Posted: December 1st, 2010 | Author: Joe | Filed under: Credit, Tips | Tags: Credit, credit repair, Guest Post, How To, Tips | 1 Comment »
Author bio: Bianca Trujio has written web content for the past three years, specializing in finances, parenting and internet marketing. When she is not spending time with her family, Bianca works on improving her budgeting practices, offering
credit card management classes locally, and learning about new developments in finance.
How to Repair Credit One Tradeline at a Time
Nobody begins adulthood with the intention of getting negative marks on their credit file. Well, at least not most people. However, at one point or another, either through poor finance choices or because of a genuine oversight, you may have to tackle the issue of credit repair. For some people, this will involve reestablishing credit after bankruptcy, divorce or numerous defaults. For others, it could be as simple as forgetting to pay a bill or two on time. Knowing the process that you will have to go through will save you time, energy, and possibly money.
photo by http://www.flickr.com/photos/travistruman/
Free Annual Credit Reports
There are tons of websites that claim to offer free annual credit reports, but the truth is that most of them want something from you – money. Even if these sites do let you see a credit report online for free, you will only get access to an estimated FICO score, or a list of fairly up to date tradelines. A tradeline is any item that appears on your credit report.
The only place that you can get a copy of both your FICO score and an accurate listing of your tradelines is AnnualCreditReport.com. Although you will be tempted to peak at your scores online, it is recommended that you opt to have a hard copy mailed to your home from the three credit reporting bureaus: Experian, Equifax and TransUnion. This step will save you some money and assist you with disputes if need be.
Reviewing Your Credit File
This part of the process will determine whether you will have to invest a few weeks of your time or are home free. After you have a copy of your hard copy credit reports, it is time to go through each trade line and compare the remarks from each of your accounts. There will likely be a few minor discrepancies, such as one credit bureau reporting a slightly lower balance than another. As long as the payment history reflected is accurate and no extraneous accounts appear, don’t worry about it.
If available, use billing statements and receipts to compare against what is on your credit reports. If you see a major discrepancy, highlight it, take note and continue forward. You will be sifting through around seven years of your credit history, so be patient and wait until you are completely finished before going any further.
If you find any errors that you cannot disprove with billing statements or payment receipts, check your credit card statements, bank records and check registers. Luckily, most people don’t pay their bills with cash. So there is a good chance that you will have the proof lying around somewhere.
Request an Account History Review
If you find errors on your credit report, you should request that they be removed. Sometimes this can be as easy as calling the company that handled the account and faxing over your receipts, but other times a knock-down, drag-out fight will be necessary. Start with the direct approach first. Using the company name, address and account number listed on your credit report, locate the main phone number and ask to speak to someone in billing.
You might get transferred to the archives department if the account is closed or if you are disputing a fairly old payment. Be patient as you will probably be inadvertently transferred to people that cannot help you, get told to call back, and repeat the same process again. Inhale…exhale…continue.
Once you are certain that no headway has been made, a certified letter to the company’s address might do the trick. Give them adequate time to respond before taking further action, with 30 days being the standard accepted time-frame. In the meantime, you can try to look for the email addresses of the CEO and people in the public relations department. If you are lucky enough to find a working email address, the problem will get resolved quickly.
For genuine mistakes, the steps outlined above are usually all that it takes to get a tradeline error removed. Unfortunately, some companies, for whatever reason, are hard pressed to correct any type of mistake. This is when you need to get directly involved with the credit reporting bureaus. Although TransUnion, Equifax and Experian have online dispute forms and toll free phone numbers, sending correspondence via standard mail usually prompts more favorable results.
The Dispute Process
Read up on the Fair and Accurate Credit Transactions Act of 2003. This is an act passed by Congress. It outlines the responsibilities and rights that consumers and companies alike are subject to.
The three major credit bureaus handle countless disputes on a daily basis so, if your dispute is not worded correctly, an unfavorable decision could be made. You don’t have to write anything fancy, but clear and concise language backed up by physical proof will be necessary for your dispute to be accurately reviewed. Just state the facts, and include dates and copies of previous correspondences.
