|
Credit Report
Want to borrow an alternative loan, rent an apartment or buy a car or home
sometime in the future? Chances are a lender will be pulling your credit report
to determine whether or not to lend you money or extend you credit. Your credit
report is a snapshot of your credit history. Credit reports typically include
information such as the type of debts you have, current balances, payment performance,
available credit, public records, and a record of credit inquires in the past
two years. Some negative credit information may remain on your credit report
for up to 7 years; bankruptcy can remain for 10 years. Student loan default
remains on your report for 7 years. These, along with other factors, enable
lenders to grade you. What they're grading on is whether and how well you have
kept your financial promises.
Checking Your Credit History
You have a credit history if you have at least one credit card, consumer loans
such as auto loans, student loans, or any other form of personal credit. It
is a good idea to request a copy of your credit report each year to ensure that
no errors exist or to resolve errors that do exist. You can request of copy
of your credit report from any of the national credit reporting agencies listed
below. Note: If you have been denied credit, you have the right to a free copy
of the credit report used in this decision within 60 days of the denial from
the appropriate credit reporting agency.
Ordering a Credit Report
Review your credit report annually to ensure its accuracy, correct errors and
protect yourself from credit card fraud and/or identity theft. Since December
1, 2004 you can obtain a free credit report from the three nationwide consumer
reporting companies (Equifax, Experian and Trans Union). An amendment to the
federal Fair Credit Reporting Act requires these companies to provide a copy
of your credit report, when requested, once every 12 months.
To receive your free credit report, go to www.annualcreditreport.com,
or call 877-322-8228 or write the Annual Credit Report Request Service at P.O.
Box 105281, Atlanta, GA 30348-5281. To receive your FICO credit score as well,
you will have to pay a small fee.
You'll need to provide your name, address, social security number, date of birth
and an answer to a question only you would know.
For a small fee you can also order a copy of your credit report directly from
one of the national credit reporting agencies listed below. It is advisable
to review all 3 credit reports because they main contain different information
on your credit history.
National Credit Reporting Agencies
Transunion (www.transunion.com)
800.888.4213
Experian (www.experian.com)
800.397.3742
Equifax (www.equifax.com)
800.685.1111
To receive a combined copy of all 3 reports go to: www.myfico.com
Additional Credit Resources
Consumer Credit Counseling Service (CCCS)
For help with repairing your credit or resolving problems with creditors,
call 800-388-2227 for the CCCS office nearest you, or visit the CCCS Web site,
www.nfcc.org.
Federal Trade Commission (FTC)
For help with credit reporting problems, call 202-326-2222, or visit the FTC
Web site, www.ftc.gov.
Fair Isaac
For more information about credit scoring, visit Fair Isaac on the Web, www.fairisaac.com.
How to Review Your Credit Report
Review the report carefully, and pay close attention to the number of accounts,
total account balances, and the timeliness of payments. Errors can occur in
your credit report. If you find any negative information that appears to be
incorrect, you should contact the credit reporting agency.
You have the right to question the accuracy of items reported on your credit
report if you believe they are incorrect. The credit reporting agency then must
investigate any item you believe to be in error on your report within a reasonable
period of time. Any errors that the agency finds must be corrected within a
reasonable time period (normally within 30 days); any information on the report
thought to be in error that cannot be verified as correct by the agency must
be deleted from your record.
If the item in question is found to be correct, you have the right to add a
personal statement on your credit report explaining what happened to cause the
negative item.
Common causes for errors are:
- inconsistent reporting by creditors
- wrong or misplaced dates
- wrong amounts
- double reporting
- incorrect reporting due to common names
- parents and students having the same address and name
- incomplete reporting of demographic information
Errors on your credit report can be corrected, but it may take several months
to complete.
What is a Credit Score?
Credit scoring is a quick method of determining the likelihood that you will
repay your loans based on your past credit history. A credit score is based
directly on the data found on your credit report and reflects credit payment
patterns over time. Your score will change as the information on your credit
report is updated. It's important to understand your credit report because most
lenders will use your score for auto, personal, mortgage and private student
loans. Some factors used to calculate your credit score can include promptness
in paying bills, number of credit cards, total credit limit, and the amount
owed on accounts. Credit-reporting agencies may use different credit-scoring
models; however, all generate a score that determines your credit risk.
How to maintain a good credit score:
- Pay bills on time. Delinquent payments will have a negative impact on your
score.
- Maintain low balances on credit cards and other revolving credit. High balances
may scare a lender.
- Avoid an excessive number of open accounts. They won't necessarily raise
a score.
- Check your credit report for errors and protect yourself from fraud.
Student borrowers are often concerned about having multiple student loans
and a large amount of education debt; however, this does not necessarily mean
you will have a poor credit score. How well you managed credit in the past
is the important thing.
Some factors that can negatively affect your credit score are:
- serious delinquency, derogatory public records, or collection accounts
- the proportion of balances to credit limits is too high
- the proportion of loan balances to loan amounts is too high
- too many new accounts
- too many accounts with balances
- insufficient time since account was established
- too many credit inquiries in the past 12 months
- too many finance accounts
|
