Jeb Posted November 15, 2005 Report Share Posted November 15, 2005 I am running across so many excellent Web articles about ID Theft and Credit today, that I fely compelled to start this credit news thread, and many more like it. Requesting a credit report http://www.bankrate.com/nsc/news/forms/cre...opy-request.asp The information in your credit report determines in large part what kind of credit, from car loans to credit cards to mortgages, you'll be able to get. Federal law gives you the right to know what consumer credit information is collected on you and you need to exercise that right. Check your credit report periodically to ensure that all the information is correct and to guard against your credit being assumed by identity thieves. You can be very aggressive with your credit management and pull your score with some regularity. Or you can take a more passive approach, checking once a year to see the status of your credit. Regardless of which approach you take, it's not hard to get a copy of your credit report. There are three major credit reporting bureaus: Experian, TransUnion and Equifax. You should get a copy of your report from each. The cost generally is around $10 per report, but depending on where you live and your credit history, you may be able to get a free copy. You can request a copy online; the links in the letter below will take you to each company's Web site where you can get more details on obtaining your credit report. Make a separate request of each agency. Many people, however, prefer the old-fashioned mail system when it comes to dealing with transmission of personal financial data. If you are more comfortable asking for a copy via a letter, then simply use this form and send a separate letter to each agency. Personalize the form letter below by entering your specifics in the areas in red. You can print out this Web page and make your changes by hand or copy the body of the letter and paste it into a document where you can make your changes on your PC. If you prefer to see a .pdf version of the letter, click here. Or you can get it in .txt format by clicking here. (Copy the body of the letter and paste it into a document where you can make your changes on your PC.) - advertisement - Date Equifax Credit Information Services Inc. https://www.econsumer.equifax.com/consumer/...ml?forward=home P.O. Box 740241 Atlanta, GA 30374 TransUnion LLC http://www.transunion.com/Personal/OrderOtherMethods.jsp Consumer Disclosure Center P.O. Box 1000 Chester, PA 19022 Experian http://www.experian.com/consumer/index.html National Consumer Assistance Center P.O. Box 2002 Allen, TX 75013 Re: Request a credit report Dear Sir or Madam: In accordance with the Federal Fair Credit Reporting Act, I am sending this letter to request a copy of my credit report. To expedite my request, here is my personal information: * Your full name * Your Social Security number * Your date of birth * Your full address (street, city, state, ZIP Code) * Your home telephone number Please include all sources for the information and the complete records of any distribution of credit information to any parties by any sources. Enclosed, you will find my payment of amount to cover cost of the report. If you are seeking a copy of your credit report because you recently were denied credit, mention that here. You are entitled to a free copy of your credit report if you request it within 60 days of the date that a creditor said "no" because of something in your file. Let the credit agency know that's why you want your report: On [specific date] I was declined credit by [name of creditor]. Enclosed you will find a copy of the letter from the creditor refusing me credit. Please do not share this information with any other agency. Any other details you would like to add about the report or your credit in general should be detailed here. Thank you for your prompt attention to my request. Your Signature Your Typed Name Your Address City, State and ZIP Code ---------------------------------------------------------------------------- Changing your last name http://www.bankrate.com/nsc/news/forms/cre...name-change.asp Congratulations on your marriage! Now the fun begins. No, we're not talking about long walks on the beach; we' re talking about your new last name. If you've chosen to take your husband's name, you'd better start letting people know, and this includes those involved in your financial life. Your credit report is a good place to start. Why bother? Because you want to guarantee that all your good credit information follows you into matrimony. That way, you and your better half shouldn't have any problem getting your first home loan! The letter below shows just how easy it is to get your new last name put on your credit report. Send a separate letter to all three major credit reporting companies (their addresses are listed in the letter). Follow up to ensure that the changes were made. You can order a copy of your report, either by phone or online, for around $10 per company. The links in the letter below will take you to each company's Web site where you can get more details on obtaining your credit report. Remember, in addition to changing your name on financial accounts, you also need to let Uncle Sam know; your Social Security card needs to reflect your new moniker. And, if things don't work out and you decide to go it alone again -- with your original last name -- you can tweak this letter to change your credit report data