What You Don’t Know About Your Credit

by Kirk B. Mayors

What are some of the reasons you might need to write a credit dispute letter? Well, if you were denied credit, you might wonder why the lender decided you weren’t a creditworthy borrower. If you generally pay your bills on time, you don’t use up all of your available credit, you have a stable employment history, and you haven’t had your vehicle repossessed, then it’s most likely a mistake.

You might need to contact the credit bureau over something as simple as a credit card billing error. Or to dispute harassing calls from collection agencies who are trying to collect on expired or invalid debts. Perhaps you need to negotiate for a lower payment schedule, or fight a misleading report that is attached to your personal credit report erroneously. Credit bureaus sometimes make mistakes!

Whatever the reason for your bureau dispute letter, you need to write it in a fashion that does not alienate the agency. If you write a successful letter, you can boost that troublesome credit rating quickly. Remember that they have to remove an item if they cannot verify it!

Make sure you keep your credit dispute letter professional yet simple. It should have a cordial tone, and should not be terribly long. You don’t need to include a lengthy personal narrative ? just stick to the facts. Make sure to include a copy of the disputed report, and highlight the information being disputed. Don’t attempt to threaten any kind of legal or other derogatory action; this will only hurt your chances of success. If you are polite and pleasant in your dispute, chances are you’ll get a much faster and more favorable result. Looking at a credit repair sample letter online can help you get an idea of how your letter should sound; just be sure you change the wording of the sample letter to fit your specific case.

When you are ready to send the letter, be sure it goes out by certified or registered mail, and make sure to request a return receipt. The signed receipt will be sent to you so that you have proof that the credit dispute letter was received before the deadline. Also, make sure to keep copies of everything for your records.

Something to watch for is to be very careful when you shop for big ticket items that require a credit card or loan. Do not give your name, address, and other information ? most especially your social security number ? until you are sure you will purchase the item. Otherwise, if you provide your information at multiple places, you might seriously hurt your credit with multiple inquiries for accounts that you never even open!

This is because whenever your credit report is pulled, your credit score is dinged to the tune of up to three points per inquiry! Now, if your credit score is a bit low, there are some strategies you can use to restore credit quickly. For one thing, make sure to bring any delinquent debts current. This will raise your credit score right away. You could even build a good payment history by charging something on a department store card, and paying it off in two payments.

Whatever else you may do, avoid being scammed by supposed credit repair companies. There are many of them online, and there are some less-than-honest attorneys too. Realize that credit agencies receive your information from all kinds of creditors, and there are no simple cures for bad credit.

But, if you feel a mistake has been made on your report, then you should write a credit dispute letter to either the lender, the credit reporting agency, or both. It’s not hard to do, and it’s the best way to ensure that your credit report contains accurate information.

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As you are believably well conscious of, your credit report is probably the nearly significant element in your financial life. If you are having problems due to your credit score, so you are in all probability speculative about free credit repair. Before you can enter repairing your credit rating, you experience to first image the importance and the kind of touch on a poor credit score can cause upon your life.

Negative credit scores happen for a variety of reasons. Perhaps you were at a bad point in your life and had troubles making payments. Maybe you had troubles and had to file for bankruptcy. Perhaps, you simply got in over your head, which happens to a lot of us believe it or not. However, in order to take advantage of free credit repair, you first have to understand what is on your credit report.

The first measure to free credit repair is to obtain a copy of your credit reports. Yes, reports, because at that place are three major credit reporting agencies accessible, TransUnion, Experian, and Equifax. You should call or write them and request a copy of your credit report from each one. The great news is that in several sites, you can obtain on free copy of your report every last year from each agency.If you do not live in those areas, the credit bureaus will hand you a free copy if you have been refused any type of credit recently.

You should receive your report within a maximum of two weeks. Here is where the free credit repair should start. When you get your reports, look them over carefully. Compare them with your own records, understand what they are saying, and make notes of any errors that you find. Even though record keeping has gotten better with computers, many times people suffer on their credit ratings due to errors.

If you receive errors, which may include points that you did not purchase or charge, such as in the cases of identity theft, or points that have been paid off but are mentioned as unpaid or payable, or details that you are current on, but are not evident in the credit reports correctly, you should take prompt action.

