Credit scores called FICO scores go between 300 and 850. It doesn’t exist a credit score below 300.

Let’s say that you are applying for a car loan and you have a FICO score of 825. This is thought to be great credit that presents zero risk to the lender. The lender is going to read one credit report from all of the CRA’s aftper paying $4. Each of them, Equifax, Experian and Trans Union will give your credit information to the lender and each CRA will make four dollars. You will receive your car loan immediately.

Now Imagine that your credit score is only 525. The dealer will start searching for lenders who will make a loan to someone with a risky, low credit score. The lower the FICO score, the riskier the loan becomes and more difficult it is to get. The dealer may be needed to try as many as 20 lenders to find one who will make the loan. All of the 20 lenders will pull your credit reports and pay $4 each, this means the each of the Credit Reporting Agencies will now make $80. They receive $4 if you have good credit and they can receive $80 if you have low credit. Do they want you to have bad credit? You bet they do.

They collect and give the information about everyone they can and sell that data to potential creditors. They obtain their information from creditors, public records, criminal records, hearsay and anywhere else they can. The worse it is for you, the better it is for them.

Experts estimate that 79% of the adult public has at least one false, misleading, inaccurate, negative item on their credit report.

Learn Here How To Fix Your Credit Report

Information Given by Creditors

Creditors can introduce a social security number or account number on your file and give false data to one or more CRA’s. The CRA’s computer database will simply have it below your name and payment history.

Data Given by Public Records.

If you have a relatively common name, it is very likely that anther’s person credit data is mixed with yours. If your name is Smith and you live on Main Street, you must verify your credit reports.

Remember this tip because the CRA could have listed false information about you. It is probably the best thing to look up your name in the telephone book, on Google, anywho.com and various other people search websites to see exactly how common your name is in your state, county city, town and zip code. If you find a lot of names which are similar to yours, you must check this small detail in your credit report.

To begin with the process of repairing your credit, you must ask for a copy of your credit report directly from the credit agencies. It is a must to obtain the report from all the credit agencies as it is possible that their data won’t match. The credit report is available for a small tax; don’t forget that it may vary from country to country and administration to administration. However if you wish to receive a copy yourself, you are obliged to mail a request in writing including info about your name, address, date of birth, phone numbers and other contact details.

Learn How To Avoid Credit Report Problems

After you have in your hands the copy of your report, have a look at it and pay attention for errors with patience. You can dispute the wrong data stated in your credit report, but for that you must write a detailed letter stating all changes you want to make and why.

Repairing your report is not something to be done in one day; it might take months to repair the credit report. You are required to provide the bureau with the proof of the errors. It is not impossible that even after a lot of energy that you put in, you may not get the real information in the credit report. Just remember to keep verifying your credit status, it is best to ask the copy of your credit report twice in a year.

If you liked what you read, come back later for more interesting information on credit report.

Now, read the public record part of the report. This is the part of your report that lists any tax liens, judgments, bankruptcies, or legal claims against you; read the list with patience to figure out if any of the information contains errors. Write anything that is incorrect or that has been satisfied (paid off) to your list of changes to be made.

The next part to read will be the collection history part of your report. This part contains the collection agency that is working to collect the debt from you. The original creditor with whom your debt originated will be listed below the collection agency; with patience read all of the dates of account openings and closings. Go through all balances owed for accuracy and compare with the date of reporting to figure out if the creditor is updating the balances properly. If any info is listed in the collection part that is inaccurate, write it down on your list. Also note that each creditor should have contact information listed.

The last part you will read is the current activity part. This shows all of your currently active accounts. Like the collection history section, you should read the accounts information with patience (dates opened and closed, balances owed, last reporting date, etc. ), read to be sure the creditor’s contact information is listed, should you need to correct any information in this part of your report. Next, make sure all accounts you have closed are listed as closed, including the date they were closed. Last, read the late activity columns to figure out if any of your payments have been documented as late.

As soon as you have reviewed your credit report and have saved the errors, you are prepared to dispute any errors you have found.

Reasons to Get a Free Yearly Credit Report

Credit reports offer you with all the necessary information regarding your credit ratings in the market after having considered all your transactions. Also keeping a check on your credit reports from time to time is seen as a great way to organize your finances efficiently as well as keep up with the high standards of the main credit agencies.

Checking your credit reports annually can be an effective way to keep a check on your credit. This will keep you informed and help you take educated decisions while using your credit card.

There are a bunch of other ways to check your credit card information. To avoid problems such as identity theft and the like always remember to check your details carefully.

Ways to Obtain a Free Credit Report

There are several ways to obtain a free report. In case your credit card application is declined, you will be given the right to access a free report within two months. But, in case you have not taken any application, then by paying a small fee you can take a good look at your credit information.

Another way to get your personal copy is to order a free report once every year. To receive your free yearly report you need to submit your personal details. These details include your name, address, date of birth, social security number, phone no, etc.

