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Credit Score
Ever wonder how a creditor decides whether to grant you
credit? For years, creditors have been using credit scoring systems to determine
if you'd be a good risk for credit cards and auto loans. More recently, credit
scoring has been used to help creditors evaluate your ability to repay home
mortgage loans. Here's how credit scoring works in helping decide who gets
credit -- and why.
What is credit scoring?
Credit scoring is a system creditors use to help determine
whether to give you credit.
Information about you and your credit
experiences, such as your bill-paying history, the number and type of accounts
you have, late payments, collection actions, outstanding debt, and the age of
your accounts, is collected from your credit application and your credit report.
Using a statistical program, creditors compare this information to the credit
performance of consumers with similar profiles. A credit scoring system awards
points for each factor that helps predict who is most likely to repay a debt. A
total number of points -- a credit score -- helps predict how creditworthy you
are, that is, how likely it is that you will repay a loan and make the payments
when due.
Because your credit report is an important part of many credit scoring systems,
it is very important to make sure it's accurate before you submit a credit
application. To get copies of your report, contact the three major credit
reporting agencies:
Why is credit scoring used?
Credit scoring is based on real data and statistics, so it
usually is more reliable than subjective or judgmental methods. It treats all
applicants objectively. Judgmental methods typically rely on criteria that are
not systematically tested and can vary when applied by different individuals.
How is a credit scoring model
developed?
To develop a model, a creditor selects a random sample of its
customers, or a sample of similar customers if their sample is not large enough,
and analyzes it statistically to identify characteristics that relate to
creditworthiness. Then, each of these factors is assigned a weight based on how
strong a predictor it is of who would be a good credit risk. Each creditor may
use its own credit scoring model, different scoring models for different types
of credit, or a generic model developed by a credit scoring company.
Under the Equal Credit Opportunity Act, a credit scoring system may not use
certain characteristics like -- race, sex, marital status, national origin, or
religion -- as factors. However, creditors are allowed to use age in properly
designed scoring systems. But any scoring system that includes age must give
equal treatment to elderly applicants.
What can I do to improve my
score?
Credit scoring models are complex and often vary among creditors and for
different types of credit. If one factor changes, your score may change -- but
improvement generally depends on how that factor relates to other factors
considered by the model. Only the creditor can explain what might improve your
score under the particular model used to evaluate your credit application.
Nevertheless, scoring models generally evaluate the following types of
information in your credit report:
Scoring models may be based on more than just
information in your credit report. For example, the model may consider
information from your credit application as well: your job or occupation, length
of employment, or whether you own a home.
To improve your credit score under most models, concentrate on paying
your bills on time, paying down outstanding balances, and not taking on new
debt. It's likely to take some time to improve your score significantly.
How reliable is the
credit scoring system?
Credit scoring systems enable creditors to evaluate millions of applicants
consistently and impartially on many different characteristics. But to be
statistically valid, credit scoring systems must be based on a big enough
sample. Remember that these systems generally vary from creditor to creditor.
Although you may think such a system is arbitrary or impersonal, it can help
make decisions faster, more accurately, and more impartially than individuals
when it is properly designed. And many creditors design their systems so that in
marginal cases, applicants whose scores are not high enough to pass easily or
are low enough to fail absolutely are referred to a credit manager who decides
whether the company or lender will extend credit. This may allow for discussion
and negotiation between the credit manager and the consumer.
What happens if you are
denied credit or don't get the terms you want?
If you are denied credit, the Equal Credit Opportunity Act requires that the
creditor give you a notice that tells you the specific reasons your application
was rejected or the fact that you have the right to learn the reasons if you ask
within 60 days. Indefinite and vague reasons for denial are illegal, so ask the
creditor to be specific. Acceptable reasons include: "Your income was low" or
"You haven't been employed long enough." Unacceptable reasons include: "You
didn't meet our minimum standards" or "You didn't receive enough points on our
credit scoring system."
If a creditor says you were denied credit because you are too near your credit
limits on your charge cards or you have too many credit card accounts, you may
want to reapply after paying down your balances or closing some accounts. Credit
scoring systems consider updated information and change over time.
Sometimes you can be denied credit because of information from a credit report.
If so, the Fair Credit Reporting Act requires the creditor to give you the name,
address and phone number of the credit reporting agency that supplied the
information. You should contact that agency to find out what your report said.
This information is free if you request it within 60 days of being turned down
for credit. The credit reporting agency can tell you what's in your report, but
only the creditor can tell you why your application was denied.
If you've been denied credit, or didn't get the rate or credit terms you want,
ask the creditor if a credit scoring system was used. If so, ask what
characteristics or factors were used in that system, and the best ways to
improve your application. If you get credit, ask the creditor whether you are
getting the best rate and terms available and, if not, why. If you are not
offered the best rate available because of inaccuracies in your credit report,
be sure to dispute the inaccurate information in your credit report.
Where can you get more
information?
The FTC works for the consumer to prevent fraudulent, deceptive and unfair
business practices in the marketplace and to provide information to help
consumers spot, stop and avoid them. To file a
complaint or to get free
information on consumer issues, visit
www.ftc.gov or
call toll-free, 1-877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4261. The FTC
enters Internet, telemarketing, identity theft and other fraud-related
complaints into
Consumer Sentinel, a secure,
online database available to hundreds of civil and criminal law enforcement
agencies in the U.S. and abroad.
