You and Your Credit

If you are a legal American citizen, you have many numbers that identify you...your social security number, your birthdate, your driver's license number, your address, your telephone number. Actually, the list could go on and on. But, one little 3-digit number holds your future in it's hand. What is this little gem?

Well, you've probably already guessed that it's your CREDIT SCORE! The number measures your worthiness to obtain credit. It tells lenders if you pay your bills. And, it seems like this particular number is getting a lot of attention these days. You can't turn on the radio without hearing a spot on "fixing your credit score" or "finding your credit score". My computer screen continually pops up ads about it.

This little 3-digit number can dictate whether you get a reasonable mortgage rate, how you'll finance your car, whether you'll be allowed to rent an apartment or maybe even if you can find affordable insurance. The little number tells the world how you handle your money and it serves as a great indicator on how you handle yourself!

Some people may have a low score just simply because they're just starting out and have no real credit opportunities to establish good credit. It's one of those tricky situations that seems futile. It's like being turned down for a job because you don't have any experience but no one will give you experience?? In regard to your credit history, you simply don't have any financial experiences that have been documented!

If you're in the "low credit score" boat because you're new to the financial world or have used cash exclusively in the past, here are some tips to get your credit score up and moving towards success!

1. Open a checking and savings account.
2. Get a secured credit card, which is backed with money held in a savings account. This really shows your financial stability.
3. If your parent is willing (and has good credit!), have your name added to their credit card so you can be linked to their good credit.
4. Always pay your bills on time.
5. Never charge your credit card close to the allowable credit limit, even though you pay the balance in full each month. Stay at least 30% below your credit limit to avoid credit score deductions.
6. Check your credit report to make sure all your accounts with creditors appear on your file. Not all creditors supply information to consumer reporting companies.

But, perhaps you have a low credit score after a lengthy financial history. Did you know that your credit history may not be accurate? Having good credit is very important and it is worth your time and effort to maintain your financial record just as you would your car's engine! It needs constant care and maintenance to combat identity theft but also to keep your credit information accurate so you can obtain the best loan rates possible.

Your credit report contains information about EVERYTHING...where you live, how you have paid your bills, whether you've ever been sued or arrested, whether you've ever filed for bankruptcy. Consumer reporting agencies sell the information in your report to creditors, insurers, employers, and any other business that needs to evaluate your financial worthiness.

The Fair Credit Reporting Act (FCRA) requires that each of the three national consumer reporting companies - Equifax, Experian, and TransUnion - provide you with a free copy of your credit report once every 12 months.

To get your free copy contact Annual Credit Report Request Service at www.annualcreditreport.com or by calling 1-877-8228. You can complete the Annual Credit Report request form and mail it to: Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281.

There is no need to contact the three nationwide reporting companies individually. You may request one, two or all three companies at one time. They will ask for your name, address, Social Security number and date of birth. Additional information may be necessary to maintain security for your file (e.g.. information only you would know).

This is the only government-sanctioned, credit-reporting, agency-operated website. Be wary of imitators or spam. www.annualcreditreport.com will NEVER send you an email solicitation for your free annual credit report, or use pop up ads. If you get an email or see a pop up about this service, it's probably a scam.

Review your credit report and make sure all the information is correct. Any inaccurate information, like late payments or past due amounts, can drag down your credit score. Make sure all the activity is from you and not an impostor. There are ways to get this information corrected and changed.

All three of the major national credit bureaus offer online dispute services on their websites. Under the FCRA, both the consumer reporting agency and creditor/employer are responsible for correcting inaccurate information in your credit report. To take advantage of your full rights under this law, contact both the national credit bureaus and the creditor/employer that you have a dispute with.

According to the Federal Trade Commission, disputing your credit report by mail may be the best way to correct items in your report. This allows your to attach a copy of the disputed item with your letter. With this item clearly circled and identified, the matter should be easier to address. Your letter should explain and identify the specific dispute, the facts of your dispute and your request to have it amended.

As with any important matter, it is recommended that you send your letter and documentation by certified mail to the creditor and request a return receipt. The national credit bureaus are obliged to investigate your dispute within 30 days. The bureaus must also provide your creditors with all information relevant to the dispute. If the creditor then deems that the disputed information is indeed false, it is then responsible for notifying the credit bureaus and reporting the correct information.

When the investigation is over, the credit bureaus must provide you with written results of their investigation. If your record needs changed, the bureaus are required to give you a free copy of your report. Accounts that belonged to another party will be removed from your file.

In addition to these measures, you may also ask the credit bureau to notify anyone who has requested your credit report in the last 6 months of the changes. You can have amended credit reports sent to any employer who may have requested them in the last 2 years.

If the investigation doesn't resolve your dispute with the credit bureau, you can ask them to add a "statement of the dispute" be included in your file.

And lastly, if the negative information on your credit report is accurate, only time will heal these wounds. A consumer reporting company (credit bureau) can report accurate negative information for seven years and bankruptcy information for 10 years. Information about an unpaid judgment against you can be reported for seven years or until the statute of limitations expires, whichever is longer. There is no time limit of reporting involving criminal convictions, applications for jobs that pay more than $75,000/year, information reported because you applied for more than $150,000 worth of credit or life insurance.

Please contact us or leave a comment if you would like some more information on this topic.