To give yourself every financial option you can, building your credit rating and getting better credit scores should be part of your Personal Financial Fitness plan.  Just like paying the bills on time and following your budget, having a Credit Building Plan in place, and using it, should be part of your routine. 

WHAT TO DO
1) Pay all bills on time.  Don’t be late on anything.  This is the number one factor in credit scores.  If you do miss a payment’s due date, contact the lender immediately to find out if it has been reported to the credit bureaus.  Typically, payments that are less than 30 days late are not reported. 

2) Keep credit card balances under 50% of the credit limit.  Having your account balances over half of the available credit usually causes credit scores to go down.  This includes your gasoline cards and retail store accounts, too.

3) Keep revolving accounts open and active.  Don’t close your credit cards when they are paid off.  They help several parts of your credit scores and they do this best when they have zero or very little balance and are used a few times a year to keep them reported as active accounts.  Use your planner to schedule a fill up with that fuel card you rarely use or that Sears account you’ve had for years.  Pay the entire bill as soon as it arrives; you’ll save money on interest fees and help your credit scores grow.

4) Keep your credit cards at home in a safe, locked place.  Don’t carry all of them with you all the time.  You rarely need to use them all in one day anyway and it may help to reduce the temptation to overspend.  Additionally, having fewer items in your wallet means less opportunities for identity thieves in the event your wallet is lost or stolen.

5) Limit the number of times you apply for credit.  The scoring formula takes into account how often you are “shopping” for credit; too many inquiries can trigger a drop in scores.  Rate shopping for mortgages or auto loans should be done within a two-week period to minimize the effect on credit scores.

6) Monitor your credit regularly.  Checking for errors at least three times per year is a great way to be sure your credit report is accurate and contains only YOUR information.  The rise in identity theft and the continued rate of credit reporting errors means you must take an active role in maintaining your good credit rating.  You can do this for free with your Annual Credit Reports.  Dispute any errors with all three credit bureaus, even if you only found the error on one report.  Keep copies of everything.

7) Bookmark our website and subscribe to the link on the right to stay updated on credit building information.  You can also get personal credit consulting services designed to optimize all five parts of your credit score based on the accounts you currently have.  Contact us today for more info.

The Fair Credit Reporting Act (FCRA) states “…that the consumer has the right to add a statement to the consumer’s file disputing the accuracy or completement of the information;”.  The credit bureaus will gladly insert this and it does indeed show up on your credit report.

However, it generally does NOT help your credit rating and has absolutely nothing to do with your credit scores.  It may, in fact, signal that you are resigned to accept the reporting as it is and will go no further in protesting it other than the few lines in the Consumer Statement.  Now, sometimes a lender will actually look over the entire credit report, see your words of explanation and pursue a loan approval anyway.  But most of the time they just check your scores for minimum qualification and ignore the rest of the credit report.

BOTTOM LINE
Don’t bother with a Consumer Statement on your credit report.  If you know something in your credit file is not correct, keep trying to get it corrected.  You can contact the original company for documentation, request validation from  collection agencies related to the account, and check your own records for something to back up your claim. 

Be sure to send in some new documents or reasons when you contact the credit bureaus so that they do not determine that your dispute is “frivolous”, which gives them a reason to stop investigating the matter and leave it as it is. Yes, this is really written into the FCRA, conveniently providing an out for the credit reporting agencies. 

Knowing your consumer rights and how to use them to your advantage is the first step to getting better credit scores and more financial options for your future.  We provide detailed strategies on how to improve your credit rating with an in-depth Credit Analysis for only $100 - get yours today.

WHO
If you are a cable subscriber using any of the cable company’s boxes, print and keep this article for future reference.

WHEN
When you cancel the cable service, because you are moving or switching, they usually require you to return their equipment.  Don’t leave it in the home or apartment.  Don’t leave it with the landlord or a family member to turn in later.  Turn it in as close to the last day of service as possible.

