Bad Credit

The words “bad credit” conjure up such negative images, don’t they?  That’s because those two little words aren’t exactly what people want associated with them.  When you have BAD CREDIT, you are almost marked when it comes to obtaining things like cars and homes.  It’s like you’re wearing a sign around your neck proclaiming that you got into trouble with credit and now you have BAD CREDIT!

Well, don’t worry; there is help for people with BAD CREDIT.  The first thing we need to do is get past the stigma associated with these words.  Bad credit simply means that you have overextended yourself when it comes to using credit and you want to work your way out of that state and get GOOD CREDIT!

How do we define bad credit?  Well, most financial lending companies will classify you according to your credit score, also known as your FICO score.  This score is calculated using a highly secretive formula developed by the Fair Isaac Company and kept under lock and key with the Federal Trade Commission’s blessing.

FICO will evaluate your credit history and then assign you a three-digit number that determines your credit worthiness and your ability to repay any loan you are applying for.  It doesn’t reflect who you are as a person, it reflects your past payment history when it comes to your debts.

You are considered to have bad credit if your FICO score is less than 620.  The median credit score for most Americans is 723, so anything less than 620 virtually guarantees that you will not be approved for a loan you might be seeking.  That’s because you are considered to have a bad credit history and seem to be unreliable in paying back your debts.

If you do have bad credit, don’t worry yourself too much.  Sure, it’s something to be concerned about, but repairing your credit can be done and you can get away from that bad credit stigma with a little hard work on your part.  It’s never too late to repair your credit and heal your bad credit history.

One place to start is to pay down your debt and stop using credit immediately.  You’ll need to work with your creditors to make a repayment plan that will work for you.  Of course, there are a lot of other things you can do to get away from bad credit and into good credit.

Look for books, software, and information that can help you with your bad credit problem.  They can help guide you toward repairing your credit and making that bad credit history a stigma that doesn’t define you but reflects your past and how far you’ve come since then!

Annual Credit Report

As a consumer in the United States, the Federal Government decided back in 2003 that you are entitled to receive a free annual credit report so you can monitor your credit and your credit rating.  The FACT Act was passed unanimously so that all Americans could get a free annual credit report and be able to keep track of what the credit reporting agencies were compiling on them.

This is groundbreaking in that people are now able to see what lenders see, correct any errors that are on the report, and keep track of their credit to prevent any blemishes that might damage their worthiness as a credit risk.  Before the FACT Act was passed, the only people privy to this information was the lenders and the credit reporting agencies.

There are two ways you can go about receiving a copy of your free annual credit report.  First, you can go directly to any of the websites of the credit reporting agencies.  These agencies are Experian, Equifax, and TransUnion.  Their web addresses are www.experian.com, www.equifax.com, and www.transunion.com.

You will have to answer a few personal questions and provide proof of your identity based on some of the information on the credit report.  Then the report appears directly on your computer screen so you can view it, download it to your computer, and/or print it out.

The second option you have is to go to either www.freecreditreport.com or www.annualcreditreport.com.  They will eventually be directing you to the credit reporting agency of your choice, but they will be able to easily guide you through the process of getting your annual credit report.

It is very important that you take advantage of getting your annual credit report each year and checking it for accuracy.  Mistakes can be made, and they can affect the decisions of lenders when you apply for a line of credit or a loan.  Just one mistake can make the difference between a yes and a no from the lender.

You will also want to monitor your annual credit report for any information that does not apply to you.  It can alert you to identity theft if you see that there is information on there that isn’t yours such as a credit card you never applied for or a loan that you never sought out.

The annual credit report is a great tool for consumers to have when it comes to their credit.  Not using it is a huge mistake, so go out and get your annual credit report today if you haven’t already.  It’s the best thing you can do for yourself.