Consumer Reporting Agencies (CRA) like Equifax, Trans Union & Experian (formally TRW), collect data from many sources to make up your credit report. The Federal Trade Commission (FTC) regulates them. Most reports include information on when the account was opened, highest balance, current balance, current payment, dates of past due payments and more. The account types listed on the report with payment ratings include installment (Auto, RV, Boat, Finance Co., etc.), credit card, home loans, student loans, Child Support and others. Bankruptcies, Court Judgments, Charge Offs, Collection Account and others, are also listed showing closed (paid) or not. Most reports are about 30-90 days behind on the information listed on the date the report is run. Generally, information falls off the report when it is seven years old two ways: a) since the account was reported paid, b) negative marks seven years after the date of the late. Bankruptcies can stay on 10 years and some other things can stay on longer.

Credit Scores are a number based on a statistical program assigning "points" to all parts of the credit report. Every time your report changes, your score changes. Every inquiry on your credit, high balances in relation to your credit limit, late payments (especially recent to within the last 12 months), negative marks (especially unpaid) will lower your score. Scores from 640-680 are "average" credit with 700+ "excellent," (although these are subjective). You can have a 620 score, though, and have no late payments listed, and might easily get a new loan. Other factors have caused the score to drop. These factors are listed on the report lenders run. Conversely you can have some recent late payments and a score of 720, and have difficulties getting a loan. The Credit Scores are a tool, not the whole story.

Credit Scores have helped with many new loan programs. There are loan programs available at less cost to consumers with higher Credit Scores. If your Credit Score is low because of erroneous data, it can be frustrating. To improve your Credit Score the basics are, first repair any wrong information (See Fix Credit Report Errors, a How To below), keep inquiries to your credit at a minimum, pay any unpaid negative marks and pay everything in the future on time. Don't make any new debt and try to pay down balances. It will take time to improve your score, usually at least 12 months after you start.

Fixing Credit Scores
Simply put, you contact the creditors (Nordstrom, Wells Fargo, GMAC, etc.) reporting to the CRA (Equifax, Trans Union, Experian) and the CRA's themselves and have it changed. In reality it is time consuming and hard work. It may take awhile to get results, but it's worth it. Phone calls do not accomplish much when repairing credit. We recommend mailing everything, certified mail return receipt and keep copies. Keep a log of what you do. Never pay an old collection account with a promise that they will take it off your credit. Get the account settled as you give them money.

Step 1.
Get a copy of all three CRA's (Equifax, Trans Union, Experian) on you and your spouse. Fixing "Sears, US Bank, GMAC, etc." on Equifax without fixing your spouse's "Nordstrom, Wells Fargo, GMAC, etc." on Trans Union is a waste of time. You need to fix it all.

Step 2.
Organize the creditors that are reporting errors. In other words, find all credit reports on each of you that have been reporting errors. Then, write a letter to those specific Banks, Department Stores, Credit Cards, etc., and Cc it to the CRA's. Report the error and include copies of any documentation or proof. Do no threaten in the letter, just state the facts and ask for their help in correcting the letter. Send each by "certified mail return receipt" and keep the copies for your records. This ends up being about four letters per dispute, one to the creditor, one to each of the three CRA's.

Step 3.
The "certified mail return receipt" gets the companies attention better than a phone call because the documentation holds the CRA's accountable to the "Fair Credit Reporting Act" which had requirements for how many days a creditor has to get back to you about a dispute. Because of this the letter gets their attention much better than a phone call. Keep the "return receipt" for at least 5 years in case a creditor puts the errors back on your report, or in case they do not get back to you at all.

Step 4.
For those creditors that do not respond, send another letter "certified mail return receipt" with copies of the first letter. Include copies of the return receipt card if you got it back. This letter should be worded more strongly, maybe suggesting you are going to seek legal advice if they do not respond. This should fix the problem. If it doesn't, you may need to consult with an attorney.

We strongly urge you not to use a "Credit Repair" service. They cannot do anything that you can't do yourself with the FTC's help and they are expensive. The FTC has even published a warning to consumers about these "Credit Repair" companies.

IF YOU'VE BEEN DENIED CREDIT:
You may request a free copy of your credit report within 60 days of a denial. A copy can be requested at any other time for a small fee. You can contact the three Credit Reporting Bureau's by mail, phone or over the internet.