What You Don’t Know about Credit Repair Can Cause Trouble

by admin

If credit repair is so easy, why doesn’t everyone have great credit scores? The answer is that many credit repair organizations use shady methods. Several of them operate under the radar, and in fact consumers get duped every day by firms claiming they can “completely erase all negative credit problems.” Either the firm takes the money and never performs, or it uses fraudulent techniques, or sells services that consumers can access themselves for free.

Let’s take a look at the problem areas of credit repair and then at what to look for in companies that are legitimate.

Two (usually fraudulent) tricks of the trade

Front Image of the book

Image via Wikipedia

There are two main ways that credit repair companies claim to clean up your credit. First, they dispute negative items on your credit report with the national credit bureaus. By law, the credit bureaus must do an investigation on the disputed items within 30 days. If there isn’t enough evidence to substantiate the negative item from the creditor, the item must be removed.

However, you can dispute and have any credit report inaccuracies corrected yourself for free, directly with the credit bureaus. Beware of disputing all negative items on a report hoping the bureau won’t get to it investigating them all. If it’s discovered that you are committing fraud through this means, your name could land in a fraud database, making it even more difficult to get clean credit.

Second, a credit repair firm may advise you to apply for an Employer Identification Number (EIN), establishing a “new” credit report & using this number on applications instead of your Social Security number.

Watch out! Following this advice can make you a perpetrator of fraud. According to the FTC, you could be charged and prosecuted for mail or wire fraud if you use the mail or telephone to apply for credit and provide false information. It’s a federal crime to make false statements on a loan or credit application, to misrepresent your Social Security number, and to obtain an Employer Identification Number from the Internal Revenue Service under false pretenses.

Companies perpetrating credit repair fraud often get away with their scams because scared consumers think they’ll be prosecuted if they report the credit repair organization. It’s not true; states have laws designed to protect consumers and prosecute the perpetrators.

Protect yourself contractually

If you consider hiring a credit repair company to dispute legitimate, inaccurate items in your credit report, take measures to protect yourself. The Credit Repair Organization’s Act specifies the following by law:

  • The credit repair organization must give you a copy of the “Consumer Credit File Rights Under State & Federal Law” BEFORE you sign a contract.
  • The credit repair organization must give you a written contract that spells out your rights & obligations, the payment terms for services and the total cost.
  • The credit repair organization cannot make false claims about their services, or charge you until they have completed the promised services.
  • The credit repair organization can’t perform any services for you until they have your signature on a written contract and have completed a three-day waiting period. During this time, you can cancel the contract without paying any fees.

Your contract must also describe in detail the services to be performed, how long it will take to achieve the results, any guarantees they offer, and the company’s name and business address. DO NOT use any credit repair company that does not follow the above legal requirements to the letter. Note that In the case of identity theft, a legitimate, experienced company can process the reams of credit repair paperwork and make recovery much easier-as long as you’re willing to pay.

Safe, sure credit repair

Perhaps you think going through bankruptcy, having delinquent credit accounts, foreclosures and/or repossessions means you’ll be ineligible for credit for years. What you should know is that the Fico score models take every month of on-time payment into account. Scores rebuild naturally after 12, 24 & 36 months following the most severe credit problems. Slow down, keep the faith and get yourself a “bad credit credit card” immediately after a severe credit problem-a low-limit card secured with a savings account of cash held as collateral. Use it sparingly, keep it paid current at under 50% of its limit and you will see results.

{ 0 comments }

Choosing a Credit Report Agency for Your Credit Report Score

by admin

Once you have decided to access your free credit report without a credit card and have received your credit score, your next challenge is to choose from among the three credit report bureaus (also called “agencies”): Equifax Credit Report Agency, Experian Credit Report Agency, and Trans Union Credit Report Agency.

