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[ad_1] According to the Federal Trade Commission, around 25% of people have errors on their report that could affect their credit score. There’s a one in four chance that errors on your report are dragging your score down unfairly—which can end up costing you thousands of dollars. Luckily, you have the right to review your credit reports and challenge inaccurate items. Here’s how to get something off your credit report. How to Challenge an Inaccurate Item on Your Credit Report Your right to a free and accurate credit report is protected by the Fair Credit Reporting Act. Under the Act, if you challenge an item on your credit report and the creditor or credit reporting agency can’t verify the item’s accuracy, the act requires the unverified item be confirmed or removed from your credit report. The Act gives bureaus and data furnishers 30 days to investigate and inform the consumer of their findings. That time can extend to 45 days under certain circumstances. The actual timeframe depends on many factors, including postal mail timing. It’s not always as simple as it sounds, though. Check out the tips and information below to better understand how errors get on your credit report and what to do about them. How Credit Report Errors Occur Credit report errors can occur for a number of reasons. Here are some common ones: Mixed files. If someone with the same name or a similar name applies for credit, a piece of their file can become mixed with your file. A consumer with a common name such as “John A. Smith,” for example, might see his file mixed with a John B. Smith or a John A. Smith, Jr. Identity theft. If someone has stolen your Social Security number, they can open a new account in your name. This information appears on your credit report and can be particularly difficult to remove. Furnisher errors. Furnishers are banks, debt collectors, and others that report the information that shows up on your credit report. A clerical error or data issue with the furnisher can mean an error getting passed on to your credit report. Re-aging of old debts. Certain debts are supposed to age off your credit report within a certain amount of time. Re-aging can occur when a debt is sold to a third-party collector and the start date on the debt’s clock is muddied and appears to be a new debt. It may even appear twice on the report from the original debtor and the debt collector. This can cause your credit to take a hit for much longer than it should. How Fast Can You Clean Up Your Credit Report? The length of time it takes to clean up your credit report depends on the number and type of issues you have. In many cases, you may be able to notice improvements to your credit score in just a few months. However, it could take several years to fully restore your credit. Bad credit issues, such as late or missed payments and defaults, can remain on your credit for up to 7 years in most cases. However, bankruptcies can remain on your account for up to 10 years. Ultimately, these negative items can affect your credit score. Fortunately, most credit scoring models place a higher weight on current debt. So, as you continue to improve your credit habits, your score can continue to rise. Removing errors from your credit report typically takes less time. The law requires credit reporting agencies to investigate all consumer disputes. They have 30 days to complete this investigation and another five days to provide you with a written explanation of their findings. If the credit card reporting agency finds in your favor, it can take an additional 30 days to fully remove the debt from your report.   How to clean up your credit report 1. Review Your Credit Report for Errors The first step is to review your credit reports for errors. Errors on credit reports occur more frequently than you might think, so it’s important to examine your credit report for errors. You can obtain one free credit report a year from each of the three top credit reporting agencies—Experian, Equifax, and TransUnion. All you need to do is go to AnnualCreditReport.com to make this request. Or, you can submit a request directly to each credit reporting agency. Once you receive your credit reports, be sure to examine them carefully for any errors, including personal and financial information. Make a list of any errors you detect and gather as much information as possible to prove this error. 2. Create a List of Errors You must challenge each item separately with the credit bureau that issued the report. You can’t make a blanket challenge for everything wrong on one report. Say, for example, you have two collection accounts you want to challenge on the same credit report. You have to file two separate challenges. If the items needing verification are for the same account—two late payments on your mortgage, for example—you only need to file one challenge to request verification of the late payments. You do need to specify that you want both of the late payments removed, however. When you finish reviewing your credit reports, take stock of all the items you want to challenge. This can help you decide if you want to handle credit repair yourself or work with a service. 3. Gather Supporting Documentation Once you know what you need to challenge, you’ll need to gather documentation to support your claim that the items are inaccurate. The more evidence you have, the stronger your case will be. In some instances, it may be hard to determine what kinds of evidence are needed. For example, an identity theft victim may not know what they need to provide to show they didn’t open an account. If you have reason to believe you were the victim of identity theft—warning signs include mysterious addresses and accounts you never signed up for. 4. Write a Dispute Letter The next step is to