WHERE
Go to the cable company’s office to turn in the box and any other equipment.  Take a copy of your statement and account number with you to assure proper credit to your account.

WHAT
Get a receipt for the box.  Something in writing on their letterhead showing the date, your name and account number, the make, model number and/or serial number for the equipment you are returning, and an employee’s or manager’s signature. 

If you are also giving them money for your final bill, get a written receipt showing all of the same information listed above, PLUS the words “paid in full, zero balance due”.  Keep these receipts in a secure place at home or in a box with important papers during the move.

HOW THIS HELPS
In the event that an error occurs and the cable company does not properly credit your account with the returned equipment, you might find a collection account on your credit report a few months or years down the road. 
NOTE: By monitoring your credit three times a year as we recommend, it is unlikely to go undiscovered on your credit reports for a few years.

You can mail a dispute letter to the collection agency reporting the account on your report.  Their name and address should be on your credit report.  Be sure to use the collection account number from your report and send a copy of the receipt showing the cable box return, telling them that you do not agree with this alleged bill and owe them nothing.  Request that this inaccurate account be removed from your credit file.  Per the Fair Credit Reporting Act (FCRA), they must respond to your letter within 30 days of receiving it.  Mark your calendar for 35 days from the day you send it. 

Their reply should show that you do not owe the money and may even state that they are contacting the credit bureaus to have it removed.  Make three copies of their letter and send one to each of the three credit bureaus with your letter disputing the collection account and requesting that it be removed from your file.  Be sure to send each bureau a copy of the original receipt for turning in the cable box, too. 

If the collection agency does not reply by the 35th day you marked on your calendar, that indicates that the account cannot be validated and should be removed from your credit reports.  Send each of the three credit bureaus a copy of the original receipt and the collection agency letter telling them that this account is not accurate and was not verified by the company reporting it, therefore it must be removed from your credit report.

Mark your calendar again for another 35 days from the time you mail these letters as the credit bureaus are required by law to respond to your dispute within 30 days after receiving your letter.  If they do not reply, they are in violation of your consumer rights under the FCRA and you can file a complaint with them and the Federal Trade Commission.

By taking a few minutes to get a written receipt for turning in your cable box, you can save yourself countless hours of time and frustration later, in addition to the money saved by not having to pay for something you already took care of but have no proof.  Plus, the lower interest rates you can get with higher credit scores will put more money your pocket, too.

BACKGROUND INFORMATION
The second largest factor in credit scores is the utilization ratio, your balance-to-credit-limit amounts.  Theoretically, having zero balance should really help that ratio. 

In reality, the credit card company has to process your payment once they receive it.  Then, the next time they transmit updated customer account information to the credit bureaus, your payment and zero balance will be included.  BUT, if the credit card company only sends customer info to the bureaus once a month and it happens the week before your payment is due, the zero balance may never show.                              

Your account will still report “current” or “in good standing”, which helps your credit score under Payment History.   The downside is that, on your credit report, it could look like that credit card is carrying a balance. 

If you regularly use a significant amount of the credit limit each month, it could be reflected with a high utilization ratio.  When credit card balances are OVER 50% of the credit limit, credit scores usually go down.

WHY IT MATTERS
When you apply for a loan or credit account, the potential lender checks your credit report and score.  If their lending guidelines require a certain credit score, and your score is 20-50 points lower than it should be due to the credit card showing a balance, creating a high utilization ratio on paper, you may be turned down for the loan or account.

WHAT TO DO
If you are planning a major purchase in the near future and heavily use your credit cards throughout the month - paying them off completely when the bill is due – you might want to consider changing your habit for a few months.  By limiting the credit card usage for two months before your loan application, you give the reporting process time to accurately reflect your true credit card account balances.  We have seen scores increase by more than 50 points just by having the utilization ratio under 30%.  So pay cash or distribute the card usage among a few different accounts for the month or two prior to your major lending purchase.

For more specific information on your accounts and how you can use them to optimize your credit score, contact us today for your Credit Analysis.