Credit repair is something many of us have had to take a serious look at. When looking at your finances your credit score is one of the most important factors to consider. If you are working towards improving your finances, you will want to take a close look at your credit report. Most people only think about their credit when they are considering a loan. But the truth is, your credit is often taken into consideration in many more aspects of your life.
Many employers are now considering a person’s credit worthiness when determining whether or not to make a job offer. In the past it was primarily financial institutions that checked a potential employees credit. Now days even some retailers will require a credit check in order to gain employment.
Banks are now denying basic checking accounts and debit cards to individuals with subpar credit. Landlords are using your credit to determine whether or not you will be a good tenant. Students who don’t qualify for federal student loans or whos federal student loans do not cover their full tuition, are subject to credit approval for private student loans. Most insurance companies will also charge much higher premium if the policy holder has bad credit.
How Is Your Credit Score Determined?
Your credit score is determined based on your credit report. There are three major credit reporting bureaus: Experian, Equifax and TransUnion. Scores can vary based on the information reported to each of the credit reporting agencies. You may also see a difference in scores depending on whether or not you are given a FICO score or an Advantage Score. The majority of financial institutions will use your FICO score so we will focus on that for now.
There are many factors in determining a person’s credit. If you would like more detailed info on how your FICO score is calculated, check out FICO’s website for some great video tutorials. You can find them by clicking HERE.
The pie chart below is from myfico.com and it breaks down how your credit score is calculated.
How Can Bad Credit Impact Your Finances?
We all know that banks and other financial institutions will use your credit score, in conjunction with other relevant information, to determine your creditworthiness. This doesn’t mean that you either get approved or denied and that’s all you need to worry about. There are a lot of programs out there that will approve a loan even with bad credit, but that comes with a price. Let’s take a look at some examples of how your credit score can affect your finances. Remember, FICO scores range from 300 to 850 and they can be broken down into credit ratings.
- Super Prime (781-850 credit range)
- Prime (661-780 credit range)
- Non Prime (601-660 credit range)
- SubPrime (501-600 credit range)
- Deep SubPrime (300-500 credit range)
Now, based on those credit ratings, consider a $20,000 car loan on a 3 year loan. Check out the difference in monthly payments as well as total interest paid.
These are only examples. Interest rates can vary.
- Super Prime – at a 4.34% interest rate, monthly payment = $593.51. Total interest paid over 3 years = $1,366.36
- Prime – at a 5.97% interest rate, monthly payment = $608.17. Total interest paid over 3 years = $1,894.12
- Non Prime – at a 10.3% interest rate, monthly payment = $648.16. Total interest paid over 3 years = $3,333.76
- SubPrime – at a 16.4% interest rate, monthly payment = $707.10. Total interest paid over 3 years = $5,455.60
- Deep SubPrime – at a 19.98% interest rate, monthly payment = $743.07. Total interest paid over 3 years = $6,750.52
As you can see from the examples above, your credit can definitely cost you if it is in a lower range. An important part of getting your finances in order will be your credit.
So, How Accurate Is Your Report?
If you have not looked over your credit report yet this year, you will definitely want to take a look. The majority of Americans find at least one error on their credit report. For some, that one error can make a difference between getting approved for their dream car or not. According to the Consumer Financial Protection Bureau’s (CFPB) annual consumer Response report, the CFPB received 126,300 complaints regarding credit reporting. That accounted for 38% of the total complaints CFPB received in 2018.
The Fair Credit Reporting Act (FCRA) protects consumers from having inaccurate information reported on your credit report. If you would like to view a copy of your rights under the FCRA, you can find it HERE.
Request A Free Copy Of Your Credit Report.
Federal law allows you to get one free credit report from each credit bureau annually. It costs you nothing to get your report but it can cost you a lot not to. If you are not familiar with the process, please click here and you will be directed to AnnualCreditReport.com
Once you request your report, make sure you print off a copy of it or save an electronic copy. You will want to go through your report very carefully and note all inaccurate information. This includes inaccurate balances, payment history, account status (collections, closed account, charge off etc.) employment information, addresses and credit inquiries.
After you have went through your report with a fine tooth comb, you will be ready to dispute any inaccurate information. If you have something on your report that could be negatively impacting your score, you have the right under the FCRA to have the information verified. I am not suggesting you use the FCRA to have valid, negative information removed. If a negative item is questionable and you are not sure whether or not it is accurate, dispute it and request verification of its accuracy.
