Rebuilding Poor Credit: What Not to Do and What to Do
Posted in Finance on 09/09/2010 04:26 pm by
Jeanette Joy Fisher asked:
Many Americans continue to find themselves in a credit muddle. For a variety of reasons, they can’t obtain credit while they try to rebuild a ruined credit rating. Here are some things that lenders look at, and some suggestions for how you can make yourself appear more creditworthy to potential creditors.
What Not to Do
Although many people think that the best way to begin rebuilding credit is to apply for many new credit cards, that practice may actually hurt your chances. The reason is that credit card companies may assume that since you’ve applied for many cards, you may have been issued a number of them, which could mean a potentially higher debt load in the future. On the other hand, they might look at the fact that many of the cards weren’t issued, which could mean the other companies didn’t trust you to make your payments. Either way, you lose, so be selective in applying for cards, and space out your requests rather than making a bunch of them in a short time.
Of course, creditors also look at the types of black marks that show up in your credit history. From best to worst, the things that will hurt you most are: payments that were late by 90 days, IRS liens, court judgments, accounts that were turned over to collection agencies, accounts that were charged off as uncollectible, repossessed goods or merchandise, real estate foreclosures, and bankruptcies.
What to Do
Creditors such as banks also look favorably at things like having a savings and/or a checking account with their institution, having a telephone in your own name, whether or not you own your home, and how long you’ve been at your current address. They’re looking for stability before extending credit.
Lenders also calculate your present debt ratio to see if you can take on more debt. They’ll generally add up all your monthly bills (not including rent/mortgage or utilities) and divide that number by your gross monthly income. If your ratio is more than 35%, they probably won’t extend you credit. You can help lower that figure by consolidating your debts, which will lower your monthly payment and decrease your debt ratio, which will give you a better chance to qualify for credit, even though it won’t reduce your actual overall indebtedness.
If you’re turned down for credit, you have the right to know why. The law says that creditors must provide specific reasons and the name and address of the credit bureau they used to make their decision. If the reasons your rejection doesn’t sound right, obtain a copy of your credit report from the bureau that the creditor used and check it for errors. You have the right to request a free copy of the report that caused you to be rejected. If you find errors, there are ways you can have them changed. Then contact the creditor again and explain the error. You just might be extended credit the next time.
Remember, lenders are in business to make a profit, so they must screen all potential borrowers carefully. However, once you know what they look for, you can make an effort to address those things in order to make yourself appear more creditworthy. Take one step at a time to rebuild poor credit.
Copyright
Many Americans continue to find themselves in a credit muddle. For a variety of reasons, they can’t obtain credit while they try to rebuild a ruined credit rating. Here are some things that lenders look at, and some suggestions for how you can make yourself appear more creditworthy to potential creditors.
What Not to Do
Although many people think that the best way to begin rebuilding credit is to apply for many new credit cards, that practice may actually hurt your chances. The reason is that credit card companies may assume that since you’ve applied for many cards, you may have been issued a number of them, which could mean a potentially higher debt load in the future. On the other hand, they might look at the fact that many of the cards weren’t issued, which could mean the other companies didn’t trust you to make your payments. Either way, you lose, so be selective in applying for cards, and space out your requests rather than making a bunch of them in a short time.
Of course, creditors also look at the types of black marks that show up in your credit history. From best to worst, the things that will hurt you most are: payments that were late by 90 days, IRS liens, court judgments, accounts that were turned over to collection agencies, accounts that were charged off as uncollectible, repossessed goods or merchandise, real estate foreclosures, and bankruptcies.
What to Do
Creditors such as banks also look favorably at things like having a savings and/or a checking account with their institution, having a telephone in your own name, whether or not you own your home, and how long you’ve been at your current address. They’re looking for stability before extending credit.
Lenders also calculate your present debt ratio to see if you can take on more debt. They’ll generally add up all your monthly bills (not including rent/mortgage or utilities) and divide that number by your gross monthly income. If your ratio is more than 35%, they probably won’t extend you credit. You can help lower that figure by consolidating your debts, which will lower your monthly payment and decrease your debt ratio, which will give you a better chance to qualify for credit, even though it won’t reduce your actual overall indebtedness.
If you’re turned down for credit, you have the right to know why. The law says that creditors must provide specific reasons and the name and address of the credit bureau they used to make their decision. If the reasons your rejection doesn’t sound right, obtain a copy of your credit report from the bureau that the creditor used and check it for errors. You have the right to request a free copy of the report that caused you to be rejected. If you find errors, there are ways you can have them changed. Then contact the creditor again and explain the error. You just might be extended credit the next time.
Remember, lenders are in business to make a profit, so they must screen all potential borrowers carefully. However, once you know what they look for, you can make an effort to address those things in order to make yourself appear more creditworthy. Take one step at a time to rebuild poor credit.
Copyright
Credit Repair Tips – How to Review and Clean Your Credit Report
Posted in Finance on 05/07/2010 01:08 am by
Chris Rutherford asked:
Your credit score has a big impact on everyday financial situations such as: What interest rate you pay on a credit card, whether you can rent an apartment, whether you have to pay a deposit with your utility company, whether you can qualify for a home loan, and maybe even a potential employer’s decision to hire you. Going through life with bad credit can be very challenging.
Getting a Copy of Your Credit Report
You can’t fix bad credit without knowing what’s in your credit report first. You need to get a copy of your credit report from all 3 credit bureaus: Experian, Trans Union, and Equifax. You can request a copy of your own credit report for free once a year.
