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].