Return
Real Consumer Credit Improvement Services Real Credit Repair Quick Credit Repair
Our Purpose Our purpose is to provide consumers with detailed information to
assist with improving their credit scores and to offer another credit
alternative to prevent consumers from falling victim to costly credit repair
scams. The information we provide will equip you with important credit
information and allow you the opportunity to improve your credit yourself. You
have now taken the first step to improving your credit score. The information
you are about to read will improve your financial situation immediately if
applied successfully. Our team of professionals are here to assist you. Don't
hesitate to call us at if you have any questions about our
services. Topics Of Interest How To Use This Credit Improvement Information
Credit Ratings and Report Credit Bureaus What Your Credit Report Reveals Public
Records: Bankruptcies, tax liens, judgments and other filings Obtaining a Copy
of Your Credit Report Knowing Your Legal Rights Repairing Your Credit Prepare a
written protest to the credit bureau Keep a calendar Send a follow-up letter
Request an updated credit report Compare the new report with the prior report
Repeat the process Gaining Creditor Cooperation Study all the facts concerning
each account and the nature of the negative ratings Contacting the creditor by
telephone Confirming an Agreement with a Creditor to Change or Update a Negative
Rating Confirming an Agreement with a Creditor to Pay Your Debts and Have Your
Positive Credit Rating Restored Present a “win-win” offer Obtain an “open
account” status Confirm your agreement in writing Honor your agreement Verify
your credit upgrade Trying again Dealing With Serious Credit Problems How Credit
Clinics Can Ease Bad Credit Bolstering Your Credit Record Tax Liens and Your
Credit Rating Make sure the IRS sends you a Certificate of Release for each tax
lien Conduct a complete lien search Review your credit report Add a Consumer
Statement to your credit report Add a Consumer Statement Challenge a bankruptcy
How To Use This Credit Improvement Information return to top It is the goal
of this Credit Improvement System to assist you in improving your credit
conveniently, efficiently and economically. Nevertheless, it is important for
you to properly use this System if you are to avoid future problems. Always
follow these instructions: 1. Carefully read all information, warnings and
disclaimers concerning the forms in this System. If, after thorough
examination, you decide that you have circumstances that are not covered by the
forms in this System, or you do not feel confident about preparing your own
documents, then you should consult with an attorney immediately. 2. Follow the
format recommended in the Sample Credit Improvement Correspondence. Do not omit
information. 3. Always use a pen or type on the documents. Write neatly or
print. Never use a pencil. 4. Avoid reassures and “cross-outs” on final
documents. 5. Correspondence forms should be reproduced on your own letterhead.
You can create your own letterhead simply by typing or printing your name,
address and telephone number on the top/center of the form, as shown below.
[YOUR NAME] [YOUR ADDRESS] [CITY, STATE, ZIP CODE] [TELEPHONE NUMBER] 6.
Whenever the documents are to be executed by a partnership or corporation, the
person signing should also print his/her name and title. 7. Always make copies
of your important documents. If you do not have access to a photocopier, keep a
copy of your draft, or make another copy yourself. Store all-important
documents in a safe place and in a location known to your spouse, family,
personal representative or attorney. Credit Ratings and Report return to
top Since many of the things we want to buy must be financed or bought on
credit, good credit is essential. A vast network of credit reporting agencies
keeps track of every American who does business or buys on credit. Each time
you apply for credit through a bank, store or credit card agency, the
prospective lender typically checks your credit with one or more of these
agencies before issuing you credit. If your credit becomes bad, it is nearly
impossible to avoid detection. Credit Bureaus return to top There are many
credit bureaus in the United States, but only three large regional bureaus –
Equifax, Experian and Trans Union. The largest, Experian (formerly known as
TRW), has processed over 35 million credit reports in the last year and boasts
50,000 business subscribers. Many businesses and potential creditors pay to
obtain your credit information contained in credit bureau files. These
businesses rightfully believe that the information contained in your credit file
is a good indication of your creditworthiness. How you have paid other
creditors in the past is an indication of how you may act in the future. The
businesses also use the credit file to verify information on your credit
application. Businesses that most often deal with the credit bureaus are the
commercial banks, credit card companies, larger savings and loans, major
department stores and finance companies. Utilities, hospitals, credit unions,
oil company credit cards and checking and savings account information deal with
credit bureaus less often. Usually the same businesses that receive information
about you also provide information to the credit bureaus. When you submit a
credit application to one of these businesses, the information in your
application is forwarded to a credit bureau so that your credit file may be
updated. The transfer of account information involves sending the credit bureau
computer disks that contain account information and any changes and additions to
be made to your credit file every month or quarter. This practice is intended
to ensure that the credit bureau’s file are accurate and up-to-date. However,
not all businesses report what they know about you to the credit bureaus, (And
of those that do, not all report the entire contents of their files. Therefore,
your file may be incorrect or out of date.) What Your Credit Report Reveals
return to top Credit reports may vary slightly between agencies; however, most
credit reports include personal identification information, account information,
information obtained in public records, information about credit report request
and a consumer statement. Personal identification information: Your full name;
your last two addresses; your social security number; your date of birth; and
your place of employment. Length of employment and income may not be reported.
