between that limit and your closing balance, which should boost your score.

Dust off an old card. The older your credit history, the better. But if you stop using your oldest cards, the issuers may stop updating those accounts at the credit bureaus. The accounts will still appear, but they won’t be given as much weight in the credit-scoring formula as your active accounts.  That’s why many financial companies recommend to their clients that they use their oldest cards every few months to charge a small amount, paying it off in full when the statement arrives.
Get some goodwill. If you’ve been a good customer, a lender might agree to simply erase that one late payment from your credit history. You usually have to make the request in writing, and your chances for a “goodwill adjustment” improve the better your record with the company (and the better your credit in general). But it can’t hurt to ask.

A longer-term solution for more-troubled accounts is to ask that they be “re-aged.” If the account is still open, the lender might erase previous delinquencies if you make a series of 12 or so on-time payments.

When trying to improve your credit score or credit history, avoid any of the following:

Asking a creditor to lower your credit limits. This will reduce that all-important gap between your balances and your available credit, which could hurt your score. If a lender asks you to close an account or get a limit lowered as a condition for getting a loan, you might have to do it — but don’t do so without being asked.

Making a late payment. The irony here is that a late or missed payment will hurt a good score more than a bad one, dropping a 700-plus score by 100 points or more. If you’ve already got a string of negative items on your credit report, one more won’t have a big impact, but it’s still something you want to avoid if you’re trying to improve your score.

Consolidating your accounts. Applying for a new account can ding your score. So, too, can transferring balances from a high-limit card to a lower-limit one, or concentrating all or most of your credit-card balances onto a single card. In general, it’s better to have smaller balances on a few cards than a big balance on one.

Applying for new credit if you’ve already got plenty. On the other hand, applying for and getting an installment loan can help your score if you don’t have any installment accounts, or you’re trying to recover from a credit disaster like bankruptcy.

By the way, all these suggestions work best if you have poor or mediocre scores to begin with. Once you’ve hit the 700 mark, any tweaking you do will tend to have less of a positive impact.

And if your scores are in the “excellent” category, 760 or above, you’ll probably be able to eke out only a few extra points despite your best efforts.

There’s really no point, anyway, since you’re already qualified for the best rates and terms. Here’s one area where it’s really OK to rest on your laurels and worry about something else.

If you are in serious, serious credit problems, sometimes the only solution is to file for a bankruptcy.  This is a last-ditch thing, though, and should only be done if you’ve dug yourself in so deep that the odds of getting out of debt are little to none.

Reading The Credit Report – Credit History

The next section is your credit history. Sometimes, the individual accounts are called trade lines.  Each account will include the name of the creditor and the account number, which may be scrambled for security purposes.

You may have more than one account from a creditor. Many creditors have more than one kind of account, or if you move, they transfer your account to a new location and assign a new number. The entry will also include:

• When you opened the account
• The kind of credit (installment, such as a mortgage or car loan, or revolving, such as a department store credit card)
• Whether the account is in your name alone or with another person
• Total amount of the loan, high credit limit or highest balance on the card
• How much you still owe
• Fixed monthly payments or minimum monthly amount
• Status of the account (open, inactive, closed, paid, etc.)
  How well you’ve paid the account

On Experian’s report, your payment history is written in plain English — never pays late, typically pays 30 days late, etc. Other comments might include internal collection and charged off or default.

Charged off means the creditor has given up, thrown in the towel.  Basically, the company has made efforts to collect the debt, realized that it’s not going to be paid, and subsequently wrote it off.

Other reports use payment codes ranging from 1 to 9; an R1 or I1 on a report is an indication of a good payment history on a revolving or installment account.  Often, the code key will be listed on the report so you can better understand what the codes mean, but they may not.

Credit accounts are divided into five categories:  real estate, installment, revolving, collection and other.  Here is a better description of each category:

Real Estate: First and second mortgage loans on your home.

Installment: Accounts comprised of fixed terms with regular payments, such as a car loan.

Revolving: Accounts with opened terms with varying payments, such as a credit card account.

