Credit Secrets?
Credit and Credit scores are very mysterious. Mysterious to the point that many people do not pay much attention to their Credit status until it is time to make a purchase. The little (and I stress little) step you take today can pay huge dividends later when you go to purchase that next home, car or appliance, etc.
If you have not looked at your credit recently there are two ways you can do this. Well there are more than two, but the following two are the best. You need to see your reports in a raw form. The best way to do this is to order a hard copy of each report from each Credit Reporting Agency (aka - CRA). Each report will cost approximately $10.00. If you believe you might have a few challenges then this first option is the best.
Let me stress............NEVER USE A FREE REPORT SERVICE.
Free reports make it more difficult to dispute any errors on your reports (this topic will be covered later). The $30.00 you spend for the hard copies will be well worth it if you need to dispute. Additionally DO NOT ORDER YOUR REPORTS FROM ANYONE OTHER THAN TRANSUNION, EQUIFAX & EXPERIAN. Third party company reports will not have many of the details you may need to see in order to optimize your report.
Exception: The only other place place to get your report (s)is a little more expensive (between $45.00 and $50.00 for all three) and that is www.myfico.com. myFICO.com is the only website you can go to and get your REAL FICO SCORES. All the other websites that claim to have your score, have what is affectionately called a FAKO (Pronounced FAKE-O). The Fair Isaac Corporation owns the secret formula for the scores and does not share that with anyone. The formula is closely guarded just like the recipe for Coke and Kentucky Fried Chicken. The score you see on myFICO.com will be the same score that a car dealer will pull or any other lending source.
What is a Trimerge report? A Trimerge report is a report you can order from third party providers which will include all three reports combined into one report. While these reports are helpful, they are not as detailed as the reports recommended above. If you sign up for a credit monitoring service then you will have access to a trimerge report. This is good for monitoring purposes and costs less, but if you need to dispute or work on your credit, the hard copies are a must. The good news is if you dispute items on your report and they are removed, the CRA will send you a new updated copy of your report at no additional charge.
To order you report mail your payment and request to the following companies:
Equifax
PO Box 740241
Atlanta, GA 30374-0241
Currently $8.00
Experian
PO Box 2104
Allen, TX 75013
Currently $9.95
TransUnion
PO Box 2000
Chester, PA 19022-2000
Currently $8.00
You will need to include a copy of your Driver's License if you mail in your request. You may also order over the phone with a credit card.
Also when you request your report you will want to OPT-OUT at the same time. When you opt out you will have your name removed from the mailing lists the CRAs sell to credit card companies and others. You will recieve less junk mail when you opt-out. This option is good for 5 years and must be renewed.
Boost Your Credit Score
Why are Credit Scores so Important?
Credit Scores directly effect many financial transactions you do, including: buying a home with a mortgage, borrowing money to purchase a car, applying for credit cards, and even applying for a job. Making sure your Credit Score is as high as possible is one of the easiest ways of saving money every month.
Your Credit Score tells a lender very quickly and efficiently how likely you are to default on a loan. The lower the Credit Score, the higher the interest you will have to pay - because the lender has to take on more risk to lend you money based on your past credit history. Make sure you take steps to increase your Credit Score today so the next time you apply for a loan or insurance you will qualify for lower rates.
there are several types of score based on the industry it relates to. Here is a clip from one of my posts:
Credit Risk Models
Fair Isaac Model
The Fair Isaac Model is available in four industry-specific versions: Auto Loan Model, Installment Loan Model, Personal Finance Model, and Bankcard Model.
Experian/Fair Isaac Insurance Score
The Experian/Fair Isaac Insurance Score allows different entities to choose from six score models - Four auto insurance models and two homeowner insurance models are available to guide underwriting decisions...
Your credit score is generally determined by the following estimated % breakdown:
· 35% Payment history
· 30% Outstanding debt
· 15% Length of your credit history
· 10% Recent inquiries on your credit report
· 10% Types of credit in use
To find out the following valuable information and more
*How to Dispute Items on Your Credit Report Yourself
*Negotiating with Creditors and Collection Agencies
*Do you need credit history or higher credit limits?
*How to keep your card debt around 30% or less
*Spreading your debt
* How can automatic deduction help my credit?
* How using your credit card for everyday purchases can help (remember with this you must pay your card off in full every month to boost your score)
*How to acquire credit history if you don't currently have any
Visit: www.myfreecredittips.com
The best thing you can do for your credit is consider the co-signer option. I can assure you that having a mortgage on your credit for at least 6 months is the best and fastest way to improve your credit scores. You could purchase with a co-signer, and then after 6 months to a year, you could refinance and remove the co-signer from the mortgage. This would be a much shorter commitment from your co-signer than if they were to help you with financing a car!
