A Six-Step Guide To Fixing Your Credit Report

So you finally heeded the advice of the experts and ordered a copy of your credit report only to discover a major error. Don't despair. Bankrate.com writer Cheryl Allebrand offers this step-by-step guide to fixing mistakes in your credit report:

Step 1: Gather your back-up materials. You already make a habit of holding on to financial records of everything likely to appear on your credit report for the next seven years, right? Good, because in order to set the record straight you'll have to prove your case. This will require providing the agency that compiled the report with copies of billing statements, payment records and any other documentation that supports your claim.

Step 2: Contact the credit-reporting agency. Once you've collected your evidence, you'll need to contact the credit reporting agency. (It will be one of three: Experian, TransUnion or Equifax.) The best way to do this is to send a letter of dispute via certified mail. Be as detailed as possible, but make sure the letter is no longer than one page. After the agency receives your letter, it is legally required to notify the other credit-reporting agencies, launch an investigation and contact the creditor who made the initial report.

Step 3: Contact the creditor. To expedite the process, go one step further and send a letter of dispute directly to the creditor who reported the error. If you choose to talk to a customer-service representative on the phone instead, don't assume that the situation has been resolved. Always ask the creditor to send you a letter describing the actions it has taken.

Step 4: Keep records of everything. It's important to keep a file of all payment records, receipts and billing statements relating to the error, along with copies of any letters you've sent to, or received from, the crediting-reporting agency and creditor.

Step 5: Follow up after 30 days. Once the agency receives your letter alerting it of the error, the creditor has 30 days to either verify or dispute the information. If the matter hasn't been resolved within this time, follow up with the credit-reporting agency. After the matter has been resolved, you are entitled to order another free credit report to ensure the changes have been made.

Step 6: If you can't resolve the situation, contact an attorney. If you've sent a letter of dispute and provided the credit-reporting agency with all of the available documentation and the error still hasn't been fixed, consider hiring a lawyer. Many of them are willing to take this type of case on a contingency basis, which means you pay only if you win the case, because the Fair Credit Reporting Act has a lawyer fee written in.

To learn more about your rights, visit the Federal Trade Commission's Web site: http://www.ftc.gov/credit.

How to fix your credit report

So you finally heeded the advice of the experts and ordered a copy of your credit report only to discover a major error. Don't despair. Bankrate.com writer Cheryl Allebrand offers this step-by-step guide to fixing mistakes in your credit report:

Step 1: Gather your back-up materials: You already make a habit of holding on to financial records of everything likely to appear on your credit report for the next seven years, right? Good, because in order to set the record straight you'll have to prove your case. This will require providing the agency that compiled the report with copies of billing statements, payment records and any other documentation that supports your claim.

Step 2: Contact the credit-reporting agency: Once you've collected your evidence, you'll need to contact the credit reporting agency. (It will be one of three: Experian, TransUnion or Equifax.) The best way to do this is to send a letter of dispute via certified mail. Be as detailed as possible, but make sure the letter is no longer than one page. After the agency receives your letter, it is legally required to notify the other credit-reporting agencies, launch an investigation and contact the creditor who made the initial report.

Step 3: Contact the creditor: To expedite the process, go one step further and send a letter of dispute directly to the creditor who reported the error. If you choose to talk to a customer-service representative on the phone instead, don't assume that the situation has been resolved. Always ask the creditor to send you a letter describing the actions it has taken.

Step 4: Keep records of everything: It's important to keep a file of all payment records, receipts and billing statements relating to the error, along with copies of any letters you've sent to, or received from, the crediting-reporting agency and creditor.

Step 5: Follow up after 30 days: Once the agency receives your letter alerting it of the error, the creditor has 30 days to either verify or dispute the information. If the matter hasn't been resolved within this time, follow up with the credit-reporting agency. After the matter has been resolved, you are entitled to order another free credit report to ensure the changes have been made.

Step 6: If you can't resolve the situation, contact an attorney: If you've sent a letter of dispute and provided the credit-reporting agency with all of the available documentation and the error still hasn't been fixed, consider hiring a lawyer. Many of them are willing to take this type of case on a contingency basis, which means you pay only if you win the case, because the Fair Credit Reporting Act has a lawyer fee written in.

Stocks Mixed On Short-Term Credit Report

The Dow Jones industrial average slipped Thursday as investors looked past an upbeat report on the economy and instead focused on data showing weakness in a crucial corner of the corporate-lending market.

That data, from the Federal Reserve, showed that the commercial paper market -- where companies go for short-term loans -- remained abnormally tight, raising concerns that the economy would be harmed if businesses are forced to reduce spending.