Credit Account Summary

Image by Casey Serin via Flickr

Which one should you choose? Essentially, they all provide the same important service: providing you with your free credit report, and helping you identify areas where you need to improve, repair, or fix your credit score. The three credit reporting bureaus operate similarly, and major creditors and lenders report information to all three. Basically, due to errors and to differences in creditors’ reporting policies, each agency may have different information about you, which is why most prospective creditors/lenders view all three bureaus as being equally important sources of information, and as such access what is called a “3 in 1 credit report”. This 3 in 1 credit report comprises information from all three credit bureaus, thus giving the creditor/lender the most complete picture available of your credit situation. While the style, format and coding may be different between the three credit bureaus, a typical report will include four of the following types of information:

Personal Information
Public Record Information
Credit History
Inquiries

With respect to the fact that no single credit bureau is viewed in this article as better or more complete than any other, a brief summary of each major credit bureau (discussed in alphabetical order) is provided below.

You can access all 3 free credit reports from the government at annualcreditreport.com

Equifax: The Equifax credit bureau is a global leader in commerce and information services. They work in a number of sectors and industries, including: financial, retail, telecommunications/utilities, information technology, brokerage, insurance and business lending industries, and government. Equifax is focused on providing ‘Personal Solutions’ for individual clients, and has a solid reputation in the credit bureau field for providing relevant, accurate, and updated credit report information. They also place a priority on protecting the privacy and confidentiality of sensitive information.

Trans Union: Trans Union serves both individuals and businesses in providing credit reports, and serving as a clearinghouse for credit history information. Creditors and lenders worldwide provide Trans Union with factual, certified information on their customer’s credit status.

Experian: Experian enables organizations and individuals to access credit information via sophisticated computer systems, software, and databases. Many of Experian’s Credit Services’ products and solutions are regulated by the Fair Credit Reporting Act, which protects consumers’ rights by limiting access to their credit reports.

Regardless of which credit bureau you choose, an important number that the prospective creditor/lender will focus upon is your Fico score. Fico scores are viewed as predictive of your ability and willingness to repay a loan. Lower Fico credit scores usually trigger an underwriter to review your loan application and credit report before a final decision is made.

Prospective creditors/lenders will also look at your Beacon score, which is also a determinant of credit worthiness. Your Beacon score falls as a result of negative entries in your personal credit report, such as late payment, and rises as a result of positive entries, such as timely payments.

Obtaining your credit report from either of the three credit bureaus: Equifax, Experian and Trans Union, is a fairly simple decision, because as noted above, each one provides a similar kind of information. However, some bureaus do not capture all of your credit information, due to the relationships that they have with various creditors/lenders. As such, your best bet might be accessing all three, or performing a 3-in-1 credit report, and identifying your free fico score. Ultimately, whichever route you choose, accessing your credit report is an excellent and effective way for you to take control over your credit status, and if necessary, take steps to repair a poor credit score, or maintain a good score.

Related articles

{ 0 comments }

What are Credit Bureaus and What do They Do?

by admin

Have you ever applied for a credit card, charge account, a personal loan, insurance, or a job? Many times when you apply for loans or a job, the lenders or employers look up a file about you. What’s this file? It’s called a credit report, and it has information about where you work and live, how you pay your bills, and whether you’ve been sued, arrested, or filed for bankruptcy. Who has this report? These reports are collected by companies called credit bureaus.

Image representing Equifax as depicted in Crun...

Image via CrunchBase

Credit Bureaus compile your information and sell it. They do this so that companies can gauge your creditworthiness. They give this information about you to creditors, employers, insurers, and other businesses. Below are some common question and answers about the 3 credit bureaus.

Q: Who are the credit bureaus?

A: There are 3 credit bureaus: Equifax, Experian, and TransUnion.

Q: What do the credit bureaus do?

A: Credit bureaus collect information about you and sell it to companies who want to see if you are going to pay your bills on time.

Q: What kind of information do credit bureaus collect?

