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5 Facts About Your Credit Report That You Should Absolutely Know

A credit report is one of the vital criteria that a financial institution or bank considers during the processing of a loan application. In some cases, prospective employers, landlords and other similar entities will want to refer to your credit rating before making a decision on whether or not to associate themselves with you. It is imperative therefore that you are aware of these issues.

1. Credit score – your credit score will take into consideration the history of all your financial transactions and award you points. Anything below a 400 score will be disastrous for you.

Points will be cut every time there is an anomaly in your financial transactions. These will include late payment of fees, default on mortgage or loan payments, bankruptcy, overdue child support, tax liens and so on.

Some of this information will stay on your report for about 7-15 years. During this period, creditors who are allowed to see your report following your application for loans or credit, will perceive you as a risky investment.

2. Credit reports content – as mentioned above, the credit report will record in minute detail all your transactions. Negative remarks from creditors will decrease your score, while timely payments and a healthy income to debt ratio will increase it. In order to maintain an optimal score – about 650 and above – do not incur debts that exceed one third of your income.

3. Credit report repair – you can verify and are advised to check what your credit report contains. Fortunately you can apply for a free report every year from each of the three credit bureaus. The details are as under. Ideally you should apply every four months so you can have one report every quarter.

Equifax - http://www.equifax.com or call 800-685-1111
Experian – http://www.experian.com or call 800-397-3742
TransUnion – http://www.transunion.com or call 800-888-4213

4. Correcting credit report errors – it is very important that you keep a close track of the remarks that find their way into your credit report. While most of them will be typing or reporting mistakes, some of these can indicate identity theft.

Make it a habit to immediately dispute anything that you find inaccurate in the report. Ensure that you attach supporting proof (always copies of the original) and that you write one letter per problem – or your dispute may be rejected.

5. Credit report repair – it is possible, though slow, to repair your credit report and credit score. For best results you need to learn how to manage your finances in such a way that you will not fall into the debt trap.

It doesn't matter how low your score falls, you can always build it up provided you are willing to work hard towards that goal.

When necessary, use reputed and legitimate credit repair agencies. Ensure that you verify their integrity before signing on the dotted line. The best way to do this will be to choose those agencies that are affiliated with reputable regulatory bodies such as the BBB (Better Business Bureau) and the ECRA (Ethical Credit Repair Alliance) for safety and best results.

 


Debt Consolidation and Credit Repair – The Perfect Connection

We have all been at some time or other pursued by bad debts. Though in most cases this would not be something that you will lose sleep about, such situations will have left a bad taste in your mouth.

Most people encounter debt problems during student days (read that as youth) when they are not yet fully conversant with the power of money and the negative effects of its mismanagement. Again, most people learn on their feet and after the first-time problems with their credit cards or hand-loans, which their parents will help settle, they start respecting money.

Some fail to learn the valuable lesson that the first debt problems teaches and consequently land into some major problems during their mid-adult life. You will observe that the most and worst debt problems happen around middle-age.

Why? Because at such time you – men and women both – are at a crossroads in life and are looking for something that will make you feel better. Instead, you end up with major debt problems.

When Debt Consolidation and Credit Repair Are Connected?

When there is no other way to pay your bills and come out of your debts burden. You will know you have major trouble with your debts when you will not be able to raise the credit you think you deserve on the terms you think you deserve. When you look for the reason for rejection, you will find that your outstanding debts are labeling you as a "bad investment" to creditors.

You have two choices here:

1. Stop looking for credit – because at this point of time, you will not get anyone who will trust you enough with their money

2. Pay back or consolidate your debts – if there is no other way you can pay for your debts, go for consolidation of debt. This will rid you of the pressure of unpaid bills. In the long run, it will also give you an avenue to improve your credit ratings, albeit a backhanded one.

The Downside of Debt Consolidation

It is true that your credit ratings will become worse before they become better once you adopt the debt consolidation route. This is because the creditors will see you as a person who is unable to manage his or her finances satisfactorily. However, do not doubt that debt consolidation is a positive move towards becoming debt free. Many people fear it because it initially brings down their credit score.

When you make the decision, think of the alternative you have. This step is best when all other alternatives have failed. Take this step as you would that of bankruptcy – only as a last resort, as initially (say for 6-12 months) it will set you back with the credit bureaus.

This method will take a little longer to give you positive readings with your credit score. Nevertheless, it is a good path to walk on, if the alternative is staying indebted and struggling to keep creditors off your back.

Once you have stabilized a little with your payments, you will be able to rebuild your credit score based upon the regularity of your payments and improving your income to debt ratio.

Engage with only reputable companies, such as those affiliated to BBB (Better Business Bureau) or ECRA (Ethical Credit Repair Alliance) so you will be assured of the best services without fear of exploitation. As you will come out of indebtedness, the credit repair agency will teach you through counseling sessions, how to manage your finances so such problems will not repeat in the future.


Resources

The Credit Repair Organizations Act
The Fair Debt Collection Practices Act (FDCPA)
Fair Credit Reporting Act (FCRA)
Consumer Credit Protection Act
The Fair Credit Billing Act
The Equal Credit Opportunity Act (ECOA)

 

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The first step in the acquisition of wisdom is silence, the second listening, the third memory, the fourth practice, the fifth teaching others.
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