A decision from the credit bureau will be mailed to you explaining why or why not they agree with your dispute. If your dispute was upheld, allow the company that made the reporting error up to 30 days to correct their mistake. If the dispute was found to be unsubstantiated, and you truly feel that you are in the right, write to the credit bureau again, making sure to note exactly why you think that they made the wrong decision. Many times disputes are not even seen by human eyes as electronic scanning software is used to read and analyze the bulk of electronic and mailed disputes. Try writing out your dispute by hand this time, or use a font that simulates cursive handwriting.
Most companies will quickly correct reporting mistakes because they honestly did not make them on purpose in the first place. On the other hand, certain unscrupulous companies, such as unlicensed debt collection agencies, will be more interested in attempting to strong-arm a payment out of you. If you can provide proof that you paid your debt, or if the reporting company cannot prove that you owed it in the first place, there is no reason that a negative mark should be on your credit.
While this process works great to remove erroneous tradelines take care not to abuse your power. Taking advantage of a situation in which you know that you owe a company money could result in your being blacklisted or even taken to court if proof surfaces in the future.
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Posted: November 15th, 2010 | Author: Joe | Filed under: Credit, Tips | Tags: Credit, credit card identity theft, Credit Cards, Credit score, Tips | No Comments »
According to the Federal Trade Commission (FTC), identity theft ranked as the number 1 consumer complaint, accounting for 21% of all complaints it handled affecting over 1.3 million people. It’s no wonder that in the information age, stealing people’s identity (which is nothing more than personally identifiable information) would be so rampant. What may be surprising is just how easily it happens. Here are 4 all to common (and low-tech) ways thieves can steal your identity.
1. They take a picture of you scanning your card and entering your pin while you’re checking out. They’ll need to be near you, or just behind you and they’ll likely be posing as though they’re looking at their phone.
2. They tour around your neighborhood after you leave for work in the morning, or before you get home. They’re looking for bills you might be sending with personal information, or credit card offers and bills being sent to you.
3. They drive through the neighborhood in the wee hours of the morning (night), looking for garbage bags. They take the garbage, and sort through it later.
4. They attach a device called a “skimmer” to ATM’s. Skimmers sit between you and the ATM, so it looks like you’re putting your card in the ATM, but in reality you’re giving it to the skimmer – and the thief.
Why I don't own a shredder. 
As you can see, identity thieves don’t need to hack your computer to put you in a bad spot. Your mailbox alone can be a
gold mine. Think of how much damage they can do with convenience checks that your credit card company is nice enough to send out. To limit this as much as possible, be sure to
call 888-5-OPTOUT and call your credit card company and ask that they stop sending convenience checks.
It’s also for this reason that you should use an office shredder, and shred anything and everything that has your name, account number or even address on it, lest it end up in the hands of the wrong people.
Debit cards are another big risk. I know a lot a people advocate debit cards over credit cards because they help limit spending, but if a thief gets hold of your debit card number and pin, then he has access to your whole bank account. At least with a credit card it’s the issuer who’s out the money while you sort things out and you still have the money in your bank to pay the bills. This is why credit cards are more secure than debit.
If your bank or credit card company offers it, consider getting a card with your picture on it.
Also, try to use secure ATM’s – the kind with doors that only open with a valid bank card, or an ATM in a public place in plain site, like the kind in stores. It’s a lot more difficult to attach a skimmer in high-traffic, public areas. Using the same ATM helps as well, since you’re more apt to noticed something different.
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Posted: October 15th, 2010 | Author: Joe | Filed under: Credit | Tags: Credit, Credit Cards, Credit score | No Comments »
Last year’s defending champ for worst credit card has done it again! Congrats to First Premier Bank Mastercard for winning the title of worst credit card for 2010 for the second year in a row. Coming in a close 2nd is Applied Bank’s Platinum Zero Secured Visa. Here’s why..
First Premier Bank Mastercard
First Premier Bank Mastercard still the worst credit card out there. Besides settling out of court with the New York Attorney General’s office (always a bad sign), First Premier sports APR of up to 59.9% and a $75 annual fee. And because of the CARD Act of 2009, you could end up paying as much as $170 in fees even though the card only has a $300 credit limit!
But the biggest red flag is how these advertise (bolded by me, for emphasis):
“First Premier’s card now advertises a $25 to $95 processing charge (which fluctuates by the minute, depending on when you click on the card’s website).”
Beware – they also offer this card under the names: Centennial and Aventium.
Platinum Zero Secured Visa from Applied Bank.
