What To Do If There Are Inaccuracies On Your Credit Report

Under the FCRA (Fair Credit Reporting Act), both the consumer reporting company and the information provider (that is, the person, company, or organization that provides information about you to a consumer reporting company) are responsible for correcting inaccurate or incomplete information in your report. To take advantage of all your rights under this law, contact the consumer reporting company and the information provider.

Step One
Tell the consumer reporting company, in writing, what information you think is inaccurate. Include copies (NOT originals) of documents that support your position. In addition to providing your complete name and address, your letter should clearly identify each item in your report you dispute, state the facts and explain why you dispute the information, and request that it be removed or corrected. You may want to enclose a copy of your report with the items in question circled. Your letter may look something like the one below. Send your letter by certified mail, “return receipt requested,” so you can document what the consumer reporting company received. Keep copies of your dispute letter and enclosures.

Consumer reporting companies must investigate the items in question—usually within 30 days—unless they consider your dispute frivolous. They also must forward all the relevant data you provide about the inaccuracy to the organization that provided the information. After the information provider receives notice of a dispute from the consumer reporting company, it must investigate, review the relevant information, and report the results back to the consumer reporting company. If the information provider finds the disputed information is inaccurate, it must notify all three nationwide consumer reporting companies so they can correct the information in your file.

When the investigation is complete, the consumer reporting company must give you the results in writing and a free copy of your report if the dispute results in a change. This free report does not count as your annual free report. If an item is changed or deleted, the consumer reporting company cannot put the disputed information back in your file unless the information provider verifies that it is accurate and complete. The consumer reporting company also must send you written notice that includes the name, address, and phone number of the information provider.

If you ask, the consumer reporting company must send notices of any corrections to anyone who received your report in the past six months. You can have a corrected copy of your report sent to anyone who received a copy during the past two years for employment purposes.

If an investigation doesn’t resolve your dispute with the consumer reporting company, you can ask that a statement of the dispute be included in your file and in future reports. You also can ask the consumer reporting company to provide your statement to anyone who received a copy of your report in the recent past. You can expect to pay a fee for this service.

Step Two
Tell the creditor or other information provider, in writing, that you dispute an item. Be sure to include copies (NOT originals) of documents that support your position. Many providers specify an address for disputes. If the provider reports the item to a consumer reporting company, it must include a notice of your dispute. And if you are correct—that is, if the information is found to be inaccurate—the information provider may not report it again.


Sample Dispute Letter
Date
Your Name
Your Address
Your City, State, Zip Code

Complaint Department
Name of Company
Address
City, State, Zip Code

Dear Sir or Madam:
I am writing to dispute the following information in my file. The items I dispute also are encircled on the attached copy of the report I received.

This item (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.) 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 investigate 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)


Source: www.mymoney.gov

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Understanding Your Credit Score

By John Prentice Prentice

Most people know that our credit reports have a lot of information about our borrowing history. How credit worthy we are - how likely we are to pay off our debts (on time or not) - is also looked at as an indicator of how people are likely to behave in other areas.

Employers rely on credit reports to see if we'll be good employees. Landlords pull credit reports to see if we'll be reliable tenants. Auto insurers rely on credit information when deciding what sort of an insurance risk we are. But for years there's been a piece of the credit report the average consumer has been unable to see.

YOUR CREDIT RISK SCORE

The scores range from 300 to 850, with a higher score being better than a lower one. It's called a credit risk score and if you have a credit report you have a score too. Fair Isaac Company, (FICO) which is the country's pre-eminent producer of credit scoring models, uses information from your credit report, applies different weights to different pieces of that information and to the history of the information, and calculates a score for you.

When a creditor is trying to decide whether or not to give you a credit card, for example, or what rate of interest to charge on your mortgage , the FICO score is one important factor they consider in making those decisions.

DO MOST LENDERS CONSIDER THESE SCORES?

At least 75 percent of home loans are approved with help from - as they're called in the industry - FICO (Fair Isaac and Co.) risk scores. A review of the 100 largest financial institutions in the USA shows that 70 percent use FICO scores. FICO scores play a major role in the marketplace.

HOW DO AVERAGE PEOPLE SCORE?

Pretty good considering that we see bankruptcies in the headlines so often today. The average score is about 720 on a scale of 350 to 850.

