Check For Errors on Your Credit Report
First off, let me get something straight. Credit improvement is painfully boring. It is. However, without decent credit many opportunities for you will not be realized. So, brace yourself, maybe get a cup of caffeine, slap yourself in the face, but please pay attention.
There are many aspects of your credit that you must be made aware of to improve your credit. One aspect is to check Your credit report regularly for errors. You can find errors on your credit report if you are vigilant.
When it comes to checking your credit reports, it is essential to know that there are three major credit reporting agencies out there. The three major credit reporting agencies in the United States are Equifax, Experian, and TransUnion.
You can find out which credit reports you have access to by visiting annualcreditreport.com or creditkarma.com. When you do an annual review of your reports, you will most likely find some errors. It is up to you to contact the reporting agencies and ask them to fix the error.
Credit reports are a great way to stay up to date on the health of your credit. However, your credit report can often contain errors. You will need to contact the reporting agency and notify them of the error. It’s been shown that many consumers don’t even know about these credit bureaus, or they think that they only have one report because they only have a one or two credit cards.
We are here to educate the consumer. Your credit is vital if you ever want to borrow money for a house, auto, or other big-ticket items. P.S. I hope you didn’t slap your face. No need for violence.
How to Handle a Credit Report Dispute
Having a credit dispute is like pulling your own teeth. Not pleasant at all. However, if you have a dispute with an error on your credit report, the first step is to figure out what the error is. Amazingly, most people do not know that they are entitled to dispute errors on their credit reports.
In a recent study, researchers found that people who disputed errors on their credit report had a higher chance of having their dispute resolved than those who didn’t.
Here’s news you can use.
The Fair Credit Reporting Act (FCRA) governs how a consumer’s credit report is obtained, compiled, and used in the financial services industry. When there is a dispute on your credit report, the act requires that it be corrected immediately so that you know about any errors.
The first step is to contact the credit bureaus and let them know that you have questions about your credit report. If they are unable to answer your questions, file a dispute with the Consumer Financial Protection Bureau (CFPB).
The Consumer Financial Protection Bureau will investigate your claim and send you a letter if they need more information for their investigation, or if they’re unable to resolve the issue. In more serious cases, you’ll also have the right to request a hearing with the Bureau’s administrative law judge.
Identity theft has also become a huge issue. Identity theft can lead to someone using your identity to obtain money from your credit cards or to get loans in your name just to name a couple of awful scenarios. If you are a victim of identity theft or someone has opened fraudulent accounts in your name, remember to contact the three major credit bureaus – Equifax, Experian, and TransUnion.
Also file a dispute against these accounts as soon as possible. Notify each bureau of the error in writing or contact each bureau’s fraud department.
Avoid Opening Too Many Credit Accounts at Once or Closing Accounts Too Quickly
Credit accounts can be helpful to build your credit score. However, opening too many credit accounts in a short period of time can lower your FICO score.
So, it is important to keep a balance between having too many or too few credit accounts.
Avoid opening too many credit accounts at once or closing them too quickly.
In the early 2000s, it was a common practice for people to open credit cards and store cards to help build their credit. The problem with this is that it’s become more difficult for people to close these accounts when they can’t pay their balances off each month.
Closing too many credit accounts can have a negative impact on your credit score. One common cause for this is when you close accounts without giving enough time to the lender to see that the account has been paid off.
What are some of the consequences of closing too many credit accounts?
It could be hard to get approved for loans in the future if your FICO score is low enough. Your current interest rates will increase as you borrow more money, and it will take longer to pay them off.
The lender could apply for a chargeback, which can be very costly. When an individual closes a credit card account, they are often hit with a “credit-kill” fee or cancellation fee. While closing an account will help reduce the number of hard pulls on your credit report, it may not make financial sense because it will have a negative effect on your FICO score and increase your interest rates.
If you’re looking to improve your credit, just be mindful of how you treat your credit accounts.
Know the Difference Between Hard and Soft Inquiries on Your Credit Report
This will be a quick overview of all things credit inquiries, so get that cup of coffee at the ready. Credit bureaus collect information on credit and debt to generate credit reports on individuals. Credit inquiries are important in determining your credit score.
They can help you determine whether you are late on making payments or have been evading debt. Your credit report is a document with information about the amount of credit you have had, when the inquiries were made, and how long ago they were made.
