Smart consumer tips and strategies from Eyewitness News Online
Trying to buy a home or a car with bad credit can be very frustrating. Not only do you have to fight harder to have the loan approved, but you also risk paying a higher interest rate. If your spouse has poor credit, and yours is in good shape, it might make sense to take out the loan on your own. But, be careful. Taking on all the debt may hurt loan approvals in the future, because your debt to income value will be thrown off balance. It's important to understand your credit score...how it's formed and why it matters so much.
Making the Score
What is it?--Your credit score is a number that is the result of a formula used by the three major credit bureaus (Equifax, Experian, Trans Union). A combination of factors determines your score. The highest score you can get is 850.
Why does it matter?
According to Robin Holland, with Equifax, your score lets a lender know the risk they are taking when making you a loan. If your score is close to 850, they are relatively sure you will make your payments on time. The lower the score, the lower the odds.
You will pay more in interest if your score is low. That means you'll be paying more than someone with a high credit score for the same thing.
What's your number?
To find out what your credit score is, simply contact the credit bureaus. You can actually order your credit report twice a year at no cost.
What happens if you've always paid your bills on time and your credit report says something different? Credit reporting agencies (CRAs) are not immune to mistakes. So, it's important for you to stay on top of your report. That way, there will be no surprises when you're about to sign on the dotted line. When reading your report, you'll notice it contains four types of information:
Name Current and past addresses Social Security number Year of birth Current and previous employers Spouse's name, if you're married
Credit accounts or loans you have with:
Banks Retailers Credit card companies Other lenders
Public Record Information
This is any information that's in state and county records including:
Bankruptcies Tax Liens Monetary Judgments
Your credit report must contain a record of all creditors who have asked for your credit history within the past year. It also includes a list of people who have requested your credit history for employment purposes in the past two years.
Because more than one of the credit agencies may have a file on you, most financial experts suggest ordering records from all three. You can contact the three major bureaus at:
Equifax 1-800-685-1111 Experian 1-888-397-3742 Trans Union 1-800-916-8800
Fix All Mistakes
After you get your credit reports, make sure they're accurate. If you find any mistakes, contact the CRA immediately.
In writing, tell the CRA what you believe is inaccurate.
Include copies of documents that support your position. Don't send originals.
Send your letter certified mail.
Keep copies of your letter and all enclosures.
CRAs must investigate the items in question within 30 days, unless they consider your disputes frivolous.
When the investigation is complete, the CRA must give you the written results and a free copy of your report. Upon your request, the agency must also send a correction to anyone who received a copy of your report in the past six months. You can also have a corrected copy sent to anyone who received a copy of your report over the last two years for employment purposes.
If an investigation does not resolve your dispute, ask the CRA to include your statement in your file and in future reports.
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