Keeping your credit in checkSherene Costanzocredit reports, stabilizing credit, identity theft
A credit report is crucial to getting approval for a home
mortgage, a car loan, credit cards, or any other type of loan. It
provides creditors, employers and insurers with a detailed picture
of your credit history. There are many things that might affect
your credit score, such as identity theft, late payments,
inquiries, inaccuracies and unauthorized charges. For this reason,
you should check your credit report periodically and make sure that
your credit history is accurate and correct.
Identity theft occurs when someone opens accounts and runs up
all sorts of bad credit using your name and personal information.
In 2005, the FBI reported that identity theft is the number one
crime in the United States. By checking your credit report, you can
see if there are any accounts listed that you have not personally
opened.
Sometimes, a late payment can occur even when you send out your
payment check at the proper time. A check can get lost in the mail,
which will show as a delinquent payment on your credit report. This
can reduce your credit score. You can avoid late payments by
signing up for an automatic debit from your checking account, or by
making payments online. There are also existing companies,
including your bank, that that will do your bill paying for you for
a reasonable cost.
When shopping around for a loan, you should keep in mind that
creditors will check your credit, which will then produce inquiries
on your credit report. Too many inquiries can hurt your score and
can be interpreted as a negative by your creditors. Each inquiry
reduces your credit score by approximately two to six points and
remains on the credit report for two years.
Having high balances, or balances too close to your credit limit
on your revolving accounts, can also hurt your credit. Always keep
your balances on your revolving credit accounts or credit cards
below 40 percent of the credit limit. High balances can hurt the
score, since it is calculated using a ratio of balances to limits.
For example, if you have a $10,000 credit limit and you owe $8,000,
you are using 80 percent of the credit limit. Keeping the balance
below $4,000 would keep you below a 40 percent usage ratio.
Many inaccuracies on your credit report can be caused by human
error and are not difficult to dispute. Under the Fair Credit
Reporting Act, a consumer has the right to dispute any item on his
credit report. Items that cannot be verified by your creditors have
to be removed from your credit report.
Credit fraud and unauthorized charges affect your credit. Credit
fraud involves the theft of your account or credit card numbers.
The accounts are then used without your authorization. This can
have a major impact on your life. Watching your credit closely and
frequently can prevent this from happening or allow you to catch
the fraud early on.
When you consider that 50-70 percent of all credit reports in
the United States are inaccurate, contacting a credit restoration
company may be a good idea. The honest truth is that most of us
need to repair our credit in some way. There are some items that
are easier to remove than others. Some of these items are
inquiries, repossessions, late payments, items older than two
years, discharged bankruptcies and more. The reason for this is
that many companies may not be able to find the necessary
information to verify the dispute, or the creditor is not too
concerned with the old account anymore. Other items are a little
more difficult to remove, but not impossible. These are items such
as recent bankruptcies, current collection accounts, state tax
liens and judgments. They are more complex to remove, because
creditors keep these accounts as current and are expecting you to
pay them. However, almost all collection agencies and creditors
store information about debtors in computers and throw out any
original signed documents, which makes it easier to dispute such
accounts.
Mortgage brokers and loan officers can use credit restoration
companies to help existing clients increase their credit scores, as
well as to close more loans! Referring your clients to a reputable
credit restoration company will set you apart from your
competition, and in turn, increase your business. It is all about
what you have to offer your clients. They will be thanking you, as
well as referring new clients your way.
Sherene Costanzo is vice president of Credit Consultants
Inc. She may be reached at (888) 522-7007 or e-mail
[email protected].
