Sample Dispute Letter

10/11/2006

Jane Doe
33-22- Elm St.
Somewhere, NJ 10607

Dispute Department
[Name of Credit Reporting Agency]
[Address]
[City, State, Zip Code]

Dear Sir or Madam:

I am writing to dispute information on my credit report. The items I wish to dispute are listed below and also highlighted on the attached copy of my credit report
[List the items that you feel are inaccurate including the type of accounts, names of the financial institutions, and full or partial account numbers. Include what changes you feel should be made.]
Enclosed are copies of [payment records, credit report, letters from the creditor, court documents, etc.] supporting my dispute. Thank you for investigating this matter.

Sincerely,
[Signature]
[Your full name]
[Date of birth]
[Social Security number]

Enclosures: (List what documents are enclosed with your letter)

TransUnion
2 Baldwin Place
P.O. Box 2000
Chester, PA 19022
http://www.transunion.com/

Equifax
P.O. Box 740241
Atlanta, GA 30374-0241
http://www.equifax.com/

Experian

go to http://www.experian.com/ and submit a dispute online

The Deal With Credit Counseling, Credit Repair and Debt Consolidation

Most of us have heard of credit counseling, debt consolidation and credit repair companies and many of us have sought or considered seeking their services. The whole business of fixing and helping people with their credit problems is a highly profitable industry, generating billions of dollars a year.

All credit counseling services and debt consolidation services do is negotiate payment arrangements with your creditors to lower rates and sometime waive fees, all of this at a cost to you somewhere upwards of $25 a month, that goes straight into the counseling service’s pocket. I suggest calling your creditors and trying to strike your own deals before turning to these companies. If you feel you can’t get anywhere with creditors and need to use a credit counseling service or a debt consolidation company, do your homework. Use the Google search box below and do a search for credit counseling and debt consolidation. Take some time to review each company and their fees and terms and pick the best one with the best terms and fees. A small difference of as little as $5 in fees adds up quickly and can spell big bucks over the life of the arrangement. Many debt consolidation services are actually loans, they pay off your creditors on your behalf and then you pay them back at a rate lower than your original debts.

While Credit counseling and debt consolidation are legitimate businesses, be wary of most companies that claim to do credit repair. We’ve all heard the saying, “if it sounds too good to be true it probably is”, well what sounds better than having hundreds of points added to you fico score or going from bad credit to good credit in 30 days? Get real! Most of the time when you see these things, it’s a scam, they will take your money and you will never hear from them again, but why take my word about it when you can read about it for yourself. See the Federal Trade Commission's Warning about these companies . Don’t be a victim and find out the hard way.

What You Should Be Saving For

The Unplanned
Anything can happen! Life is full of unexpected curve balls and the only thing you can do is make sure you’re not caught with your pants down. Surprise car break downs, lay-offs and injuries are stressful enough and for a lot of us there is the added strain of not being financially prepared to deal with it. Do you really want to be laying in a hospital bed worrying about the debt you’re going to be in over the bill or find yourself jobless without enough money in your account to get you to the end of next week? Of course not! And you can avoid finding yourself in that situation if you build an emergency fund. A “reserve” of 3-6 months living expenses is commonly recommended and more than that is even better! 3 months of expenses can become a huge number but it doesn’t have to be overnight but be disciplined and put as much as you can spare away over time and slowly but surely it’ll begin to pile up.

Special Expenses
Weddings, college, new car and first home purchases are just a few examples of some pretty expensive milestones. Why drown in debt to pay for special events when you can prepare. I’ve met too many people who are still paying the bills for their wedding after the divorce! If it means that much to you to incur huge amounts of debt it should mean that much to you to save up as much as possible ahead of time. Of course I’m not suggesting putting off buying a home until you have every last dollar in cash but do find a middle ground. Remember, it all has to be paid sooner or later…with interest! The less you finance, the better off you are.

Retirement
It may seem a long way off but it creeps up on you and it’s better to save a slow and steady amount every year starting now that to be scrounging for money to live off of later. Social security will be non-existent before most people retire and it was never anything to count on count either way. At 20 years old you would only have to save $33 a month at 12% interest to have a million by age 67, however for a 30 year old to get the same results they would have to save $109 at the same interest rate. You don’t need a calculator to figure out which is the smarter move.

Raising Your Credit Score

Who doesn't want to raise thier credit score? A1 credit can be yours through active and responsible credit management and it's easier than you may think.

Following these golden rules will rocket you above and beyond the ideal 650 fico score range.

The first rule is to make punctual payments! Payments of 30, 60, 90+ days late stay on your report for 7 YEARS!!!! Yikes! Avoid making late payments at all costs, make a minimum payment or a strike a deal with the creditor. Collect cans from the garbage for recycling if you have to but whatever you do, avoid late payments!It's just not worth it! And think of all the late fees, it's hard earned money down the drain, give away your money to charity, not banking insitutions!!!!

Next rule, check often, check closely. Order copies of your credit report and go over it with a fine tooth comb. Check for errors and unusual or unauthorized activity and take care of them ASAP!

Curb debts, don't max out or keep high balances. It's a huge waste to pay interest month to month on high balances and it puts up a red flag to potential creditors AND it lowers your fico score. Ideally, balances on accounts should be 30% of the total limit or LESS or even better, pay everything in full every month.

Stop applying for credit! Don't apply for every credit offer that comes your way because this lowers your fico score and ultimately hurts you in the end. Once you have a sufficient amount of open accounts in good standing only apply for offers that are really neccessary or have not just good but GREAT deals.

Patience. Waiting SUCKS but it's neccessary for optimizing your credit reports. A long history of accounts in good standing are indispensible on your credit report. Like fine wine the older the accounts, the better! It's important to always think twice about closing your oldest account because it may make your credit history appear shorter than it actually is.

