Mixed credit reports are caused when the credit bureau places information belonging to another consumer on your credit report.
The reason mixed files are so hard to correct is because the lender typically is not sending in incorrect information. The problem is being caused by the credit bureau inadvertently commingling data belonging to two consumers and placing it on one credit report.
Credit reporting agencies are under no obligation to proactively investigate the information on your credit reports to determine if it’s yours or if it belongs to another person with the same name.
It's you’re responsible for pulling your own credit reports, reviewing the information and then filing a formal dispute with the credit bureaus if you find data that you believe is incorrect or belongs to someone else.
Additional reasons for incorrect data in credit files include:
>You have a common name
>The person applied for credit under different versions of their name (Robert Jones, Bob Jones, etc.)
>Clerical error in reading or entering name or address information from a hand-written application
>The person gave an inaccurate Social Security number, or the number was misread by the lender
>Sr.'s and Jr.'s living within the same household get account information crossed
>Loan or credit card payments were inadvertently applied to the wrong account
Did you know that March is National Credit Education Month? As a business owner, your business and personal credit scores may affect various aspects of your business.
Aside from the fact that you should avoid racking up debt, if you ever want to apply for alternative financing, the lender will likely need to know your credit score. Understandably, many business owners get stressed out when it comes to maintaining or improving their credit scores.
1. Understand the difference between your business and personal credit score – Many people don’t realize that business and personal credit scores are not the same. To start, business credit scores are generated by companies like Dun and Bradstreet and Equifax. In most cases, you’ll need to pay to get a copy of your business credit report, while your personal credit report can be accessed for free through various websites. Another difference is that the scale for business and personal credit scores are different – while personal scores can range from 300 to 850, business credit scores usually range from 0 to 100.
2. Check your score frequently – Even if you think your credit scores are sufficient, things change. There could be an error on your personal or business credit report in the future, or your score could fluctuate depending on whether or not you make payments on-time, among other factors. Make it a consistent initiative to monitor your scores, so that you are never in the dark!
3. See how you measure up – While every business is different, it is important to know how your credit scores fare in terms of other businesses. If your score is below the national average, then it is imperative that you work to raise it. For instance, according to Value Penguin, the national average personal credit score in the U. S. is 695. By knowing the average scores, you can set goals for your business to meet.
4. Focus on meeting payment deadlines – If you’re serious about boosting your personal credit score, a good place to start is to ensure that you’re paying your bills early or on-time. If paying bills late is one of your bad habits, set up payment reminders through your banking portals, so that you’re notified before a payment is due. By making payments on-time moving forward, you’ll likely see your personal credit score increase. Same goes for your business credit score – pay outstanding balances on your business accounts on-time, too!
5. Reduce debt – It’s easier said than done, but paying off an outstanding balance can be a great way to improve your credit score. Even if it is reducing it by small amounts, it is important to make an effort to pay off debt. Once eliminated, make it a priority to stay debt-free. Your future self, and your credit scores, will thank you!
CREDIT EDUCATION MONTH: DEALING WITH A BAD CREDIT REPORT
Think of your credit report as a reflection of your financial character that impacts almost all the major & minor financial decisions you make. Therefore, reviewing your credit report may confirm your fears if you have made some credit mistakes in the past. As part of Credit Education Month, here are some steps that you can take to make the situation better and repair your credit report.
Steps to Repair Your Credit Report for Credit Education Month
Correct any Errors on Your Report
It’s common to find that there is incorrect information in your credit report. You have the legal right to dispute and correct this information, and you should. You can send a written dispute to each credit reporting agency that has reported inaccurate information. By law, they must investigate the entry, correct any mistakes, and respond to you within 30 days. Afterward, you should obtain another copy of your credit report to confirm the corrections. Then, you should also send the results of the investigation to the other credit reporting agencies.
Written by Elizabeth Aldrich
If you mess up financially, or even make a tiny mistake, you can usually bet it will lower your credit score. However, if you’re doing everything you should and being financially responsible, that doesn’t always mean your credit score will increase.
It’s unfair, but building credit usually requires some knowledge of how credit scores are calculated and active and intentional financial decisions based on that knowledge. For example, being so responsible with your money that you don’t need a credit card won’t help your credit at all, but taking out a credit card you don’t need, using it for regular purchases, and paying it off each month will.