[ad_1] If you’ve got an error of your credit report, it’s up to you to find it, dispute it, and fix the error. Formally disputing an error involves writing a formal dispute letter to the creditor as well as the appropriate credit bureau reporting the inaccuracy. Sounds like a piece of cake, right? Not always. Errors are not all created equal—and unless you’re specific and provide evidence for your claim, you risk having your dispute denied. Or worse: the error can actually get re-reported to the credit bureaus if you fail to work directly with the creditor reporting the error in the first place. Here’s what you should know if you’re getting ready to send a credit dispute letter. In This Piece What Is a Credit Dispute Letter? What Can I Dispute on My Credit Report? Credit Report Dispute Letters and Your Credit Score What Is a 609 Letter? How to Write a Credit Dispute Letter Reasons to Mail in Your Dispute How Long Will It Take to See Results from Your Dispute? What Are other Ways to Dispute Wrong Credit Report Information? How Disputing Information Will Affect Your Credit Score Follow Up to Fix Your Credit What Is a Credit Dispute Letter? A credit dispute letter is a written document that: Tells the credit bureau you believe there’s an error on your report Provides information and documentation on why you think this is the case Formally asks the credit bureau to correct the error You might see this type of letter referred to as a 609 dispute letter. This is an odd nickname for this type of correspondence that came about based on Section 609 of the Fair Credit Reporting Act. The section is not really pertinent to the topic, but it does explain your rights as a consumer. However, the FCRA does protect your right to an accurate credit report. Federal law requires that the credit bureaus investigate matters when consumers dispute items on their credit reports and make any edits that are necessary after those investigations.  The Fair Credit Reporting Act (FCRA) ensures that consumers are able to review their credit report for accuracy and dispute any errors, unsubstantiated claims and outdated information. If your dispute is not responded to quickly and appropriately by the credit reporting agencies and your creditors, you can file a complaint with the Federal Consumer Financial Protection Bureau. In most cases, the bureaus are required to investigate your claim within 30 days of receiving your letter and wrap up their investigation within 90 days. What Can I Dispute on My Credit Report? You can dispute anything that’s inaccurate on your credit report. That includes but isn’t limited to: Incorrect personal information. If your name is spelled wrong or other information used to identify you is incorrect, you can ask the credit bureau to fix it. Accounts that aren’t yours. If someone else’s financial account shows up on your credit report, you can ask to have it removed. Inaccurate balances. If you’ve paid off half your mortgage but the bank is still reporting the full amount due, for example, you probably have a case for a dispute.  Late payments that weren’t late. If the lender reported that you’re 30 days past due on a loan but you have proof you made all payments on time, you can send a dispute letter. Hard inquiries you didn’t approve. When someone checks your credit for the purpose of evaluating you as a borrower, it shows up as a hard inquiry. You have to approve those checks, though, so if you don’t recognize inquiries, consider disputing them.  When writing your credit dispute letter, make sure you: Identify the error you want corrected. List it specifically in your letter, but consider including a copy of your credit report with the error circled in red for good measure.  Make a case for why it’s wrong. Keep this statement short and factual. Include any documents you have that back up your case. Make a specific request. Tell the credit bureau what action you want them to take. You might ask them to delete information that’s not accurate or edit it so it is accurate, for example.  Credit Report Dispute Letters and Your Credit Score An error on your credit report—such as a debt reported beyond the statute of limitations, a credit card marked as closed when it shouldn’t be, or something related to identity theft—can seriously damage your score. That makes it harder to secure an affordable line of credit. A credit dispute letter doesn’t automatically fix this issue or repair your credit. And there are no guarantees the credit reporting agency will remove an item—especially if you don’t have strong documentation that it’s an error. But writing a credit dispute letter costs little more than a bit of time. And when you do have the documentation to make a case for an error, this effort can be well worth it when the bureau corrects the mistake and your credit returns to your accurate and fair credit score. You can request your free credit report from each of the three credit reporting bureaus annually. Finding errors on your credit report isn’t as uncommon as you might think. According to the Federal Trade Commission, as many as 20% of people could have an error on their report. That’s true even if you think you’ve already resolved the problem. Request and review them each year to stay on top of the information contained there. What Is a 609 Letter? A 609 letter is a debt validation letter asking for information about an item on your credit report. It’s named after the section of the FCRA that gives you a right to request this information—section 609. If you’re not sure whether an item on your credit report is a mistake or you need more information to create a case that it is, a 609 letter can be a good start. You’ll need to include account names, numbers, or other identifying details to make

