Get Your Free Annual Credit Report and Repair Your Credit

First of all, credit report analysis is not the easiest thing to do. The first thing that I would do is to make copies of each of your credit reports. If you have not already done so, you can get your free annual credit report by going to annualcreditreport.com or calling 877-322-8228. If you've used a service where you can print them off of the internet, make sure that you have at least 2 copies. Put one copy of your credit report away and don't touch it. Grab your yellow highlighter and one credit report at a time. Although each credit report has its own rating system, they are similar enough that we can figure out the positive listings from the negative listings from each of the credit reporting agencies, Equifax, TransUnion, and Experian.

Anything which is listed as Paid As Agreed, we will leave alone. Paid As Agreed is a positive listing. Look for items which say charge offs, foreclosure, repossessions, collections and paid collections, settled accounts, bankruptcy and included in bankruptcy, as well as 30, 60, 90, or 120 day late payments. Also look for an item that says Too New To Rate. It shows up on my report as a negative listing (ouch). With the exception of Paid As Agreed, make sure you highlight each of the items mentioned above, one credit report at a time. A negative listing can be in the form of something on your credit report that does not belong to you. Check for duplicate items which and balances which may not be correct and make sure to highlight those listings.

According to the Fair Credit Reporting Act (FCRA), the information provider (ie the company that gave you your auto loan) as well as the consumer reporting company (ie Equifax) are required to correct incomplete or inaccurate information as it relates to your credit report. Make sure you go through each of the negative listings to determine if they are valid or if they do not belong on your credit report.
Credit report analysis is now finished.

Along with your credit report, you can also request your credit score (also called FICO). There will be a charge to get your credit scores from each credit reporting agency but along with your credit report, this will be the tell tale sign as to your buying power. If you are given the choice of buying an all in one report which includes your credit report from all 3 agencies along with your credit scores, don't choose that option. This type of report is usually more of a summarized report and won't include all the information that you need to see on your credit report.

The way I see a credit score is that it is a number which not only predicts your potential buying power but also your risk. Some see it as your ability to make credit payments on time. This credit score is your number at a particular point in time and it can change at any moment.

What is considered a good credit score? So why does your credit score matter? Are you looking to purchase a car in the near future? Maybe just getting auto insurance to go along with that new car you are thinking about. Perhaps moving into an apartment or house shopping? What about that credit card application that just showed up in the mail at 1.9% for the first six months? Hey, that department store said that I could get 10% off my purchase today if I apply for their store credit card. I'm looking for a job and I wonder what my future employer thinks of me?

All of the above could be dependant on your credit score or what some call FICO (Fair Isaac Corporation). FICO scores range from 300-850, the higher the score the better or what is also considered to be a lower risk. FICO comes up with their score through a mathematical equation. Either the credit report itself and/or the FICO score is passed on to the lender when a request for credit is made on your behalf.

How do you rank?
FICO Credit Score Percent of People
With That Score
300 - 499 2%
500 - 549 5%
550 - 599 8%
600 - 649 12%
650 - 699 15%
700 - 749 18%
750 - 799 27%
800 - 850 13%

If you are considering a mortgage, although FHA says that you only need a 620+ credit score, 650 or above is considered adequate. Mortgage brokers and banks really like to see that FICO at 720 and above.

Generally, a FICO score below 700 entails some sort of risk. Your goal should be to get your score at 720 or above and keep it at that level.

What you do affects your credit score or FICO. First of all, there is no perfect credit score. The average FICO consumer credit score today is right around 678. Credit scores are not affected by race, creed, education or religion. Credit scores are individual, meaning married couples do not share a score. But what we must remember is that you can improve your credit scores.. in all 3 bureaus.

What affects your credit score negatively? Ughhhh Bad Credit.

* Foreclosures
* Bankruptcy
* Tax Liens
* Late Payments
* Percent of Credit Use to Available Credit
* Too Many Requests for Credit
* Having No Credit

So, on a daily basis, what do you need to do to stabilize or improve your credit score? Woohoo Positive Credit.

* Make Payments on Time
* Keep Your Balance on Each Card at or Below 30% of Available Credit
* Make Use of Credit. Do Not Have A Zero Balance
* Keep Those Credit Cards (Credit Age)

It all sounds so simple but in life, we realize that payments can't always be made on time. There is job loss, you might move and the bills might not catch up to you, and credit issuers may lower your credit limit and push you past the use of 30% of your credit on any one card. Look, at least 1/3rd of all credit reports have an error in them. Again, forget about the elusive perfect credit score. You should be asking%u2026 how do I increase my credit score? What's a good credit score? Our goal is to get our FICO into the 720+ area. We might as well look at our credit reports and credit scores and right any wrongs in those credit reports.

Ok%u2026 now that you've highlighted the negative information on your credit report, its time to get down to the facts. Do you see any information that is at all questionable? I'm talking about incorrect balances, payments that have been incorrectly marked as late, any accounts that are not yours, chargeoffs or collection accounts which are not correct, an account that you have been paying on which is market too new to report, etc.. Remember, it is your right to dispute ANY information in your credit report that is not correct.

It is time for do it yourself credit repair.

Do it yourself credit repair involves writing a dispute letter. I'll give you an example of a dispute letter below along with the information that you will need to send the credit bureau that is reporting the information incorrectly.

Sample Do It Yourself Credit Repair Letter

Date
Your Name
Your Social Security Number
Your Address,
City, State, Zip Code

Complaint Department
Name of Company
Address
City, State, Zip Code

To Whom it May Concern:

I am writing to dispute the following information in my file. The item(s) that are in dispute is (are) circled on my credit report.

This item (identify item(s) disputed by name and account number) is (inaccurate or incomplete) because (describe the reason why). I am requesting that the item be deleted (or request another specific change) to correct the information on my account.

(for example Bank of America VISA Acct: xxxxx-xxxxx-xxxx-xxx: This account is listed as being 30 days late. I have never been late on this account.)

Enclosed is a copy of my credit report (if you have any backup information supporting your dispute also include and describe the backup information). Credit reporting laws ensure that bureaus report only accurate credit information. Please remove this inaccurate information as soon as possible.

Sincerely,
Your name

Well there you have it. The above dispute letter is very basic but gives you a general idea of do it yourself credit repair. What happens next is that the reporting agency contacts the credit in question and they have 30 days to respond regarding the dispute that you have presented. If the creditor does not respond, the dispute should be removed or corrected on your credit report. If the creditor confirms the information, you may just have to keep on top of it and write another do it yourself credit repair letter a couple of months down the road.