This is especially true for renters. Missing a rent payment, getting sent to collections, or getting evicted will almost certainly affect your credit. However, paying your rent on time likely won’t. That’s because your rent payments aren’t automatically reported to the major credit bureaus.
What is rent reporting?
Rent reporting is when your rental manager or a third party service reports your rent payments to credit bureaus for you. This third party service can be a rent reporting service that charges a monthly fee, or it can be a portal through which you pay your rent that offers rent reporting and may or may not charge a fee. Examples include Rent Reporters and Credit my Rent.
If you have rent reporting, it means that the credit bureaus being reported to are tracking your on-time payments and taking them into consideration when they calculate your credit score. So, as long as you never pay late, rent reporting will increase your credit score.
Why you should sign up for rent reporting
Rent reporting is a great, easy way to build your credit score by simply paying your rent on time. While there are loans and credit cards specifically designed to help you build credit, it doesn’t hurt to add on-time rental payments into the mix as well.
This is a great option for people who don’t plan on buying a home anytime soon. It allows their rent payments to still have a positive impact on their credit profile. It’s also a way to build a little credit for people who don’t have any, although taking out a credit building loan or secured credit card will still be necessary to build a substantial amount of credit.
Another benefit of rent reporting is having an official record of your on-time rent payments. If you ever plan to rent again, this can be very beneficial. Landlords almost always want to see a good rental history, and relying on references from old landlords isn’t always the most credible way to vouch for a new renter. This is especially true if you have no or low credit and are having trouble finding a place that will rent to you — showing them a record of on-time rental payments will help convince them.
The drawbacks of rent reporting
There are no real drawbacks to rent reporting in terms of your credit score. Of course, if you miss a payment, it will impact your credit negatively. But late payments can be reported to the credit bureaus even if you aren’t registered for rent reporting.
The only real drawback to rent reporting is that is often costs money. There is a chance that your landlord is already signed up for rent reporting, so be sure to ask if they are before looking into services on your own.
If your rental management doesn’t already report your rent payments, you’ll have to look into third party services on your own. These often have a setup fee and then a monthly fee associated with them. Setup can range from a few dollars to $100, and monthly fees can range from nothing to around $10.
If you decide that rent reporting is right for you and find a service that you like, it’s worth talking to your landlord and seeing if they’ll include rent reporting in your rent. They may decide to offer it as an added bonus to their future renters.
How to sign up for rent reporting
Again, the first step is to ask your landlord if they’re already signed up for rent reporting. Your on-time rent payments could already be boosting your credit score without you even knowing it.
If you’re not signed up for rent reporting, it’s time to shop around. The most important thing to know is that every rent reporting service reports to different credit bureaus. Some may only report to smaller credit bureaus, while others may report to one of the major credit bureaus, and others still may report to all three major credit bureaus.
The problem with a rent reporting service that only reports to certain credit bureaus is that they may not be reporting to credit bureaus that your future lenders use. You have many different credit scores, and when you apply for a credit card, mortgage, or loan, the bank will typically look at one of those scores from one of those bureaus – whichever bureau they typically pull from. If your rent reporting service is reporting to credit bureau A, but all your future lenders pull your credit report from credit bureaus B and C, then the rent reporting service you paid for was essentially useless.
The three major credit bureaus are Experian, Equifax, and TransUnion. Ideally, you’ll want to find a rent reporting service that reports to all three. You should calculate the total annual cost, include setup and monthly fees, and find the most inexpensive option that reports to major credit bureaus. Be sure to ask the service what happens in the case of a dispute with your landlord.
Other perks to look for are things like free access to credit scores and recommendations for specific lenders and credit cards that pull credit reports from the credit bureaus that your service reports to.
by Gerri Detweiler
From student loans to a house mortgage, debt accumulation is stressful and overwhelming. As you make moves to get out of debt, you might want to consider consolidating credit cards or other loans to save you time and money. But that begs the question—does debt consolidation help or hurt your credit?
The answer depends on how you consolidate and what you do with your debt afterward.
1. Debt Consolidation Loans
Getting a new loan to pay off other debts is the most popular way to consolidate. It’s certainly what most people think of when they consider consolidation. But finding a loan that has decent terms and is designed specifically for the purpose of consolidation can be challenging—especially if your credit scores are a bit lower due to the balances you’re carrying.
It’s certainly not impossible, though. Look for reputable debt consolidation companiesthat will work for your specific situation.