[ad_1] You might not realize it, but having a good credit score may directly impact your ability to achieve your personal and financial goals. For instance, you might not be able to purchase a home or new car unless your credit is in good standing. Nearly all lenders conduct thorough credit checks prior to approving a loan. If you don’t have at least a good credit rating, you’re apt to have trouble securing a loan. But what is good credit, and how can you get good credit? Read more about what “good credit” is below to help you better understand this important credit term and how it could influence your financial standing. Find Out If You Have a Good Credit Score In This Piece What Is a Good Credit Score? What Do Credit Scores Mean? Do Lenders Prefer a Good VantageScore Score Over a Good FICO Credit Score? What Are the Differences Between FICO and VantageScore? What Makes a Good Credit Score? Is a Credit Score the Only Thing Lenders Consider? What Doesn’t Matter to Your Credit Score? How to Get a Good Credit Score How Do I Check My Credit Scores? FAQs What Is a Good Credit Score? Every lender has its own requirements for what’s a good credit score. Most lenders use either FICO scores or VantageScore scores when determining approval for a loan or credit card. These credit scoring models identify what each considers a poor, fair, good, very good, and excellent credit score. FICO and VantageScore aren’t the only credit scoring models. However, they are the most commonly used models and the ones used by the three major credit bureaus: Experian, Equifax, and TransUnion. Some lenders even have their own scoring models. But most lenders and credit card companies use FICO scores or VantageScores. Below is a closer look at these ratings. What Is a Good FICO score? The FICO scoring model takes several factors into account when determining credit scores. They are: Payment history — 35% Credit utilization — 30% Age of credit history — 15% Mix of accounts — 10% New credit — 10% FICO also breaks down these scores into these credit score ranges: Excellent — 800-850 Very good — 740-799 Good — 670-739 Fair — 580-669 Poor — 300-579 What Is a Good VantageScore? The VantageScore scoring model also uses several factors when determining its final credit score but places the most weight on payment history. Factors are: Payment history — 40% Age and type of credit — 21% Credit utilization — 20% Credit balances — 11% Recent credit applications  — 5% Available credit — 3% Final VantageScore credit scores are also broken down into various ratings, which are: Excellent — 781-850 Good — 661-780 Fair — 601-660 Poor — 500-600 Very Poor — 300-499 What Do Credit Scores Mean? The three-digit numbers called credit scores are how the scoring institutions break down your credit profile. That number is calculated based on the information in your credit report at a credit bureau. Each bureau has its own file, which explains why your score might differ from one scoring institution to the next. Your file is a picture of how you’ve used credit to date. Your score and where it falls tells lenders and credit card issuers how likely you are to pay off a loan, pay off a credit card, make late payments, and default on payments. In other words, it tells them if you’re an acceptable risk and if they should approve you for a loan or credit card. A low score doesn’t necessarily mean lenders won’t give you a loan or card. Instead, it can mean they do so at a higher interest rate and with inferior loan terms. In other words, to offset the risk you pose, they charge you more interest or a higher annual fee. For example, if you’re buying a $300,000 house with a 30-year fixed mortgage and you have good credit, you can end up paying around $94,000 less for that house over the life of the loan than if you had bad credit. Scores are also used by landlords, cell phone companies, and even employers to check how risky you are. Do Lenders Prefer a Good VantageScore Score Over a Good FICO Credit Score? Lenders don’t necessarily prefer one score over the other. It’s likely, though, that a given lender uses only one credit scoring institution. FICO reports that 90% of the top US lenders use FICO scores when deciding whether to loan money to an applicant. On the other hand, VantageScore states that between March 2021 and February 2022, approximately 14.5 billion VantageScore credit scores were used. The VantageScore model offers these advantages to lenders and consumers: It was developed by the three major credit bureaus to offer a model across all bureaus that’s more consistent than FICO. It calculates scores for more people by giving a score to people with a shorter credit history. Both models are consistent enough that knowing where you stand in one gives you a reliable indication of your credit in general. What Are the Differences Between FICO and VantageScore? While FICO and VantageScore are similar in that they use the details of your credit history to evaluate and rate your creditworthiness, there are key differences. First, FICO is one of the oldest and most popular credit scoring models. Most home mortgage lenders use FICO scores when approving loans. FICO also offers a tri-bureau scoring model, which merges data from the three major credit reporting bureaus: Experian, TransUnion, and Equifax. In comparison, VantageScore is a newer model but is growing in popularity. Instead of a tri-bureau rating system, VantageScore uses a different scoring model for each credit reporting agency. VantageScore also offers industry-based scoring models, such as credit card scoring models and auto loan scoring models. This feature makes VantageScore a popular option for some lenders. What Makes a Good Credit Score? The same primary considerations go into calculating VantageScore credit scores and FICO credit scores: Payment history Credit utilization Credit age Mix of accounts New credit

