Improve your Credit Score – Fixing Your Credit Report

STARTING POINT  – Understanding Your Credit Report?

Your credit report is crucial to determining your financial health. Among other important personal data, it contains a list of lenders with whom you have credit cards or loans, as well as the total amount you are allowed to borrow on these credit cards and loans. It also includes payment history and how often you’ve been on time or late with your payments. You can see why it can be a powerful tool for lenders. It helps them establish how likely you are to pay back loans completely and on time.  Credit reports are also useful for uncovering possible cases of identity theft.

There are several facts you should know about your credit report. Test your knowledge with this quiz (the answers are provided below).

  1. True or false?  The interest rate you pay for credit cards, mortgages, and car loans are determined by how good your credit report is.
  2. True or False?  Your credit report contains your credit score.
  3. Of the following, which is not included on your credit report: installment loans, revolving loans, lines of credit, child support payments, or student loans?
  4. True or false?  U.S. consumers can check their credit reports once a year for free at annualcreditreport.com.
  5. Which two of the following remain on your credit report for 10 years: foreclosure, student loan debt, credit history inquiries, bankruptcy, or unpaid tax liens?
  6. True or False? A car loan is an example of a revolving loan.
  7. True or False?  You don’t need to hire a credit repair company to dispute/correct mistakes on your credit report.
  8. Which of the following is the first step to take if you discover an error on your credit report: call the Better Business Bureau, notify each of the three main credit reporting agencies or file a police report?
  9. True or False? Taking out a consolidation loan to decrease your number of open loans is a good way to improve your credit report and credit score.
  10. True or False?  If you are married, your credit report will always include your spouse’s credit history with yours.


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Answers:

1. True. The better your credit report, the better your rates for credit cards, mortgages, car loans and other types of financing.

2. False. Your credit score is not listed on your credit report. Traditionally, you could obtain your credit score by paying a fee to credit reporting agencies. However, many banks and credit card companies are now offering their clients’ credit scores for free.

3. Child support payments are not mentioned on your credit report.

4. True.. In fact, through annualcreditreport.com, you are entitled to one free credit report per year from each of the three central credit reporting agencies: Trans Union, Experian, and Equifax. You can request your three reports all at once or stagger your requests throughout the year to better monitor for signs of identity theft.

5.  Both bankruptcies and foreclosures remain on a credit report for 10 years. Credit inquiries remain on your report for two years and unpaid tax liens remain on your credit report forever. Student loan debt typically remains on your credit report for seven years. But if your account is turned over to a collection agency, that agency can keep the debt on your report for seven years from when they start to collect from you!

6.  False. A car loan is an example of an installment loan. It has fixed payments for a specified time period. Most credit cards are examples of revolving accounts. They have varying payments and indefinite payment periods.

7.  True. . Credit repair companies can’t do anything to fix your credit report that you can’t do by yourself for free.

8.  The first step you should take if you discover an error on your credit report is to notify each of the three main credit reporting agencies in writing.

9.  False. Many lenders look at consolidation loans as indicators of inability to pay your current loan obligations.

10.  False. Lenders can request either joint or individual credit reports or both for married couples.

Now that you know how useful your credit report can be, head straight to annualcreditreport.com and check it for accuracy. Remember, this service is free for all U.S. consumers once every year. Be sure to review each version of your report from Trans Union, Experian, and Equifax. Your credit report can help you determine your financial health and enable you to plot a course for improvement.

Let’s Learn a Few Tips To Fix Your Report and FICO Score

7 Ways to Remove Negative Credit Report Entries from Your Credit Report

Having negative items on your credit report can be a real damper to your financial aspirations. The negative output can put you out of a home that you like, a job or a personal loan. If you are struggling with negative credit report information, you can try any or all of these seven processes to have your negative credit report entries removed:

1. Pay the Debt, and Send a Letter
The best way to have a valid negative item removed from your credit report is to pay the entire debt and then contact the creditor. The creditor is the one who reports your account activity to the credit bureau. You can type a professional letter that directly asks the creditor to remove the information. You should make sure that you put your name, social security number and account number on any correspondence that you send. You may even want to notarize the letter and send it through the certified mail process with a tracking number so that you know exactly when the company received your letter.

2. Make an Arrangement With the Creditor
Another tactic you can try to get your debt removed is contacting the company for a payment arrangement with a removal request or a settlement request. A settlement request is an offer to pay a certain percentage of the debt if the creditor agrees to remove the negative information from your credit report. You can also ask the creditor to set you up with an installment agreement in exchange for the removal. The decision will be left up to the creditor whether or not to extend grace to you.

3. Get a Consolidation Loan
You can apply for a consolidation loan if your credit score is not in the realm of “extremely poor.” The consolidation loan will allow you to pay all of your debt, including your delinquent accounts. Once you pay those accounts, then you can request that your creditors remove the derogatory information from the record.

4. Sign up for Debt Management Plan
A debt management plan may allow you to have some of your negative records removed. You can visit a debt management company that specializes in those matters. The counselor can negotiate with the creditor for you. The negotiation may include a request for information removal.