A: Credit bureaus collect the following information:

  • Job history (for employers mainly)
  • Current and previous addresses (landlords look at this when deciding whether to rent to you)
  • Outstanding loans
  • Amount owed on each loan
  • Credit card information
  • Amount of times you have applied for credit
  • Credit available
  • Mortgage information

Q: Can I find out that information the credit bureaus have on me?

A: Yes, you can. Under the Fair Credit Reporting Act , you are entitled to a free credit report if you ever denied for credit. Furthermore, recent changes in the law allow you to get a free credit report once a year. Go to annualcreditreport.com for more details (this is available in all states).

Q: I was told my credit is low, is this the credit bureaus fault?

A: The 3 credit bureaus don’t make up information on your credit report. They only compile information that was given to them. That said, the information they received might be incorrect. So, if you’ve had to take out a bad credit personal loan or a bad credit auto loan, you will want to contact the credit bureau that the lender got the information from. They will give you a free credit report. Then you can check the accuracy of the report.

Q: How can I contact the 3 credit bureaus?

A: Look in the yellow pages under “credit” or “credit rating and reporting.” The three major national credit bureaus are:

Experian (formerly TRW)
National Consumer Assistance Center
PO Box 2002
Allen, TX 75013
To order report: 1-888-397-3742
To report fraud: 1-888-397-3742
Web site: www.experian.com

 

Equifax
Equifax Credit Information Services, Inc
P.O. Box 740241
Atlanta, GA 30374
To order report: 1-800-685-1111
To report fraud: 1-800-525-6285
Web site: www.equifax.com

 

TransUnion LLC
Consumer Disclosure Center
P.O. Box 1000
Chester, PA 19022
To order report: 1-800-888-4213
To report fraud: 1-800-916-8800
Web site: www.transunion.com

Related articles

{ 0 comments }

Is There a Free Lunch – or a Free Fico Score Online?

by admin

Free credit reports abound online. But getting a free fico score? Not so easy.

While some online vendors offer a free fico score with a free credit report, most don’t. You get a credit report from one bureau as an incentive to try a subscription credit monitoring service. These services cost $75 or more per year. If you decide to keep the service going after the free trial period of 30 days, you’ll have access to your score, but usually from one bureau only.

A free fico score from one bureau is a good indicator of your overall credit health, but you can’t be sure unless you see scores from all three bureaus. Even when you pay for a 3 in 1 merged credit report from a vendor, which has data from all three bureaus shown, you are usually given a credit score from just one bureau. Depending on the type of lender, any of the three Fico scores-or all three-may be used.

Myfico.com, a website from credit score developers Fair, Isaac & Co., claims to be the only provider of all three credit scores for consumers. You can also buy credit reports from all three bureaus at this site. Though the credit scores are not free, there is a free score estimator utility on this website. You answer a series of questions and the final result shows you a rough estimate of your credit score.

The estimate is probably only useful at a very birds-eye level. Even between bureaus, scores can vary by 50 or more points, and 3-5 points can kick you up or down the interest rate scale. A rough estimate won’t serve a specific need. However, if you fall below the 600-point level on this psuedo free fico score (FAKO credit score), it probably would indicate that you should check further. Even with this rough estimate, you’ll know if you’re starting to hit the score level for bad credit loans.

Credit card offers reflect scores

Another way to keep loose tabs on your score for free is to check the interest rates listed in your credit card offers. Most consumers get several of these offers each week. Credit card companies buy mailing lists from the credit bureaus that meet certain score ranges. They segment their offers depending on scores; that’s how you get one offer and the house next door gets another from the same company. If you start with offers of 15% interest rates or above, you know your score is low compared to the average. Over months’ time, you can actually determine that your scores are rising when you see the interest rate offers falling.

All in all, there’s no substitute for getting copies of all three bureaus’ credit reports and all three scores once per year. With the new FACT legislation, you can get a free credit report without a credit card at each bureau once per year, then buy scores separately. If you buy the whole package, it will cost about $40. Either way, free or paid, it’s the best method for optimizing scores, preventing fraud and keeping your credit report error-free.