Please note that if you are self-employed, a credit bureau may incorrectly list
you as unemployed. You will need to contact the credit bureau and instruct that
your file be corrected. Account information: Credit issuer’s name; opening
date of account; original balance/limit; current balance; terms of account; and
the current status of the account. A specific code system is used to describe
the status of each item. Public Records: Bankruptcies, tax liens, judgments
and other filings return to top Credit report requests: Each time a creditor
requests a copy of your report, it is recorded in your report. If numerous
requests are made and no subsequent accounts are opened, other potential
creditors may assume that your credit application was turned down. This may
lead to some difficulty in obtaining credit. Consumer statements: A brief (100
words or less) explanation of any entry in your credit report that is written,
and submitted to the credit bureau by you. Obtaining a Copy of Your Credit
Report return to top Credit bureaus do make mistakes. Therefore, it is
important to check your credit report periodically so that inaccurate
information can be corrected. Information Required: Credit bureaus routinely
require the following information: your full legal name; your current address;
your former address; your social security number; your date of birth; and, if
applicable, your spouse’s full legal name, social security number and date of
birth. You may call the credit bureaus to inquire about the specific
information they require at the telephone numbers listed on the following page.
Fee if you have received a credit rejection within the past 60 days: None.
Simply write a letter in the form of Sample Letter Number 1 to the credit bureau
listed on the rejection letter and demand that the credit bureau provide you a
free copy of your credit report. Fee if you have not received a credit
rejection within the past 60 days: $8.00. It would be wise to call the credit
bureau to confirm that the fee has not changed. Send a written request in the
form of Sample Letter Number 2 to each of the credit bureaus listed below.
Since the information compiled and maintained by the credit bureaus differs, it
is important to contact all three credit bureaus, particularly if you suspect
that incorrect or inaccurate information appears in your credit file. EQUIFAX
Credit Information Services P.O. Box 740241 Atlanta, GA
EXPERIAN Credit Information Service (Formerly TRW) 955 American Lane Schaumburg,
IL 60173 RANS UNION Corporation P.O. Box 97328
Jackson, MS 39288-7328 Knowing Your Legal Rights return to top
The Fair Credit Reporting Act (FCRA), 15 USC Sections 1681 through 1681t,
protects you against credit abuse by granting you the following rights: 1. You
may challenge the accuracy of your credit report at any time. 2. The credit
bureau must “reinvestigate” anything you challenge within 30 days. 3. The credit
bureau’s 30-day period begins when the credit bureau receives your notice of
dispute, unless you send the credit bureau additional information during the
30- day period. In that event, the credit bureau may extend the deadline by 15
days. 4. If the credit bureau cannot confirm the adverse information or finds
any error, it must promptly delete that erroneous information from your credit
file. 5. If the credit bureau cannot or does not confirm the information you
have challenged within a seasonable time period, it also must delete that
information from your files. 6. If a creditor verifies the information and the
credit bureau responds in a timely manner, the negative marks will remain on
your record. However, if you maintain that the statements is inaccurate or
incorrect, then you have the right to submit a brief statement (called a
“Consumer Statement”), that sets forth your explanation of the credit dispute.
Representatives of the credit bureau are available to assist you in writing a
Consumer Statement. Once your Consumer Statement is finalized, it will appear
on every copy of your credit report that is sent out. Repairing Your Credit
return to top Review your personal information Once you have received a copy
of your credit report, review it carefully. Check all spellings, numbers and
dates. Then proceed to the “Summary” or “Account Profile” section of your
credit report to determine whether it contains any negative
information. Determine your overall credit score. ICS can provide you
with your current score, for details call Gail Locate
the “Summary” or “Account Profile” section on your credit report. This section
contains a summary rating for each of your accounts. A summary may be positive,
negative, or non-rated for each of your accounts. “Positive” means that your
payments are all on time. “Negative” means you have a serious credit problem
such as having defaulted on a debt. “Nonrated” means that you may have a few
late payments, which could place you in a weak position, even though there is
nothing strongly negative in your credit report. If you have any “Negative” or
“Non-rated” ratings, then proceed to the section containing negative history
remarks. Negative remarks may appear in the following four sections:
Historical Status; Comments; Inquiries; and Public Records. Make sure you
review them all. ..Locate the negative history remarks. ..Highlight or circle
all of the negative remarks in your credit file. ..Locate the key to the coding
symbols. ..Familiarize yourself with the coding symbols. ..Compare the
highlighted or circled negative remarks to the coding symbols. To fully repair
your credit, you must protest, and eventually remove, all negative or non-rated
profiles. Prepare a written protest to the credit bureau return to top To
repair your credit, you must challenge any negative remarks that appear in your
credit file. You have the right to dispute any citation on your report if the
information contained in that citation is inaccurate or incomplete. (Fair
Credit Reporting Act 15 USC Section 1681). The only limitation to your dispute
is that it should not be “frivolous or irrelevant.” To begin preparing your
written protest, refer to the Sample letter Numbers 3 and 4. Remember to use a
pen or type your letter and avoid erasures and “cross-outs.” Use photocopies of
each document as worksheets, or as final copies. Create your own letterhead, as
instructed previously. Do not try to explain all of the negative ratings in one
attempt. Carefully list each negative rating that you want to challenge. Next,
set forth an explanation for or comment about each negative rating. Even if the
explanation is the same for all negative ratings, it is more effective if you
repeat the same explanation several times for each negative rating. Be sure to
include photocopies of any documents you provide to support your claims. These
might include correspondence with your creditors, canceled checks indicating
payment, receipts or other documents. Explanations for negative ratings could
be: that your debt was satisfied and therefore should not be reported as a
charge off; that the debt was paid, but the creditor failed to note this in your
credit report; that a payment was delinquent due to a mix-up with the post
office. For example, you change your address and bills were not received even
though a change of address was furnished; or something else. Make a copy of
your letter for your records. Send your letter certified mail with return
receipt requested so that you can be sure the bureau receives it. It is also a
good idea to include a copy of your credit report to make sure the bureau checks
the right file. Refer to Sample Letter Number 3 when your credit report
contains incorrect information. Refer to Sample Letter Number 4 if you are
demanding a corrected and updated credit report. Keep a calendar return to top
As soon as you mail your letter, log the date for each negative rating that you
have protested. Keep related disputes together in a file with a copy of the
letter, the credit report and any other documents that you include with it.
