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Archive for April, 2012

Credit reports have many different names.  They are sometimes referred to as a credit file, sometimes a credit history, and often a personal credit report.  Regardless of what they are called, periodically pulling your personal credit report is an excellent idea.  It gives you the ability to review your credit report, as credit underwriters see it, so that you can have complete control over your financial wellbeing.  This gives you the opportunity to check for errors, and if needed, to make corrections to your personal credit report.

What to do if something is wrong?  Bear in mind, that statistics have shown that many credit reports have some sort of error in them.  You don’t want to get turned down for credit, or even worse, employment, because of erroneous information included in your personal credit report.  So what can you do if you find an error?  The short answer is to make the specific credit reporting agency aware of it, and by law, it is their responsibility to correct it.  That’s right, under the Fair Credit Reporting Act, the burden of responsibility falls squarely on the credit bureau and the company (or person) who reported the disputed information.  You are required to kick start the process though, by filing a dispute with the appropriate credit reporting agency in which the erroneous information is included.  If you only pulled one personal credit report, it is a good idea to pull the other three now to ensure that if you are going to clear one up, you can clear them all up.

What happens next?  Upon notification, the credit reporting agency must launch an investigation within thirty days.  They have the ability to throw out your claims if they determine them to be completely baseless.  If they do not think that though, then they will commence with sending information to the information provider to verify the debt, and the reporting of the debt.  If the information is indeed found to be inaccurate, then the credit reporting agency will send notifications to all three agencies, notifying them of the inaccuracy.  If it turns out to be accurate information, then no changes are made.  In the unlikely event that the dispute cannot be resolved, then you can ask for a letter of dispute to be placed in your file.  Please note that this is informational only, and it does not have an impact on your credit score calculation.

Still not satisfied?  If you have the feeling that the credit bureau just simply declared a draw, and you are not satisfied as to how this will be showing on your personal credit report, then you can press the matter a little.  The next step would be to go after the information providers directly.  We are calling them information providers, but in most cases, we are referring to banks.  When attempting to dispute directly with them, there are few items that you should take note:

• Put your dispute in writing.  Waiting on hold for an hour to tell a call center representative that you are disputing this information is not the best plan of attack.  First, the call center is not designed to handle complex issues like disputes.  They are designed to field questions quickly and efficiently.  Disputes are muddy, and can hardly be resolved in a matter of a few minutes.  In addition, call centers are notoriously bad at following up on issues.
• Never send them originals, only send copies.  You never want to send your original into the bank when making a dispute.  The fact is that more than likely, they will lose it, or a research representative will not know what to do with it and will park it on their desk for a few weeks, with no one else knowing of its existence.
• Make sure you aren’t sending your dispute to a payment processing center.  If you think banks get a lot of phone calls into that call center, imagine what is going on at their payment processing centers.  Anything that isn’t some form of a payment will be quickly discarded and probably not followed up on.

Before disputing any information on your personal credit report, be sure that you have all of the correct information to ensure that process is handled correctly.

Although ordering a copy of your free credit report is a good habit, but understanding your free credit report government can be difficult.  There are many misconceptions out there today as to what is actually included within your free credit report government.  Often times, consumers will order a free credit report either right before attempting to obtain a mortgage or after they have been recently declined for a loan.  When doing so, consumers assume that the information is presented in a nice format that includes a credit score.  In fact, the information can be difficult to understand and interpret for people without much experience in the matter, and there is no credit score included.So I have my credit report…now what?  Let’s assume you have taken the time and have ordered a copy of your free credit report government.  Before we even talk about dissecting this information, we should point out that you should order a free credit report from all three of the major credit reporting agencies.  Those would be Equifax, TransUnion, and Experian.  Fast forward a few days, and you have all three reports in front of you on your kitchen table and you are ready to take stock in what you have.  You start looking at it like it’s a tenth grade math exam, and you have no idea where to start.  The first thing that you will notice is that there are a lot of numbers on it.  I mean a lot.  There are codes and abbreviations that seem like something from another world.  What to do?

