Time for a Fresh Start On Your Credit Report

January 14th, 2016

Credit report with score on a deskAre you ready to get a fresh start on the year by checking your credit report and score? If you’re planning on purchasing a house soon, remember that it can sometimes take up to 90 days for disputes to work through on your credit report, so the sooner you start, the better. Also, you can set up some good habits that will help build up your credit rating and ensure that it will stay at the best levels.

Get Your Credit Report

You’re entitled to get your personal credit report once a year from each reporting agency. This doesn’t include the score.

When you see a site offering a free credit score, keep in mind that it’s not going to be the same credit score pulled by lenders. What you are getting is an estimate based upon your credit report, and not a true evaluation. San Jose based FICO is the first U.S. credit scoring company, and it is their score that tends to be the gold standard. Each credit reporting agency uses FICO differently which is why your score is different if you had pulled it separately from each bureau.

There are many sites out there that allow you to pull your credit report and score from one or all three of the credit reporting bureaus.  You can get your free report Annual Credit Report.  Now, this won’t give you a score unless you pay for it.  But you can at least look for mistakes which do happen. If you start there, it will send you to the three main sites where you can fill in your personal information and get your record:

  1. Equifax
  2. Experian
  3. Transunion

Often, sites try to get you to sign up for a monitoring service, and they have a free trial period. If you cancel before the end, you will get your score for free.

Some credit card companies like Discovercard and Citibank are offering your credit score. They don’t say which bureau it’s pulling from, but it can give you a ballpark. They also offer recommendations to increase your score.

Review Your Credit Report

Check your personal information including name, address, phone number, birth date, and Social Security number to make sure everything is accurate. Information regarding lawsuits, judgments, liens, late child support, or other late payments should be stricken from your credit report after 7 years and bankruptcies after 10 years. Credit inquiries from companies to determine eligibility for credit must be removed after 2 years.

Then mark anything that looks suspicious including credit card accounts that you closed but still appear as open on the report; accounts that you never opened; activity that you were not involved in; and account histories that show late payments when you know you paid on time.

So you’ve found errors. Now what do you do?

The FTC has a full page on how to dispute including a sample dispute letter. In a nutshell, you need to write out a description of the errors and inaccuracies in detail. Explain why it’s an error, and include a copy of the report where you’ve circled the issue. More detail is better. If you have supporting documentation, include a copy of that as well.

Then send the letter certified mail with return receipt. You want proof that you sent it in case there’s a claim you never notified them. By law, the credit bureau must investigate and contact you within 30 days of receipt.

In the past, there were ways to dispute online, but this wasn’t as good because it wasn’t possible to add in the supporting documentation. Also, it wouldn’t necessarily clean up the report. The agencies would reduce your issue to a two-digit code and provide only that code on to the requester and not what the dispute was about or who was correct.

The good news is as of 2014, you can upload supporting documentation such as a canceled check, a note marked “paid” when submitting your dispute online, and the credit reporting agency must provide all relevant information, including the dispute itself and supporting documents, to the furnisher.

You can mail in your dispute if you prefer the paper trail.

Also, if there are errors for a specific account, send a copy of the dispute to that account also via certified mail with return receipt. Give the company a chance to fix it on their own.

If the information is found to be in error, then it must be removed from your report. You have the right to ask that a corrected version of the credit report be sent to any company that has requested your credit report in the past 6 months. The credit bureau must also send you a free copy of the corrected version.

Additionally, under the Fair Credit Reporting Act, if the information found to be in error on your credit report is not removed and the court finds the violation intentional, you are entitled to actual and punitive damages, as well as court costs and attorney’s fees.

Improve Your Score

  • Set up payment reminders so you never have a late payment again.  Do remember that a lot of credit card companies want the payment a few days before the due date to have time to process it.  It’s not fair since they say it’s due on a certain date, but it’s best be a few days early.
  • Set up automatic payments using online banking where you can.
  • Reduce the amount of debt you  owe. The percentage of debt to credit limit matters a lot.
  • Check your credit report annually.  You can get your free report here.  Now, this won’t give you a score unless you pay for it.  But you can at least look for mistakes which do happen.
  • Get your credit report 3-6 months before applying for a major loan.
  • Be patient.  It can take 30-60 days for information to be updated on a credit report after you’ve made changes (like paying off a student loan, or had disputed information resolved)

8 Surprising Things That Impact Your Credit

And what would a post be without some trivia.  This is from blog:

  1. Renting a car
  2. Applying for credit (even when you aren’t rejected)
  3. Disputing an account
  4. Having credit cards, but no loans
  5. Just a single late payment
  6. Closing an account
  7. Divorce
  8. Late library books

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