[ad_1] If you decide to file for bankruptcy, you must next decide which type of bankruptcy is right for you. Most individuals have three options, and understanding Chapter 11 vs. Chapter 13 vs. Chapter 7 is important in making the right decision.  Bankruptcy can be complex, and even a small mistake in how you file can substantially change the outcome of your case. It’s typically a good idea to consult an experienced bankruptcy lawyer before you file a bankruptcy petition. However, we’ve provided some basic answers below to the question, “What is the difference between Chapter 7, 11, and 13 when it comes to bankruptcy?” In This Piece Understand the Types of Bankruptcy How Do You Know Which Bankruptcy Type is Right for You? What Is Chapter 11 Bankruptcy? What Is Chapter 7 Bankruptcy? What Is Chapter 13 Bankruptcy? Should You File for Bankruptcy? The Main Differences Between the Types of Bankruptcy Who Can File for Each Type of Bankruptcy? What Happens After You File for Bankruptcy Options Other Than Bankruptcy Understand the Types of Bankruptcy Bankruptcy is a way to reorganize your debts or get your debts dismissed because you’re insolvent. “Insolvent” is simply a financial state where you can’t pay your bills—usually because your debts outpace your income.  People can end up in this situation for a number of reasons. It may be that you lost your job or had reduced income—job losses due to the COVID-19 pandemic are just one example of when this can happen. In other cases, people have unplanned expenses such as medical bills that can put them over the edge financially. Bankruptcy does have some benefits, such as potentially putting a stop to wage garnishments or foreclosures.  Regardless of how you ended up in this position, it’s important not to jump immediately to bankruptcy. Consider all of your options and speak with an experienced bankruptcy attorney to understand whether bankruptcy will help you. How Do You Know Which Bankruptcy Type is Right for You? This is a complex personal or business finance question. Consider talking to an attorney to understand your financial and legal situation. An experienced attorney can quickly apply means tests and other information to your case to help you understand what your options are. What Is Chapter 11 Bankruptcy? According to the United States Courts, individuals and business entities can enter into Chapter 11 bankruptcy. Typically, this type of bankruptcy is a reorganization of a business. Through the bankruptcy, the debtor restructures and then creates and implements a plan to pay back creditors. The plan must be approved by a Trustee appointed by the court. The Trustee is typically in charge of implementing and overseeing the plan, ensuring that the business has the income and resources to follow through with it. Once the plan is completed and confirmed, any remaining debts under the bankruptcy are discharged. This is an extremely simple summary of how a Chapter 11 bankruptcy works. In reality, they can take years and involve numerous legal proceedings on behalf of the person or business filing as well as the Trustee and creditors.  What Is Chapter 7 Bankruptcy? The main difference when it comes to Chapter 7 vs. Chapter 11 bankruptcy is that Chapter 7 is a liquidation plan. That means there’s no repayment plan associated with a Chapter 7 bankruptcy. When you file Chapter 7, you typically agree to liquidate your assets to pay off as much of your debt as you can. The remaining debts that are part of your bankruptcy are dismissed.  Whether or not you can file for this type of bankruptcy is determined by income. If your income is below the median for the state you’re filing in, you can probably choose Chapter 7 bankruptcy. If your income is above the state minimum, you must pass a “means test.” A bankruptcy attorney can quickly apply these tests to help you understand whether you meet eligibility for Chapter 7.  You don’t have to give up everything you own in a Chapter 7 bankruptcy, though. You may be able to keep exempt assets, which can include certain personal belongings. You may also be able to keep your home, a car, and other items, even if you owe money on them, if you can continue to make timely payments on those debts.  Again, bankruptcy is a complex process and what you can keep and how your proceeding goes is based on a variety of factors. Consult an experienced bankruptcy attorney to find out more about your individual situation. What Is Chapter 13 Bankruptcy? Chapter 13 bankruptcy may sound similar to Chapter 11 because these both involve repayment plans. But when it comes to Chapter 11 vs. Chapter 13, the biggest difference is that Chapter 13 allows someone with regular income to make an adjustment to how they pay back some debts. Chapter 13 may be an option for individuals who fail the means test for Chapter 7. Typically, Chapter 13 bankruptcy works for people who have stable income to make some payments on debts but they don’t have enough income to pay all the debts as currently structured. The individual submits a repayment plan to the court. This plan must be approved by a bankruptcy court Trustee. The Trustee is also typically tasked with making payments under the plan, so the individual pays the Trustee. The Trustee’s office then pays various creditors. Usually during a Chapter 13 you only pay off part of your debts. Priority and secured debts, such as taxes or auto loans, are paid in full. But unsecured, nonpriority debts, such as medical bills and credit card debt, are only partially paid. If you work through your Chapter 13 repayment plan successfully, the remaining debts are dismissed at the end of the repayment plan. That can take three to five years.  Should You File for Bankruptcy? Only you can decide if bankruptcy is the right choice for you. In most cases, you should consider all your other options and ensure there really is no way to feasibly pay your debts as you