How Inquiry Removal Can Help Boost Your Credit Score
Posted in Finance on 03/08/2011 10:11 am by
Chris Robertson asked:
Your credit score plays a crucial role in your ability to obtain a loan, whether it is a small personal loan, an auto loan, or a home or business mortgage. New credit (or your pursuit thereof) is one of the main factors that determine your score. When your credit score is being calculated, then the most recent credit on your report will account for about 10 percent of your score. Within that “new credit” category, there may be what’s called hard credit inquiries. That’s why inquiry removal can greatly affect your credit score in a positive manner. Let’s explore how this works.
Credit Inquiries Explained
A credit inquiry is displayed whenever a business (with permission according to the federal Fair Credit Reporting Act) requests a copy of someone’s credit report. Some inquiries called “hard inquiries” will count against your credit score, while others called “soft inquiries” will not. Hard inquiries are those created when you actively apply for new personal credit, whether it is through a bank or credit union, credit card company, finance company, or even a retail outlet. These are inquiries that result when you need to borrow money for credit cards, mortgages, car loans, furniture purchases, high-end electronic purchases, boat loans, etc.
Your credit score plays a crucial role in your ability to obtain a loan, whether it is a small personal loan, an auto loan, or a home or business mortgage. New credit (or your pursuit thereof) is one of the main factors that determine your score. When your credit score is being calculated, then the most recent credit on your report will account for about 10 percent of your score. Within that “new credit” category, there may be what’s called hard credit inquiries. That’s why inquiry removal can greatly affect your credit score in a positive manner. Let’s explore how this works.
Credit Inquiries Explained
A credit inquiry is displayed whenever a business (with permission according to the federal Fair Credit Reporting Act) requests a copy of someone’s credit report. Some inquiries called “hard inquiries” will count against your credit score, while others called “soft inquiries” will not. Hard inquiries are those created when you actively apply for new personal credit, whether it is through a bank or credit union, credit card company, finance company, or even a retail outlet. These are inquiries that result when you need to borrow money for credit cards, mortgages, car loans, furniture purchases, high-end electronic purchases, boat loans, etc.
Raise Credit Fast – 3 Things You Are Doing Wrong When Trying to Fix Credit
Posted in Finance on 08/12/2010 02:47 am by
Irena Bocheva asked:
Do you want to raise credit fast? Do you want to qualify for a favorable mortgage or auto loan, but fear that your FICO score is too low? Are you worried that the job you want to get requires a mandatory credit check? Whatever your case is, you are not alone. More than 35 million Americans are dealing with issues related bad credit score.
Contrary to the popular beliefs, fast credit repair is possible. The only requirement is knowledge about the inner workings of the credit system and the various loopholes in it.
Here are 3 simple tips that will help you understand how fast credit repair works:
1 You are not the victim…learn your rights.
Harassing collection phone calls, tons of unwanted mail, refusals to get financed on your mortgage or auto purchase-a lot of factors can leave you with the impression that you are a helpless victim of the credit system. In reality, however, you have numerous rights and you are far from being powerless. For example, under the Fair Credit Reporting Act you can dispute any incorrect, outdated, incomplete, questionable or unverifiable information on your report. The disputes can be filed on multiple levels -credit bureaus, companies reporting to credit bureaus, collection agencies and original collectors (623 Dispute). You can dispute the validity of the whole negative account (the account is not mine) as well as separate listings within the account (wrong balance, wrong account limit, you did not make a late payment that month etc). Under the protection of FCRA you can sue credit bureaus if they fail to conduct investigation on your case within 30 days. You can also sue original creditors if you dispute a debt and they fail to report it as disputed to collection bureaus or if they pull your credit report without your authorization. Collection agencies can also be held accountable if they can’t validate a debt (provide proper documentation that the debt is yours), but continue to pursue collection activity. The Fair Credit Reporting Act and the Fair Debt Collection Practices specify numerous rights for the consumer and limitations for the practices of the credit agencies and debt collectors. The more you know about these rights, the better your chances to raise credit score fast.
2 Are you taking advantage of the loopholes in the system?
The credit system is rife with loopholes. However, you have to be knowledgeable in order to take advantage of them. A simple example-the so called Dispute 623 allows you to dispute a listing ( within a negative account ) with the original creditor. Only a small percentage of creditors keep a decent records. The rest preserve records for 13-18 months the most. The reason is simple-it takes a lot of money to keep huge database updated or to input data from one system to another (in the case of acquisition). If your debt is more that 18 months old, file 623 dispute. More than likely the creditor will not have the proper documentation to verify the debt. Under these circumstances, creditors are required to remove the whole item ( even though you disputed a separate listing) from you credit record. Nice, isn’t it…
3 No written proof…no guarantee
Another thing you have to keep in mind is that fast credit repair requires keeping proof of every piece of paperwork you ever exchange with credit institutions. If you attempt to engage in credit repair over the phone or e-mail, you mind end up on the losing side. Use certified mail and fax instead.