Collection: Accounts seriously past due that have been assigned to an attorney or collection agency.

Other: Accounts where the exact category is unknown. This could include 30-day accounts, such as an American Express card.

Your credit report lists a summary of the details and terms for each account. This summary includes information aboutthe account number, condition, balance, type and pay status for each account. The summary for collection records is slightly different.

The following information is for real estate, installment, revolving and other type records:

Creditor: The official account name.  This name may be different than you expect if your account is managed by a larger financial corporation.

Account Number: This is an identifying number for your account.  Typically, this would be a credit card number for a credit card account or a loan identification number for a mortgage.

A portion of the number is hidden for security reasons.  A partial account number is all that is needed to file a dispute about the record.

Condition: This is the account’s status as open or closed, according to the most recent update from your creditor.

Balance: The amount you presently owe on the account based on the last reported activity.  Very recent activities may not yet have appeared in the bureaus’ computer system so this balance may be a few days out-of-date.

Type: The account’s specific type. Some common types are real estate, automobile, educational and credit card accounts.

Pay Status: The account’s payment status, according to the most recent update from your creditor.

For each account, the report also displays an illustrated payment history over the last 24 months. There will be a key at the top of this section describes each payment history symbol and what it indicates for your account. Green boxes marked “OK” show that your payment was made on time.

Most credit reports also give you more in-depth information about specific accounts.  This is also an important part of the credit report you’ll want to review for accuracy.

The following information may be reported for your account in this section:

Past Due: The amount of payment overdue as of the most recent reported activity. Very recent payments may take a few days to appear on your credit report.

High Balance: The most you have ever owed on this account. In the case of a credit card, this is the highest balance you’ve ever charged. For a mortgage, it is the initial amount of the mortgage.

Terms: This is the number of payments you have scheduled with a creditor. Most commonly this applies to loan accounts. For example, an auto loan may have a repayment plan scheduled over 36 months and a home loan may have a repayment plan scheduled over 360 months.

Limits: For a credit card or other revolving account, this is the maximum amount you are approved to borrow.

Payment: This is the minimum amount you are required to pay each month toward the account.

Opened: The date the account was opened.

Reported: The last date when any activity for this account was shown. Activities include payments, credit card billings and changes in your terms. Very recent activity may not yet show on your account, since it takes time for it to appear in the credit reporting agency’s system.

Responsibility: This indicates your responsibility for the account. For example individual, joint or co-signer.

Late Payments: A summary of your 30, 60 and 90 day late payments over the past 7 years. Please note that the figures in the seven year history include any late payments shown in the two-year history.

Remarks: Notes about the status or condition of your account.

Collection accounts are accounts that are seriously past due and have been transferred to an attorney, collection agency or creditor’s internal collection agency. As your debt is transferred between different agencies, you may see several records on your report for the same debt.

Only one record should be marked as open at a time. All the collection records and the original debt record will expire from your credit report at the same time.

Collection records use a unique summary format on your credit report:

Creditor Name: The official name of the company that is currently attempting to collect the debt.

Account Number: An identifying number for your account with the collection agency. This is not the same as the account number on your original debt.

Original Creditor: The name of the original creditor where you accumulated your debt. This could be an account that is listed on your credit report (such as a credit card) or an account that is not listed on your report (such as a library, video rental or cell phone company). If this creditor was a medical office, the name may be masked for your privacy.

Responsibility: This indicates your responsibility for the account. For example individual, joint or co-signer.

Condition: The current status of your collection record. For example open, closed or paid.

Original Balance: The amount of debt owed on the original account before it was transferred.

Date Opened: The date the account was transferred to the collection agency.

Date Reported: The date of the collection agency’s last update to this account record.

Remarks: Notes about the account as reported to each credit reporting agency. For example, this section may note that the collector has been unable to locate you or that you have not yet paid the debt.

Credit Repair Attorneys

Let the Experts Fix your Credit

When dealing with credit repair, professional legal advice is priceless since matters like this have legal repercussions. It is a good thing that there are many credit repair attorneys that provide such services.