once again. Personalize the form letter below by entering your specifics in the areas in red. You can print out this Web page and make your changes by hand or copy the body of the letter and paste it into a document where you can make your changes on your PC. If you prefer to see a .pdf version of the letter, click here. Or you can get it in .txt format by clicking here. (Copy the body of the letter and paste it into a document where you can make your changes on your PC.) - advertisement - Date Equifax Credit Information Services Inc. https://www.econsumer.equifax.com/consumer/...ml?forward=home P.O. Box 740241 Atlanta, GA 30374 TransUnion LLC http://www.transunion.com/Personal/OrderOtherMethods.jsp Consumer Disclosure Center P.O. Box 1000 Chester, PA 19022 Experian http://www.experian.com/consumer/index.html National Consumer Assistance Center P.O. Box 2002 Allen, TX 75013 Re: Request to change name on credit report Dear Sir or Madam: My credit information with your company current is currently held under my maiden name: Full pre-marriage name. However, I have recently married and now am legally known as: Full married name. This letter is my formal request that you change your records to reflect my new legal name. In addition to my new name, your data should indicate my new address. Below I have listed, along with my Social Security number, my prior name and previous address and my new name and address to which my records should be changed: Pre-marriage information Full maiden name Social Security number Old mailing address City, State and ZIP Code Married information New married name Social Security number New mailing address City, State and ZIP Code If you have any questions about these changes, you can contact me by mail at my new address or by telephone at work phone number during business hours. I also am enclosing a copy of my marriage license. This will verify my name change and ensure accurate spelling on my updated credit report. Thank you for your prompt attention to my request. Your Signature Your Typed Name Your Address City, State and ZIP Code Enclosure: Marriage license (copy) ---------------------------------------------------------------------------------------- Stopping credit bureau from sharing your data http://www.bankrate.com/nsc/news/forms/opt...dit-bureaus.asp As a consumer, you have privacy rights that specify what personal and financial information may be collected, how it can be gathered and who gets access to your data. These rules apply even credit bureaus. The Fair Credit Reporting Act was created more than 20 years ago to promote accuracy of consumer information and the privacy of the personal data collected by consumer reporting agencies, including credit bureaus. To accomplish this goal, the FCRA has a framework of practices related to personal information, including the accessibility of the data, limits on its use and distribution, and requirements for consent from the consumer regarding use of his or her collected data. So what exactly does that mean to you? Basically, you need to take charge of your personal data and make sure that it's used -- or not used -- as you deem appropriate. One way is to demand that credit bureaus not place your personal information on a marketing list. This form letter is a handy and easy way to let three credit reporting agencies -- Equifax, Experian and TransUnion -- know that you object to your personal information being disclosed to marketers. Send a separate copy to each of the credit bureaus. Personalize it by entering your specifics in the areas in red. You can print out this Web page and make your changes by hand or copy the body of the letter and paste it into a document where you can make your changes on your PC. If you prefer to see a .pdf version of the letter, click here. Or you can get it in .txt format by clicking here. (Copy the body of the letter and paste it into a document where you can make your changes on your PC.) - advertisement - Date Equifax Credit Information Services Inc. P.O. Box 740241 Atlanta, GA 30374 TransUnion LLC Consumer Disclosure Center P.O. Box 1000 Chester, PA 19022 Experian 475 Anton Boulevard Costa Mesa, CA 92626 Dear Sir or Madam: In accordance with the Fair Credit Reporting Act, this letter is my formal request that credit bureau name remove my name from its marketing lists. I have listed below all the appropriate information to help you expedite this removal. In this paragraph, list your full name: first, middle and last. Along with your current mailing address also provide previous mailing addresses you've had in the last six months. Don't forget to include your date of birth and Social Security number. If you wish to explain why you want your name to be removed from the bureau's marketing list, do so here. Thank you for your prompt attention to my request to be removed from your marketing list. Please send me written confirmation when you comply with this request. Sincerely, Your Signature Your printed name Your mailing address City, State and ZIP Code -------------------------------------------------------------------- How to read and understand your credit report http://www.bankrate.com/nsc/news/pf/20001127a.asp By Pat Curry • Bankrate.com The lender told you to get a copy of your credit report as part of the pre-qualifying process for a mortgage. The purpose, he said, was to see how your credit looked and to clear up any errors that might be in the report. But now that you've got it, there are