Building Credit From Scratch
Have little to no credit is both a blessing and a curse. At times having no credit seems like the equivalent of having bad credit and understandably so. You can't get a loan, a credit card or a decent interest rate when someone does take a chance on you. The reason is simple...you're risky! Nobody knows how your going to behave and manage debt, they have no way of telling if they'll ever see thier money again once they lend it to you. So how do you show them that you're responsible or deserving?

You get a credit card! But wait, you can't get a credit card without a credit history and you can't build a credit history without a credit card or loan or some other kind of credit. What to do what to do...

If you're in college, you're in luck! College campuses are one of the easiest places to get your hands on a credit card without any credit history. After reading this search "student cards" and "credit cards students" in one of the google search boxes on this page and see what's available to you. Avoid cards with annual fees and secured cards, these are last resort.

If you're not in college, don't lose hope, there are still many options available to you. One option is to have someone who you know and trust and more importantly, who trusts YOU to add you as a secondary card holder on one of thier existing credit cards that are in good standing. Although the primary card holder is responsible for the bill, you will be issued your own card with you name on it and it will apear on your credit report building your history.

A secured credit card is an undesireable option but an option nonetheless and it's guaranteed! Nobody will deny you a secured card!

It's hard to get you foot in the door but once you do a whole new world will open up to you...whatever you do...don't screw it up!!!!!

Keep your eyes on the prize.

The prize being a score of 650 or better, the magic number that will get you approved for most credit and loan terms.

It takes time but your credit score will increase over time as long as you prove yourself responsible and credit worthy, make yourself desireable to creditors.

For tips on managing and maximizing your credit score, read "Raising Your Credit Score" and to understand how your FICO score (credit score/rating) is calculated read "Fico Breakdown"

The Credit Report Timeline
Most of us have SOMETHING negative on our credit report and then there's those whose credit is just....shot! Late payments, tax liens, accounts in collections, bankruptcies and even credit inquiries are just a few of the harmful things that work against us on our credit reports. These tarnishes on your report join forces to lower your score and stand between you and the sweetest deals and interest rates.

Fortunately the saying "time heals all wounds" applies to credit reports as well as broken hearts. Here is a list of the different types of accounts and how long negative information concerning them will remain on your report:

Bankruptcy Chapter 7, 11 or 13 stay on for 10 years.
For some reason it is widely believed that it stays on 7 years but 10 years is the actual length of time.
Charge-Off Accounts - 7 years
Closed accounts -7 years
For negative accounts but positive accounts can stay on longer which is a good thing!
Collection Accounts - 7 years
it is 7 years from the last 180-day late payment in the ORIGINAL account.
see *special note about collection accounts* below
Inquiries -1 to 2 years
see ** special note on inquiries** below

Judgements - 7 years

Late Payments - 7 years

Avoid these at all costs, I know sometimes it is unavoidable but even if you can make a bare minimum payment, do it!

Unpaid tax leins stay on your report indefinitely until they are paid, then they remain for 7 years from the payment date, sorry guys this is one that just won't go away so always take care of these as soon as possible!!

*Special note about collection accounts*
A paid off collection account is noted on your report as "paid in collection"
and an account settled for reduced amounts are reported as "paid for less than due" which looks HORRIBLE on your report!

**Special Note On Inquiries**
These only include hard inquiries and they stay on for a maximum of 2 years. Keep in mind that soft inquiries such as checking your own report do not reflect on your report or score. Never be discouraged from checking your own credit for fear of it affecting your score. You can check your own credit report an unlimited amount of times a year and I strongly encourage you to actively stay on top of your report and catch any errors or fraudulent activity as soon as possible.

I hope this information was helpful and informative, don't forget to check out my blog:
"FICO BREAKDOWN: How Your Credit Score Is Calculated" at http://finance-girl.blogspot.com/2006/09/fico-breakdownhow-your-credit-score-is.html

Fico Breakdown:How Your Credit Score Is Calculated

Unfortunately with credit reports the bad tends to outweigh the good. Mortgages and loans are determined by your fico score (credit score/rating) which is calculated based on the information on your credit report.

35% of your fico score is based on your payment history and the more recent a late or missed payment the more it hurts your credit score. Generally, missed/late payments (more than 30,60 and 90+ days past due) are reported to credit agencies and remain on your credit report(s) for a period of up to 7 years.

30% of your fico score is the current usage of credit, meaning how much on a current loan do you still owe and how much of your credit limit on your cards is used? If your balances are close to the limits it has a negative effect on your FICO score. Balances close to the limits make you appear risky to potential creditors.

15% of your fico score is the length of credit history- how long have you been using credit, 1 year, 10 years, the longer you've been reliably using credit the better. Accounts that have been open for long periods of time with good payment histories are invaluable.

10% of your fico score is based on your applications for new credit. Applying for too many new accounts is bad for your FICO score and it's a red flag to creditors. It's based on how many places have requested a credit report on you, so even if you apply for credit and don't get it then it still reflects negatively on you. New accounts include car loans, store credit cards, regular credit cards, etc... However keep in mind that only "hard inquiries" count against you. You requesting your own credit report is considered a "soft inquiry" and can be done an unlimited amount of times with no reflection on your credit report.

The last but not least 10% of your fico is based on how well you've been able to pay off different types of debt. Having a mix of different types of debt reflects well on you. Successfully managing various loans, from credit cards, mortages, auto loans, reflects better on you than having all of one or two kinds of loans.

It's in your best interest to get your FICO score as high as possible before applying for a mortgage or any loan or credit for that matter because it's the key to securing the lowest available interest rate. You can then put all the money you're NOT paying in interest in a Roth IRA!