- Why should I check my credit report?
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The information on your credit report can be used to determine whether or not you are able to buy a new car, rent an
apartment, get a loan, or qualify for other credit. By monitoring your personal credit report, you'll stay informed
about your current credit status. You'll know which businesses and credit grantors have requested to view your credit
report, which new accounts have been activated in your name, and whether or not derogatory information has been
added.
Checking your credit also allows you be alerted to information that may have negative, long-term effects on your
credit history—such as excessive inquires and possible fraud.
By checking your credit report, you can discover possible inaccuracies in your credit history. Correcting
inaccuracies ensures that your credit report is current and correct, which in turn helps speed the processing of your
credit requests.
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- How often should I check my credit report?
- Many financial experts agree that you should check your credit report at least once a month. Creditors generally
send updates to the credit bureaus once every month. Therefore, your account information should be updated once a month
as well. If you are expecting an important change in one or more of your accounts, or if you are closely monitoring
your credit history, you may want to check your credit report more often.
All creditors do not send updates to the bureaus on the same day. The credit bureaus are constantly receiving updates.
There is no easy way to tell exactly when a creditor will send new information to the bureaus, or when the bureaus will
update their databases. However, it is common for the same creditor to update records on the same day of each month. Thus,
it is beneficial to choose the same day each month to check your credit report.
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- What is a credit bureau?
- A credit bureau, or credit repository, is an entity that gathers information about consumers' credit histories.
Your credit history includes information concerning your identity, your payment habits, and your public record. Credit
bureaus sell credit reports to credit grantors, such as banks, finance companies, and retailers. Credit grantors use
credit reports to determine whether or not a potential borrower is creditworthy.
There are three major credit bureaus in the United States: Experian, Equifax, and Trans Union. These three bureaus provide
nationwide coverage of consumer credit information.
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- How do the credit bureaus obtain information?
- Credit bureaus obtain identification and credit information from credit grantors, such as banks, retailers, and
collection agencies. Bureaus obtain monetary-related public record information directly from the court systems.
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- How long do the credit bureaus keep my credit information?
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- The credit bureaus keep your personal credit history for a period of approximately ten years.
- Closed or Inactive Accounts - 10 years from the date of last activity.
- Derogatory Accounts - 7 years from the date of original delinquency.
- Public Records - 7 years from the date of payment or indefinitely if the Public Record is an unpaid tax lien.
- Chapter 7 Bankruptcies - 10 years from date filed.
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- What if inaccurate information appears on my credit report?
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You have the right to dispute any misinformation on your credit report. You should begin the dispute process by
contacting the creditor responsible for the inaccuracy. The contact information for each of your creditors is listed
at the end of your credit report.
You can also dispute inaccurate information directly with the credit bureaus.
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- What is an inquiry?
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An inquiry occurs when an entity requests a copy of your credit report. These inquiries can be made by
credit-granting organizations, such as banks and retail stores, when you are applying for credit. Other inquiries,
from requestors such as insurance companies, potential employers, or rental housing agencies, can be made after you
have given the requestor your consent. The entity's name will appear on your credit report, allowing you to monitor
who accessed your credit history. When you personally access your credit report with TrueCredit, an inquiry will
not be recorded in your report.
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- What is a Public Record?
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Not all personal information is private—including Public Records. All federal, state, and county courts make certain
information public. This includes information about legal matters affecting your credit. It works like this: the
courts record legal information, make it public, put it on your credit report, and it becomes a "Public Record." The
most common types of Public Records include judgements against you in civil actions, state or federal tax liens, or
bankruptcies. Public Records stay on your credit report for seven years. If the Public Record is a Chapter 7
Bankruptcy, it will stay on your credit report for ten years.If you have a Public Record on your credit report, you
can take steps to ensure that you receive credit under the best possible terms. The most important step is to make
timely payments on your Public Records. Set a goal for yourself: Aim to have your Public Records paid-in-full by a
certain number of months or years. By sticking to your payment plan, you’ll prove to potential creditors that you are
a creditworthy consumer.
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- What is a Revolving Account?
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Revolving Accounts have open terms and varying payments. This means that your monthly payments will vary depending on
the balance of the account. Examples of revolving accounts include all major credit cards and credit cards from
department stores.
Facts about Revolving Accounts:
- When you open a revolving account, such as a credit card account, you are given a maximum amount that you can
charge--a limit.
- It’s up to you how much of your limit you will spend.
- The amount that you owe will change each month, depending on how much of your limit you have charged.
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- What is an Installment Account?
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Installment Accounts have fixed terms with regular payments. If you’ve ever had a car loan, student loan, home loan,
or personal loan, you know what we’re talking about. Let’s say your car payment is $300 per month—this means that
each month you pay the $300 installment.
Facts about Installment Accounts:
- You owe a certain amount of money.
- You have to pay back a set amount of that money each month and this set amount does not change.
- You also have a certain amount of time to pay off the loan.
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- How can I reduce/eliminate debt?
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With time, determination, and a Debt Elimination Plan, you can significantly reduce your debt or even be debt-free!
Here’s how…
Step 1: Develop an "Accelerator Margin" - an amount set aside monthly to pay extra bills. Suggested goal - 10% of
your gross income.
- Review your last 6-8 months of check registers.
