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The Impact of Your Credit Score

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By : Karim El Sheikh    99 or more times read

The need for excellent credit is more important now than it has ever been in the past. Even though a tight economy and suffering real estate market would seem the perfect opportunity to lessen credit score requirements to boost sales, just the opposite has happened. Without A+ credit you will find it very hard to take advantage of the available low interest rates. If you have less than perfect credit you may even find it impossible to receive financing without paying ridiculously high rates.

So what can the consumer do to improve their credit scores?

The first thing you must do, and this is no longer an option that can be ignored, is obtain a copy of your credit report from each of the three major credit bureaus. If you have not obtained a copy of your report in the last 12 months you can do so for free at: Make sure that you obtain copies from each bureau because each report will contain different information.

A recent study has shown that 80% of all credit reports contain errors, and these errors can adversely affect your credit score. There are specific things you should look for on your report, and if found, dispute them immediately.

  • Tax Liens. This type of debt will remain on your report the longest. If you paid your lien, the entry will remain on your report for 7 years. If you have not the item will remain for 15 years. It is important to verify the dates on these items and dispute them if they are near or past the removal date. A lien of this type has severe ramifications on your report.

  • Judgments/Lawsuits/Bankruptcy Debts. All of these debts will remain active on your account for 7 years. The bankruptcy itself will remain for 10. However, any debts included in this bankruptcy must be listed as so, and any collection agencies that are associated with this debt must be removed. Make sure that any debts associated with these three transactions are not reported inaccurately.

  • Duplicate Entries. Collection agencies overturn debts at a steady rate. Many times a person will find that the same bad debt is listed over and over again on their report but through different agents. The debts must be removed once the collection agency sells the debt, however, they usually fail to do so. Removing these multiple entries will improve your credit score.

  • Reporting Time Errors. Any report against you for late payments, charged off accounts or bad records can only remain for 7 years. Verify the time limit on each account to make sure it has not expired.

  • Ex-Spouse/Unknown Individual. If there are debts on your account that are not yours or belong to an ex-spouse dispute them immediately. This is also important if the debt is a good listing on your report. You are not responsible for anyone’s debt but your own.

  • Credit Inquiries. If you have requested credit in the past it will show up as a bad mark on your report. These inquiries should not remain for longer than 2 years. Dispute any item that is older than this.

Once reported the credit bureau has 30 days to verify the information. If they cannot prove the information it must be removed. It is important to stay on top of this process in the event the creditor resubmits the information again at a later date. As a way to avoid problems down the road keep copies of all your disputes and results. If the fight becomes too difficult you may have to resort to old-fashion tactics and start sending disputes by registered mail so you can create a non-digital paper trail.

Keeping your credit report current and correct will allow you to benefit from the super-low interest rates available on the market today.
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