There is only one way to discover “health”
of your credit. You need to examine your credit
report. Your credit report is your “consumer
identity” that prospective lenders will use to judge your
creditworthiness.
Use these tips to give your credit profile the
“tuning” you need for 2004.
Tip #1: Check for Errors
Your credit report or profile is more than just a
collection of who your creditors are and how much
owes them or has paid them.
The first thing to do is to carefully check that
your credit report is accurate. Almost 70% of the credit
The reports contain errors.
These errors can be as simple as an incorrect
middle initial or address. Or could it be so serious
as a creditor reporting that you were behind on a
payment when in reality it has not been late at all.
This error may not seem like a big problem to you. However, for a future lender like a mortgage company, it makes a world of difference!
Look carefully at your credit report and if you find a
error contact your creditor and the credit bureaus. struggle
and fix these mistakes now before it hurts your chances
to get credit in the future.
Tip #2 – Bug Fixes
The two most common errors contained in credit reports
are:
1) incorrect account information
2) incorrect record of late payments.
If you find a reported account that doesn’t belong to you,
you should contact the credit grantor or issuer immediately. Remember, finding accounts you haven’t personally opened is a sign of possible identity theft.
Hopefully, you’ll discover that this error is nothing more than an oversight and not an identity theft issue. Most of the time, this happens when they report an account that belongs to a family member or someone with a similar name on their credit report.
If your problem is a mistake in reporting a late payment
you will need evidence to support your case before this error
can be corrected or removed. The most common mistake occurs when a payment is reported as “late” when it was actually a current or “on time” payment.
In either case, the problem can and should be corrected.
You must correct the error in writing. Keep a journal or log of all calls and correspondence.
The Fair Credit Reporting Act (FCRA) requires credit
bureaus and the agency that reports the information to the
credit bureau to correct inaccurate information in your
credit report. Therefore, it is important that you contact
both the credit bureau and the creditor whose information is in dispute.
Here is a sample letter to help you correct
your credit profile. Be sure to clearly identify the information you are disputing, include copies of receipts or documents that support your position. Then request that the information be corrected or removed from your file.
Send your letter by certified mail, requesting a return receipt from the recipient. Save all correspondence you send by mail. Give the agencies involved 30 days to begin their investigation. You can call them, but please note that calling does not protect your rights as a consumer. You must notify them in writing to protect your rights.
They must notify you of the results of their investigation.
Although the process will take time, it is important to do it. This is your credit profile, your “consumer identity” that is at stake. Don’t expect a mistake to correct itself.
At your request, the credit bureaus must send notices of
corrections to your credit profile to anyone who has requested your report in the last six months. If you applied for a job and were turned down because of inaccurate information on your credit report, you can mail the correct report to anyone who has received a copy in the last two years.
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Sample Dispute Letter
Date
Your name
Your adress
Your city, state, zip code
Complaints Department
Name of the credit reporting agency
Address
City
: Condition
: Postal Code
Dear Sir or Madam:
I am writing to dispute the following information in my file. The items I question are also enclosed in the attached copy of the report I received. (Identify disputed items by name of source, such as creditors or tax court, and identify item type, such as credit account, judgment, etc.)
This item is (inaccurate or incomplete) because (describe
what is inaccurate or incomplete and why). I request that the item be removed (or I request another specific change) to correct the information.
Attached are copies of (use this award if applicable and describe any accompanying documentation such as payment records, court documents) that support my position. Please reinvestigate this issue(s) and (remove or correct) the disputed items as soon as possible.
To be honest,
Your name
Attachments: (List what you are attaching)
Originally posted on http://www.ftc.gov/
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Tip #3 – Budget Planning
You can also use your credit report to help you plan and
Implement a personal budget. Your credit report will show
where you are spending your hard earned dollars. While credit card balances may not be completely up to date, you’ll still be able to see which of your cards has the highest outstanding balance.
If you have more than one major credit card, you should
compare the annual percentage rate (APR) you are paying
in each account. If you are working on a budget to “pay
reduce” your credit cards, start by paying the one with the highest APR or interest.
Once that credit account is paid off, move on to payment
from the account with the second highest APR. using this
method you can focus your efforts on paying off your outstanding credit obligations.
You should also check with your credit card company to see what the best annual percentage rate (APR) they can offer you. If you are a good customer, you can often qualify for a lower rate than what you are currently offered.
Caution: Ask if the new rate you are receiving is a “promotional” rate or a “contracted” rate. A promotional rate will expire at the end of the promotion term, eg 6 months. A contract rate does not have a “maturity” as long as you continue to meet the terms set forth by your lender for that rate.
Tip #4 – Make a major purchase
If you are considering a major purchase, such as a car or a
home, reviewing your credit report gives you the opportunity to see what a potential lender sees and uses to judge your creditworthiness.
You want to make sure your credit report is accurate
before applying for that new sports car or house. mistakes
or problems can be corrected before your lender can use
those against you and deny your credit application. You’ll also have a better idea of what type or rate of credit to expect from a potential lender.
Tip #5 – Check your credit report regularly Check your credit report regularly. Protect your “consumer identity” as you would anything else you treasure. Use your credit wisely, along with these tips, and you’ll enjoy the benefits your good credit and good name deserve now and for years to come.
