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Credit Scores and Loan Applications
Keep Your Credit History Clean - Remove A Negative Credit
Record From Your Credit Report
It can make a difference of up to 18% in loan repayment costs.
For example, on a 30-year, $150,000 fixed rate mortgage, a
borrower with the best credit score, 760-850, will pay 5.59%, or
$860 per month, while someone in the worst score range will pay
7.18%, or $1,016 per month. This can make a big different to the
household budget, so it's to your advantage to keep your credit
score as low as possible.
The 3 major credit bureaus, Experian, Equifax and Trans Union
are similar and feature a "Credit Score", which is derived from
credit report information submitted to them about you.
Uner the Equal Credit Opportunity Act, a credit scoring system
may not use characteristics such as race, sex, marital status,
national origin or religion as factors, though they are allowed
to use age.
Credit scores are determined by your bill-paying history, the
number and type type of accounts you have, late payments,
collection actions, and outstanding debt. The total number of
points reflects how likely you are, statistically-speaking, to
pay back a loan.
If you are denied credit, the Equal Credit Opportunity Act
forces the creditor to tell you the specific reasons your loan
application was denied if you ask within 60 days. Acceptable
reasons include high balances on charge cards, or bad employment
history. Unacceptable reasons include vague excuses such as "You
didn't meet our minimum standards". Sometimes you can be denied
credit because of information on a credit report. The Fair Credit
Reporting Act requires the creditor to give you the contact
information of the credit report agency supplying the
information. The credit reporting agency can give you the
information on your report, but only the lender can tell you why
this led to your application being refused.
However your credit report may include inaccurate or
incomplete information (credit records). Identity theft is a
growing problem, and can take up to a year to resolve. Nearly 10
million people fall victim to identity theft each year, costing
consumers $5 billion and businesses $48 billion, according to the
Federal Trade Commission.
In this situation you have to send letters to every one of the
credit bureaus. Also learn your credit rights by familiarizing
yourself with the Fair Credit Reporting Act (FRCA).
The FCRA gives you the right to dispute inaccuracies and
omissions, and it requires credit bureaus to investigate your
complaint (generally in thirty days), send you a prompt response
and correct any errors. The law as well requires the source of
inaccurate information (such as a bank) to correct the record at
the credit bureaus to which it initially provided the erroneous
information.
Consumers working on their credit reports say many times their
letters are ignored by credit bureaus. Consumers say even with
proof a credit record isn't theirs, its removal from their credit
report can take 3 or even 4 challenge letters, because the credit
bureaus will have only corrected the facts in their own files and
not updated the credit report.
Send your dispute letter by REGISTED MAIL. Credit companies
will respond faster if they know you can prove you filed a
complaint on a certain date. Keep a record of when you sent the
dispute letters and what date you should expect a response. If
you have received no defense to your claim after thirty to thirty
seven days, send another registered letter requesting an updated
credit report and demanding the disputed credit record be
deleted.
If the bureaus don't reply in the thirty days, it must be that
the information they had on file was either inaccurate or
unverifiable. In either case, based on data from the Fair Credit
Reporting Act, the credit record must be immediately deleted from
your credit report.
A few consumers have eliminated negative marks on credit
reports just by going through this process of disputing credit
records many times. Since some creditors will not take the time
to respond, you can sometimes win by default. Usually a bit of
progress will be made with each challenge.Remember, the credit
bureau would like you to quit bothering them because if you are
not disputing the credit report, they can legally carry on
selling it as profitable information.
To obtain your credit score, correct your credit rating, or
even avoid becoming a Victim of Identity Theft visit our website
at www.credit-score-now.info
Frank Vanderlugt
MORE RESOURCES:
Credit - Google News
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