- List each entry that offers any hope of reduction.
- Except bills or taxes, etc.
- If you have any "maybes," list them.
- Categorize each entry into major areas of your life.
- Entertainment, dining out, savings, shopping, etc.
- Review each entry and write out a plan of action of how to save in each area and how much will be saved.
- A sack lunch versus eating out saves $30 per week.
- Develop a strategy that will allow you to save on each entry, while aiming for a total of 10% of your gross
income.
Step 2: Develop Your Debt Elimination Schedule.
- Create a list of all debts.
- For each debt, divide the total amount that you owe by the monthly payment.
- Put the debts in order, starting with the lowest division answer.
- Each month make the current minimum payment on each debt.
- Except debt #1 (lowest division answer), to which you apply the Accelerator Margin (AM) from above.
- Repeat until debt #1 is paid.
- Pay the minimum monthly on all bills.
- Except debt #2, to which you apply the minimum monthly + AM + the former debt #1 payment.
- Continue until debt #2 is paid.
- Begin eliminating debt #3 with the minimum payment + AM + former debt #1 + former debt #2, and so on...
- Once all debts (including your mortgage) are paid, take the money you use to spend paying debt and start
yourself with a mutual fund!
Caution:
- You may be tempted to pay off the higher interest debt first – Don’t do it! The strategy is to pay off debts
with the shortest life span first.
- If you experience a financial emergency, stop the schedule temporarily until it is resolved. Then pick up
where you left off!
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- How can I improve my creditworthiness?
- By observing the following guidelines, you can influence your creditworthiness for the better:
- Pay your bills on time.
Prove that you are a reliable and consistent consumer.
- Check your credit report regularly and dispute inaccuracies.
Don't let your creditworthiness be lowered by inaccurate information.
- Watch your debt.
Keep your account balances below 75% of your available credit.
- Watch your available credit.
If you have multiple accounts, all with high credit limits, lenders may conclude that your access to
excessive unused credit could result in too much debt.
- Avoid excessive inquiries.
Inquiries mean that you have been seeking credit with various credit grantors, resulting in multiple
requests for your credit report. Creditors may view too many inquiries as a sign that you are experiencing
financial difficulties.
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- My spouse's accounts do not appear on my credit report. Why not?
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The credit bureaus maintain credit files on individuals, so your credit report contains payment information on credit
accounts that are in your name only. This is why your credit report is separate and unique from that of your spouse.
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- Why should I be concerned about credit fraud?
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Credit fraud is a growing problem, and it affects each and every one of us. When a credit card thief purchases goods
with a stolen card, it is the creditor that has to cover that cost. Creditors cover this loss by charging cardholders
higher interest rates.
Credit card fraud goes beyond the use of a stolen credit card. A thief can use your account numbers even when your credit
cards are safely in your wallet. You may not realize that fraudulent charges are being racked up on your card until you
notice charges, that you did not make, on your monthly statement.
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- How do I deal with credit fraud?
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If fraud is suspected, you should contact the credit bureaus immediately (see contact information below). The bureaus
have an established process that will help identify and stop fraudulent activities. In the case of fraud detection,
you must inform your creditors and request that they immediately halt all incoming transactions.
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- What is the Fair Credit Reporting Act?
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The Fair Credit Reporting Act (FCRA) is the federal law that governs the consumer credit reporting industry. This law
was enacted to protect the consumer's right to privacy. The FCRA outlines the situations or permissible purposes for
which a company or organization may request a consumer's credit report. You may obtain a copy of the FCRA from the
Federal Trade
Commission.
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- Am I eligible for a free credit report?
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You are eligible to receive a free copy of your credit report if:
- You have been denied credit, insurance, or employment within the past sixty (60) days as a result of your
credit history.
- You can certify in writing that you are unemployed and intend to apply for employment in the 60-day period
beginning on the date in which you made the certification.
- You are a recipient of public welfare assistance or have reason to believe that your file at the agency
contains inaccurate information due to fraud.
If you are a resident of Colorado, Massachusetts, Maryland, New Jersey, or Vermont, you may receive one free copy of
your credit report each year from the credit bureaus. If you are a resident of Georgia, you may receive two free
copies of your credit report each year from the credit bureaus.
Illinois law, 815ILCS505/2B.2 (Solicitations Regarding Records) :
MANY GOVERNMENT RECORDS ARE AVAILABLE FREE OR AT A NOMINAL COST FROM GOVERNMENT AGENCIES. CREDIT REPORTING AGENCIES
ARE REQUIRED BY LAW TO GIVE YOU A COPY OF YOUR CREDIT RECORD UPON REQUEST, AT NO CHARGE OR FOR A NOMINAL FEE.
- To obtain a copy of your credit report from Experian -
Mail request to: P.O. Box 949, Allen, TX 75002-0949
Or call toll-free (888) Experian (888-397-3742)
- To obtain a copy of your credit report from Equifax -
Mail request to: P.O. Box 740241, Atlanta, GA 30374
Or call toll-free (800) 685-1111
- To obtain a copy of your credit report from TransUnion -
Mail request to: 2 Baldwin Place, P.O. Box 1000, Chester, PA 19022
Or call toll-free (800) 888-4213
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- More questions regarding consumer credit?
Please
contact our Credit Specialists.
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