Although you may never have to take action to remove negative information from your credit report, you should also be aware that errors do happen from time to time.

If you ever discover an item that needs correcting, you will want to be armed with the advantage that only preparation beforehand can provide.

This is necessary for your financial well-being because these mistakes are often uncovered for the first time when people make a major purchase, such as taking out a mortgage, applying for a personal loan, or starting a new business.

Where errors can be found

– Obtain your credit reports from the three major reporting agencies (Experian, Equifax, and TransUnion) and look carefully for any inaccuracies and negative records that could lower your credit score.

Even though records of your loan and credit applications will stay on your credit report for a year or two, requesting this information yourself will not cause this damaging type of inquiry, and you should feel free to do this when the need arises.

– Look for items on your credit report (collections, bankruptcy, tax liens, charge-offs, judgments. closed negative accounts and repossessions), if any, that have now expired and should have been removed automatically.

At the same time, you can correct charges made by someone else in your name, any data errors that you discover, and records that actually belong to another person’s report.

What you can do

– If you are certain that you have found some kind of error in your credit report, calm down, focus on the facts, compose a “letter of dispute” to the Dispute Investigation Department of the credit reporting agency in question, and keep a copy for yourself.

This is the first step in having the related information investigated and the errors corrected in your report. (This process will work with TransUnion and Equifax, but Experian only accepts such requests online.)

– To strengthen your case, include as much background information and written proof of the facts as you can because the credit bureaus are free to ignore any requests that appear to be without merit.

– By law, they must finish their investigation of your dispute within 30 days and correct your report as needed. Once they have done this, they will inform you of the outcome and provide details as well.

If you don’t succeed in resolving a dispute with your initial request, you are also free to submit the disputed item again if you can provide additional documentation to back up your claim.

– As another means of solving such a problem, you can also deal directly with the creditor that forwarded the data to the credit bureau.

This maybe your best option, because once that creditor has the correct information that you supplied, they can notify all three credit bureaus, and their word will be more convincing than yours as a private individual.

Avoiding a new problem

While you can’t be certain that you will get a speedy response from any credit bureau, don’t become impatient and resort to contacting some expensive “credit repair” company for assistance.

They have no more authority than you do in this area, and you will be receiving second-hand information whenever they report to you.

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When you decide to open a new checking or savings account, how do you decide which bank to go with? What about money market accounts? Credit cards? If you aren’t running a thorough background check on a bank you’re considering, you could be putting your money in the wrong hands. A better idea is to check your bank’s credit rating to make sure it’s worthy of your cash.

Although the FDIC and other government organizations will not share your bank’s credit rating with consumers, it is easy enough to run a background check. Just as a credit card company would do if you were applying for a new card, you should check up on what your bank has been doing since its inception. One of the most valuable resources for this activity is the Safe & Sound program from Bankrate.

Safe & Sound is a system for allowing consumers to check their bank’s credit rating. All you have to do is select what type of financial institution you want to research (bank or credit union, for example), then search for the particular bank you are interested in. It allows you to search based on the institution’s name, state, zip code, asset size or rating, depending on your needs.

When you view that bank’s credit rating, you’ll find a variety of information, including their location and telephone number. It provides data such as net profit/loss, deposits, equity, asset size, and earnings rating. Each financial institution is issued a comprehensive rating from one to five stars, five being the best and one being the worst.

Of course, Safe & Sound isn’t the only way you can check your bank’s credit rating. You can also visit Bauer Financial to view their rating system for banks and credit unions. Here, financial institutions are also given a score of one to five stars, and you can choose from five different financial reports to understand the bank’s credit rating.

The difference, of course, is that Bauer Financial requires you to pay to view more than just a bank’s credit rating (such as the detailed reports), while Safe & Sound is free. Nevertheless, I’ve discovered that many banks have different credit ratings on each of the sites. For example, Bank of Texas gets only one star at Safe & Sound, while Bauer gives it 3.5 stars.

If you aren’t interested in viewing a bank’s entire credit rating, you can also look at the complaints filed on the Better Business Bureau. Rather than learning the financial aspects of the bank, you’ll learn how customers view the service given by different financial institutions. This in itself can be illuminating.

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These days your credit rating is a very important factor in society.

With the lending culture, many people feel they are disabled if they have a poor credit score and many people think that a good credit score is a necessity and requirement in life.

What is a Credit Score?

Your credit score is a figure which is the result of research into your financial history.

The riskier the person, the lower the credit score. Obviously the higher the score, the better options you have when it comes to financing, loans and credit cards.

Chances are, if you are above the age of eighteen you will already have some sort of credit score.

At the very least you will have a credit history and this will be the foundation of your score.

If you already have a high credit score then you should work on increasing it due to the fact banks and other financial institutions will look upon you more favorably and thus, reduce interest and give you preferential treatment.

Improving your credit score is not a complicated process, however; it is time-consuming.

There are several ways to achieve this and one even some of them take a short period of time, but it is important to treat this as a long-term financial project to help you achieve the ratings you deserve.

The first method to boost your rating is to ensure you regularly check your credit reports.

If you see any errors it is important to inform the credit agency and challenge the erroneous information contained in the report.

It is also important to check your credit rating to avoid identity theft and ensure no un-authorized financial transactions are taking place.

Next, it is important to show that you repay finance options early. So, pay off all your balances fully every month. It demonstrates you are committed to managing your debt, and also it helps you save a ton of money on interest.

It is also important not to spread your debt too far. If you have a large number of credit cards, try and reduce it to just two in order to reduce your risk.

If you have a few credit options opposed to many, it will increase your credit score.

One of the most important things you can do is to ensure you always repay your loans on time. If you miss a payment it will affect your credit rating.

You need to prove that you are a good investment to the banks and missing payments will show up on your report.

However, if you have a history of missing payments then in time they will be erased from your credit report. Usually, this takes between three and five years.

Finally, you should work on being more efficient with the options you have. Use your credit cards wisely and share the balance between them all.

A good thing to do is to always ensure you are under 50% of the maximum limit. Maxed out credit cards are not good for you, or your credit score.

Following those methods will help ensure your credit rating increases and in time it will lead to further opportunities, and hopefully preferential treatment.

Remember that every time you take credit, you are paying interest!

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