Credit Help

Your Credit Report

"Your credit payment history is recorded in a file or report. These files or reports are maintained and sold by ""consumer reporting agencies"" (CRAs). One type of CRA is commonly known as a credit bureau. You have a credit record on file at a credit bureau if you have ever applied for a credit or charge account, a personal loan, insurance, or a job. Your credit record contains information about your income, debts, and credit payment history. It also indicates whether you have been sued, arrested, or have filed for bankruptcy."

Your Credit History

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If you don't have wads of cash stuffed in a mattress or locked away in a safety deposit box, you've probably used credit to buy some of the finer things in life-a college education, a car, a boat or an engagement ring. Every purchase you make on credit and fail to repay in full within a stated time (or fail to repay at all) becomes part of your credit history. In the United States, there are three major credit repositories that maintain enormous databases that contain detailed personal financial information, including debt and loan payments, residences, and whether a company has taken action to collect on a debt. If you have ever purchased anything on credit, or were granted a loan, you are probably on file with one or more of these credit bureaus.

Experian (formerly TRW), Trans-Union, and Equifax are among the largest credit reporting agencies in the country. They gather credit information on a daily, weekly, and monthly basis from credit card companies, mortgage lenders, utility companies, department stores, and banks, and sell that information to companies that extend credit to consumers-mortgage brokers, finance companies, and department stores.

When they receive information, the credit bureaus add it to the existing data in your file (which is continuously updated). If you pay off a loan, for example, or are late with a credit card payment, this information is entered into your file and becomes available to companies that may purchase a credit history to check on your financial situation. Credit reporting agencies share their file information with each other which would lead one to believe that they are all storing the same information. However, certain data may not be reported or even updated to all of the companies. That is why it is important to check your credit on an annual basis to ensure the accuracy of the information they are reporting. Sometimes for example, a reported collection account (an account that is reporting that you stopped paying the debt) could have been repaid in full but still shows up as a delinquent credit account. By not checking your credit profile, you may be turned down for credit later on because the credit bureaus are still reporting the outstanding collection account.

Source:http://:www.credit-factor.com

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Why should I periodically review my credit report?

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Identity Theft/Fraud: With identity theft on the rise in the United States, the number one reason to review your credit report at least once a year is to detect and stop fraud – before you need your credit.

You've Never Seen It: You should at least review your credit once in your life. See what the credit grantors know about you. It's amazing the amount of personal information that can be obtained in this one report.

Buying a Home or Car: Know ahead of time what appears on your report to help you shop for the best rate and take care of inaccuracies or past due balances.

Renting/Relocating: Take your credit report with you! Prospective landlords will be checking your credit, and you might just snag that great relocation by not having to wait for credit approval.

Divorce: You'll need to evaluate your financial position with your attorney. Make sure you check to see if there have been any accounts opened that you might not have known about.

Bankruptcy: Catch all your credit accounts. Letting one slip by can cause financial grief in the future.

Self-Employed: New entrepreneurs better check their credit before applying for merchant accounts and other business services.

Need a Credit Card: Or any other credit line, for that matter. It's always wise to check your credit report before applying in case there are any inaccuracies. Don't get caught surprised because someone else's information is on your credit report!

Financial Planning: Any long or short term financial planning involves looking at your current financial position. And what better way to see that than reviewing your current credit report?

source:http://www.credit-factor.com

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Why should I check my credit report?

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It's one thing to have bad credit, but it is another to have errors on your credit report through no fault of your own. The result, however, is the same - unless you correct it.

Did you know that you pay a higher interest rate on you car and mortgage with questionable credit?

Were you aware that insurance companies can turn you down or put you in a higher risk category with higher premiums if they consider you have a bad credit history.

Consider this: More employers now run credit checks for potential job selection and/or promotions than ever before in our history.

Can you really afford to lose your next promotion because of a credit error?


Who can access your credit report?

1. Landlords, utility companies, phone companies.
2. Hospitals, doctors, dentists, insurance companies.
3. Credit unions, finance companies, banks.
4. Retailers, department stores, credit card companies.
5. Car dealers, mortgagers.
6. Investigators, lawyers, courts.
7. Anyone who can offer just cause and/or has access as a member of a credit reporting agency.

source:http://www.credit-factor.com

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Why does an account that has been paid still show with a balance on a credit report?

"Most credit grantors report to repositories on a monthly or bi-monthly basis. Time requirements of creditors to report their data to the three major repositories widely varies. Time requirements that credit repositories have to add to a consumers credit report with new credit data also varies. The human factor between creditor and credit repositories may sometimes take weeks or several months to update their data. (Example: on an average a credit report reports balances approximately 30-60 days behind.)"

Who Can Look at My Credit Report?

