Financial Future

The reliance of making transactions through credit has been widespread from the late 80′s. This way of completing transaction grew wider and wider to what it is today. This expanding reliance made the major bureaus employ a scoring system. However, this system was developed three decades even before it came into major use. In the late 1950′s, Earl Isaac, a mathematician, and an engineer, Bill Fair, formulated a system that rates a person financial performance.

Today’s system is being used more than ever since its formulation. This system is based on your performance when it comes to managing both your debts, both long-term and short term, and as well as your bills, and applications for credit cards. Much to the misunderstanding of most people, the scores that are being given by this system are not reviewed by creditors in terms of absolute figures. Instead, they review your score based on relative terms.

Meaning they decide whether they should give you a higher or a lower rate of interest based on your distance from the average credit score. The average score varies according to its scope of calculation (be it from country to country, city to city, or from state to state). This is to say that if the scope of calculation were just in the state of South Dakota, the average credit scores would be different, than it would be if the average would be calculated based on Iowa.

This is where knowing your own score and the average score comes in handy. By knowing your own score and by comparing it to the average, you will be able to budget your income. By doing this, you will also be able to determine whether potential creditors would say that you have a good credit score or not.

It would also help you determine how high or low your interest rate would be should you apply for a loan. A major misconception of most is that the average credit score is always computed by total score over the number of factors. Most of the time, the average score is the median of all the scores on a given state. Meaning, the average rating is the score where there would be equal number of people with higher ratings and lower ratings.

As of now, the latest reported national average credit score by FICO is 728. This means that if you have a rating of 728, there are some 50 million people with better scores than you are, and there are also 50 million people with lower scores than you have. As of 2008, the state with the highest average credit score is Minnesota with 721 and the lowest is from Nevada, with a score of 668.

Your credit score can easily be improved once you take the necessary steps. By requesting your free credit report you will be able to identify and correct errors, false information and inaccurate listings. This will clean up your report to ensure you have a good credit score.

Theres more where this came from. Check out additional ways to improve a credit score and learn how to get a good credit score.

If you’re not familiar with the Fair Credit Reporting Act (FCRA) established in 1971, you need to understand it and know your rights as a consumer. One of your rights as a consumer is obtaining your report. This is one of my credit repair tips is to get your free report.

Any credit repair tips that come from me will refer to this act constantly because it is the foundation of your credit report and rights especially when it comes to dealing with the big 3 bureaus.

This act requires that the national consumer reporting agencies provide you a copy of your report once every 12 months free of charge.  The Federal Trade Commission (FTC) enforces this law so you can benefit from your rights.

So then, how do you go about getting a free copy of this report? It’s not hard at all really. All you have to do is go to the website annualcreditreport.com and request one.

If you have done so in the past and it has not been at least 12 months, it will tell you and you will not be able to get one anyway. After your 12 months has expired, you can try again and you should get it. I have personally done this several times.

The 3 credit recording bureaus Equifax, Experian and Transunion set up a central website where you can go on-line to get your report. The web address is just above. Also they have a toll-free number you can call or you can request it by regular mail.

You can call 877-322-8228 or complete the Annual Credit Report Request Form and mail it to: Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281.  You can find the form at annualcreditreport.com/cra/order.

You can request a report from all 3 credit bureaus at the same time.  Watch out though for websites that try to mask themselves as the source for free credit reports. They tend to trick you using the words “free credit report” or “free credit scores” and “free credit monitoring”.  The one and only site on the web that will give you a free report is the one I listed here for you in this article.  Also you need to know that they will never send you any emails requesting information from you or soliciting you in any way.

So how long does it take to get your free report?  Well again, if you follow my credit repair tips by doing this online, you should get it instantly.  You do have to fill out your personal information.  They will not ask you for any credit card information at all.  So if you find yourself on a site that does ask for payment information, click the red X in the upper right hand corner of your browser.

Now a good reason to get this free copy of your report is because you need to know what it contains.  Any lenders you may be talking to is using this to make a decision and decide how much they will loan you and what rate you will pay.

