Building Better Credit Report Essay, Research Paper

Building a Better Credit Report

The American dream is a puzzle, both for those who study it and for those who pursue it. We should never forget that this dream is connected to the credit as much as a fragile flower to the sun. What would you say is the American dream? Today s American dream, Lendol Calder, author of the Financing the American Dream replies, includes a house in the suburbs with a backyard for the kids to play in, a patio for barbecues, a shady street bright and obedient children, camping trips, fishing, two family cars, seeing the kids taking parts in school and church plays, and online access to the world (3). This is not the end of the puzzle. In fact, it s just the beginning. To reach this dream is necessary to keep credit clean and under control. There are important things that need to be done to improve credit.

There are three important players in the consumer credit game; creditors, credit reporting services and credit repairing agencies. All of them are in the game to make money but none of them are truly here to help the consumers. Creditors are the first one. They allow clients, purchasers, customers and buyers to use future income to purchase goods and services today. In exchange, creditors expect to make their own profit by applying interest (Hammond 17-18). All the creditors put trust in one another significant player in the credit game, the credit reporting service. Information on millions of American consumers is gathered by these services to provide creditors with credit histories on every one of them. Three national agencies compile credit reports; Experian, Equifax and Trans union. In fact This information is provided to them by individual creditors such as department stores, mortgage companies and banks, known as subscribers in credit bureau parlance. (qtd. in Hammond 18). Consumers credit history is being evaluated each time they apply for new credit or an extension. Creditors want to be secure that everyone is a good risk by checking credit history before approving your request. Credit repair agencies are also important players in the credit game. They claim to be able to influence credit rating and to change it for the better. As Hammond observes, Historically, such businesses have often been scams operations, skipping the town before unwary customers realize their credit rating are unchanged but their bank balance has dropped. (21-22).

Most of credit consumers need to repair credit. The first step to improve credit is by requesting your credit report. To request a copy of credit report, consumers must enclose a copy of driver s license, credit card bill or utility bill. If it s the first time it should be included full name, address, previous address, social security number, and a copy of a billing statement (McNaughton 68). The credit reporting services charge eight dollars for a report, a fee that is waived if you are unemployed or disabled. In fact, Edwards Audrey, author of U-Do-It Credit Repair notes, By law, if you have been turned down for credit, each of the three major credit bureaus must send you a copy of your credit report free of charge (1). To get this free report the consumer s request must be accompanied by a copy of the denial letter. Once a copy of credit report has been received, determine the status. Unfortunately, 70% of American consumers have at least one item in their credit report that is negative (Hammond 41). Trouble is, the information may well be incorrect, misleading or inaccurate. It is definitely recommended to attempt to remove all erroneous information by writing to the credit bureau to dispute all entries you think are inaccurately reported. Check all the dates, amounts and account numbers. When a dispute is filled, it is the creditor s responsibility to respond about the disputed item. The credit reporting agency will complete the investigation with the creditor within 30 days. If the dispute is not answered by the creditor or it is unverifiable, the item must be removed (Jones 2). Now we know how to get credit report and dispute erroneous information when it s false.

Credit repair clinics are useless and unnecessary to improve credit rating. They offer to help clean up your credit by using loopholes in the law that only they know about. Some repair clinics may even get consumers into legal trouble by encouraging them to distort the information in the credit file or by helping to initiate a new file with a new address and federal identification number (Rowland 2). There are three ways to create a new file. Same name different personal information, different first or last name and the same personal information and the last of all is to use an alias name with same or different personal information (Jacquelyn 1). The Federal Trade Commission adds the warning that consumers may be prosecuted for mail or wire fraud if they provide false information when requesting for new credit or an extension (Paradis 1). This illegal businesses are easy to recognize. Usually are located in different state with the one that they operate. If it s the same state they would change locations, names and phone numbers very often (Avdrey 1). According to Brown, The companies that have been accused of file segregation by the F.T.C. are listed on the web (www.ftc.gov) (1). Some experts suggest the nonprofit organizations. Most of them will be free or require a minimal charge for consulting. If it is more than $50 start walking. Finally credit repair services, or so-called credit doctor cannot do anything that you couldn t do yourself. So let s focus on what needs to be done to repair credit.