In most cases, the credit reporting agencies will simply answer your first dispute request with a letter stating the items you disputed have been “verified.” That is not enough of a verification, you have the right to know who verified the information and what information was used to verify the accuracy. For this reason, it may take several rounds of disputes in order to have the incorrect information removed.
How To Dispute An Item On Your Credit Report.
You have the option of disputing items online directly through the credit bureau; however, I do not recommend you do it online. When you are working on credit repair, you lose some leverage you have when you mail a letter via certified mail, return receipt requested. Your dispute letter does not have to be complicated, the minimum required information can be typed up using Google docs or Word. You will want to make sure you include the following:
[Your complete name and address]
[Address of credit reporting company]
Dear [Equifax or Experian or TransUnion],I am writing to dispute the following information that appears on my [Equifax or Experian or TransUnion] consumer report:
Dispute 1 [The following examples are meant to be helpful, include all disputes that apply]
Account Number or other information to identify account: [Insert account number or other information, such as account holder names and past addresses. This is especially important if you have had multiple accounts with the same company.]·
Source of dispute information: [Insert the name of the company, such as the bank, that provided the information to the credit reporting company.]
Type of disputed information: [Insert category of disputed information such as public records information, unknown credit account/tradeline, inquiry, etc.]
Dates associated with the item in question: [Insert the date that appears on your report. This helps ensure that the correct account is identified by the company and to identify which aspects of the report are being disputed. You can still file a dispute if you don’t have this date.]
Explanation of dispute: [Insert details about why you think the information is inaccurate. Choose one of the choices below if it fits, or add your own description.]
- My report includes accounts with a reported name that is different than mine.
- I don’t recognize the accounts in queston.
- The report shows I owed money to the company that I have already repaid. [Give details about when you paid, and attach a copy of any proof that you have.]
- The current status of my account is not correct. The report shows that I am delinquent but I have made all of my payments on time. [Include account history or other information that shows the on time payments.]
- I’m the victim of identity theft and I don’t recognize one or more of the accounts on my report. [You may wish to include a copy of the FTC identity theft affidavit describing the identity theft.]
- Other [Describe what is wrong with the report and include copies of any additional supporting documentation that you have.]
Dispute 2 [Continue numbering for each disputed item on your report and include the same information.]
[Include the following sentence if you are including a copy of your credit report or other supporting documentation. “I have attached a copy of my report with the accounts in question circled.”]
Thank you for your assistance.
You can find a copy of this basic dispute template HERE.
**You will want to include a copy of your driver’s license (with your current address), a copy of your social security card and a copy of a utility bill or bank statement verifying your address.**
750+ myCredit System
If you would like to take all the guesswork out of credit repair, I highly recommend the 750+ myCredit System from MyEcon. The cost for the program is $99.95. This is a one-time payment and it gives you lifetime access to the system.
If you do some research on the available credit repair companies, you will notice that most of these companies are charging an initial registration fee (ranging from $49 to $199). In addition to the registration fee, they charge an ongoing monthly fee, which is also pretty high.
Although you may be able to easily remove some items on your credit report, others may take several rounds of dispute letters. If you are enrolled in a monthly plan, it can get very costly. One of the reasons I chose to use myEcon’s Smart Credit System, was because there is only a one-time charge.
What you get with myCredit System
The Smart Credit System includes:
- 26 DIY Videos
- 4 Rounds of Dispute Letters
- Income Shifting Strategy
- Debt Elimination Software
- Minimize Expense Calculator
- Re-establish Credit Sources
- Investment Calculator
- Business Opportunity
This system provides much more than just the credit repair. MyEcon’s system is set up to help you achieve financial freedom.
Before coming to myEcon, I first tried a well known “law firm” who offered credit repair services but saw very little results. After spending several hundred dollars over a 6 month period, I went back to doing research on credit repair programs and decided to try myEcon’s myCredit System. I am super thankful I found this company. I was able to bring my credit score up from a 627 (non prime) to a 756 (prime) and I am not done yet. My student loans were even removed.
To get started with the myCredit System, or for more information, CLICK HERE
MyEcon also offers the option of enrolling in their program as an associate. If you would like more information about their associate program, please check out my blog post: How To Make A Full-Time Income From Home Working Part-Time Hours. You can also check out the video HERE.
Make sure you sign up below for a free copy of the first round dispute letter, to help you get started repairing your credit today. If you found this information helpful, please share it with others. As always, I would love to connect with you on Facebook.