CREDIT REPORTS

There is a new FICO scoring system in town that brings with it some improvements that potential borrowers just might enjoy. While it doesn’t come with a fortress of bells and whistles, it does have a few benefits that can help your FICO score improve some.

Why Make Changes?

In these trying times of reduced credit and liquidity, consumers are becoming increasingly aware of how important their credit reports are. Credit scores are often considered the gauge of your financial health – and this affects the willingness of financial institutions to provide you with a low rate loan. If you are fully invested in improving your credit score, you need to know that a negative item on your credit report can follow you around for more than seven years!

On average, negative credit information should automatically drop off your credit report after seven years time, and after you’ve payed off the debt. However, that is not always the case. Consumer reporting companies can a tap into:

Very often, settled accounts can remain on a credit report for several years. The good news is that there are ways to have these accounts removed – you just have to know what to do.

Why They Are Still There

So you’re probably wondering why in the world after you’ve held up your end of the bargain and paid off a debt, it still shows up on your report. Unfortunately, there is no rule that says that settled accounts have to be removed from your credit report after you’ve settled your debt. In fact, the only time that, by law, an account must be removed is 7 years after the original delinquency. And with a bankruptcy, the information can remain on your report for up to 10 years. The account will be marked as “paid” or “settled” but it will sit there, alerting future lenders of your prior delinquencies.

How to Have Them Deleted

Your credit report is often viewed by a number of agencies and companies; some of these views are known as hard pulls and soft pulls. Also known as inquiries, when a company or agency “pulls” information from your report, they are trying to obtain information that can help them make a decision regarding an interest that they have in you.

But hard pulls and soft pulls don’t stop at just providing information to interested parties; they also have a very direct effect on your credit report and score. So to give you a better idea of what these actions entail, let’s look more closely at their meanings.

If you know your credit report contains details that may result in you not being approved for a loan, car or home, it may be time to contact your creditors to make some repairs. It may feel a little scary to contact these agencies, especially if you don’t have the full amount to pay them; however, they are usually prepared to strike a deal with you, so it’s truly worth the effort.

Why You Should Clean Up Your Credit Report

While your credit report may divulge a lot of information that you would not like shared with lenders, there is also information that can’t be reported to credit bureaus. Though the list isn’t extremely long, it may provide you a little be of comfort in knowing that not all of your information can be shared with the lenders.

What Can’t be Reported

If you’re wondering whether collection accounts from companies or agencies you owe will show up on your credit report, the answer is maybe. It is typically up to the company’s discretion to determine when or if they will report any negative activities to one or all of the three credit bureaus. However, there is usually a better chance than not that your accounts will show up.

Why Are Collect Accounts Reported?

Credit consumers today are more aware than ever before of the necessity of checking their credit reports regularly and monitoring their accounts to guard against identity theft. To assist them, a number of credit monitoring service companies have sprung up, claiming to offer some protection against identity theft and help you keep track of your credit report and credit score. For their services, credit monitoring services usually charge a monthly fee, which could be anywhere from $15 to $130 in some cases.

What is Credit Monitoring?

The credit bureau Experian announced that it will be terminating its agreement with Fair Isaac that allows FICO scores to be available to consumers based on its data. The news comes as a surprise to consumers who rely on access to this data to judge their own creditworthiness.

Why Are They Doing It?

After 6 years of partnering up with Experian, representatives from Fair Isaac are scratching their heads in confusion as to why the credit bureau made the decision. However, the credit bureau explains that while it is eliminating access to FICO score information, it will still allow access to its own data-generated VantageScore. The only problem is that very few lenders rely on this score to make lending decisions, which means access to this score won’t help provide the information consumers need to make borrowing choices.

The Fair and Accurate Credit Transactions Act (FACT Act) is a law that was enacted in 2003. Under the FACT Act, consumers are entitled to receive a free copy of their individual credit report from each of the three major credit bureaus – Experian, Equifax, and Transunion – once in any 12 month period. This free credit report is available to you at the official site, www.annualcreditreport.com.

Up until recently, it was very difficult to see your own credit report. Consumers were not entitled to a free copy of their credit report unless they had recently been turned down for credit. If you were turned down, you had to write to each one of the three credit bureaus – Experian, Equifax, and Transunion – with a copy of your letter of denial, and request a copy of your credit report in writing from each agency. If you were not turned down for credit, and you wanted to see your own credit report, you would have to pay for it.