Your credit report can be one of the most important pieces of information when it comes to your financial health. It is important that you have an understanding of all that it contains and how it relates to future credit you may apply for.
Your credit report says a lot about you
Your credit report tells a lender what kind of borrower you are. It tracks late payments, collection requests, and bankruptcies. It also tracks on time payments, loans that are paid off, and accounts that are opened and closed. It is your history and it can affect your future.
Too much credit can hurt you
It seems silly, but having too many credit card accounts on your credit report can actually hurt you even if you have no late payments and carry a low balance. Lenders worry that because you have the ability to run up high credit card bills, you might accrue a large debt and be unable to pay them back because you have other bills to pay. If you have credit cards in your wallet that you seldom use, close the accounts. Instead of carrying three gas credit cards, trim down to one, or put your gas purchases on a general use credit card.
What you don’t know can hurt you
Credit reports contain a lot of information about you and with the volume of information they are compiling, it is possible that it contains some mistakes. Perhaps you have closed an account that your credit report states is open or you have paid off a balance that is still listed. Whatever the discrepancy, if you notice an inaccuracy on your credit report, it is up to you to contact the credit bureau and get it corrected.
What you don’t do can hurt you
Missing credit card payments costs you more than just late fees. Having late payments reported on your credit report can keep you from getting a home loan or even buying a car and once accurate negative information is on your credit report it takes 7 years to get it erased. It is important to make your payments and make them on time and to carefully consider every purchase you place on a credit card.
Showing posts with label credit report. Show all posts
Showing posts with label credit report. Show all posts
Friday, May 8, 2009
Improving Your Credit Report and Score
Your credit report determines how much interest you will pay for your mortgage, credit card, or home loan. You need to know your score and ways to improve it.
Q. How do I improve my credit report and score?
A. The best way to improve your score is to avoid doing the things that lower your score.
Every time you apply for credit, make a payment, or miss a payment, you add information to your credit report and that affects your credit score. The companies that calculate credit scores don't reveal exactly how they do it, but they do offer general ideas for consumers. Learn more at www.myfico.com.
Pay on time. One of the best ways to boost your score is to improve your record of paying on time. Timely payment on all your debts is a must. Check your bills to see when payments are due; it may be sooner than you think. Late fees and interest penalties add up quickly and make it hard to pay the balance.
Pay more than minimum. Pay as much as you can on every account, and never less than the minimum.
Stay below the limit. Your credit score also considers how much credit is available to you and how you use that credit. If you regularly charge close to the maximum on your charge card you will hurt your credit score.
Have fewer accounts. If you apply for store credit to get a special offer or discount, you may harm your score, even if you don't use the store account often. Opening a new account and transferring your existing balances to the new account will not improve your score.
Group your inquiries. When you shop for a loan, each lender will check your credit history. Every "inquiry" is listed on your credit report. The credit scoring system sees too many inquiries as a sign of risk. Avoid this problem by comparison shopping within a short time period. If you make several inquiries about one type of loan, say a car loan, within one month, FICO counts this as only one inquiry. When you check your own report (make an "inquiry") you do not harm your score.
Wait for progress. A bankruptcy or series of late payments can lower your score quickly, and it will take time to recover. It is important to stay on a positive track. The credit scoring formulas give more weight to the recent positive history, and older poor performance fades away.
The Federal Trade Commission (FTC) works for the consumer to prevent fraudulent, deceptive and unfair business practices in the marketplace and to provide information to help consumers spot, stop and avoid them. To file a complaint or to get free information on consumer issues, visit the FTC web site or call toll-free, 1-877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4261. The FTC enters Internet, telemarketing, identity theft and other fraud-related complaints into Consumer Sentinel, a secure, online database available to hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.
Q. How do I improve my credit report and score?
A. The best way to improve your score is to avoid doing the things that lower your score.
Every time you apply for credit, make a payment, or miss a payment, you add information to your credit report and that affects your credit score. The companies that calculate credit scores don't reveal exactly how they do it, but they do offer general ideas for consumers. Learn more at www.myfico.com.
Pay on time. One of the best ways to boost your score is to improve your record of paying on time. Timely payment on all your debts is a must. Check your bills to see when payments are due; it may be sooner than you think. Late fees and interest penalties add up quickly and make it hard to pay the balance.
Pay more than minimum. Pay as much as you can on every account, and never less than the minimum.
Stay below the limit. Your credit score also considers how much credit is available to you and how you use that credit. If you regularly charge close to the maximum on your charge card you will hurt your credit score.
Have fewer accounts. If you apply for store credit to get a special offer or discount, you may harm your score, even if you don't use the store account often. Opening a new account and transferring your existing balances to the new account will not improve your score.