Tip: Triple check lenders’ certifications to make sure you’re dealing with a legitimate site if you’re shopping for a loan online. Scams abound.
Effect on Your Credit:
Consolidating credit cards with high balances using an installment loan (i.e. a loan with fixed monthly payments) may actually benefit your credit rating, especially if you use the loan to pay off credit cards that are near their limits. At the same time, any new loan can cause a short-term dip in your credit scores—so don’t be too surprised if you see your credit score change slightly when taking out a new loan.
2. Debt Management Plans
Debt management plans are often confused with debt consolidation—however, they’re very different programs. Debt management plans (DMPs) are offered through credit counseling agencies and, much to many people’s surprise, they don’t actually consolidate your debt.
Instead, you make a “consolidated” payment to the counseling agency, which then pays each of your creditors—usually at a reduced interest rate. Even though you’re making only one or two monthly payments, the counseling agency doesn’t actually pay off your creditors for you—it simply acts as a middle man to help you repay your debts and ensure that the creditors get the money they’re owed. These programs are available regardless of credit scores, so if you are having trouble consolidating, a DMP might be worth considering.
Tip: If you choose to move forward with a DMP, you should close or suspend your credit card accounts. Unfortunately, you’re not permitted to use credit cards while enrolled in a DMP.
Effect on Your Credit: If you have a good credit score and adhered to a creditor’s repayment terms in the past, a DMP could have a negative impact on your credit as it indicates that you are experiencing or have experienced difficulty with payments. Also, since a DMP directly impacts payment terms, credit reporting agencies might ping your DMP commitment because it designates a change in payment policies.
3. The Credit Card Shuffle
Transferring a high-rate credit card balance to a card with a lower rate is another way to consolidate. Carrie Rocha, author of Pocket Your Dollars: 5 Attitude Changes That Will Help You Pay Down Debt, and her husband paid off some $60,000 in debt, and taking advantage of low-rate balance transfers was one of the strategies they used to dig out. However, if you decide to go this route, you must be very disciplined in your approach. Otherwise, you may fall into traps such as getting stuck with a balance at a high interest rate after the introductory period ends.
Tip: Read the fine print. Keep your eyes peeled for any “but” or “until.”
Effect on Your Credit: It depends on how you use a transfer. You’ll often see a temporary dip in your credit score when opening any new card. If you use a substantial portion of the available credit (on the card) to consolidate balances from other cards with lower balance-to-available-credit ratios, your credit scores may drop from that as well. Finally, you may also lose points if you open a new card and use a majority of the credit line to consolidate.
However, if a 0% card allows you to save money and pay off your debt faster, you can come out ahead in the long run, both financially and credit score–wise.
The End Goal: Less Debt Equals Stronger CreditPaying down debt can have a tremendous impact on your credit scores. According to FICO, the company behind most of the credit scores used by lenders, consumers with high credit scores (e.g. 785 and above), tend to keep their balances low. Specifically, two-thirds of consumers with good credit carry less than $8,500 in non-mortgage debt, and they use an average of 7% of their available credit on their credit cards.
That means that paying off debt—whether you use a consolidation loan or just put every penny you can toward your debt—will often improve your credit ratings in the long run. The biggest risk, though, is that it’s easy to run up new balances on the cards you paid off in the consolidation—and that’s definitely not a good move for your credit or your bottom line. As you make progress on paying off your loans, periodically check your free credit report to see where you stand.
Remember, moving debt is a means to your end. The goal is to pay off those balances and free up cash flow as well as to help build strong credit. So whether it’s a consolidation loan, credit card shuffle, or DMP, know your options so you get there just a little faster.
We cannot find a person without any sort of debt in this present world, where the way of living has been exceeded beyond what we can afford. The debt maybe of house loans, education loans, credit cards, car payments and your debt and payment history becomes your credit history and you may find later that you have a very bad credit score. This bad credit report can affect your life in a bad way that you never imagined. When you go to get a loan from a bank, or to get a new credit card or even to buy any utilities on EMI’s you can find how difficult they can turn out just due to your bad credit report and low credit score. So, it’s highly recommended to repair your credit before you experience these situations in your life. For credit repair, there are a number of credit repair companies in the market which provides you good services to repair your credit and to raise your credit score. Some credit repair companies also provide financial advices to their clients other than technical services. As there a number of credit repair companies in the market nowadays, it’s difficult to find which one is genuine and keeps their promises and which ones are frauds. So, you have to take care while choosing a credit repair company and in this article let me guide you on this matter.