Also calendar the date that the response is due. By law, credit bureaus must
respond within 30 days. Send a follow-up letter return to top If the credit
bureau does not respond within 30 days, you should write a follow-up letter.
Point out that federal law requires the credit bureau to respond to a consumer
dispute within 30 days of the reminder, write a final follow-up letter. Refer
to Sample Letter Number 6. Failure of the credit bureau to respond in 30 days
entitles you to have any negative mark on your report deleted provided it was
one that you challenged. Since many creditors won’t take the time or effort to
defend the negative entry, you can eventually “repair” your credit through the
default of your creditors. Do not be discouraged if the credit bureau does not
respond. It is possible to eliminate negative marks simply by going through
this process of disputing the negative ratings. If the credit bureau fails to
immediately provide an updated credit report, free of the disputed entry, you
may notify the Subcommittee on Banking, Credit and Insurance and/or the Federal
Trade Commission. Both entities can bring legal action against the credit
bureau. Request an updated credit report return to top At the end of every
letter that you send to the credit bureau, ask them to send you an updated copy
of your credit report. Also request that the credit bureau send the updated
credit report to anyone else who inquired about your credit. 15 USC Section
1681j of the FCRA requires the credit bureau to send a free notification of any
updates to anyone who has received a copy of the report during the six-month
period prior to any corrections or addition to your credit report. Note: Credit
bureaus are not required to send a copy of your entire report, but they will
often do so because it is more convenient. Compare the new report with the
prior report return to top Most credit bureaus will send you an updated
report. Compare carefully the updated report with the original one. Mark all
improvements that you find. Highlight any negative rating that has changed to
non-rated rating or any non-rated or negative ratings that have changed to
positive ratings. Chances are that you will not get results on every protest
the first time. But some progress is likely. Repeat the process return to
top If negative ratings remain on your credit report, repeat the process. If a
dispute about a negative rating results in a more negative rating than before,
do not be discouraged. Go back to the beginning of the process and start
again. You should put your credit record through this process at least twice
before going on to the next phase. Be patient, but persist. Remember that
credit cannot be rebuilt in a day. It takes patience and persistence. Also
remember that during this process you must be very careful not to allow any new
problems to appear on your record. Keep all your accounts current or pay ahead
of schedule. Gaining Creditor Cooperation return to top A credit bureau may
not remove negative ratings if a creditor routinely cooperates with the credit
bureau’s request (s) for verification. In this event, you will need the
creditor’s cooperation to remove the negative ratings. You will have to
persuade the creditor to soften its stance by either toning down or entirely
deleting their remarks on your credit report. Create an accurate record of your
dealings with the remaining creditors who still give negative ratings. List
each creditor’s name, account number, negative credit remarks and any documents,
correspondence or notes you have on your dealings with them. Study all the
facts concerning each account and the nature of the negative ratings return to
top Write a letter to each creditor explaining your version of how the problem
arose. Be specific and give all the relevant details, including full
documentation. Be factual, but also appeal to the creditor’s sense of good
will. Perhaps your company went bankrupt suddenly or you lost your job. Or
perhaps you became ill and were unable to work. Remind the creditor that you
eventually paid the delinquent amount. Appeal to the creditor’s compassion and
request that the negative ratings be removed or that a statement be included
that the account is current. Do not use lame excuses for late bill-payment
habits. Use strong, compelling reasons. At the end of your letters always
thank the creditors for their time and consideration. Refer to Sample Letter
Number 7. Send the letter by certified mail, return receipt request. Keep a
copy of each letter. Contacting the creditor by telephone return to top If
your creditor does not respond to your letters, use the telephone. This will
allow you to interact with the creditor in a more personal way. Before you
call, study the information you have gathered from your credit report, your
creditor’s responses, and the accurate record of negative ratings that you
compiled. Then write a sample outline of every point that you want to make
during your call. Try not to become angry. Remain calm and be polite. If your
first telephone call does not produce the results you want, do not give up. Be
persistent. Ask to speak to another person or a manager. Different people will
react to you differently. By speaking to more than one person, you may find
someone who will relate to your problem more positively. Confirming an
Agreement with a Creditor to Change or Update a Negative Rating return to top
If a creditor agrees that a change in the rating is justified, ask the creditor
to agree on the telephone that the change will be made in your credit status.