Group your inquiries. When you shop for a loan, each lender will check your credit history. Every "inquiry" is listed on your credit report. The credit scoring system sees too many inquiries as a sign of risk. Avoid this problem by comparison shopping within a short time period. If you make several inquiries about one type of loan, say a car loan, within one month, FICO counts this as only one inquiry. When you check your own report (make an "inquiry") you do not harm your score.
Wait for progress. A bankruptcy or series of late payments can lower your score quickly, and it will take time to recover. It is important to stay on a positive track. The credit scoring formulas give more weight to the recent positive history, and older poor performance fades away.
The Federal Trade Commission (FTC) works for the consumer to prevent fraudulent, deceptive and unfair business practices in the marketplace and to provide information to help consumers spot, stop and avoid them. To file a complaint or to get free information on consumer issues, visit the FTC web site or call toll-free, 1-877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4261. The FTC enters Internet, telemarketing, identity theft and other fraud-related complaints into Consumer Sentinel, a secure, online database available to hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.
Is Your Credit Report Costing You Money?
Everyone needs to take advantage of the new Federal Free Annual Credit report program, and everyone means you! Why? Because the odds are about 4 to 1 against your credit report being accurate at all 3 bureaus. That’s one of the things the big three credit reporting agencies don’t want you to know. A recent study did random pulls of credit reports from Equifax, Experian and Transunion, with the consumers involved prior permission. They then contacted each consumer and verified all information on those reports. In 79% of the cases, there were one or more errors on the reports from at least one agency! This indicates that there is about a 4 out of 5 chance that there may be an error on your credit report. Some estimates put the rate as low as 1 out of 3, while another puts the estimate at 90%, but no matter what the actual percentage is, even the low end is cause for concern.
Now, some of these errors that are found are pretty harmless, such as incorrect past addresses or employers, but a lot them are not. And many of these errors can have a negative impact on the consumer's credit scores. This means you could be turned down for a loan or credit card, or charged a higher interest rate for your loan, all through no fault of your own. In our own experience in consulting on Florida mortgage loans, we’ve seen many instances of errors somehow appearing on clients reports. One client had several derogatory items listed, simply because he had once lived in the same apartment complex as a man who had the same first and last name, and who also had some problems with his credit. Even though their age and middle initials, and in fact their addresses, were different, the bad credit data had shown up on his report as well.
And of course, they obviously had different social security numbers...
In another case we had a customer who had a collection listed on their account for an unreturned cable box. After disputing it with the cable company for several weeks on the phone, and reporting the discrepancy to the bureaus, they finally dug through old paperwork from 3 years before and found the receipt for the unit's return. Only after carrying the receipt down to the cable company for their inspection was the collection removed from their account, and then it was simply posted as a collection that had been "satisfied"! It took another series of phone calls, letters to all three bureaus, and almost 2 months to get the incorrect item removed completely.
In other instances, we’ve seen derogatory credit posting on a son’s account from his mother’s credit history, or on a daughter’s from her father, and vice versa. The bureaus "assumed" that since their addresses were the same, that there was a legally binding link between their credit. But this would normally only apply if they were husband and wife, or if they had applied jointly for the credit. In these cases, they had not applied jointly, and one would think that the 25-30 year age difference would give the credit bureaus a clue as to their real relationship, or would at least cause them to seek verification of a marriage through public records. But, of course they didn't.
In my own case, one of my credit card accounts has now shown up on my wife’s credit bureau reports, simply because I mentioned her name on the phone to a credit card company representative, while I was declining their offer to add her to the account. In this instance, it does neither of us any harm, since we both have excellent credit, and as husband and wife are responsible for each other’s debts anyway, but it was an "intentional error", none the less. I would be willing to bet that the credit card company offers a bonus to their reps for getting co-signers added to an account, and the rep I was speaking to simply cross referenced my address to find my wife’s account.
When confronted with the errors discovered in the study referred to above, all of the credit bureaus had basically the same response. Human beings help compile the data in these reports, and being human, may make mistakes. All of the bureaus have procedures in place for consumers to dispute erroneous items, and a fedreal law requires that they remove any that they cannot verify are correct within 30 days. But if any of you that are reading this have ever tried to have an erroneous listing removed from your credit report, you know what a frustrating and time consuming job it can be. Plus, in my experience in dealing with client’s credit reports, I have rarely seen good credit listings from another consumer magically appear on someone’s report, but I see derogatory ones that don’t belong there, show up all of the time.