The Dow, comprising 30 blue-chip stocks, fell 50.56, or 0.4 percent, to 13,238.73. The Standard & Poor's 500-stock index, a broader market measure, fell 6.12, or 0.4 percent, to 1457.64. The tech-heavy Nasdaq composite index, rose 2.14, or 0.1 percent, to 2565.30.

The total amount of corporate commercial paper outstanding fell $62.8 billion during the week ended Wednesday, to $1.98 trillion, the Fed said. The drop followed declines of more than $90 billion in each of the previous two weeks as companies had trouble finding buyers. Since Aug. 8, the day before turmoil in the credit market hit financial markets around the world, the amount outstanding has dropped 11 percent.

Much of the decline has come from commercial paper backed by assets, such as mortgages, subprime loans and credit card debt. The total amount outstanding of asset-backed commercial paper, which accounts for half of the market, fell $59 billion during the week, to $998 billion.

Companies that have relied on such short-term credit include mortgage lenders Countrywide and H&R Block, Wall Street firms Bear Stearns and Lehman Brothers, and Capital One, the Virginia-based bank, according to Thomson Financial.

"No one is stepping up to the plate to purchase this paper," said Frank Scaturro, vice president of corporate advisory services at Thomson Financial. If a business needs "capital for day-to-day expenditures, whether that's to do a buyback or run your base of operations . . . it may cause you to rethink certain strategies because you can't tap the credit markets as easily."

The next big market event will come Friday morning when Fed Chairman Ben S. Bernanke is to give a speech in Jackson Hole, Wyo. Investors will listen for clues to what the central bank's policymaking committee will decide when it meets Sept. 18. The market is counting on it to cut the federal funds rate, which would lower borrowing costs for consumers and businesses, which in turn could help stocks.

So far, the Fed has responded to the credit market turmoil in several ways, but has not cut that benchmark short-term interest rate. On Thursday, the central bank put $10 billion more into the financial system, bringing the total of amount of such injections to $147 billion since credit markets began their fall on Aug. 9.

The central bank also has cut the rate at its discount window, where banks go to borrow directly from the Fed. Data released by the agency Thursday showed this borrowing rose for the second week in a row, with daily borrowing averaging $1.32 billion for the week ended Wednesday. That amount surpassed last week's average of $1.2 billion, which had been the highest since the Sept. 11, 2001, attacks.

Shares in all sectors ended lower Thursday, except for tech stocks, which rose by 0.4 percent. Among the movers were Motorola, whose shares rose 1.7 percent, to $16.75, after Lehman Brothers upgraded the phone maker's stock.

After the market closed, Dell reported second-quarter profit that beat analysts' expectations. Shares of the computer maker rose 2.2 percent, to $28.46, before the earnings report.

The financial sector continued to be a drag. Freddie Mac shares, the mortgage funding giant, fell 5 percent, to $60.07, after the company reported that its quarterly profit fell by nearly half in part because it had to set aside more money to cover expected losses from defaults on loans.

Adding to investor nervousness about the state of the housing and mortgage markets was an analyst report from Lehman Brothers, reduced its earnings forecast for four of Wall Street's biggest investment firms through 2008. Shares of the companies named in the report -- Goldman Sachs, Merrill Lynch, Morgan Stanley and Bear Stearns -- all fell Thursday.

"The reality, in our view, is that 3Q earnings will be significantly impacted by the dislocation in the credit and asset-backed/mortgage markets," the report said.

Also Thursday, traders and money managers largely ignored a favorable report on the economy, which measured activity from April to June, before much of the turmoil in the financial markets took place.

The report from the Commerce Department showed that gross domestic product rose at a seasonally adjusted annual rate of 4 percent in the second quarter, but analysts said it shed little light on how the economy would look given the problems in the credit market.

"Most people are probably just totally discounting the second quarter report as, 'That's in the rearview mirror and we're in a whole new ball game,' " said James W. Paulsen, chief investment strategist for Wells Capital Management.

More telling, some analysts said, was the weekly unemployment-claim figures released Thursday. Claims rose by 9,000, to 334,000, in the week ending Saturday, the Labor Department said.

Your credit, your number

If you've ever applied for credit or insurance, chances are the lender or insurance company checked your credit score. For years, creditors have been using credit scoring systems to determine if you'd be a good risk for credit cards, auto loans, and mortgages. Credit scores are also often used by employers and utilities.

So what is credit scoring? It's a system creditors use to help determine whether to give you credit. It also may be used to help decide the terms you are offered or the rate you will pay for the loan.

