How can I clean up my credit report without consulting a credit councel?

UNDERSTANDING CREDIT REPORTS

YOU ARE NOT ALONE!

According to the Consumer Federation of America, it has been found that consumers still have an insufficient understanding of their credit report and credit scores.

WHAT IS A CREDIT REPORT OR CREDIT SCORE (INTERCHANGEABLE TERMS)

鈥?Most popular Credit Score is the FICO Score. FICO stands for Fair-Isaacs Corporation, and this is a company started many years ago by two men, Mr. Fair and Mr. Isaacs, who created the credit scoring system now primarily used by most lenders.

鈥?A 鈥渞eport card鈥?of your recent credit history and how you have handled credit in the past. Lenders use credit reports to measure the risk they will take if they lend you money or extend you credit

鈥?Includes information on

oMortgages

oLoans of all types (personal, student loans, car loans, etc.)

ocredit cards, including those that have gone into collections and those that have been paid off

HOW DO I READ AND UNDERSTAND A CREDIT REPORT?

鈥?There are 4 Sections on your credit report:

oIdentify Information

飩?Your name, address, SSN, DOB, where you work, if applicable

oTrade Line information

飩?Type of account (revolving, installment, etc.)

鈥?Revolving = credit cards: monthly payments, monthly balance changes depending on account activity

鈥?Installment = car loan, e.g., monthly payments stay the same for the life of the loan

飩?Date account was opened and/or closed

飩?Account numbers (possibly scrambled for security purposes)

飩?Amounts owed monthly (minimum monthly payment)

飩?Credit Limit or Loan Amount

飩?Whether or not payments have been timely or late and how late?

鈥?Delinquencies stay on your report for 7 years from the date of the delinquency

鈥?15% of consumers have had a loan or account 90 days past due

A not for profit organization

飩?Accounts that have been 鈥渃harged off鈥?or in collections (7 years from the date the account was sent to collections)

鈥?charge-off = an unpaid portion of a bill that a lender has accepted will never be paid and records it as a bad debt. Serious negative impact on credit report

鈥?collections = creditor sells your account to a collections agency for much less than it is worth to try to get some money back on your debt. Serious negative impact on your credit report.

oIf the account is currently in collections, your credit report will say 鈥渁ccount in collections.鈥?

oIf you have satisfied the collection agency, your report will say: 鈥減aid in full鈥?or 鈥渟ettled in full.鈥?br>

oInquiries 鈥?stay on your credit report for 2 years

飩?Voluntary

鈥?Self-inquiries (acceptable without penalty)

鈥?Inquiries by creditors and lenders you have applied to for credit or a loan

鈥?Inquiries by prospective landlords, employers

飩?Involuntary

鈥?When a creditor makes an inquiry to see if they can pre-approve you for credit, without your request

飩?Rate Shopping

鈥?If you shop for auto loan or mortgage, many prospective lenders may put inquiries on your credit report. Therefore, many inquiries within a 14 day window of time will count as only 1 inquiry.

鈥?Also, all inquiries made within 30 days of your score will be ignored.

oPublic Records

飩?Matters of public record, such as tax liens, bankruptcy filed, delinquent child support, evictions, judgments against you, lawsuits, wage garnishment, etc. Most are on your report as soon as they are filed against you, and stay on your report for 7 years after they are cleared up. Bankruptcy stays on for 10 years; judgments vary from state to state, usually 7 or 10 years.

鈥?Judgment = a decision from a judge on a civil action or lawsuit 鈥?usually an amount of money a person is required to pay to satisfy a debt or as a penalty.

oOn a credit report, if money remains uncollected, it appears as a 鈥渏udgment鈥?br> oIf judgment was resolved, 鈥渟atisfaction of judgment鈥?will appear on your credit report

WHAT IS NOT IN MY CREDIT REPORT?

鈥?Under the Equal Credit Opportunity Act, a credit score may NOT use the following when factoring your score

oRace

oGender

oMarital status

oNational origin/ethnicity

oReligion

oAge

鈥?According to FICO (www.myfico.com 鈥?credit education section) other things not included

oSalary

oWhere you live

oAny interest rate being charged on credit cards or other accounts

WHY DO WE CARE ABOUT CREDIT SCORES?

