 |
||||||||||||||
 |
||||||||||||||
|
Does Your Credit Need Fixing?
In 2008, the Fair Isaac Company (FICO) reported that 13% of the general population was suffering from bad credit. The auto industry reports an even higher number, that of 35% of Americans as a national average who possess bad credit. If you have bad credit, can it be fixed? Why would you want to fix it? Two reasons: It is very difficult in this world to make major purchases without the option of buying on credit and having good credit saves you money on interest spent over the life of the loan. Credit Report ErrorsThere are two ways that you can fix a bad credit report. The first way is by removing errors in your credit report that may reflect negatively on your credit worthiness. According to FICO statistics, 79% of all credit reports contain a number of errors and 25% of these were serious enough to damage a person’s credit rating. So, if you have been denied credit due to a bad credit report, the first thing you should do is check to see if your credit report is accurate. Why would it be inaccurate? Well, with millions of pieces of credit information being entered into a credit reporting agency’s database on a daily basis, it’s not to hard to imagine how a mistake could be made. A customer’s account number may only be one digit different from yours and when it is entered incorrectly into their computer causes that information to end up on your credit report. There is also the possibility of identity theft. If someone gets a hold of your social security number, they have the capability of opening a credit card in your name that is sent to their address. This information will also be added to your credit report.
Fixing a Bad Credit ReportThe procedure for correcting errors on your credit report is simply to start by contacting the credit reporting agencies directly and requesting a copy of your credit report. Under the Fair and Accurate Credit Transactions Act (FACT Act), consumers can get a free credit report once a year. The website annualcreditreport.com is where you can access these free reports. Register at this website and then you will be directed to each of the three major credit reporting agencies, Experian, Equifax and TransUnion. You will then be asked to identify yourself and then you can download or print your free credit report. If after examining your credit report, you notice that there are mistakes on it, you should gather as much proof of the mistake as possible. Make copies of your report and your proof and write a letter to the credit reporting agency stating clearly what the mistake is, why you believe it is a mistake and ask them to remove the error as soon as possible. Make copies of this letter as well and send all of this material to the credit reporting agency via registered mail with a return receipt requested. This is your proof that you requested the correction and the date you requested it. The credit reporting agency will forward this request on to the lender that sent them the incorrect information and they will investigate the matter. If an error is in fact found, the lender will make the correction usually within 30 days and the corrected information will be sent to all three of the credit reporting agencies on your behalf. This should take care of the problem. If it does not, you can file a formal complaint with the Federal Trade Commission (FTC) at their website listed below. Credit reporting agencies are required by law to keep accurate records of a consumer’s credit history and the FTC takes these complaints seriously. Bad Credit ? - Start by Paying the BillsIf you still have bad credit even though your credit report is now accurate, then the best thing to do is start today utilizing better money and credit managing practices. Do your very best to pay bills on time and avoid getting into more debt. Consult a legitimate credit counseling service for advice on money and debt management and work hard to establish a good future credit history. In time, the older accounts will fall off the record and a good credit record will evolve. Credit reporting agencies can hold a record of negative information for 7 years and a bankruptcy report for 10 years. However, you don’t have to wait that long for your credit score to improve. The older the information, the less impact it will have on your credit rating. Recent pay history is the most important factor in determining credit scores. Credit HistoryIf you are having financial problems, you can prevent negative reports from reaching your credit history by immediately communicating with your creditors and lenders and explaining the situation. Ask for help setting up a lower payment plan and do your best to resolve this issue before it goes to collections. You might consider the option of debt consolidation through your bank or other finance company. Be careful of debt consolidation companies that hide their fees or ask for very high donations that will only further burden you with debt. Credit ScamsDon’t be fooled by credit fixer scams that promise to erase bad credit for a fee. This is impossible and illegal. If they are able to erase temporarily some piece of negative information, it will simply reappear when it is proven to be accurate. Sometimes they will suggest applying for a federal employer identification number to use when applying for credit, thereby creating a “new” credit report. This is false representation of your identity and illegal. Any credit or debt counseling service that is legitimate will offer their services with a clear and understandable contract. They will not charge you until their services are complete and they will never ask you to do anything illegal. Fix Your Credit ProblemsSo with patience and hard work, you can fix your credit. For more information on credit issues and credit repair along with a list of legitimate credit counseling agencies, consult the following links. Federal Trade Commission Website – Credit Repair Credit Repair: How to Help Yourself |
|||||||||||||
| ||||||||||||||
