What you should know about a Credit Report
How do lenders determine who is approved for a credit card, mortgage, or car loan? Why are some individuals flooded with credit card offers while others get turned down routinely?
Credit Reports
Because creditors keep their evaluation standards secret, it is difficult to know just how to improve your credit rating. It is important, however, to understand the factors and to review your credit report periodically for any irregularities, omissions, or errors. Reviewing your credit report annually can help you protect your credit rating from fraud and ensure its accuracy.
Many factors determine your credit. Here are some of the major factors considered:
Evaluation Factors
These factors may be used, and weighted, in determining credit decisions.
Credit reports contain much of the above information.
Credit reports are records of consumers’ bill-paying habits. Credit reports are also called credit records, credit files, and credit histories and are collected, stored, and sold by three credit bureaus, Experian, Equifax, and TransUnion.
Recent changes to the Fair Credit Reporting Act (FCRA) require that each of the three credit bureaus provide you with a free copy of your credit report, at your request, every 12 months.
Get Your Credit Reports
If you have been denied credit or believe you’ve been denied employment or insurance because of your credit report, you can request that the credit bureau involved provide you with a free copy of your credit report – but you must request it within 60 days of receiving the notification.
The Fair Credit Reporting Act (FCRA) protects consumers in the case of inaccurate or incomplete information in credit files. The FCRA requires credit bureaus to investigate and correct any errors in your file.
If you find any incorrect or incomplete information in your file, write to the credit bureau and ask them to investigate the information. Under the FCRA, they have about thirty days to contact the creditor and find out whether the information is correct. If not, it will be deleted.
Be aware that credit bureaus are not obligated to include all of your credit accounts in your report. If, for example, the credit union that holds your credit card account is not a paying subscriber of the credit bureau, the bureau is not obligated to add that reference to your file. Some may do so, however, for a small fee.
The Fair Credit Reporting Act FCRA
This federal law was passed in 1970 to give consumers easier access to, and more information about, their credit files. The FCRA gives you the right to find out the information in your credit file, to dispute information you believe inaccurate or incomplete, and to find out who has seen your credit report in the past six months.
You need to understand Your Credit Report
Credit reports contain symbols and codes that are abstract to the average consumer. Every credit bureau report also includes a key that explains each code. Some of these keys decipher the information, but others just cause more confusion.
Read your report carefully, making a note of anything you do not understand. The credit bureau is required by law to provide trained personnel to explain it to you. If accounts are identified by code number, or if there is a creditor listed on the report that you do not recognize, ask the credit bureau to supply you with the name and location of the creditor so you can ascertain if you do indeed hold an account with that creditor.
If the report includes accounts that you do not believe are yours, it is extremely important to find out why they are listed on your report. It is possible they are the accounts of a relative or someone with a name similar to yours. Less likely, but more importantly, someone may have used your credit information to apply for credit in your name. This type of fraud can cause a great deal of damage to your credit report, so investigate the unknown account as thoroughly as possible.
I recommend an annual review of your credit report. (I do mine around July- date has no significance)It is vital that you understand every piece of information on your credit report so that you can identify possible errors or omissions
Some Calculators to help you:
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A Week in Perspective
Want to let everyone know that with the upcoming holidays and my need to catch up my readiness for this upcoming season, The will be no Week In Perspective on December 26th, or January 2nd.
I also want to let you all know that I have a very special post for you scheduled for January 4th.
Happy birthday to us! – Twenty years ago, five more-or-less young accountants went over the wall of a national CPA firm to start their own firm. They wisely discarded their first working firm name (“Dunderhead CPAs”) and settled on the name “Roth & Company.”
Not sure how I missed this:
Are You Ready For The Big Payroll Tax Deposit Change? – The IRS is changing the rules in a BIG way, when it comes to payroll and corporation tax deposits. Are you going to be ready for this new change? If not, you don’t have long to get ready! The new change goes into effect on January 1, 2011.