Lenders can use one of many different credit-scoring models to determine if you are creditworthy. Different models can produce different scores.

However, lenders use some scoring models more than others. The FICO score is one such popular scoring method.

The FICO scale runs from 300 to 850. Generally, the higher your score, the better rates you'll be offered. Those with a score of 720 or higher will get the most favorable interest rates on a mortgage, according to data from Fair Isaac Corp., a California-based company that developed the first credit score as well as the FICO score.

According to Fair Isaac, 58 percent of Americans have a FICO score of 700 or higher.

The Fair Credit Reporting Act (FCRA) requires each of the nationwide consumer reporting companies -- Equifax, Experian, and TransUnion -- to provide you with a free copy of your credit report, at your request, once every 12 months.

To order your free annual report from one or all the national consumer reporting companies, and to purchase your credit score, visit www.annualcreditreport.com, call toll-free 877-322-8228, or complete the Annual Credit Report Request Form and mail it to: Annual Credit Report Request Service, P. O. Box 105281, Atlanta, GA 30348-5281.

Only one website is authorized to fill orders for the free annual credit report you are entitled to under law -- annualcreditreport.com. Other websites that claim to offer "free credit reports," "free credit scores," or "free credit monitoring" are not part of the legally mandated free annual credit report program. In some cases, the "free" product comes with strings attached.

For example, some sites sign you up for a supposedly "free" service that converts to one you have to pay for after a trial period. If you don't cancel during the trial period, you may be unwittingly agreeing to let the company start charging fees to your credit card.

FCRA also gives you the right to get your credit score from the national consumer reporting companies. They are allowed to charge a reasonable fee, generally around $8, for the score. When you buy your score, often you get information on how you can improve it.

Typically, your credit score is most influenced by two factors: how you pay your debts and how much debt you owe. For example, late payments on loans, a past bankruptcy, debt collections or a court judgment ordering you to pay money as a result of a lawsuit will negatively affect your credit score.

Lenders want to be sure that the debt you owe is manageable. One example: Lenders get concerned if you have a significant amount of debt compared to your income --- say, if what you owe each month on all loans and credit cards exceeds one-third of your monthly income.

Other factors that can affect your credit score include how long you've used credit, how often you've applied for new credit and whether you've taken on new debt.

While federal law requires lenders and other companies providing information to credit bureaus to give accurate information, mistakes do happen. So, when you look at your report:

* Make sure it accurately reflects how you have paid your bills. If you always pay your credit card and other loans on time, but your credit report erroneously shows late payments, you'll want to correct that.
* Verify that all the accounts listed are yours, especially if you have a common name or you share a name with a relative (such as John Doe, Jr.).
* You also want to be careful that an identity thief hasn't opened new accounts in your name to commit financial fraud.
* Look for accounts you don't use and may have forgotten. You may be able to raise your credit score by closing unnecessary credit card accounts.

SOURCES: Bankrate.com, Federal Trade Commission, Federal Deposit Insurance Corporation

Clients report credit-fix swindle

The Better Business Bureau warned consumers Monday that it had received complaints that a Hickory-based grant-writing and credit-repair company was taking customers' money without providing any services.

The company, Accucredit Inc., guaranteed customers that it would fix bad and poor credit ratings if they paid fees of up to $1,000 in advance, said Janet Hart, a spokeswoman for the Southern Piedmont BBB.

Accucredit has also done business as Grant Writing Plus Inc., promising customers thousands of dollars in governmental grants in exchange for initial fees as high as $4,000, Hart said.

Accucredit's Web site was not working Monday morning, and the company's phone had been disconnected.

The complaints allege that the company took thousands of dollars from consumers and has not provided them with improved credit ratings or grant money.

In both cases, Hart said, the company guaranteed a full refund if a grant wasn't received or credit wasn't improved. But the company did not pay any refunds, she said.

Last month, Attorney General Roy Cooper also ordered Accucredit and Grant Writing Plus to stop charging upfront fees, said Department of Justice spokeswoman Noelle Talley.

Cooper's office, Talley said, has received 28 complaints this year from Accucredit and Grant Writing Plus customers who have lost a total of $73,000.

Federal law prohibits companies from charging fees in advance for fixing bad credit, according to the Federal Trade Commission.

Hart said the BBB has received 19 complaints about the company, owned and operated by Ken Yang and Pao Yang, during the past three years.

The Yangs, she said, have also been linked to two other credit service companies, National Credit Solutions and Carolina Credit Repair of Hickory.

Though most of the complaints are from the Southeast, Hart said, the bureau has also received complaints from customers in Utah, Colorado, Illinois, New Mexico, Wisconsin and Oklahoma.

