1. If you spend more than 50% of your credit limit every month, this indicates to the Credit Bureau that you do NOT have enough cash on hand to meet your monthly expenses. This will identify you as a high credit risk and will actually reduce your credit score by 60 - 70 points overnight (Fair
Isaac).
2. If you miss 1 or 2 payments on your credit card debt, the issuing company will skyrocket your interest rate to a whopping 27% -
30%!
3. Out of a random sample of 3 million American consumers (included in Experian's National Score Index), 51% of them have at least 2 credit cards and 14% of them have 10 or more credit cards.
Correcting Your
Credit Report
Nothing in this world will ever run without a hitch – at
least, not so long as humans are pulling the strings. If you
value your credit, then it is important to keep tabs on your
report regularly and dispute errors. Although credit reporting
agencies (also called credit bureaus) should only report
accurate and current information, the final say and ultimate
responsibility lies in your hands to make sure of it. You also
have the burden of proof if you ever have to appear in court, so
make sure you leave a clear and unmistakable paper trail. In
other words, send everything via certified mail, make copies of
every document mailed, and keep detailed records of every action
you take.
Video: Dealing with credit report
inaccuracies
1. Get Your Credit Reports
If you aren't already keeping a close eye on your credit
report, you may not become aware of a problem until you are
denied credit. Whether you are preventing that situation or
trying to fix it, the first thing is to get your credit reports
from TransUnion, Equifax, and Experian – the
major credit bureaus.
You can get your report from each company once each year at no
charge through Annual Credit Report Service, or pay a fee to
receive it directly from the bureaus. Just keep in mind the
information on each report since your creditors may not report
to every bureau.
2. Understand What Can Be Removed
Just because something is negative doesn't mean it should not
be on your report. Your credit report must contain all credit
and debt data so long as it is accurate and up-to-date. You may
dispute wrong information, duplicate information, and old
negative information. “Wrong” information includes accounts you
never opened, lawsuits you were never a part of, and data
relating to someone else's name. Duplicate information sometimes
happens out of error – you may wish to have it removed so
creditors don't count it twice. Last, most information on your
credit report should not be older than seven years. Some data,
such as bankruptcy, student loans, and child support arrears
stay longer. Check your state's statute of limitations on those
items, as they can vary from state to state.
3. Take Action to Remove Inaccuracies
You will need to file your dispute with the bureau via website, phone, or mail. They will need
some kind of identification (typically your social security
number), a description of the inaccuracy, and what the
information should reflect. If you have any documentation on
your side (like court papers or copies of cashed checks) you
should include those too – and don't forget to make copies and
send it via certified mail. After 30 days a dispute notation
should have shown on your credit report and the creditor given a
chance to prove their case. If the creditor fails to verify the
information, the bureau will have to stop reporting it – but
that does not mean it has been deleted. If you receive a letter
stating the item has been deleted along with an updated copy of
your credit report, then the item has been permanently purged
from your report. Otherwise, do not assume the change has been
made.
Video: The impact of inaccuracies on your
credit reports
Important Last Steps
Most of the time the above steps are enough to remove
inaccuracies. However, if your case is different, write a letter
to the creditor explaining why the information they are
reporting should be changed along with any documents which
support your case. If you still haven't been able to get the
change you would like, you can write a letter of explanation
which will be attached to your report. This is 100 clearly
written words explaining your side with supporting facts and
sent to the three major credit bureaus. You never know, those
100 words could make or break your credit application.
Just because something is negative doesn't mean it should not
be on your report. Your credit report must contain all credit
and debt data so long as it is accurate and up-to-date. You may
dispute wrong information, duplicate information, and old
negative information. “Wrong” information includes accounts you
never opened, lawsuits you were never a part of, and data
relating to someone else's name. Duplicate information sometimes
happens out of error – you may wish to have it removed so
creditors don't count it twice. Last, most information on your
credit report should not be older than seven years. Some data,
such as bankruptcy, student loans, and child support arrears
stay longer. Check your state's statute of limitations on those
items, as they can vary from state to state.