IRA Investment Planning for Taxation
3 Ways to Improve Your Credit in the New Year – Improving your credit quickly can be tough since the whole point of a credit history is to establish good financial trends – a pattern of paying off your debts. However raising your score over a longer period of time isn’t too tough if you consistently follow good money habits.
Why Don’t We Tip Everyone? – Earlier this week I asked my readers why they tip at the holidays. I was afraid a lot of you would read that, scoff, and say “Of course I tip my coffee barista! Every day!”. Of the few people that commented it seemed that everyone thought there was an appropriate time to tip (I agree) and sometimes it just doesn’t make sense to tip. But as I considered holiday tipping another thought crossed my mind. Why do only certain professions warrant the expectation of tips?
Everyone is Deserving, Right?
Friday’s Tax Quote – December 17, 2010 – “People don’t complain about taxes because they are selfish or stingy. They complain because they simply don’t believe they’re getting their money’s worth.”
- Zell Miller
Don’t Overlook This Easy Way to Put More Money in Your Pocket – If you have an employer, you might be offered a health care or dependent care flexible spending account benefit. Flexible spending accounts are one of those benefits that can make your eyes glaze over, because at first glance they don’t seem like a benefit. But they’re actually great, because when you take advantage of them you get to:
Are You on the Hook for Repaying Your Homebuyer Tax Credit? – In the wake of the financial crisis and the housing market crash, there were a number of efforts made to prop up the failing market. Among these efforts were tax credits for homebuyers, encouraging them to buy homes. However, not all the tax credits were created equal; in some cases, homeowners may be on the hook for repaying the tax credit.
Merry Taxmas! House OKs tax bill – In addition to keeping the current six tax rates that range from 10 percent to 35 percent, the bill contains a raft other tax breaks for both individuals and businesses. Many of the provisions relate to 2011, but there are some of the individual tax provisions that expired at the end of 2009 and were extended retroactively for the 2010 tax year:
- Alternative minimum tax (AMT) patch
- State and local sales tax deduction (itemizing required)
- Tuition and fees deduction
- Teachers et al write-off for $250 of out-of-pocket expenses
- Private mortgage insurance (PMI) deduction
- Direct donation of IRA money by older account holders
A New 2011 Economic Stimulus Package With Obama-Bush Tax Cuts and Unemployment Benefit Extensions – [Update - No New Taxes with Tax Extensions Approved] President Obama has signed into law a bill that covers an extension of all the bush-era tax cuts and additional tax benefits. With this legislation he has essentially created a new 2011 Economic Stimulus package, estimated at around $858 billion. Here’s how various key components of the “2011 economic stimulus package” legislation will affect you:
Estate tax extension through 2012: Nudging mama off the train in two years?
With Obama’s signing of the compromise tax deal yesterday, the really wealthy were among those who got an early tax present.
Some of the House Democrats railed against this latest version of the estate tax, but in the end, it passed.
For 2011 and 2012, estates worth $5 million or less won’t be taxed at all. For estate values greater than that, a 35 percent tax rate will apply.
Bush-rate extension passes; what it means – After a day of posturing, the extension of the Bush-era tax cuts ended up passing easily last night, 277-148.
So what does it do? Go to the above page for Joes great list of. . .
Also with More coverage of the final bill:
Robert D. Flach, TaxGrrrl, Tax Foundation, Kay Bell, Peter Pappas, The Blog that Inexplicably Hates Our LInks
Tax Bill Passes: What This Means for You – Here’s what’s in and out and what this means for you.
Boston Tea Party Anniversary – The Boston Tea Party was 237 years ago.
Steps To Stimulate A Recovery And Employment The Law Of Opposites
December 19th, 2010 Filed under: MBA Finance Jobs — Finance Author
As I wrote in 2008 on the financial crash, I was in the small minority that would have let the market crash. Now, you may be wondering what I meant then and mean now:
How do we distribute tax benefits for charitable donations? – I’m struck by the remarkable generosity of many of the low-income taxpayers at our Union College Volunteer Income Tax Assistance (VITA) site, who rarely get any tax benefits for their donations.
