Your credit report
It is a record of your credit activities, or can be considered a library of your payment history. It compiles, collects, stores, and sells information on your financial history and past use of credit. (Yes, I said they sell your information. Look at your junk mail that contains credit card offers. Companies buy that information from the credit companies.)
Your credit list all of your credit card accounts and loans, the balances, as well as your payment history. It also shows if any action has been taken against you because of unpaid bills such as a collections, public record information such as lawsuits foreclosures, bankruptcy, and judgment filings. Because businesses use this information to examine and evaluate your credit worthiness for credit applications, car purchases, insurance, and employment, it’s important that the information in your report is complete and accurate, especially if you plan to make a big purchase like a home.
The Fair Credit Reporting Act (FCRA), enforced by the Federal Trade Commission (FTC), is designed to promote accuracy and ensure the privacy of the information used in consumer reports. Under the FCRA, both the credit reporting agency (CRA) and the organization that provided the information to the CRA (usually the credit card company) must correct any errors or incomplete information in your report.
If you do encounter a mistake on your credit report, several steps need to be taken to correct the matter:
1. The first thing to do is get a copy of your credit report from each of the three major CRAs: Equifax, http://www.equifax.com; Experian, http://www.experian.com; and TransUnion, http://www.tuc.com. You have a right to get a free copy from them once a year.
2 In a written letter, tell the Credit Reporting Agency (CRA) what information you believe to be inaccurate. Include copies (not originals) of documents that support your position. Provide your complete name and address, identify each item in your report you dispute, and request deletion or correction. Be sure to make copies of your dispute letter and enclosures. Also put an exact copy of the letter and attachments in the mail to the creditor. Their address will show up on the credit report. The creditor has to respond to you and you want to keep that documentation in your file, in case they make a mistake in the future.
3. Send your letter by certified mail, return receipt requested, so you can document what and when the CRA and creditor received by them.
4. The Fair Credit Reporting Act (FCRA) mandates that all CRAs reinvestigate the items in question — usually within 30 days — unless they consider your dispute frivolous. They also must forward all relevant data you provide about the dispute to the creditor. After the creditor receives notice of a dispute from the CRA, it must investigate, review all relevant information and report the results to the CRA.
5. If the disputed information is found to be inaccurate, the creditor must notify all nationwide CRAs so they can correct this information in your file. Disputed information that cannot be verified must be deleted from your file.
6. When the investigation is complete, the CRA must give you the written results and a free copy of your report if the dispute results in a change. If an item is changed or removed, the CRA cannot put the disputed information back in your file unless the creditor verifies its accuracy and completeness, and the CRA gives you a written notice that includes the name, address, and phone number of the credit card company.
7. If you are correct — meaning the information you disputed is found inaccurate — the creditor cannot use it again. Further, at your request, the CRA must send notices of corrections to anyone who received your report in the past six months.
Collections, charge offs, and judgments, OH MY! These are another entirely different animal found in the credit jungle, and they are not easy to tame. You might want to get professional advice before you venture out to hunt them, so give me a call. I have a few contacts in the credit repair jungle that can help you!
Collections - If you pay them off today, they will lower your credit score for at least 90 days because the date you pay it off will show current activity. Even though you pay it off, it equates to a brand new "bad debt" notice of activity on the collection. You can requests the collection be removed from your credit permanently when you pay it off, but not all credit companies will comply. It's called a "Pay to Delete". And, they certainly take their good old time removing it as well. You will need to request a letter stating it is paid in full and they are permanently deleting it from the credit bureau.
Charge offs - These are usually turned over to a collection agency and the charge off will show "0". They have written off the debt...but that doesn't mean you don't owe it to someone else.
Judgments - they are usually required to be paid off prior to closing a mortgage. The reason they need to be paid is because the creditor can go back to court and ask they put a lien on the property and/or garnish your wages in order to collect on the judgment. That being said, you may not have income to pay the mortgage in that case.
Feel free to call me 941-504-14145 and we can go over your credit and other items on your credit BEFORE you start correcting your credit. What you think is a positive move, may be a real set back as far as a credit score goes. I am not a credit repair person, and once I review your credit, we can discuss what problems are facing you with your credit.
Call me and I will pull your credit from all 3 bureaus and get true "mortgage scores" rather than those you find on Credit Karma or other sites. There are a variety of different scores for cars, credit cards, insurance, and mortgages, so if you thought you had a 720 score, it could be lower for a mortgage.
It's a jungle out there and I will guide you through this home ownership process to make your dream come true! Email me at Sherry@SherryBitner.com or call or text me at 941-504-1445.