You can contact the credit bureaus in writing, notifying them of the error and they will look into it. This is absolutely free and costs you nothing. However, when it comes to free credit repair, you cannot simply expect that they will take your word for it. If this was the case, there would be no such thing as a negative credit rating as everyone would be challenging and removing their bad debt.

When you write the credit bureaus in efforts to seek free credit repair, you want to provide as much information and substantiation of your claim as possible. This could be a receipt, a letter from the creditor, or even a canceled check. If subsequently looking into the claim, they find that there is an error, it will be instantly removed from your credit report.

Free credit repair also includes making payments on time, paying off old debt, and seeking credit counseling. All of these, even if you are late paying off your debt, looks better to creditors than not paying them at all.

There is no right or wrong answer to how many credit cards you really need. Common sense dictates the fewer the better, that way you curb your appetite for credit. The problem is, common sense doesn’t always reign supreme. How can it when this is the era of consumerism, of instant gratification? Some of us like to spend with complete abandon and there’s nothing wrong with that. It can be argued that by spending, we fuel the economy.

Credit cards are the one of the primary enablers of compulsive spending. Let’s have a look at some of the facts here:

Fact # 1: On average, a cardholder will have three bank cards and four gas or store credit cards for a staggering total of seven credit cards! This statistic courtesy of www.cardweb.com.

Fact # 2: Three fifths of U.S. households are responsible for nearly 560 billion dollars of credit card debt. This comes to $11,000 per household of credit card debt. This figure is from Motley Fool, citing testimony by Robert Manning before the U.S. Senate Judiciary Committee.

Fact # 3: Have you ever asked yourself why minimum payments are low? The answer is obvious. By asking consumers to make small minimum payments, they encourage the consumer to carry more debt. The lower the minimum payment, the larger the debt someone will owe. Who wins in the end?

Fact # 4: Lead blogger Jim at Blueprint For Financial Prosperity gives us this useful fact. Credit card companies, just like the phone company or cable company, want to keep you from going over to their competition. If you contact them about interest payments which you think are too high, they will almost certainly work with you. Call them; you’d be surprised what you can get them to do for you.

Fact # 5: There is a link between debt and depression. Studies (cited by Franklin Galvin, Secretary of the Commonwealth of Massachusetts) have shown that students who have over $1,000 in credit card debt have higher rates of drinking, smoking and are far more likely to be medicated for depression.

Just keep these facts in mind as you read on. Getting back to the question of how many credit cards you need, what is this magic number? As for us, we’d like to outlaw carrying more than two! Of course, this idea would never fly in our country.

Of course, no one can tell you how many credit cards you can or should have. Your financial planner or banker may scowl, but they can’t make you give them up.

If we may propose something - If you’ve got more than two cards, why not lock up the excess cards in a secure place to keep temptation at bay? Another idea - When your statement comes each month, make a payment larger than the minimum. After all, the idea is to get out of debt and this will make things happen faster.

Christmas is almost here. You’re at liberty to use your credit cards in any matter you want. This is the time of the year where everyone uses credit cards without holding back or thinking twice since the holidays always put us in a cash crunch. But do yourself a little favor. For your New Year’s resolution, how about making a promise not to use your credit card more than once a month? This is like imposing some kind of military-like discipline, but then again, everyone agrees that uncontrollable credit can be compared to a cobra with a poisonous venom.

Just two more facts for you: U.S. cardholders charge as much as 1.8 trillion dollars every year. 1.8 trillion dollars - just think about that number for a minute. 11% of American cardholders pay interest rates of more than 25%! Both of these figures come to us from the U.S. GAO (General Accounting Office).

It’s time for all of us to take a hard look at the way we use credit cards. Perhaps this can lead to some changes in the way we spend.

One of the greatest things you could have is freedom from debt. Just think about the figures we’ve given you in this article and we think you’ll agree with us. Make getting out of debt your top priority for 2008.

While we would advise having no more than two credit cards, we know that this is simply not going to happen for many. If you can control your spending and keep a grip on your payments, then you can have as many cards as you would like. However, try not to take your cards shopping with you - if you can’t just pull out that card and buy anything anytime, you’ll be keeping yourself out of a lot of trouble. You probably don’t need it that bad anyway.

Patience is a virtue - wait to make those non-essential purchases until you can make them with cash. Don’t be too surprised if you don’t even want them anymore by the time you can pay cash. Best of all, you’ll be helping to keep yourself out of debt.