Some customers, like Jessica McFarling of Huntersville, paid thousands of dollars in hopes of starting small businesses. McFarling, 38, and her husband were planning to open a freight trucking business, and Accucredit guaranteed them $199,000 in government grants, she said.

They signed a contract with the company, saying they would pay $9,000 in monthly payments of $750, which was automatically taken from the couple's checking account, McFarling said.

"We never got any money, we just paid them money," she said. "It sounded so legitimate when they were talking about getting governmental money and grants."

They had paid $3,000 when her husband decided to check out the company on the Better Business Bureau's Web site and noticed numerous complaints.

McFarling immediately closed the checking account, she said, and plans to sue the company to recoup the money they lost.

"I live in a two-bedroom apartment," she said. "I can't afford to lose $3,000."

Protect Yourself

The federal Credit Repair Organizations Act helps protect consumers from companies that promise to fix bad credit in exchange for upfront fees. North Carolina and South Carolina have also incorporated laws saying how much companies can charge after services have been completed.

Ways to remove Unauthorized Credit Inquiries From Your Credit Reports

Some inquiries do reduce your credit score, but not in all cases. Some inquires which are not a problem are Inquiries regarding court orders, Order of your own credit report from authorities, applying for a job, applying for home owner’s, auto or rental insurance etc. Inquiries that do have a negative effect on your credit score are applying for a government license, allowing someone to access your credit, collection of debts. The credit score is calculated not only keeping in view the current unpaid bills but the complete account history and accordingly they analyze whether their money with you is safe or not and what more can be offered to you.

How much can a credit inquiry lower your credit scores?

Knowing that the credit inquiries have an adverse effect you will definitely try and evaluate what actually the results are. There is no correct answer to this but one can make an assumption. Age factor comes into play here. A person with 60 years of credit history will be placed differently as compared to a beginner. Someone who has already faced a financial crisis will be treated differently. According to the studies, approximately 12 points are lost in case of bankruptcy.

Unauthorized Inquiry

This is the case when somebody tries to access your report without your consent. These inquiries have the worst effect on credit scores, so they must be handled seriously and tactfully. If somebody tries to get inquiry of your account you can write to the authorities asking for a proof. If they are unable to provide results you can post a conflict. You can even sue the company in case they are not able to provide you with proofs. All you have to do is make three copies of a dispute letter and mail it to all the credit reporting agencies. Then the authorities will need to act accordingly, inquire the lender and let you know about all the details. In case the authorities fail to send to a complete report (called as 'willful noncompliance), they are in trouble but this doesn’t happen a lot especially in the case of reputed companies.

Remedies to inquiry disputes

In case you report a dispute to the company and they fail to respond back and clarify their point, then you have all the reasons to sue the company. One must keep a few things in mind before going on with this step like keeping a track of your credit scores just before the incident and after it. This will definitely help you claim the damages clearly and strongly. Say your disputed inquires cause you a reduction in your credit score from 580 to 568, the authorities will have to pay for it if you are able to prove their default in the case. Even the company itself can track back the complete information but its better for you to keep all information with you before hand. So if you are looking for a way to boost credit score ratings to provide you with a much sounder financial base, you must follow the instructions.

One of the agencies has an on-line reporting system, but it is not very user friendly. The window is tiny and in order to read a sentence, you have to scroll from left to right. The best way to notify the credit bureaus of your disputes is to send them a letter. Letter writing suggestions are included in many books with credit repair tips. but you can view a perfectly usable example of a dispute letter at the Federal Trade Commission's credit website.

Farmers to get hassle free credit cards

The government has fixed criteria for issuing credit cards to farmers in an effort to help them access adequate and easy credit.

The norms that government fixed involve commercial banks, regional rural banks and cooperative banks that issue Kisan Credit Card (KCC) to farmers.

Minister of State for Finance Pawan Kumar Bansal told parliament today the norms would help farmers get timely credit in a hassle free and cost effective manner. He was replying to a question.

According to the norms the credit limit of a farmer is fixed on the basis of his operational land holding, cropping pattern that he follows, agriculture practices adopted in his area, scale of finance approved by District Level Technical Committee and the repaying capacity of the farmer.

The Banks have robust internal grievance redressal mechanism to address all customer complaints, including those relating to KCC, said a ministry press release.

Various instructions have been issued to banks on dealing with complaints. The banks are also instructed to attend to grievances related to KCC loans. Besides, National Bank for Agriculture Rural Development can also be approached with complaint regarding KCC, said the release.