This card has the dubious distinction of being the second worst credit card available. This is a sly piece of abusive marketing. They advertise 0% APR, no application fee and no annual fee but when you look deeper you see that none of it is really true. Oh, it’s technically true, just not really true. It all depends on what your definition of the word is is…
While there is no Annual fee, there is a $9.95 monthly fee (which adds up to $119.40 per year!). If you’re late with a payment, you’ll get hit with a $35 late fee. And that 0% APR is on purchases and cash advance, but there is no grace period and interest charges accrue beginning on the date of the transaction. So, again it is 0% technically - IF you pay it off on the same day!
It’s easy for someone like me to look at these cards and think that anybody who agrees to these terms deserves what he gets, but I know there are a lot of people with poor credit scores or no credit history and little opportunity to build or rebuild their credit score. But there is a better option than cards like these. These cards represent the worst of the credit card industry. They are the stereotypical credit card company that sucks the lifeblood from the very people who need a break – the so called subprime borrower. A better option for people who need to build their credit history might be secured credit cards.
source
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Posted: August 2nd, 2010 | Author: Joe | Filed under: Credit, Debt | Tags: Credit, Credit Cards, Credit score, Debt, Tips | 1 Comment »
How can your credit score drop when you pay off your balance?
I came across this article the other day in which a person asks a staff reporter for CreditCards.com if she pays off her credit card every month, can her score still suffer if that balance is “too high”? The surprising answer is: yes!
Your credit score could be hurt by large balances, even if they are always paid off, so keeping debt levels relatively low may help your family’s scores.
The key to understanding this is the idea of your debt level.
One of the major factors in determining your credit score is the ratio of debt to available credit you have. This is called your debt utilization ratio and it is quite simply a measure of how maxed out are you on your credit cards. For example, let’s say you have an available credit of $10,000, and your monthly balance is about $3,000. This puts your ratio at an nice round 30% – even though you never carry a balance from one month to the next!
Now the problem is also one of timing.
Say that in this example your credit card issuer reports your current balance to the credit bureaus on the 30th of the month, but you submit your payment on the 1st of the following month (still ahead of the due date). Now you apply for a car loan on the 15th and the bank pulls your credit report and sees that you have a revolving debt utilization ratio of 30%. By the way, this would most likely be a perpetual instance, not just for one month – unless you paid your bill much earlier in the billing cycle some months.
Obviously there are other factors involved here as well. For example, your ratio will appear much worse if you don’t have any other credit cards available, or your balance is higher and your credit line lower. In the example above, you’d look like a poor candidate indeed if your credit limit was only $5,000 (you’d have a debt ratio of 60% – $3,000/$5,000. Most financial experts believe that your utilization ratio should be under 30% to maintain an excellent credit score.
Here are some ways to turn this problem around:
- Charge less.
Lowering you monthly balance is a great way to lower your debt utilization ration AND live within your means, though it’s not always easy to do…
- Pay more often.
Most credit card companies let you make multiple payments throughout the billing cycle. The more payments you make, the lower your balance will be at report time.
- Pay earlier.
If you pay off the balance as soon as the statement is available, then you will likely have a 0% utilization when the issuer reports your balance to the credit bureaus.
- Request a higher limit.
This is simple math. Increase the denominator (the number on the bottom – in this case the available credit limit) and you decrease the ratio. The problem is that it may not so easy anymore.
- Open up another credit card – but don’t use it!
Having another credit line can help offset the ratio in much the same way as a higher limit can, since the new credit card limit adds to the available credit you have. As long as you don’t use it, it won’t impact your ratio negatively. But bear in mind that too many credit cards is also a bad thing for your credit score. The sweet spot seems to be about 3 open credit accounts.
A real life scenario.
I was worried about just this sort of thing when I was looking to buy a new home. We put most of our purchases on our family reward card and pay it off every month. But since I have this blog, I’m always keeping up on personal finance news and I knew about the possibility of this sort of timing issue hitting me on my credit report.
I was worried that when I began to shop around for the best mortgage that my debt utilization ratio would get in the way. So, I called my credit card company and asked for a limit increase. This was back in the day when credit was like candy, so they were very willing to do this for me. Also, my utilization ratio was right about on the 30% fence, so it didn’t take much. An increase of $5,000 was enough to put me into the 20% range, and the rest is history – I got a very favorable rate on my mortgage at a wonderful local bank instead of one of the mega-subprime meltdown lenders.
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