Well, the first thing to do is to understand what the free credit report government is attempting to tell you.  There are four main points of communication, or sections, within the report.

• Identifying Information.  This is the basic information that would include name, address, social security number, phone number, employer, past addresses, work history, etc.  This is to ensure that everyone who is using this credit report is evaluating the same person.  It is also helpful for consumers to catch fraud attempts; as fraudsters will typically attempt to change the address to reroute mail.
• Credit History.  This is the meat of the report.  What is included in this section is your payment history, balances, credit lines, type of debt, etc.  When it comes time to for a credit underwriter to evaluate your credit worthiness, this is the main section they use.  This section will also have the biggest impact on your credit score, as the two main factors are payment history and credit in use ratios.
• Public Records.  This section will hold any adverse information that isn’t necessarily creditor related.  For example, if you have an unpaid speeding ticket, it is likely that this bill will eventually show up on public records.  In general, this represents judgments against you in which you owe an outstanding balance of some sort.  Criminal claims are not applicable in this section.
• Inquiries.  This part is probably the most misunderstood section of the free credit report government.  The inquiries section tracks when anyone has pulled your credit report for the purpose of making a credit decision.  That is why it is important to go directly through the credit bureaus when ordering a free credit report.  Pulling the report through any other means will be shown as an inquiry.  Why is this important?  It is important because each inquiry will deduct two points from your credit report.  If you have multiple inquiries over a short period of time, it is typically an indicator that something is wrong, since you are having your credit pulled so often.  That is why it is a good idea to supply a copy of your credit report to mortgage lenders, instead of having them pull them, when you are mortgage shopping.

Free credit report government should not feel intimidating when attempted to review them.  In fact, you probably already know what is on there since they represent you own credit history.  Be sure to take the time and review your credit report fully to ensure accuracy, as statistics have shown that a majority of credit reports from any of the three agencies have some sort of error in them.

Business owners have a lot to concern themselves with.  In fact, if you conducted a poll, you will probably see that topics that rank toward the top of the list are sales and marketing, payroll, customer satisfaction, account receivables, and those types of issues.  Concerns over their business credit report are probably not anywhere near the leaderboard.

Should it be?  One would think that since so much can be impacted by one’s business credit report, such as office rent or financing, that it would be a concern that is closer to the top of the list.  In reality, it isn’t.  This is because so many businesses fail during the early years that they are more concerned with simply surviving, than worrying about their business credit report.  In addition, many business owners just don’t understand business credit.  Even if they have a solid understanding of personal credit reports, a business credit report can be extremely different.

To help shed some light on the issue, let’s take a look at how a business credit score is determined.  The first thing that a credit agency has to do is obtain information.  For individual consumers, this is much easier since the process is refined, and down to a science.  For businesses, there are three main sources as to where this information can come from:

• Suppliers and lenders.  Often times, businesses will need availability to credit in order to purchase supplies or product, which is then sold at a premium.  The proceeds will be used to pay off the credit; then they start the cycle over again.  Established businesses will enter into such arrangements with banks and lending institutions, whereas newer businesses will have to discuss options with a supplier.  Whoever they choose to go through can provide information on their payment history and in general, how well they have managed their credit.  This information is then fed to a credit reporting agency, and will be available on their business credit report, and will factor into their score.
• Courts.  Local, county, and state courts keep everything, so legal filings are available for credit reporting agencies to obtain.
• Everywhere else.  Any other type of background information can be obtained from other sources, which include, but are not limited to public records, credit card institutions, collection agencies, and marketing databases.  This information can sometimes prove to be stale, but nonetheless can be valuable information that is fed into credit reporting agencies.

What is gathered from these sources?  Having sources is one thing, but getting something useful is a whole other issue.  In this case, the useful information that is obtained can be trade payments, public record information, or collections information.  This information serves as the backbone for creating a business credit report.  That is why managing business finances in a timely and accurate fashion can be just as important, if not more so, than personal finances.  Failure to obtain credit can be mean the end of some businesses, as many require credit influx to simply operate.