Credit inquiries can have huge impacts on your credit score and how much you pay for loans in the future. Let’s face it, by “pay” I mean how much interest you will be charged on a loan.
Yes, and as a reminder as to why all this education on how to improve your credit? It comes down to getting the best interest rate. Usually as a side benefit to a better interest rate you can bet the lending institution will offer other incentives to do business with them.
OK, back to credit inquiries.
There are four different types of inquiries, which will be discussed below: hard inquiry, soft inquiry, hard pull, and soft pull. The most common types of inquiries on your credit report are also referred to as hard inquiries and soft inquiries.
Hard Inquiries
Hard inquiries are requests that go directly to the bureaus and pull credit data on you. They are not removed automatically as they require more work by the lender or business requesting data from the bureaus. Therefore, hard inquires could stay on your file longer than soft inquires do.
Hard inquiries can be damaging to your credit score as they can show up as negative information on your report and turn up in future credit searches.
Soft Inquiries
Soft inquiries are requests to look at your credit report to get basic information such as your balance, when the last payment was made, and how much time it will take for you to repay everything.
When you’ve paid off your debts, a soft inquiry could be removed from your file immediately. A soft inquiry is a small credit search made without the intent of getting a loan. It can be used for identity verification purposes, such as when you’re applying for a new job, applying for welfare benefits, or requesting to rent an apartment.
A hard pull
A hard pull means that someone has requested a copy of your credit report from the credit bureaus. It is a major event on your credit report. “A hard pull” is a term used when requesting credit information from the credit bureaus.
Generally, a hard pull means that someone has requested a copy of your credit report to check for errors. This can happen when you apply for credit or if you are hired for a job requiring background checks.
A soft pull
A soft pull is a type of inquiry that does not affect your credit score. These types of inquiries are typically seen on a credit card application. It’s important to remember that even though these inquiries don’t show up on your credit report, they are still visible to lenders and can still impact your ability to obtain loans or other financial products.
Now there, don’t you feel like a better human being after learning about the extremely boring details of credit inquiries.
Paying off debt with The Snowball Payoff Method
Through whatever circumstance you’ve arrived here to improve your credit, know this. It can be done. Once you’ve identified what needs to be paid off you now need a strategy to pay off those pesky debts. Before we talk about how to pay off the debts, I want to talk about mindset.
Some are under the impression that the debt they have is insurmountable. If that is truly the case, then this advice will not help. Bankruptcy may be in your future. For many of us, we can overcome and improve our credit score. The most important aspect of credit cleanup is not paying off your debt. Yes, you heard right. The first thing is to get your mind right. Whatever that takes! Once you’ve gotten the noggin straight then let’s talk money.
As it turns out, these debts are paid off by money. Go figure. So, there are a few ways to have the money to pay off your debt. You can either cut back on lifestyle expenditures or possibly make more money.
If you need to make more money, there are a ton of choices for you. From a three-month tech certificate to a four-year degree. You can do it!
Now we can finally talk about a strategy to pay off your debt.
The Snowball Payoff Method.
The snowball payoff method is a way of paying off your debt by paying off the smallest amount first to the largest amount last. That is it! It’s not magical and it’s staggeringly simple. Here’s a quick example. Let’s pretend you have a credit card in which you own $200.00. You have another credit card which you owe $1,500.00.
The Snowball Payoff Method recommends paying off the smaller amount first. In this case it’s the $200.00 credit card. After you have paid off the smaller amount then pay the next smallest amount debt until you reach, your biggest debt that you owe.
The snowball payoff method has many benefits, including:
- You can pay off small debts early in the process and maybe even before they get too big.
- It forces you to create a budget and stick with it.
- You can make your payments more manageable to fit your budget needs.
Listen, once you begin with this technique, you’ll also feel a sense of accomplishment. Even though the snowball payoff method is basic common sense you’d be surprised how many want to pay-off the largest debt first. Maybe they figure it’s more important.
In the eyes of your credit report, the quicker you have your debts paid the better. Paying off the smallest to the largest debt will get you to a better credit score.
As I’ve said many times, this is painfully boring information. However, it’s also incredibly critical to your financial future.
Do what you must. Work out, chant, sing, walk around like a crazy person, but take care of this. We believe in you. Now go out and begin this credit journey.