Be certain to obtain the creditor’s name and office address. After your
conversation, immediately send the creditor a letter confirming your agreement.
Refer to Sample Letter Number 9. Send the letter, along with a self-addressed,
stamped envelope. The creditor should sign the letter and return it to you for
your own records. This letter is important if the creditor forgets to change
your status or later changes his or her mind about helping you. In that event,
you can send the letter to the credit bureau yourself to repair your credit.
Confirming an Agreement with a Creditor to Pay Your Debts and Have Your Positive
Credit Rating Restored return to top If you have outstanding debts owed to a
creditor and the creditor has placed negative ratings on your credit report, you
may still be able to repair your negative credit. Write a letter to the
creditor, and express your interest in negotiating a repayment plan. Explain
sincerely your ability to make regular payments and pay off your debts. If a
particular circumstance led to your inability to pay, then you should describe
that circumstance, assure the creditor that it will not happen again and repeat
your desire to pay off your debts. Be specific and give all the relevant
details, including full documentation. In return, you are going to ask your
creditors to restore your positive credit rating. It is always best to avoid
having a debt turned over for collection. If your account has been sent to a
collection agency, deal first with the original creditor. A collection agency
receives a percentage of what it collects from you so it may be less willing to
negotiate. Rather, a collection agency will try to get as much cash as possible
from you. The creditor, on the other hand, may have already given up any
expectation of full payment. By dealing with the creditor, you may have more
flexibility to negotiate the time or the amount to pay. If you cannot avoid
negotiating with the collection agency, use the following points. Which also
apply to dealing with a creditor. Present a “win-win” offer return to top
Keep in mind that your goal is to trade money for a positive rating on your
credit report. Perhaps you can offer to set up a payment schedule in exchange
for a promise to improve your credit rating. For example, you could agree to
pay the entire amount owed in 12 monthly installments in exchange for the
creditor agreeing to recognize your new bill paying commitment with better
credit ratings. Be specific. Alternatively, you may agree that after three
months of punctual payments a negative rating could be raised to a non-rating.
Perhaps after six months of regular payments, the non-rating could be lifted to
a positive rating. Obtain an “open account” status return to top Even if you
are making regular payments, a potential creditor may react negatively if your
account is closed to further purchases. Therefore, when you are negotiating an
offer with your creditor ask him or her to reopen your account while you uphold
your end of the agreement. You can be very persuasive if you offer to pay the
entire debt perhaps with interest or a service charge added. Confirm your
agreement in writing return to top The “win-win” negotiation procedure can
occur via a telephone conversation. Once you have reached a verbal agreement,
it is imperative that the agreement be put in writing. Draft a letter that
carefully lists all the points of agreements. Refer to Sample Letter Number
10. Do not exaggerate, embellish or take any liberties. Then send the letter
along with a stamped, self-addressed envelop. Once the creditor signs the
agreement and returns it to you, it can become part of your credit record.
Honor your agreement return to top Now that you have a written agreement, you
need only fulfill it and your credit rating will be restored. So be punctual.
Make every payment on or ahead of time. If your ability to meet the payment
schedule in the agreement is threatened by unemployment or illness, inform your
creditor right away, before you mail any payments. Discuss your plans for
meeting the payments with the creditor and explore ways to solve your temporary
setback. Verify your credit upgrade return to top Remember to order an updated
copy of your credit report to verify that the creditor has honored his or her
side of the agreement and made the promised changes. Allow a reasonable time
period from the date the creditor agreed to make the change. If the changes
have not been made, you should immediately telephone the person with whom you
made the agreement and remind that person of his or her promise. If the
creditor still fails to upgrade your credit rating, then you can effectively
dispute the information on your credit report by sending the credit bureau a
copy of the signed agreement. Trying again return to top If a creditor will
not cooperate with you and the negative rating remains in dispute, then a
Consumer Statement may be the only tool that can work in your favor. However,
you should remain persistent. Wait a few months and repeat the process. After
a lapse of time, the situation may have changed. You may find a more receptive
person who is willing to help you regain a good credit rating. Dealing With
Serious Credit Problems return to top If, in your financial past, you have
encountered serious credit problems, such as bankruptcies, court claims,
repossessions, or foreclosures, then these negative ratings may stick to your
credit report, even after you try every method discussed above. For these
serious credit problems, remain patient. You will be surprised at how much you
can accomplish through persistence. Be assured that as these events drift
further into your past, they will become less significant in your credit
history. With the exception of a bankruptcy or tax lien, any adverse
information more than seven years old must be deleted from your credit report.
