Quick Credit Repair: A Personal Experience

One great way to repair or build credit fast is to get a secured VISA or MasterCard. A secured credit card is one in which you open up a savings account with the card issuing bank. This savings account is used as a security deposit for your credit card. Your credit limit is based on the amount that you deposit into the savings account.

Once you have established a good record of payments on the credit card, the savings account funds are returned to you. Only use this secured credit card for gas or a few small purchases each month. When you get your bill, pay it immediately but overpay it by about $10 - $15. That way you always have a negative balance. The FICO system accelerates your credit rating quickly by doing this. Just make sure that you NEVER are late on making that payment.

This method worked very well for me when I had very bad credit. After receiving my secured credit card, it took about 8 months before I was receiving pre-approved non secured VISA and MasterCard offers from large banks.

How To Dispute Negative Items On Credit Report

STEP ONE

Tell the consumer reporting company, in writing, what information you think is inaccurate. Include copies (NOT originals) of documents that support your position. In addition to providing your complete name and address, your letter should clearly identify each item in your report you dispute, state the facts and explain why you dispute the information, and request that it be removed or corrected. You may want to enclose a copy of your report with the items in question circled. Send your letter by certified mail, “return receipt requested,” so you can document what the consumer reporting company received. Keep copies of your dispute letter and enclosures.

Consumer reporting companies must investigate the items in question — usually within 30 days — unless they consider your dispute frivolous. They also must forward all the relevant data you provide about the inaccuracy to the organization that provided the information. After the information provider receives notice of a dispute from the consumer reporting company, it must investigate, review the relevant information, and report the results back to the consumer reporting company. If the information provider finds the disputed information is inaccurate, it must notify all three nationwide consumer reporting companies so they can correct the information in your file.

When the investigation is complete, the consumer reporting company must give you the results in writing and a free copy of your report if the dispute results in a change. If an item is changed or deleted, the consumer reporting company cannot put the disputed information back in your file unless the information provider verifies that it is accurate and complete. The consumer reporting company also must send you written notice that includes the name, address, and phone number of the information provider. If you request, the consumer reporting company must send notices of any correction to anyone who received your report in the past six months. You can have a corrected copy of your report sent to anyone who received a copy during the past two years for employment purposes.

If an investigation doesn’t resolve your dispute with the consumer reporting company, you can ask that a statement of the dispute be included in your file and in future reports. You also can ask the consumer reporting company to provide your statement to anyone who received a copy of your report in the recent past. You can expect to pay a fee for this service.


STEP TWO

Tell the creditor or other information provider, in writing, that you dispute an item. Be sure to include copies (NOT originals) of documents that support your position. Many providers specify an address for disputes. If the provider reports the item to a consumer reporting company, it must include a notice of your dispute. And if you are correct – that is, if the information is found to be inaccurate – the information provider may not report it again.

CREDIT BUREAU DISPUTE CONTACT INFORMATION

Experian
NCAC
PO Box 9556
Allen TX 75013
888-397-3742

Equifax Information Services
P O BOX 740256
Atlanta, GA 30374
800-997-2493

TransUnion
Customer Disclosure Center
Trans Union Consumer Relations
PO Box 2000
Chester, PA 19022-2000
800-888-4213

Average FICO Score Drops Again For New-Car Loan Approvals

United States automakers are engaged in a struggle to survive and, in their fight to avoid complete insolvency, are making use of drastic, even unorthodox, measures. While, in today’s economic climate, governments bailouts seem neither drastic, nor unorthodox – everybody’s doing it, or so it seems – some of the other steps the big three are taking are certainly unusual.

It looks as if banks are lowering their standards for approving consumers for a car loan, at least a little. In March, 2009, the average FICO score for new-car buyers, 722, hit its lowest level since May 2006, according to CNW Research.

In November 2005, the average FICO score for financing a new-car buyer was 681, which was the lowest level recorded.'

The 722 average FICO score for March includes buyers who took out a car loan, lease and paid cash. It excludes commercial fleets used 80 percent or more for business.

As banks and lenders keep lowering the average FICO score required to get an auto loan, more buyers who need a car but don’t have perfect credit will be able to get approved for the car loans and leases they need.

Those in the market for a new vehicle would do well to check out the broad range of incentive programs available today. Auto manufacturers are competing against each other to provide consumers with reasons to choose their vehicles above the others. Some are offering unusually good opportunities, in light of the difficulties presented by the economic turbulence that characterizes the market today. However, it is always good to remember the wise consumer only makes the purchase if it makes good fiscal sense for him, not just because it is a great bargain.

Mortgage loans now require higher FICO score

You may think that having a credit score of at least 700 and a down payment of almost 5 percent will help you buy a home in this home buying environment. But lenders have tightened credit requirements for obtaining a mortgage when you're buying a home.

You may still be able to get an affordable mortgage through the FHA, which has lower down payment requirements, or that you're better off waiting until you have improved your credit score and saved more money for a down payment.

For the most part, your best loan option might be an FHA loan because of the size of down payment you want to put into the purchase. As for most other loan products, you may find it difficult to secure a low down payment loan.

FHA loans require just 3.5 percent in cash for a down payment. On a $160,000 home purchase, you'd have to put down at least $5,600, but you'd have to be able to afford the payments. On a 30-year fixed rate mortgage at 5 percent, your monthly payments would be about $840 plus real estate taxes and insurance.

While 700 is a good FICO score, it's not a great credit score. Some lenders are now looking for borrowers to have at least a 72o FICO score to get the best rates.

