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Manage Your Credit

Your Credit Report

Credit is a part of life and maintaining a solid credit history is imperative.  Your credit report tells a lender payment history, outstanding balances, length of time credit has been established, number of inquiries to your credit history, current and previous addresses as well as employer information, and if there are any collection items, liens, judgements or bankruptcies.
What Makes up a Credit Score?

Payment History
Balances Carried
Credit History
Type of Accounts

A Credit Score is a number that helps lenders and others predict how likely you are to make your credit payments on time.  Each score is based on the information in your credit report.  These credit scores (FICOs) were developed by Fair Isaac Corporation are and today’s most commonly used scoring system.  FICO scores range from 300-850, with most people scoring in the 600-700 range.  FICO scores above 700 are very good and are a sign of financial health.  FICO scores below 600 indicate higher risk and, if approved, could result in a higher interest rate. 
It’s important to review your credit report regularly to verify the information.  Report any inaccuracies immediately.  If you’ve gotten behind on bills, obtaining a credit report will help you evaluate where you stand. 

Improve Your Credit Score

If you’ve had trouble with your credit for whatever reasons, hang in there.  Repairing damaged credit requires persistence but is worth your time.  Here are some tips to help you improve your credit score:

  1. Pay your bills on time.  Any amounts that are past due destroy your credit score.  Work at paying down past due balances as soon as possible.  Start by paying off those with the highest interest rates first.  Once you become current on any late payments, contact all creditors that have reported the late payments and request they be removed.  Limit your spending so you don’t further extend your credit obligations.  If you’ve had late payments, you might not want to close the card right away because the last payment history will reflect the late payment.  Instead, keep the card open for 24 months to allow the late payment to fall off.  Making timely payments will reestablish your credit. 

  2. Pay Charge Offs and Liens.  Any charge offs or liens within the past 24 months damage your credit score.  Work at paying these as quickly as possible.

  3. Eliminate Collection Accounts.  Work at paying these as quickly as possible.  Not all collection agencies will do this but many will, and it’s well worth your effort to try.  When you are getting ready to pay off a collection, contact the collection agency and make arrangements to pay it off with the condition they remove all reporting from the credit bureaus.  Request a letter from them that states this agreement. 

  4. Don’t exceed your credit limit.  Creditors compare your outstanding balance to your credit limit.  Keep your card balances at 50% of that limit or below.  Anything over 70% of your limit lowers your score. 

  5. Manage Credit Card Accounts.  Keep the number of credit cards you have between three and five.  If you need to close any cards, the newest cards are the ones to close.  People that have credit for a longer period of time are assumed to be at less risk of defaulting on payments.  Use the old card at least once every six months to avoid it moving to inactive. 

  6. Avoid Credit Card Hopping.  Frequently switching cards for better rates can damage your credit rating because it helps to show clean payment history over a longer period of time.  Frequently opening and closing cards can show a shorter period of payment history. 

  7. Limit additional requests for credit.  Your credit file will show the number of inquiries into your credit.  Too many can damage your credit.

Credit Repair

Everyday, companies nationwide appeal to consumers with poor credit.  They promise, for a fee, to clean up your credit report or eliminate debt so you can get a car loan or a mortgage.  Do yourself a favor and save some money.  Only time, a conscious effort, and a personal debt repayment plan will improve your credit report. 

Watch out for companies that:

  • Want you to pay for credit repair services before they provide any services.  Under the Credit Repair Organizations Act, credit repair companies cannot require you to pay until they have completed the services they have promised.
  • Do not tell you your legal rights and what you can do for yourself for free.
  • Recommend that you not contact a credit reporting company directly.
  • Suggest that you try to invent a “new” credit identity – and then, a new credit report – by applying for an Employer Identification Number to use instead of your Social Security Number.
  • Advise you to dispute all information in your credit report or take any action that seems illegal. 

If you follow illegal advice and commit fraud, you may be subject to prosecution.  It’s a federal crime to lie on a loan application.  If you’ve been victimized by a credit repair company, don’t be embarrassed to report it. 

The truth is no one can legally remove accurate and timely negative information from a credit report.  The law allows you to ask for an investigation of information in your file that you dispute as inaccurate.  There is no charge for this.  Everything a credit repair company can do, you can do for yourself at little or no cost. 

According to the Fair Credit Reporting Act (FCRA):

  • You’re entitled to a free credit report if you’ve been denied as long as your request your report within 60 days of receiving notice of the action.
  • Each of the nationwide consumer reporting companies is required to provide you with a free copy of your credit report, at your request, once every 12 months.

    Website                 www.
    Phone                    1-877-322-8228
    Mail                         Annual Credit Report Request Service
                                    P.O. Box  105281
                                    Atlanta, GA  30348-5281

    To buy a copy of your credit report, contact:
    Equifax                 800-685-1111           Click here 
    TransUnion         800-888-4213          Click here
    Experian               888-397-3742          Click here
  • You can dispute mistakes for free.  Under the FCRA, both the credit reporting company and the information provider are responsible for correcting inaccurate information in your report.

If you have discovered inaccurate information on your credit report, know your rights and follow these steps. 

Tell the credit reporting agencies, in writing, what information you think is inaccurate.  Include copies (NOT originals) of documents that support your position.  Clearly identify the item(s) you’re disputing, explain why you dispute the information and request that it be removed or corrected.  Send your letter by certified mail, “return receipt requested,” so you can document that they received your letter.  Keep copies of your dispute letter and enclosures.

Credit reporting companies must investigate the dispute within 30 days.  They must also forward all relevant data to the organization that provided the information.  The organization then must review, investigate and report the results back to the credit reporting agency.  If the information provider finds the disputed information is inaccurate, it must notify all three credit reporting agencies to correct the file.  When the investigation is complete, the credit reporting agency must give you the results in writing as well as the name, address, and phone number of the information provider.  If you request, the credit reporting agency must send notices of any correction to anyone who received your report in the past six months.  

When negative information in your report is accurate, only time can assure its removal.  Credit information stays on your report for seven years and bankruptcy information for ten years. 

If you’re having trouble paying bills, you’re not alone.  Many people face financial crises at some time in their lives.  Whether it’s caused by personal or family illness, the loss of a job, or simple overspending, it can seem overwhelming.  To deal with debt consider these options: realistic budgeting, credit counseling from a reputable, non-profit organization, debt consolidation or bankruptcy.

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