A bankruptcy or tax lien may remain on your credit report for up to 10 years.
How Credit Clinics Can Ease Bad Credit return to top This unique Credit Repair
System is designed to help you repair your bad credit yourself. Credit clinics
use the same process. They operate under the same reasoning discussed above –
that each item on a credit report must be proven and that every negative rating
on a credit report can be denied or challenged at any time. Upon receipt of a
denial or challenge, the credit bureau must then reinvestigate. If the item
cannot be reverified within 30 days, it is automatically removed from the file.
A credit clinic will instruct you to send a letter to the credit bureau similar
to those discussed previously. After a few months, the credit clinic will have
you send another letter to the credit bureau starting the process all over
again. These credit clinics understand the value of persistence. They will
encourage you to continue this process until all of your negative items are
removed. Should you tire of the process, the credit clinic will recommend that
you submit a Consumer Statement as discussed previously. As you can see, you
do not need to pay a credit clinic to repair your credit. With this unique
Credit Repair System you can easily and inexpensively do it yourself.
Bolstering Your Credit Record return to top The law remains unclear about
adding favorable items to a credit report. However, the FTC has advised credit
bureaus that, where a report has resulted in unfavorable action against you; you
should be allowed to add to your credit report, thereby creating a more complete
and balanced picture of your credit history. Consequently, most credit bureaus
will, for a small fee, contact any creditor you name and add that creditor’s
information to your file. The charge will usually run $2 to $3 per item. If
you have good credit with a company that does not report to a credit bureau,
then you should contact that company. Inform them that you need your account
information listed on your credit report. Once they agree to release your
account record, tell them which credit bureau will contact them. Do this for
each good credit account you have. Next, send a letter to the credit bureau
with your list of non-reporting creditors. Refer to Sample Letter Number 11.
Request that the credit bureau contact these creditors and add the items to your
report upon verification of the information. Once you have cleared your credit
report of as many negative ratings as possible and added all possible positive
ratings, you should have a new and improved credit report that will provide you
with future credit as needed. Tax Liens and Your Credit Rating return to top A
tax lien on your credit report will definitely hurt your chances when applying
for significant credit, such as a loan to buy a home, business, car, boat or any
other major purchase. It may also prevent you from obtaining credit cards. Tax
liens may not be erased from your credit report for 10 years. However, a past
tax lien is not as damaging as a current tax lien. It is important to avoid
having the IRS place a tax lien on your credit report. It is equally important
to ascertain that every credit bureau updates your credit history to show that
past tax liens have been fully paid and discharged. Make sure the IRS sends you
a Certificate of Release for each tax lien return to top Once you have fully
paid your taxes, the IRS must send to you a Certificate of Release of Federal
Tax Lien (Form 668Z) for each office that has a tax lien on file. This may
include the clerk of your city, town or county, the federal district court
nearest where you reside and wherever real estate transactions for your locale
are recorded. If you have moved, there may be liens filed where you originally
lived. There may also be several tax liens for the same tax problems if the
problems extend over several years. Conduct a complete lien search return to
top To ensure that you obtain a Certificate of Release for each tax lien filed,
you must conduct a complete lien search. This can be accomplished by: (1)
requesting that the IRS send you copies of every lien the IRS filed against you;
(2) having a commercial lien search service review the public records; (3)
conducting your own lien search at the public recording office; or (4) reviewing
your credit report. Be aware, however, that a credit report may overlook some
tax liens. Once you are satisfied that you have identified all the recorded
tax liens, make certain the IRS files a Certificate of release for each lien.
Do not assume the IRS will do this on its on accord. Review your credit
report return to top For each recorded lien (not noted as discharged) you must
insist that the reporting agency contact the IRS or check the public records to
confirm that the lien has been released. You may also send the credit bureaus
copies of the Certificate of Release of Federal Tax Lien. Follow up with the
credit bureau to make sure your credit report reflects the discharge of all tax
liens against you. Add a Consumer Statement to your credit report return to
top If you are paying the IRS in installments, then your credit report can
reflect the anticipated discharge of your lien because an agreement has been
reached with the IRS. As discussed above, you can submit a Consumer Statement
to the credit bureau and insist that it accompany your credit report.
