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Cleaning Up Your Credit
A good credit rating is invaluable. It will help you get more
credit and open up financing options. But if over the years, you've
got yourself in a credit stew, don't give up, because it's possible
to rebuild a good credit history. It may take a while, and you may
find yourself on a credit diet, but if you've got the willpower,
you can do it.
One of the best ways to keep yourself out of credit trouble is
to be your own most rabid critic by monitoring your own credit report
for damaging information. Get a professional credit report done
every year and before any major purchase. This gives you the opportunity
to see yourself the way lenders, insurance companies and other businesses
do. And it gives you a chance to correct any false or damaging information
before it hampers your ability to get financing. Finally, it can
spur you to take the hard steps required to clean up your credit.
1. What's In A Credit Report?
2. How To Get A Copy of Your Credit
Report.
3. Disputing A Credit Report.
4. Tips On Cleaning Up Your Credit.
5. Web Links.
6. Resources.
1. What's In A Credit Report?
A credit report includes detailed (and sometimes almost indecipherable)
information on whether you pay your bills on time, who has granted
you credit, and what credit you have applied for, even if you've
been turned down. Every credit card you've ever had, including some
you've forgotten, will be listed and evaluated. So will your history
of repaying bank loans, utility bills, and the government.
For every credit account, the report lists:
- Date account was opened
- Scheduled monthly payment amount
- Estimated actual monthly payment amount
- Date last payment was made
- Terms of the account--interest rate, etc.
- Original loan amount, credit limit, historical high balance
- Balance owed, balance date, and amount past due, if any
- Payment history for the last 24 months
Even minor infractions like a missed payment or a payment over
30 days late, stays on your credit report for seven years. Bankruptcy
hangs around for 10.
Bankruptcy filings, student loan defaults, liens and legal judgments
against you are also included. Your financial statements and financing
sources, if you have released them, may be reported as well. Credit
inquiries from companies that have checked on your credit are also
listed. This can give potential lenders an idea of how much credit
you have sought unsuccessfully.
2. How To Get A Copy of Your Credit
Report
Since lenders use different, and sometimes multiple, credit agencies,
it pays to get a report from all of them. If you have recently been
denied credit, the report is free if you order within 60 days.
For business credit reports:
Dun & Bradstreet
Business Information Reports
99 Church Street
New York, NY 10007
800-TRY-1DNB
Experian
The Credit Bureau, Inc.
P.O. Box 596
Pittsburgh, PA 15230
Toll Free (1-888-397-3742)
Or visit their web site at: Experian
Experian (formerly TRW) charges $8.00. You can order online for
$19.95 from the Microsoft Network or ATT Network.
Equifax Information Services Center
P.O. Box 105873
Atlanta, GA 30348
Toll Free (1-800-440-5059)
Or visit their web site at: Equifax
Trans Union Corporation
Consumer Relations
1561 E. Orangethorpe Ave.
Fullerton, CA 92831
Toll Free (1-800-916-8800)
Or visit their web site at: Trans
Union Corp.
3. How to Dispute A Credit Report
You've discovered a glaring error: Who is this XYZ Company who
claims you owe them $200,000? Must be that mix-up with your cousin
with the same name. Thanks to the Fair Credit Reporting Act, the
credit agency is required to correct all errors and send a notice
of correction to anyone who has requested your report in the last
six months. But you've got to ask.
What to do:
Report any incorrect information to the credit reporting agency
immediately. They are required to investigate disputed information
within a reasonable period of time.
If the dispute is not resolved to your liking, you're allowed
to file a statement of up to 100 words explaining your position,
which will be included each time your report is requested.
If a credit report notes you made late payments on accounts that
are no longer delinquent, it must also reflect that your payments
are now up-to-date. The same goes for a fraudulent charge that appears,
unpaid, on your report.
If you're confused by your credit report--and it can be a confusing
document--make an appointment with the credit reporting agency to
have someone explain what it all means.
4. Tips on Cleaning Up Your Credit
Starting now, pay all your bills promptly, making at least the
minimum payment. It takes time to reverse years of bad credit, but
eventually your new prompt pattern will overtake your past record.
Stop using your credit cards! Work to pay off the total balance
of existing accounts so you don't look like you have high monthly
payments.
If you don't need the "safety net" of having many credit cards,
cancel some of your cards. Sometimes your total credit limit is
considered in granting you new credit and your unused credit lines
may count against you as your total credit exposure/obligations.
Consider consolidation loans to get credit off high interest credit
cards onto lower-interest cards or loans.
If you missed or were late with a payment to a creditor some time
ago, but you're up to date now, ask them to remove the blemish to
your credit rating with a note to the reporting agencies.
Make sure all the information on your credit reports are accurate.
If you can't get credit or you constantly misuse credit, switch
to secured credit cards. Because secured cards are linked to your
bank savings account, you can only withdraw up to the amount in
your account.
Recruit co-signers for loans. Make sure your co-signer understands
he or she is fully responsible for the loan if you default. Then
don't.
Avoid "credit repair" companies that promise quick, easy mending
of your credit rating -- there's no such thing.
Defer as many big purchases as possible until you've cleaned up
your credit.
Weed out clients who are slow payers or poor credit risks. While
you're giving them a break, they're hampering your efforts to pay
your own bills on time.
If you are in a slow-paying industry, where payment often takes
over 90 days, consider selling your receivables to a factor to avoid
more late payments.
5. Web Links
Dun & Bradstreet
Inc. Information on D&B's products and services, along
with some business how-to's. Order business backgrounders on-line
for $20.
Experian (Formerly
TRW) information on Experian and its business information services.
Site of Debt
Counselors of America, A non-profit group that assists
individuals and families trying to clean up their debt.
Bank Rate
Monitor's site. Lots of frequently updated information
on which banks and credit card companies are offering the best rates.
Also breaks information down by city, and offers advice on cleaning
up your credit and how to choose the right credit card.
6.
Resources
For business credit reports:
Dun & Bradstreet
Business Information Reports
99 Church Street
New York, NY 10007
800-TRY-1DNB
Experian
The Credit Bureau, Inc.
P.O. Box 596
Pittsburgh, PA 15230
Toll Free (1-888-397-3742)
Or visit their web site at: Experian
Experian (formerly TRW) charges $8.00. You can order online for
$19.95 from the Microsoft Network or ATT Network.
Equifax Information Services Center
P.O. Box 105873
Atlanta, GA 30348
Toll Free (1-800-440-5059)
Or visit their web site at: Equifax
Trans Union Corporation
Consumer Relations
1561 E. Orangethorpe Ave.
Fullerton, CA 92831
Toll Free (1-800-916-8800)
Or visit their web site at: Trans
Union Corp.
For credit information:
National Association of Credit Management
8815 Centre Park, Suite 200
Columbia, MD 21045
410-740-5560
For Debtors Anonymous meetings in your area:
Debtors Anonymous
General Services Board
P.O. Box 20322
New York, NY 10025
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