Somehow the credit bureaus manage to spot differences in consumers account details and social security numbers when posting good credit lines, but ignore them on a regular basis when posting bad ones. And some consumers would just as soon pay off a small delinquency, even if it isn’t theirs, rather than holding up buying a home or a car for 30-60 days (including mailing and processing time) while they dispute the item and get it removed. This of course benefits the company listing the delinquency, since they really don’t care who pays, as long as someone does.
All of these problems are why the credit bureaus are now required by law to give you access to your credit reports for free on an annual basis. Even if you’ve never had a issue with your credit rating before, you need to take advantage of this free service. Do it before you need a new mortgage or other loan, so there are no surprises when you do apply. And do it every year, to insure that no new errors appear on your report. It only takes a few minutes of your time to order the reports, and it is time well spent. Consider this, at current fixed rates for an average $200,000 Florida mortgage, a half of one per cent increase in you interest rate, caused by an error on your credit report lowering your score, could cost you over $23,400 in interest over the life of the loan. If it takes you 1 hour a year to request and look over your credit reports to correct that error and save that money, (and it shouldn’t even take that long), you’ll have been paid about $780 an hour for that time.
Now, maybe the credit bureaus are correct, and are being honest, when they claim that all of the mistakes in their credit reports are simply human error, but that doesn’t mean you have to be a victim of those errors. Find out NOW if your reports are accurate, and make sure to get any errors corrected before you need your next loan. Don’t be put in the position of having to pay for someone else’s mistake in order to buy your dream home. Or having to pay too much, year after year, for that home.
I’ve mentioned in previous articles that dealing with a local, fully licensed Mortgage Broker, is the best way to get your home mortgage, and this is just another reason why. With most banks, finance companies and large, on-line lenders, all you’ll get is a standard turn down letter if you have problems with your credit. But a truly dedicated Broker will discuss your credit report with you (although they are restricted from actually giving you a copy of your reports), help identify any mistakes, and then help you get them corrected. Now I may well be prejudiced, considering I’m associated with the one of the best, if not the best, Florida Mortgage Brokers, but considering that about 4 out of 5 clients can use that help, and banks and on-line lenders usually don’t offer it, I think my opinion is actually fair and unbiased o this matter. Solving one problem with your credit report could save you 5-10 times the amount of a reputable Mortgage Broker’s average fee. And that’s not counting the lower interest rate you’re likely to get to begin with.
To get a free copy of your credit reports using the federal program you can call;
1-877-322-8228
To contact any of the big three credit bureaus, if you have issues to be resolved, use the numbers below;
Equifax 1-800-685-1111
Experian 1-888-397-3742
Transunion 1-800-916-8800
So, check your credit reports now, and correct any mistakes before they become an issue. One thing your free reports won’t give you is your actual score, but if your report is clean, and you’re still paying more than 7% on your first or second mortgage, give Star Mortgage a call;
Star Mortgage, Inc. 813-882-8878
They’ll pull your credit just one time, run it through a matrix of hundreds of programs from dozens of wholesale lenders, and find the best mortgage to solve your problems and save you money. The consultation and mortgage analysis is free, and you’re under no obligation. They'll work to make getting your next Florida mortgage as relaxed and pressure free as a day at the beach. See the resource box for links to the website for your Free Credit Report and the Star Mortgage website.
Now, some of these errors that are found are pretty harmless, such as incorrect past addresses or employers, but a lot them are not. And many of these errors can have a negative impact on the consumer's credit scores. This means you could be turned down for a loan or credit card, or charged a higher interest rate for your loan, all through no fault of your own. In our own experience in consulting on Florida mortgage loans, we’ve seen many instances of errors somehow appearing on clients reports. One client had several derogatory items listed, simply because he had once lived in the same apartment complex as a man who had the same first and last name, and who also had some problems with his credit. Even though their age and middle initials, and in fact their addresses, were different, the bad credit data had shown up on his report as well.
And of course, they obviously had different social security numbers...
In another case we had a customer who had a collection listed on their account for an unreturned cable box. After disputing it with the cable company for several weeks on the phone, and reporting the discrepancy to the bureaus, they finally dug through old paperwork from 3 years before and found the receipt for the unit's return. Only after carrying the receipt down to the cable company for their inspection was the collection removed from their account, and then it was simply posted as a collection that had been "satisfied"! It took another series of phone calls, letters to all three bureaus, and almost 2 months to get the incorrect item removed completely.
In other instances, we’ve seen derogatory credit posting on a son’s account from his mother’s credit history, or on a daughter’s from her father, and vice versa. The bureaus "assumed" that since their addresses were the same, that there was a legally binding link between their credit. But this would normally only apply if they were husband and wife, or if they had applied jointly for the credit. In these cases, they had not applied jointly, and one would think that the 25-30 year age difference would give the credit bureaus a clue as to their real relationship, or would at least cause them to seek verification of a marriage through public records. But, of course they didn't.
