Credit Q&A:

Important Answers To Your Credit Repair Questions

Here are some questions consumers have asked the FTC about consumer reports and consumer reporting companies, and the answers.

Q. Do I have a right to know what's in my report?

A. You have the right to know what's in your report, but you have to ask for the information. The consumer reporting company must tell you everything in your report, and give you a list of everyone who has requested your report within the past year - or the past two years if the requests were related to employment.

Q. What type of information do consumer reporting companies collect and sell?

A. Consumer reporting companies collect and sell four basic types of information:

Identification and employment information: Your name, birth date, Social Security number, employer, and spouse's name are noted routinely. The consumer reporting company also may provide information about your employment history, home ownership, income, and previous address, if a creditor asks.

Payment history: Your accounts with different creditors are listed, showing how much credit has been extended and whether you've paid on time. Related events, such as the referral of an overdue account to a collection agency, also may be noted.

Inquiries: Consumer reporting companies must maintain a record of all creditors who have asked for your credit history within the past year, and a record of individuals or businesses that have asked for your credit history for employment purposes for the past two years.

Public record information: Events that are a matter of public record, such as bankruptcies, foreclosures, or tax liens, may appear in your report.

Q. Is there a charge for my report?

A. Under the Free File Disclosure Rule of the Fair and Accurate Credit Transactions Act (FACT Act), each of the nationwide consumer reporting companies — Equifax, Experian, and TransUnion — is required to provide you with a free copy of your credit report once every 12 months, if you ask for it.

Q: How do I order my free report?

A: The three nationwide consumer reporting companies are using one website, one toll-free telephone number, and one mailing address for consumers to order their free annual report. To order, click on www.annualcreditreport.com, call 1-877-322-8228, or complete the Annual Credit Report Request Form and mail it to: Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281. The form is at the back of this brochure; or you can print it from ftc.gov/credit. Do not contact the three nationwide consumer reporting companies individually. You may order your free annual reports from each of the consumer reporting companies at the same time, or you can order from only one or two. The law allows you to order one free copy from each of the nationwide consumer reporting companies every 12 months.

Q: What information do I have to provide to get my free report?

A: You need to provide your name, address, Social Security number, and date of birth. If you have moved in the last two years, you may have to provide your previous address. To maintain the security of your file, each nationwide consumer reporting company may ask you for some information that only you would know, like the amount of your monthly mortgage payment. Each company may ask you for different information because the information each has in your file may come from different sources.

Still, www.annualcreditreport.com is the only authorized online source for your free annual credit report from the three nationwide consumer reporting companies. Neither the website nor the companies will call you first to ask for personal information or send you an email asking for personal information. If you get a phone call or an email — or see a pop-up ad — claiming it's from www.annualcreditreport.com (or any of the three nationwide consumer reporting companies), it's probably a scam. Don't reply or click on any link in the message. Instead, forward any email that claims to be from www.annualcreditreport.com (or any of the three consumer reporting companies) to spam@uce.gov, the FTC's database of deceptive spam.

Q: Are there other situations where I might be eligible for a free report?

A: Under federal law, you're entitled to a free report if a company takes adverse action against you, such as denying your application for credit, insurance, or employment, and you ask for your report within 60 days of receiving notice of the action. The notice will give you the name, address, and phone number of the consumer reporting company. You're also entitled to one free report a year if you're unemployed and plan to look for a job within 60 days; if you're on welfare; or if your report is inaccurate because of fraud, including identity theft. Otherwise, any of the three consumer reporting companies may charge you up to $9.50 for another copy of your report within a 12-month period.

To buy a copy of your report, contact:

Equifax
800-685-1111
www.equifax.com Experian

Experian
888-EXPERIAN (397-3742)
www.experian.com Trans Union

TransUnion
800-916-8800
www.transunion.com

Questions On Credit Scores

Q. What is a credit score, and how does it affect my ability to get credit?

A: Credit scoring is a system creditors use to help determine whether to give you credit, and how much to charge you for it.

Information about you and your credit experiences, like your bill-paying history, the number and type of accounts you have, late payments, collection actions, outstanding debt, and the age of your accounts, is collected from your credit application and your credit report. Using a statistical formula, creditors compare this information to the credit performance of consumers with similar profiles. A credit scoring system awards points for each factor. 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 the payments on time. Generally, consumers with good credit risks have higher credit scores.

You can get your credit score from the three nationwide consumer reporting companies, but you will have to pay a fee for it. Many other companies also offer credit scores for sale alone or as part of a package of products.

For more information, see Credit Scoring at ftc.gov/credit.

Getting Your Financial Education Pays Off
(ARA) - The proportion of American families carrying an average credit card balance of $5,100 rose to 46.2 percent, according to the 2004 Survey of Consumer Finances conducted by the Federal Reserve Board. Many people may not realize how debilitating this type of credit card debt can be.

“Credit cards are good tools for people to build credit as long as you know how to use them,” says Eric Justason, director of marketing, Genesis Financial Management. “It’s very important to pay off the balance every month. One you start carrying a balance, your risk of future financial troubles increases ten fold. If you get sick, experience job or income loss, the debt can easily spiral out of control.”

If you have a loss of income and your minimum credit card payment becomes a struggle, the first thing to happen is late payments, followed by missed payments, which cause all your cards’ interest rates to increase. Then minimum payments increase and it snowballs from there into financial ruin that can take a lifetime to recover from.

“I purchased a house when the market was good,” explains Dale Winslow of Tampa, Fla. “I had credit card debt and student loans and thought I could pay them off when I had some equity in the house. Then I lost my job. I started making late payments and even missed a payment or two. In a few months, my interest rates went up, my credit score went way down and there was no way I could catch up. I was very near losing my house. It was the scariest position I’ve ever been in.”

“The first step to good personal financial management is education -- you need to learn the right steps to take,” says Justason. “Always pay the balance in full, save money, follow a budget and spend less than you earn. It’s never too late to learn how to do it right.”

Here are some of your options:
1) Loan. Get a loan to pay off credit card balances, but beware of the fact that this doesn’t break the habit of credit card use. If you continue to use your credit cards, then you’ll have both credit card and loan payments.

2) Home equity. Using home equity to pay off credit card balances can be dangerous. It reduces the investment value of your home, and if you’re late or delinquent on payments, puts your home in jeopardy.

3) Credit counseling. Enrolling in a debt management program helps you manage your debt by consolidating all your payments into one monthly payment, and most major creditors support this program as an effective way to get credit card debt under control.

The Genesis Debt Management Plan is a program that works with creditors to manage your past due accounts, lower your monthly payments and reduce your interest rates so you can get out of debt and keep it that way.

Another word of advice from Justason: “Avoid giving your kids everything they want. You don’t have to always keep up with the Joneses.”

For more information visit www.yourgfm.com or call (877) 205-5179.

Courtesy of ARAcontent

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