Credit repair attorneys are experts in sorting out the mess, such as delinquent loan payments, in people’s credit report to make them credit-worthy. The first thing that most of these lawyers check is of course the credit report, the document which creditors look at to assess a borrower’s financial standing.

Experts advise people to always update their credit reports as these may contain inaccurate or erroneous information that may result in disapproval of a loan, payment of higher interest rates on credit or loan, denial of insurance coverage among other inconvenient situations. Thus, credit repair attorneys ask clients to secure their credit report from credit bureaus, which provide it free of charge. The lawyer can help people dispute any inaccurate or erroneous items or entries in the credit report.

Hiring a lawyer to repair one’s credit would make the process more convenient and hassle-free. Legal experts that they are, credit repair attorneys they can have negative or disputed items removed from a credit report. There are online directories where you can search for credit repair attorneys or bankruptcy lawyers in various states. The services of legal experts are more in demand now because there are more and more people that suffer from poor credit history. These lawyers also advise people about their rights under the Fair Credit Reporting Act (FCRA) and the Consumer Credit File Rights Under State and Federal Law.

Credit Repair Fraud

Beware of Credit Fraudsters

Credit repair fraud has become prevalent, not all companies advertising or offering credit repair services can be trusted. There are illegitimate companies that are out to defraud people needing help in straightening out their credit history.

There are tell-tales signs that can warn people against companies who may commit credit repair fraud. These fraudsters usually ask for money or payment even before they perform any job. They may also attempt customers to resort to illegal means in repairing credit report including but not limited to creating a new credit identity.

Beware of those who do not even have an office where you can call or go to for inquiries or follow-up, even those which offer online credit repair have an office or can specify an address or telephone numbers for customers to contact for further inquiries or updates.

There are other new scams that are being invented by credit repair companies to entice people to hire their services. People who have been victimized by such illegitimate companies can seek the help of government agencies that monitor credit repair companies in various states. Appropriate punishments and penalties may be slapped against erring firms or individuals because it is a crime to defraud people and there are laws in place to protect consumers.

There is no shortcut to credit repair and people should avoid those who promise to repair your credit history in no time or instantly unless they want to be involved in credit repair fraud. It is best to research the reputation and track record of the credit repair service provider, whether it is an individual or a company.

Credit Repair Loan

Borrowing Even With Bad Credit

Debts such as credit card purchases, personal loans, home mortgages, or auto loans due to unavoidable reasons turn sour or bad. When this happens, there is no need to despair and panic. There are ways to credit repair loans with the help of professionals or by doing it your self.

It all starts with disciplined spending and borrowing habits. Debts or loans are a serious responsibility, thus the debtor or borrower should be responsible. With effective credit repair, loans and debts can be restructured and payments for them rescheduled.

For instance, piled up credit card debts can still be settled by talking to the credit card issuer or the bank and negotiate for a more flexible payment arrangement with more affordable interest rates. Most of them would likely acquiesce in order to recover an otherwise irrecoverable credit card balance.

Likewise, a low credit score does not mean that you cannot qualify for mortgage loans for your dream house. There are so-called bad credit home mortgage loans, which are extended to people with poor credit history. This type of loan however has high interest rates and more rigid payment terms.

People with bad credit can still avail of auto loans, which however come with high interest rates and with large down payments as requirement of at least half of the price of the car. The payment terms are also shortened to not more than five years only, compared with regular payment terms of up to seven years to people with good credit standing.

How To Dispute Credit Report

When mistakes happens…

As we’ve said before, your credit report is very important to you as well as your credit score. People are human and the information contained in your credit report is entered in by human hands. Sometimes those hands make mistakes.

Maybe you paid off a past due bill and it’s still showing on your credit report as delinquent. There are all sorts of things that can be reflected incorrectly on your credit report, so it’s important that you take steps to make corrections as soon as you can.

Here are what you can do:

The first thing you need to do is check over your report and dispute any old negative reports you can find. Say that fight with your phone company over an unfair bill a few years ago resulted in a collections account. You can continue protesting that the charge was unjust, or you can try disputing the account with the credit bureaus as “not mine.”