For professional help with credit repair, check out Lexington Law, they are relatively inexpensive and have helped a few of my buyers in the past. http://www.lexingtonlaw.com/
Viewing and Disputing
Your Own Credit Report Online
Guerilla Credit Repair I
Here is a glossary of terms you need to know and I will add to the list as I go.
This will be broken up into bite sized pieces. First I want to let you know that I believe there is a place for credit repair companies, but I will be frank.........The Credit Reporting Agencies (Transunion, Equifax and Experian) receive so much canned ham from Credit Repair Companies that the CRAs now profile all the incoming disputes. Another problem with a credit repair company is they can never do what you can accomplish on your own and you can get results much faster; and last, if you work on it yourself, you will probably be more careful with your credit in the future.
The very first step in working on your credit is to order your reports. DO NOT ORDER FREE REPORTS. Free reports are BAD.
Montinoring your credit is good. It is necessary today on a semi annual basis to make sure you do not fall victim to identity theft. If you are in the middle of credit rehab, then a daily monitoring service with the ability to pull a fresh consumer report every 24 hours is a must.
The reason why free reports are bad is because when you need to file a dispute with Transunion, Equifax or Experian, they now have 45 days to do their research rather than 30 days. If you are playing the loophole game in credit rehab, this is very important. If you have a problem you want clear up, it is reasonable to get it cleared up a quickly as possible.
There are two types of credit report pulls. One is known as a "Hard Pull" and one a "Soft Pull".
Hard Pull - This is when you apply for credit. This pull (inquiry) will show on your report and after certain numbers of pulls will start to affect your score. Typically if you are shopping for a loan for a home or car, multiple hard pulls within a short time frame will not decrease your score. These pulls will stay on your report for two years before dropping off.
Soft Pull - This is when you as a consumer pull your own report through a thrid party service such as myFICO.com or TrueCredit or order your report directly from Transunion, Equifax or Experian. You can pull daily through a service like TrueCredit and monitor rehab or changes in real time. SOFT PULLS have no (ZERO) impact on your score. In fact they can help your score on Transunion and Equifax. Continual daily soft pulls on TU and EQ will eventually bump off Hard pulls, so if you have too many hard pulls and do not want to wait 2 years for the hard pulls to fall off, you can bump them off early through daily soft pulls. It takes as many as 100 or more soft pulls, but I have seen it work.
Remember FREE REPORTS are BAD. If you cannot afford to pony up the whopping total of $30.00 to get the three reports directly from each Credit Reporting Agency, then you should not be applying for new credit.
Order your hard copy reports directly from each CRA and pay for them.
Once you receive your reports you need to triage your reports. Look them over and determine if you need work and if so how much. Before you attempt any disputes, you want to make sure your personal information is as clean as possible.
The first attack is your name(s) and addresses. If you have a whole slew of different variations of your name you are going to correct that in your first dispute. Second you are going to dispute all the addresses that do not match your driver's license. Don't worry whether you lived there or not. You want old addresses off for the simple reason that those old addresses could cause your identity to become compromised. Your name and an old address could get on a mailing list and the person living at that old address could use it to steal your identity. The CRAs do not have to delete valid previous addresses, but I am of the school of thought to get everything off you can. In order get the best results you need to send a copy of your driver's license and social security card to prove who you are. TU, EX & EQ already have this info, so all this does is verify you are who you say you are. This also validates the exact spelling of your name and the correct address they should have on file.
How to write this first dispute
Please follow this carefully and do not let other ideas creep into your mind. There is a very firm reason as to why you need to follow this approach. Your dispute CANNOT BE COMPUTER GENERATED. It must be HANDWRITTEN, on yellow lined note pad paper. Remember how I explained that the CRAs profile the disputes for Credit Repair Companies? This is why you need to use the handwritten approach. If you ask why yellow lined paper? It is suggested that the CRAs scan the typed disputes in to the computer system then OCR the disputes so the computer can profile and find the form letters from the Credit Repair companies. Also a hand written letter typically will not be sent to off shore processing and will be handled here in the states. Make sure your letter sounds like a consumer and not an attorney. See the below sample. Send this Certified but without the Return Receipt. You can track online, with the number, that it was delivered.
If you have spelling errors and cross outs on your letter, this is even better; the point it to make sure it does not look like it is coming from a Credit Repair Agency. Yellow paper and purple/lighter-blue inks make it harder to scan for OCR.
And one last very very important tip, DO NOT INCLUDE a copy of the credit report you are disputing from.
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