Below that (720), you may have some problems applying for credit. 20% of people score below 620. Since this group includes about 50% of all people who default on their mortgages, lenders are very cautious about approving them for mortgages. The next group of scores represents another 20 percent of people who, in this instance, score between 620 and 690. A score in this 70 point range may not stop you from getting credit, but lenders are going to require greater scrutiny of applicants and may require additional assurances of ability to manage a proposed mortgage. In addition, Fannie Mae and Freddie Mac (buyers of mortgages for the secondary market) may require that lenders probe for more information to understand why there's been a problem before they agree to make a loan. On the high end, any score above 780 is considered elite. About 1-2% of borrowers score in the 800s.

There are a few factors that make a big difference in your score - let's talk about them and how you can make changes in them to improve your score:

-Your bill-paying record (This accounts for 35 percent of your score). We all know to pay bills on time. If you always have, you've done well in this category. If you slip up here and there, it can hurt your score a fair amount. The more recent the slip up, the more it hurts your score. And, as in all of these categories, a pattern of bad behavior is worse than one mistake. A string of 30-day late payments is worse than one 60-day late. (The way credit scoring works is to compare your habits to those other individuals who have proven to act in a positive or negative way overall. But there are different groups of patterns, so a seasoned user won't be compared to a new user.)

-How much you owe now (30 percent). The scoring companies look at how much you owe relative to how much credit you have available on your credit cards. The closer you are to maxing-out your cards, the lower you'll score in this area. But owing nothing doesn't prove your ability to handle credit - owing a little bit is better. For example, being at 80 percent of your limit would be viewed as very high and a negative; 60 percent in most cases is detrimental enough. Having your balances at 20 to 30 percent of your maximum is just fine.

-How long you've handled credit (15 percent). When people are trying to get their spending under control, one of the things they do - indeed that we might advise them to do - is to make sure they don't have too many tempting cards in their wallet. But, when it comes to your credit score, you may not want to cut up that one card you've had the longest. Then the credit scoring companies lose the ability to see just how long you've been managing credit. It may be better to keep that old card even if it's at a high interest rate, use it a couple times a year and pay it off completely rather than cutting it up.

-Mix of credit (10 percent): It's good to show that you can manage different kinds of credit. So having an installment loan (on a home or a car) as well as having a revolving credit account (credit card) is a positive.

-Pursuit of new credit (10 percent): The media often exaggerate how much searching for new credit can hurt you. That's because, a few years ago, the scorer's methodology was changed to reflect the idea that it was OK - indeed smart - to be shopping around for a loan. So all of your inquiries into a mortgage over a 30-day period now count as one. That said, if you have real credit problems and you're constantly shopping around for new cards or loans, it's going to hurt your score. Moderation is key. If you're out looking for new credit every month, it's a minus. Less frequently than that, you'll probably be okay.

Now that you have this information, you can use it to improve your credit overall. When you receive your report, you can use it to negotiate with lenders in a preliminary way. You could approach a mortgage broker and say,"This is my score, will it be easy for me to get a mortgage?" If you buy your FICO score, you'll also get a guide to understanding the report and the top four factors that contributed to establishing your score. Having reviewed your report and scores, if you need to, you can work to improve your score before you apply for credit. Give yourself three to six months to get it in shape.

If you run a Web search for "free credit score," you'll most likely come up with a number of America’s Lending Partners’ free loan request service will match you with up to four lenders to help you mortgage lenders and banks who may be willing to give your score to you. In some cases, you may have to actually apply for a loan. In other cases, giving them an e-mail address and phone number (so that they can market to you later, one assumes) seems to be sufficient. So if you're willing to give up some personal information, you can get your score for no money. Or you can pay the $ 9 - $13 to the credit reporting agencies and receive your scores. (Even if you're not up for checking your score, you should check your credit report about once a year. If there are problems, you should check all three of the credit bureaus.)

About the author:
John Prentice is a Credit Expert in the Mortgage Industry. John provides credit score repair information and a Credit, Finance & Mortgage newsletter at his web site: http://www.AccelerateMyCredit.com

Article Source: http://www.Free-Articles-Zone.com

Credit Repair Can Be Your Ticket To Lower Living Expenses

By Information Net Source Jones

There are few problems in life that can be more damaging than poor credit. Poor credit translates into a low credit score, causing all manner of trouble for American citizens.

A low credit score can have very damaging effects on one’s financial life and well being. For example, a low credit score can mean higher interest rates when purchasing a home.

Higher interest rates on a home mean a higher house payment. Having a house payment start at a high level means that one will not be able to afford as nice a house as he or she would if he or she were starting with a high credit score.

Some people with low credit scores would like to refinance the home they do own, but are unable to because the interest rate they receive will make their house payment too steep.