Is there a truly free fico credit score? Maybe not, but think of it like dental work-it’s cheaper to maintain your credit health than to repair it.

{ 0 comments }

Rapid Correction Services For Fico Scores

by admin

Do-it-yourself error correction for your credit report takes from 30 to 60 days. You have to gather documentation, contact the bureaus reporting the errors and wait for the bureaus to process and approve the corrections.

But what if you’ve found your dream home and need errors and fico scores updated fast? Sellers don’t like to wait and markets are competitive with other buyers ready to pounce. Fortunately, there’s a faster way to get your credit report errors corrected.

Rapid FICO credit score correction: especially for mortgage borrowers

Rapid correction (aka rapid rescoring) is a specialty service offered by many mortgage brokers and some lenders. Here’s how it works: You bring approved documentation for errors to your broker or lender, who sends it to the mortgage credit reporting company. That company works directly with each of the three national credit bureaus (Equifax, Experian & TransUnion) to have the errors corrected in the credit file. The process takes just 3-10 days on average.

Once corrected, an updated credit report is generated with fico scores that reflect the new data. Depending on the type of correction, a major boost in points can follow. One caveat is that fico scores are still a proprietary calculation, and no one can guarantee that any correction will raise your score. In a small number of cases, corrections can lead to a drop in the score.

Your best bet is to consult with a knowledgeable mortgage broker about the types of errors you see on your report. Some errors are more likely to improve your fico scores than others and almost never have a negative effect, like paying down your account balances to below 50%. You can even use this service to have payments you’ve recently made reflected on your report ahead of the normal cycle, if it will lead to higher scores and better rates.

How much does rapid correction (rapid rescoring) cost?

Rapid correction services are not free. Most mortgage credit reporting companies charge by the correction and by the bureau, as that’s how they are charged. That is, if one correction shows up from all three bureaus, you’ll pay the fee three times. Fees run $25-$50 and up for each account that needs rapid rescoring. It can get pricey if you make a lot of corrections. But the cost of a low fico credit score is much more. Even 1/4 of a percentage point higher rate on your loan adds up to thousands of dollars over the life of the loan.

You can be selective about the errors for which you use the service, using rapid correction on only those most likely to increase your fico scores. Note that in a home loan decision, the middle score of those supplied by the three bureaus is the one that’s used for underwriting purposes. Depending on your situation, a rapid correction service may be a better option than so-called credit repair, where you give a (hopefully) legitimate firm your money to make corrections.

Not many consumers know about rapid correction services. If your broker doesn’t use a credit reporting company offering these services, ask him/her to use one, or find one yourself online and request a direct referral to one of their brokers in your area.

{ 0 comments }

Financial Impact of Your Fico Credit Score

by admin

It’s amazing how much a number can impact your finances. In the case of your fico credit score, you’re looking at a number that can literally save or cost you tens of thousands of dollars over your lifetime.

That’s because this country’s financial community uses the fico credit score (“fico” being shorthand for Fair, Isaac & Co.,) to decide whether you are creditworthy. The fico credit score models predict the rate of default for each score range. For example, at scores below 499, as many as 87% are likely to default; above 700, only 5% or fewer will default. You can bet that as your score drops below 600, you’ll likely be in the category of bad credit loans (see bad credit personal loans, bad credit auto loans, or bad credit credit cards for more information).

Does your fico credit score help or hurt?

Credit isn’t just a “yes” or “no” decision these days. Since lenders know the default rate for each score range, they can figure out what to charge in interest rates & fees to cover their losses.

In one way, the system has helped millions of consumers get the goods & services they want, especially homes, that they might have been locked out of 30 years ago. It also has improved non-discriminatory lending practices, as borrowers are judged on their past credit behavior rather than their race, gender, age or other irrelevant quality.