The AMT Effect for Individuals – For years, tax practitioners have been clamoring for a permanent fix to the AMT system. Ask a tax preparer about the late extension passed in 2007. If Congress does not pass the extension this year, it is estimated that 28 million taxpayers will pay AMT, with 82% of those taxpayers earning below $200,000. You will notice, that in 2009, 4.5 million were subject to the AMT.
2010 and 2011 AMT Tax Brackets – AMT is Alternative Minimum Tax. The Bush tax cut extension law officially known as the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010 (H.R. 4853) includes an AMT patch for 2010 and 2011. Congress used to patch AMT one year at a time. This time they did two years in one shot. That’s a 100% improvement!
How much are those New Year’s Eve babies worth?
A time to be born … a time to die – Playing the video while you read this post. And yes read the post. This is a great Article Mary.
“There’s no such thing as a free bike.” – Those “gift” bikes could turn out to be very expensive, because the IRS does not treat it as a “gift” but as a “taxable fringe benefit.”
It raises interesting tax questions.
Rentals and 1099s – Beginning in just a few days, landlords will have a new complication to renting their properties. As if dealing with renters who don’t want to pay their rent or trash the house when they leave isn’t bad enough, landlords will have to begin issuing 1099MISC to any service providers they pay $600 or more over the course of the year.
The new 1099 Requirement you MUST comply with in 2011 – Real estate investors take note: January 1, 2011, is the starting date for new 1099 Reporting rules. Effective January 1st, you must track payments you make to all businesses and individuals that you buy services from. Once you have paid $600 or more to any one business or person in connection with any kind of rental property expense, you’ll need to report those payments to the IRS, and issue each person or business a form 1099-MISC…
Form 1099 repeal fails yet again
While waiting for the Senate to get around to its final vote on the deal to extend the current income tax rates, the chair of the Finance Committee took another shot at repealing the new Form 1099 reporting requirement.
This tax task was devised as a way to help pay for health care reform. Specifically, businesses will have to provide 1099 information returns to each payee that the business pays $600 or more during the year.
How the Price to Earnings Ratio is Calculated – The price to earnings ratio (P/E ratio) represents a company’s current share price compared to its earnings per share. Commonly referred to as the earnings multiple, the P/E is commonly used by investors to compare and analyze stocks, as well as determine if a company is under or overvalued. There are many different versions of the price to earnings ratio which are often used to understand past, present, and future valuations.
TAX BLOGOSPHERE BUDDIES – PROF JAMES MAULE – Friday series of mini-interviews with fellow tax bloggers is Professor James Maule of MAULED AGAIN. A fellow “Wandering Traveler in the Internet Wilderness”, Jim has been a professor at Villanova University School of Law in Pennsylvania since 1983, and has been blogging since 2004. I enjoy reading Jim’s, appropriate for his profession, scholarly posts on tax policy. We have both made the extreme error of disagreeing with a certain multi-initialed blogger.
Social Security by the Numbers
Charge cards vs. credit cards: 3 reasons to charge it – The other day, someone asked me, if given the option, which I preferred: charge cards or credit cards. My answer: “There’s a difference?”
There is. And who knew?
(If you knew, kudos, because I always thought “charge card” was what our ancient ancestors – Mom and Dad – called the plastic we carry around in our wallet.)
Pre-paid credit cards: Why you should give them a second look – Today, it’s often difficult for anyone to get a credit card – whether it’s a zero percent balance transfer card or a best cash back credit card. And if you’re just starting out -or starting over – getting an approval based on your credit score can be even more of a hassle. This is what makes pre-paid cards so attractive if you want to use them for online shopping, travel or even just everyday expenses.
Reminder;
You can go to my company web site Tax Center page where you’ll find this year I have a Free Tax Organizer. You’ll need a .pdf reader to open this 14 page organizer. You can also find my Online Tax Organizer, used mostly by clients and/or those who will be clients.
Enter your email to subscribe to the L & R Tax Preparation monthly newsletter.