If you want to raise credit fast, you have to gain knowledge about the credit system and the various loopholes in it. You don’t have to reinvent the wheel here-simply use strategies and little known secrets that worked for others.
Stephanie
Do you want to raise credit fast? Do you want to qualify for a favorable mortgage or auto loan, but fear that your FICO score is too low? Are you worried that the job you want to get requires a mandatory credit check? Whatever your case is, you are not alone. More than 35 million Americans are dealing with issues related bad credit score.
Contrary to the popular beliefs, fast credit repair is possible. The only requirement is knowledge about the inner workings of the credit system and the various loopholes in it.
Here are 3 simple tips that will help you understand how fast credit repair works:
1 You are not the victim…learn your rights.
Harassing collection phone calls, tons of unwanted mail, refusals to get financed on your mortgage or auto purchase-a lot of factors can leave you with the impression that you are a helpless victim of the credit system. In reality, however, you have numerous rights and you are far from being powerless. For example, under the Fair Credit Reporting Act you can dispute any incorrect, outdated, incomplete, questionable or unverifiable information on your report. The disputes can be filed on multiple levels -credit bureaus, companies reporting to credit bureaus, collection agencies and original collectors (623 Dispute). You can dispute the validity of the whole negative account (the account is not mine) as well as separate listings within the account (wrong balance, wrong account limit, you did not make a late payment that month etc). Under the protection of FCRA you can sue credit bureaus if they fail to conduct investigation on your case within 30 days. You can also sue original creditors if you dispute a debt and they fail to report it as disputed to collection bureaus or if they pull your credit report without your authorization. Collection agencies can also be held accountable if they can’t validate a debt (provide proper documentation that the debt is yours), but continue to pursue collection activity. The Fair Credit Reporting Act and the Fair Debt Collection Practices specify numerous rights for the consumer and limitations for the practices of the credit agencies and debt collectors. The more you know about these rights, the better your chances to raise credit score fast.
2 Are you taking advantage of the loopholes in the system?
The credit system is rife with loopholes. However, you have to be knowledgeable in order to take advantage of them. A simple example-the so called Dispute 623 allows you to dispute a listing ( within a negative account ) with the original creditor. Only a small percentage of creditors keep a decent records. The rest preserve records for 13-18 months the most. The reason is simple-it takes a lot of money to keep huge database updated or to input data from one system to another (in the case of acquisition). If your debt is more that 18 months old, file 623 dispute. More than likely the creditor will not have the proper documentation to verify the debt. Under these circumstances, creditors are required to remove the whole item ( even though you disputed a separate listing) from you credit record. Nice, isn’t it…
3 No written proof…no guarantee
Another thing you have to keep in mind is that fast credit repair requires keeping proof of every piece of paperwork you ever exchange with credit institutions. If you attempt to engage in credit repair over the phone or e-mail, you mind end up on the losing side. Use certified mail and fax instead.
If you want to raise credit fast, you have to gain knowledge about the credit system and the various loopholes in it. You don’t have to reinvent the wheel here-simply use strategies and little known secrets that worked for others.
Stephanie
Report Card for the Fair Credit Reporting Act
Posted in report card for the fair credit reporting act on 01/10/2010 06:45 pm by
Learn How to Fix Credit Fast!
Posted in Finance on 12/06/2009 08:44 pm by
Vincent Polisi asked:
If you want to learn how to fix credit fast, then you will want to read this article. Specifically, we will be discussing the first thing you need to do and what options you have to raise your score. When you are finished reading this article, you should be prepared to begin credit restoration.
Review Your Report
The first thing in any credit repair plan is to carefully review your file. You can get a copy of each of your three credit reports once a year at annualcreditreport.com. If you have already received your free report this year, or you want to get a copy of your credit score, you will need to pay a small fee for your report. There are companies that will give you your score for free up front, but this involves a trial membership in a monitoring service. These services can be a good idea if you are attempting credit repair, but just make sure you understand the associated costs.
Decide Which Strategies Will Work Best for You
Once you have your report, you will want to review your file carefully. It is a good idea to make an extra copy so that you can highlight all of the items that you feel need attention. Make special note of anything that is incorrect or questionable. Once you have reviewed your report it is time to develop a plan!
o Pay Off Revolving Debt
One of the quickest and easiest ways to improve your credit score is to pay off your revolving debt. Your credit utilization makes up 30% of your credit score. By getting each of your account balances at down below 25% of your available credit, you can raise your credit score by up to 50 points.
o Dispute Derogatory Credit and Errors
The Fair Credit Reporting Act gives you the right to dispute anything in your credit that you believe is inaccurate. If a creditor fails to verify an account within 30 days, the credit bureaus must remove the account from your credit file.
o Get a Relative to Add You as an Authorized User
Many people think that due to FICO 08 that becoming an authorized user can no longer help your credit score. This is actually not true. While FICO 08 does restrict who can add someone as an authorized user, it does not prevent a parent or spouse from helping your credit by adding you as an authorized user.
