Right now there are more people who are suffering with bad credit and low credit scores than at almost any time in history. The current economic down slide has affected people who never had problems before.
When people are losing jobs, having a difficult time paying for health care and small businesses are unable to borrow money, it is inevitable that many people will suffer credit problems and financial hardships.
Even when people know that their credit scores are going down the truth is that many people do not realize what is taken into consideration in a credit score. For instance, it is not common knowledge that shopping for credit can actually make that credit harder to get because every inquiry into the credit report makes the credit score go down.
A debt to credit ratio is the amount of credit available compared to the amount of debt used. In order to have the highest scores it is important to have very little debt compared to how much credit you are approved of and have available to you. A smart consumer will keep their debt level at 20% or below the available line of credit.
If there are questionable listings showing on your credit report you have the right to dispute them and possibly get them removed. It is estimated that as many as 70% of all credit reports contain errors and omissions and therefore, Congress passed the Fair Credit Reporting Act back in 1970. This law regulates the collection, assemblage and distribution of individual credit information. This law also allows the consumer the right to dispute erroneous information.
The FCRA also allows consumers to receive one free credit report one time each year from all of the three main credit-reporting agencies. You do not have to participate or join any type of credit-monitoring service or pay for any type of service in order to get the free report. Just contact the credit bureaus and your report will be forthcoming.
Educated consumers will take advantage of this free report to check things out at least once per year to make sure that everything is accurate. Credit reports are very changeable and errors show up frequently. It is estimated that as many as 75% of all reports have repairable errors.
Once you have taken a good look at your report and you have discovered discrepancies and errors you can dispute them to get them removed. You must send a certified letter about the error on your report. If you have any paperwork documentation you should also send copies of that. Upon receipt of the dispute letter the credit bureaus have 30 days in which to verify the accuracy of their reporting or delete it completely.
There are also other things that you can do to repair and improve your credit. In order to change your debt to credit ratio, you can always pay down your debt but you could also get your credit line increased. Make sure and avoid all inquiries on your credit and of course, it is always important to pay all of your bills on time and make sure that you keep your current credit in proper order.
Image via Flickr Scott Manson