鈥?According to the Consumer Federation of America study

oConsumers with scores below 600 are usually charged higher interest rates.

oThose with scores above 700 are usually charged comparatively lower interest rates

oThose with scores above 760 are charged the lowest interest rates

鈥?This translates into the following fact:

oThe lower your score, the higher your interest, the more money you are paying, usually over many many years 鈥?literally thousands more dollars

oFor example: According to www.myfico.com a 36 month fixed car loan in New York will yield the following interest rates based on your FICO score:

飩?720 鈥?850: 7.146%

飩?690 鈥?719: 7.952%

飩?660 鈥?689: 9.416%

飩?620 鈥?659: 10.854%

飩?590 鈥?619: 14.173%

飩?500 鈥?589: 14.881%

鈥?It鈥檚 important to check your credit score routinely, a minimum of 1X/year, better is 2X/year to be sure it has current, accurate information.

oReminder triggers: daylight savings time; birthday + new years

oAdditionally, check your credit score a few months before you expect to apply for a car loan and especially a home mortgage 鈥?review it, correct any errors and/or fix problems

HOW DO WE GET A CREDIT REPORT?

鈥?You may receive a copy of your credit report once a year for free if

oYou were denied credit, insurance, or a job

oYou are on welfare, unemployed and looking for a job OR

oYou have been a victim of fraud/identity theft

鈥?ALSO - New Law called FACTA 鈥?Fair and Accurate Credit Transactions Act 鈥揳ll Americans are permitted to have a free credit report each year from each of the three credit bureaus. (In some states you can get 2 free reports from each bureau, per year). Go to www.annualcreditreport.com or call 1.877.322.8228 for more information.

鈥?You can choose to get one report from all three reporting agencies at the same time, or you can get three separate reports over the course of a year, spread out over time.

鈥?NOTE THAT THE LAW STATES YOU ARE ENTITLED TO A FREE CREDIT REPORT, BUT NOT NECESSARILY YOUR FREE CREDIT SCORE. You can obtain your score for a fee (typically about $15 for one bureau鈥檚 score; $30 for the one report that includes information from all three reporting bureaus).

鈥?Three main Credit Reporting Bureaus:

oEquifax1.800.685.1111

oExperian1.888.397.3742

oTransUnion1.800.916.8800

鈥?When you go to the website to get your free credit report you can get additional services for a fee. These include:

oPurchasing your score (as noted above)

oOther services offered are tips to improve your credit; you do not need these, because I will tell you tips to improve your credit.

oCredit reports every month to be delivered, so you can track your credit report. Best if you are concerned about identity theft, but note that the companies do not guarantee that their monthly reports to you are 100% complete and accurate (they avoid liability).

oAnd lastly, you should not need additional services because you should know what your credit is by tracking it yourself.

鈥?Your credit reports/scores may be different, depending on which credit bureau you get the report from! This is because creditors are not required to report information to the bureaus although many larger companies do. That is why it is important to check with all 3 credit bureaus.

鈥?Be aware that under the Fair Credit Report Act, many others besides you may be able to legally get your credit report, even without your express permission as long as they indicate a legitimate business reason. This includes banks, other lenders, landlords, utilities, etc. Also, a court can obtain your credit report with or without your permission.

FACTORS THAT AFFECT YOUR SCORE

鈥?35% of your score: Your payment history

oRegularly paid on or before due date?

鈥?30% of your score: Amounts you owe

oSmall balance and no missed payments is better than no balance in some cases, because it proves you can manage credit responsibly and 鈥渃arry a balance鈥?br> oDon鈥檛 have too many accounts open, but have more than one open so you don鈥檛 put too much on one card. Avoid getting too close to your available credit limit, as that is seen as a risk.

oDon鈥檛 owe a lot of money on many accounts, because lenders worry that you are, or will quickly become, overextended and more likely to make late payments or no payments.