Jacob
If you want to learn how to fix credit fast, then you will want to read this article. Specifically, we will be discussing the first thing you need to do and what options you have to raise your score. When you are finished reading this article, you should be prepared to begin credit restoration.
Review Your Report
The first thing in any credit repair plan is to carefully review your file. You can get a copy of each of your three credit reports once a year at annualcreditreport.com. If you have already received your free report this year, or you want to get a copy of your credit score, you will need to pay a small fee for your report. There are companies that will give you your score for free up front, but this involves a trial membership in a monitoring service. These services can be a good idea if you are attempting credit repair, but just make sure you understand the associated costs.
Decide Which Strategies Will Work Best for You
Once you have your report, you will want to review your file carefully. It is a good idea to make an extra copy so that you can highlight all of the items that you feel need attention. Make special note of anything that is incorrect or questionable. Once you have reviewed your report it is time to develop a plan!
o Pay Off Revolving Debt
One of the quickest and easiest ways to improve your credit score is to pay off your revolving debt. Your credit utilization makes up 30% of your credit score. By getting each of your account balances at down below 25% of your available credit, you can raise your credit score by up to 50 points.
o Dispute Derogatory Credit and Errors
The Fair Credit Reporting Act gives you the right to dispute anything in your credit that you believe is inaccurate. If a creditor fails to verify an account within 30 days, the credit bureaus must remove the account from your credit file.
o Get a Relative to Add You as an Authorized User
Many people think that due to FICO 08 that becoming an authorized user can no longer help your credit score. This is actually not true. While FICO 08 does restrict who can add someone as an authorized user, it does not prevent a parent or spouse from helping your credit by adding you as an authorized user.
Jacob
Report Card for the Fair Credit Reporting Act
Posted in Finance on 05/21/2009 02:20 pm by
Hunter Stuart asked:
“It is the purpose of this title to require that consumer reporting agencies adopt reasonable procedures for meeting the needs of commerce for consumer credit, personnel, insurance, and other information in a manner which is fair and equitable to the consumer, with regard to the confidentiality, accuracy, relevancy, and proper utilization of such information in accordance with the requirements of this title.”
In the words of the U.S. Congress, the previous paragraph is the purpose of the Fair Credit Reporting Act (FCRA). In short, the Fair Credit Reporting Act is designed to help protect consumers against unfair practices within the credit reporting system.
While the mission of the FCRA was a noble one, a quick look around today’s credit society shows the results have fallen well short of expectations. What follows is how the FCRA has failed to produce a fair credit system for today’s consumers.
Detailing the Failures of the Credit Reporting System
Accuracy – It is well documented that credit reports contain errors but it bears repeating. Recent studies show that almost 80% of all credit reports contain factual errors such as duplicate listings, incorrect dates, tradelines placed on the wrong person’s credit reports, and omitted positive credit accounts.
These studies also indicate that 25% of credit reports containing errors significant enough to result in a credit denial.
How fair is a credit system that can cause a person to get declined for a loan or force them to pay higher interest rates than are necessary based on their actual credit risk? True, you have the right to dispute these inaccurate items with the credit bureaus, but this chore is not necessarily easy or foolproof. Depending on the nature of the erroneous items on your credit reports, credit repair can be a frustrating and time consuming ordeal that you are forced into because of no fault of your own.
Relevancy – While they do not say it directly, the credit bureaus’ creation of the VantageScore is evidence enough that the current FICO based credit scoring models are not as relevant as they could be. According to Experian spokesman Donald Girard, the VantageScore is “the most sophisticated, highly predictive scoring model that’s available in the marketplace” and as a consequence the much more popular FICO score is less predictive.
One of the flaws in the FICO score that the VantageScore tried to fix is the impact that very old credit accounts have on the credit score. According to Dr. Bonnie Guiton Hill, advisor to President Bush on consumer affairs, “it is our understanding that computer models that predict credit worthiness find most information that is more than two years old nonessential.” This is why newly created scoring models like the VantageScore are beginning to ignore credit information that is over three years old. It does not serve to accurately determine your credit risk.
So why have lenders been so slow to adopt scoring models such as the VantageScore? They claim it is because FICO is ingrained in the current credit system and has stood the test of time. A more cynical answer is that these lenders are not willing to sacrifice the huge profits they make from charging higher interest rates on loans granted to people who are a relatively low credit risk.
