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Some of the Common Mistakes on Credit Reports
(Why the Bureaus May be Reporting them Inaccurately,
And What You Can Do to Fix those Mistakes!)
Credit report errors occur for a number of reasons but they can all have a negative impact on your eligibility for any future credit or the Best Rates Available! It's important to stay on top of your credit report to avoid any mistakes made by the creditors and credit bureaus —Equifax, Experian and TransUnion. Some common reasons for credit report errors include:
- The individual has applied for credit under several different names (i.e. John Doe and Jonathon Doe)
- Someone made a clerical error in entering or reading information (names, social security numbers, addresses, etc.) from a handwritten application.
- Mix ups with common names. For example, there is likely more than one John Smith living in New York City and often there is the chance that information intended for one John Smith might appear on another John Smith's credit report as he applies for a mortgage.
- The individual gave an inaccurate Social Security number or the number was misread by the creditor.
- Loan or credit card payments were inadvertently applied to the wrong account.
No matter what the reason, the erroneous information could reflect poorly on your credit file, thus causing approval problems when the time comes to apply for a job or obtain a mortgage. If you find errors, no matter how small, be sure you get them fixed, and make sure that you contact all three credit bureaus with your change.
Below are Helpful Links, Downloads, and Tools to Help Get You Started Raising those All Important Credit Scores.
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Click here to Download
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Budget Spreadsheet
This is the Budget Excel spreadsheet provided as a free download here for your convenience. All you have to do is enter your income and bills. Choose a loan payment that allows you to have a positive net cash flow. It is in Excel 97 format only. DO NOT convert it to Excel 7.0, 5.0, or earlier, because it WILL NOT work. The format and formulas will be all messed up and unusable. |
Before you can apply for a home mortgage and buy a house, you must determine if you are creditworthy. Don’t think that just because you have a good income and never missed a payment that you will get approved. Many people with great credit and income are not mortgage worthy and get rejected for a mortgage because they are self employed, or their debt to income ratio is too high for the bank. For example, if you have a good salary, but lots of credit card debt, chances are you'll get rejected for a mortgage. It seems like they just look for reasons to reject you. If you have always been a cash buyer and have not established any credit, good luck getting a mortgage. You must have a credit history or you'll be rejected for a mortgage. You don't want to have too few credit accounts, or too many on your credit report either, or you'll get rejected.
Where is your down payment coming from?
Most banks don't want you to use money from family as a down payment. They figure that without that money you can't afford the house. So if you plan to get money from your family, put it in your bank account at least 6 months before you apply. This is because most mortgage lenders only check 3 months worth of bank statements, and you'll be hiding below the radar.
When is your income not considered income?
Items that you think will help you get approved will often prevent you from getting approved. For example, if you derive income from a corporation, many banks will not acknowledge it as an income basis for a mortgage if the corporation has not filed at least 2 years of tax returns. So if you earned $100,000 from your corporation, it will not count if the corporation is a only year old. This is because many companies are fly by night and go out of business. Also, self employed people have a real tough time getting approved, and often must put down 25-35% to be approved for a mortgage. Pay down your credit card debt as low as you can, then get your Credit Report.
Being Self Employed Is A Bad Thing To Do To Your Credit
This is one reason why I recommend that you never list yourself as self employed, it's the worst thing you can do for your credit rating. Many banks won't even touch you for home or auto loans if you're self employed. Talk to your tax advisor about this, but I felt better off incorporating, now I'm an employee with a verifiable W2 form, not a self employed person. This makes all the difference in the world. Also, if you're self employed, all liabilities flow through to you, but in a corporation, the corporation usually assumes all the liabilities.
Before you plan for your future, you better get in touch with your past
Your Credit Report is the single most important item. If you're going for a mortgage, don't get the free credit reports or the $8 reports you see on the Internet, they simply do not have enough information for you. The "merged comprehensive reports from the big 3 credit bureaus" are the ones to get, from sites like Consumerinfo, True Credit or Equifax. These Credit Reports cost a bit more, but remember you are about to make the biggest purchase of your life and you only get one shot at getting it right, so get a 3 Bureau Online Credit Report, the banks do it and you do it also.
Get The Credit You Deserve
When you order your Online Credit Report from online sites like Consumerinfo, True Credit or Equifax, be sure to also select the option to get your credit score. Many sites now offer the Fair Isaac score that the banks receive when they check your credit. Knowing your score up front can give you a good idea of your chances of getting approved for a mortgage. Many people also call this the "Beacon Score". A score of 660-680 or higher is considered good, and you'll most likely get approved with favorable financing terms.
