You’ve found the house you’ve been dreaming of. What do your credit reports look like? Even borrowers with good credit should check their credit reports. This means regular checks to ensure reporting accuracy from the three credit bureaus. Most people may think they have only one credit report and one credit score.
In fact, they really have three, and each credit report can differ. You should check all three reports regularly. We want your good credit to be ready when you need it. We will cover how to do that in this great article! You have two choices in fixing your credit. Do it on your own or find a credit counselor.
How Can I Tell a Credit Repair Scam From a Reputable Credit Counselor?
As in most industries, there are people and counselors who can help you with your credit report, and others who take your money but don’t help you.
Recognizing a credit repair scam is fairly easy, if you know how. Warning signs for credit repair scams include companies that ask you to pay before providing services.
The company may claim that it can guarantee a specific increase in your credit score or eliminate any negative credit information in your credit report.
How Do I Find a Credit Counselor?
Most credit counselors offer services through local offices, online, or on the telephone. You can find a list of approved credit counselors online from the most trusted source available in the United States.
That being the Department of Justice. Here is a great resource. It’s the Department of Justice website.
It includes approved credit repair and counseling agencies by the DOJ: https://www.justice.gov/ust/list-credit-counseling-agencies-approved-pursuant-11-usc-111
Once you’ve developed a list of potential counseling agencies from the Department of Justice, you could even go a couple steps further and check them out with your State Attorney General’s office, and local consumer protection agency.
Finally, ask the counselors for free information about their services and what they provide.
How Can I Fix My Credit On My Own?
If you’re thinking how can I repair my credit myself, then you need to know that repairing your credit on your own only gets done if you’re willing to put in the time along with the detailed effort by using physical mail, email and telephone.
Through these communication methods, you are going to explain and communicate your case. You will send personal letters and emailed responses in reply to credit agency questions about your specific situation.
Expect it to take some time to get everything up to par if you have poor existing credit.
You can find several how to guides here: https://www.consumerfinance.gov/consumer-tools/credit-reports-and-scores/answers/how-to-guides/
My Application For Credit Was Denied Because Of My Credit Report
If you were turned down for a loan or a line of credit, technically the lender is required to either give you a list of the major reasons for this denial or direct you to resources telling you how to get the main reasons.
Finding out what caused the lender to turn you down is critical. If a lender rejects your application, it’s required under the Equal Credit Opportunity Act (ECOA) to tell you the specific reasons it rejected your application or tell you about the right to learn the reasons, if you ask within 60 days.
It will probably take some work on your part to find out why you were turned down. You can use the resources on this page along with what they give you to ensure the reason/s.
If a lender rejects your application based on your credit report, it also requires the lender to:
1) Provide you with the numerical credit score it used in taking the adverse action and the key factors that affected your score.
2) Give you the name, address, and telephone number of the credit reporting company that provided the report.
3) Tell you about your right to get a free copy of your credit report from the credit reporting company that provided it within 60 days of your adverse action notice.
4) Explain the process for fixing mistakes on your report or adding information to make your report more complete.
If you find information in your credit report that you believe is inaccurate, you can dispute what is in the report with the credit reporting company and the company that provided the information.
Look ahead in this article, where this is covered in more detail. It requires the credit reporting company to investigate and correct any errors it finds.
If after the investigation you still believe that the report is wrong, you have the right to have a statement added to the report stating that you dispute the information.
If it denied you because of an “insufficient credit file”, or needing to build your credit for the first time, look at this free download called Building Credit From Scratch report. https://files.consumerfinance.gov/f/documents/201612_cfpb_credit_invisible_checklist.PDF
Request Your Free Credit Reports
If you’re not ready to speak to a specific credit counselor or not ready to look further into their services, then Federal law allows you to get a free copy of your credit report every 12 months from each credit reporting company.
The three credit agencies are Experian, TransUnion and Equifax. These free reports do not show credit scores though, so keep this in mind.
Ensure that the information on all of your credit reports is correct and up to date. Visit some tools on the Consumer Finance website for more help. https://www.consumerfinance.gov/consumer-tools/credit-reports-and-scores/
What Is a Credit Report?
Let’s get down to the facts about what a credit report really is. Many people think they only have one credit report.
Some banks call it the beacon score. That’s only a partial credit report. It may be good enough to get a credit card or a minor line of overdraft protection, but for large credit lines you’ll get checked out through the three big agencies.
We know these as Experian, Equifax and TransUnion. We call that credit report a Tri-phase credit report.
