How to Manage Your Credit Report

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How to manage your credit Report.

Submitted: December 20, 2010

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Submitted: December 20, 2010

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Managing your credit report There are three main credit reporting agencies in the United States (Equifax, TransUnion, Experian), and you have to pay attention to each one because the information is not identical at all three places. It is not uncommon to see a difference of up to 50 points between the three agencies because of two main reasons:

1. Credit reporting is a voluntary system - Creditors can subscribe to whichever agencies they want too, sometimes all three, sometimes none at all.

2. Credit Agencies also collect their information at different times of the month, “often resulting in one agency having more up-to-date information than another” (Source: www.myfico.com).

Your first step in actively managing credit is to order a copy of your credit report from each of the three main agencies: Experian, TransUnion, and Equifax. Due to a federal law that rolled out in Sept 2005, you are entitled to one free report from each agency once a year. Some experts advise you to stagger the reports through the span of a year, which I do suggest when you are actively managing your reports, but for first timers, get all three at once to see what each is reporting.

There are three different methods you can utilize in order to receive a free copy of each of your credit reports annually, and they all come from the same company, AnnualCreditReport.com.

1. Online – www.annualcreditreport.com 2. Phone – 877-322-8228 3. Mail - You can complete the form on the back of the “Annual Credit Report Request” brochure and mail it to: Annual Credit Request Service, PO BOX 105281, Atlanta, GA, 30348.

AnnualCreditReport.com is a centralized service established by congress that allows consumers to request free annual credit reports. This service “provides consumers with the secure means to request and obtain a free credit report once every 12 months from each of the three nationwide consumer credit reporting companies in accordance with the Fair and Accurate Credit Transactions Act (FACT Act)”, (Source: www.annualcreditreport.com). Annualcreditreport.com is “the only authorized source for consumers to access their annual credit report online for free” (Source: Bankrate.com, “Credit scores explained”). They are authorized by Equifax, Experian and TransUnion for this purpose.

Note: Beware of any web site offering free credit reports that ask you to provide your credit card information up front. Most sites offer a free trial period, so you are able to view your credit report, but if you don’t cancel within a certain time frame, they can start billing you for their services (usually about $15) each month until you do.

AnnualCreditReport.com’s service will provide you with a complete credit report that you are able to view for free, for 30 days, but will not provide you with your score. If you want to see your score it will cost a small fee depending on where you receive it from. “If you’ve been turned down for credit in the last 60 days because of something a lender saw on your credit report, you can obtain a copy of your report free of charge. Lenders are required by law to notify you of this right if they deny you credit” (Source: About.com, Your Credit Report).

There are services on the internet that offer a free credit report up front as well as a management program for a fee (about $15), and each of the three credit agencies provide this service. This is a good idea if you are not going to actively manage your credit reports because they will notify you if you fall behind or if there is a strange inquiry on your report. But again if you are taking an active role from year to year and stagger the time frame you receive your reports from the three main agencies, you can catch these occurrences yourself and save about $180 dollars annually in subscription fees.

When you receive your credit report there are four main sections of interest: Identifying Information, Account/Credit History, Negative Items, and Inquires. Make sure that this information is correct; basically your report should be a true representation of any accounts you have opened or closed, charged or paid in full etc. If there is incorrect account information in your credit report you need to dispute it immediately so that it won’t affect you negatively. (I will show you how to dispute incorrect information and accounts at the end of this chapter)

Identifying Information – This is your personal information that identifies who you are. Such as your name, social security #, addresses, date of birth, etc… Your identifying information is NOT used in calculating your FICO score.

Account/Credit History – These are your credit accounts. For each item the report will show the name of the creditor, type of account, date account was opened, credit limit or loan amount, the account balance, and most importantly the payment history.

Example from TransUnion

Wells Fargo Card Service (#) Balance: $0 Pay Status: Paid or Paying as Agreed PO BOX 5445 Date Updated: 10/2008 Account Type: Revolving Account Portland, OR High Balance: $3,089 Responsibility: Individual Account (800)642-4720 Credit Limit: $10,000 Date Opened: 11/2002 Past Due: $0 Date Paid: 05/2008 Loan Type: Flexible Spending Credit Card Late Payments 48 months 30 60 90 0 0 0

Summary of this particular account: This is a credit card that was opened in November of 2002. The credit limit is $10,000 and this account is not shared by multiple people and currently carrying a $0 balance. This person has never had a balance higher than $3,089 and has been consistent in making on time payments.

Example from Experian

EXXMBLCITI Address: Account Number: PO Box 6497 # Sioux Falls, SD 57117 Address Identification Number: # Status: Open/Never late. Date Opened: Type: Credit Limit/Original Amount: 01/1997 Revolving $1000 Reported Since: Terms: High Balance: 03/2007 NA $273 Date of Status: Monthly Payment: Recent Balance: 10/2008 $10 $203 as of 10/2008 Last Reported: Responsibility: Recent Payment: 10/2008 Joint with $150 “Persons Name” Balance History: 09/2008 $--- 08/2008 $--- 07/2008 $--- 06/2008 $---

Between Jan 2008 and Sep 2008, your credit limit was $1000.

Summary of this particular account: This is a joint account opened in January 1997. It is a gas card with a credit limit of $1000. This person has never charged more than $273 during any one billing period. This account is still open and this person has never made a late payment.

Negative Items – Or sometimes referred to as Public Records. Hopefully this section is blank, but if not it will show any Bankruptcies, Judgments, and Tax Liens you have had. Also any delinquencies (missed payments) and overdue debt from collection agencies will report in this section as well. These occurrences can stay on your record for 7 to 10 years before they drop off, and have some of the harshest effects negatively on your credit report.

Inquiries - Anyone running your credit will show as an inquiry. You do not want too many voluntary inquiries on your credit report, because too many over a period of time can negatively affect your credit score. If you are shopping for a home or car loan and your inquiries are within a 14 day period you should be ok. The scoring should only count as one within that time frame. This section contains a list of lenders who accessed your credit report within the last two years.

Example from TransUnion

Account Review Inquiries

WASHMTL/PROV pe

PO BOX 9007 Requested On: 06/2008 PLEASANTON, CA 94566

DISCOVER FINCL SVC LLC pe 2500 LAKE COOK RD Requested On: 02/2008 RIVERWOODS, IL 60015

I have listed below some terms I feel are important in regards to your credit report. These are common terms you will see in credit reports and should be aware of what they mean.


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