First of all let me tell you that don’t go for a credit repair companies help and service, unless you have tried your best to sort out the problems in your credit report and failed to do it. Most of the credit repair companies offer services that you can do all by yourself. But in some cases you may need such companies help to sort out the problem and solve it. If you are a very busy person and you don’t have time to go after your credit report, then it’s ok to give your bad credit report for its repair to such companies on the fee they charge. Otherwise try yourself first and then only seek their services.
If you have decided to seek a credit repair company for your service, then don’t pick up your phone and fix an appointment. You have to consider certain things before doing so.
Most of the companies that offer credit repair services are scams. They might buy money from you as their fee and disappear overnight with your money. So beware of such companies and their traps. You can do this by doing a research on the company. You could get help from the state attorney general’s office or any other consumer assistance agencies run by the state. You can research on the companies track records, complaints registered against that company and the nature of the complaint, etc. if you find that company satisfactory, and then you can approach them.
Some companies may be promising you things that may be illegal, to correct your credit report. Don’t fall in such traps and sign any contract with them. You can go ahead and file complaint against such companies who offer illegal services.
After all these factors if you decide to go ahead with that credit repair company, then consider these things too.
Thanks to a new federal law put into place in September of 2005, everyone is entitled to one free credit report each year. This is so that you can verify that your report does not contain any false information, and so you can see how your credit rates. Getting your annual free report is as easy as going to the authorized source, www.annualcreditreport.com and requesting one.
Once you have your free report, what in the world do all those abbreviations, numbers and codes mean?! The most widely used system for scoring is the FICO score, developed by The Fair Isaac Corporation, and the number determines the risk to extend credit to an individual. Credit reports are usually divided into sections; identifying information, public records, credit history, and inquiries to your credit report from creditors looking to extend you credit based on your credit score.
The identifying information includes your name, address, and social security number. Make sure they are all correct. Usually this section will also include a list of your previous addresses, your date of birth, phone number, spouse’s name, employers information.
The public records section is the section you hope has no information. This is where a bankruptcy or judgment would show up on your report, and it will harm your rating more than anything else on the report, and take longer to repair.
The credit history section is the most confusing. It will list every creditor you’ve ever had business with, including accounts that have been closed and those that remain open with no balances, and accounts that you are currently making payments on. Depending on which credit reporting agency you get your report from, this section will actually be displayed differently on each report. Experian’s report displays it in “english”, and states everything in common sense terms, like “pays on time”, “pays 30 days late”, etc. Reports from other agencies might use numerical codes in a table that you have to refer to another page to find out what each code means. Either way, make sure you agree with each creditors reporting of you since this is how your score is determined. If you have accounts that you don’t have the credit cards for anymore, or a loan that has been paid off but remains on your report as a revolving credit (money available to you as you pay it down), call and write each company to ask them to close the account completely and report that to the credit agencies. Otherwise, it appears that you have all of that money available to you, and that goes against your debt to income ratio.
The section called “inquiries”, and it includes a list of everyone who has ever looked at your report. This will include credit companies you’ve contacted to request a credit card or loan, but it will also include what is considered “soft” inquiries. Soft inquiries are any promotional offers, such as a retail store checking into your credit history to determine whether or not to mail you an offer for their credit card. Soft inquiries do not harm your overall credit score.
You can also get a copy of a credit report any time you’ve been denied credit. This is because there is always the possibility that there are errors in your report, which prevented you from obtaining the credit you applied for. Regardless of how you get your report, take the time to look it over and find any discrepancies (immediately call the creditors in question and straighten it out) and close out any accounts that you no longer use but are showing open and available to you on your credit report. Having your report will show you where you stand if you’re considering going for a mortgage, new vehicle, or other loan.
Copied with permission from: http://plrplr.com/20033/what-s-in-a-credit-report/
A subject of great concern to many of those with damaged credit is the issue of time limits. The two main categories are collection-related and reporting-related.