an awful lot of numbers, abbreviations and terms you've never seen before. Trade lines, charge-offs, account review inquiries -- how do you read this thing? First off, there are three major credit-reporting agencies in the United States: Experian, TransUnion and Equifax. Order a copy of your credit report to review. Thanks to a new federal law you'll now be entitled to one free credit report from each of the main credit reporting agencies per year. The program rolled out across the nation region by region with all Americans eligible on Sept. 1, 2005. The reports will not automatically be sent out. Each consumer must request their reports one of these three ways. Go to www.annualcreditreport.com, which is the only authorized source for consumers to access their annual credit report online for free; call (877) 322-8228 or you may complete the form on the back of the Annual Credit Report Request brochure, and mail it to: Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA, 30348-5281. One more caveat: You'll be able to order all three credit reports at one time or at different times throughout the year. It's your choice. But, be sure to order from the centralized agency. If you go directly to the credit reporting agencies, you will be charged unless you fit another criteria for a free report. If you want to review your credit reports more frequently, you can order directly from the credit reporting agencies via their Web sites, by phone or mail. Costs vary from state to state, but in most states, it can cost up to $9.95 to get your report. TransUnion, Equifax and Experian all allow you to review your report online. "Looking at one is a useless endeavor; you need to look at all three," says Howard Dvorkin, president of Consolidated Credit Counseling Services in Fort Lauderdale, Fla. "People tend to pull one and think everything is the same on all of them. That's not normally the case." The reports will have different information because it's a voluntary system, and creditors subscribe to whichever agency they want -- if any at all. Maxine Sweet, vice president of consumer affairs at Experian, stresses the importance of ordering the report directly from the credit bureau instead of asking a buddy who works at a bank to pull one for you. The ones at the bank are written for people who work in the credit industry. The one you get from the credit bureau is designed for consumers. - advertisement - "The information is the same, but it's much more consumer-friendly," she says. Well, not quite the same. But the differences, Sweet says, are only to make the report easier for consumers to read. The report sent to a lender will list the credit bureau member numbers of your creditors and it won't have the complete list of every company that's pulled your credit information for promotional purposes, like pre-approved credit card offers. "If you compared the two reports side by side, the consumer one will have a couple more pages of information," says John Ulzheimer, business development manager for myfico.com. The Fair Isaac Corporation is the creator of the FICO score, the widely used credit scoring model that is used to determine a person's credit risk. A credit report is basically divided into four sections: identifying information, credit history, public records and inquiries. Identifying information is just that -- information to identify you. Look at it closely to make sure it's accurate. It's not unusual, Sweet says, for there to be two or three spellings of your name or more than one Social Security number. That's usually because someone reported the information that way. The variations will stay on your credit report; "If it's reported wrong, we leave it because it might mess up the link. Don't be concerned about variations." Other information might include your current and previous addresses, your date of birth, telephone numbers, driver's license numbers, your employer and your spouse's name. The next section is your credit history. Sometimes, the individual accounts are called trade lines. Each account will include the name of the creditor and the account number, which may be scrambled for security purposes. You may have more than one account from a creditor. Many creditors have more than one kind of account, or if you move, they transfer your account to a new location and assign a new number. The entry will also include: * When you opened the account * The kind of credit (installment, such as a mortgage or car loan, or revolving, such as a department store credit card) * Whether the account is in your name alone or with another person * Total amount of the loan, high credit limit or highest balance on the card * How much you still owe * Fixed monthly payments or minimum monthly amount * Status of the account (open, inactive, closed, paid, etc.) * How well you've paid the account. On Experian's report, your payment history is written in plain English -- never pays late, typically pays 30 days late, etc. Other comments might include internal collection and charged-off or default. "Charged-off means the creditor has given up, thrown in the towel," Ulzheimer says. "He's made efforts to collect and written it off." Other reports use payment codes ranging from 1 to 9; an R1 or I1 on a report is an indication of a good payment history on a revolving or installment account. The next section is the part you want to be absolutely blank. The public records section "is never a good story," Sweet says. "If you have a