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Credit Reports & Credit Repair - Cleaning Up Your Credit |
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General Rule. Keep tabs on your credit report, because it is now used for employment, insurance, and purposes other than credit. In Colorado, you are entitled to a free credit report from all 3 credit reporting agencies at least once each year and anytime you are denied credit. Go to annualcreditreport.com. Get just the free reports, don’t pay for extras such as credit scores. |
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Today your credit report is more important that ever before, since insurance companies and employers, as well as potential lenders may check your credit report.
However, permission must be given by you before anyone can check your credit. Your privacy is one reason. Another reason is that your credit scores generally are reduced every time your credit is checked, since there is an expectation of an extension of credit.
Credit Reporting Agencies
There are 3 credit reporting agencies: Equifax, TransUnion, and Esperian. Essentially all lenders submit your credit information to all 3 credit reporting agencies.
Accuracy Laws
Federal law requires that your credit report be accurate. If it is accurate, you cannot change it. Even though the credit repair scammers tell you that they can remove all credit dings from your credit report.
How Your Credit Score is Calculated.
The approximate weighting is:
- 35% for payment history
- 30% for amount you owe
- 15% for length of credit history
- 10% for new credit
- 10% for the types of credit you have
How Foreclosures, Workouts, and Bankruptcy Affect Your Score
Chapter 7 Bankruptcy appears on your credit report for 10 years and Chapter 13 for 7 years.
Other negative information generally is listed for 7 years.
Foreclosures, Workouts, and a Deed in Lieu of Foreclosure probably all affect your credit about the same as a bankruptcy. The biggest impact is likely the reason for the default in making payments, particularly mortgage and student loans payments.
Your Rights to Dispute Your Credit Report
The Federal Credit Reporting Act allows you to dispute inaccurate information. And you should.
Watching Your Credit Report
Colorado law allows you to get a free copy of your credit report once annually and whenever you are denied credit. The best place to get a free copy of your credit report is on line at www.annualcreditreport.com. Don’t’ pay for any extras, just get the free reports.
Cleaning Up Your Credit Report
There are usually errors on your credit report. Even if you are not having financial difficulty, you should review your credit report at least one per year.
If you are having financial difficulty, you should get free copies of your credit report.
Make sure that none of the following appear in error:
1. Accounts that do not belong to you. Particularly as to identity theft. Such accounts must be corrected ASAP or they can become a nightmare for you.
2. Delinquent (unpaid) accounts that are older than 7 years or do not show when they became delinquent.
3. Charge-offs, if you have paid the account.
4. Credit inquiries made without your knowledge that were made when you were shopping for a mortgage or car loan. You should be concerned because too many inquiries show that you are trying to get a lot of credit, which weakens your credit score. Also, no one can access your credit without your consent.
5. Commingled accounts where the information on your report belongs to someone else.
4. Duplicate accounts, where the same information is listed twice, often under different categories or creditor names.
5. Accounts listed as open, when they are closed.
6. Erroneous charge off codes.
7. Voluntary surrender of a car that is mistakenly listed as a repossession.
8. Paid tax liens listed as unpaid.
9. Criminal records older than 7 years.
10. Lawsuit judgments that are older than 7 years
By the federal Fair Credit Reporting Act laws, you cannot dispute or change any reported items which are correct.
However, you have the right to dispute any errors. If the disputed item cannot be verified by the Credit Reporting Agency, then it must be removed from your credit report.
Sometimes the Credit Reporting Agencies will consider your investigation request to be frivolous. If they consider your request to be frivolous, they can refuse to investigate.
Be specific in your written contact as to the error and the reason that it is in error. Indicate what is the correct information.
Your Dispute Letter.
Your have the right to have erroneous information removed from your credit report under the Fair Credit Reporting Act 15 U.S. Code Section 1681.
Your Request for Removal of Outdated Information letter to request that old information be removed, as required by law.
Your Complaint letter should request the removal of erroneous information. Specify what you want corrected and why.
Your letter must go to the Credit Reporting Agencies, not to the creditor. For example, if one of your credit cards has been erroneously reported, you must contest the error with the Credit Reporting Agencies, not the credit card. However, sending a blind copy of your letter to the credit card company may also be helpful.
You also have the right to add a Consumer Statement to any disputed item. Such as “I do not owe the computer store, because I returned all of the merchandise because it did not work properly.”
You can also make copies of account statements for accounts which are not being reported and ask the Credit Reporting Agencies to report your regular payments on these unreported accounts.
Repairing Your Credit After a Period of Difficulty or Bankruptcy
Begin to acquire credit, and use it wisely. Charge only enough to begin to re-establish a payment record. Your purpose is to establish a credit record, not acquire goods on credit.
You can get a credit card almost immediately. However, you may have to pledge a savings account as collateral. As soon as you can, begin putting money into a savings account.