The older and smaller a collection account, the more likely the collection agency won’t bother to verify it when the credit bureau investigates your dispute. Some consumers also have had luck disputing old items with a lender that has merged with another company, which can leave lender records a real mess.

If there are significant errors on your credit report, you need to be sure and get them removed right away. However, there are also some mistakes that you can ignore and it won’t impact you negatively.

Your credit score is calculated based on the information in your credit report, so certain errors there can really cost you. But not everything that’s reported in your file matters to your score.

What you should correct:

• Late payments, charge-offs, collections or other negative items that aren’t yours.
• Credit limits reported as lower than they actually are.
• Accounts listed as “settled,” “paid derogatory,” “paid charge-off” or anything other than “current” or “paid as agreed” if you paid on time and in full.
• Accounts that are still listed as unpaid that was included in a bankruptcy.
• Negative items older than seven years (10 in the case of bankruptcy) that should have automatically fallen off your report.

You actually have to be a bit careful with this last one, because sometimes scores actually go down when bad items fall off your report. It’s a quirk in the FICO credit-scoring software, and the potential effect of eliminating old negative items is difficult to predict in advance.

What you don’t have to bother:

• Various misspellings of your name.
• Outdated or incorrect address information.
• An old employer listed as current.
• Most inquiries.

If the misspelled name or incorrect address is because of identity theft or because your file has been mixed with someone else’s, that should be obvious when you look at your accounts. You’ll see delinquencies or accounts that aren’t yours and should report that immediately.

However, if it’s just a goof by the credit bureau or one of the companies reporting to it, it’s usually not much to sweat about.

Two more items you don’t need to correct:

• Accounts you closed listed as being open.
• Accounts you closed that don’t say “closed by consumer.”

Closing accounts can’t help your score, and may hurt it. If your goal is boosting your score, leave these alone. Once an account has been closed, though, it doesn’t matter to the scoring formulas that did it — you or the lender. If you messed up the account, it will be obvious from the late payments and other derogatory information included in the file.

What Should You Do If There Are Errors:

So say you’ve found some significant errors on your credit report and you need to correct them. There are certain steps you need to take in order to make sure that the error is corrected and ultimately removed from your report.

1.   Make a copy of your credit report and circle every item you believe is incorrect.

2.   Write a letter to the reporting agency (the address will be printed on the report). Explain each dispute and request an investigation to resolve the issues. If you have supporting paperwork, send it along, coding pages to match dispute paragraphs. Do not send your originals.

3.   Send all materials by certified mail, return receipt requested, so that you can prove the packet was received.

4.   Send a similar letter of dispute to the creditor whose reporting statements you disagree with. Refer to a billing statement to find the correct address for disputes, because it’s usually different from the payment address.

If your dispute involves personal information, such as your current address, enclose a copy of your driver’s license or a utility bill in your name to verify your residence.

What happen then?

The reporting agency will initiate an investigation, contacting your creditors to verify the accuracy of the information. If the creditor cannot verify that the entry is correct, it must be removed. When the investigation is complete, the agency must send you a free copy of your report if changes were made.

If the investigation uncovers an error, you have the right to ask that a corrected version of your credit report be sent to everyone who received the report during the past six months.

It’s a good idea to contact your creditor first, then allow a bit of lead time before you submit the dispute to the reporting agency. By the time the dispute is verified, the creditor will hopefully have corrected the error.

You can also make changes online directly with the credit reporting agency. When you are on their website, they will usually have links that allow you to click a button to dispute incorrect information.

You can initiate an investigation from many online credit reports by following the links provided and checking the disputed items as directed. There sometimes isn’t a place for remarks–you’ll simply check a multiple-choice reason for each dispute.

If the credit reporting agency says the original information is accurate, it must provide you with a written notice that includes the name, address, and phone number of the person who made the report. If you still disagree, initiate a second investigation.

Unfortunately, in the real world the reporting agencies often try to sidestep that requirement, giving you standard, computer-generated information rather than the facts you need to find the person or department who made the negative report. Keep plugging away until you have the answer you’re looking for.