Of course, this cynicism is not simply the result of a general and unfounded grudge. It is born from the observation that seemingly every quirk and inconsistency in the credit reporting system falls in favor of the lenders. For example, when looked at logically, it makes sense to close unused credit cards. Not too long ago, financial experts suggested people do exactly this to make your credit score look better by showing your lack of need for unsecured credit.
But now we know that closing those accounts can actually lower your credit score because FICO rewards you for having multiple accounts and a large amount of credit at your disposal. So while closing accounts seems to be the financially responsible thing to so, it is probably more than an odd coincidence that this behavior which makes you a less profitable consumer for banks and credit card companies it punished by FICO.
The same goes for paying off installment loans early and voluntarily lowering credit limits. Both of these actions seem inline with what we would expect from the ideal consumer, but neither will have a positive impact on your credit score. Early payment of installment loans, another common goal of a financially responsible consumer that diminishes the profits of lenders, is not noted on your credit reports. And contrary to what you would think, lowering credit limits would lower your credit score because as alluded to above, you are rewarded for having multiple credit accounts and lots of credit at your disposal.
But by another quirk of the FICO credit scoring model, you are rewarded for having multiple credit accounts, but you are punished for seeking new credit. Consumers are told that inquiries are added to your credit reports each time you apply for credit so other lenders can see that you may be overextending yourself or crashing. But isn’t it convenient that inquiries will lower your credit score at the exact time when you are looking to qualify for new lines of credit? FICO wants you to have multiple lines of credit, but in trying to appease the scoring model, you will temporarily lower your credit score allowing lenders to charge you higher interest rates.
It seems no matter what you do, the deck is stacked against the consumer.
So while the VantageScore is a step in the right direction, it is still a long way from producing truly relevant results. This is because the VantageScore maintains many of the same scoring quirks exhibited by FICO and still uses the same basic, and very limited, variables for determining your credit score such as payment history, amounts owed, and length of credit history.
Your credit score is found by taking these variables as recorded in your credit reports, plugging them into a predictive model, and calculating a single three digit number. A late payment for example will be entered into the formula and will lower your credit score a set amount based on the amount of time it was late and how long ago the late payment was reported.
The fundamental flaw in this model, however, is that there is no accounting for why the payment was late. Whether you were late in making a payments because the lender did not send you a bill, because the bills were sent to the wrong address, because you wrote the wrong amount on the check, because your checks bounced, or because you blew all your money on illegal drugs; it is all the same in the eyes of the credit scoring model. Even if you have a sloppy lender to blame for your late payments, your credit worthiness in the eyes of lenders will be the same as a person saddled with a serious drug addiction.
Proper Utilization – Given how common it is for a credit score to be a gross misrepresentation of a person’s credit worthiness, it could be argued that the pervasiveness of credit scores in the financial market is improper. But in today’s society, the use of credit scores goes well beyond determining loan amounts and interest rates.
Employers, landlords, insurance companies and others may request to see your credit score. In today’s society your ability to get a certain job, rent an apartment, or qualify for reasonable insurance premium can all be dependent on your credit score.
Improper is a subjective term, but being passed over for a job because of completely irrelevant and possibly inaccurate negative credit items in your credit reports that are plugged into a flawed credit scoring model to produce a credit score that is not indicative of your actual credit worthiness fits the bill.
The FCRA Made Improvements, but there is Still a Long Way to Go
The FCRA’s failure to produce a system where the “accuracy, relevancy, and proper utilization” of your information is protected has resulted in a credit reporting system that is hardly “fair and equitable” to you as a consumer. But in defense of Congress, the FCRA has been heavily influenced by deep-pocketed industry lobbyists. In fact, when the FCRA was originally passed in 1971, Senator William Proxmire, one of the bills primary sponsors, felt defeated at what had become of his original intentions for the bill.
Since that time, the FCRA has been amended to become more and more consumer friendly, but there is still a ways to go and as was the case in 1971, those in the credit industry are still keenly interested in maintaining the status quo.
While the credit bureaus are no longer able to record information about you such as your ethnicity and religion, they also are not required to collect other personal information that is relevant to your credit worthiness. If you are a model citizen who has worked with the same company for 10 years, has a perfect criminal record and makes more than enough money to cover your expenses, it is fairly obvious that you are more worthy of credit than a career criminal who is a continual burden on the system. But none of this information is recorded by the credit bureaus or used when calculating your credit score. If you and the career criminal have the same types of accounts on your credit reports, your credit scores will be the same.
Also, while you now have the ability to see what information is contained within your credit reports, you do not have the ability to learn any more than the very basics of how this information is used to formulate your credit score. What impact will paying off a past due debt have on your credit? Which credit cards should be paid down first? What effect will shopping for a new loan have on your credit score? We have vague, observation based answers for these questions, but the exact formula is unknown and is subject to change at any time.