In my own case, one of my credit card accounts has now shown up on my wife’s credit bureau reports, simply because I mentioned her name on the phone to a credit card company representative, while I was declining their offer to add her to the account. In this instance, it does neither of us any harm, since we both have excellent credit, and as husband and wife are responsible for each other’s debts anyway, but it was an "intentional error", none the less. I would be willing to bet that the credit card company offers a bonus to their reps for getting co-signers added to an account, and the rep I was speaking to simply cross referenced my address to find my wife’s account.
When confronted with the errors discovered in the study referred to above, all of the credit bureaus had basically the same response. Human beings help compile the data in these reports, and being human, may make mistakes. All of the bureaus have procedures in place for consumers to dispute erroneous items, and a fedreal law requires that they remove any that they cannot verify are correct within 30 days. But if any of you that are reading this have ever tried to have an erroneous listing removed from your credit report, you know what a frustrating and time consuming job it can be. Plus, in my experience in dealing with client’s credit reports, I have rarely seen good credit listings from another consumer magically appear on someone’s report, but I see derogatory ones that don’t belong there, show up all of the time.
Somehow the credit bureaus manage to spot differences in consumers account details and social security numbers when posting good credit lines, but ignore them on a regular basis when posting bad ones. And some consumers would just as soon pay off a small delinquency, even if it isn’t theirs, rather than holding up buying a home or a car for 30-60 days (including mailing and processing time) while they dispute the item and get it removed. This of course benefits the company listing the delinquency, since they really don’t care who pays, as long as someone does.
All of these problems are why the credit bureaus are now required by law to give you access to your credit reports for free on an annual basis. Even if you’ve never had a issue with your credit rating before, you need to take advantage of this free service. Do it before you need a new mortgage or other loan, so there are no surprises when you do apply. And do it every year, to insure that no new errors appear on your report. It only takes a few minutes of your time to order the reports, and it is time well spent. Consider this, at current fixed rates for an average $200,000 Florida mortgage, a half of one per cent increase in you interest rate, caused by an error on your credit report lowering your score, could cost you over $23,400 in interest over the life of the loan. If it takes you 1 hour a year to request and look over your credit reports to correct that error and save that money, (and it shouldn’t even take that long), you’ll have been paid about $780 an hour for that time.
Now, maybe the credit bureaus are correct, and are being honest, when they claim that all of the mistakes in their credit reports are simply human error, but that doesn’t mean you have to be a victim of those errors. Find out NOW if your reports are accurate, and make sure to get any errors corrected before you need your next loan. Don’t be put in the position of having to pay for someone else’s mistake in order to buy your dream home. Or having to pay too much, year after year, for that home.
I’ve mentioned in previous articles that dealing with a local, fully licensed Mortgage Broker, is the best way to get your home mortgage, and this is just another reason why. With most banks, finance companies and large, on-line lenders, all you’ll get is a standard turn down letter if you have problems with your credit. But a truly dedicated Broker will discuss your credit report with you (although they are restricted from actually giving you a copy of your reports), help identify any mistakes, and then help you get them corrected. Now I may well be prejudiced, considering I’m associated with the one of the best, if not the best, Florida Mortgage Brokers, but considering that about 4 out of 5 clients can use that help, and banks and on-line lenders usually don’t offer it, I think my opinion is actually fair and unbiased o this matter. Solving one problem with your credit report could save you 5-10 times the amount of a reputable Mortgage Broker’s average fee. And that’s not counting the lower interest rate you’re likely to get to begin with.
To get a free copy of your credit reports using the federal program you can call;
1-877-322-8228
To contact any of the big three credit bureaus, if you have issues to be resolved, use the numbers below;
Equifax 1-800-685-1111
Experian 1-888-397-3742
Transunion 1-800-916-8800
So, check your credit reports now, and correct any mistakes before they become an issue. One thing your free reports won’t give you is your actual score, but if your report is clean, and you’re still paying more than 7% on your first or second mortgage, give Star Mortgage a call;
Star Mortgage, Inc. 813-882-8878
They’ll pull your credit just one time, run it through a matrix of hundreds of programs from dozens of wholesale lenders, and find the best mortgage to solve your problems and save you money. The consultation and mortgage analysis is free, and you’re under no obligation. They'll work to make getting your next Florida mortgage as relaxed and pressure free as a day at the beach. See the resource box for links to the website for your Free Credit Report and the Star Mortgage website.
Subscribe to:
Comments (Atom)