Experian Score

Image by Casey Serin via Flickr

Despite the system’s good points, there are problems. The biggest is when your fico credit score is based on mistakes in your credit file, or on your not knowing how your Fico score works, causing you to do things that drop your score unnecessarily. If a credit report mistake drops your score 20 points and you don’t know it, you’ll face unfairly higher costs across the board. In general, if you don’t pay attention to your fico credit score, you’ll probably pay for it.

How much does a low fico credit score cost?

  • 1% of interest rate adds over $35,000 to the cost of your home loan over 30 years.
  • The same 1% interest rate difference makes you pay $100 more each month for 30 years.
  • Lower scores cause lenders to charge more points and often, private mortgage insurance.
  • At certain score levels, your ability to get a low or no-down payment loan goes away; therefore a lower score can force you to come up with thousands of dollars of down payment cash you wouldn’t otherwise need.
  • You’ll pay higher home refinance costs and more for equity lines of credit.
  • You’ll wind up with higher auto loan costs.
  • You’ll even pay higher auto insurance premiums. (Yes, it’s controversial for auto insurance companies to base your rates on a credit score along with your driving record.)
  • You’ll pay higher Visa, MasterCard & other revolving account rates.
  • You’ll get charged higher store card & gas card rates.

Clearly, you’ll save money when you know how to keep your credit scores high. Make sure you get a free credit report and begin optimizing your scores. It’s harder to find a free fico score, but even if you have to pay for it, the cost is well worth it.

{ 0 comments }

Top 12 Tips for a Higher Fico Score

by admin

Want to know how to get a higher FICO credit score? Check out these 12 tips to help you increase your FICO score…

  • Do the basics: Check and correct credit report errors. Take advantage of the many ways to get a free credit report with online vendors, or a free credit report without a credit card through the bureaus themselves with recent legislation. Pay your bills on time every month. Don’t assume that once you’re over 30 days late your credit is already shot-it gets worse as you hit 60 days late, and at 90 days & over the score definitely dives. Also, don’t assume that if you have had trouble paying your bills in the past year or so, that getting back on track will take forever. It won’t; time passes and accounts that are paid on time begin to lift the score noticeably after 13 months. Keep at it!
  • Keep your revolving account balances under 50%. The “proportion of balances to credit limits” score factor has a lot of weight in the scoring models. Even if you pay your bills on time every single month, it will hurt your Fico score to have a 50% or higher balance against your credit limit on on any account.
  • Limit the number of accounts you open. When you shop the mall at the holidays, don’t open new store card accounts all over for the one-time discount. Carrying too many accounts has a negative effect on your score.
  • But don’t carry too few accounts. Typically, three accounts-an installment account like a mortgage or auto loan, a revolving account like a Visa or MasterCard, and one store or gas credit card account, all held for 1-3 years at least, will give the Fico score models enough credit history. Too little information is negative and can trigger a negative scoring factor.
  • Make sure negative accounts are not duplicated. Sometimes an account will go to a collection company for non-payment. If the original creditor reports the account as still delinquent, and the collection company reports the same account as delinquent, you’re paying twice for the same mistake. Only the collection company should report. You can contact the original creditor and each credit bureau affected to request an investigation.
  • Accounts dismissed in a bankruptcy should not continue reporting delinquencies.The bankruptcy showing on your credit report causes a significant score drop. But if the accounts that were dismissed in this action are still reporting past-due status, the Fico score model reads it as though the account is
    Factors contributing to someone's credit score...

    Image via Wikipedia

    delinquent in the present, even if the discharge was years ago and it will continue to depress your Fico score inappropriately. Contact the creditor and the credit bureaus for adjustment.