Collection Of Debts
Collections Action - A creditor or third-party collection agency can legally demand or request payment on a debt, via letters and phone calls, forever, as long as the debt remains unpaid. A debtor can order a third-party collector to cease communication, as per the Fair Debt Collection Practices Act, which should stop routine demands from that source. (See our Collection Agency FAQ for details.) In practice, the older a debt is, the less vigorous the collection efforts will be, and the more likely the creditor or collector will give up easily. And, unless the debt is secured by some type of property (e.g. a car), they cannot actually force a debtor to pay without a lawsuit.
Lawsuits - When a consumer is seriously delinquent (late) on a debt for a significant amount, there is the possibility of the creditor filing a lawsuit. The time limit for doing so is known as the statute of limitations, which is set by individual states. The relevant statute is the one for the state in which the debtor resided at the time of the delinquency. The expiration of the statute of limitations covering a debt will not necessarily prevent a lawsuit, but it will provide an absolute defense, whereby the debtor is simply required to file a response with the court, pointing out this fact, in order to have the suit dismissed. Here is a chart with the statute of limitations for each state and type of debt.
Judgements - If a lawsuit has already been filed and won by a creditor, there is another, separate statute of limitations for enforcing (collecting) the judgement. Here is a chart with the judgement enforcement time limits for each state.
Federal Taxes - Ten years from the date of the assessment for delinquent amounts, unless a lien has been filed. Tax liens on, for example, real estate, remain until the back taxes have been paid.
Student Loans - There is no statute of limitations or other time limit for lawsuits or other enforcement action on defaulted federal student loans.
Credit ReportingThe time limits for various types of information to appear on consumer credit reports are set by the federal Fair Credit Reporting Act.
Making payments or partial payments on bad debts does not effect the running of the credit reporting time limits, except in the case of tax liens and federal student loans. All other types of items should expire on schedule, based on the original dates, regardless of when or whether they are paid. There was previously a great deal of confusion over the starting point, which could have been interpreted as the date of the last activity on the account. This resulted in the possibility of "re-setting the clock" on an old bad debt by making a payment on it, or by paper-shuffling on the part of collection agencies. The issue was clarified in the 1996 amendments to the FCRA, which set a specific starting date related to the original delinquency date (see FCRA Section 605 (c) (1).)
Inquiries - Two years.
Late Payments - Seven years from the month in which the late payment was due. If there are multiple late payments in one account item, then they will each expire individually.
Charge-Offs - Seven years. The time runs from the date of the delinquency, plus 180 days. If a payment was due on an account on January 1, 2000, but the debtor defaulted, and never caught up to become current again, and the account is eventually declared a charge-off by the creditor, then the seven year reporting time limit starts running on July 1, 2000, with the item scheduled to expire from his/her credit reports on July 1, 2007. Here is our article on charge-offs.
Collection Accounts - Seven years. The running of this time limit is the same as with charge-offs. The date of delinquency still refers to the original delinquency with the original creditor, regardless of when the collection agency began working the debt. This includes debts that have been bought by a collection agency. Collection agencies cannot legitimately "re-set the clock."
Lawsuits And Judgements - Seven years or until the governing statute of limitations has expired, whichever is longer.
Bankruptcy (Chapter 7) - Ten years (from the date of entry of the order for relief or the date of adjudication.
Bankruptcy (Chapter 13) - Seven years.
Paid Tax Liens - Seven years from the date of payment.
Unpaid Tax Liens - Forever (unless paid - see above.)
Unpaid Federal Student Loans - Forever (unless paid, after which they can appear for seven years.)
The above time limits apply to credit reports which would be available to creditors for most types of credit applications. However, the credit bureaus are legally permitted to disclose older information in the following situations:
A credit application involving a principle loan amount of $150,000 or more.
An application for a life insurance policy with a payout of $150,000 or more.
An application for employment in a position paying $75,000 per year or more.
Have you ever wondered what companies send you when they claim you can erase your bad credit overnight? How about those ads that say you can get any major credit card 100% Guaranteed regardless of your credit?
Ads abound almost everywhere (online and off) selling books, systems and secrets to help you fix your credit in a hurry. Many of these programs have claims, which read like the covers of supermarket tabloids, "In 3 hours my credit score jumped from 580 to 676!"..."Erase bad credit and smash your debts with just 2 Magic Letters!"..."Create a completely new credit file in 24 hours!" Are these types of claims ALWAYS too good to be true? The answer is "Yes and...no."
