MODULE ONE: HOW TO CORRECT CLIENT’S CREDIT LIKE A PRO

LESSON 1. WHAT IS A CREDIT BUREAU?.

V 13 ulnE8 II za 13. A credit bureau, also known in the U.S. as a credit reporting agency, is an organization that collects and researches individual credit information and sells it to creditors for a fee, so they can make decisions about extending credit or granting loans. Credit bureaus are not without accountability, they are governed by the Fair Credit Reporting Act (FCRA) ..

The information collected from the creditor includes the type of credit extended; for example, revolving credit, installment loan, or mortgage, and could also include your address, place of employment, date of birth, or job title. Credit bureaus acquire their information from data providers, which can be creditors, debtors, debt collection agencies, vendors, or offices with public records (court records, for example, are publicly available). Most credit bureaus focus on credit accounts; however, some also access more comprehensive information, including payment history on cellphone bills, utility bills, rent, and more. Credit bureaus then use a range of methodologies to calculate a person’s credit score based on this credit history..

OBTAINING CREDIT REPORTS. CREDIT REPORT. You're entitled to a free copy of your credit report every 12 months from the three nationwide credit bureaus by visiting their website. You can request these free annual credit reports online, by phone, or by mail. In addition to receiving a free annual credit report, the following conditional reasons are also allowed. If you are unemployed and searching for employment. If you are the recipient of public welfare assistance. If you are a victim of identity theft and you suspect fraud. If you’re sending your request by mail, please be sure to include your name, Social Security number, current and previous addresses, date of birth, and telephone number. Or you can fill out the Annual Credit Report Request form on the Federal Trade Commission’s website ..

If you request your report online, you should be able to access it immediately. If you order it by phone, it will be mailed to you within 15 days. If you order it by mail, your request will be processed and mailed to you within 15 days of receipt. You can get six free additional Equifax credit reports per year by creating a myEquifax account. After creating your account, you can also click on "Get my free credit score" on your myEquifax dashboard and enroll in Equifax Core Credit. You'll receive a free monthly Equifax credit report and a free monthly VantageScore 3.0 credit score, based on Equifax data . For most, reviewing a credit report can feel like trying to decipher an ancient language. One of the things that may feel confusing is all the dates reported on your credit report. Let’s take a look at four important dates on your credit report and examine how they might impact your credit score. The date opened, or open date, assigned to each of your credit accounts tells you when you first opened the account. This date is important because it will help determine the age of your credit history. If you have very old credit accounts, that’s a positive for your credit score. The older your credit accounts the higher your score. However, if you have a lot of very new credit accounts (less than a year old), your credit score could be negatively affected. If you’re shopping around for a loan, many lenders may be wary of you as a borrower if you’ve recently opened a lot of new credit accounts. You can figure the average age of your credit accounts by adding up the age of each account and dividing that total by the number of accounts you have. For example, if you have one AMEX account that’s 5 years old and a VISA account that’s 2 years old, the average age of your credit accounts is 3.5 years..

The date of the last activity tells you when your account took on a certain status. That status could be anything—paid, delinquent, or collections. If your date of last activity is for a negative status such as a charge off, then the older it is the less impact it will have on your credit. On the other hand, if you haven’t used a credit card in a long time and your date of last activity is many months ago, the information on your credit account may not be used when calculating your credit score. This is particularly problematic if you have few open credit accounts and you’re trying to reestablish your credit history. Try to use your credit accounts on a regular basis so that positive information is used when calculating your FICO score. It’s important to note that the date of last activity is sometimes called ‘date of status’ or ‘date paid/closed’ depending on the credit bureau. The date reported is the date that financial information about your account was reported to the credit bureau. This date is important because it impacts whether or not financial information such as your credit card/mortgage/auto loan balance will be used when determining your credit score. Because the balance amount on your credit accounts helps to determine your credit utilization, the inclusion of the most up-to-date information is critical. If the data reported is too old, the information may not be accurate so the credit bureau excludes the information when calculating your score. The ‘inquiry date’ or ‘date of request’ is the date that inquiries were made on your credit report. There are two types of inquiries soft inquiries and hard inquiries. A soft inquiry occurs when a person or company checks your credit as part of a background check or a lender checks your credit to pre-approve you for a loan..