public record on there, you've had a problem." It doesn't list arrests and criminal activities; just financially related data, such as bankruptcies, judgments and tax liens. Those are the monsters that will trash your credit faster than anything else. The final section is the inquiries. That's a list of everyone who asked to see your credit report. "Any time anyone gets into the report, it'll post an inquiry," Ulzheimer says. "If you call the credit bureau and ask for a copy, it will be on there. It's a very detailed entry record. It's great for the consumer." Inquiries are divided into two sections. "Hard" inquiries are ones you initiate by filling out a credit application or taking your child to the orthodontist. "Soft" inquiries are from companies that want to send out promotional information to a pre-qualified group or current creditors who are monitoring your account. The soft inquiries are only shown on reports given to consumers, according to Sweet. You may have heard that a large number of inquiries can have a negative impact on your credit score, but you're probably OK. "The vast majority of inquiries are ignored by the FICO scoring models," Ulzheimer says. "They're not the steak in the steak dinner." For instance, the FICO scores have at least a 30-day buffer period where auto and mortgage inquiries are initially bypassed and not counted. It also counts two or more "hard" inquiries in the same 14-day period as just one inquiry. "You could have 30 in two weeks and it only counts as one," Ulzheimer says. If you find a mistake on your credit report -- an account that isn't yours or a disputed amount -- you'll need to fill out the form that comes with the report or follow the instructions on the explanatory sheet. The process takes time because the creditors have 30 days to respond to a charge of a discrepancy. As long as a charge is in dispute, that dispute will show up on your report. Long-time lenders say it's common for reports to have errors. Some estimate that as many as 80 percent of all credit reports have some kind of misinformation. Amy C. Fleitas contributed to this article. More stories by Pat Curry This one's a Gem.... Dealing with the tenants from hell http://www.bankrate.com/brm/news/real-estate/20050721a1.asp --------------------------------------------------------------------- Disputing and correcting a mistake on a credit report http://www.bankrate.com/nsc/news/forms/cre...t-error-fix.asp Statistics show that 70 percent of credit reports contain serious errors that might cause consumers to be denied credit cards, car loans and even mortgages. The good news is that the Fair Credit Reporting Act requires credit-reporting agencies to fix these mistakes. But it takes your diligence to make sure it happens. - advertisement - The first step is locating any discrepancies in your report. Even the smallest error could seriously dent your credit chances. If you find a mistake, immediately bring it to the credit agency's attention. Remember, there are three credit reporting services -- TransUnion, Experian and Equifax -- so you need to check, and correct, the record held by each. The links in the letter below will take you to each credit agency's Web page, where you can find details on how to obtain a copy of your credit report. The letter also details what information is needed to successfully correct your mistaken report. Send a separate letter to each agency where a mistake is found. Be sure to explain the situation in detail and include a copy of the credit report with the faulty information highlighted. Personalize the letter below by entering your specifics in the areas in red. You can print out this Web page and make your changes by hand or copy the body of the letter and paste it into a document where you can make your changes on your PC. If you prefer to see a .pdf version of the letter, click here. Or you can get it in .txt format by clicking here. (Copy the body of the letter and paste it into a document where you can make your changes on your PC.) Date Equifax Credit Information Services Inc. https://www.econsumer.equifax.com/consumer/...ml?forward=home P.O. Box 740241 Atlanta, GA 30374 TransUnion LLC http://www.transunion.com/Personal/OrderOtherMethods.jsp Consumer Disclosure Center P.O. Box 1000 Chester, PA 19022 Experian http://www.experian.com/consumer/index.html National Consumer Assistance Center P.O. Box 2002 Allen, TX 75013 Re: Credit report error Dear Sir or Madam: I have discovered inaccurate information on my credit report maintained by credit agency name. The report is in my name -- enter your full name here -- and my Social Security number is enter your Social Security number here. Enclosed, please find a copy of my credit report containing the mistaken data. I have highlighted the errors. Specifically, the following information is in wrong: The Fair Credit Reporting Act following defines the following as billing errors that must be corrected. Pick those that apply to your situation and detail for the credit bureau what you believe is the mistake. Be sure to list the creditor's name and account number for which the incorrect data appears: * A purchase made by someone other than the account's authorized user or something that you did not buy. * A disagreement between the purchase price and the price shown on the bill. * A charge for a product or service that was not delivered according to agreement. * Mathematical errors. * Questionable items or any entries for which