If your attempts to correct an entry are unsuccessful, you can ask the reporting agency to insert a 100-character explanation next to it that explains your side of the story.

Under the Fair Credit Reporting Act, the credit bureau is required to solve the problem in a reasonable amount of time, generally 30 days. If you feel that a credit bureau has not responded promptly and fairly to your situation, contact the attorney general of your state or the Federal Trade Commission in Washington at 202-FTC-HELP.

Click Here for a Sample Credit Report Dispute Letter

How To Establish Good Credit

Ways to raise your credit score fast

When you’re starting fresh with no credit history at all, here are a few ways to get a good start on establishing good credit:

1.  Pay your bills on time, especially mortgage or rent payments. Apart from extreme circumstances like bankruptcy or tax liens, nothing has as big of an impact on your credit history as late payments.

2.  Establish credit early. Having clean, active charge accounts established many years ago will boost your score. If you are averse to credit, on principle, consider setting up automatic monthly payments for, say, utilities and phone on a credit card account and locking the card away where it’s not a temptation.

3.  Don’t max out available credit on credit card accounts. Lenders won’t be impressed. Instead, they are much more likely to assume that you have trouble managing your finances. Beyond one or two credit cards, it starts to get complicated.

4.  Don’t apply for too much credit in a short amount of time. Multiple requests for your credit history (not including requests by you to check your file) will reduce your score. If you are hunting around for good loan rates, assume that every time you give your Social Security number to a lender or credit card company, they will order a credit history.

5.  Be neat and consistent when filling out credit applications. This will insure that all your good deeds get recorded in a single file, as opposed to multiple files or, worse, someone else’s file. Watch out for inconsistencies in use of “Jr.” and “Sr.”

6.  Check your credit history for errors, especially if you will soon be requesting a time-dependent loan, like a mortgage.

One great way to start establishing credit is to apply for a store credit card (Sears, JC Penney, etc.).  Once you get the card, make a few small purchases and pay them off completely.  Do this a few times over the course of a year and you’ll find yourself with some established credit with an excellent payment history.  DO NOT go overboard and buy more than what you can pay for, though.

Secured Credit Cards

You can also apply for a secured credit card.  These cards ask that you place a certain amount of money in your account for which you will receive a charge card.  Then you can make purchases up to the amount of money that is in your account.  Credit reporting agencies treat these cards just like regular credit cards and look to them as a responsible way for you to establish a good credit history.

You will have to have a checking account to establish credit.  This lends to your credibility with lenders and shows that you are able to manage your money effectively.

When applying for a credit card of any type, be sure to ask if they report to any of the credit reporting agencies.  As we’ve said before, they are not required to do so, and if they don’t, having one of these cards or loans won’t do you a lick of good even if you do make your payments on time.

You can also establish credit by making a purchase or applying for a loan with a co-signer.  A co-signer is a person with good credit history who is basically telling the lending company that they will be responsible for making sure you make your payments on time.  Often a co-signer is a relative such as a parent.  This can be a risky proposition for them, so know that they are putting their own credit history on the line just to help you out, so don’t let them down.

When applying for a loan, such as a car loan, it can also be helpful if you have a large down payment to make thus lessening the amount of money you have to borrow.  This shows the lending company that you have the ability to save and they are more likely to take a chance on you based on this factor alone.

So let’s do a quick review on how to establish a good credit history:

• Apply for a store or gas credit card and make a few charges
• Ask a loved one to co-sign on a loan
• Find a respected secured credit card company
• Open a checking account
• Don’t apply for too many credit cards in too short of a time
• Check your credit report for any errors
• Go slowly
• Don’t overspend
• Make sure your lender reports to at least one of the credit reporting agencies
• MAKE YOUR PAYMENTS ON TIME!!!!!!!

Of course, the last one is the most important in establishing credit.  If you don’t make your payments on time, it won’t make a hill of beans worth of difference what you are trying to do.  This is what makes your credit history worthwhile – making on time payments and showing you are responsible with your credit and your creditors.