Cleaning up credit is not all that complicated. It s not complicated enough to pay people thousands of dollars to help you. According to Joyce Jones, author of the jurnal The Truth About Reparing your Credit , the FTC and the credit bureaus recommend consumers to clean up credit on their own, without spending money for counselors (4). The key is consumer s education and awareness. What consumers need is patience to follow through and make sure that credit reporting agencies are doing their jobs. Mary Rowland, author of Good Credit Gone Bad , suggests five steps for credit repair that are helpful for everyone. First thing, put the cards away. This means not to close the accounts yet. Credit might have been damaged and getting new cards could be impossible. If consumers are to clean up credit they must stop using them. Also it s necessary to figure out where you stand. It s not easy to focus on budgets and net worth if consumers know they spend more than they make. Right here is an immediate need to devise a plan. Consumers must pay bills on time to improve credit rating. At least pay the minimum balance within 30 days because there is no other way out. Another smart thing to do is negotiating with creditors. Most consumers think that creditors will not cooperate. The truth is that 90% of creditors will renegotiate terms if consumers have fallen behind. The last thing that Rowland points out is adding pertinent information to your credit report. It s totally consumers responsibility to add information that might help credit rating. Negative information can damage credit as much as information left out from it (2).

Also a good way to repair credit rating according to the Federal Trade Commission, is by developing a budget. There are three significant lists that everybody should be able to do. The first one includes all incomes from different sources. A smart step toward controlling your financial situation is by checking the money that comes in and goes out. Continue by making a list of the expenses, for example rent, mortgage payments, insurance, and car payments ( Building 5). Another list must include the expenses that vary and the ones that seem unimportant, such as amusement, clothing, or recreation. Finally by taking a close look consumers must identify the expenses that are necessary. The goal is to make sure you can make ends meet on the basics: housing, food, health care, insurance, and education. ( Building 5).

Establishing credit is as important as protecting it. According to McNghten, author of the book The Insider s Guide to Managing your Credit, there are four effective ways to establish credit. Opening a personal secured loan it s a smart move. First open up an account from which you draw interest, either CD or saving account. By getting a loan against it the bank will trust clients at no risk. Then it s up to you to pay when due and obtain good credit. Merchants are also good source. Before actually applying make sure they report to the major reporting agencies. After selecting an item you would like to purchase ask them to set up 90 day account. Repeat this couple times before applying for major credit card. Secured credit card it s a very common and effective way to obtain credit. This kind of credit card must be secured with a deposit to the bank that provides this kind of program. Few banks do that so be systematic with the payments. A cosigner works just fine to establish credit. A friend or a relative should cosign a loan or credit card under your name. Everything will be reported on yours as well as on the cosigners credit report. In this case the cosigner is playing with the cards open because he is totally depending on you. Make the payments on time so you don t mess up your credit and lose a friend at the same time (52-53).

Eventually after dealing with many problems consumers must know how to protect credit. Whether you ve been a victim of identity theft or just to ensure it never happens to you, here are some tips. Everyone should use the Federal Trade Commission s sample letter to request from all major national credit agencies to keep your personal information confidential. Definitely, remove everything from marketing list. Also let the department of the motor vehicles know you want to maintain your privacy. Finally, realize that people can get your information from all sorts of places. One of them is the Internet service provider. Give away as less information as possible and sue them if they fail to keep your privacy (McLaughlin and Lane 2).

Did we complete the puzzle? Did we reach the American dream? One thing is sure; our credit is deeply connected to this dream.

A young man and a woman sit close together against a tree on a warm summer night. They gaze dreamily at the heavens, where they see images in the night sky: not centaurs and winged horses, but object more familiar and perhaps more fabulous. They see a split-level ranch house and a swimming pool. They see a son playing ball and a daughter playing the piano. They see a sport car and a family station wagon, a hi-fi stereo set and a television, helpful home appliances-all the twinkling constellations of the American dream (Calder 3).

Outline

Thesis: There are important things that need to be done to improve credit

I. There are three important players in the consumer credit game.

A. Creditors allow consumers to use future income topurchase goods and services.

B. Credit reporting services provide crediters with informations about every consumer

C. Credit repairing agencies claim to be able to influence credit rating

II. Most of credit consumers need to repair credit

A. First step to improve your credit is by requesting your credit report

1. Determine the status of the credit report.

2. Dispute all erroneous information.

B. Credit repair clinics are useless and unnecessary to improve credit rating.

C. Consumers can clean up credit problems on their own.

1. Five steps for credit repair

2. An effective way to repair credit is by developing a budget

III. Establishing credit is as important as protecting it.

A. There are four efficient ways to establish credit

B. Tips to pretect credit report.