While many people would love for you to believe that the only thing that can fix bad credit is time; in reality… nothing could be further from the truth. The fact is, time is only one factor which will fix a credit report (but it's a far cry from being the only factor). How can I back this up? Easy. Under a consumer protection law known as the Fair Credit Reporting Act (a.k.a. the FCRA), the only negative information which can remain on your credit report is not what is accurate… but what can be proved as such. What's this mean to you?
It means any negative item on your credit report can only remain there if it is accurate and CAN BE PROVED AS ACCURATE under the guidelines of the FCRA. This indisputable fact presents consumers with both good news and bad news. The good news is that through the FCRA, your credit score can most likely be improved dramatically in a very short period of time with only a modest amount of effort on your part.
The bad news is that while the actual "work" will take very little of your time, it is vital that you have good information on "how" to go about it. This is the bad news; 9 out of 10 courses on restoring your credit will do nothing more than lead you into a snake pit. This is because they provide you with outdated "Boiler Plate" dispute letters which are rarely effective. These are nothing more than form letters and… quite frankly (more bad news) the Credit Bureaus and Creditors will laugh at you if you try to use them.
While I agree with the Federal Trade Commission (FTC) that "Anything a Credit Repair Clinic can do for you legally, you can do for yourself at little or not cost"… the key element you need for success is the latest inside techniques and procedures to get the results you want. These involve strategies known as "Proof of Contract", "Constructive Notice", "Challenge of Procedure" or "Restrictive Endorsement" and many others.
All these terms may "sound" impressive, but they are really quite simple. In the end, it is nothing more than a method of communication which exercises your consumer protection rights, gets the results you want, and raises your credit score. Even more impressive, once you learn how simple it can be by doing it for yourself, you will find there is a fortune to be made doing it for others! Either way, it all starts by requesting a free copy of your credit report by visiting: www.AnnualCreditReport.com.
The TRUTH About Credit Repair
by Scott Bilker
Scott Bilker is the author of the best-selling books, Talk Your Way Out of Credit Card Debt, Credit Card and Debt Management, and How to be more Credit Card and Debt Smart. He's also the founder of DebtSmart.com. More about Scott Bilker and DebtSmart can be found in the online media kit.
Taking the right little steps can fix credit in a big way.
Everyone should care enough to improve their credit score. Lenders use this three-digit number to decide whether to give you credit, and at which interest rate and terms. Insurers, utility companies, cellphone companies and even landlords also use credit scores.
The FICO score is the most commonly used credit score. It ranges from 300 to 850. You can get your credit score for a fee from myFICO.com — the consumer division of FICO — or from the three credit reporting agencies, Equifax, Experian and TransUnion. And several credit card companies give cardholders free access to their FICO scores.
You also can get a version of your score for free from a website such as GOFreeCredit, which offers a TransUnion credit score as part of a seven-day trial of GOFreeCredit’s credit-monitoring service.
If your score is low, you might have a hard time getting credit. Even if you do get credit, you likely will pay higher rates because you are considered a risk. But you don’t have to settle for a low score. “There are many strategies to increase your credit scores — some with limited effectiveness and others with much more,” said John Ulzheimer, a credit expert formerly with FICO and Equifax. “The first thing to do is to be realistic with your expectations.”
For example, if your score is low because you filed for bankruptcy this past year, there isn’t much you can do except let time pass, because it will stay on your credit report for seven to 10 years, Ulzheimer said.
But if your credit score drops for one of many other reasons — such as racking up debt over the holidays, opening several new credit accounts or making other similar credit mistakes — you can take these steps to build credit and improve your score in 2017.
1. Check Your Credit Report
Get a free copy of your credit report from each of the three credit reporting agencies at AnnualCreditReport.com. Your score is based on information in your credit report, including:
How much you owe
Your payment history
The type of credit you have
The number of accounts you have
How long you’ve been using credit
Note what you find when looking over your credit report. Do you see missed payments listed on your report? Have you maxed out several credit cards? Such factors can lower your score. Your score might vary among the credit bureaus because they use different formulas to calculate credit scores, and their reports might have differing information about your credit, according to AnnualCreditReport.com.
The average FICO score in the U.S. is 699, according to the most recent data from FICO. Lenders have their own criteria for determining a “good” score, but FICO classifies scores of 740 to 799 as very good, according to myFICO.com. A score of 800 or above is considered “exceptional.”
When you review your report, make sure all of the information is correct. An error on your report can affect your score. If you find a mistake, AnnualCreditReport.com recommends contacting the credit bureau that issued the report, or reaching out to the business that provided the information to the credit bureau so you can dispute the inaccurate information.
