General Credit Tips

Like everything else you buy, credit has a price tag and it pays to comparison shop. With the Internet, you can now compare local credit offers with those from financial institutions around the nation.

The Equal Credit Opportunity Act protects you when dealing with anyone who regularly offers credit, including banks, finance companies, stores, credit card companies and credit unions. When you apply for credit, a creditor may not:

* Ask about or consider your sex, race, national origin or religion

* Ask about your marital status or your spouse, unless you are applying for a joint account or relying on your spouse's income, or you live in a community property state (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas and Washington)

* Ask about your plans to have or raise children

* Refuse to consider public assistance income or regularly received alimony or child support

* Refuse to consider income because of your sex or marital status or because it is from part-time work or retirement benefits

You have the right to:

* Have credit in your birth name, your first name and your spouse's last name, or your first name and a combined last name

* Have a co-signer other than your spouse if one is necessary

* Keep your own accounts after you change your name or marital status or retire, unless the creditor has evidence you are unable or unwilling to pay

* Know why a credit application was rejected-the creditor must give you the specific reasons or tell you how you can get them if you ask within 60 days

* Have accounts shared with your spouse reported in both your names

* Know how much it will cost to borrow money

Top

Credit Bureaus and Credit Scoring Tips

A credit report contains information on where you work and live, how you pay your bills, and whether you've been sued, arrested, or filed for bankruptcy. Consumer Reporting Agencies (CRAs) gather this information and sell it to creditors, employers, insurers, and others. The most common type of CRA is the credit bureau.

The three major national credit bureaus are:

* Equifax, 1-800-685-1111
Fraud Hotline: 1-888-766-0008
* Experian, 1-888-397-3742
Fraud Hotline: 1-888-397-3742
* TransUnion, 1-800-916-8800
Fraud Hotline: 1-800-680-7289

FICO And VantageScore

Historically, FICO has been the most well-known credit scoring system. The information in your credit report is used to calculate your FICO credit score, a number generally between 300 and 850 that rates how risky a borrower you are. The higher your score, the less risk you pose to creditors. Your FICO score is available from www.myfico.com for a fee. Free credit reports do not contain your credit score. You may purchase your credit score by contacting the credit bureaus. All three credit bureaus also offer a 3-in-1 service so you don't have to contact each bureau separately.

VantageScore is a new scoring technique, the first one that was developed collaboratively by the three credit reporting companies. This model allows for a more predictive score for consumers, even for those with limited credit histories, reducing the need for creditors to manually review credit information. VantageScore features a common score range of 501-990 (higher scores represent lower likelihood of risk). A key benefit of VantageScore is that as long as the three major credit bureaus have the same information regarding your credit history, you will receive the same score from each of them. A different score alerts you that there are discrepancies in your report.

Top

Building A Better Credit Score

* Pay your bills on time. Delinquent payments and collections negatively impact your score.

* Keep balances low on credit cards and other "revolving credit." High outstanding debt lowers your credit score.

* Apply for and open new credit accounts only as needed. Don't open an account just to have a better credit mix; it probably won't raise your score.

* Pay off debt instead of moving it around. Owing the same amount, but having fewer open accounts may lower your score.

Top

Negative Credit Information in Your Credit Report

Negative information concerning your use of credit can be kept in your credit report for seven years. A bankruptcy can be kept for 10 years, and unpaid tax liens for 15 years. Information about a lawsuit or an unpaid judgment against you can be reported for seven years or until the statute of limitations runs out, whichever is longer. Inquiries remain on your report for two years.

Anyone who denies you credit, housing, insurance, or a job as a result of a credit report must give you the name, address, and telephone number of the CRA that provided the report. Under the Fair Credit Reporting Act (FCRA), you have the right to request a free report within 60 days if a company denies you credit based on the report.

If there is inaccurate or incomplete information in your credit report:

* Contact both the credit reporting agency and the company that provided the information to the CRA.

