When was the last time you reviewed your credit history? If it was more than 12 months ago, it’s time to do it again. That’s because each day, new information, sometimes unknown to you, makes its way into your report. This information can include queries about your credit (from credit card providers, cell phone companies, car rental companies and even no Teletrack payday loan companies). Sometimes you never authorized these queries. Sometimes information is entered in error. Any of these items count against your credit score.
The standard for summarizing your credit is the Fair Isaac Score or FICO. And most loans, mortgages and even automobile insurance can be tied to it. What is especially unfortunate is that we, as consumers, don’t have a rubric that defines how our score is computed. All that we know is that the score involves a breakdown using these approximate percentages: payment history (35%), outstanding debt coupled with available credit lines (30%), length of credit history (15%), types of credit in use (10%) and recent inquiries to your credit (10%). But how any individual entry on our history counts remains a trade secret.
The only weapon we have is to keep constant tabs on our credit reports and ensure that the information is at accurate. The three main credit bureaus (Trans-Union, Experian and Equifax) are under obligation to review and correct erroneous information, but only AFTER you bring it to their attention.
So, let’s assume that you paid off a mortgage two years ago, but the information still shows on your credit report. You now move and are getting ready to purchase a new home. You can almost count on lengthy delays as you work to clean up this situation. If interest rates are changing, you may find that you miss a lock-in window and have to pay a higher rate. And, in the worst-case scenarios, you may get charged a higher interest rate or cannot even qualify for the loan.
The easiest way to keep tabs on your credit is via annualcreditreport.com. This site is supported by the three main credit bureaus and allows you one free credit report from each bureau annually. That means you and your spouse, partner or significant other are each entitled three reports every twelve months. If you spread the reports out so that you order one each every 4 months, you can monitor your credit annually for free.
You can also request free credit reports from all the credit bureaus should you ever be denied credit.
You can also subscribe to various credit report access, credit monitoring services and/or identity protection services. Each of the three credit bureaus and other third-party providers offers these for a fee. But, be careful what you pay for and what you get. For example, if you order identity theft, you don’t get credit monitoring. The Free Credit Report dot Com site charges $14.95 per month for their 3-bureau service. Somehow that really isn’t “free.”
Once you get your reports, you really have to plow through them. Look for any errors or omissions. This can include the spelling of your name, an erroneous address, and/or a late payment that wasn’t late. Look for credible sources that you have paid off, canceled, or otherwise removed from use. Note that some credit cards may only be listed by the last 4 digits of the card; others may show credit card company account numbers, which may be different from your card number.
If you find anything (absolutely anything) that needs to be updated, contact the credit bureau in writing and request that they repair and/or update the information. Along with your “dispute” letter, provide copies of any documentation that will help them do this. For example, if you have paid off a credit card and have a letter from the credit card company “thanking you for being such a loyal customer and that they are sorry you closed account # – – -,” send a copy. Be sure to send your letter via certified mail or Fed-Ex to ensure that the credit bureau receives it.
Alternatively, you can contact the mortgage or credit card company and have them send off the updated information. American Express is especially good in this department.
Credit bureaus have 30 days to act on your request to correct erroneous information. If the bureau cannot refute the information, you can still add a personal statement (limit 100 words) to your credit report.
You should then follow-up and request a new credit report about 60 days later to ensure that the error or omission has been fixed.
Several years ago, my stepson discovered that he had a blemish on his credit history. It involved a payment to a utility company. He had taken care of the situation but found out that the utility company and/or the credit bureau had not. It took him months of interaction to resolve the matter and get the credit report cleaned up.
Finally, if your credit history is tarnished, be wary of paying someone to fix it. You can only fix what is fixable. You cannot remove truthful information because you don’t like it.
So, if your credit is good or great, keep it that way; if it needs attention, there’s no better time than right now to get started. Go to AnnualCreditReport and follow their prompts. You can order your bureau reports online, by phone or through the mail. If you work to maintain your credit history, I think you’ll be happy with the results.…