Thursday, July 17, 2008

Save a Buck: Boost your credit score

Want to save $105 a year?

A new study by Washington Mutual estimates that credit card users can do just that if they boost their credit scores by 30 points.

Credit scores are essentially an estimate from the credit companies of the risk that you won't pay off your loan. Credit scores typically range from 200 to 800 and they are used by banks and insurance companies to determine rates for mortgage loans, credit cards, auto loans and other financing.

Some quick tips to boost your score:

Try not to use your credit card to the max. You should have a "usage limit" below 50 percent, meaning if you have a $10,000 limit, try to use $5,000 or less of that amount.

Avoid opening multiple new accounts quickly.

Pay off your debt rather than moving it around. Paying off a large balance improves credit scores.

The scores are compiled by three credit bureaus: Equifax Inc., TransUnion LLC and Experian Group. Consumers can obtain a free copy of their report from all three once a year, but you have to pay about $15 to see the actual scores.

Tuesday, July 15, 2008

Review your credit report annually

Reviewing your credit report is important to make sure that your information is accurate when applying for a loan. It can also help minimize the damage from possible identity theft. You are entitled to a receive a free credit report every 12 months, so why not request it each year on your birthday?

Your report starts with your personal information — name, address, social security number, telephone number, and employment data. Following that is your account information. Review all the details and make corrections if needed by following the instructions provided.

For each credit account, you will find the lender's name, account number, type of account, and loan information, including your payment history. The credit bureaus also collect information from court records, so don't be surprised to find notes about bankruptcies, tax liens, and/or criminal proceedings that may have occurred. At the end of the report will be a list of any parties who have requested your information.

Potential lenders review your report to determine your creditworthiness. They consider your track record in making timely payments, as well as the total amount of credit you are carrying. They want to determine if you are able to handle monthly payments on any new loans you may apply for.

When you review your report, make sure you agree with all the items listed. If you notice anything unusual it may be an indication that a thief is using your accounts without your knowledge, so review the report carefully and make a list of any incorrect or misleading information. You have a right to dispute incorrect information on your report.

Typically you will receive a form to complete if you wish to file a dispute. When the credit bureau receives your request, it is obligated to investigate within 30 days and to correct any errors. You will receive a report on the conclusion of the investigation, and if your credit report is changed as a result, you should also get an updated copy.

You also have the right to add a statement of 100 words or less to your report, explaining your side of the story with respect to any disputed information.