A hard inquiry is when a lender checks your credit to determine if they will lend you money. Soft inquiries do not impact your credit while hard inquiries can lower your credit score a little or a lot depending on how many you have and how recent they were. Hard inquiries that are older than 24 months are not shown on your credit while hard inquiries that are older than 12 months old show on your credit but don’t harm your score. If you want to improve your credit score, use your understanding of these important dates to your advantage. The reporting date is the date the credit card company reports your balance to the three major credit-reporting agencies: Experian, Equifax, and TransUnion. Having a good understanding of what can be removed from a credit report will help you with your credit repair strategy. Errors on your credit reports can cause your credit scores to be lower than they should be, which can affect your chances of getting a loan or credit card and how much interest you pay. Disputing credit report errors and getting those negative items removed can be a quick route to a better score. Items that can be removed from a credit report include: Wrong account status (such as a payment mistakenly reported late when you paid on time). Negative information that's too old to be reported; most derogatory marks on your credit must be removed after seven years..

An ex-spouse is incorrectly listed on a loan or credit card. Wrong account numbers or accounts that aren’t yours. Inaccurate credit limits or loan balances. Accounts you don't recognize. Addresses where you've never lived. Please note: Negative information that is challenged and removed by the credit bureau can reappear on a credit report. This is because, when you dispute an item and the company in question does not respond within 30 days, the credit bureau will remove the item per FCRA. Credit reports include personal information such as the individual's current and previous addresses, Social Security numbers, and employment history. These reports also include a credit history summary such as the number and type of bank or credit card accounts that are past due or in good standing, and detailed account information related to high balances, credit limits, and the date accounts were opened..

Credit reports typically divide information into four sections. The top of the report contains personal information about the consumer, and in many cases, this section may include variations of the consumer's name or Social Security number, simply because the information was reported incorrectly by a lender or other entity. The second section comprises the bulk of most reports and includes detailed information on lines of credit, also called trade lines. The third section includes public records such as bankruptcies, judgments, and tax liens . The bottom of the report lists all of the entities that have recently asked to see the individual's credit report because of an event such as applying for a personal loan. If an individual submits an application for credit, an insurance policy, or rental property, creditors, insurers, landlords, and select others are legally allowed to access his credit report. Employers may also request a copy of an individual's credit report as long as the individual agrees and grants permission in writing. These entities typically must pay the credit bureaus for the report, which is how credit bureaus earn money..

Cr Its re xcellent. A FICO score is a credit score created by the Fair Isaac Corporation (FICO). FICO credit scores are a method of quantifying and evaluating an individual’s creditworthiness..

So, what affects your credit score exactly? Your FICO credit score is based on information found in your credit reports. So, data found outside of your credit reports, like criminal records, won’t impact these numbers. The information that influences a FICO Score is broken down into five categories: Payment history (35%) Amounts owed (30%) Length of credit history (15%) Types of credit used (10%) New credit (10%).

Payment history impacts your credit score more than any other information on your credit report. It’s worth an impressive 35% of your FICO score. The purpose of a credit score called its “state design objective,” is to predict the likelihood you’ll become 90 days late (or worse) on any credit account within the next 24 months. If you already have a history of paying bills late, the odds are much higher that in the future you’ll make a late payment on a credit line, and, if your risk is higher, the credit score you earn will be lower. A lower credit score could mean you are offered a higher interest rate on a credit card or loan..

Amounts owed is the second-most influential of the credit score factors. Worth 30% of your FICO Score, the amount of debt you carry (especially credit card debt) is nearly as important as whether you pay your bills on time. If you do have credit card debt, try paying it off or down to help keep it from negatively affecting your FICO score. The primary factor FICO considers in this category is known as credit utilization. Your credit utilization ratio describes how much of your available credit (also known as credit limit) you use each month on revolving credit accounts. For example, if you have a card with a $1,000 credit limit and an $800 credit card balance, your credit utilization rate is 80%. If you want a chance to earn great credit scores, aim to maintain the lowest utilization rate you can (ideally 5% or less). FICO doesn’t consider your age when it calculates your credit score. The age of your accounts, however, is another story. Your length of credit history is worth 15% of your FICO Score. Statistics show that consumers with longer credit histories are less risky borrowers. The idea is that with more data to work with, the results of the scoring model will be better, which helps a lender be more confident in its lending decisions..