you need more information. Please investigate this matter with the creditor in question and you should find there is an error. When that is confirmed, please remove this error from my credit report. In addition, please make this letter a permanent part of my credit record. If you have any questions about my request or the credit information in question, please do not hesitate to call me at work or home phone number, depending upon when you would prefer to discuss the matter. Thank you for your prompt attention to my request. Your Signature Your Typed Name Your Address City, State and ZIP Code Enclosure: credit report -------------------------------------------------------------------- 5 steps for improving your credit rating By Dani M. Arthur • Bankrate.com Blotches on your credit report cost you. But, don't despair. It's never too late to become credit worthy -- just get started, and remember that it won't happen overnight. Here are 5 steps for improving your credit rating: 1. Order your credit reports Find out what the top three credit bureaus -- Equifax, Trans Union and Experian -- are saying about you. It's likely that they're all slightly different. Yes, different! Creditors don't have to report to all three credit bureaus, so they typically report to the credit bureau to which they also subscribe. Useful phone numbers and addresses Federal Trade Commission consumer response center (877) 382-4357 Equifax P.O. Box 740241 Atlanta, GA 30374-0241 (800) 685-1111 Experian (formerly TRW) P.O. Box 2104 Allen, TX 75013-0949 (888) 397-3742 Trans Union Corp. 760 W. Sproul Rd. Springfield, PA 19064-0390 (800) 888-4213 Time and money is wasted, says Steve Rhode, president and co-founder of Myvesta.org, if you only order a report from one credit bureau. Thanks to a new federal law you'll now be entitled to one free credit report from each of these credit reporting agencies per year. The program rolled out across the nation one geographical region at a time with all consumers eligible on Sept. 1, 2005. The reports will not automatically be sent out. Each consumer must request their reports one of these three ways. Go to www.annualcreditreport.com, which is the only authorized source for consumers to access their annual credit report online for free. Or, call 877-322-8228. Lastly, you may complete the form on the back of the Annual Credit Report Request brochure, and mail it to: Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA, 30348-5281. One more caveat: you'll be able to order all three credit reports at one time, or at different times throughout the year. It's your choice. But, be sure to order from the centralized agency. If you go directly to the credit reporting agencies, you will be charged unless you fit another criteria for a free report. The new ruling doesn't replace the other ways to receive a free credit report. You're still entitled to a free credit report if: you've been denied credit, insurance or employment based on your credit report; you're applying for unemployment or receive public assistance; and you currently reside in a state that already offers an annual free credit report from each credit reporting agency (Colorado, Maine, Massachusetts, Maryland, New Jersey and Vermont. Georgia residents are entitled to two free annual credit reports from each credit reporting agency.) You can also order a credit report from each bureau for around $9. 2. Examine your reports carefully Nearly every consumer has an error on at least one credit report from one of the major credit bureaus, says Rhode. Credit bureaus generate your report on information they receive from your creditors; they don't verify. Keeping your credit report a true reflection of you is -- like it or not -- your job. Get ready to clean and polish. Carefully look for everything from typing errors, outdated and incomplete information to inaccurate account histories. You'll want to make a thorough list of items you dispute and why. Be meticulous. Here's how to read and understand your credit report. If the negative information in your report is true, only time and improved habits can change that. Late payments and charged-off accounts remain on your report for seven years; bankruptcies for 10. Most creditors, however, look for a pattern of payment rather than focusing on one-time or rare occurrences; so consistent on-time bill payments will improve those blemishes. 3. Double-D strategy -- dispute and document Remember, a bad report costs you money. So, it pays to be thorough! You can either complete the dispute form provided with your credit report or write a letter. Clearly identify each mistake and state why it's wrong. A recommendation is to send a photocopy of your credit report with the mistakes circled to the reporting credit bureau. Include copies of supporting documents. Document, document, document. Keep copies and records of all the forms, letters and documentation that you send the credit bureaus, plus dates sent. The credit bureau must investigate any relevant dispute within 30 days of receiving your letter. Any item that is not verified as accurate by a creditor is removed. Sometimes it's necessary to contact your creditors to resolve mistakes. Bankrate's how to fix your credit report will help you tackle the serious errors. If the credit bureau makes any changes to your credit file, it will send you the results and a free, updated copy of your credit report. Once a negative item is removed from your report, the credit bureau cannot put it back on unless a creditor verifies its accuracy and completeness -- and sends you written notice. 