鈥?15% of your score: Length of your credit history

oDo you have a long-established credit history, over a few years? Or are you relatively new at handling credit? These factors influence your score.

鈥?10% of your score: New Credit

oAre you taking on more debt, at a rapid pace and in a short period of time? If so, lenders will be concerned.

鈥?10% of your score: Do you have a healthy mix of different types of credit use?

oTo a small degree, they look to see if you are able to handle different types of credit, such as retail, installment loans, mortgage, etc. DO NOT OPEN UP A CREDIT CARD SIMPLY TO IMPROVE YOUR 鈥淢IX鈥?鈥?None of the experts advise this.

HOW TO RAISE YOUR CREDIT SCORE 鈥?Damaging your credit can happen quickly, but improving it takes time. If you remain consistent in the following areas, you will succeed:

鈥?Pay your bills on time 鈥?on or before the due date!!

鈥?If you have missed payments, get current and stay current!

鈥?If you are legitimately struggling financially, having difficulty making ends meet, a credit counseling agency such as ours may be able to help you get lower interest rates or you can also try to call your creditors directly

鈥?Keep balances low on credit cards

鈥?DON鈥橳 CLOSE UNUSED CREDIT CARDS!!! Oddly enough, this will NOT help your score and may even lower it, because a long-established account with no negative activity helps your score.

鈥?DON鈥橳 OPEN NEW CREDIT CARDS YOU DON鈥橳 NEED

鈥?Limit the number of 鈥渉ard鈥?or voluntary inquiries you have and if you are rate-shopping, be sure to do so within a 14 day period.

鈥?If possible, pay down an account balance or two.

HOW TO IDENTIFY CREDIT REPAIR SCAMS

Since 1992, the Fraud Victim Assistance Department FVAD has helped more than one million Americans who were victims or potential victims of fraud. Here are some tips to prevent yourself from being a victim.

鈥?Credit report rule of thumb: 鈥淚f it sounds too good to be true, it probably is鈥?

鈥?We have all seen the advertisements on television or the internet, such as 鈥淐redit Problems? No Problem鈥?or 鈥淓rase Bad Credit! 100% Guaranteed鈥?or 鈥淩emove Bankruptcy and Liens from your Credit File鈥? These ads claim that they can remove negative information from your credit report.

鈥?Companies can charge $50 to $1,000 to fix your credit report. Often they will take your money, not improve your credit report, and then disappear.

鈥?Companies may offer to create a 鈥渘ew鈥?credit identity and then a new credit report by having you apply for an Employer Identification Number to use instead of your social security number. This will not erase your credit problems, and invites you to commit an illegal act of fraud, subjecting you to possible prosecution.

鈥?Companies that claim that they can improve your credit score by at least 20 points are being deceptive. Remember that it takes time to improve your score and that there are no quick fixes.

鈥?To avoid being victimized by fraudulent credit repair clinics contact your state Attorney General or the Better Business Bureau to learn more about the individual company.

THE TRUTH ABOUT CREDIT REPAIR

According to the Federal Trade Commission:

鈥?no one can legally remove accurate and timely negative information from a credit report. Of course, you can do an investigation and errors can be removed.

鈥?Any legal efforts that a credit repair clinic can make on your behalf you can do yourself at little or no cost.

TYPICAL ERRORS ON YOUR CREDIT SCORE

People are surprised to learn that errors on a credit report are not at all unusual.

鈥?Some reports estimate that one out of every three reports have at least one error. Other estimates are even higher!

鈥?A survey by U.S. PIRG (Public Interest Research Group), found:

o79% of credit reports had mistakes

o25% of credit reports had errors serious enough that credit could be denied

Some of the most common errors:

鈥?Name co-mingling. Information for someone who has a name similar to yours 鈥?whether related to you or not related to you 鈥?gets mixed in with your information on your credit report.

鈥?Ex-spouse information. Joint accounts can stay on a credit report for seven years, even after a divorce. But some spouses do not have joint accounts and their spouse鈥檚 account shows up anyway.