Is there a score?  And if so, how is it calculated?  Yes, there is a business credit score that is derived from information available on your business credit report.  Like the personal credit score, there is a complex statistically based algorithm that calculates the business credit score.  It attempts to take into consideration the factors that will help determine risk.  In general terms, these are credit, public records, and demographic information.  Credit is an obvious one.  Things like number of trade experiences, outstanding balances, payment history, and percent of credit in use and many of the typical factors you will see in the personal credit score are in play here as well.  Public records factor in liens, judgments, and bankruptcies.  Finally, demographic information takes in to consideration the years on file, business size, and the Standard Industrial Classification (SIC) code.

Taking the time to familiarize yourself with the details of the business credit report and the business credit score can be an excellent tool for business longevity.  Business owners throughout the country can benefit by simply paying attention to some small items like ensuring bills are being paid on time.  This could have a long reaching impact on their business’ future.

Many individuals have never seen their credit report. In today’s world, that shouldn’t be the case. With the free annual credit report government program, the United States government has mandated that all American citizens have the right to request a free copy of their credit report once per year.

How can I get this credit report from?

There are three credit bureaus that participate in the free annual credit report government program, and they are:

• TransUnion
• Equifax
• Experian

Simply contact them directly and they can walk you through the process of obtaining your free credit report.

Why is reviewing your credit report important?

An annual review of your credit report is important since it allows you to stay on top of your financial situation. In general terms, taking advantage of the free annual credit report government program and getting a free copy of your credit report, will help you find in accuracies, ensure that all of your bills are paid, and that they are not a victim of fraud. In addition, it will help any consumer know what to expect when they apply for credit. If there are a lot of delinquencies, or past due payment histories, then it will be more difficult to get approval, or at least they should expect a higher interest rate.

Does my credit score come with it?

No. Only basic credit history information is included in your credit report. Credit scores need to be obtained separately and will typically be at a cost. There are few third party vendors who may be able to offer you free or discounted credit scores, usually in exchange for membership to another site or in conjunction with another offer.

What to look for once I have my credit report?

As mentioned earlier, your free credit report will simply be a file that includes your credit history, but no credit score. A credit score isn’t necessary to determine whether or not you have an excellent or poor credit history. The first thing you should do is to look to see if you have current negative records. These will impact your credit score the most and will weigh the heaviest when credit underwriters are reviewing your file. To have the biggest impact, pay these current immediately. Next, look for anything that may be inaccurate. Perhaps there is an account that is not yours or maybe an account was showing as behind at some point and it really isn’t. This is important because it can be an indicator of fraud.

Then, you want to look to recent inquiries. An inquiry occurs when a credit institution has pulled your credit report in response to a credit application. Credit reports can only be pulled with your permission, and if you don’t remember applying for a loan, then perhaps this may also be an indication of fraud. Either way, excessive inquiries can impact your credit score since each inquiry reduces your score by a couple of points. Finally, you should ensure that all your personal information is correct. The credit report will house information such as current address and work history. These items are typically used to validate identity, and if this information is not accurate, then again, it could be an indication of a fraud attempt.

Can I get a report more than once per year?

In addition to the free annual credit report government program, that allows a consumer to obtain a free copy of their credit report once per year, a consumer may also get a free copy of their credit report within thirty days of being denied for credit. In other words, if information from a credit report was used during the approval process for anything, such as a loan application or payment plan approval for insurance payments, and the request was denied, then the applicant has the right to obtain a free copy of their credit report. In the past few years, many other third party vendors have started to offer free credit reports regardless of the circumstance. Typically, these offers are part of an overall marketing program that will usually cost consumers a monthly fee down the road. The best, safe way to obtain a free credit report without being barraged by advertisements is directly through the free annual credit report government program.