5. Hire a Law Firm or Removal Company
You can hire a law firm or a removal company if you do not have the energy or patience to handle the issue yourself. These third-party companies and attorneys take the time to review your credit report and see what you need. They communicate with the creditors and initiate removal requests. They negotiate debt settlement offers. Furthermore, they file disputes on your behalf and notify the credit bureaus of misinformation, expired dates, duplicate information and the like. Some firms have debt management plans. The only catch to using a third-party company or an attorney is that you will have to pay fees for their services. You may want to try some of the other options if you are income challenged.

6. Dispute the Items in Question
You are entitled to at least one free credit report per year. Therefore, you can order your credit report through the bureaus and then file a dispute for each item that you would like the bureau to strike from the record. Most credit bureaus have an online dispute process. You can initiate the dispute through the account information page. To initiate a dispute, you must choose a reason that you are requesting it. The most common reasons that people file disputes are:

Wrong balance
Account belongs to someone else
Account is fraudulent
Balance has been paid
Seven years have passed

The credit bureaus are obligated to investigate all disputes, and they must answer your request within 30 days. The investigation will begin immediately upon receipt of your removal request. The creditors must provide information that disproves the reason for your dispute. The bureau will usually ask for signed documents that display your approval of the rules and regulations associated with the credit item. If the creditors cannot come up with evidence against your claims, then they will have to remove the information from your credit report. You will receive a response in the mail that will notify you of the bureau’s decision.

7. Wait for the Fall
Finally, you can wait for the negative information to fall off of your credit report. Negative information usually takes seven years to fall off. Some items such as a bankruptcy can take as many as 10 years to fall off. Nevertheless, the credit bureaus usually remove it. You can always dispute an item that you see is still on your credit report after its time has expired.

Fixing Your FICO Credit Report

Your FICO credit score and credit report are the main ways that lenders decide whether to loan you money. A less than perfect credit history can impact your ability to get credit, increase the interest rates that you pay and can mean less than ideal repayment terms. Fortunately, there are steps that you can take right now to start fixing your credit history and increasing your FICO credit score:

Get a copy of your credit report
Get your credit score
Understand what your score means
Understand and manage your income and outgoings
Find out what you owe and who you owe it to
Prioritize who you are going to pay off first
Create automatic payments and reminders
Make your payments on time
If you are having trouble paying, talk to your lender
Don’t open or close accounts with lenders and don’t move debt around
Don’t create new debt
Practice financial responsibility

Get a copy of your credit report
You can request your credit report for free from each of the three main credit scoring agencies in the US – Transunion, Equifax and Experian. Search for ‘Free Credit Report’ on their websites and follow the instructions.

Get your credit score
You can get your FICO credit score through several methods:

You can sign up with a free trial with the various credit scoring agencies
You can go to a website like Credit Karma or Credit Sesame and get your scores through there for free

Understand what your score means
You’ll want to aim for a credit score of 680 or above, as this will put you in the range of ‘good’ credit scores, which means better interest rates and credit repayment terms. If your score is 619 or below, it will need to be worked on urgently.

Understand and manage your income and outgoings
The only way to start reducing your debt is to spend less than you earn and use some of that surplus to reduce your outstanding debt. There are lots of online budget calculators available that can help you work out exactly where your money is going. Once you know where your money is going, look at where you can cut costs further to free up more cash to pay down your outstanding balances.

Find out what you owe and who you owe it to
Collect together all of the paperwork to do with your debts. Make a note of any outstanding balances you have, who you owe the money to, how much of a repayment you need to make each month and the interest rates that you’re paying.

Prioritize who you are going to pay off first
You should prioritize the debts that you are going to pay off; a good way to approach this is:

Pay off your smaller balances first of all
Pay off the loans that charge the most interest
Pay off the slightly bigger loans
Pay off as much extra a month as you can afford on your biggest loans

Create automatic payments and reminders
Set up bank drafts and make arrangements with your lenders to make regular repayments. This will help you budget and contribute to bringing down your debt.

Make your payments on time
Being late on a payment is one of the easiest ways to damage your credit rating. Make sure that you always make your repayments on time. If you have any delayed or late payments, get up to date as soon as possible.

If you are having trouble paying, talk to your lender
If you’re in financial trouble, contact your lender and explain the situation. They may be able to defer payments or work out an alternative repayment schedule that will reduce some of the financial burden that you are facing.

Don’t open or close accounts with lenders and don’t move debt around
Opening and closing accounts and moving debt around can do more harm than good. Until you have repaired your credit history, don’t make changes to your credit accounts.

Don’t create new debt
Try not to put any more debt on consumer credit or credit cards. These often have high interest rates and you could get deeper into financial trouble. Instead, save up your surplus income until you have enough to buy what you need to without going into further debt.

Practice financial responsibility
Understanding your finances, incomes and outgoings is essential to improving your financial responsibility. Once you are on top of your debts, continue to budget responsibly, spend your money wisely and stay out of expensive, long-term debt.

In closing
These practical steps will all help you to rebuild your credit history, improve your score, get you out of debt and reduce the stress that you feel over your finances. Taking some simple measures now will improve both your peace of mind and your financial security.

Gina Wilson

Another post from Gina Wilson – Credit & Loans Specialist Blogger.