Managing Finances for a Better Credit Rating
by: Holly Bentz
In the world of finances it is all about
managing debt to maximize one’s
buying power. Since a consumer’s credit score has a direct correlation
on any financing or loan authorization, reviewing the accuracy of a credit
report is a consumer savvy. Consequently, managing one’s personal finances
for a better credit rating is critical.
Did you know that when financial institutions consider authorizing loan approval,
they review your payment history? Even if you were unemployed when you were
inundated with medical bills, the balance will appear on the credit report.
FACT: Over thirty-five percent of American consumers impaired with a low credit
score -- due to expensive hospital and medical bills.
About Your Credit Report Card
A credit report is very similar to an adult life quality report card. It details
such personal information as:
- Where a consumer works
- Where the individual resides
- Have you ever been convicted of a crime
- Has the individual ever been involved in a lawsuit or claim
- How you pay your bills
Credit reports or your report card are
kept by organizations referred to as consumer reporting agencies (CRAs).
These credit bureaus collect, compile and sell consumers credit documents
to businesses. Banks and lending institutions approve applications based
on credit. Certain insurance companies and employers evaluate one’s
credit before writing a policy or extending employment.
Subsequently, Americans should always review their credit score to ensure
the information is accurate. Financial advisors recommend that all consumers
should report any updated, omissions or inaccuracies. Specifically, for the
person planning to apply for a mortgage, auto loan or other personal loans
(secured or non-secured) an exact truthful credit report is important. Moreover,
the Fair Credit Reporting Act (FCRA) authorizes consumers the opportunity to
submit corrections.
Another aspect of managing one’s
finances with a better credit score is by checking the accuracy of information
detailed on the credit file. Nonetheless, it may drastically accelerate the
credit-granting process.
On the other side of the spectrum, consumers who are denied credit have the
right to acquire the following information:
- The credit bureau’s name (CRA)
- The CRAs address and all contact information
- A copy of a free report within 60 days of a denial
- In lieu of fraud, being on welfare or unemployment, consumers a allowed
one complimentary copy of their credit report
Generally, the cost of a credit report starts at nine dollars.
Credit Reporting Agencies and Credit Bureaus
There are three major credit bureau agencies (Experian, Trans Union and Equifax).
All agencies may have different information about a consumer. To compare and
check all your credit files from all the top agencies, here is their address:
Experian
P.O. Box 2002,
Allen, TX 75013
(888) EXPERIAN (397-3742)
Trans Union
P.O. Box 1000
Chester, PA 19022
(800) 916-8800
Equifax
P.O. Box 740241
Atlanta, GA 30374-0241
(800) 685-1111
After you obtain a copy of your credit report, the first step to managing
your finances begins with noting any discrepancies. Then, protect your rights
under the FCRA Act by contacting the source of the erroneous information and
the credit reporting agency by writing a letter.
Sample Dispute Letter
Date
(Your Information)
Name Address City, State, Zip Code
Complaint/Dispute Department Name of Credit Reporting Bureau Address City,
State, Postal Code
To Whom It May Concern:
Attached you will find a copy of a report I received. The items of dispute
are circled on the attached copy of the report I received.
1.) (Detail the disputed items in a list with the credit account, name of
the creditor the type of item, such as credit account or judgment etcetera)
This above item is (inaccurate) because (detail what item is inaccurate or
incomplete and why). I am requesting that the above named item be removed or
corrected (or state the specific change).
Attached you will find copies (describe any enclosures that depict a record
of payments or any court documents) which demonstrate my position. Please research
this issue and (remove or amend) the disputed item(s) as soon as possible.
Regards,
Your name
Enclosures: (List what you are enclosing)
Remember to include duplicates (only) of the documents that corroborate the
correction.
Facts about Accurate but Negative Credit Report Information
There are scenarios where negative information may be accurate. Unfortunately,
there is a general period of time that the information must remain on a credit
report. Usually, the time limit is seven months; however the following list
details the exceptions:
- Any information regarding criminal convictions may be reported for an unlimited
time span.
- Any credit information provided as a response to an application for a salary
position worth over $75,000 does not have a time limit.
- Bankruptcy information can remain on a report up to ten years or more.
- All credit information reported as a result of an application worth over
$150,000 of credit or life insurance does not have a limit.
- Any unpaid judgments or lawsuits have a credit report life of seven years
or more -- until the statute of limitations has expired (whichever is longer).
In summation, despite negative accurate information, paying your bills on
time and correcting any errors is a good way to manage your finances for a
better credit rating. |
