How to Safeguard and Fix Your Credit and Avoid Credit Problems
When a lender is determining whether or not to extend credit to you, creditors generally focus on the type of credit history you have established. Since credit history is what is used to determine whether to extend additional credit, it is important that you take care of your current credit so that no blemishes are reported to the credit bureaus. Having blemishes on your credit reports or even having too much credit, could result in your credit scores being lowered.
Three of the largest credit bureaus include:
Trans Union
PO Box 403, Springfield, PA 19064
Phone: (800) 888-4213TRW/Experian
PO Box 2106, Allen, TX 75013
Phone: (800) 422-4879Equifax
PO Box 740241, Atlanta, GA 30374
Phone: (800) 378-2732
What does a credit report contain?
There are several items that appear on a credit report: personal information, such as your name, current and previous addresses and social security number; previous credit and loans from department store cards, auto loans, mortgages, and credit cards; court records, including bankruptcies; and credit inquiries, which lists when and where you apply for credit. The information that is listed in the credit report gives creditors the information needed to determine whether or not you would be a good credit risk.
How to build credit history and establish credit
If you have not yet established your first credit account or loan, this is where you should start in order to build credit history. By not establishing some type of credit, creditors do not have any information when determining whether or not to extend credit. So, if you have a steady income and you have lived in the same area for a year, you might want to try to apply for credit with a department store. Or, you may try borrowing a small amount from your bank. You may find that the credit standards are not as tough to meet as they would be with a larger credit lender.
If you do not think that you could be approved for credit on your own, perhaps you could ask someone that has a credit history to be a co-signer for your account. A co-signer, is an individual who would be responsible to re-pay the debt if you do not. Having a co-signer, might improve your chances of getting approved for credit, but once you have repaid the debt, you should try to obtain credit on your own.
If you have been married and are now divorced or widowed, you also may be in the position that you have no credit history, particularly if your spouse's name was the only one reported on your shared credit accounts. If you have had shared credit accounts with a former spouse, you should talk to the credit bureau and ask that these accounts also be listed under your name. Credit bureaus are not required to add accounts to your file, but many of them will include the information if you request them to do so. There may be a small fee the credit agency may charge to make the change to your file.
If you are currently married and share a credit account with your spouse, you should request that the creditor report the credit information in your name and your spouse's name. This way, you will be creating a credit history of your own.
If you get rejected for credit, you should find out why. There may be reasons other than lack of credit history. Your income may not meet the creditor's minimum requirement or you may not have worked at your current job long enough. A problem such as this might need only time to resolve. You could wait for a salary increase and then re-apply, or you could simply apply with a different creditor. Whatever you decide to do, it's best to wait at least six months before making each new application. Credit bureaus record each inquiry into your credit history. Some creditors may deny your application if they think you are trying to open too many new accounts too quickly. They might also think you have too much credit available to you.
Repairing bad credit
By law you are entitled to be able to correct any inaccurate information that appears in your credit report. If a creditor rejects your application because of negative information in your credit report, it must identify the credit bureau that it got the information from. At your request, the credit bureau must disclose the contents of your credit file. If you act within thirty days of being turned down, you will not be charged for this service.
Whenever you receive a copy of your credit report, you should check to make sure all the information is accurate and complete. Don't fail to skip over your social security number, since a mistake in just one number can have you confused with a totally different person and situation. You have the right (under the Fair Credit Reporting Act) to dispute the completeness or accuracy of any information in your report. If you find an error, it helps to tell the credit bureau in writing why you think the information is not correct. Unless your dispute is frivolous or irrelevant, the credit bureau must do an investigation. If they find any information that is not correct, they must correct it. Any information that cannot be verified must be deleted. If you disagree with the results of the credit bureau's findings, you may file a brief dispute in future credit bureau reports.
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