2. Avoid Making Late Payments
Payment history accounts for 35 percent of your FICO credit score, according to myFICO.com. “The best way to avoid a low score is to never give any creditor a reason to report you as being delinquent on your obligations,” Ulzheimer said.
You have 30 days after the due date before a lender can report you as being late to the credit bureaus, Ulzheimer said. To avoid paying bills late or missing them altogether, use an app such as Mint Bills to alert you when due dates are approaching. If your score has slipped because of late payments in the past, making on-time payments going forward will help boost your number, according to myFICO.com.
If you typically pay bills on time but were late just once, ask your credit card company or lender to reach out to the credit bureaus and remove your delinquent payment from your credit report.
3. Pay Off Big Credit Card Balances
If you racked up debt during the holiday season, paying it down in the new year can improve your score. “One of the fastest ways to bump up your credit scores is to reduce balances on credit cards,” said Gerri Detweiler, head of market education for Nav, a credit resource for businesses.
Detweiler said debt usage accounts for up to one-third of your credit score. “Some consumers can see their credit scores improve by 10 to 50 points or more in as little as a month just by reducing their balances,” she said.
Credit-scoring models compare the balances on your lines of credit to your credit limits. Detweiler said consumers with the best scores tend to use less than 10 percent of their available credit.
Did you get a big tax refund in 2016? If so, it is an indicator that you might find extra cash in your budget in 2017 to pay down credit card debt. A refund signals that you let Uncle Sam withhold too much in taxes during the year. To adjust your withholding, file a new W-4 form with your employer to claim more allowances.
If you received the average refund of $2,777 in 2016, adjusting your withholding could add about $231 to your bottom line each month in 2017.
4. Eliminate Small Balances
If you can’t pay off — or even just pay down — credit card debt right now, Ulzheimer suggested another option. “If you’re able to eliminate the lower ‘nuisance’ balances, then your scores will also improve even if you still have other cards with balances.”
For example, perhaps you opened retail credit cards during the holidays to get discounts on purchases. If so, you might have multiple accounts with fairly small balances. “The more you have, the more problematic it is for your scores,” Ulzheimer said.
So, you can make paying down small balances a priority while paying the minimum on cards with bigger balances. Start with the smallest balance by paying as much as you can toward it each month until it’s paid off. Then, move to the card with the next highest balance and keep repeating the pattern.
5. Pay Credit Card Bills Early in the Month
Even if you start paying your credit card balance in full each month in 2017, your score might not rise as much as you expect. That’s because making payments at the end of the month might work against you.
“Most issuers report balances when the billing cycle ends before you make your payment,” Detweiler said. “That means the reported balance may be higher than the balance you end up with after you’ve made your payment.”
In particular, this can impact consumers who use their credit cards for everyday purchases to earn rewards points and carry higher balances as a result. So rather than wait until your bill is due, Detweiler recommends paying earlier.
“You can make an extra payment before the billing cycle closes to reduce the balance that will be reported to the credit reporting agencies,” she said.
6. Don’t Close Accounts After They’re Paid Off
It’s a mistake to close credit card accounts after you’ve paid off balances — even if you don’t plan to use those cards again. “There’s really never a good reason to close a credit card account because of the possible damage you can cause to your scores,” Ulzheimer said.
Having cards with zero balances strengthens your credit utilization ratio because you haven’t used any of your available credit on those cards. If you close those accounts, you lower the total amount of your available credit. Such a move can lower your credit score if you carry balances on other cards.
For example, let’s say you owe $500 and have a total credit limit of $2,000 across all cards. Then, you close a few accounts, and your available credit drops to $1,000. Now, you’re using 50 percent of your available credit instead of 25 percent.
“Once your cards have been paid off, it’s a good idea to leave them open and even use them sparingly from time to time so the issuer doesn’t close them due to inactivity,” Ulzheimer said. “Having unused and open credit cards on your credit reports is helpful to your scores.”
7. Use a Personal Loan to Consolidate High-Interest Debt
You might be able to improve your credit score by taking on new debt to pay down existing debt. “If you can’t afford to pay down your high credit card balances, another way to boost your scores can be to use a personal loan to consolidate,” Detweiler said.