Finally, you have the right to dispute the questionable items in your credit reports, but you don’t have the right for this process to be easy or necessarily effective. Depending on your unique situation, credit repair can be as easy as submitting an online form or as difficult as tracking down creditors, fighting with collections agencies, and possibly involving legal intervention. The very entities who profit most from inaccurate credit reporting are the ones who played such a big role in watering down the FCRA and continue to resist consumer attempts to add equity to the credit system. It is these entities you are forced to contend with when working to enforce your right to a fair and accurate credit report.
Roberta
“It is the purpose of this title to require that consumer reporting agencies adopt reasonable procedures for meeting the needs of commerce for consumer credit, personnel, insurance, and other information in a manner which is fair and equitable to the consumer, with regard to the confidentiality, accuracy, relevancy, and proper utilization of such information in accordance with the requirements of this title.”
In the words of the U.S. Congress, the previous paragraph is the purpose of the Fair Credit Reporting Act (FCRA). In short, the Fair Credit Reporting Act is designed to help protect consumers against unfair practices within the credit reporting system.
While the mission of the FCRA was a noble one, a quick look around today’s credit society shows the results have fallen well short of expectations. What follows is how the FCRA has failed to produce a fair credit system for today’s consumers.
Detailing the Failures of the Credit Reporting System
Accuracy – It is well documented that credit reports contain errors but it bears repeating. Recent studies show that almost 80% of all credit reports contain factual errors such as duplicate listings, incorrect dates, tradelines placed on the wrong person’s credit reports, and omitted positive credit accounts.
These studies also indicate that 25% of credit reports containing errors significant enough to result in a credit denial.
How fair is a credit system that can cause a person to get declined for a loan or force them to pay higher interest rates than are necessary based on their actual credit risk? True, you have the right to dispute these inaccurate items with the credit bureaus, but this chore is not necessarily easy or foolproof. Depending on the nature of the erroneous items on your credit reports, credit repair can be a frustrating and time consuming ordeal that you are forced into because of no fault of your own.
Relevancy – While they do not say it directly, the credit bureaus’ creation of the VantageScore is evidence enough that the current FICO based credit scoring models are not as relevant as they could be. According to Experian spokesman Donald Girard, the VantageScore is “the most sophisticated, highly predictive scoring model that’s available in the marketplace” and as a consequence the much more popular FICO score is less predictive.
One of the flaws in the FICO score that the VantageScore tried to fix is the impact that very old credit accounts have on the credit score. According to Dr. Bonnie Guiton Hill, advisor to President Bush on consumer affairs, “it is our understanding that computer models that predict credit worthiness find most information that is more than two years old nonessential.” This is why newly created scoring models like the VantageScore are beginning to ignore credit information that is over three years old. It does not serve to accurately determine your credit risk.
So why have lenders been so slow to adopt scoring models such as the VantageScore? They claim it is because FICO is ingrained in the current credit system and has stood the test of time. A more cynical answer is that these lenders are not willing to sacrifice the huge profits they make from charging higher interest rates on loans granted to people who are a relatively low credit risk.
Of course, this cynicism is not simply the result of a general and unfounded grudge. It is born from the observation that seemingly every quirk and inconsistency in the credit reporting system falls in favor of the lenders. For example, when looked at logically, it makes sense to close unused credit cards. Not too long ago, financial experts suggested people do exactly this to make your credit score look better by showing your lack of need for unsecured credit.
But now we know that closing those accounts can actually lower your credit score because FICO rewards you for having multiple accounts and a large amount of credit at your disposal. So while closing accounts seems to be the financially responsible thing to so, it is probably more than an odd coincidence that this behavior which makes you a less profitable consumer for banks and credit card companies it punished by FICO.
The same goes for paying off installment loans early and voluntarily lowering credit limits. Both of these actions seem inline with what we would expect from the ideal consumer, but neither will have a positive impact on your credit score. Early payment of installment loans, another common goal of a financially responsible consumer that diminishes the profits of lenders, is not noted on your credit reports. And contrary to what you would think, lowering credit limits would lower your credit score because as alluded to above, you are rewarded for having multiple credit accounts and lots of credit at your disposal.
But by another quirk of the FICO credit scoring model, you are rewarded for having multiple credit accounts, but you are punished for seeking new credit. Consumers are told that inquiries are added to your credit reports each time you apply for credit so other lenders can see that you may be overextending yourself or crashing. But isn’t it convenient that inquiries will lower your credit score at the exact time when you are looking to qualify for new lines of credit? FICO wants you to have multiple lines of credit, but in trying to appease the scoring model, you will temporarily lower your credit score allowing lenders to charge you higher interest rates.
It seems no matter what you do, the deck is stacked against the consumer.