Getting your free report online is another option that you can opt for. All it calls for is to register with a site that provides such services. These websites provide you with services that enable you to get all the information you need about credit reports. You can access these websites any and every time you have a query. This is more convenient and time efficient compared to manually applying for credit reports.

If you have not applied for your free yearly credit report as yet, I believe it’s about time that you do it. Having your credit report will not only help you spend wisely but will also save you from serious financial consequences.

A credit report does not have any information on your race, religion or political preferences, but it does have information on:

Your Personal Identifiers: your legal name, present and past addresses, present and past employers and your social security number.
Current and Past Credit Accounts: this part includes all your present credit accounts also credit limits, balances and payment histories.
Public Record Data: Here they keep any tax liens, bankruptcies and legal judgements against you.
Credit Inquiries: Data regarding businesses that have asked your credit file in the last 12 months.

It’s important to periodically review your credit file as more than half the credit reports contain a bunch of errors, according to the Federal Trade Commission (FTC.gov) A lot of time, there can be errors from the credit bureaus themselves: the credit info is sent to the 3 major credit bureaus by tapes or written reports, and a small typographical mistake may inadvertently add negative information to your file.

Creditor mistake happens when the reporting company mistakenly sends the wrong information about you.

Finally, considering that the major credit bureaus are competitors, they do not give data. So positive data may be reported to Equifax and Experian, but is absent from your credit file at Transunion.

For these motives, it’s vital to check your free credit report before any major purchase or at least annually to send any mistakes.

Ordering your Free Credit Report is simple. The Federal Trade and Accurate Credit Transactions Act (FACT) of 2003 allows you to obtain a free annual credit report from the 3 major credit bureaus annually at no charge.

What is FICO

FICO is a method of reporting your credit with a score within a range of 300-850 with 300 being below standard, 500 being poor, and 700+ being A+ credit. FICO is an abbreviation for Fair Isaac Company credited with creating this scoring method from the information in your credit report. According to myFICO.com 90% of lenders use this credit scoring system. It would be a good idea to find out your score. This score determines what APR you will get for a mortgage or auto loan. This means that it decides how much your monthly payments will be. For a score of 500-600 you may pay 3% or more in interest per month than a neighbor buying the same item with a credit score of 700-800. This cost someone with a low score thousands more dollars a year for the same item. Needless to say some credit card companies and other lenders to those with bad credit take full advantage of this information to ask for extremely high interest rates.

How much time Does Credit Reporting Stay on Record

After seven years most debts are cancelled. The adage time cures old wounds applies even to credit scores as derogatory information such as slow pays, etc., will be removed from your report after seven years. Reports relating to good credit standing are usually kept on your records. After these damaging entries are erased from your report, your credit score should improve your credit repair efforts. Be careful to make timely payments and watch for error reporting.

How Can I Correct Mistakes on my Credit Report

The best way to address errors once you obtain copies of your credit report from all three credit bureaus is to write each of them. Document all of the mistakes and write out your dispute with the report along with copies of any evidence you may have. Also get in touch with the creditor that made the error and do the same. Credit repair efforts could increase your score after these corrections have been made.

Get Your Credit Report - Any credit report company worth its salt will be able to quickly and easily get your personal credit report. Yes, getting your credit report is free, but these guys can do it quickly as they know where and how to get yours from each of the three credit bureaus. Normally this is worth the cost in time saved.

Assess Your Credit Report – Once you have access to your credit report, you then have to begin the laborious task of reading it. Credit report companies know exactly what to look for and what it means for your credit standing. They will be able to point out the problems in your personal credit report.

Offer Advices To Improving Your Credit – Once they have taken a look at your credit report, a credit report company will be able to offer a list of concrete steps that you can take to improve the problem areas of your credit history. This is usually going to be in the form of challenging dubious or mistakes on your credit.

Improve Your Credit – If you don’t want to do it yourself, then credit report companies can actually implement steps to improve your credit rating by challenging false or misleading claims on your credit report. These guys have big experience at doing this and know exactly who to contact and how to contact them regarding errors on your credit report. This service can be a great time saver.

As you can see, credit report companies can save you a lot of time and hassle, and in the long run will usually be able to help you improve your credit score and gain access to more and cheaper finance.

Credit reporting can be helpful in extreme cases, but it is often misrepresented by collection agencies trying to sell their services. When a collection agency reports a delinquent account to a credit bureau, it does not get the business any money today. However it provides a ‘wish’ for a payment some unknown time in the future if the debtor ever has to do a financial transaction that involves a creditor that checks their consumer credit report.

The issue is that credit reporting also can create a liability for businesses because of collection agencies reporting accounts that were not valid debts. This can open the business to legal action – something no businesses needs. It has been estimated that over 41% of the information contained in consumer credit reports has mistakes, and with identity theft on the rise, a business must tread lightly when considering credit reporting.