Challenge a tax lien return to top As discussed above, it is possible to erase
negative ratings, including existing and unpaid tax liens by challenging the tax
liens. Follow the same process for challenging negative ratings described
above. If the government does not substantiate the lien within the required 30
days, the credit bureau must delete the tax lien notice and cannot later
reinstate it. You will be most successful if you attempt to challenge the tax
lien after your tax file has been transferred to the federal archives. This
transfer usually takes about a year and increases the turnaround time to
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financial planning Consumer Credit Improvement Services a division of
International Communication Systems, Inc. Our Purpose Our purpose is
to provide consumers with detailed information to assist with improving their
credit scores and to offer another credit alternative to prevent consumers from
falling victim to costly credit repair scams. The information we provide
will equip you with important credit information and allow you the opportunity
to improve your credit yourself. You have now taken the first step
to improving your credit score. The information you are about to read will
improve your financial situation immediately if applied successfully. Our
team of professionals are here to assist you. Don't hesitate to call us if
you have any questions about our services. Topics Of Interest
How To Use This Credit Improvement Information Credit Ratings and Report Credit
Bureaus What Your Credit Report Reveals Public Records: Bankruptcies, tax
liens, judgments and other filings Obtaining a Copy of Your Credit Report
Knowing Your Legal Rights Repairing Your Credit Prepare a written protest to the
credit bureau Keep a calendar Send a follow-up letter Request an updated credit
report Compare the new report with the prior report Repeat the process Gaining
Creditor Cooperation Study all the facts concerning each account and the nature
of the negative ratings Contacting the creditor by telephone Confirming an
Agreement with a Creditor to Change or Update a Negative Rating Confirming an
Agreement with a Creditor to Pay Your Debts and Have Your Positive Credit Rating
Restored Present a “win-win” offer Obtain an “open account” status Confirm your
agreement in writing Honor your agreement Verify your credit upgrade Trying
again Dealing With Serious Credit Problems How Credit Clinics Can Ease Bad
Credit Bolstering Your Credit Record Tax Liens and Your Credit Rating Make sure
the IRS sends you a Certificate of Release for each tax lien Conduct a complete
lien search Review your credit report Add a Consumer Statement to your credit
report Add a Consumer Statement Challenge a bankruptcy How To Use This
Credit Improvement Information return to top It is the goal of
this Credit Improvement System to assist you in improving your credit
conveniently, efficiently and economically. Nevertheless, it is important
for you to properly use this System if you are to avoid future problems.
Always follow these instructions: 1. Carefully read all information,
warnings and disclaimers concerning the forms in this System. If, after thorough examination, you decide that you have
circumstances that are not covered by the forms in this System, or you do not
feel confident about preparing your own documents, then you should consult with
an attorney immediately. 2. Follow the format recommended in the Sample Credit
Improvement Correspondence. Do not omit information. 3. Always use a pen or
type on the documents. Write neatly or print. Never use a pencil. 4. Avoid
reassures and “cross-outs” on final documents. 5. Correspondence forms should be
reproduced on your own letterhead. You can create your own letterhead simply by
typing or printing your name, address and telephone number on the top/center of
the form, as shown below. [YOUR NAME] [YOUR ADDRESS] [CITY, STATE, ZIP
CODE] [TELEPHONE NUMBER] 6. Whenever the documents are to be executed by a
partnership or corporation, the person signing should also print his/her name
and title. 7. Always make copies of your important documents. If you do not
have access to a photocopier, keep a copy of your draft, or make another copy
yourself. Store all-important documents in a safe place and in a location known
to your spouse, family, personal representative or attorney. Credit Ratings
and Report return to top Since many of the things we want to buy must be
financed or bought on credit, good credit is essential. A vast network of
credit reporting agencies keeps track of every American who does business or
buys on credit. Each time you apply for credit through a bank, store or credit
card agency, the prospective lender typically checks your credit with one or
more of these agencies before issuing you credit. If your credit becomes bad,
it is nearly impossible to avoid detection. Credit Bureaus return to top
There are many credit bureaus in the United States, but only three large
regional bureaus – Equifax, Experian and Trans Union. The largest, Experian
(formerly known as TRW), has processed over 35 million credit reports in the
last year and boasts 50,000 business subscribers. Many businesses and potential
creditors pay to obtain your credit information contained in credit bureau
files. These businesses rightfully believe that the information contained in
your credit file is a good indication of your creditworthiness. How you have
paid other creditors in the past is an indication of how you may act in the
future. The businesses also use the credit file to verify information on your
credit application. Businesses that most often deal with the credit bureaus are
the commercial banks, credit card companies, larger savings and loans, major
department stores and finance companies. Utilities, hospitals, credit unions,
oil company credit cards and checking and savings account information deal with
credit bureaus less often. Usually the same businesses that receive information
about you also provide information to the credit bureaus. When you submit a
credit application to one of these businesses, the information in your
application is forwarded to a credit bureau so that your credit file may be
updated. The transfer of account information involves sending the credit bureau
computer disks that contain account information and any changes and additions to
be made to your credit file every month or quarter. This practice is intended
to ensure that the credit bureau’s file are accurate and up-to-date. However,
not all businesses report what they know about you to the credit bureaus, (And
of those that do, not all report the entire contents of their files. Therefore,
your file may be incorrect or out of date.) What Your Credit Report Reveals
return to top Credit reports may vary slightly between agencies; however, most
credit reports include personal identification information, account information,
information obtained in public records, information about credit report request
and a consumer statement. Personal identification information: Your full name;
your last two addresses; your social security number; your date of birth; and
your place of employment. Length of employment and income may not be reported.
