There is only one way to find out how good or bad your credit is. Your credit report needs to be looked at. Your credit report is your "consumer identity," and potential lenders will use it to decide if they want to lend you money.
Use the following tips to "tune up" your credit profile:
Tip #1: Look for mistakes
Your credit report or profile is more than just a list of your creditors and how much you owe or have paid them.
The first thing you need to do is check your credit report carefully to make sure it is correct. There are mistakes on nearly 70% of credit reports.
These mistakes could be as simple as a middle initial or address that is wrong. Or, it could be as bad as a creditor saying you were late on a payment when you weren't even late.
You might not think this mistake is that important. But it makes a big difference to a future lender like a mortgage company.
Check your credit report carefully, and if you find a mistake, let your creditor and the credit bureaus know. Find and fix these mistakes now, before they hurt your chances of getting credit later.
Tip #2: Fix any mistakes
These are the two most common mistakes on credit reports:
- Wrong recording of payments that were late.
- The account information was wrong
If you find a reported account that isn't yours, you need to get in touch with the credit grantor or issuer right away. Remember that having accounts that you didn't open yourself is a sign that your identity may have been stolen.
Hopefully, you'll find out that this mistake was just a mistake and not a sign of identity theft. Most of the time, this happens when they put an account on your credit report that belongs to a family member or someone with a similar name.
If your problem is that you made a mistake when reporting a late payment, you will need proof to back up your case before the mistake can be fixed or taken away. When a payment is reported as "late" when it was actually "current" or "on time," this is the most common mistake.
No matter what the problem is, it can and should be fixed. You will have to write down how to fix the mistake. Keep a log or journal of all calls and letters.
The Fair Credit Reporting Act (FCRA) says that the credit bureaus and the agency that gave the wrong information to the credit bureau have to fix it. So, you should contact both the credit bureau and the creditor whose information is in question.
We've given you a sample letter to help you fix your credit profile. Make sure you say clearly what information you disagree with and include copies of receipts or other documents that back up your point of view. Then ask for that information to be changed or taken out of your file.
Send your letter by certified mail and ask the person you're writing to send you a return receipt. Keep all of the mail that you send out. Give the involved agencies 30 days to start their probes. You can call them, but calling them won't protect your rights as a consumer. To protect your rights, you must tell them in writing.
They have to tell you what they find when they finish their investigation. Even though it will take time, it's important to go through with the process. This has to do with your credit history and your "consumer identity." Don't think that a mistake will fix itself.
If you ask, the credit bureaus must let anyone who has asked for your report in the last six months know about any changes to your credit profile. If you were turned down for a job because of mistakes in your credit report, you can have the corrected report sent to anyone who got a copy of it in the last two years.
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Sample Dispute Letter
Date
Who Are You?
Your Address
Your town, state, and postal code
Complaint Department
Name of the credit bureau
Address
City, State, and Postal Code
Dear Sir or Madam:
I'm writing to say that the following things in my file are wrong. The parts of the report I don't agree with are circled on the copy I got, which is attached. (Name the source of the disputed item(s), like creditors or the tax court, and name the type of item, like a credit account, a judgement, etc.)
This item is (wrong or missing something) because (describe what is inaccurate or incomplete and why). I want the item to be deleted (or I want another specific change) so that the information is correct.
Included in this letter are copies of things that support my position, such as payment records or court documents. Please look into this (these) again and (delete or fix) the items in question as soon as possible.
Sincerely,
Who you are
Enclosures: (List what you are enclosing)
First put up on http://www.ftc.gov/
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Tip #3 - Budget Planning
You can also use your credit report to make a personal budget and stick to it. Your credit report will tell you where your hard-earned money is going. Even if your credit card balances aren't up to date, you'll still be able to see which of your cards has the highest balance.
If you have more than one major credit card, you should compare the annual percentage rates (APRs) you pay on each one. If you are working on a budget to "pay
down "your credit cards, pay off the one with the highest interest rate or APR first.
Once that credit account is paid off, pay off the account with the second highest APR. Using this method, you'll be able to put all of your efforts into paying off your credit obligations.
You should also talk to your credit card company to find out what their best annual percentage rate (APR) is. If you've been a good customer, you may be able to get a lower rate than the one you're getting now.
Be careful: Ask if the new rate you are getting is a "promotional" rate or a "contract" rate. At the end of the promotional period, for example 6 months, a special rate will no longer be available. A contract rate doesn't "expire" as long as you keep following the rules that your creditor set out for that rate.
Tip #4: Buying something big
If you want to buy something big, like a car or a house, you can check your credit report to see what a lender would see and use to decide if you are a good credit risk.
Before you try to get that sports car or new house, you should make sure that your credit report is correct. Before your lender can use it, mistakes or problems can be fixed.
those against you and refuse to give you credit. You'll also have a better idea of what kind of credit or interest rate a possible lender might offer.
Tip #5: Keep an eye on your credit report.
Look at your credit report often. Protect your "consumer identity" the same way you would protect anything else you value. If you use your credit wisely and follow these tips, you will get the benefits that your good credit and good name deserve now and in the future.
