Credit- Credit - Introduction To Credit You're probably already familiar with the concept of "credit," the idea that if you build up a reputation for paying bills and debts on time, you'll be better able to borrow money in the future. Your credit is one if the most important aspects of your personal finances. Credit is important because it enables you to borrow money when you need it. In addition, the better your creditworthiness, the more cheaply you'll be able to borrow money, whether for a car, education, home, or some other large expense. On the other hand, if you are not a good credit risk, you may not be able to borrow when you need to, or you might be able to borrow but only at a very high interest rate. Your creditworthiness may also be important when you are looking for certain types of insurance, and when you apply for certain types of jobs.
|Credit is used primarily in order to obtain loans. Loans can be an excellent way to fund large purchases and business initiatives, but managing debt can be a complicated process. Let's face it: It can take just a few months to get into financial trouble and years to get out. Although debt is sometimes useful, there is a difference between good debt and bad debt. The two most important characteristics are how you borrow the money and what you do with it. A mortgage is usually good debt, since you probably couldn't afford the house otherwise, the interest rate is relatively low, and the interest is usually tax-deductible ( Mortgages). Borrowing to pay for an education is usually good debt, because it's an investment in future earnings ( College Loans). Carrying a balance on your credit card at a high rate of interest is bad debt, especially if the money was used to buy luxury items or things you didn't really need. Even though debt is a part of life, the key to preventing it from becoming destructive is knowing its benefits and risks. The rest of this section will focus on credit and credit cards. |
|How to Fix the Credit Report?:
The following five steps can help you take better control of your credit report situation:
||Credit Mistakes -
Many credit reports accumulate errors over time and some of these errors can be serious enough to lead to a denial of credit. For this reason it is important to fix any incorrect information as soon as you discover it. |
Both the CRA and the information provider have responsibilities for correcting inaccurate or incomplete information in your report. To protect all your rights under this law, contact both the CRA and the information provider. In both cases, include copies of documents which support your position, and send your letter by certified mail return receipt requested, so you have proof that they received it.
First, tell the CRA in writing what information you believe is inaccurate.
When the reinvestigation is complete, the CRA must give you the written results and a free copy of your report if the dispute results in a change. If an item is changed or removed, the CRA cannot put the disputed information back in your file unless the information provider verifies its accuracy and completeness, and the CRA gives you a written notice that includes the name, address, and phone number of the provider.
Second, tell the creditor or other information provider in writing that you dispute an item. Many providers specify an address for disputes. If the provider then reports the item to any CRA, it must include a notice of your dispute. In addition, if you are correct -- that is, if the information is inaccurate -- the information provider may not use it again.
If the CRA or information provider won't correct the information you dispute, ask the CRA to include your statement of the dispute in your file and in future reports. If you request, the CRA also will provide your statement to anyone who received a copy of the old report in the recent past. There usually is a fee for this service. If you tell the information provider that you dispute an item, a notice of your dispute must be included anytime the information provider reports the item to a CRA.
Although the Federal Trade Commission can't act as your lawyer in private disputes, they do investigate complaints to detect patterns. Send your questions or complaints to: Consumer Response Center, Federal Trade Commission, CRC-240, 600 Pennsylvania Ave NW, Washington, D.C. 20580. If push comes to shove, you may sue a CRA, a user or (in some cases) a provider of CRA data, in state or federal court for most violations of the FCRA. If you win, the defendant will have to pay damages and reimburse you for attorney fees to the extent ordered by the court.