Credit Report & Score: A credit report provides future creditors with details of your credit history, including payment history.

YOUR CREDIT

Your credit plays an important part in your and your families life but understanding what credit is and how it will affect you can be challenging. A great way to learn how your credit will affect your life is with the knowledge of two credit basics; “Credit Report” and “Credit Score”.

CREDIT REPORTS

Your credit and what you should know… A credit report provides future creditors with details of your credit history, including payment history. Your credit report will influence whether you’ll receive further credit with a creditor. Credit reports are maintained and sold by “consumer reporting agencies” (CRA’s). CRA’s are commonly known as credit bureaus. The main three CRA companies are Equifax, Transunion and Experian. Your credit record contains information about your income, debts, and credit payment history. It also indicates whether you have been sued, arrested, or have filed for bankruptcy.

You can obtain a copy of your credit report from the three major credit reporting agencies at any time. On your credit report, each creditor will list debts with one to all three credit reporting agencies, this is why it’s a good idea to check all three. If you have been denied credit in the last 60 days, you are unemployed and plan to seek employment within 60 days, your report is inaccurate due to fraud or you are on welfare, your entitled to a free copy of your credit report. Otherwise, you can purchase copies from the credit reporting agencies.

ORDER YOUR CREDIT REPORTS

In order to get a copy of your credit report, you must provide the following in writing to each credit reporting agency:

• Social Security number
• Birthday
• Full name hand printed
• Current address
• Previous address
• Full name signature

The top three credit reporting agencies are:

• Equifax (http://www.equifax.com)
• Trans Union (http://www.transunion.com)
• Experian (http://www.experian.com)

Top five reasons to check your credit report:

1. Inaccuracies – Human error, unreported payments, someone else’s info on your file
2. Payment History – Verify payments applied to you account and not marked late when on time
3. Identity Theft – Make sure no one has opened an account in your name
4. Company Inquiries – You should know which creditors are checking your credit and why
5. Credit Fraud – theft of account info to make unauthorized charges to your account

INACCURATE OR NEGATIVE INFORMATION

The Fair Credit Reporting Act (FCRA) requires CRA’s to furnish correct and complete information to businesses to use when evaluating your application. However, since we don’t live in an ideal world, there are many reasons that your credit report could contain negative or inaccuracy information that might prevent you from receiving the further credit. The good news is you can take action to keep your report accurate.

• Incorrect Information on Your Credit Report – If you find there is incorrect information in your credit report, you can request, in writing, an investigation that will be made within 30 days, contact the creditor, in writing, If you are unable to resolve the dispute, the creditor must report your dispute to the credit reporting agency.
• Negative Information on Your Credit Report – If the negative information is false, then it falls under “Incorrect Information” above. If you find negative information in your credit report that is correct it can not be taken off. But you can: pay any balances so that creditors can update your file. The only other option you have is to wait seven years for negative information to be taken off; or write a brief statement of explanation to be included in future reports. Bankruptcy stays on your credit report for up to ten years.

DEBT COLLECTORS

You are responsible for your debts. If you fall behind in paying your creditors or an error is made on your account, you may be contacted by a “debt collector.” A debt collector is any person, other than the creditor, who regularly collects debts owed to others. This includes lawyers who collect debts on a regular basis. You have the right to be treated fairly by debt collectors. YOUR RIGHTS UNDER THE FAIR DEBT COLLECTION

PRACTICES ACT

• Debt collectors may contact you only between 8 a.m. and 9 p.m.
• Debt collectors may not contact you at work if they know your employer disapproves.
• Debt collectors may not harass, oppress, or abuse you.
• Debt collectors may not lie when collecting debts, such as falsely implying that you have committed a crime.
• Debt collectors must identify themselves to you on the phone.
• Debt collectors must stop contacting you if you ask them to in writing.

YOUR RIGHTS

UNDER THE EQUAL OPPORTUNITY ACT

• You cannot be denied credit based on your race, sex, marital status, religion, age, national origin, or receipt of public assistance.
• You have the right to have reliable public assistance considered in the same manner as other income.
  If you are denied credit, you have a legal right to know why.

YOUR RIGHTS

UNDER THE FAIR CREDIT REPORTING ACT

• You have the right to know all the information in your credit report, including the source of the information in most cases.
• You have the right to know the name of anyone who received your credit report in the last six months.
• You have the right to a free copy of your credit report when your application is denied because of information supplied by the CRA. Your request must be made within 30 days of receiving your denial notice.
• You have a right to add a summary explanation to your credit report if the problem is not resolved to your satisfaction.
• Any company that denies your application must supply the name and address of the CRA they contacted, provided the denial was based on information given by the CRA. In addition, a CRA must investigate the validity of credit report information when you contest the information in writing.

MANAGING YOUR CREDIT

Ordering your credit report gives you the opportunity to manage your credit wisely, while planning your credit strategy for achieving future goals, like paying bills on-time.

Top five ways to manage your credit:

• Dispute all inaccuracies on your credit report
• Pay bills on time
• Contact your creditors immediately if you are unable to pay your bills
• Avoid unnecessary inquiries on your credit – each application for credit = an inquiry on your credit
• Reduce the number of credit cards you have and close unused accounts

YOUR CREDIT SCORE

Your credit report is the first step in applying for a loan, the second step is obtaining your credit score, also known as your FICO Score. Fico stands for the company that developed it, “Fair, Isaac and Company”. Your FICO Score is used to determine your credit history and current credit worthiness in a numerical value. This value determines whether you receive future credit and if given credit – the score will affect the credit line amount you’re given. To a creditor, your credit score shows how likely you are to pay them back and that your monthly payments will be on time. Your FICO Score will also affect the interest rate you’ll pay on a loan or credit account. The lower the score – the higher the percentage rate.

HOW CREDIT SCORES ARE CREATED

Credit scores are created based on a borrower’s credit history. The CRA’s consider numerous factors:

• The length of time credit has been established
• Late payments or fees
• Negative credit data (bankruptcies, charge-offs, collections, etc.)
• The amount of credit used versus the amount of credit available.
• Time and stability at present residence
• Employment history

Credit scores are computed by information that is provided by the three main CRA’s as listed above: Equifax, Transunion, and Experian. Creditors usually check only one CRA, however, mortgage lenders use all three of your credit scores to calculate your median score. This median score will be one factor that they use to calculate your loan interest rate. Again, the lower the score – the higher the percentage rate.

To learn more about your credit and or to learn more about your credit score fill out our online form and a Certified Financial Planner will contact you shortly. There are no hassles and no obligation! The Financial Advisor will give you a FREE quote for services and you pay ONLY if you decide to use their service(s). So what are you waiting for, APPLY TODAY!

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