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Learn what your bad credit rights are

Q. What is a credit score, and how does it have an effect on my capability to obtain credit?
A: Credit scoring is actually a technique creditors use to help decide whether to give you credit, and how much to charge you for it.

Specifics of both you and your credit activities, like your bill-paying record, the number and type of accounts you've got, overdue repayments, collection actions, outstanding financial debt, as well as the age of your accounts, is gathered from your credit application form and your credit report. Working with a statistical formula, lenders compare this data to the credit performance of customers with similar background. A credit scoring system grants points for each element. A total number of points - a credit score - can help estimate how creditworthy you are; that is, just how likely it is that you'll pay off a loan and make the payments on time. Typically, people who are good credit risks get higher credit ratings.

You may get your credit history from the 3 nationwide credit reporting organizations, but you will have to pay a fee for this. A number of other companies also provide credit scores for sale alone or within a package of products.

Improving Your Credit Rating

Under the FCRA, both the credit scoring organization and the information provider (the person, company, or institution which offers information about you to a credit rating company) are responsible for rectifying incorrect or partial information in your report. To take advantage of all your rights under the FCRA, contact the credit reporting company and the information provider in cases where you notice incorrect or not complete details.

1. Tell the credit reporting agency, in writing, what information you think is inaccurate. Include copies (NOT originals) of records that support your position. In addition to supplying your full name and home address, your letter must clearly specify each item in your report that you challenge, point out the facts and talk about the reason why you dispute the data, and require that the information be deleted or corrected. You might like to enclose a duplicate of your report along with the items in question circled. Post your letter by licensed mail, return receipt requested, so you're able to document what the credit scoring agency received. Keep copies of your dispute letter and enclosures.

Credit reporting agencies have to investigate the items in question - generally within 30 days - unless they consider your claim frivolous. Furthermore they ought to forward all the related information you deliver about the inaccuracy to the institution that provided the information. After the information issuer gets notice of a dispute from the credit rating agency, it must investigate, evaluate the appropriate facts, and report final results back to the credit reporting provider. If the information provider realizes the disputed details are wrong, it must alert all three national credit scoring agencies to allow them to fix the details in your file.

When the investigation is finished, the credit reporting company should give you the written results and a free copy of your report should the dispute results in a change. (This free report doesn't count as your yearly free report under the FACT Act.) If an item is modified or deleted, the credit reporting firm can't put the challenged facts back in your file unless the information provider verifies that the information is, indeed, correct and complete. The credit reporting agency also has to send you written notice that involves the name, home address, and phone number of the information issuer.

If you ask, the credit reporting organization has to send notices of any correction to anyone who obtained your report within the last six months. A fixed duplicate of your record could be sent to anyone who received a copy during the last 2 years for employment reasons.

If an examination does not sort out your argument with the credit scoring organization, it is possible to ask that a statement of the dispute be included in your file and in future reports. In addition, you can require the credit reporting company to offer your statement to anybody who received a copy of your report in the recent past. Expect to pay a fee for this service.