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Better Credit Rating
by Michelle Simms
If you’re thinking of buying or refinancing a home, make
sure you repair your credit history before you apply for
financing. Doing so, can speed up the loan approval process,
plus lower your loan fees.
Repairing your credit history includes correcting false
information, updating outdated items and adding missing
details. If there is negative — but accurate — information
in your file, it generally will drop off your records in
about seven years. In the mean time, you should work on
counteracting this information by updating positive items to
your credit file.
Having a positive credit report is important because it’s
one of the main factors lenders consider when approving you
for a mortgage loan. Most lenders use credit scores to
quickly and automatically judge if you’re a good investment.
The higher your credit rating, of course, the greater your
chances of getting the best interest rate for your home or
refinance loan.
Understanding the Impact of Credit Scores
Credit scores, also known as FICO® scores, generally
range from 300 to 850. Most lenders will work with you if
your score is at least 620. If your rating is 720 or higher,
they’ll consider you the most trustworthy type of borrower
and offer you their best rates.
Your credit scores are based on the information in your
credit report. This detailed consumer report tells
everything about you, including where you work and live, how
you pay your bills and whether you’ve ever been arrested,
sued or filed for bankruptcy. Consumer reporting agencies
(CRAs) or credit bureaus collect and sell your credit report
to banks and other businesses.
Your payment history for the latest two years generally
will determine your credit score. But technically, CRAs
calculate your score using a closely-guarded mathematical
formula. TransUnion, for example, determines credit scores
using a variety of factors based on your credit and payment
history, including:
o How you’re paying your accounts
o How much money you currently owe
o How long your accounts have been open
o What different types of credit you use
o How much credit you use compared to the amount of credit
you have available
o How often and how recently you’ve applied for credit.
How to Repair Your Credit History
Your credit score is calculated using the information
that’s available the same day your lender requests it. That
means you can work on raising your score on a daily basis.
You can obtain a copy of your credit report from any of the
three major credit bureaus — TransUnion, Experian or Equifax
— or you can get a three in one report from
www.get3reports.com and handle this yourself. Or you can
seek help from credit experts such as Credit Repair Whiz, a
consumer advocacy company that helps educate and protect
people from credit abuses and unfair practices.
Under the Fair Credit Reporting ACT (FCRA), CRAs and
their information providers must work with you to correct
any inaccurate or incomplete items in your credit report.
Here’s what it takes to start improving your credit file:
1) Tell the CRA in writing what information you believe is
inaccurate. Include copies (NOT originals) of documents that
support your position. Clearly identify each item in your
report, state the facts and explain why you dispute the
information, and request deletion or correction. Send your
letter by certified mail, return receipt requested, so you
can document what the CRA received. Keep copies of your
dispute letter and enclosures.
2) CRAs generally must investigate the items in question —
usually within 30 days. They also must forward all relevant
data you provide about the dispute to the information
provider. After the information provider receives notice of
a dispute from the CRA, it must investigate, review all
relevant information provided by the CRA, and report the
results to the CRA. If the information provider finds the
disputed information to be inaccurate, it must notify all
nationwide CRAs so they can correct this information in your
file. Disputed information that cannot be verified must be
deleted from your file.
3) CRAs must make necessary repairs to all appropriate items.
If your report contains erroneous information, the CRA must
correct it. If an item is incomplete, the CRA must complete
it. For example, if your file showed that you were late
making payments, but failed to show that you were no longer
delinquent, the CRA must show that you're current. Or if
your file shows an account that belongs only to another
person, the CRA must delete it.
4) When the investigation is complete, the CRA must give you
the written results. They must also give you a free copy of
your report if the dispute results in a change. If an item
is changed or removed, the CRA cannot put the disputed
information back in your file unless the information
provider verifies its accuracy and completeness, and the CRA
gives you a written notice that includes the name, address,
and phone number of the provider.
4) At your request, the CRA must send notices of corrections
to anyone who received your report in the past six months.
If an investigation doesn’t resolve your dispute, you could
ask the CRA to include your statement of the dispute in your
file and in future reports.
5) In addition, tell the creditor or other information
provider in writing that you dispute an item. As with the
CRAs, include copies (NOT originals) of documents that
support your position. If the provider then reports the item
to any CRA, it must include a notice of your dispute. In
addition, if you are correct and the disputed information is
not accurate, the information provider may not use it again.
6) If your credit file doesn’t reflect all your credit
accounts, work on updating it. Most national department
store and all-purpose bank credit card accounts will be
included in your file, but not all creditors supply
information to CRAs. Some travel, entertainment, gasoline
card companies, local retailers, and credit unions are among
those creditors that don't.
If you start improving your credit history today, you can
look forward to having lower loan rates tomorrow.
Michelle Simms. CreditRepairWhiz.com is
dedicated to helping individuals restore their credit.
Learn more about credit restoration and read our
recommended resources page at www.CreditRepairWhiz.com
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