Personal Credit Repair for the New Year

Most people know they need to be concerned about what their credit reports say and what their overall credit rating is when they are in the process of buying a home or purchasing a car. What many don’t know is that their credit scores are also being used to:

• Determine their interest rate for car loans or mortgages
• Compute their rates for homeowner’s and auto insurance
• Decide whether or not they will receive credit card offers and what interest rate they’ll be charged
• Decide whether or not they can rent an apartment
• Determine if they will have to pay a utility deposit before their telephone or gas will be turned on
• Decide if they qualify for a cell phone plan that was advertised on TV
• Determine whether or not they will be offered a job

For all of these reasons, savvy consumers know they must regularly check their credit reports to ensure that they are complete and accurate.

Your Credit Report
Your credit report, or file, includes information on where you live, your income, debts and credit payment history, as well as whether you’ve been arrested or sued or have filed for bankruptcy.

And while the Fair Credit Reporting Act (FCRA) helps ensure that the consumer reporting agencies, or CRAs, provide correct and complete information to businesses that check your credit report, errors—either inaccuracies or incomplete information—can happen. And because such inaccuracies can damage your credit status, experts recommend you check your report regularly and at least once a year.

The Reporting Agencies
The three major consumer reporting agencies, Equifax, Inc., Experian and TransUnion LLC, all get their information about you from different sources. So your credit report from one company may not have all of the information or even the same information that is in your reports from the other two. This doesn’t necessarily mean that any of your reports is inaccurate; it’s just different. But for that reason, you will want to request reports from each. It's up to you whether you request reports from all three agencies at once or stagger your requests throughout the year—a strategy that some experts suggest may help you stay on top of the accuracy and completeness of your reports.

Here is the contact information for each of the three CRAs:

Equifax: 1.800.685.1111
Experian: 1.888.397.3742
TransUnion: 1.800.888.4213

Free Credit Reports
Thanks to the Fair and Accurate Credit Transactions Act of 2003 (FACTA), by September 1, 2005, everyone in the United States will be eligible for one free credit report each year from each of the three CRAs. On December 1, 2004, consumers in the Western states became the first to be able to order their free credit reports. The rest of the states will follow according to a regional roll-out schedule: Midwestern states become eligible on March 1, 2005; Southern states, June 1, 2005; and Eastern states, as well as the District of Columbia, Puerto Rico and all U.S. territories, September 1, 2005.

Meanwhile, Federal law also states that you’re entitled to a free report if you’ve been denied credit, insurance or employment and you ask for your report within 60 days of receiving notice of the denial; if you’re unemployed and plan to look for a job within 60 days; you’re on welfare; or your report is inaccurate because of fraud or identity theft.

And if you live in Colorado, Georgia, Maine, Maryland, Massachusetts, New Jersey or Vermont, your state law already provides for free access to your credit report.

Please note: If you qualify for a free annual credit report through FACTA, there is only one authorized source for that request: AnnualCreditReport.com. Do not contact the three CRAs Web sites individually. They are only providing the free reports through this one site. (For details on ordering your free report, see the Federal Trade Commission’s Facts for Consumers article “Your Access to Free Credit Reports.”)

What to Look for in Your Report
After you get your credit report from each agency, you want to look through every transaction and ensure all of the information is correct.

Check your personal information. Is it accurate?

Check your credit card and loan information. Do you still own those credit cards? Have you already paid off that loan?

Also pay particular attention to the FICO® score on each of your reports. This is a credit score developed by Fair Isaac and Company that condenses your entire credit history—including payment history, amount owed, length of credit history, new credit and types of credit used—into a number between 350 and 850 so lenders will have a fast, objective measurement of your credit risk. The higher your score, the lower your interest rate will be.

If everything in your credit file is correct, you can breathe a sigh of relief.

If you find credit cards listed on your credit report that you didn’t apply for and haven’t used, you may be the victim of identify theft or credit fraud. If you suspect that you are the victim of fraud, contact all three CRAs immediately.

Likewise, if you find any mistakes in your report, make sure they are corrected quickly. Each credit reporting agency’s Web site has information about how to dispute information. You can also learn more about resolving errors in The Federal Reserve Board’s "Consumer Handbook to Credit Protection Laws."

Countering Negative Information
Just one missed payment can make a difference to your credit rating. Your FICO® score, for example, could go from a fabulous 800 to a less than adequate 700—or lower. So again, this underlines the importance of checking your credit report regularly: If your credit report should include inaccurate late payments, you’ll want to make sure that incorrect information is fixed as soon as possible.

If you’ve truly missed more than one payment or have become embroiled in an argument over a purchase, your credit score could be ruined. And sadly, you cannot have negative information about you taken off the report. But the negative information does drop off over time.

In the meantime, don’t be late on any payments, pay off old debts and check your reports regularly to make sure that no one is using credit under your name but you.

Credit Repair Clinics
No one can instantly repair your credit. Over time, you can improve your credit by paying your bills on time and paying off debt, but no one, not even a fairy godmother, can make the negative credit information go away.

So don’t believe any person or agency who offers to make your bad credit good again. They are just charging you to do what you can do yourself for free: check with the CRAs and report incorrect information.

RELATED ARTICLES
Business Records: What to Keep and What to Toss at the End of the Year
How to Work a Room: Networking for Small Business
Giving at the Holidays: How to Pick a Worthy Charity
Holiday Tipping 101: How Much Should You Give?

RELATED PRODUCTS
Credit Repair: Take Control of Your Credit Situation with this E-book and 14 Essential Forms
Complaint Letter to Delete Inaccurate Information: Rectify Inaccurate Information on Your Credit Report
Request for Removal of Outdated Information: Ensure that Old Items Are Promptly Removed from Your Credit Report
Get Out of Debt: Overcome the Burdens of Debt and Turn Your Life Around
Bankruptcy Kit: All the Legal Forms and Instructions Necessary to File for Bankruptcy and Manage the Entire Process