4. Solve and dissolve debt Now's the time to devise a spending plan that reduces your debt and sets you up to pay on time, every time. If you're having difficulty making payments, be proactive. Call your creditors and negotiate to keep your accounts current and from being reported as delinquent or "bad debt." You can ask for reduced monthly payments, or even change due dates to balance out your monthly bills. The same strategy can be used for fixed-loan payments. Remember, though, that this is a short-term strategy. You'll pay more interest to extend the repayment schedule, but it allows you to stay current and save your credit rating. Use the extra money to pay off debts one at a time, gradually increasing payments to other debts. Deal with any collection accounts. Unpaid collections are worse than paid collections. You can negotiate a pay-off settlement that reduces your bill, plus demand that all derogatory remarks are removed from your credit report or at least reported as paid in full. Be sure to get verbal agreements in writing before sending off your payment. Slowly close out unneeded or unused credit accounts. Most experts recommend carrying between two and four major cards. But, be cautious when canceling because closing accounts can negatively impact your credit score, commonly called a FICO score. FICO considers the ratio of total debts to total available credit. A good rule of thumb is to keep your revolving debt to 50 percent of your available credit. Remember that cutting up the card doesn't close out the account. Here's a step-by-step guide to smartly close out your account. Other tips: * Close out your newest accounts so that you don't lose your longer credit history. * Close out accounts slowly over several months. * Verify that all accounts you've closed are reported as "closed by consumer" for the best report. * Even if creditors offer to raise credit limits, allow yourself only moderate credit limits. * Keep your balances low and avoid revolving balances. 5. Add stability to your credit file You can also work to add positive information and show stability in your credit file. You may have been denied credit because of an insufficient credit file, yet you have credit. Some creditors -- such as, travel, entertainment, gasoline card companies, local banks and credit unions -- may not report your credit history to the credit bureaus. You can try asking the credit grantors to report your account information and monthly payment history to a credit-reporting agency. Not all will do that. So, in the future, before opening a new account, ask if your on-time payments will be reported monthly to a credit-reporting agency, recommends Myvesta.org. If you have really bad credit -- perhaps even filed bankruptcy -- don't let your credit status go dormant. "The faster you begin to re-establish good credit, where you pay on time, every time," says Craig Watts, consumer affairs manager of the Fair, Isaac and Company, "the faster you'll improve your credit score." Build a solid credit history. A secured credit card offers those with no credit and those repairing their credit this opportunity. Shop around for the best deal available, but limit your applications. Credit bureaus look at how many new accounts you've opened, and the number of "inquiries" for new accounts that are listed. A sudden flurry of "inquiries" results in a lower score, because many times consumers anticipating money problems increase their credit lines. Inquiries made by creditors wanting to make "prescreened" credit offers are not counted. Lastly, open a savings account at your bank. This shows creditors that you are working to save and that you have reserves to repay debts. -------------------------------------------------------------------------------------------- How to cancel a credit card -- the right way Link There's always a right way and a wrong way to do things, and that goes for canceling a credit card. Whatever your reason for getting rid of a credit card you'll want to make sure you do it thoroughly and that no harm is done to your credit report. First, don't try to cancel a card while you're paying the balance. Cancel the card only after you have paid off the balance in full. "There isn't a need to cancel that account until you're through with it," says Jean Brannan, community outreach coordinator for Consumer Credit Counseling Service in West Palm Beach, Fla. She adds that you have to employ self-discipline and stop using a card while you're paying off the balance. OK, let's say you have paid off a card's balance and you want to cancel the account. Brannan suggests that you do the following, in order: * Notify the card issuer by phone. * Follow up by notifying the card issuer in writing. * Get a copy of your credit report and make sure it's accurate. * Repeat, if necessary. Notify the issuer by phone Your issuer's customer-service number will be printed on the back of the card, on the monthly statement, or both. Call that number, confirm that your balance is zero, and notify the customer-service representative that you're canceling the card. Do not call to cancel a card if you still have a balance. If the card issuer knows you are thinking about leaving, it could raise your interest rates to the maximum allowable by law as a penalty for closing the account, if you do so with an outstanding balance. Some companies