Credit report Topics

01.  Credit report frequently asked questions
02.  How credit bureaus compose your credit score
03.  Request for obtaining your credit report
04.  Credit report dispute letter

Credit has become very important in today's world.

Credit is easily defined as buying things today and making arrangements to pay later. The creditors report on your payment status. If you are late making a payment or miss a payment completely it is reported to agencies. These agencies then compile all the information into a report, which is known to us as a credit report.

A credit report is a factual record of your payment history. It also lists personal information such as your social security number and name. Most importantly, this record shows creditors how you have handled credit in the past. Creditors rely on this report to make decisions about your financial future with them.

On your credit report you will have a number, which is referred to as a credit score. Lenders use this to determine your credit worthiness. It is a method that is used to figure out the probability of a potential default or bankruptcy, as well as the chance of repayment. To sum up easily, credit scores are used to make an educated guess or prediction that a borrower will successfully repay, or not repay, the debt.

It is so important to keep a good credit score. All lenders look at your credit report before extending you credit. A poor credit score can cause the lender to deny you credit or give you a higher interest rate and bad terms. The average American has a credit score of 682. Each lender has different requirements but in most cases if you meet the average credit score or above you will get decent rates and terms.

As we have talked about it is imperative to keep a good credit score, but not always easy. There are some ways to help raise your score and maintain it. You want to make sure you always pay your bills on time. Sometimes things happen and it is beyond your control, but try to always make timely payments. Also, make sure that all old accounts are closed at your request. The reason you want to close accounts that you are no longer using is to lower your debt level. In other words if you have a Macy's account that has been open for two years and you never plan to use it close it. Lenders pulling your report show that amount available to you even though there may be a zero balance. It will be held against you since it is available to you at any time. As you read further on I will discuss more ways to get and maintain a good credit score.

1. Frequently Asked Questions

What are the three credit bureaus and how do I contact them?

TransUnion P.O Box 2000
Chester, PA 19022
800-916-8800
www.transunion.com

Experian 475 Anton Blvd.
Costa Mesa, CA 92626
888-243-6951
www.experian.com

Equifax Credit Information Services, Inc
P.O. Box 740241
Atlanta, GA 30374
800-685-1111
www.equifax.com

How do I receive a free credit report?
You can mail a letter requesting a free credit report to all 3 bureaus. Example 3 is a format that you can use.

What do the credit scores range between?
The credit scores range between 300 and 900. The higher number the better risk you are to the creditor.

I have a bad credit score but was not denied for any loans?
Even with a bad credit score some lenders will extend credit. However, your interest rate and terms will be a lot higher than someone with good credit. The reason for this is because you are a higher risk therefore they charge you more money in case you default.

What are inquiries?
Inquiries are any attempt to check your credit. There are two kinds of inquiries, which are hard and soft. Hard inquiries are the attempts that actually count against you. Many people are not aware that when you give someone permission to check your credit it is being noted and can lower your score. Those are called hard inquiries. Now when you pull your own report it does not count against you and is encouraged.

What are some ways to get and maintain a good credit score?

Pay all bills on time

Keep debt to income level low

Dispute all negative information

Correct inaccurate information

Close all old accounts at your request

Notify in writing creditors your change of address

Fill out credit applications the same

Review credit report annually

Why should I pull my credit report once a year?
You should pull your credit report at the least once a year to make sure everything is correct. Pulling your credit report has many advantages. First, you can make sure that you have not been the victim of identity theft. Next, check to see what the creditors are reporting is accurate. Finally, to know what your score is.

I pulled my credit report and found inaccurate information. What do I do?
You need to write all 3 credit bureaus a letter explaining that the information is not correct. Example 4 is the format of the letter you can write.

Why must I contact all 3 credit bureaus?
The bureaus do not contact each other. Therefore if you do not contact all 3 you will not know what each one is reporting.

How do I repair damaged credit?

Pay off your debts

Apply for a secured card

Manage your money

2.How credit bureaus compose your credit score

The table below shows what the credit bureaus use to compose your credit score. Each section is defined to give you a better understanding.



Payment History: consists of how well you pay your bills.
Length of Credit History: how long you have had credit.
New Credit: any new credit that you have taken out.
Types of credit used: what type of credit you have (credit cards, loans, etc.).
Amounts owed: how much debt you are in.

These factors are not included in your credit score:

Race

Color

Religion

Sex

Marital status

Age

Salary

Occupation

Interest rate being charged

Child support

Family obligations

Certain types of inquiries

3. Request for obtaining your credit report

Here's all the information you'll need to obtain your credit report : Request letter

MY NAME
MY ADDRESS
MY PHONE NUMBER

Send a copy to Each Credit Bureau: Experian, TransUnion and Equifax at the address provided above:

Today's Date Dear Sir/Madam,

Request for credit report, Can you please provide one FREE copy of my credit report?

Name:

Address:

Date of Birth
SS#

Yours truly,
MY SIGNATURE
MY NAME

4. Sample, Credit report dispute letter

Date
Your Name
Your Address
Your City, State, Zip Code

Complaint Department
Name of Credit Reporting Agency

Address
City, State, Zip Code
Dear Sir or Madam:

I am writing to dispute the following information in my file. The items I dispute are also encircled on the attached copy of the report I received. (Identify item(s) disputed by name of source, such as creditors or tax court, and identify type of item, such as credit account, judgment, etc.)

This item is (inaccurate or incomplete) because (describe what is inaccurate or incomplete and why) . I am requesting that the item be deleted (or request another specific change) to correct the information.

Enclosed are copies of (use this sentence if applicable and describe any enclosed documentation, such as payment records, court documents) supporting my position. Please reinvestigate this (these) matter(s) and (delete or correct) the disputed item(s) as soon as possible.

Sincerely, Your name
Enclosures: (List what you are enclosing)

Credit reporting agencys must reinvestigate the items in question--usually within 30 days--unless they consider your dispute frivolous. They also must forward all relevant data you provide about the dispute to the information provider. After the information provider receives notice of a dispute from the CRA, it must investigate, review all relevant information provided by the CRA, and report the results to the CRA. If the information provider finds the disputed information to be inaccurate, it must notify all nationwide CRAs so they can correct this information in your file. l Disputed information that cannot be verified must be deleted from your file.

If your report contains erroneous information, the CRA must correct it.

If an item is incomplete, the CRA must complete it. For example, if your file showed that you were late making payments, but failed to show that you were no longer delinquent, the CRA must show that you're current.

If your file shows an account that belongs only to another person, the CRA must delete it.

Got a question? Then contact our Education Team on 561-883-2398 Ex.310 United conducts regular seminars on financial education, including "How to Budget", come along and join us - to reserve your seat contact our Education Team on 561-883-2398 Ex.310

Newsletter 12
Rev.2
June & December, 2005