U.S. PIRG, the federation of state Public Interest Research Groups (PIRGs), did a survey of adults in 30 states.  They had all of them get copies of their reports.  This group stands up to powerful special interests on behalf of the American public, working to win concrete results for our health and our well-being.

The statistics they found are mind-blowing.  It enforces the reasons why you should be getting this report at least once each year.

Here’s some of the statistics they reported:
Twenty-five percent (25%) of the reports surveyed contained serious errors that could result in the denial of credit, such as false delinquencies or accounts that did not belong to the consumer;
Fifty-four percent (54%) of the reports contained personal demographic information that was misspelled, long-outdated, belonged to a stranger, or was otherwise incorrect;
Twenty-two percent (22%) of the reports listed the same mortgage or loan twice;
Almost eight percent (8%) of the credit reports were missing major credit, loan, mortgage, or other consumer accounts that demonstrate the creditworthiness of the consumer;
Thirty percent (30%) of the reports contained credit accounts that had been closed by the consumer but remained listed as open;
Altogether, 79% of the reports surveyed contained either serious errors or other mistakes of some kind.

So with numbers like these, is there any wonder why so many people are denied loans? Especially when buying a house is this a big problem.

So what is one of my best credit repair tips for this article? Get your copy now and make sure you follow-up and get any errors you may find corrected.

As you no doubt realize, your credit report contains a great deal of personal information about you. For example it has a history of your addresses over the past several years, if you pay your bills on time, any lawsuits you may have been involved in, arrests and if you have filed bankruptcy in the past. All of this information is collected and then sold by the 3 major credit companies to many different places if you allow it and they make the request. If any of this information is incorrect, you may need to use the credit repair tips – disputing credit report errors.

One of my first credit repair tips in this article is, do not authorize people or companies to pull your credit report unless you have very good reason for doing so. If you are applying for credit, this is a good reason. This would include things like opening a credit card account applying for an auto loan or mortgage etc.

The information is needed for your creditor to make a decision and determine your interest rate.

Now-a-days you have to allow insurance companies to see your report before they give you a quote on auto insurance. How your credit score affects the way we drive is something I will never understand.

Let me tell you a little story. When I bought a house, my auto insurance went up on the next renewal period. Then…….. sorry, I got off topic. Ask me some time, I have a great experience on this one.

You need to be sure that whatever is on your report is 100% accurate. In the past, when I was in the mortgage business I saw hundreds of credit reports. I was shocked at how many mistakes they had on them.

Many times I found myself helping the customer get the mistakes corrected just so they could apply for a mortgage. It was a long drawn out process sometimes I must say.

So what if you get your free report and find mistakes on it?? You need to dispute these errors right away. The process of disputing errors is somewhat easy if you know how to do it.

Disputing and Correcting the Errors

First off, you need to know that under the Fair Credit Reporting Act (FCRA) the reporting company and the information provider both have to be sure that everything is 100% correct. So let’s look at it this way for just a moment.

Let’s suppose you are the bank that gave you a mortgage. If the bank finds that you are making all of your payments on time and then reports to the credit reporting company that you missed a single payment, is that right?? Not really because you have made every payment and all of them have been on time.

You would need to get that error corrected since it will shows up on your report and cost you some points in your score. Let’s take this a step further, suppose the bank reports that you were always late on your payments. Now some people do not realize it but if you go past 30 days late, each time you do this it is reported to these reporting companies.

So if you know and can prove you have made all of your payments and have never been late, you want this corrected right away. When offering people credit repair tips, I urge everyone to not fall into the trap of thinking a grace period as something you should be using. A grace period is for the occasional time you may be a few days late, it is not a new due date for your payment. I know some people who use this falsely think it does not affect their credit. It does!

Once you get your free copy of your report and you find errors, there is a process you need to follow. Under the FCRA (Fair Credit Reporting Act) you can insist on errors being corrected since this is a poor reflection on you.

Normally it is the information provider (like the example of the bank above) that causes the error. These companies are only reporting what the providers tell them. However they have an obligation to help you get things corrected if there are errors.