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Online Sites To Get Your Credit Reports |
| Consumerinfo is a great place to get your credit report instantly online. We send all our friends and family there, because it's so easy to use. |
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| True Credit lists your credit reports online instantly. |
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| Equifax Instant Online Credit Reports & Score Power |
- Score Power credit report with your FICO Credit score. Online investigation request.
- Credit Watch credit monitoring service, email alerts of changes to your report.
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| Equifax is one of the big 3 credit bureaus, used by most creditors who run your credit profile. When you apply for mortgages and car loans, banks get your credit report from the big 3 credit bureaus. By using the same credit reporting agency as the bank, you'll be in sync with what they see. Inferior credit bureaus may not have all the information that the Equifax report has, and this could lead to you getting rejected on your loan. The Score Power Package includes your Equifax Credit Profile, the FICO score based upon that profile (also known as your BEACON score), plus a personalized analysis that provides tips on how to improve your score over time, how you rank among other consumers, and how lenders interpret your score. |
When you get your credit report, look it over good for errors, and incorrect previous addresses, as well as old revolving credit accounts that you no longer use or have gone out of business. The beauty of your instant online sites like Consumerinfo, True Credit or Equifax is, with your credit score you have the ability to dispute it online after your credit report appears. You can check off the accounts that should be closed and dispute any item on there, then submit, and they report back to you within 30 days per federal law.
Tips for obtaining a high credit score
I'm not just blowing steam, I'm living proof of what works. Don't open a lot of credit accounts. All you really need is a couple of credit cards and nothing else. Stay away from department store cards almost all of which are 21% APR, you already have other lower APR credit cards. The stores entice you with free gifts or 10-20% off your purchase if you sign up, but don't fall for that trick. Once you sign up they have you and you'll be paying 21% APR, because few people pay their department store bills in full. Don't sign up thinking "I'll just get the free gifts or discounts then close the card." Most people don't end up closing it.
If you finance a car, a computer, or furniture, make sure the account is marked CLOSED on your credit report when it's paid off. You don't want any excess luggage lingering around on your report. Pay all your bills on time, and always pay more than the minimum or it will take you up to 10 years to pay it off. Try to keep your balances low, especially when you are applying new for credit. Don't apply for new credit within 6 months after you move to a new address or accept a new job, as you may be rejected. Many creditors will turn you down if they can't verify your address in the phone book or if you have not been at the same job for 6 months. Also, don't apply for new credit if you have recently been approved for credit somewhere else. Stick with no more than two credit cards that you opened in college, and don't open new credit cards for no reason. Pay them on time, and keep them in good standing. Accounts that have been in good standing for your entire credit history help bring your beacon score up.
What if you find an error or a black mark on your credit report?
Why is my bankruptcy from 5 years ago still on my credit report?
If you have a bankruptcy, it stays on your credit report for 10 years. Other bad marks like credit card defaults will remain on your report for 7 years. If these are legitimate, then neither you, nor me, or even God can have them removed. But if you find mistakes you can contest them, and most people are unaware that federal law requires credit bureaus to give you 100 words of your choosing to appear on your credit report, for example, to refute any bad marks on your credit report. Also, you can contest any black mark on your credit report, and by law, the credit bureaus have 30 days to respond or they must remove the bad mark. This is covered in much better detail on our other site DebtWizards.com.
Disputing bad marks on your credit report:
How to do it yourself for free.
Try Fresh Start: The Authoritative Guide To Consumer Credit Repair. It's a very easy to read guide from Horizons Unlimited. We cannot say enough good things about Fresh Start, the best debt resource we've seen, covering more topics related to your debt than anyone. It walks you through each of the remedies available to you to remove negative credit. Forget credit doctors who scam you out of $600, this book shows you how to do it free yourself. There are great step by step tips on analyzing your credit report, disputing bad marks with credit bureaus, negotiating tips, common mistakes, laws that work in your favor, well written sample dispute letters, credit bureau phone numbers, web sites, and addresses, settling bad debts AND getting the creditor to remove them from your file. There's tips for people who default on government student loans, divorce & credit, bankruptcy, judgments, old delinquent accounts, credit card fraud and more. This book is available from them as a CDROM, as a book, or as an instant electronic download. By ordering the download, you can start immediately and it's searcheable. I just got the download, it's easier to use.
For more great tips on cleaning your credit report yourself and avoiding credit doctor scams, try DebtWizards.com There's also great information on establishing credit, dealing with debt collectors and your rights, debt consolidation, and much more.
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