Beware of Bogus Credit Repair Companies! 

So-called "credit repair" companies claim they can remove negative information from credit reports. Advertising as "Credit Advisors," "Credit Rating Correction Services" or "Credit Consultants," they trumpet variations on this message: "Turned down because of bad credit? We can help!" Many of these companies charge hundreds if not thousands of dollars for promise to "clean up" bad credit reports. But truth is, these companies can only do what you could do yourself--at no charge. Nobody can remove negative information that is accurate from your credit report. No company has a "secret" ability to remove all negative information. But this doesn't stop their claims. This deceptive quote is from a credit repair company brochure: "Charged-off accounts, collection accounts, judgments, tax liens, repossessions, and even bankruptcies can be removed from your credit records in less than one year (five to seven month average)." One tactic is to bombard credit reporting agencies with requests to verify information. If a credit reporting agency cannot verify an entry within 60 days, it will remove information from report. But if information is later verified to be accurate, it will go back in report. Before you even consider signing a contract with a company that promises to repair your credit, remember these facts: ·You may obtain a copy of your credit report on your own. ·You have right to dispute entries in your credit report.

Beware guaranteed credit offers! Credit repair and other companies often claim they "guarantee" to get you a credit card, regardless of your credit history. In fact, these companies do not always honor their guarantee. Sometimes, they'll just take your money and run--you will not get any credit, regardless of what they promised. If they get you a card at all it often will be a "secured" bank credit card, with high up-front "application" fees, that requires you to deposit and keep several hundred dollars in a savings account, or a card that only allows you to buy items in a catalogue from a business that you probably never heard of. (You can apply for a secured credit card by yourself. For a free list of banks that do not charge application fees for secured cards, see information from Consumer Action in "For More Information" section below.) Credit repair companies often advertise on television, in newspapers and even on matchbooks. Sometimes they require consumers to dial a "900" telephone number to get more information. Calls to 900 numbers can cost $2 or $3 a minute, so listening to a few minutes of information about cards can be expensive. Some companies try to get people a credit card by having them apply using financial information of other people with good credit histories. It is a criminal act to apply for credit under someone else's name--do not do business with one of these companies.

et Your Credit Score To Soar In The Twinkling of An Eye.

Ever wonder how a creditor decides whether to grant you credit? For years, creditors have been using credit scoring systems to determine if you'd be a good risk for credit cards and auto loans. More recently, credit scoring has been used to help creditors evaluate your ability to repay home mortgage loans. Here's how credit scoring works in helping decide who gets credit -- and why. What is credit scoring? Credit scoring is a system creditors use to help determine whether to give you credit. Information about you and your credit experiences, such as your bill-paying history, number and type of accounts you have, late payments, collection actions, outstanding debt, and age of your accounts, is collected from your credit application and your credit report. Using a statistical program, creditors compare this information to credit performance of consumers with similar profiles. A credit scoring system awards points for each factor that helps predict who is most likely to repay a debt. A total number of points -- a credit score -- helps predict how creditworthy you are, that is, how likely it is that you will repay a loan and make payments when due. Because your credit report is an important part of many credit scoring systems, it is very important to make sure it's accurate before you submit a credit application. To get copies of your report, contact three major credit reporting agencies: ·Equifax: (800) 685-1111 ·Experian (formerly TRW): (888) EXPERIAN (397-3742) ·Trans Union: (800) 916-8800 These agencies may charge you up to $9.00 for your credit report. Why is credit scoring used? Credit scoring is based on real data and statistics, so it usually is more reliable than subjective or judgmental methods. It treats all applicants objectively. Judgmental methods typically rely on criteria that are not systematically tested and can vary when applied by different individuals. How is a credit scoring model developed? To develop a model, a creditor selects a random sample of its customers, or a sample of similar customers if their sample is not large enough, and analyzes it statistically to identify characteristics that relate to creditworthiness. Then, each of these factors is assigned a weight based on how strong a predictor it is of who would be a good credit risk. Each creditor may use its own credit scoring model, different scoring models for different types of credit, or a generic model developed by a credit scoring company. Under Equal Credit Opportunity Act, a credit scoring system may not use certain characteristics like -- race, sex, marital status, national origin, or religion -- as factors. However, creditors are allowed to use age in properly designed scoring systems. But any scoring system that includes age must give equal treatment to elderly applicants. What can I do to improve my score? Credit scoring models are complex and often vary among creditors and for different types of credit. If one factor changes, your score may change -- but improvement generally depends on how that factor relates to other factors considered by model. Only creditor can explain what might improve your score under particular model used to evaluate your credit application. Nevertheless, scoring models generally evaluate following types of information in your credit report: ·Have you paid your bills on time? Payment history typically is a significant factor. It is likely that your score will be affected negatively if you have paid bills late, had an account referred to collections, or declared bankruptcy, if that history is reflected on your credit report. ·What is your outstanding debt? Many scoring models evaluate amount of debt you have compared to your credit limits. If amount you owe is close to your credit limit, that is likely to have a negative effect on your score. ·How long is your credit history? Generally, models consider length of your credit track record. An insufficient credit history may have an effect on your score, but that can be offset by other factors, such as timely payments and low balances. ·Have you applied for new credit recently? Many scoring models consider whether you have applied for credit recently by looking at "inquiries" on your credit report when you apply for credit. If you have applied for too many new accounts recently, that may negatively affect your score. However, not all inquiries are counted. Inquiries by creditors who are monitoring your account or looking at credit reports to make "prescreened" credit offers are not counted.