Credit Reports: What You Should Know
How do lenders determine who is approved for a credit card, mortgage, or car loan? Why are some individuals flooded with credit card offers while others get turned down routinely? Because creditors keep their evaluation standards secret, it is difficult to know just how to improve your credit rating. It is important, however, to understand the factors and to review your credit report periodically for any irregularities, omissions, or errors. Reviewing your credit report annually can help you protect your credit rating from fraud and ensure its accuracy.
Credit Evaluation Factors
Many factors determine your credit. Here are some of the major factors considered:
- Age
- Residence
- “Authorized user” payment history
- Checking and savings accounts
- Bankruptcy
- Charge-offs (Forgiven debt)
- Child support
- Closed accounts and inactive accounts
- Jobs
- Payment history
- Recent loans
- Collection accounts and charge-offs
- Cosigning an account
- Credit limits
- Credit reports
- Debt/income ratios
- Department store accounts
- Payment history/late payments
- Finance company credit cards
- Income/income per dependent
- Mortgages
- Revolving credit
- Name/alias
- Number of credit accounts
- Fraud
- Inquiries
These factors may be used, and weighted, in determining credit decisions. Credit reports contain much of this information.
Obtaining Your Credit Reports
Credit reports are records of consumers’ bill-paying habits. They are collected, stored, and sold by credit bureaus.
Credit reports are also called credit records, credit files, and credit histories. Under federal law, you are allowed access to free credit reports. There are three major credit bureaus and thousands of smaller ones where you can obtain a credit report.
These credit bureaus offer free credit reports, as well as monthly credit reports and services for a fee.
- Experian Credit Bureau: 888-397-3742 (cost: free or $14.95 monthly)
- Equifax Credit Bureau: 800-685-1111
- Trans Union: 877-322-8228 (cost: $11.95 monthly)
If you have been denied credit, you can request that the credit bureau involved provide you with a free copy of your credit report – but you must request it promptly. Otherwise each of the bureaus will provide you a copy of the report for a fee. You can request a copy from their websites (see links above) or toll-free numbers (also listed above).
Disputing Errors in Your Credit File
The Fair Credit Reporting Act (FCRA) protects consumers in the case of inaccurate or incomplete information in credit files. The FCRA requires credit bureaus to investigate and correct any errors in your file.
Tip: If you find any incorrect or incomplete information in your file, write to the credit bureau and ask them to investigate the information. Under the FCRA, they have about thirty days to contact the creditor and find out whether the information is correct. If not, it will be deleted.
Be aware that credit bureaus are not obligated to include all of your credit accounts in your report. If, for example, the credit union that holds your credit card account is not a paying subscriber of the credit bureau, the bureau is not obligated to add that reference to your file. Some may do so, however, for a small fee.
Fair Credit Reporting Act (FCRA)
This federal law was passed in 1970 to give consumers easier access to, and more information about, their credit files. The FCRA gives you the right to find out the information in your credit file, to dispute information you believe inaccurate or incomplete, and to find out who has seen your credit report in the past six months.
Understanding Your Credit Report
Credit reports contain symbols and codes that are abstract to the average consumer. Every credit bureau report also includes a key that explains each code. Some of these keys decipher the information, but others just cause more confusion.
Read your report carefully, making a note of anything you do not understand. The credit bureau is required by law to provide trained personnel to explain it to you. If accounts are identified by code number, or if there is a creditor listed on the report that you do not recognize, ask the credit bureau to supply you with the name and location of the creditor so you can ascertain if you do indeed hold an account with that creditor.
If the report includes accounts that you do not believe are yours, it is extremely important to find out why they are listed on your report. It is possible they are the accounts of a relative or someone with a name similar to yours. Less likely, but more importantly, someone may have used your credit information to apply for credit in your name. This type of fraud can cause a great deal of damage to your credit report, so investigate the unknown account as thoroughly as possible.
We recommend an annual review of your credit report. It is vital that you understand every piece of information on your credit report so that you can identify possible errors or omissions.
If you have any questions about how to obtain your credit report or how to interpret what’s in your report, contact me.
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