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August 05, 2009

An article with good advice about your credit score

Here's an article from Nurido English News about improving your credit score. The article even mentions what I call mixed file cases, where the credit bureaus put the credit accounts of one person on another person's credit report, sometimes with disastrous results. Unfortunately the article oversimplifies how hard it is to get the credit bureaus to fix their errors. Here's the article:

"A common question that we get asked a lot is how to improve a credit score. I tend to challenge the notion that we need a good credit score in the first place, since the way it is calculated really makes it an ‘I love debt score’. The FICO score is based on such things as the amount of debt outstanding, the available credit outstanding, payments history, etc.

I do believe however that it is important to check your credit report at least once per year and verify the accuracy of the report. I don’t know how many times I’ve coached a Bob Johnson that has an error on his report which it turns out in the end, was for another Bob Johnson. This type of error actually happens more than the industry will admit, but there are steps that you can take to remove the errors.

At least once per year everyone should visit to view a free copy of their personal credit report. Since there are 3 reporting agencies (Equifax, TransUnion and Experion) I visit the website every 4 months to receive a free credit report from one of the companies.

It is important to point out that you will only receive your free report from AnnualCreditReport. You do not need to sign up for a free offer or enter your credit card to view your report.
Once you receive your report, make sure to review it for accuracy both in amounts of credit, as well as the correct accounts. As I mentioned before, account information is incorrectly reported many times.

If you find an error on your report, the Federal Fair Credit Reporting Act provides direction on what can be done to have it changed. Depending on the 3 credit reporting companies, many times you are able to dispute the error on their website by filling out a simple form. Once the error is pointed out, the agency has 30 days to investigate. At the completion of the investigation there are 3 possible outcomes.

1) You are found liable for the debt and it was reported correctly. In this case the information will remain on the report.

2) The information was found inaccurate and the agency is required to remove it.

3) If no information can be found to either prove or disprove the information, it must also be removed by the agency."

[There is a fourth option - i.e. where the information is wrong but because neither the credit bureau nor the furnisher are willing to perform a reasonable investigation, the erroneous information stays on your credit report ... until you hire me that is.]

"The main reason we do suggest checking your credit report is to hopefully stop would be identity thieves early in their tracks, as well as to make sure that someone else is not getting reported on your report. If there is a serious error on your report or the agency does not allow you to report the error on its website, you will need to send a letter to them. In the letter, make sure to state the error and explain why it does not pertain to you. Send it return receipt requested so you have a record of them receiving it, and the 30-day countdown begins.

If you’re wondering how to actually improve your credit score, well, that will happen naturally if you do the things we teach, such as pay your bills on time and eliminate your debt."

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