"Not just used to grant credit anymore, your credit file is used more and more as a measure of your character. Yes, prospective credit grantors will still review at least one of your credit reports before granting you credit. But, it is increasingly common for insurance companies to review your credit before extending auto or health insurance. And many employers now check your credit before they consider you for a position. If you rent, you have probably already been through a credit check to determine your worthiness as a renter. Basically, anyone who can prove a valid business purpose (and has your permission) can view your credit file. The Fair Credit Reporting Act has specific details.

Source:http://:www.credit-factor.com

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Who can access credit reports?

" Credit reports may be furnished to individuals or companies who use it to evaluate you for credit risk, employment, insurance, licensing, or any legitimate business need. You may also request a copy of your credit file for yourself."

What Kind of Information Appears on the Credit Report?

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Identifying Information
Items such as your name, any aliases, current and previous addresses, social security number, possibly marital status.

Merchant Trade Lines or Credit Lines
These include all regular installment or revolving credit lines such as department store cards, auto loans, mortgages, and credit cards. If you have any history of late payment or if the credit account was included in a bankruptcy, charged off, or put into repossession, the listing will be considered negative or derogatory by all credit grantors.

NOTE: Not all credit accounts may be listed on your credit report since not every credit grantor reports to the same credit bureaus. In addition, not all credit grantors report every credit account to the credit bureaus. For a thorough review of your credit file, you should look at information from all three major credit bureaus.

Collection Accounts
When any credit account is referred to a collection agency or the collections department of a credit grantor because of delinquency, non-payment, or other reason, it shows on the credit report as a collection account. Collection accounts can appear as paid or unpaid accounts. Any account that shows as a collection account (whether paid or not) is considered very negative by credit grantors.

Court Records
Court records include bankruptcies, judgments, satisfied judgments, liens, satisfied liens, and divorce. Most court records, including satisfied liens and/or judgments, are considered very negative by credit grantors.

Inquiries
Each time you apply for credit and a potential credit grantor looks at your credit file, an ""inquiry"" appears on at least one of your credit bureau files. Inquiries can also appear when an existing credit grantor reviews your credit periodically (to increase your credit line, etc.), or when you review your own credit report. These requests for your credit report are noted as part of your credit history file and can remain for 24 months.

However, a credit grantor may find what it considers ""excessive inquiries,"" and reject your credit application. There are no guidelines or laws that govern the number of inquiries that constitute ""excessive."" It is each credit grantor's decision. Credit grantors usually reject applications for this reason when they see several inquiries but no new credit. They would rather be safe than sorry. Some companies make unauthorized inquiries to check your credit. Protect yourself from unauthorized inquiries by not giving out your personal information to a merchant (including addresses and drivers licenses) until you are ready to actually apply for credit.

What's Not Included
Your credit report will not include information about your race, salary history, religion, checking or savings accounts, stocks and bonds, medical history, personal assets, criminal record or personal background and lifestyle.

source:http://www.credit-factor.com

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What is an inquiry?

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An ""inquiry"" is a listing of the name of a credit grantor, or authorized user who has accessed your credit file. Each inquiry is posted to the credit file so you know who has obtained a copy of it. No inquiry is posted on consumer's credit file when the consumer checks own credit report.

Credit grantors post an inquiry before offering you a pre-approval credit card application. These are listed as ""promotional"" inquiries on your credit file because only your name and address were accessed, not your credit history information. They are NOT sent to credit grantors or businesses for reasons of credit reporting. They are listed for your informational purposes only.

source:http://www.credit-factor.com

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What is an acceptable debt-to-income ratio?

"Generally, the lower your debt-to-income ratio, the better is your financial condition. A recommended debt-to-income ratio is under 15 percent. A ratio of 20 percent or higher signals a need to control credit and to begin a plan for regaining financial stability. Ideally, you will carry little or no debt so your income can be saved, invested, or spent as desired, rather than used on interest.

Your debt-to-income ratio

- 20% or less: This is a healthy debt load to carry for most people.

- 20%-35%: Not bad, but start paring debt now before you get in real trouble. You should look carefully at your monthly payments and expenses and start decreasing your overall level of debt.

- 35%-50%: Financial difficulties are probably imminent unless you take immediate action. You should stop accumulating debt and start looking for ways to decrease your total debt level.

- 50% or more: Get professional help to aggressively reduce debt.

Why is monitoring your debt-to-income ratio important?
You can avoid ""creeping indebtedness"" by staying aware of your debt-to-income ratio. Knowing your debt-to-income ratio will help you manage your personal finances. Keeping your debt-to-income ratio under 20 percent will help you avoid major credit problems.

Because it is such a powerful indicator, lenders look at your debt-to-income ratio when they consider extending credit. Letting your debt-to-income ratio rise will jeopardize your chance of making major purchases, such as a car or a home, when you desire. Also, if your ratio is high, you will find it difficult to get additional credit in case of emergencies. As a bonus, if you keep your debt-to-income ratio low, you will more likely qualify for the lowest interest rates and best terms when you apply for credit."