The Cost of Credit
Whether you are aware of it or not, your credit score is costing you money. The cost of credit is dependent on the consumer and their situation, but it is clear that almost everyone is suffering from damaging items on their credit reports to some degree or another. A damaged credit report, even small seemingly insignificant errors, are dropping your credit score and costing you money.
How credit costs you:
Higher interest rates. Interest rates awarded by lenders on credit cards, mortgages, and all other loans are almost wholly based on a prospective borrower’s credit report and score.
On a typical loan of $5,000 over a term of 5 years at 7% interest will cost you approximately $1,750.00 in interest payments. That same loan at a 13% interest, very common for credit scores below 650, will cost you $3,250, nearly double the amount just in interest. Starting to see the cost of bad credit?
Loss of Employment Opportunities: More and more employers, including the Federal Government, are now reviewing credit reports of prospective employees. This means a bad credit report and score can keep you from getting hired. Pretty expensive price to pay for poor credit!
Insurance Premiums: Most insurance carriers, and soon all major ones, will now check your credit prior to approving your insurance policy or even quoting you a price. Insurers feel, and the data supports, that poor credit performers are more likely to make more frequent and costly claims for automobile accidents, medical payments, and even home fires and damage. Fair or not, bad credit will cost you on your insurance needs.
Credit History Repair
The good news about credit reports is that they can be fixed: bad credit is not a life sentence. Credit history repair is more and more common and now the credit bureaus are streamlining the process for consumers. Experian will now allow you to dispute erroneous items on your credit history easily and online. Getting misreported and inaccurate information off your report will improve your overall credit profile and subsequent FICO score dramatically. Why should you pay for someone else’s mistakes? The answer is you shouldn’t. Get your credit report and start identifying and removing common errors made by lenders, unauthorized accounts, and the credit bureaus themselves, through the dispute process.
What to Do When You’ve Been Denied Credit
Video: Credit Card Holders' Bill of Rights
What to do when you’ve been denied credit? Fight back and find out why. When you have been denied a loan or credit application, it is not personal; it’s simply numbers. The credit score your credit report is generating is too low and the lenders don’t want to take the risk to extend you credit. Take advantage of an otherwise unpleasant experience. The law provides for you under the Fair Credit and Reporting Act (FCRA) a free copy of your credit report. The credit bureau responsible for providing the lender with your credit information that then resulted in you being denied credit must hand over a free copy to you. Go online or call and request yours immediately after the denial. Use your credit report to identify why your credit profile is costing you borrowing opportunities.
How to Remove Negative Credit
If you are interested in learning how to remove negative credit, look no further. The dispute process must be followed in order for you to successfully remove negative items unfairly reported to the credit bureaus on you.
Common errors reported are:
Accounts that are not opened by you, but opened fraudulently by identity thieves.
Accounts that should have expired after 7 years and been removed from the credit report.
Accounts that were reported inaccurately by the lender making the report. For example, a reported missed or late payment when the payment was in fact made on-time.
Accounts in your credit report that were entered incorrectly by the credit reporting bureau itself.
The process for a dispute is simple and if followed will work every time. Once the error has been found, contact the credit bureau to get the item removed. In your request you should provide proof such as a receipt or canceled check to prove your claim. The credit bureau will then have to start a dispute investigation into your claim. The credit bureau must take action to make your credit report accurate; the law is on your side.
Financial Risk Management
Video: Financial Planning 101
Financial risk management is a plan to keep you on the right path to financial success. While it is important to have excellent credit ratings, you must have a plan in place for the future. Your retirement, the future financial needs of your children, everything important to you is at risk if you are not planning financially for tomorrow. You need to stay ahead of the curveballs life throws at you with a solid financial plan to save, make, and invest money. Many banks and private institutions now offer financial planning services. Additionally there are literally thousands of qualified, highly professional financial planners that will help you get your finances managed. Don’t wait for bad luck to find you, plan ahead with financial risk management.
