Hey Everyone,I thought I would share my knowledge of credit reports with everyone since there are some new threads out there about FICO scores. First let me say that I am a commercial loan officer and credit underwriter so I am very knowledgable about the bureaus. First FICO is Fair Isaac Credit Organization, a company based in California. The highest FICO score is 850. 800-850 is excellent credit. 700-800 is good. 650-700 is ok but could be better. Anything below a 620 and typically you cannot get a loan or a mortgage and likely not even a credit card. There is also what is called a New Risk score. Depending on where you are in the country they may either use FICO or New Risk. With FICO the higher the score the better. With New Risk it is the opposite. The lower the better.

The three bureaus are Experian, Equifax, and Trans Union. I am in Dallas and Experian is headquartered here so almost everything in Texas is pulled through Experian. If you do not check your reports often you should. You should check them once every 6 months by logging on to any of the bureau websites. You can buy a copy of all three reports and your credit score for like $35. It is important that you check all three as there may be items on one that do not show on the other two. The only way to see everything is to have all three reports.

Now there are alot of things that can effect you score such as inquiries, late payments, collections, charge-offs, settlements, balance to limit ratios, public records, etc.

Lets first take inquiries. Everytime you apply for credit somewhere you get hit with an inquiry. Too many can lower your score so you have to be informed about how many are on your reports. If you have alot and some result in declines it shows that you are out there trying desperately to get credit. It looks bad. Inquiries stay on your report for two years from the date and then drop off.

Now lets take late payments, collections, charge-offs, settlements and public records. All of these are bad but the one that hurts you the least is a late payment. Public records are like tax liens, liens filed for child support, lawsuits, etc. Collections, charge-offs and settlements are basically the equivalent of filing personal bankruptcy and will absolutely destroy your credit rating. These items stay on your reports for at least 7 years and then should drop off but it is not uncommon to have them remain for up to ten years.

Next is balance to limit ratios. This one heavily effects your credit rating. Lets say you have $10K in limits on your cards and you have a balance on your cards of $5k, then you have a 50% revolving availability. Once you fall below 50% in this ratio it WILL get harder for you to get credit approvals. To fall below 50% means you are maxing out your cards or getting dangerously close to the max. So keep this in mind.

Also, closing old credit relationships can hurt your score as well. If you have a Citibank card you opened in 1990 and have never had a late payment on and you have an AMEX card you opened in 2000 that you have been late on four times and you want to close one, close the AMEX account. While those late pays will still remain, you have not erased your excellent payment history dating back 13 years. Close your newest accounts first if you have to close something.

For anyone that does have a charge-off on there account. If it is charged off then do not ever make another payment on these accounts. Charge-off accounts are aften sold to other companies for a premium and then the new company attempts to collect on the charged-off debt by nagging the hell out of you nightly. Lets say you have a citibank account that was charged off in 2000 for $1,000. This will remain on your report for the 7 year time period. You have 3 years of the 7 years under your belt already. Lets say you give in to these nagging collectors that call you and agree to pay off the debt now or just pay a little. If you do from that point of payment you have just reset that 7 year time period. That three years you had under your belt to get it erased is now gone and you start over.

Now, what can you do to clean up your reports. You do have options. First get a copy of your reports. Sometimes the quickest clean ups will be accounts are your reports that aren't yours or accounts that are duplicated on your report. Look for these. The main way to clean it up is to dispute any false items with the bureaus in writing. You have the right to write the bureaus about any inaccuracies on your reports. While this is a pian to do it does work. When you dispute an item on your report the bureau has 30 days to verify the accuracy of this item with the creditor. If after 30 days, the creditor does not respond then the bureau MUST remove the item from your report. NOTE - If that creditor responds to the bureau lets say 45 days later instead of the 30 days, that item that was just removed can then be put back on the report. This does happen occasionally. Anyway, the bureaus will then send you a free copy of your report after about 60-90 days showing you the result of your investigation, whether the item was deleted or remains. If you do not get it removed then send another letter to re-investigate this item. They may tell you that they can't because it was already investigated. Don't let that stop you because it is an attempt to get you to stop making the bureau's do extra work to investigate your items. Keep sending these letters over and over and over. I promise you, at least in my experience doing this that they will get so sick of investigating the same items that they will remove them just to get you out of there hair. I have cleaned up over 20 negative items on all three of my reports by this method. Items resulting from my irresponsible days in college and in the frat house where I ran up my credit cards.

Anyway, you do have options to clean up your reports so that when you go in to get a loan to buy that Q or M or G you won't have to worry about if you will be declined or not. Know about your credit before they do and do what you can to make sure it is as clean as possible.

Also, while some people may recommend credit repair companies and debt consolidators I say RUN LIKE HELL FROM THESE PEOPLE!!! Do not do it. You can do the same things they do and not have to pay them a fee to do it. Plus, if you use a debt consolidator they require you to close all of your accounts. In doing so they will flag your accounts to say "closed at credit grantors request" instead of "closed at consumers request". This is an automatic red flag to banks and anyone looking at your credit that you have indeed done debt consolidating.

Today, bankers don't take the time to listen to your reasons for bad credit like a terminally ill child, unemplyment, etc. They look at that damn credit score and if it isn't above there requirements it is an automatic NO with no explanation. KNOW YOUR CREDIT BEFORE THEY DO AND CLEAN IT UP. It will take time but it can be done.

I think you can request a copy of your reports once a year for free. I will have to check on that as I can't remember. I do know that this WILL NOT give you your credit score you WILL have to purchase that. Also, if you are declined for credit from someone and they sent you a letter of decline it should tell you which bureau they pulled from and you can request a copy from that bureau for free with in I believe 60 days. Just wanted to add that tidbit.

I did want to add one more thing. Everytime you write the bureaus to do an investifation you will get a FREE copy of the report after the 60-90 day time period they have to investigate. One way to keep getting FREE reports is to reinvestigate things that remain. That is how I kept getting free reports without ever having to purchase them.

Also, here is a secret. When you write them for investigations, ok say you WERE late four times on your Citicard, the bureaus don't know that. Maybe those late pays were the result of unemployment, change of address, CC company didn't post it in time. They don't know this. Make them investigate all of the items over and over again. If you are lucky some of your creditors might not respond to the investigation and if they don't guess what? Automatic delete from your report. Or they get sick of your disputes and delete them to get rid of you or you get some computer geek that works for your credit card company and is in charge of verifying your history and refuses to forget about it and let the bureaus delete it. In this case it may be a long 7 years for you to get that one deleted. I had this happen with SEARS, the worst company on the planet. No matter what I did I could not get that one removed, good news is my 7 years was up last year. Deleted! Yeah.

Ok, I apologize for the novel here guys but I thought this might help some people out there about how the system works and how to screw the system. For those of you who already know all of this sorry to be redundant, for those that never chekc their credit and this is all new to them then I hope this helps you. If anyone has any questions. Lemme know.