Opening a new line of credit can lower your score, according to myFICO.com. However, a personal loan for a fixed amount is typically reported as an installment loan and is not included when calculating the credit utilization ratio, Detweiler said. Transferring debt to a personal loan often can improve the credit utilization ratio — and improve your credit score.
Of course, you need a very good credit score to get the best personal loan rates. But even if you can’t get the top rate, you still might get a personal loan rate that’s lower than the rates on the credits cards you want to pay off.
8. Get Tax Liens Off Your Credit Report
Fail to pay your taxes, and the federal government will file a tax lien against you. “Tax liens are one of the most seriously negative types of information on credit reports,” Detweiler said. “Normally, they stay on credit reports for seven years once paid, and indefinitely if unpaid.”
Paying your tax bill in full is the best way to get rid of a tax lien, according to the IRS. However, if you can’t afford to pay all of what you owe, take advantage of the IRS Fresh Start program, Detweiler said. If you meet the qualifications, you might be able to get the lien removed from your credit report even before your tax bill is paid off, she said.
“This can raise your credit scores by 50 to 75 points or more,” Detweiler said. “Some taxpayers have found this to be a relatively fast process — a month or so — while others have reported it took a few months.”
CFPB Orders TransUnion and Equifax to Pay for Deceiving Consumers in Marketing Credit Scores and Credit Products
Credit Reporting Companies Misstated the Cost and Usefulness of the Credit Scores and Products They Sold, Lured Consumers into Costly Recurring Payments
WASHINGTON, D.C. – The Consumer Financial Protection Bureau (CFPB) today took action against Equifax, Inc., TransUnion, and their subsidiaries for deceiving consumers about the usefulness and actual cost of credit scores they sold to consumers. The companies also lured consumers into costly recurring payments for credit-related products with false promises. The CFPB ordered TransUnion and Equifax to truthfully represent the value of the credit scores they provide and the cost of obtaining those credit scores and other services. Between them, TransUnion and Equifax must pay a total of more than $17.6 million in restitution to consumers, and fines totaling $5.5 million to the CFPB.
“TransUnion and Equifax deceived consumers about the usefulness of the credit scores they marketed, and lured consumers into expensive recurring payments with false promises,” said CFPB Director Richard Cordray. “Credit scores are central to a consumer’s financial life and people deserve honest and accurate information about them.”
Chicago-based TransUnion and Atlanta-based Equifax are two of the nation’s three largest credit reporting agencies. TransUnion and Equifax collect credit information, including a borrower's payment history, debt load, maximum credit limits, names and addresses of current creditors, and other elements of their credit relationships. These generate credit reports and scores that are provided to businesses. Through their subsidiaries, TransUnion Interactive and Equifax Consumer Services, the companies also market, sell, or provide credit-related products directly to consumers, such as credit scores, credit reports, and credit monitoring.
Credit scores are numerical summaries designed to predict consumer payment behavior in using credit. Many lenders and other commercial users rely in part on these scores when deciding whether to extend credit. No single credit score or credit score model is used by every lender. Lenders use an array of credit scores, which vary by score provider and scoring model. The scores that TransUnion sells to consumers are based on a model from VantageScore Solutions, LLC. Although TransUnion has marketed VantageScores to lenders and other commercial users, VantageScores are not typically used for credit decisions. Scores Equifax sold to consumers were based on Equifax’s proprietary model, the Equifax Credit Score, which is an “educational” credit score that also is typically not used by lenders to make credit decisions.
TransUnion, since at least July 2011, and Equifax, between July 2011 and March 2014, violated the Dodd-Frank Wall Street Reform and Consumer Financial Protection Act by:
Enforcement ActionUnder the Dodd-Frank Act, the CFPB is authorized to take action against institutions engaged in unfair, deceptive, or abusive acts or practices, or that otherwise violate federal consumer financial laws. Under the consent orders, TransUnion and Equifax must:
The full text of the CFPB’s Consent Order against TransUnion is here:http://files.consumerfinance.gov/f/documents/201701_cfpb_Transunion-consent-order.pdf
More information about credit scores can be found here: http://www.consumerfinance.gov/about-us/blog/what-you-need-know-understanding-why-offers-your-credit-score-are-not-all-same/
copied from: http://www.consumerfinance.gov/about-us/newsroom/cfpb-orders-transunion-and-equifax-pay-deceiving-consumers-marketing-credit-scores-and-credit-products/