6/17/2011 2:52 PM ET|
7 steps to clean up your credit report
If you don't remember the last time you took a look at your credit report, you're overdue. Errors are common: Here's how to find and fix them.
When you set about tidying and reorganizing your linen closet or garage, don't forget about your credit report. Your credit history is the foundation of your financial stability. The information in your credit report is what scoring companies such as FICO use to generate your credit scores, which govern everything from how much you pay for a loan -- or if you can get one -- to your insurance rates.
Paying attention to your credit report only when you're about to make a big purchase, such as a house or car, can backfire. According to a 2004 U.S. Public Interest Research Group study, nearly 80% of surveyed reports had inaccuracies. (And 25% had "serious errors.") If any inaccuracy takes some time to sort out, that can be a problem if you're racing the clock to secure a loan. Get a head start by going over your credit report now, and check up on it periodically so you can catch and fix any problems right away. (Do you know your credit scores? Take this MSN Money quiz to get an estimate.)
1. Order a copy of your credit report
If it's been years since you've given your credit report a good once-over, or if you never have, just figuring out where to start can be daunting. Luckily, federal law entitles you to a free copy of your credit report once every 12 months from each of the three major credit-reporting agencies: Equifax, Experian and TransUnion. You can get a free copy of all three bureaus' versions of your credit report at AnnualCreditReport.com.
To check your credit report every few months, order one at a time and space them out over the year. Or, if you're getting acquainted with your credit history for the first time, order all three at once. If you live in Colorado, Maine, Maryland, Massachusetts, New Jersey or Vermont, you're entitled to a second copy of each report annually, says Steve Bucci, Bankrate's debt adviser and the author of "Credit Repair Kit for Dummies." Georgia residents can get three a year from each bureau.
If you're turned down for a job or credit, or if you don't get the best interest rate available, you also have a legal right to see your credit reports at no charge. The paperwork you get notifying you of the decision will include a number for you to call.
2. Start with your identification basics
It's easy for people to forget the most important part of their credit report: checking their identifying information, including name, address and Social Security number, says Natalie Lohrenz, the director of counseling at the Consumer Credit Counseling Service of Orange County, in California.
"People obsess over tiny fluctuations in their credit score, but what they should focus on is the question, 'Is it accurate?'" she says.
Small discrepancies, such as an account that lists you by your nickname instead of your given name, don't affect your score, but if there's a more serious discrepancy such as an incorrect Social Security number, you'll want to straighten it out, says Maxine Sweet, vice president of public education at Experian.
After checking all of the identifying information, look at the accounts and make sure they're all yours. Keep in mind that some lenders, such as the financing companies that issue store-brand credit cards and companies that handle medical billing, might have different names from those on storefronts or hospitals.
3. Scan your report for discrepancies
"If you see an account you don't recognize, you definitely want to call that to a credit bureau's attention," says Craig Watts, the public affairs manager for FICO. "Definitely find out what's going on. If you see any negative information like a collection account that you don't think belongs there, it could be somebody else's account that got into your report by mistake, or something you forgot about," he says.
Watts says another red flag can be an account with a much higher balance than you carry. Because any of these items could indicate a case of mistaken identity or identity theft, these are problems to address right away.
Jessica Cecere, a regional president at credit counseling organization CredAbility, says one common error she encounters is the inclusion of old negative information that should have come off the person's record. Most negative information stays on for seven years, and Chapter 7 bankruptcies remain for 10. "A lot of times the information on your report doesn't automatically fall off at that seven-year mark," she says.
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I agree that the credit reporting industry and the banks are in cahoots. And the government does not do anything about it. Because negative "reports" allows the credit industry to force you to order their reports with the SCORE ($15 a pop). And, of course, banks (and other financial institutions) can charge higher interest for your loans, credit card, et al.
Take my experience. Bank of America, who issued me my MasterCard, "upgraded" my card. Of course, they cancelled my old card and issued me a new M/C. Good thing I routinely check my credit reports. The card, which was cancelled by the Bank of America -- to give me an upgraded, enhanced benefit card -- was reported as "lost or stolen." That description negatively impacts my credit rating. I contacted the Bank and they refused to change the
description -- they could have simply reported it as "cancelled by the issuer." Worse, when I contacted the FTC, they agreed with the bank that "lost or stolen" description for cancelling a card is a common industry practice and the government refused to do anything about it.
The person who wrote this artcle if very much misinformed. What the article is not saying, is when a person tries to use the "free" credit report that a mark goes aganist them and their score. It is much better to write the Credit Reporting Agencies or call them to get your credit report. Every few months the "Credit Reporting Agencies" actually tell you how to fix your credit the right way. Banks do the same thing. Banks give you what they are looking for when a person gets a negative score and why they got a negative score.
This is the best way to make sure that you are not getting a low score on your credit report.
One: Make sure that you pay your bills on time no matter if the bill is from a major credit card company or a small store that gives out credit cards. It's the small stores that will hurt the most. Make sure that you pay all your utility bills on time this is what the "Credit Card Companies look for.
Two: If you do not pay your doctor bills on time or the doctor bill goes into collections and the bill is paid off it stays on your credit report for the next 7 years. The only way the late doctor bill can be removed is that you have to call the doctor's biling office, have them write a letter to the collections agency make sure that you get a copy of the letter so it can be used to send to the "Credit Reporting Agencies" this is the ony way it can come off before 7 year limit expires.
Three: If you do run into problems paying your credit card bills this is what you should do.
The "Credit Card Companies" actually said this, if you call them and make arrangements with and explain you situation to them they will work with you they don't want to lose you as a customer. But make sure you hold true to your word and do what is necessary to pay the "Credit Card Company" back.
This is a lot of hard work it will pay off in the long run, and it you stay true to your deal with the "Credit Card Company" and pay them back you'll be suprised on the good score they will give you.
So in the end find out what the "Banks, Car Loan, Credit Card Companies, want and work with them you'll be suprised that their not out to hurt you. The only one who gets hurt is you.
In the process of reviewing and cleaning up my credit record I found that there is more than one scale being used. The three credit bureaus have my score at 900+ then I receive another score and it was 780+. When I questioned the difference I was told I assume as an example, TransUnion has two scores, A TransRisk Score with a range up to 850 And a VantageScore with a range up to 990. I know in reviewing my credit score I have yet to run across The TransRisk Score.
So I guess like a lot of folks are saying your credit score can be manipulated depending on the circumstances.
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