Reviewing Your Credit Report
It may not be fun, but reviewing your credit report line by line at least once a year is very important to identify any errors or issues that you may not be aware of. Pay special attention to “derogatory” (or negative) items such as late payments, collections, and charge-offs – they lower your credit score, sometimes significantly.
First, make sure your name, birth date, and current address are showing correctly on the report (in the “Personal Information” section). If not, make a note to correct them with the credit bureau(s). Make sure you check every account listed on your credit report:
Verify the account status is correct – you may discover old accounts you thought were closed that still show up as “open”. If you have accounts left open that you’re not aware of, they may be hurting your ability to apply for new credit or raise the credit limit on accounts you are using. Look at each account in detail (account number, credit limit, date opened etc.) and make sure it is really YOUR account. Someone else could have a similar name and their account might be mixed up with yours. Or worse, someone may be stealing your identity to open accounts in your name, leaving you with the unpaid bills. If you recently refinanced and/or paid off a mortgage or credit card account, check to make sure the account status (“paid, closed”) and current balance ($0) are reflected in the credit report. Note that there will be some delay (30-60 days) in updating your report.
Too many inquiries (requests for your credit history made by other people) can hurt your credit score. Review the “Inquiries” section in your credit report and make sure you know who asked for your credit file and why. You should either already have an account with the inquiring entity, or have authorized their credit check in some way (e.g. by applying for a new bank / credit card account or loan).
Understanding Your Rights
Remember, you have the legal right to know what’s in your credit file, and you have the right to dispute incomplete or inaccurate information. By law, the credit reporting agencies must correct or delete inaccurate, outdated, incomplete, or unverifiable information from your credit history, usually within 30 days.
Therefore, reviewing your credit report at least annually is critical to maintain the accuracy of your credit information. You can raise your credit score by disputing any errors or outdated negative information (more than 7 years old, or bankruptcies more than 10 years old).
Eugene
Your credit score has a big impact on everyday financial situations such as: What interest rate you pay on a credit card, whether you can rent an apartment, whether you have to pay a deposit with your utility company, whether you can qualify for a home loan, and maybe even a potential employer’s decision to hire you. Going through life with bad credit can be very challenging.
Getting a Copy of Your Credit Report
You can’t fix bad credit without knowing what’s in your credit report first. You need to get a copy of your credit report from all 3 credit bureaus: Experian, Trans Union, and Equifax. You can request a copy of your own credit report for free once a year.
Reviewing Your Credit Report
It may not be fun, but reviewing your credit report line by line at least once a year is very important to identify any errors or issues that you may not be aware of. Pay special attention to “derogatory” (or negative) items such as late payments, collections, and charge-offs – they lower your credit score, sometimes significantly.
First, make sure your name, birth date, and current address are showing correctly on the report (in the “Personal Information” section). If not, make a note to correct them with the credit bureau(s). Make sure you check every account listed on your credit report:
Verify the account status is correct – you may discover old accounts you thought were closed that still show up as “open”. If you have accounts left open that you’re not aware of, they may be hurting your ability to apply for new credit or raise the credit limit on accounts you are using. Look at each account in detail (account number, credit limit, date opened etc.) and make sure it is really YOUR account. Someone else could have a similar name and their account might be mixed up with yours. Or worse, someone may be stealing your identity to open accounts in your name, leaving you with the unpaid bills. If you recently refinanced and/or paid off a mortgage or credit card account, check to make sure the account status (“paid, closed”) and current balance ($0) are reflected in the credit report. Note that there will be some delay (30-60 days) in updating your report.
Too many inquiries (requests for your credit history made by other people) can hurt your credit score. Review the “Inquiries” section in your credit report and make sure you know who asked for your credit file and why. You should either already have an account with the inquiring entity, or have authorized their credit check in some way (e.g. by applying for a new bank / credit card account or loan).
Understanding Your Rights
Remember, you have the legal right to know what’s in your credit file, and you have the right to dispute incomplete or inaccurate information. By law, the credit reporting agencies must correct or delete inaccurate, outdated, incomplete, or unverifiable information from your credit history, usually within 30 days.
Therefore, reviewing your credit report at least annually is critical to maintain the accuracy of your credit information. You can raise your credit score by disputing any errors or outdated negative information (more than 7 years old, or bankruptcies more than 10 years old).
Eugene
Whom do I report to take a legal action against a credit bureau?
Posted in Credit on 03/17/2010 04:13 am by
jagan13 asked:
I am having trouble with the Equifax Credit Bureau.They are not updating my current address on my credit file though I applied for credit from my new address which eventually changed the address on my credit file in Experian and Transunion.I also have faxed them a proof of my current address with a copy of my photo ID and also a letter clearly requesting them to update my address.I am having a lot problem lately for renting a car or leasing an apartment and almost everything that involves a credit check and every commercial organization request a credit report from Equifax which in my case they are not able to get because of the outdated address on my file.
Roy
I am having trouble with the Equifax Credit Bureau.They are not updating my current address on my credit file though I applied for credit from my new address which eventually changed the address on my credit file in Experian and Transunion.I also have faxed them a proof of my current address with a copy of my photo ID and also a letter clearly requesting them to update my address.I am having a lot problem lately for renting a car or leasing an apartment and almost everything that involves a credit check and every commercial organization request a credit report from Equifax which in my case they are not able to get because of the outdated address on my file.
Roy