June 18,2009
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Fixing Your Credit, Pt.1
Why Fix My Report?So why fix my credit? Credit scores, often referred to as a FICO score, are not only used by banks in determining your risk factors, they are also used by insurance companies, potential employers, landlords, and credit card companies. At one time a score in the low 600’s was acceptable. Today, to qualify for a mortgage, most banks require individuals to have a minimum score of 620. Even then, a score of 620 would be highly scrutinized by the underwriting department. Additionally, the interest rate the bank will consider offering will also be affected. If your credit card and loan payment history is less than perfect, you can expect the interest rate offered will be higher. The difference between a score of 720 and 650 can increase your interest by 1, 2, or 3%. The type of mortgage you qualify for would also be affected. You’ll be paying on that mortgage for a long time. You’ll want to make sure you get the best deal possible. Getting a lower credit card interest rate, could also save you hundreds of dollars a year.
Under the FACT Act amendments to the Fair Credit Reporting Act, you are entitled to one free credit report within a 12 month period from each of the three major credit reporting bureaus, Equifax, Experian, and TransUnion. You can request these reports in writing, on the phone, or online at AnnualCreditReport.com. The free credit reports do not include your actual credit score. To get your credit score, you’ll be required to pay a small fee. Your free report will list all open and closed credit card accounts, auto loans, and mortgage accounts. The report will also list any organizations that have recently inquired into your credit history including banks, credit card companies, and loan companies. Negative elements such as collections, judgments, and foreclosures will also be listed.
When reviewing your reports, it would be wise to print a copy for your records. Remember, you're only eligible for a free report once every 12 months. If you'll be disputing items on your report, you might consider signing up with one of the programs that offer unlimited access to your report for a small fee. You can pay by credit card online or check/money order via mail. Upon receipt of your credit report, you can begin the process of repair.