Even with the abundance of credit card offers most of us receive in the mail, those with low credit scores do not have the opportunity to obtain a credit card. Credit cards are often portrayed in a negative light, but they do have their uses.

For example, take the case of a family with a low credit score and no credit card who would like to go on a vacation. This family would run into two problems when attempting to plan the vacation.

For starters, the family would have much difficulty obtaining a reservation for accommodations. Most hotels and vacation rental companies require a credit card number to reserve a room or vacation home.

Secondly, the family would not be able to make a reservation for a rental car. As with accommodations, rentals on cars can only be made with credit cards.

If someone with poor credit would take the necessary steps to increase their credit rating, many benefits would immediately be in place.

Suddenly, this person would be able to make reservations for vacation accommodations and rental cars. When attempting to purchase a car, he or she would be able to obtain financing easily and with a lower interest rate.

When house hunting, this person would realize that he or she could afford a nicer home with the same payments he or she was making previously without an increase in monthly house payment.

Basically, those with higher credit scores are able to live more cheaply than those with lower credit scores. Those with higher credit scores have saved countless dollars over their lifetimes while those with lower credit scores needlessly spend money.

In addition to financial burdens, those with low credit scores must deal with other inconveniences.

Many people with low credit scores do not make their payments on time. Therefore, they must deal with phone calls from debt collectors that can be embarrassing and frightening.

So, how can a credit score be repaired? There are certain steps individuals can take that will help them start on the road to credit recovery.

The first step is to know what is in the credit report. There are three agencies that handle credit reports and information should be obtained from all three.

Once armed with knowledge of the credit report, an individual is ready to take action.

By writing letters and calling the credit agencies, credit scores can increase. These means of communication must be well planned and be executed in a calm and professional manner.

Once credit agencies have been contacted, the individual must begin paying off debt. The highest interest debt needs to be paid first. Once the highest interest debt is paid, an individual should pay off the next debt with the highest interest rate and so forth.

In addition, there are many books and web sites devoted to helping individuals increase their credit scores. It is worthwhile to explore these options and consult professionals.

Credit scores should be closely monitored by everyone. When one has a low credit score, the individual should take immediate action to increase the credit score. By increasing the credit score, the individual is given the freedom to spend money more wisely while saving money in the process.

About the author:
Information Net Source Corp. has been helping people find the perfect work at home jobs, businesses and opportunities for the last 9 years.

Article Source: http://www.Free-Articles-Zone.com

Bad Credit Loan -- Lets Cut Through the Hype!

By Jim Eastman

Bad credit loans

Bad credit loans seem to be a hot topic these days. In fact, if you need a bad credit loan, you’re likely to find an overabundance of information.

See if this sounds familiar. You need a loan. Maybe you want to buy a car, enroll in college, or take out a home improvement loan. Or perhaps you’re a first time home buyer and you’re looking for a mortgage. The problem is, you’ve got a bad credit history, and you’re afraid you won’t be able to find a lender.

But then you do a little research on bad credit loans and find that, lo and behold, there ARE loans for people with bad credit available! In fact, EVERYONE wants to give you a loan. Loans for cars, mortgage loans, student loans, personal loans, loans for just about anything you want. Not only loans, but credit cards too. Why, who would have ever thought is would be so easy to get a loan when your credit history is so dismal?

So, that’s great news, right? RIGHT?

Let’s just stop for a moment. Ask yourself “Why is everyone so eager to extend credit to me when my credit history is so bad?”

The question can be answered in two words -- HIGH RATES. Sure, you can get a bad credit loan easily enough. But you’ll “pay through the nose” when it comes to the interest rate.

So “What’s the ‘big deal’ about paying a little higher rate?” you ask.

Let’s look at a few figures.

Suppose you want to buy a car. After looking long and hard, you find the “perfect” car for $20,000. So you apply for a car loan and get a loan with no trouble, but because of your poor credit, you have to pay 20% interest. On a 60 month loan, your monthly payments will be $529.88.

Now if your credit were very good, you might have gotten the same 60 month loan at an interest rate as low as 10%, with monthly payments of $424.94.

The bottom line is, over the life of the loan you’ll have paid an additional $6,296.40 in interest that you would NOT have paid if you had you gotten the loan at 10% interest. Your bad credit loan will have cost you $6,296 more FOR THE SAME CAR!

But if you think that’s bad, take a look at a home mortgage loan.

Suppose you want to buy a $100,000 home and you’re just thrilled to find a lender willing to give you a 30 year loan in spite of your bad credit. He’ll charge you 12% interest, and your monthly payment will be $1,028.61.

