Credit Center

Under the Fair Credit Reporting Act you are entitled to obtain a free credit report once every 12 months. To receive your free credit report you can do the following:

You may call the following toll free number: (877) 322-8228

You may mail a completed Annual Credit Report Request Form to:

Annual Credit Report Request Service
PO Box 105281
Atlanta, GA 30348-5281

You may go on-line and fill out an on-line request form.

You may also purchase your credit report from the various credit reporting agencies. The three major credit reporting agencies or credit bureaus are:

Equifax: (800) 685-1111
Experian: (888) 397-3742
TransUnion: (800) 888-4213

UNDERSTANDING YOUR CREDIT REPORT

Once you have obtained your credit report, don’t be confused by what you see. Credit Reports are divided into four basic categories:

1. Identifying Information includes your name, phone number, address, Social Security Number and date of birth and sometimes current and previous employment and previous addresses.

2. Credit History is a summary of your credit transactions. This section will list all your past and current credit accounts. Each account will be identified separately and include the following information:

Date account was opened
Type of credit
Name the account is in
Credit limit/amount of loan
Outstanding balance
Monthly payment
Account status
Payment history

3. The Public Records section includes any filings of personal bankruptcies or court judgments against you.

4. The Inquiry section lists people and companies who have requested a copy of your credit report. Remember when you decide to apply for a mortgage loan, all lender inquires made within a fourteen day period will be counted as one inquiry. Only auto and mortgage inquires are counted in this manner.

PRESUMED METHODOLOGY

Now that we understand what your credit report is comprised of, the next item to understand is your FICO score a rating system developed by the FairIsaac Corporation. FICO scores range from around 300 to about 850. Approximately 1 percent of the population with established credit has credit scores below 500 and another 13 percent score from 500 to 600. By far the largest group, 28 percent, is in the 750 to 799 scoring range. About 11 percent of the population is in that rarified area above 800 points. The median credit score (the point where 50 percent rank higher and 50 percent rank lower) is 723.

While FICO does not divulge its methodology, most presume that historical credit data on large numbers of individuals are grouped into credit score groups or cohorts and tracked to evaluate ongoing credit performance. According to FICO, all information in their scores come straight off of an individual’s credit report. Since information on file may vary from one credit bureau to another, it is very common for an individual to have three different credit scores. Typically lenders will use the middle FICO score in making credit determinations.

It is assumed that collected information is weighted by FICO software in approximately the following ratios:

Payment History 35%:

Have payments been made in a timely manner? Is there a consistent history of slow payments? Have there been charge-offs, collection activity, occurrences of foreclosure, bankruptcy, suits, liens, or repossessions?

Amounts Owed 30%:

What is the total debt, debt on individual accounts, number of accounts, percent of available credit converted to debt? If credit lines or cards are exhausted, this will have a negative impact on a credit score.

Length of Credit History 15%:

How long has the borrower been a creditor? An insufficient credit history or lack of credit history will have a negative impact on a credit score. FICO, in fact, will not calculate a credit score unless a credit report shows an account which has been open for six months or more and at least one account that has been updated in the previous six months.

New Credit 10%

The number of recently opened credit accounts and their proportion to total open accounts and/or the number of recent credit inquiries may be viewed as an indication of cash flow problems. However, new credit, if indicating re-establishment of a positive credit history following credit problems will have a positive impact.

Types of Credit Used 10%

Too many credit card accounts, revolving retail charge accounts, or loans from certain types of lenders such as finance companies can have a negative effect on scores.

These are guidelines for the general population. Evaluation criteria for persons, for example with newly established credit, may be different. Also, lenders may also integrate information from your loan application, such as your job, length of employment, or whether you own a home.

Certain types of information are not used in compiling a credit score. U.S. law prohibits race, color, religion, national origin, sex and marital status from being used in any type of credit evaluation including scoring. Age is not a factor in constructing a FICO score but may be used in other kinds of credit scoring. Other information such as location of residency, interest rates on current loan obligations, and child or family support obligations may be used in some credit scoring programs but are not factors in a FICO score.

Do you have bad credit? If so, before trying repair it yourself or using a reputable company to assist I would suggest you read the following.

Disputing Inaccurate Information

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. Your letter may look something like the sample posted at the end of this page. Send your letter by certified mail, “return receipt requested,” so you can document what the consumer reporting company received the dispute letter. Keep copies of your dispute letter and enclosures.

Consumer reporting companies must investigate the items disputed — 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.

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.

Reporting Accurate Negative Information

When negative information in your report is accurate, only the passage of time can assure its removal. A consumer reporting company can report most accurate negative information for seven years and bankruptcy information for 10 years. Information about an unpaid judgment against you can be reported for seven years or until the statute of limitations runs out, whichever is longer. There is no time limit on reporting: information about criminal convictions; information reported in response to your application for a job that pays more than $75,000 a year; and information reported because you’ve applied for more than $150,000 worth of credit or life insurance. There is a standard method for calculating the seven-year reporting period. Generally, the period runs from the date that the event took place.

The Credit Repair Organizations Act

By law, credit repair organizations must give you a copy of the “Consumer Credit File Rights Under State and Federal Law” before you sign a contract. They also must give you a written contract that spells out your rights and obligations. Read these documents before you sign anything. The law contains specific protections for you. For example, a credit repair company cannot:

1. make false claims about their services
2. charge you until they have completed the promised services
3. perform any services until they have your signature on a written contract and have completed a three-day waiting period. During this time, you can cancel the contract without paying any fees

Your contract must specify:

1. the payment terms for services, including their total cost
2. a detailed description of the services to be performed
3. how long it will take to achieve the results
4. any guarantees they offer
5. the company’s name and business address

Have You Been Victimized?

Many states have laws regulating credit repair companies. State law enforcement officials may be helpful if you’ve lost money to credit repair scams.

If you’ve had a problem with a credit repair company, don’t be embarrassed to report it. While you may fear that contacting the government will only make your problems worse, remember that laws are in place to protect you. Contact your local consumer affairs office or your state Attorney General (AGs). Many AGs have toll-free consumer hotlines. Check the Blue Pages of your telephone directory for the phone number or check www.naag.org for a list of state Attorneys General.

Need Help? 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.

Do-It-Yourself Check-Up

Even if you don’t have a poor credit history, some financial advisors and consumer advocates suggest you review your credit report periodically because

1. the information it contains affects whether you can get a loan or insurance — and how much you will have to pay for it.
2. to make sure the information is accurate, complete, and up-to-date before you apply for a loan for a major purchase like a house or car, buy insurance, or apply for a job.
3. to help guard against identity theft. That’s when someone uses your personal information — like your name, your Social Security number, or your credit card number — to commit fraud. Identity thieves may use your information to open a new credit card account in your name. Then, when they don’t pay the bills, the delinquent account is reported on your credit report. Inaccurate information like that could affect your ability to get credit, insurance, or even a job.

SAMPLE 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)