  • Don’t pay off a lien or judgment before getting your home or auto loan until the lender requires it. It may seem like paying off a judgment might remove it from your credit report and raise your score. While paying off a past debt is the right thing to do, the timing needs to be looked at carefully. If you pay a judgment or lien that’s years old, the date of “most recent activity” becomes now, and that makes the Fico score model evaluate the account as though it is current. The delinquency is brought forward and the score drops, even though paid. It’s as if it sees your serious delinquency as occurring just last month, and payment this month. So if you have old, unpaid judgments or liens in your past, pay them upon the lender’s request for your steps to close your loan, or after you have secured your loan.
  • When you rate shop for loans, do it in two weeks or less. All mortgage or auto loan inquiries will count as only one inquiry if they are made within two weeks of the first inquiry. So if you’re shopping for a mortgage or auto loan, get your ducks in a row before you submit that first application. Inquiries, incidentally, don’t drop your score much-maybe 1-3 points each-but every point counts if you are at a threshold for the next higher level of interest rates. Also, the Fico score will drop more than this if you make several inquiries close together for credit cards or personal loans, as the model perceives that you’re looking for money due to cash troubles.
  • If you declare bankruptcy, open a secured credit card account immediately (sometimes known as a bad credit credit card). Even one credit account with a small amount of cash held as collateral by the issuer will work to raise your score. Use your card a little every month, keeping the balance under 50%. If you use a card once per month, for instance, and pay $5 or $10 or the minimum payment due, you begin to show a new, reliable payment history. It’s not how much; it’s how reliable you are with repayment. As mentioned previously, 13 months of positive payment history gives your score a good lift.
  • When deciding between a home equity loan and a home equity line of credit, opt for the loan if you will be using over 50% of the proceeds. Why? Because the Fico score looks at lines of credit as revolving accounts-like credit cards. If you carry over a 50% balance on this line of credit, it will drop your score as it activates the “high proportion of balances to credit limit” factor again. Not many people can come up with thousands of dollars to pay down a line of credit to less than 50% for a higher score, so plan your needs carefully when deciding what type of cash loan you require and how much is needed. If you find yourself already in this position, ask your lender if they will raise your limit by the amount needed to put the existing balance at under 50% of the total-some will and the effect on the score will be the same after it’s reported.
  • Don’t close old accounts indiscriminately. Old accounts that were paid as agreed show the score model that the consumer has a longer history of good credit use. Deleting these accounts unnecessarily can lower your score.
  • Use rapid correction services for error correction and updates when applying for a home loan. If you’ve paid a bill that’s not showing on your report because it was made in the last 30 to 60 days, consider using a rapid correction service to show the bill paid and get it reflected in your fico scores. Use this service also for error correction. It takes 3-10 days over the regular 30-60 day turnaround, and is available from many mortgage brokers & lenders through their mortgage credit report vendor.
Related articles

{ 0 comments }

Correct Credit Report Errors Fast

by admin

Credit report errors are very common. Most are inconsequential, like spelling errors in accounts or addresses. But some drive down your Fico score and point to fraud-these errors need fixing asap.

Here are some important credit report errors to look for and correct:

  • Your name. Slight changes in a name can result in your credit file being mixed with someone else’s. Make sure your Social Security number matches and check carefully for title designations like Jr., Sr., III, etc.
  • Payment history mistakes. Even a few late payments can drop your credit score. Review all payments, especially those reported late.
  • Bankruptcies or judgments reporting past the cutoff. Bankruptcies should drop off your credit report after 10 years, and judgments after 7. That includes any charged-off accounts included in the bankruptcy; if they are on your credit report past the allowed period, they are pushing your score down unnecessarily.
  • Bankruptcy accounts reporting delinquencies in the present. Any accounts charged off in a bankruptcy should be listed as such. Sometimes accounts continue to report delinquencies after discharge; any accounts reporting 90 days or more past due are big, bad score busters and should be removed.
  • Double negatives. Sometimes an account will report delinquency after it has been sent to collections, and the collection company will report as well. There should be one set of data for each account, not both.
  • Any activity you don’t recognize and can’t confirm. If there’s an account listed you don’t remember, you can contact the creditor (the address & phone number is usually listed on the credit report) for details. If you believe someone has charged you fraudulently or mistakenly, contact the credit bureau that supplied the credit report (Equifax, Experian or TransUnion)-you could be looking at identity theft.
Myfico Equifax Score

Image by Casey Serin via Flickr

To correct credit report errors, start with creditors. They are the ones reporting to the bureaus; in fact most credit report errors originate with them. Use any documentation you have to substantiate your claim (cancelled checks, bank & account statements, discharge papers). Request that the creditor contact the bureau directly, and also send you a letter detailing the error and reporting it as cleared. Get all pertinent details on the letter-name, Social Security number, account number, dates, manager spoken to, date, address, etc.

