Savings/Credit information-Savings and Credit

How to Fix Problems with Your Credit Rating

Your credit rating is a calculation based upon your credit history. Credit ratings for individuals are maintained by three major consumer reporting agencies: Experian, Equifax, and TransUnion. Lenders use your credit rating to gauge the likelihood that you’ll repay your debts on time and in full – and to identify your risk factors that could indicate an inability to pay. If you have problems with your credit rating, either factual or mistaken, you need to repair them as soon as possible.

Why Know My Credit Rating?

Your credit score is important for many reasons: it affects your ability to secure loans at an affordable rate, your ability to open new lines of credit, your ability to rent or buy a residence, and possibly your ability to find employment. You should get your credit report quarterly, to make sure that all information is valid and up-to-date and that no fraudulent activity has occurred. You can get a free credit rating report every three months from one of the three major credit reporting agencies at AnnualCreditReport.com. Note this is the only Web site that is truly free and accredited by all three major credit reporting agencies, as well as the Federal Trade Commission.

Know Your Rights as a Consumer with Credit

The Fair Credit Reporting Act provides for the following consumer protection when it comes to investigating credit ratings: If a company denies your application for credit, employment or another service, you are entitled to a free report within 60 days after the company notifies you of their action. The company’s notice will give you the name, address and phone number of the consumer reporting agency.You are entitled to a free credit report if you are unemployed and will be looking for a job in the next 60 days, or if you are on welfare.If you suspect identity theft, you are also entitled to a free report.You may dispute possible mistaken or incorrect items in your report for free, by law.

How to Recognize Errors in Your Credit Report

Errors in your credit rating can take many forms, but carefully check the following information. Incorrect information here can signal a problem:

Accounts that you did not open or do not recall opening
Any outstanding balance on accounts that you know you have been closed or are paid off in full
Any delinquent accounts for which you did not receive a delinquency notice
Any residence address where you did not live
Inaccurate or missing employment information
Incorrect social security number
Mistakes in your name (note: people with common surnames, like Smith or Jones, should check all of their information closely, as personal identity mistakes may occur).

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Correcting Errors in Your Credit Score

If you find what you believe are errors, first write a hardcopy letter to the consumer reporting agency that provided your credit report, noting what you think is incorrect. Along with your letter, include the erroneous portions of your credit report and circle the errors. Send photocopies of the credit report and any other documents, and keep the originals (especially for forms like W-2s). Send this letter via certified mail with a return receipt requested, so you know it was delivered.

What to Expect After Sending a Dispute Letter

Consumer reporting agencies have 30 days to investigate your dispute. If they consider a dispute frivolous (for example, disputing all negative items on your report, without providing any proof of your claims), they may not investigate it. If investigated, they must forward to you all data relevant to the inaccuracy, and also notify the creditor of the investigation.

Contacting the Original Creditor

Follow up by contacting the creditor(s) yourself, in writing, with the pertinent information and notification that you have filed a dispute. This may seem redundant, but it connects you with the original source of the disputed debt. If this debt is deemed to be accurate after the investigation, you will need to deal with the original creditor directly.

The Creditor’s Obligation

If the debt is found by the consumer reporting agency to be incorrect, then the creditor must fix this information and notify the three major credit reporting agencies of this correction. The credit reporting agency must forward you the results in writing and provide a free copy of your credit report if a change is made because of the investigation. You can also request that the agency send a corrected copy to anyone who has received your credit report in the last six months, or in the last two years for employment purposes.

What if I Still Owe a Debt?

If the creditor reports that the debt is accurate, then the consumer reporting agency must contact you with the name, address and phone number for contacting the creditor. If you still disagree, you may request that a record of this dispute be included in your credit history file and in subsequent reports. You can (for a price) have the credit reporting agency send this information to anyone who has received your credit report within the past year. You are still legally obligated to settle this debt with the creditor, even if the information is removed from your credit report.

How Long Will Negative Information Remain?

Negative information can remain on your credit report for seven years by law, and bankruptcy information can remain for 10 years. The Federal Trade Commission has a good Web site about credit reporting and ways you can improve your credit score.

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