Blogs in Real Estate

I hope you were able to get your credit reports.  If you don’t already have your report from all three credit bureaus, do that right now!  The first step in repairing anything (credit included) is identifying what the problems are.  Go to www.annualcreditreport.com RIGHT NOW, and request your free credit reports.  Once you have your credit reports in front of you, read on to learn how to read your credit report.

Okay, so now that you’ve got your report, you look it over and you see that it’s pretty confusing.  There are a bunch of numbers, abbreviations and terms you’ve probably never seen before. Trade lines, charge-offs, account review inquiries — how do you read this thing?

I’m here to help you.  I’ll tell you what the various sections of the report are and I’ll explain a little bit about each report.

A credit report is basically divided into four sections. They are:

Identifying Information
Credit History
Public Records
Inquiries
Identifying Information
Identifying information is just that — information to identify you. Look at it closely to make sure it’s accurate. It’s not unusual for there to be two or three spellings of your name or more than one Social Security number.  With regard to identifying information, you just want to make sure that you are the subject of the credit report.  If your name, address or employer is wrong, that’s not going to hurt your score.  But if the person on the report is not YOU, that might not really be you’re your score, particularly if the person on your report is a real deadbeat.  Point is, don’t be concerned about variations; just make sure that the person on the report is you.

Credit History
The next section is your credit history. This is where you want to begin looking for inaccuracies that can hurt your credit score.  Each account will include the name of the creditor and the account number, along with other information such as:

When you opened the account
The kind of credit (installment, such as a car loan, or revolving, such as a credit card)
Whether the account is in your name alone or with another person
Total amount of the loan, high credit limit or highest balance on the card
How much you still owe
Fixed monthly payments or minimum monthly amount
Status of the account (open, inactive, closed, paid, etc.)
How well you’ve paid the account.
You want to look at each “blemish” on the report that says you paid late or the debt was “charged off.”  Make a note of each blemish contained in the credit history section and move on to the next section.  In a minute, I’ll tell you what to do with these black marks.

Public Records
The next section of your credit report is the part you want to be absolutely blank. The public records section lists bankruptcies, judgments and tax liens.  These are the things that will trash your credit faster than anything else.  Again, make a note of anything that shows up in this section and I’ll tell you what to do with these blemishes.

Inquiries
The final section is the inquiries. That’s a list of everyone who asked to see your credit report.  Inquiries are divided into two sections. “Hard” inquiries are ones you initiate by filling out a credit application. “Soft” inquiries are from companies that want to send out promotional information to a pre-qualified group or current creditors who are monitoring your account.  Each hard inquiry brings down your credit score by 3 - 5 points.  Soft inquiries have no effect on your score.

Okay, now that you’ve looked through the report and have made a list of all the blemishes on your report, it’s time to go to work improving your score.  To do this, you’ll focus on three things.

Disputing inaccuracies and other blemishes
Minimizing other credit risk factors
Improving your “creditworthy” behavior
At this point, the quickest and most significant improvement in your credit score will come from disputing inaccuracies in your credit report.  Most likely, some of the “black marks” on your report are inaccurate.  Experts believe that 50% - 80% of credit reports contain inaccuracies.

So, here’s what you need to do first.  Look over your list of blemishes and identify any that you believe are incorrect.  Consult with your significant other or anyone else who may have an effect on your credit report (have you co-signed a loan?, etc.) to verify any inaccuracies.Once you’ve identified the inaccuracies, you’re ready to dispute them.  I’ll tell you how to do that in tomorrow’s installment of this Credit Repair Program.  For now, make sure you know which black marks are inaccurate and begin assembling any documentation that proves the inaccuracy.

The first step to improving your credit score is to get a copy of your credit report.  This is super important because there’s a good chance that there are inaccuracies on your report that are bringing down your score.  At least 50% of credit reports have inaccuracies and some experts estimate that as high as 80% of reports contain inaccuracies.

Fortunately for all of us, the government has recognized this problem and has done some things to benefit consumers.  I’m going to tell you how you can get your credit report without spending any money (in most cases).

For starters, there are three major credit-reporting agencies in the United States: Experian, TransUnion and Equifax.  These agencies (sometimes called “bureaus”) all have a credit report and score for you on file.  You must look at your report from all three agencies in order to maximize the improvement in your credit score.  Here’s why…

Your “credit score” is actually the middle score of the three scores reported from Experian, TransUnion and Equifax.  If you only work on your credit report from Experian, it doesn’t matter how much the score improves because TransUnion and Equifax will still be reporting unimproved scores.  Remember: it’s the middle score that counts, so you need to work on your credit report from all three credit bureaus to give yourself the best chance for improvement.

Okay, here’s how to get your credit reports from the three bureaus:

Experian:  www.experian.com or (888) 397-3742
TransUnion:  www.transunion.com or (800) 888-4213
Equifax:  www.equifax.com or (800) 997-2493
If you contact the credit bureaus directly, they will charge you around 10 bucks each for your report.  They will also add a few bucks if you want to know your score (which you probably will).  But you may not have to pay anything at all to get your reports… and you can be looking at your credit reports in a matter of minutes.

A new federal law called the Fair and Accurate Credit Transactions Act (the Fact Act) entitles you to one free credit report from each credit reporting agency per year.  You can request your three reports, in accordance with this new law, by going to www.annualcreditreport.com which is the only authorized source for consumers to access their annual credit report online at no charge.  You can also request your reports by phone by calling 877-322-8228.

I prefer to request the reports online because you can get them in about 5 minutes.  But keep in mind that the new law only requires the reporting agencies to give you your credit report, not your credit score.  So, if you want your score from each bureau, you’ll have to pay about $5 for each score.  It may or may not be worth it to you, but I like to know what the actual score is that each agency is reporting.  Also, keep in mind that if you got a free credit report within the last 12 months under this new law, you’ll have to pay for your report.

Your first assignment is to go order your report from each of the three credit bureaus right away.  Remember to get all three reports.  Next I’ll show you some helpful information about how to understand your report and how to identify problems with your reports so that you can improve your credit score.