Sunday, November 23, 2008

You and Your Credit

We don't generally think of our credit rating or FICO score unless we want to purchase something, get a new credit card or buy a house or auto. That is probably the wrong thing to do. We should get a copy of our credit report every year.
A study by US Public Interest Group found 70% of all credit reports had errors, with over 1/3 of those errors being sufficient enough to get credit denied.
You credit report has information as name, social security number, address, place of birth, and place of employment. It also has public records information as civil suits, judgments, and divorces.
How do they come up with your credit score?
Credit scoring: 35% payment history, 30% amount owed, 10% new inquiries, 10% types of credit and 15% length of history.
To improve your credit rating:
*Pay bills on time; if you cannot, write and explain why. Try to send some amount. The worst thing to do is nothing.
*Do not cancel any old credit cards. This is part of the history equation. The longer you have a credit card, the better it is for you.
* Do not apply for credit on a lark. All of those store credit cards you are tempted to get to get the 20% off for 2 days, will not be a good thing for your credit rating.
* Every time you apply for a cell phone or insurance, your credit will be checked.
* You should have a minimum of two major credit cards, VISA or Mastercard. If you are too tempted to use them, only use them once every 6 months, then store them in a safe place in your home. Pay off the bill in full.
* Do not charge your credit card to the maximum allowed. Take you maximum, subtract 1/3 and that should be your personal limit.
To obtain copies of your credit
To limit your number of credit applications coming though the mail, call 888-5OPTOUT. This is a good idea to limit your risk for identity theft as well.
If you have an issue with your credit, here is a sample letter asking to have the item removed from you credit report.

ABC Credit Bureau
100 Credit Dr
Hometown, IA. 5555
RE: Credit Record Problem
To Whom It May Concern:
I recently reviewed a copy of the credit file you company is maintaining on me. While doing this I identified the following problems. (Clearly describe your problem in as few words as possible.) I have enclosed the following documentation to support my claim. (itemize the documentation.)
Please investigate this problem as quickly as possible, correct it and provide me with a corrected copy of my credit report. Please send this to:
Jane Doe
123 Main St.
Anytown, ME 44444
I can be reached by phone at 555.555.5555. Thank you for your prompt attention to this matter.
Jane Doe
Full Name
Social Security Number
Spouse Name
Current Address
CC: Federal Trade Commission
*Information obtained from JP Morgan Treasury Services

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