A few of the factors FICO considers in the length of credit category include: Your average age of accounts The age of your oldest and newest account How long each account has been open The length of time since you’ve used each account Be cautious about opening too many new credit accounts at a financial institution as this could lower your average age of credit. Also, avoid closing accounts when possible. Closing an old credit card, for example, won’t cause the account to stop aging (that’s a myth.) but a closed, positive account will eventually fall off your credit in around 10 years. When that happens, your average age of credit might decrease, resulting in a lower credit score. Do you have a mixture of account types on your credit report — both revolving credit and an installment loan? If so, FICO scoring models may reward you in the form of extra points for your credit score. The types of credit you use also called your credit mix is worth 10% of your credit score. Credit mix isn’t nearly as influential over your score as other categories. Yet you might still earn extra points in this category over time..

FICO evaluates whether you have experience managing both revolving accounts (like credit cards) and installment accounts (like personal loans or a car loan). If your credit experience is limited to just one type of account, you may not earn as many points as you could have otherwise. The final 10% of your FICO Score comes from the new credit category of your credit report. Applying for too much new credit or opening too many accounts in a short period of time could hurt you here. When someone requests a copy of your credit report from a reporting agency, a record of the access is added to your credit report. This record is called a credit inquiry. Hard inquiries, or those that might damage your credit score, take place whenever you apply for something and the lender pulls a copy of your credit report. FICO considers the number of hard inquiries that appear on your credit report within the last 12 months. Too many recent inquiries could be a sign of financial distress (in other words, you're searching for new credit because you need it to get by) and your credit scores might decline. Yet the potential credit score impact of inquiries is often exaggerated. New credit only accounts for 10% of your score. Plus, some hard inquiries might not affect your credit score at all.

A VantageScore is a credit score that is a competitor to FICO. It is used by lenders and landlords. A VantageScore is a credit score jointly developed by the three major credit bureaus to predict how likely you are to repay borrowed money. It is used by lenders, landlords, and financial institutions to evaluate creditworthiness. Credit bureaus Experian, TransUnion, and Equifax came up with the algorithm to produce VantageScore in 2006, competing against the better-known FICO scores. Initially, VantageScore was on a different scale than FICO, but the most recent revisions have a 300 to 850 scale, just like FICO’s. VantageScore has begun to get lenders’ attention, and it is widely offered to consumers for free..

What are identity theft and identity fraud?. Identity theft is the crime of obtaining the personal or financial information of another person to use their identity to commit fraud, such as making unauthorized transactions or purchases. Identity theft is committed in many different ways and its victims are typically left with damage to their credit, finances, and reputation. Credit monitoring companies offer credit monitoring for a minimal cost. How does it work? You pay a company a monthly fee to track your credit activity. They monitor your credit report for suspicious activity such as new inquiries, new accounts opened in your name, and other triggers of potentially alarming activity..

Synthetic identity theft is a type of fraud in which a criminal combines real (usually stolen) and fake information to create a new identity, which is used to open fraudulent accounts and make fraudulent purchases. Synthetic identity theft allows the criminal to steal money from any credit card companies or lenders who extend credit based on the fake identity. Child identity theft In child identity theft, someone uses a child's identity for various forms of personal gain. This is common, as children typically do not have information associated with them that could pose obstacles for the perpetrator. The fraudster may use the child's name and Social Security number to obtain a residence, find employment, obtain loans, or avoid arrest on outstanding warrants. Often, the victim is a family member, the child of a friend, or someone else close to the perpetrator. Some people even steal the personal information of deceased loved ones. Tax identity theft Tax identity theft occurs when someone uses your personal information, including your Social Security number, to file a bogus state or federal tax return in your name and collect a refund. Criminal identity theft In criminal identity theft, a criminal poses as another person during an arrest to try to avoid a summons, prevent the discovery of a warrant issued in their real name or avoid an arrest or conviction record..