Please note that if you are self-employed, a credit bureau may incorrectly list
you as unemployed. You will need to contact the credit bureau and instruct that
your file be corrected. Account information: Credit issuer’s name; opening
date of account; original balance/limit; current balance; terms of account; and
the current status of the account. A specific code system is used to describe
the status of each item. Public Records: Bankruptcies, tax liens, judgments
and other filings return to top Credit report requests: Each time a creditor
requests a copy of your report, it is recorded in your report. If numerous
requests are made and no subsequent accounts are opened, other potential
creditors may assume that your credit application was turned down. This may
lead to some difficulty in obtaining credit. Consumer statements: A brief (100
words or less) explanation of any entry in your credit report that is written,
and submitted to the credit bureau by you. Obtaining a Copy of Your Credit
Report return to top Credit bureaus do make mistakes. Therefore, it is
important to check your credit report periodically so that inaccurate
information can be corrected. Information Required: Credit bureaus routinely
require the following information: your full legal name; your current address;
your former address; your social security number; your date of birth; and, if
applicable, your spouse’s full legal name, social security number and date of
birth. You may call the credit bureaus to inquire about the specific
information they require at the telephone numbers listed on the following page.
Fee if you have received a credit rejection within the past 60 days: None.
Simply write a letter in the form of Sample Letter Number 1 to the credit bureau
listed on the rejection letter and demand that the credit bureau provide you a
free copy of your credit report. Fee if you have not received a credit
rejection within the past 60 days: $8.00. It would be wise to call the credit
bureau to confirm that the fee has not changed. Send a written request in the
form of Sample Letter Number 2 to each of the credit bureaus listed below.
Since the information compiled and maintained by the credit bureaus differs, it
is important to contact all three credit bureaus, particularly if you suspect
that incorrect or inaccurate information appears in your credit file. EQUIFAX
Credit Information Services P.O. Box 740241 Atlanta, GA
EXPERIAN Credit Information Service (Formerly TRW) 955 American Lane Schaumburg,
IL 60173 TRANS UNION Corporation P.O. Box 97328
Jackson, MS 39288-7328 Knowing Your Legal Rights return to top
The Fair Credit Reporting Act (FCRA), 15 USC Sections 1681 through 1681t,
protects you against credit abuse by granting you the following rights: 1. You
may challenge the accuracy of your credit report at any time. 2. The credit
bureau must “reinvestigate” anything you challenge within 30 days. 3. The credit
bureau’s 30-day period begins when the credit bureau receives your notice of
dispute, unless you send the credit bureau additional information during the
30- day period. In that event, the credit bureau may extend the deadline by 15
days. 4. If the credit bureau cannot confirm the adverse information or finds
any error, it must promptly delete that erroneous information from your credit
file. 5. If the credit bureau cannot or does not confirm the information you
have challenged within a seasonable time period, it also must delete that
information from your files. 6. If a creditor verifies the information and the
credit bureau responds in a timely manner, the negative marks will remain on
your record. However, if you maintain that the statements is inaccurate or
incorrect, then you have the right to submit a brief statement (called a
“Consumer Statement”), that sets forth your explanation of the credit dispute.
Representatives of the credit bureau are available to assist you in writing a
Consumer Statement. Once your Consumer Statement is finalized, it will appear
on every copy of your credit report that is sent out. Repairing Your Credit
return to top Review your personal information Once you have received a copy
of your credit report, review it carefully. Check all spellings, numbers and
dates. Then proceed to the “Summary” or “Account Profile” section of your
credit report to determine whether it contains any negative
information. Determine your overall credit score. ICS can provide you
with your current score, for detail. Locate
the “Summary” or “Account Profile” section on your credit report. This section
contains a summary rating for each of your accounts. A summary may be positive,
negative, or non-rated for each of your accounts. “Positive” means that your
payments are all on time. “Negative” means you have a serious credit problem
such as having defaulted on a debt. “Nonrated” means that you may have a few
late payments, which could place you in a weak position, even though there is
nothing strongly negative in your credit report. If you have any “Negative” or
“Non-rated” ratings, then proceed to the section containing negative history
remarks. Negative remarks may appear in the following four sections:
Historical Status; Comments; Inquiries; and Public Records. Make sure you
review them all. ..Locate the negative history remarks. ..Highlight or circle
all of the negative remarks in your credit file. ..Locate the key to the coding
symbols. ..Familiarize yourself with the coding symbols. ..Compare the
highlighted or circled negative remarks to the coding symbols. To fully repair
your credit, you must protest, and eventually remove, all negative or non-rated
profiles. Prepare a written protest to the credit bureau return to top To
repair your credit, you must challenge any negative remarks that appear in your
credit file. You have the right to dispute any citation on your report if the
information contained in that citation is inaccurate or incomplete. (Fair
Credit Reporting Act 15 USC Section 1681). The only limitation to your dispute
is that it should not be “frivolous or irrelevant.” To begin preparing your
written protest, refer to the Sample letter Numbers 3 and 4. Remember to use a
pen or type your letter and avoid erasures and “cross-outs.” Use photocopies of
each document as worksheets, or as final copies. Create your own letterhead, as
instructed previously. Do not try to explain all of the negative ratings in one
attempt. Carefully list each negative rating that you want to challenge. Next,
set forth an explanation for or comment about each negative rating. Even if the
explanation is the same for all negative ratings, it is more effective if you
repeat the same explanation several times for each negative rating. Be sure to
include photocopies of any documents you provide to support your claims. These
might include correspondence with your creditors, canceled checks indicating
payment, receipts or other
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