So while the VantageScore is a step in the right direction, it is still a long way from producing truly relevant results. This is because the VantageScore maintains many of the same scoring quirks exhibited by FICO and still uses the same basic, and very limited, variables for determining your credit score such as payment history, amounts owed, and length of credit history.
Your credit score is found by taking these variables as recorded in your credit reports, plugging them into a predictive model, and calculating a single three digit number. A late payment for example will be entered into the formula and will lower your credit score a set amount based on the amount of time it was late and how long ago the late payment was reported.
The fundamental flaw in this model, however, is that there is no accounting for why the payment was late. Whether you were late in making a payments because the lender did not send you a bill, because the bills were sent to the wrong address, because you wrote the wrong amount on the check, because your checks bounced, or because you blew all your money on illegal drugs; it is all the same in the eyes of the credit scoring model. Even if you have a sloppy lender to blame for your late payments, your credit worthiness in the eyes of lenders will be the same as a person saddled with a serious drug addiction.
Proper Utilization – Given how common it is for a credit score to be a gross misrepresentation of a person’s credit worthiness, it could be argued that the pervasiveness of credit scores in the financial market is improper. But in today’s society, the use of credit scores goes well beyond determining loan amounts and interest rates.
Employers, landlords, insurance companies and others may request to see your credit score. In today’s society your ability to get a certain job, rent an apartment, or qualify for reasonable insurance premium can all be dependent on your credit score.
Improper is a subjective term, but being passed over for a job because of completely irrelevant and possibly inaccurate negative credit items in your credit reports that are plugged into a flawed credit scoring model to produce a credit score that is not indicative of your actual credit worthiness fits the bill.
The FCRA Made Improvements, but there is Still a Long Way to Go
The FCRA’s failure to produce a system where the “accuracy, relevancy, and proper utilization” of your information is protected has resulted in a credit reporting system that is hardly “fair and equitable” to you as a consumer. But in defense of Congress, the FCRA has been heavily influenced by deep-pocketed industry lobbyists. In fact, when the FCRA was originally passed in 1971, Senator William Proxmire, one of the bills primary sponsors, felt defeated at what had become of his original intentions for the bill.
Since that time, the FCRA has been amended to become more and more consumer friendly, but there is still a ways to go and as was the case in 1971, those in the credit industry are still keenly interested in maintaining the status quo.
While the credit bureaus are no longer able to record information about you such as your ethnicity and religion, they also are not required to collect other personal information that is relevant to your credit worthiness. If you are a model citizen who has worked with the same company for 10 years, has a perfect criminal record and makes more than enough money to cover your expenses, it is fairly obvious that you are more worthy of credit than a career criminal who is a continual burden on the system. But none of this information is recorded by the credit bureaus or used when calculating your credit score. If you and the career criminal have the same types of accounts on your credit reports, your credit scores will be the same.
Also, while you now have the ability to see what information is contained within your credit reports, you do not have the ability to learn any more than the very basics of how this information is used to formulate your credit score. What impact will paying off a past due debt have on your credit? Which credit cards should be paid down first? What effect will shopping for a new loan have on your credit score? We have vague, observation based answers for these questions, but the exact formula is unknown and is subject to change at any time.
Finally, you have the right to dispute the questionable items in your credit reports, but you don’t have the right for this process to be easy or necessarily effective. Depending on your unique situation, credit repair can be as easy as submitting an online form or as difficult as tracking down creditors, fighting with collections agencies, and possibly involving legal intervention. The very entities who profit most from inaccurate credit reporting are the ones who played such a big role in watering down the FCRA and continue to resist consumer attempts to add equity to the credit system. It is these entities you are forced to contend with when working to enforce your right to a fair and accurate credit report.
Roberta
Credit Report and Credit Scores For Individuals
Posted in Finance on 05/17/2009 03:11 am by
Julie-Ann Amos asked:
In this day and age it is vitally important to maintain a decent credit score, especially if you plan to make major purchases like a home or a car. If your credit score is 700 or above, your chances for being denied a loan are very slim; and while Triple A credit is a luxury people dream of, few actually achieve that goal due to poor financial choices. However, you can make the most of your score by understanding the credit rating system, and by maintaining awareness of your standing. Doing this before you begin to shop for a home or auto loan can save hundreds and thousands of dollars just on the interest rate. It could also mean the difference between being approved or denied.
What’s In A Credit Report?
Your credit report houses information that ranges from fairly personal information to your income and borrowing habits. It lists things that creditors will want to know before they decide to lend you money; things like
o How you pay your bills
o Your present and past employment history
o If you have been arrested or sued
o If you have filed for bankruptcy
o Your current residence, and past addresses depending on the time you have been at your current address
Nationwide consumer reporting companies sell information within your reports to employers, creditors, and insurers who utilize all information to evaluate your applications for credit, renting or buying a home, and obtaining insurance.