The Fair Credit Reporting Act regulates the activities of credit reporting agencies. A credit reporting agency under this law means any person or business which assembles or checks consumer credit information for the purpose of providing consumer credit reports to third parties.

According to consumer credit report laws, here are some items that cannot be mentioned in consumer credit reports:

A discharge or final order in Bankruptcy Court dated more than 10 years prior to the date of the consumer credit report.
Lawsuits and judgments entered more than 7 years prior to the date of the consumer credit report.

Paid tax liens which, from the date of payment, precede the report by more than 7 years.

Accounts placed for collection or charged to profit and loss by the creditor that are dated more than 7 years before the credit report.

Records of arrest, indictment, or conviction of crime that, from date of disposition, release, or parole, precede the report by more than 7 years.
Any other adverse information that precedes the report by more than 7 years.

There are three major credit bureaus: Equifax, Experian, Trans Union. Federal law specifies how long negative information can remain on a person’s credit report. This includes late payments, accounts that the credit grantor turned over to a collection agency and judgments filed against a person in court – even if later the account was paid.

A good part of people do not realize that they have three entirely separate and distinct credit reports, one from each of the three credit reporting bureaus. Since these bureaus do not share information it means that not one of them has a clear and complete picture of your credit. And that’s not all, chances are extremely high that your credit report with at least one (if not all) of the credit bureaus contains errors, and the only way the errors will get removed is if you dispute them.

But let’s spend some time here talking about some very common myths about credit, credit scores, and credit reporting, and find out what the real deal is on this misconceptions.

Myth #1: Paying off a negative account on your credit report will get it removed from your report.

That account will remain on your credit report for years, as it is part and parcel of your credit history. Don’t forget that, your credit history is exactly that – a history of your dealings with credit, and just because an account is closed or paid off does not dismiss the fact that it is still part of your credit history.

Myth #2: Paying off an account will make your credit score to increase significantly.

There are a huge number of factors that come into play when the credit bureaus calculate your credit score. Chief amongst those factors are: have you been paying your financial obligations on time with at least the minimum payment due. Paying off an account entirely can actually do more damage than good. Having credit in good standing, but keeping your balance less than about 32% of your credit limit is a great place to be, and you gain no additional points by paying off that account.

Myth #3: Checking your credit reports will lower your credit score.

The financially savvy consumer will check his credit report at least once a year, sometimes more often. Every time someone requests a copy of your credit report, that fact is flagged, but it is also flagged as to who requested your credit report. If it was you, then it does nothing to your credit score, as opposed to having your credit report requested by 12 different loan companies, which is almost sure to raise a red flag and lower your score.

Myth #4: Cosigning for a loan does not mean you are responsible for the account.

The reason you were requested to co-sign on a loan or an account for someone is because they themselves have insufficient credit history or have bad credit history. The act of you co-signing on it is you telling the financial institution “hey, if they default on this, I’ll take care of it”, so you do have responsibility for the loan. But it gets worse – if the person who took out the loan starts to default on it, then it is also your credit score that suffers, since again, you co-signed on it, giving you some responsibility for making sure they repay it on time.

Understand how the credit game is played. You cannot win any game if you don’t know the rules, and since credit affects a lot of different areas of your life, it is well worth your time to understand the factors and the myths about how your credit score is derived.

Sometimes, the negative items on your credit report are a direct result of financial decisions you have made in the past. However, there are times when your credit record states negative items that should not be listed. Next you will see methods to identify these types of errors and a bunch of helpful tips that will help you get them removed.

Identifying Negative Items

The credit reporting agencies and credit bureaus that track and report your credit history are not infallible. They make mistakes. That is why most experts advise that you request a copy of your credit reports from the main agencies. That is the only way you can identify errors and begin the process of removing negative items that should not be listed. Maintaining a clean credit report requires this type of annual review of your credit reports.

Correcting Errors

You need to write a letter to the credit bureau that issued the credit report where you found an error. Include copies of any documentation that you have to prove your case. Include a copy of your report with the errors circled. This will make it easier for the agency to identify the items in dispute. In your letter, ask them to remove the error(s) from your credit report. The credit bureaus are obliged to investigate legitimate disputes within 30 days. If the credit bureau removes the errors, ask them to send notices to anyone who has received your credit report during the past 6 months. They are required to do this, but you must ask them.

Erasing Negative Items

If you find negative items on your credit report that are reported accurately, the only way to truly erase them from your credit report is to either wait until such items are dropped by a time limitation or work with a creditor to have items removed.

Your credit history can either make life easier or more difficult. It can impact your ability to purchase a home loan, get a car, get a job, or even rent an apartment. But, through vigilantly checking your credit reports annually, you can keep track of any errors that need to be erased.

Maintaining a clean credit report, free from errors, can result in qualifying for loans with favorable interest rates. Over time, a clean credit history can save you thousands of dollars and offer peace of mind.