鈥?Outdated information. Most information should be removed from your credit report after seven years. There are two major exceptions: bankruptcies, which can stay on for ten years, and judgments against you, which stay on for seven years or longer, depending on the statute of limitations established by the state you are in.

鈥?Student loans and other loans showing up as several different entries. This can happen if a loan has been sold to other lenders several times.

鈥?Accounts, judgments or bankruptcies that are simply not yours.

鈥?Accounts you have paid off that are still showing as open. Rumor has it that it does not matter to a lender if the report indicates the account is closed 鈥?which implies the creditor closed it against your wishes 鈥?or if the report indicates the account was 鈥渃losed by consumer鈥?which clearly implies you voluntarily closed it. Why not play it safe? Be sure that all accounts you voluntarily close are stated as such on your report.

鈥?Transcription errors. Social security numbers accidentally transposed, incorrect name spelling and incorrect balance amounts are all examples of human errors made when processing information on your report. Sometimes these can make your financial situation look bleak to a lender 鈥?particularly if you owe $100 on a credit card and it reads as $10,000, for example.

鈥?Missing information. Sometimes a report does not provide a full picture of your finances because it omits information that shows you to be responsible. Since creditor reporting is voluntary, it is up to the consumer to make sure the report contains all pertinent information.

WHAT DO I DO IF I FIND AN ERROR?

鈥?Your credit report should come with a form you can use to tell the credit bureau what the mistakes are. Fill it out and send it back to the credit bureau. I suggest sending it registered mail, return receipt requested. Send along documentation that substantiates your claim.

鈥?Request an 鈥淎DEQUATE INVESTIGATION鈥?鈥?this is the buzz phrase which means that you will get human beings reviewing the situation rather than a computer doing some quick, often mistaken, electronic cross-checking.

鈥?You can also send a letter. There are sample letters in the HANDOUTS.

鈥?By law, the credit bureau has 30 days in which to review your dispute. If they cannot verify that the information in dispute is correct, they must remove it from your credit report.

鈥?If the credit bureau says it has conducted an 鈥渁dequate investigation鈥?and they verified the disputed information as correct, then you must go to the source of the original information, such as the creditor. First, call the customer service number on your statement or loan papers. Ask them how they require you to formally dispute the information. Seek a manager if the customer service representative is not knowledgeable or helpful enough.

鈥?If still not satisfied, write to the president of the company! Google search or local library can get you name and address.

鈥?KEEP RECORDS OF ALL CONTACTS MADE BY PHONE AND IN WRITING (i.e. dates, names, what was discussed, etc.)

鈥?If the credit bureau refuses to alter your report, by law you are entitled to add a brief statement of up to 100 words on your credit report. Your statement should include your side of the story, and should mention any documentation you have that substantiates your side of the story. A potential lender may consider your statement and be swayed to extend you credit or a loan.

鈥?You can file a complaint with the Federal Trade Commission (FTC). They will not get involved with a specific case, but if they see a trend of complaints against a particular credit bureau, they do take action and investigate. It will not help you personally, but you will be doing your fellow consumer a favor and blowing off steam in a constructive way. (write to the FTC, Division of Credit Practices, 600 Pennsylvania, NW, H-130, Washington DC 20580)

IDENTITY THEFT

鈥?Last year, as many as 8.9 million Americans had been victims of identity theft.

鈥?Dumpster diving, shoulder surfing (people looking over your shoulder to glimpse your PIN numbers) and mail theft are the top three culprits.

HOW TO PROTECT YOURSELF AGAINST IDENTITY THEFT

鈥?Destroy private records and statements 鈥?shred or tear credit card statements, pre-approvals and other types of written solicitations and any other documents that contain your personal financial information

鈥?Secure your mail 鈥?don鈥檛 include account numbers on the outside of the credit card billing envelopes; do not send your mail by leaving it in your mailbox for the carrier to pick up.

鈥?PROTECT YOUR SOCIAL SECURITY NUMBER!! Do not carry your card with you in case your wallet gets lost or stolen. Do not put it on your checks. If you do give it out, be sure you know you are dealing with a reputable business.