Obtaining Your Credit Reports Online
It is a requirement of The Fair Credit Reporting Act that the three main consumer reporting companies, Trans Union, Equifax, and Experian, provide consumers with free copies of their credit report once every 12 months (upon request). These companies are also charged with promoting privacy and accuracy of consumer reporting.
You can obtain a free copy of your credit report by either requesting it in writing directly from each of the three major credit bureaus, or by using the online request system they have created. AnnualCreditReport.com is a site that is sponsored by TransUnion, Equifax, and Experian to make it fast and easy for consumers to get reports online as they fulfill their legal requirements. You may order all three credit reports from each consumer reporting agency or you may choose to order only one report at a time; either way by law you are permitted to obtain one free copy of your report per year from each of the reporting agencies.
The only information needed to obtain your free credit report is your date of birth, name, address, and social security number. Each consumer reporting agency will ask for different verifiable information only you know because each of your files have been obtained from different sources.
It is recommended that you check all three and not assume all of them to be correct if the first is, since all companies get their information from different resources; you could have an error on one and not another.
Your FICO Score
FICO is an acronym for Fair Isaac Company which was the company that originally created the system used to condense credit history into one distinct number; major credit agencies, businesses, and bank lenders have adopted this system as a means of evaluation for creditworthiness.
Ultimately, one’s credit score is determined by major factors such as amount currently owed to lenders. The general break down of how your score is determined is as follows:
o Outstanding loans, credit cards, and mortgages, and the amount owed on each (as well as the type of debt-revolving, secured, etc.) makes up about 30% of your score.
o At least 35% of your FICO score is based on how successfully you’ve repaid past debts.
o 15% of your score is based upon how long you have been utilizing credit; a lengthy credit history is of major benefit to you. This is not based on age, either-you can be middle aged with no credit if you do not take loans or use credit accounts, or you can be young with a long history of borrowing and repayment.
o 10% of your credit score is based on the amount of inquiries listed-on how many entities you sought credit from and allowed access to your credit report. Lower numbers of inquiries are better as some lenders tend to view frequent applications of credit in a specific period of time to be negative, and from the standpoint of the credit reporting agencies numerous inquiries indicate that you need to shop many sources to obtain credit.
All of these factors determine the number that makes up your credit score. This one simple number is crucial in enabling you to obtain any type of credit. Scores of 657 to 700 are considered good, and with a score of 700 or above you’re likely to be deemed creditworthy by many lenders. If you maintain a score of 600 or below, most likely you will have to invest some time and effort in order to rebuild your credit before applying for any type of loan. In addition, the higher the score the lower the cost of lending will be to you-higher scores net lower interest rates because they are considered less risky, while lower scores show some past trouble and increased risk for the lender, so when credit is offered it will be at a higher rate that allows lenders to recoup more on their loan earlier on.
Understanding credit scores can be difficult, but highly beneficial. When you know more about how banks and lenders evaluate you, and how you can confirm your good rating, you understand where you fall on the lending spectrum, and what options you have for improving your present and future financial situation.
Ellen
In this day and age it is vitally important to maintain a decent credit score, especially if you plan to make major purchases like a home or a car. If your credit score is 700 or above, your chances for being denied a loan are very slim; and while Triple A credit is a luxury people dream of, few actually achieve that goal due to poor financial choices. However, you can make the most of your score by understanding the credit rating system, and by maintaining awareness of your standing. Doing this before you begin to shop for a home or auto loan can save hundreds and thousands of dollars just on the interest rate. It could also mean the difference between being approved or denied.
What’s In A Credit Report?
Your credit report houses information that ranges from fairly personal information to your income and borrowing habits. It lists things that creditors will want to know before they decide to lend you money; things like
o How you pay your bills
o Your present and past employment history
o If you have been arrested or sued
o If you have filed for bankruptcy
o Your current residence, and past addresses depending on the time you have been at your current address
Nationwide consumer reporting companies sell information within your reports to employers, creditors, and insurers who utilize all information to evaluate your applications for credit, renting or buying a home, and obtaining insurance.
Obtaining Your Credit Reports Online
It is a requirement of The Fair Credit Reporting Act that the three main consumer reporting companies, Trans Union, Equifax, and Experian, provide consumers with free copies of their credit report once every 12 months (upon request). These companies are also charged with promoting privacy and accuracy of consumer reporting.
You can obtain a free copy of your credit report by either requesting it in writing directly from each of the three major credit bureaus, or by using the online request system they have created. AnnualCreditReport.com is a site that is sponsored by TransUnion, Equifax, and Experian to make it fast and easy for consumers to get reports online as they fulfill their legal requirements. You may order all three credit reports from each consumer reporting agency or you may choose to order only one report at a time; either way by law you are permitted to obtain one free copy of your report per year from each of the reporting agencies.