Then contact the appropriate credit bureau, and send copies of your substantiating documents (not originals) to them. It also helps speed the process along to send a copy of the credit reports with the error circled (more than one bureau may be affected). Contact the bureaus online or by phone:

Equifax Information Service
P.O. Box 740256
Atlanta, GA. 30339
(800) 270-3435
www.equifax.com

Experian (formerly TRW)
P.O. Box 2106
Allen, TX. 75002
(888) 567-8688
www.experian.com

TransUnion Corporation
(800) 888-4213
P.O. Box 390
Springfield, PA 19064-0390
www.transunion.com

The credit bureau will investigate your claim of error directly with the creditor and review your documentation. If legitimate, the bureau will correct the data on the credit report and send you a copy of the corrected file. The process supposedly takes 30 days but in practice can take more.

High-speed corrections for mortgage borrowers

If you have an urgent need for a credit report correction while applying for a home loan, you can contact your mortgage broker or lender about rapid correction services to lift fico scores, obtained from the broker’s mortgage credit reporting company. This service takes from 3-10 days with documentation and can cost up to hundreds of dollars, depending on how many errors & bureaus, but the credit report is fixed quickly and new scores are generated that may save thousands of dollars in lower interest rates & fees.

New rules allow credit report resellers to investigate errors on behalf of consumers. For more information, review the FACT Act details at the website of the Federal Trade Commission (FTC.gov).

Related articles

{ 0 comments }

Are all Credit Reports the Same?

by admin

Are all credit reports the same?

The short answer is “no.” Here’s why:

Each bureau’s credit reports differ. Your creditors report your account details to one or more of the credit bureaus (Equifax, Experian & TransUnion). Large consumer finance companies, mortgage lenders and auto lenders send monthly updates to all three. Smaller companies may select just one or two bureaus for reporting, leading to somewhat different pictures.

Would it surprise you to find you have a credit score of 680 at one bureau and only 640 at another? It’s very common. Also true is that any or all of the bureaus can have mistakes not appearing on the others.

That’s why it’s crucial to review your credit reports from all three bureaus at least once per year.

Most consumer credit reporting companies make this easy by offering merged 3 in 1 reports. You can clearly see the differences and figure out what’s necessary to optimize each bureau’s report for highest score, fraud prevention and error correction. It’s easy to find a free online credit report, but not as easy to find a free fico score-but you’ll need both from all three bureaus for the truest evaluation. Here are more reasons why.

Credit report formats differ. Data appearing on credit reports comes from raw bits of information. It’s up to each bureau or agency to format the data so it’s clear. Credit reports in the past were notoriously hard to read, complicated by the overuse of symbols & abbreviations that only a banker could understand (if lucky).

Thanks to the consumerizing of credit reports in recent years, all providers are getting wise about make them easy to read. Designers and writers are now employed to create icons, graphical groupings and definitions that really work, even when working with merged credit reports. Make sure you get a format that’s easy to read by viewing your provider’s sample reports online in advance. If you don’t like it, try another.

Credit reports pulled for different purposes will have different results. Though it’s a credit-score related issue, it’s a question often posed by confused consumers: How come the credit reports & scores I ordered myself don’t match the ones my mortgage broker has?