If your credit had not been so bad, you could have gotten the loan for a rate closer to 9%. If your credit had been very good, you might have been charged only 6% interest and your monthly payment would have been $599.55.

The bottom line? That bad credit loan will have cost you (over the 30 year term) a staggering $154,461.60 MORE than you would have paid had you gotten a loan at the 6% rate.

No, this is NOT a typo. Your lender will pocket $154,461.60 in additional interest payments because you were charged a higher rate for a bad credit loan. That’s over 1 ½ times the cost of the house itself!

So why did he charge you the higher rate? Because he knows he can get it! After all, he’s got you “over a barrel.” He knows (and you know) that you need a loan, but because of your bad credit no one’s going to give you one at a low interest rate.

Do you see now why people are so eager to lend you money in spite of your bad credit? In fact, credit reporting companies make a fortune selling lenders the names of people who have bad credit. Those lenders know they can charge them high rates, and that if they need credit, they have no choice but to pay them.

So what’s the solution? You may be thinking “What choice do I have anyway? My credit is bad, I need a loan to get a house (or car, college education, or whatever) and there’s just nothing I can do about it except find a lender willing to give me a loan at whatever interest rate I can get!”

But consider for a moment whether you might be looking at the situation from a completely wrong angle. Rather than resign yourself to the situation, you should be thinking about repairing your credit.

Now if you just found the house of your dreams, you may have no choice but to act now before someone else buys it. But if you can wait a couple of months, it’s highly likely you can make some major improvement in your credit score and THEN look for a loan.

Maybe this isn’t what you wanted to hear. After all, you’re looking for a loan, NOT credit repair advice. But wouldn’t it be worth it to postpone getting that house or that car if it would save you thousands, tens of thousands, or maybe even $150,000.00 or more over the long haul?

If you’re thinking your bad credit history is something you’re just stuck with, or that it will take years to improve, you’re mistaken. It’s often possible to make major improvements in your credit rating in just a few months, and in some cases in as little as 30 days!

It’s not that difficult either. You basically have 2 options. You can hire a “Credit Repair Agency” or you can take the “do it yourself” approach.

If you decide to hire an agency, you can easily find one in your phone book or online. Just look for “credit repair.” However, it won’t be cheap. Agencies usually charge from $2,500 to $5,000 or more to repair your credit. But that’s still a bargain compared to how much you’ll be saving in the long run.

But if you think only a professional agency can fix your credit, think again! In spite of their high fees, they won’t do anything for you that you can’t easily do for yourself. If you can write a few letters, address, stamp, and mail them you can repair your own credit.

If you choose the “do it yourself” route (recommended) you can learn how by doing some online research. Unfortunately, along with all the good information you’ll find some misinformation as well. A better option is to find an authoritative book on credit repair and follow the advice therein.

In conclusion, you should seriously consider postponing your search for a bad credit loan. First spend a couple of months improving your credit rating. Then you can abandon the search altogether, and begin looking for a GOOD credit loan!

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About the Author
Jim Eastman is the support contact for ErasingBadCredit.com. Anyone wanting to repair their credit can get valuable advice by signing up for the FREE mini-course at http://www.erasingbadcredit.com.

Personal Budget Planning Tips

By Sarah Freeland

Your personal money management is the key to your financial success; your method of reaching your goals and dreams. No one likes the term budgeting, but without it, you won’t know if you are getting the most from your income. Everyone wants to pay all their bills on time. Successful debt and asset management is a source of pride and of good credit. All of us want good credit whether we use it or not. Unless you have unlimited funds to spend however you wish, you will need a personal budget to pay off debts. Budgeting your money can be a difficult process.

In order to create a household budget, you must include all your monthly and yearly bills. You must also include your spending money, savings goals, and retirement funding. It doesn’t matter how much money you make; it’s how you spend it. A personal or household budget will help you make payments on time, provided you follow the plan.

When you don’t follow a debt management program, your debt may overtake your income and then you are forced to make late payments on bills or no payments at all because you don’t have the money. You can’t just spend money and hope you have enough for your bills. You must spend within a budget.

You can prepare a budget by using budgeting software on your computer. The program will ask you the same questions that a personal finance advisor asks during a financial planning interview. The questions concern your expenses, your spending habits, and retirement goals. They may include tips on debt consolidation and reasonable cash flow. Or you can choose a financial planner to help you with your personal finance concerns.

For more on debt management and credit repair visit the resource center at DebtControlExperts.com. If you are in the market for a home equity loan, auto loan or mortgage, visit FundingMarketplace.com for financing options.