Your Credit Score
Financial institutions take into account many details when deciding whether to approve or deny an application. Your credit score is one of the most important factors. Choosing the right financial product starts with knowing your credit score. Your score will fall into one of the following categories :
- Excellent: 750 – 850
- Good: 650 – 749
- Fair: 600 – 649
- Poor: 550 – 649
- Bad: 500 – 549
- Limited: 300 – 549
- No Credit: 300
With a low score, you may have to opt for products like a secured card. This gives you the opportunity to build your credit, all the while taking the risk off of the credit card company. As you work your way up the scale, you’ll find it easier to qualify for a large number of offers. For example, a consumer with an exceptional credit score is most likely to qualify for the majority of credit cards.
Credit Errors & Disputes
Here are some things you should do if you spot an error on your credit report:
Make note of what you’re seeing: It’s critical that you double check the data to ensure that it’s inaccurate. From there, make a copy of your credit report and write down exactly what’s wrong. You’ll need this information in the future.
Contact the organized that provided the information to the credit bureau and the credit bureau itself: Both parties are responsible for making things right as outlined by the Fair Credit Reporting Act. Inform them as to what’s wrong as soon as possible.
Provide all the necessary information: Credit bureaus are required by law to investigate the information in question within 30 days. In addition to providing a copy of the credit report to support your stance, you should clearly identify the disputed item, add facts as necessary, and request that it’s corrected or deleted in a timely manner.
From there, wait for a response from the credit bureau. If they state that the issue will be taken care of, continue to regularly check your credit report to ensure that it is.
The Federal Trade Commission is well aware that this is a problem, which is why it provides information on its website about how to dispute credit report errors.
It’s frustrating to find an error on your credit report, as it forces you to spend time disputing the information and making things right. However, it’s better to do this than to simply hope for the best. Your credit report is a picture into your financial health. You want it to be 100 percent accurate at all times. Should you come across an error, take the steps above to rectify the situation as soon as possible.
Common Red Flags on Credit Reports
1. Inaccurate Identity Information
In the identity section, everything should match information that pertains to you. No one else. While you’re reviewing for these inaccuracies, check your Social Security number to ensure that it also checks out. And when it comes to addresses, there shouldn’t be anything on the list that you don’t recognize. For example, if it says you’ve lived in Alaska for five years but have never even visited the state, that’s a problem.
2. Credit History Errors
As the years go by, your credit history will continue to grow. While you expect it to remain accurate, this doesn’t always happen. Closely read through this section of your credit report to check for errors. Do you see accounts that you never opened? How about late payments that you actually made on time? What about open accounts that are displayed as closed?
If you find that an account was opened without your consent, there’s a good chance you’ve been the victim of identity theft.
3. Public Record Errors
While this section isn’t typically as expansive as your credit history, it could include things such as a bankruptcy filing and tax liens. You probably won’t find any errors here, but it could happen. It’s worth a closer look just to be sure. The last thing you need is a bankruptcy showing up in the public record section when you never filed.
4. Inquiry Permission
Hard credit inquiries can ding your credit score, so too many of these are a bad idea. It’s okay to apply for a loan that’ll result in a hard inquiry, you just don’t want to do this too often. If you find a hard inquiry that you didn’t consent to, find out why.
Tip: hard inquiries will remain on your credit report for roughly two years. After that, they drop off and are never to be seen again.
Plan the Process
If you don’t know your credit score, you could find yourself applying for loan and credit offers that you don’t qualify for. For instance, if a particular credit card requires a very good or exceptional score, but you’re in the fair range, your chance of approval is extremely low.
Here’s something else to consider: too many credit inquiries in a short period of time can have a negative impact on your score. For this reason, you don’t want to continually apply for offers that you won’t qualify for.
Knowing your credit score will help you better plan the search and application process.