Everyone knows about credit reports and credit scores. They are the final word on whether one receives a credit card or a loan. When you fall behind on payments, your credit score suffers and your credit report gets a negative mark on it. There are three credit reporting agencies. They are Equifax, Experian and Trans Union. Each report from these three reporting agencies will be different. Not all creditors report to all three, some may report to just one or two and some will report to all three. It is not possible to determine how creditors will report your payments or lack thereof. Although sometimes in collection letters they state that they report to all three credit reporting agencies, this isn’t necessarily the case.
Requesting Reports
Each consumer is entitled to one free copy of their personal credit report annually. These reports can be obtained from the website at AnnualCreditReport.com. Everyone is entitled to request a complete report from each of the three credit reporting agencies once a year. Further, if you apply for and are denied credit at any time, you are entitled to request a credit report from the reporting agency that affected the decision. The creditor who is denying the credit is required to tell the individual where the information was obtained from. Once you receive the letter of denial, you simply send a request with a copy of the denial letter to the agency or agencies listed and you will be sent a current copy.
Reviewing Your Credit Report
Once you have received your credit report, pay close attention to the items that are found there. Review the report for items that you do not recognize first. Mistakes can be made and items may be listed on your report that do not belong to you. After reviewing the report for entries that shouldn’t be there, look closely at the items that are creating a negative impact. Each credit reporting agencies allows individuals to dispute items found on their credit report. Disputing the items will take about 45 to 60 days. Sometimes just simply disputing the item results in the item being removed from your credit report.
You will also want to review your credit report for inactive accounts. If you opened a credit card account two years ago and there’s been no activity, this does not reflect well on your credit score. One should either close the account altogether or make sure that there is periodic activity on the account that reflects positively on your credit score.
Ways To Improve Your Credit
To be able to improve your credit, it is important to understand how credit reporting works. You have a bill, you make payments, etcetera, the creditor reports this to the credit reporting agencies. Not all creditors report monthly. Some creditors take a three month average and report it that way, others will report every other month and just report the current month. The best way to ensure your credit report is clear is to obviously make your payments on time each month. Note that the credit report also has categories for late payments. There is a category for zero to ten days late, 11 to 15 days late, 16 to 30 days late, etcetera. The further out on the categories you are, the worse score you receive.
Remember when applying for credit that each inquiry into your credit history is recorded. If you apply for credit often, this negatively affects your credit score. It is thought that someone who requests credit often is likely a high credit risk and therefore they receive a lower score especially if the credit requests are continually denied. When reviewing your credit report, it is a good idea to look carefully at the last page to insure that there are not inquiries on there that you did not authorize. These too should be disputed.
Rebuilding and Repairing Your Credit Score
When one is trying to repair and rebuild their credit, there are very simple ways to do this. First, you want to make sure that you have good credit that is recent showing on your credit report. A simple way to do this, after taking care of any unsecured debt that is negatively impacting your score, is to apply for a fee based credit card. Make a purchase and then make monthly payments of the minimum amount. After approximately three months of doing this, you will notice an improved score. Improving your score once you have solved the negative issues happens very quickly. Along with that improved score one will start receiving credit card and loan offers regularly. One should not be tempted to apply for all of these offers. Remember that each inquiry is reflected on your credit report and will negatively impact your score. While you may receive many pre-screened offers, the inquiries into your credit history from these pre-screened offers will not affect your score until you request the credit being offered.