Credit Repair Tips – Getting Started Disputing Errors

You need to write a letter to these credit bureaus about what you feel is not accurate on your credit report. Along with this letter you need to include copies (do not send originals) to back up what you are claiming to be the mistake. This gives proof that it is a mistake. Examples of this might be canceled checks, money order receipts, etc.

After providing your full name and current address you should make it clear what items on the report you are disputing. If there’s more than one mistake, spell them out one by one. You need to state all the facts and explain clearly why you have a dispute about the information. Then request that they remove it.

It’s a good practice to include a copy of your report and highlight or circle the item(s) in dispute. Be sure and send your letter by certified mail with a “return receipt requested” since it’s amazing how people claim “it must have gotten lost in the mail”. I’m sure you know what I mean here.

By sending your letter this way, you have proof of where it went and what companies you sent them too. You want to keep a separate file for each of the 3 credit bureaus you send them to. In each file be sure to keep a copy of the dispute letter and the proof you sent them. This way if you end up talking on the phone with them, you will be looking at the same thing they are.

Credit Repair Tips – What Happens Now

Because of FCRA, the credit bureaus have to investigate the items you are questioning. This has to be done within 30 days unless they think your dispute is not valid. That’s why the copies of proof is advisable.

They will forward your information to the provider who appears to have made the mistake. This causes the information provider to have to look into it and try to figure out what went wrong. After their research, if they find an error on their part, they must provide the corrected information to all 3 credit bureaus so your credit report is accurate. Even if there is no error they still must report it to the credit bureaus and explain their position why they feel the disputed item is correct.

Credit Repair Tips – Now What?

The credit bureaus now have to provide you an updated report (free of charge) that shows the corrections have been made. Once a disputed item is removed from your credit report, the bureaus cannot put it on your report again.

For this reason you want to be sure that at least once a year you take a look at your report. The first time you do this may be a little more work depending how many disputes you may find. It is well worth the time and effort since your credit score is affected and can cost you thousands of dollars in higher interest rates on car loans, mortgages and so much more.

Now I know I got a little long-winded here, but I really want you the consumer to know your rights under this Fair Credit Reporting Act (FCRA) and to use them to your advantage by using these credit repair tips.

Summary:
Debt management solutions are intended to help you pay off your debt and enable you to become debt-free. But in addition to that, they also incorporate a balanced budget routine into your lifestyle that is too good to turn down. And soon you won’t have any trouble keeping the perfect balance in your income to expenditure ratio.

Debt Management- A Relatively New Concept

Although debt management is a relatively new concept, it has rapidly gained popularity thanks to the growing number of debtors. The Internet has also facilitated access to information, and people can find resources related to debt management solutions.

Debt Management Solutions Offer Stability
Debt management will not take away your debt, but it does offer stability by helping you find ways to pay off your debt.

You can opt for a comprehensive program or chose from a variety of services agencies offer.

Choices in Debt Management
Many of you might not be aware of how intense the concept of debt management is. Some programs even cover credit issues along with debt issues. It is a good idea to find out more about the different sectors of debt management.

Variations in Debt Management Solutions
It’s not uncommon to find variation in debt management solutions as no two companies will offer precisely the same services. Apart from counseling, negotiation, consolidation or settlement, it’s good if a debt managing agency offers educational awareness about debt.

This educational initiative is very helpful for those who have little or no knowledge about money management or debt. This program can help them become aware of debt and its future consequences on their personal and professional lives.

Debt Counseling- More Than a Strategy
Counseling is the first phase of any debt management programme. Here you are not only taught to be aware of your spending and payment patterns, but also how its impact can lead to heavy debt and even to bankruptcy. It also gives a constructive alternative for a brighter financial future.

Debt Consolidation- A Convenient Payment Option
Debt managementthrough consolidation offers a convenient method to pay off various types of debts by bundling them into one single pay-off structure. Instead of making various payments within their respective time frames, you can pay once through a consolidation scheme. Many credit agencies and banks offer consolidation loans at very reasonable interest rates. It’s a good option to pay off high interest debt and avoid the possibility of going bankrupt.