If you decide to pursue buying property now, speak with a mortgage lender to see what options you may have. You may be pleasantly surprised to find that you and your fiancé will qualify for a nice starter home. If not, at least you'll know what you have to do to get ready to buy down the road.

Sample Credit Report Dispute Letter

Date
Your Name
Your Address
Your City, State, Zip Code

Complaint Department
Name of Company
Address
City, State, Zip Code

Dear Sir or Madam:

I am writing to dispute the following information in my file. The items I dispute also are encircled on the attached copy of the report I received.

This item (identify item(s) disputed by name of source, such as creditors or tax court, and identify type of item, such as credit account, judgment, etc.) is (inaccurate or incomplete) because (describe what is inaccurate or incomplete and why). I am requesting that the item be deleted (or request another specific change) to correct the information.

Enclosed are copies of (use this sentence if applicable and describe any enclosed documentation, such as payment records, court documents) supporting my position. Please investigate this (these) matter(s) and (delete or correct) the disputed item(s) as soon as possible.

Sincerely,
Your name
Enclosures: (List what you are enclosing)

Help for people with no FICO Score

You might think that your FICO score is the be all and end all of your credit report. You would be wrong.

There’s a “parallel credit universe” out there, and it’s important to know how it works so that you can continue to work for the best credit possible, and thus the lowest rates on everything form your car loan to your home loan.

There are still only three major credit reporting agencies (TransUnion, Experian and Equifax), and most lenders either buy credit reports from them or send your account information to them. FICO, built by Fair Isaac, is a credit score that resides on the mainframes of all three agencies. But many people – an estimated 50 million in the U.S. – do not have any credit with lenders who report to the “Big 3” credit agencies, which makes it extremely difficult for them to get loans at competitive rates.

Outside of getting a credit card and taking on some debt, there’s another option for these folks. A company by the name of PRBC (Payment Reporting Builds Credit) allows consumers to self-report the details of their rent, utilities, cell phone bill and other nontraditional financial obligations. The company verifies your report, for a fee, and then grants you a new credit report. FICO has even built a credit score that will score their limited data and provide a risk score that lenders can use to evaluate nontraditional information for a fee of about $30. The advantage to this approach is that it gets you into the system of the credit agencies, albeit for a cost – and it’s still not widely used by mainstream lenders, said Ulzheimer.

There’s also a new credit score in town trying to give FICO a run for its money. VantageScore is a proprietary score created by all three reporting agencies that competes with Fair Isaac. You can learn more about Vantage here.

Bad Credit? Don't Despair

Just because you have a poor credit report doesn’t mean you won’t be able to get credit. Creditors set their own credit-granting standards and not all of them look at your credit history the same way. Some may look only at more recent years to evaluate you for credit, and they may grant credit if your bill-paying history has improved. It may be worthwhile to contact creditors informally to discuss their credit standards.

If you’re not disciplined enough to create a workable budget and stick to it, work out a repayment plan with your creditors, or keep track of mounting bills, consider contacting a credit counseling organization. Many credit counseling organizations are nonprofit and work with you to solve your financial problems. But not all are reputable. For example, just because an organization says it’s “nonprofit,” there’s no guarantee that its services are free, affordable, or even legitimate. In fact, some credit counseling organizations charge high fees, or hide their fees by pressuring consumers to make “voluntary” contributions that only cause more debt.

Most credit counselors offer services through local offices, the Internet, or on the telephone. If possible, find an organization that offers in-person counseling. Many universities, military bases, credit unions, housing authorities, and branches of the U.S. Cooperative Extension Service operate nonprofit credit counseling programs. Your financial institution, local consumer protection agency, and friends and family also may be good sources of information and referrals.

If you are considering filing for bankruptcy, you should know about one major change to the bankruptcy laws: As of October 17, 2005, you must get credit counseling from a government-approved organization within six months before you file for bankruptcy relief. You can find a state-by-state list of government-approved organizations at www.usdoj.gov/ust. That is the website of the U.S. Trustee Program, the organization within the U.S. Department of Justice that supervises bankruptcy cases and trustees.

Reputable credit counseling organizations can advise you on managing your money and debts, help you develop a budget, and offer free educational materials and workshops. Their counselors are certified and trained in the areas of consumer credit, money and debt management, and budgeting. Counselors discuss your entire financial situation with you, and help you develop a personalized plan to solve your money problems. An initial counseling session typically lasts an hour, with an offer of follow-up sessions.

For more information, see Knee Deep in Debt and Fiscal Fitness: Choosing a Credit Counselor at ftc.gov/bcp/conline/edcams/credit/

Credit Repair

You have two options when it comes to repairing your credit ...

• hire someone, preferably an attorney who knows the credit laws;
• do-it-yourself using a good quality guide and your 3-in-1 credit report;

Whichever way you decide to go, here are just a few tips to keep you on track:

• Don't fall for scams that tell you to create a new credit file ... that's credit fraud if you do it, and can make you subject to legal repercussions;
• Do read the Fair Credit Reporting Act so you have an idea of your rights while you go through the credit repair process;
• Get yourself organized and committed to the process, there is no overnight fix;
• If you use an online service, you want to know what the fees will be, monthly or "as you go" is best, and you want to be able to cancel at anytime;
• Always act in a cooperative and professional manner when dealing with creditors or collection agencies;
• Don't make threats, however subtle, if you can't back them up.

Deciding whether to hire a credit repair firm, or doing it yourself, depends a lot on your willingness to work, as well as your ability to be organized and follow through on the process. If you really don't want to deal with it yourself, and would rather a professional, we recommend one who is well-versed in the use of the Fair Credit Reporting Act to protect your credit, and who will handle all the detail work for you.