* Tell the CRA in writing what information you believe is inaccurate.

Under The Fair Credit Reporting Act, the information provider is required to investigate and report the results to the CRA. If the information is found to be incorrect, it must notify all nationwide CRAs to correct your file. If the investigation does not solve your dispute, ask that your statement concerning the dispute be included in your file. A notice of your dispute must be included anytime the CRA reports the negative item.

If the information is accurate, only time, hard work, and a personal debt repayment plan will improve your credit report. Credit repair companies advertise they can erase bad credit for a hefty fee. Don't believe it.

Under the Credit Repair Organizations Act, credit repair companies can't require you to pay until they have completed promised services. They must also give you:

* A copy of the "Consumer Credit File Rights Under State and Federal Law" before you sign a contract
* A written contract that spells out your rights and obligations
* Three days to cancel without paying any fees

Some credit repair companies promise to help you establish a whole new credit identity. You can be charged with fraud if you use the mail or telephone to apply for credit with false information. It is also a federal crime to make false statements on a loan or credit application, to give a false Social Security number, or to obtain an Employer Identification Number from the Internal Revenue Service under false pretences.

If you have lost money to a credit repair scam, contact local consumer protection office or use the National Fraud Information Center complaint form.

Top

Credit Billing Disputes

If you find an error on a credit card or charge account bill, you have the right to dispute the problem under the Fair Credit Billing Act. The law defines billing errors as: incorrect credits for payments, charges that you didn't make, and charges for goods or services that you did not receive or that were not as promised.

Write to the creditor within 60 days of the postmark of the first bill with the disputed charge. If more than 60 days have passed but you just recently found the problem, you may still be able to dispute the charge.

* Send a letter to the address provided on the bill. Do not send the letter with your payment.

* Be specific. In your letter, give your name and account number, the date and amount of the charge disputed, and a complete explanation of why you are disputing the charge.

* Send your letter by certified mail, with a return receipt requested, if you want to make sure it is received.

If you follow these requirements, the creditor or card issuer must acknowledge your letter in writing within 30 days of receiving it and conduct an investigation within 90 days.

While the bill is being investigated, you do not have to pay the amount in dispute. The creditor cannot try to collect this disputed amount, nor can the creditor report the amount as late or close or restrict your account.

* If there was an error, the creditor must credit your account and remove any related finance charges or late fees. For any amount still owed, you have the right to an explanation and copies of documents proving you owe the money.
* If the bill is correct, you must be told in writing what you owe and why. You will owe the amount disputed plus any finance charges.

What if you don't agree with the creditor's decision? You can file an appeal with the Office of the Comptroller of the Currency.

Top

Debt Collection

The Fair Debt Collection Practices Act applies to those who collect debts owed to creditors for personal, family and household debts. These include car loans, mortgages, charge accounts and money owed for medical bills. A debt collector is someone hired to collect money you owe.

Within five days after a debt collector first contacts you, the collector must send you a notice that tells you the name of the creditor, how much you owe, and what action to take if you believe you don't owe the money.

If you owe the money or part of it, contact the creditor to arrange for payment.

If you believe you don't owe the money, contact the creditor in writing and send a copy to the collection agency with a letter telling them not to contact you. A debt collector may not:

* Contact you at unreasonable times, for example, before 8 a.m. or after 9 p.m., unless you agree

* Contact you at work if you tell the debt collector your employer disapproves

* Contact you after you write a letter telling them to stop, except to notify you if the collector or creditor plans to take a specific action

* Contact your friends, relatives, employer or others, except to find out where you live and work

* Harass you through threats to harm you, profane language or repeated telephone calls

* Make any false statement, or claim that you will be arrested

* Threaten to have money deducted from your paycheck or sue you, unless the collection agency or creditor intends to do so and it is legal

To file a complaint, contact your local consumer protection office and the Federal Trade Commission.

Source: ConsumerAction.gov

Top