In the credit industry, there is something called the Three C’s of Credit. These are Character, Capital and Capacity. These are areas a creditor looks at before deciding to decide about whether to take you on as a borrower.
Credit reports may affect your mortgage rates, credit card approvals, apartment requests, or even your job application.
Reviewing credit reports helps you catch signs of identity theft early as well.
Details such as how much credit you have, how much you owe, and how often you pay affect your credit scores.
When Should I Review My Credit Report?
You should check your credit reports at least once per year to make sure there are no errors. These could keep you from getting credit or best terms on a loan.
You should also check your credit report before making a major purchase that may involve a loan, like a house or a car.
Before applying for a new job is a good time to check your credit report. As mentioned earlier, many companies look at your credit history when hiring employees to get an idea of character, since it is one factor and part of the three c’s that determine your credit score – in this case to take you on as an employee.
You also want to check your credit regularly to guard against identity theft. Identity theft happens when someone uses your personal or financial information to commit fraud.
What Are Common Credit Report Errors That I Should Look For On My credit Report?
When reviewing your credit report, check that it contains only items about you. Be sure to look for information that is inaccurate or incomplete. Some common errors in credit reports are:
- Identity errors.
- Errors made to your identity information (wrong name, phone number, address).
- Accounts belonging to another person with the same or a similar name as yours (this mixing of two consumers’ information in a single file is called a mixed file).
- Incorrect accounts resulting from identity theft.
- Incorrect reporting of account status.
- Closed accounts reported as open.
- They report you as the owner of the account, when you are actually just an allowed user.
- Accounts that are incorrectly reported as late or delinquent.
- Incorrect date of last payment, date opened, or date of first delinquency.
- Same debt listed more than once (possibly with different names).
- Data management errors.
- Reinsertion of incorrect information after it was corrected.
- Accounts that appear multiple times with different creditors listed (especially with delinquent accounts or accounts in collections).
- Balance Errors.
- Accounts with an incorrect current balance.
- Accounts with an incorrect credit limit.
If you find errors, contact the credit reporting company who sent you the report, and the creditor or company that provided the information (called the “furnisher” of the information). Your credit report includes directions about how to dispute inaccurate or incomplete information, or you can use our sample dispute letters for furnishers and credit reporting companies.
How Do I Dispute An Error On My Credit Report?
If you find something on your credit report that’s not supposed to be there, then you should do this. Look at this credit report dispute instruction sheet: https://files.consumerfinance.gov/f/documents/092016_cfpb__CreditReportingSampleLetter.pdf
…and model this as your letter format: https://files.consumerfinance.gov/f/documents/092016_cfpb_CreditReportingDisputeLetter.docx
It is important to dispute inaccurate information with both the credit reporting company that created the report and the company that first reported the inaccurate information, often called the furnishing company.
While this packet provides information about disputing inaccurate information with a credit reporting company, you can find information about disputing inaccurate information with a furnishing company at: http://files.consumerfinance.gov/f/documents/092016_cfpb_FurnisherSampleLetter.pdf
Spot Identity Theft Early
Suspicious activity or accounts you don’t recognize can be signs of identity theft. Review your credit reports at least once per year to catch problems we just mentioned in this article very early.
If you use this article’s advice, then there is plenty of positive reason you should be on your way to getting close to a near perfect credit score. Do you know what the highest credit score anyone can get is? The answer is 850.
How to Build and Establish Credit in the Hispanic Community
When CreditCards.com in Austin, Texas, compiled data and analyzed credit card users by race, gender, age and income level, it reveals 87% of white consumers, 72% of Black Americans and 76% of Hispanics had at least one credit card in 2020.
While the most Hispanics have and use credit cards, it’s still below the average across U.S. adults. This kind of credit access inequality can lead to other types of financial inequalities, like lower credit scores and higher interest rates.
Members of the Hispanic community have made strides toward financial equality, but CreditCards.com’s recent data show that 15% of Hispanics have no credit history and still experience challenges in the personal finance space. To help overcome this issue, Creditcards.com has created a guide to help Hispanics prepare for their financial future properly by providing expert advice on:
- Financial barriers and solutions
- Credit basics and how to build your credit
- Managing and avoiding debt
- Hispanic Credit Cards
- Why and where to find a Hispanic credit union
- Hispanic credit solutions
Here are resources to look into that will show you the easiest ways for members of the Hispanic community to improve their finances and access to credit.
Their experts have translated their guide to accommodate our Spanish-speaking readers. Here’s the link to their fully translated version in Spanish:
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