The only information needed to obtain your free credit report is your date of birth, name, address, and social security number. Each consumer reporting agency will ask for different verifiable information only you know because each of your files have been obtained from different sources.
It is recommended that you check all three and not assume all of them to be correct if the first is, since all companies get their information from different resources; you could have an error on one and not another.
Your FICO Score
FICO is an acronym for Fair Isaac Company which was the company that originally created the system used to condense credit history into one distinct number; major credit agencies, businesses, and bank lenders have adopted this system as a means of evaluation for creditworthiness.
Ultimately, one’s credit score is determined by major factors such as amount currently owed to lenders. The general break down of how your score is determined is as follows:
o Outstanding loans, credit cards, and mortgages, and the amount owed on each (as well as the type of debt-revolving, secured, etc.) makes up about 30% of your score.
o At least 35% of your FICO score is based on how successfully you’ve repaid past debts.
o 15% of your score is based upon how long you have been utilizing credit; a lengthy credit history is of major benefit to you. This is not based on age, either-you can be middle aged with no credit if you do not take loans or use credit accounts, or you can be young with a long history of borrowing and repayment.
o 10% of your credit score is based on the amount of inquiries listed-on how many entities you sought credit from and allowed access to your credit report. Lower numbers of inquiries are better as some lenders tend to view frequent applications of credit in a specific period of time to be negative, and from the standpoint of the credit reporting agencies numerous inquiries indicate that you need to shop many sources to obtain credit.
All of these factors determine the number that makes up your credit score. This one simple number is crucial in enabling you to obtain any type of credit. Scores of 657 to 700 are considered good, and with a score of 700 or above you’re likely to be deemed creditworthy by many lenders. If you maintain a score of 600 or below, most likely you will have to invest some time and effort in order to rebuild your credit before applying for any type of loan. In addition, the higher the score the lower the cost of lending will be to you-higher scores net lower interest rates because they are considered less risky, while lower scores show some past trouble and increased risk for the lender, so when credit is offered it will be at a higher rate that allows lenders to recoup more on their loan earlier on.
Understanding credit scores can be difficult, but highly beneficial. When you know more about how banks and lenders evaluate you, and how you can confirm your good rating, you understand where you fall on the lending spectrum, and what options you have for improving your present and future financial situation.
Ellen
Fix Your Credit Report
Posted in Finance on 02/04/2009 06:39 am by
Thomas Morva asked:
Your credit report may have errors without you even realizing it. Your black marks can be because of a non-payment of a bill that you never got in the first place. Whatever the cause, a bad credit report can make it difficult for you to apply for a loan for a purchase. It can even reduce your chances of finding employment.
If for some reason you have a negative error, the best option for is to get it fixed. This can be done by paying overdue bills, if any. Consider a situation that may arise when you move out of an apartment and a service provider company such as the electric company didn’t send you the electricity bill for your last month’s stay. You may not be at fault, but the end result is that you have a negative error in your report.
Under the Fair Credit Reporting Act, it is the responsibility of the consumer, the reporting company, and the information provider companies to fix the inaccuracies. The procedure for this is simple. You need to inform the consumer reporting company in writing, the information that you feel is inaccurate. These companies will then investigate your information and submit a report of the same, usually within thirty days. For this, they send notices to the information provider companies who then investigate and review the information. If they find the information is actually inaccurate, they will have to report the same to the consumer reporting companies, who in turn, will fix the errors in your report.
Apart from fixing the error, these companies will give you the result in, and also a free copy of, your credit report. Also, remember that when you dispute an error in your report, you must also send a copy of the notice sent to the CRAs as well as to the information provider company.
Chris
Your credit report may have errors without you even realizing it. Your black marks can be because of a non-payment of a bill that you never got in the first place. Whatever the cause, a bad credit report can make it difficult for you to apply for a loan for a purchase. It can even reduce your chances of finding employment.
If for some reason you have a negative error, the best option for is to get it fixed. This can be done by paying overdue bills, if any. Consider a situation that may arise when you move out of an apartment and a service provider company such as the electric company didn’t send you the electricity bill for your last month’s stay. You may not be at fault, but the end result is that you have a negative error in your report.
Under the Fair Credit Reporting Act, it is the responsibility of the consumer, the reporting company, and the information provider companies to fix the inaccuracies. The procedure for this is simple. You need to inform the consumer reporting company in writing, the information that you feel is inaccurate. These companies will then investigate your information and submit a report of the same, usually within thirty days. For this, they send notices to the information provider companies who then investigate and review the information. If they find the information is actually inaccurate, they will have to report the same to the consumer reporting companies, who in turn, will fix the errors in your report.
Apart from fixing the error, these companies will give you the result in, and also a free copy of, your credit report. Also, remember that when you dispute an error in your report, you must also send a copy of the notice sent to the CRAs as well as to the information provider company.
Chris