Something For Everyone . . .

Can you improve your credit rating and raise your credit score?  There’s an easy way to find out.  It might cost you a few bucks for postage, a few minutes of your time, and require a couple of phone calls.  It could save you thousands of dollars or more.  Let’s take a look.

Be very wary of any company that offers to improve your credit for a fee.  You can do all the same things they can.  Give them money and you’ll likely get cheated.

Basically, you’ll get a free report from each of the three credit reporting agencies, look them over carefully for any errors, then dispute those errors.  Will it remove everything you’d like?  If the entry is correct, your mileage may vary.  But it’s worth a shot, and you may be very pleasantly surprised.  There’s no harm in trying.  There’s nothing to gain by repeated requests to remove correct entries.

Start by going to AnnualCreditReport.com.  There are many other websites that will get the reports, but they’ll charge for this or other services.

Answer a few questions to prove who you are and you can print all three reports.  (Experian, Equifax and TransUnion agencies can all have slightly different info.)  Everything’s free.  You can do this once each year.  Next year, you might stagger them so you get a different agency’s report every four months.

Go over each detail carefully and mark every error.  These can lower your credit score.  It’s not uncommon to find incorrect old street addresses, other people’s addresses, etc.  Have all errors removed or corrected.  Read the instructions and contact each agency to dispute the items you’ve marked.

Dispute every item you’ve marked.  ”I dispute that the July, 2008 payment was late” even if it was actually late in June; it might come off altogether.  Do this in writing and mail it to the agency.  Use the US Postal Service’s “return receipt requested” card to receive notification when each one is delivered.  It’s not expensive.

The most important thing is to document everything you do, including dates and names so you can follow up on the phone one month later.  A piece of paper, a Word document on your PC, sticky notes, an email to yourself, a calendar entry — doesn’t matter.  Just do it somewhere so you can follow up in exactly one month.

The agency contacts each creditor about your denials.  The creditor must respond within 30 days, or the item automatically comes off your report.  (Some sources state 45 days for free reports.  Call at 30 days.)

Even if they manage to keep something on your report, you can include a statement about the entry for a small fee.  Your intent is to influence future loan decisions, so be sensible and be very brief.

Remember to contact the agency by phone exactly 30 days after they receive your denial (evidenced by your “return receipt requested” card) to follow up and make sure the item is removed.  If you don’t call them, they’ll often wait longer than 30 days for the creditor’s reply, so hold their feet to the fire.

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You’re better off never getting those black marks in the first place.  Here’s a method that works very well for me to pay all my monthly bills on time.

Most banks and credit unions have a program to automatically pay your bills for you by sending a check or doing a money transfer for you (ACH Debit stands for Automated Clearing House).  This is NOT the same as having a vendor pull money from your account, which I strongly suggest you do NOT do (except perhaps for car insurance payments, which will always be the same amount).  Vendors make mistakes.  That $100.02 you owe for an electric bill could become a request for $1,000.20 and get pulled from your account (and bounce all your other checks and payments).  They’ll fix it later (after you find the error and complain) but you’ll have a lot of headaches before it’s over.  Just say “no” to letting a vendor pull funds in any amount whenever they see fit.

Instead, your bank will give you a web-based tool to set up automated (single, weekly, or monthly) payments that you SEND TO the vendor.  You choose the date and amount, and the bank sends the money electronically, or they’ll print and mail a check for you.  Many banks don’t charge anything for this service, since they save money on check-handling costs.  Some charge a few dollars, but ask them if they have a plan to waive the fee.  (Your auto-deposited paycheck or a minimum balance may qualify you.)

Large monthly payments can be split in two to match your bi-weekly paycheck.  If you’re paid weekly, you could even pay 1/4 each week, so long as they get all their payments before the due date.

Leave plenty of time for the payment to reach the vendor before the due date.  Many credit card companies don’t use the same calendar as the rest of the world (slimy!).  They often have “floating months” that will change your due date as it suits them.  Don’t get chumped when they change your due date without warning.  Everyone should study every statement every month to look for errors and other information, including bill and bank statements.  Most systems give you only 60 days to report errors or you’re stuck with them.  If you’re not watching your money, no one else is, either.

Using the bank’s ACH payment service also means your check won’t get lost in the mail (it happens — a lot).  It’s easy to track payments since they’re itemized on your monthly bank statement and online.  If there’s ever a question or dispute, you have a solid trail and records to straighten everything out, and the service will usually go to bat for you.  If you mail checks, you’re on your own.  Using this method, it may take a year for you to go through a single book of checks because you just won’t use them.

You can choose to make the payments end on a certain date (e.g., car payments), or run indefinitely (your gas bill budget plan).  You can change the amounts or dates any time you wish, or send some extra money on demand.  Once you get your accounts set up (the bank will need to know the account number and address for each vendor) it’s really easy to maintain them.

Do nothing more, and all your bills get paid, on time, every month, without fail.  All you have to do is open your vendors’ bill each month and look it over to make sure everything’s on track.

They may not handle government payments, child support, or insurance payments.  In case there’s a question, they don’t want to be in the middle.  Many car insurance companies will pull premium payments from your account each month instead of a huge bill every six months.

If you wish to raise your credit score, you have good reason.  That number determines the interest rate you get on any loan (or if you even get a loan).  Keeping your credit score as high as possible just saves you a lot of money.

There are a few more things you can do.

Be sensible.  Opening new credit cards, then closing them soon after may be a way to get a free airline ticket or a prize, but looks bad on your report.  Max’ing out a card is bad.  Closing your oldest accounts is bad.  Anything that looks like you’re handling credit in an irresponsible manner is bad.  Every vendor wants customers that use credit responsibly, pay their bills on time, and behave the same as their other good customers.

If you do close an account, call on the phone and insist that your account read, “Closed at customer’s request.”  Otherwise, it can look like the vendor closed it instead of you — bad.

If you are late with a payment, you’ll be charged a late fee.  Call the vendor on the phone and ask if they can waive the fee.  If you’ve been responsible and haven’t made a similar request lately, they may just remove it and that’s the end of it.  If you’re over 30 days late, they’ll report you to the agencies as a missed payment/more than 30 days late.

Until a few years ago, utility companies didn’t report payments over 30 days late, but now they can.  Make all your payments on time.

In many states, a poor credit score will raise your car and other insurance premiums.  Insurance companies figure if you’re careless with your monthly payments, you’re probably a careless driver or a bad risk, and the numbers hold up.  You’ll also pay more for the interest rate on home and auto loans and credit cards.  It can even keep you from getting hired.  Many hiring managers figure if you’re sloppy with your payments, you’re more likely to be sloppy with your job.

There are many benefits to removing black marks from your credit reports.  The cost is next to nothing, the time involved is brief.  The most important part is your follow-up at the 30-day mark.

Good luck,

Charlie Gosh

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Learn a simple trick to take advantage of the next recession . . .  http://www.charliegosh.com/?p=97

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