will allow you to cancel without even talking to a customer service representative. Others will transfer you to a special department for the sole purpose of trying to convince you to not cancel your card. Steve Rhodes, past president of Myvesta.org, a financial crisis treatment center, suggests you spend a little time listening to the representative. They might be willing to lower your interest rate, offer a two-for-one airline ticket, or upgrade your standard card to platinum. Carefully consider the ramifications of keeping the card open. If you are in the process of reducing the number of credit cards you carry, then cancel a different card. If no such offers are made, or appeal to you, then go ahead with the cancellation and do not allow the representative to convince you otherwise. Follow up with a letter Write a short letter to the card issuer. "If you can get a name so you can send it directly to someone, that is better," Brannan says. The letter should say that you're closing your account and that you want your credit record to reflect the fact that you requested that the account be closed. Provide your name, address and account number. Send the letter by certified mail or return receipt requested. That way you can prove that the card issuer received your letter, Brannan says. Then, wait a month. "You can allow as much as 30 days for the closing of your account," Brannan says. "Then get a copy of your credit report and make sure it says 'Closed at customer's request' and that (the account) actually has been taken off your credit report." Check your credit report You don't want your report to say the account was "closed by creditor," because that reflects negatively on you. If the card issuer mistakenly reported that the issuer, not you, closed the account, you'll have to return to the beginning. Call the customer-service department to report the mistake, follow up with a letter sent by certified mail (include a copy of the letter you wrote requesting that the account be closed), and check your credit report again. "Remember that a credit report is your credit history," Brannan says. "The information is submitted by lenders, but it's your individual responsibility to make sure it's correct." Believe it or not, it's not the credit bureau's responsibility to make sure that your credit report is correct. Credit bureaus report what creditors tell them. So if your credit report is inaccurate, don't ask the credit bureau to fix it. Ask the creditors to correct inaccuracies and update the credit bureaus. Experts recommend that you check your credit report annually to spot inaccuracies and detect identity-theft problems. Check your credit report before buying a house or car so you can correct any problems before applying for a loan. Why not to cancel But not everyone should start canceling all kinds of credit lines. If you're planning to buy a house or car soon, you might want to hang on to your unused credit lines until after you've qualified for a loan. "If your goal is to improve your credit score, closing accounts is not a good tactic," says Craig Watts, consumer affairs manager for Fair, Isaac and Co. based in San Rafael, Calif. "Paying down credit cards is terrrific. Closing them is not going to help." Canceling a large amount of unused credit could actually hurt your credit score. Credit-scoring models look at a number of factors when calculating your score, including the result of the following formula: The total amount of debt on credit cards and revolving accounts divided by the total amount of debt available on those accounts. This formula results in a fraction less than one. The lower the fraction the better. A score of one would mean your outstanding debt equals your available credit and you've maxed out your cards. Let's look at an example. Let's say you've got $5,000 of debt and $15,000 in credit lines. By dividing 5,000 by 15,000 you get one-third. You're using one-third of the credit available to you. Now let's say you cancel an unused credit card with a $5,000 limit. You've still got $5,000 of debt but only $10,000 in credit lines. By dividing 5,000 by 10,000 you get one-half. You're now using one-half of the credit available to you. The closer to one this fraction gets, the more it hurts your credit score. "When you cancel unused credit cards without paying down your credit debt, you change that ratio so it appears as though you're closer to being overextended," Watts says. The best advice for a home or auto shopper is to hang on to credit lines until after you've landed your loan. "Wait until you've been approved for the loan and have the money in hand, and then start closing accounts," Watts says. If your credit card balance is zero, go ahead and close as many unused accounts as you want. As long as your credit cards are balance-free, it won't hurt your credit score a bit. So call those card issuers and cut away. If you're in credit trouble or if you had credit problems in the past and you know an open credit line is just going to tempt you to spend -- go ahead and close the account. Yes, it may ding your credit a bit. But if it will keep you from acquiring more debt, it's best to do it. You can worry about building up your credit score after you're back on your feet financially. ------------------------------------------------------------------------------------------ Link to comment Share on other sites More sharing options...
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