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The Secrets of Credit Repair

The Secrets of Credit Repair

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Published by: lvn_reviewer on Nov 03, 2008
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Mastering and Repairing Your Credit Report
The Secrets Of Credit Repair
A Consumer Guide to Real Credit RepairLexington Law Firms
Chapter One: The Secrets Of The Credit BureausWhat is a Credit Report? What Kind of Information Appears on a CreditReport? How Long Will Negative Information Stay on my Credit Report?How does Bad Credit Affect a Mortgage? Can I See My Credit Report? HowMuch Bad Credit Does it Take for Me to be Denied Credit? Who Looks atMy Credit Report? 10 Favorite Myths about Bad Credit What is a CreditReport?Whenever you apply for any type of credit or financing, a credit report ispulled from at least one of the three major credit bureaus. While there arehundreds of smaller credit bureaus around the country, virtually everycredit bureau is affiliated with either TRW, Trans Union, or Equifax. Thesecredit bureaus collect and maintain information on the majority of Americans, but they are not affiliated with the government in any way.The credit bureaus are for-profit corporations and they sell your personalinformation for money. They receive your personal information throughthe same lenders who grant you credit.The credit bureaus have agreements with each of these credit grantorsthat require the credit grantor to inform the credit bureau of everythingthat occurs in your relationship with the credit grantor. If you make a latepayment, the negative credit listing is quickly reported to at least one of the major credit bureaus and is added to your credit history. Creditreports are not just a record of how you are currently managing yourcredit accounts. Credit reports are histories of everything you are doingwith your credit now, and everything you have done in the past.The credit bureaus gather this information, list the information on yourcredit report, then sell it to other credit grantors whoosh to see your credithistory before they decide to lend you money. The credit grantors whoreview your credit are especially interested in any negative credit. If youhave shown any tendency to pay late, or to disregard your financial
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Mastering and Repairing Your Credit Report
commitments in the past, the creditors' computers will immediately rejectyour application. Exactly like when you were in grade school, your creditreport is your financial report card to the world.What Kind of Information Appears on the Credit Report? Merchant TradeLines These include all regular credit lines, such as department storecards, auto loans, mortgages, and credit cards. If there is any history of late payment, or if the trade line was included in the bankruptcy, chargedoff, or put into repossession, the listing will be considered negative by allcredit grantors. Collection Accounts When an account is referred tocollections because of delinquency or because of a bad check, this appearson the credit report as a collection account. Collection accounts canappear as paid or unpaid accounts.Any type of collection account, whether paid or not, is considered verynegative by all credit grantors. Court Records Court records includebankruptcies, judgments, liens, divorce, satisfied judgments, and satisfiedliens. All court records, including satisfactions, are considered verynegative by all credit grantors. Inquiries Every time a potential creditgrantor looks at your credit file, a credit inquiry appears on at least one of your credit bureau reports. If the number of inquiries is very few over thelast two years, then there may be no negative effect on your creditworthiness. However, if there are many recent inquiries showing on yourcredit report, credit grantors will become nervous and you will probably bedenied.How Long will Negative Information Stay on my Credit Report? The FairCredit Reporting Act (FCRA) requires that most negative credit items bedeleted from your credit bureau file in no more than seven years, exceptfor bankruptcy which can be reported up to ten years. These are the timelimits for reporting negative credit. The creditor or credit bureau canchoose to have the negative credit information whenever they please.Inquiries remain on the credit report for two years.How Does Bad Credit Affect a Mortgage? Would you believe that it isusually much harder to qualify for a gas card than it is to qualify for ahome loan? Like many, you may have already disqualified yourself frombuying a home due to bad credit. Little do you know, you may beconsidered an "A" buyer by many brokers and lenders. Even if your bad orinsufficient credit disqualifies you as an "A" buyer, a home loan atstandard interest rates may still be within your reach.Homes are very secure collateral. Because of this, the lenders feel morecomfortable lending you money against the property. As opposed tounsecured credit lines, the lender will be primarily interested in your job
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Mastering and Repairing Your Credit Report
security, debt to income ratio, and ability to pay a reasonable downpayment. Your credit report will only represent minor role in yourmortgage approval.Can I See My Credit Report? Most credit grantors are not allowed by thecredit bureaus to show you your own credit report. But, you can purchaseyour credit report from the credit bureaus for a fee. Once you receive yourcredit report, you may find that you cannot read it because theinformation is listed in an unfamiliar code. Trans Union and Equifax creditreports are very difficult to interpret and understand. TRW credit reports,however, are quite easy for most people to read.How Much Bad Credit Does It Take for Me to be Denied Credit? As youmay have already experienced, as little as one small late pay listing willbring credit denials at every turn. It is a myth that a large amount of positive credit can outweigh some negative credit. Any negative creditwhatsoever will become a substantial credit obstacle in almost every case.Who Looks at My Credit Report? With the passing of each year, your creditreport is used more and more often as a yardstick to measure yourcharacter. Prospective collectors will always review at least one of yourcredit reports before granting you credit. Today, it is increasingly commonfor insurance companies to review your credit before extending auto orhealth insurance. Many employers now check credit before they consideryou for a position. If you rent, you may have already been through acredit check to determine your worthiness as a renter.10 Favorite Myths about Bad CreditMyth #1 When I pay off a past-due account, such as charge off orcollection account, it will show "paid" and will no longer be negative. It ispractically impossible to restore your credit without somehow satisfyingyour outstanding debts. However, the act of paying off a debt actuallyhurts your credit. Negative credit is allowed to stay on the credit report fora maximum of seven years, except for bankruptcy which may remain upto ten years. This seven year clock begins ticking on the "date of lastactivity," or, in other words, when the last action took place on theaccount. By paying an outstanding, delinquent debt you will change theaccount status to "paid collection," "paid was late," or "paid was chargedoff"-- which will stand out as a very negative listing. Furthermore, you willcreate a new date of last activity on the day you settle the account. Theseven year clock will reset and begin all over again. When you haveoutstanding debt, it is almost always prudent to seek professional aid sothat you may settle your debts without further damaging your credit (seeShould I Use a Professional?)
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