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Credit Repair Education

1 - Introduction to Credit2 - Repairing Your Credit3 - Protecting Your Credit4 - Consumer Credit Laws5 - Resources




Your Credit Report

To many, credit reports remain a mystery, but that need not be the case.  Your credit report is not hard to get – you can simply contact one (or more) of the three most popular credit agencies: Equifax, Experian, or TransUnion.  Your credit report includes:

Personal Identification Information – name social security number ,addresses, and employment history.
  • Public – record information, such as tax liens, bankruptcies, and child support orders.
  • Collection activity.
  • Information on each credit account that you have, whether it is open or closed.
  • A list of inquiries, that is, companies that have requested your credit file.
  • You also have the option to include a personal message, and to receive your credit score.
Should you find an error on your credit report, you can contact the appropriate reporting agency and dispute the entry.  If the disputed item is not investigated and verified within 30 days, it must be removed from your credit report.  If the information has been changed or deleted, you should receive a free copy of your new report.  For more information, see the Fair and Accurate Credit Transactions Act, or FACTA.

It is a good idea to obtain a copy of your credit report when making major changes in your life, such as making a large purchase (house or car), applying for a job, joining the military, or getting married or divorced.

You are entitled to a free copy of your credit report if:
  • You were recently denied credit (within the last 60 days).
  • You are currently unemployed and will be seeking employment in the next 60 days.
  • You are currently on welfare.
  • You are a victim of identity theft (make sure you have reported it to the police).
Keep in mind that most negative items stay on your credit report for 7 years, but others, such as bankruptcies, stay on for 10 years.  Fortunately, positive information stays on for 10 years or more.
Your Credit Score
To help you put things in prospective, it you should know that FICO scores range from 300 to 850.  Your score is determined by a number of factors:
Paying on time – 35%.  Needless to say, the more timely you are, the better your score will be.  Missing a payment can potentially lower your score by 50 to 100 points.
  • Amount and type of debt – 30%.  The goal here is to have a low balance owed compared to the amount of credit you have available.  That said, having credit cards with small or no balances improves your credit score.
  • The length of time you’ve been using credit – 15%.  Accounts that you’ve had at least 2 years will increase your score.
  • The variety of accounts – 10%.  Riskier types of credit, such as revolving credit or finance company loans lower your score more so than student loans or mortgage loans.
  • The number and types of accounts recently opened (in the last 6 months) – 10%.  In this case, creditors are concerned that if you apply for many accounts at once, you may not be able to pay them.
Your Credit Risk
When lenders determine your rates, or if they are going to lend you money, they first want to know what kind of credit risk you are.

You are considered a normal credit risk if:
  • You have 11 credit accounts reporting to a credit bureau.
  • You have never been more than 30 days late on a payment.
  • Carry credit card balances of less than $1000.
  • Have access to about $12,000 on all credit cards combined.
You are a “higher than normal” credit risk if:
  • You have a credit history shorter than two years.
  • Have credit card balances more than $10,000.
  • You’ve had an account closed due to default.
  • You have had an account that was at least 90 days overdue.
If you don’t fall into either of the above categories, you may fall into a non-traditional category and receive a FICO expansion score.  This type of score benefits those in special situations who also need to use credit.  

Examples are younger people with little or no credit, those just arriving to the United States, people who use cash often and rarely use credit, and those who previously had joint credit with a spouse and are newly single.


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