鈥?Don鈥檛 leave a paper trail. Do not leave ATM, credit card or gas station receipts behind.

鈥?Never let your credit card out of sight. There is a new scamming device called a skimmer which allows a thief to quickly create a duplicate card.

鈥?Take yourself off of marketers鈥?lists. Contact 1.888.5.OPT.OUT and request that your name be removed from these lists.

鈥?Be more proactively defensive about your information. If a salesperson requests your Social Security or Driver鈥檚 License Number, ask why it is necessary.

鈥?Monitor your credit report at least twice a year to check for errors and possible fraudulent activity. Many people are not even aware they are victims of identity theft until they try to get a loan or mortgage and are denied.

鈥?Review your credit card statements carefully. Be sure you recognize all purchases and services noted.

鈥?Photocopy your credit cards on front and back. Keep the copies in a safe location at home. In case the cards are ever lost or stolen, you will quickly know which creditors to contact in case of loss or theft.

鈥?Write 鈥淐HECK PHOTO ID鈥?in permanent ink on the signature line of your credit cards.

WHAT TO DO IF YOU ARE A VICTIM OF IDENTITY THEFT

鈥?According to FACTA you now only have to call one of the 3 credit bureaus to report that you have been a victim of identify theft. Their fraud hotlines are listed below:

oEquifax1.800.525.6285

oExperian1.888.397.3742

oTransUnion1.800.680.7289

鈥?The credit bureau will put a fraud alert on your credit reports. This means that you will be notified any time someone is trying to open up a new account using your name 鈥?even if it is you yourself. This will delay your ability to open a legitimate account, but it is well worth it, to avoid further fraudulent activity. The fraud alert will stay in your file for 90 days. You may get an extended alert which will stay in your file for seven years. For further information visit www.consumer.gov/idtheft

鈥?Placing a fraud alert will also entitle you to a free credit report. It is suggested that you wait one month or so before requesting your credit report, because it can take a little time for other fraudulent activity to appear.

鈥?You should also file a police report. Get a copy of the police report and send it to creditors and others which may require proof of the crime.

鈥?Contact all creditors, advise them of the situation and request new credit cards with different account numbers.

鈥?You also have the right to ask that the credit bureau block information which you believe results from identify theft. In order to do this, you must provide proof of your identity and a copy of your identity theft report.

鈥?The FTC has developed an Identity Theft Affidavit to make it easier for you to report information to all the companies who must be notified about activity done in your name fraudulently. Please refer to the HANDOUT.

鈥?File a complaint with the FTC, which maintains a database of identity theft cases. Go to www.consumer.gov/idtheft or call 1.877.ID.THEFT.

鈥?Keep records of everything you have done in regard to the identity theft, including all correspondence and a phone log. Keep the record for several years, because it is not unusual to believe that everything has been cleared up, only to see another unexpected fraudulent activity pop up again.

鈥?You are only responsible for $50 of charged goods and services in a fraud case. Most creditors will even waive that with solid proof that you have been a victim.

How can I clean up my credit report without consulting a credit councel?

PAY YOUR BILLS ON TIME

How can I clean up my credit report without consulting a credit councel?

First you need to make sure you pay your bills on time and never pay minimum. If you cant make a large payment pay a couple of dollars over minimum. Payoff your dues. Get your debt down. It may take a while but it will be worth it!

How can I clean up my credit report without consulting a credit councel?

First if you don%26#039;t already have one is look at your credit report, if you need to get one go to www.annualcreditreport.com

Look at that first start with the debt that you know you can take care of yourself, dispute anything that is not yours or is reported twice, looking at those duplicates.

And start calling those to get a reduced rate or some type of understanding, follow-up with letters.

That should get you started, won%26#039;t be easy and won%26#039;t be quick, but stay at it while accumulating no more debt and you should get there.

Good Luck

How can I clean up my credit report without consulting a credit councel?

The credit report came with instructions for contesting anything that%26#039;s incorrect. You%26#039;ll want to contact them and tell them everything that%26#039;s wrong, then check your report again in about 6 months to make sure that things have been corrected.