Deutsch: FICO-Logo English: FICO logo

Image via Wikipedia

Different business purposes use slightly different scoring models. The developer of credit scores, Fair Isaac & Co. (FICO), has created models that predict repayment behavior for main business categories, including home loans, auto loans, consumer credit reports, insurance, credit cards and others. Scores determine whether you can get conventional loans or must face the higher interest rate bad credit loans. Very similar calculations are used, yet each credit score result is specific to its purpose. Don’t worry about it; you’ll learn the nuts & bolts of your position closely enough when you order your credit reports yourself. Just don’t plan on an exact match.

Timing. Every month is a fresh start in the world of credit reports. Payments have been made or missed; new accounts opened or closed; more time has passed. That’s why your credit report in January will not deliver the same Fico score as in June. Any problems you’ve had in the past have less influence every month. Righting yourself financially and holding steady will show results in 12-13 months, with noticeable progress about every 6 months after. Keep at it!

Related articles

{ 0 comments }

Getting a Free Credit Report Without a Credit Card

by admin

If you’ve had credit troubles, the paradox of improving your credit health is that 1) you need to review your credit report regularly, 2) credit reports are typically ordered online with a credit card, and 3) people with credit troubles often don’t have credit cards. Credit cards are required to sign up for a free online credit report & trial offer to a credit monitoring service, but also to help confirm your identity.

Fortunately, this dilemma has been solved. Started in December 2004, consumers can get a free credit report without a credit card from each national credit bureau (Equifax, Experian, TransUnion) simply by asking, once every 12 months. This service is in response to the overwhelming movement to make the high impact credit reporting process more open and to help thwart identity theft.

The rollout of this program was specified by FACTA, the latest amendment to the Fair Credit Reporting Act. It was completed in September 2005 nationwide. The regional implementation schedule was as follows:

Western states – Alaska, Arizona, California, Colorado, Hawaii, Idaho, Montana, Nevada, New Mexico, Oregon, Utah, Washington, and Wyoming: December 1, 2004.

Midwestern states – Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Nebraska, North Dakota, Ohio, South Dakota, and Wisconsin: March 1, 2005.

Southern states – Alabama, Arkansas, Florida, Georgia, Kentucky, Louisiana, Mississippi, Oklahoma, South Carolina, Tennessee, and Texas: June 1, 2005.

Eastern states – Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, North Carolina, Pennsylvania, Rhode Island, Vermont, Virginia, and West Virginia – the District of Columbia, Puerto Rico, and all U.S. territories: September 1, 2005.
The online address where you can apply for free copies of your credit report by FACTA is http://www.annualcreditreport.com.

Before the free annual credit reports from the government you were only entitled to a free credit report without a credit card from the bureaus for these reasons:

You have been denied credit somewhere because of information in your credit report
You are the victim of identity theft, and you place a fraud alert in your file
Your file contains inaccurate information as a result of fraud
You are on public assistance
You are unemployed but expect to apply for employment within 60 days

Note that in most cases you won’t get a free fico score, but if at all possible you should find a way to purchase this information as it gives you valuable insight about how lenders rate your ability to repay credit.

Fraud alerts

Credit Score Compare

Image by Casey Serin via Flickr

 

If you believe you’re the victim of fraud, you can ask a credit bureau to put a fraud alert in your credit file. There are short-term alerts (90 days) and alerts that last 12 months or longer. Both processes provide a free credit report without a credit card; in the longer alert, you can get two free reports during the 12 month period. However, if this situation doesn’t legitimately apply to you, don’t use it, as the alerts can make getting new credit accounts more difficult by creditors doing extensive checks to prevent additional fraud.

For more information, call the credit bureaus or visit them online:

Equifax Information Service
P.O. Box 740256
Atlanta, GA. 30339
(800) 270-3435
www.equifax.com

Experian (formerly TRW)
P.O. Box 2106
Allen, TX. 75002
(888) 567-8688
www.Experian.com

TransUnion Corporation
(800) 888-4213
P.O. Box 390
Springfield, PA 19064-0390
www.transunion.com

{ 0 comments }

← Previous Entries

Next Entries →