Taxes and Credit Report

If one notices that a tax lien has been imposed on the credit report generated by the bureaus, then it is imperative that one takes action on the same. This is not a very good sign and it would have a bearing on your credit score. If your credit score is not up to the mark, then it would pose future problems for you with respect to sanction of loan, mortgage etc.

So the 1st thing you need to set right is for any errors or ambiguity in your credit score. You need to get in touch with the credit bureau that has generated your credit report. One needs to begin the process by issuing a dispute letter to the bureau.

Even credit bureaus do commit mistakes with respect to the reports. So you do not have to get worried. Mistakes do happen, but it is your duty to notify the bureau so that the mistakes do not go unseen. Once the bureau is in receipt of your dispute letter, it would look into the matter to confirm if there are any mistakes from their side. The credit bureaus would contact the offices of the Federal Government or State Government to clarify matters relating to your debt. Once they are totally clear about the verification they would intimate you and you would have to shell out some money.

Once could always get in touch with your tax consultant who would help in negotiating the taxes for you. Either you could approach the government directly or through any of these consultants. The choice is yours. A tax negotiator would help in getting you the best possible rates.

The amounts overdue by you are normally collected by the Federal Government or State Government once every 10 years. One needs to ensure that there is no negative report in your credit report, since the account would be in the records of the State for the next 7 years. If your default payments, it would remain in the records, which is obviously not something which anyone would want. Once you have cleared your payment, you need to wait for 3 months, till you hear something from them and remind them again with another dispute letter requesting the bureau for validation. It has been observed that once the government has received your payment, they would not consider the bureaus validation request.

So just to be on the safer side, you need to send reports stating that you have cleared all the amounts pending, so that you are clear from your side.

Post payment: Individuals interested in settling payments partly can opt for an OIC. State Governments normally agree to such OICs. Before agreeing to the OIC, the Government would make its enquiries relating to your asset value, your previous credibility, creditworthiness, whether you would default any further payments. One could always forward a letter of hardship stating that you are going through a financial crisis. This letter might be considered by the Government.

Obviously, you would not want a negative mark on your report. So what are you waiting for? Try and pay all your outstanding and start afresh. A seven year period is too long. Do not wait. Go ahead and try and clear your amounts.

How to Get Your Free Credit Report

The major credit bureaus like TransUnion,Equifax and Experian offer credit reports to individuals who are keen on getting loans for car, credit card or any type of consolidation loan. An individual has a clear picture of his credit report. The reports give a clear picture of the present and past amount outstanding, his previous payment itinerary. This could also include other options like foreclosure, insolvency if any etc.

The credit report normally give a FICO score. This FICO score is calculated on the basis of the past records of the individual. His ability to effect payments on time and whether he has cleared his previous debts on time etc. FICO score also is the deciding factor for future loans as well as the interest calculation.

Your future lenders would be in a better position to determine your fairness depending on the FICO score generated by the reports of the credit bureaus.

FICO score if found positive then there are fair chances of your loan sanction getting approved. If there is a negative score, then you can kiss goodbye to your chances of getting your loan sanctioned. Default payments effected by you would also negate your FICO score.

An individual is entitled to receive a free credit report copy from any of the 3 bureaus mentioned above. There are many websites which offer services, but everything comes for a price. There is only particular website which charges absolutely nothing for a credit report. Individuals can access that website and be rest assured that they would get their credit report free of charge. The basic credit report is absolutely free, without any price, but if you are interested in knowing your FICO score, then you definitely need to pay a few dollars. This FICO score report does not come free from any of the bureaus mentioned above.

Not only is an individual entitled for his free credit report annually, but he could also order a free copy in case he has not been granted his credit. The individual could either email or telephone the credit reporting agency to get an explanation regarding the reasons for the denial of his credit. Effectively, a free credit report would be available in your inbox with a period of 7 to 10 days maximum.

It is mandatory as well as advisable that an individual keeps a track of his credit reports. One needs to maintain a robust credit rating always so that he is saved from any corruption regarding his individuality. Individuals are advised that they audit their credit reports six monthly and in case they find any discrepancies regarding their payment schedule, status of accounts etc, they could report the matter to the credit bureau. The credit bureau would then go through their reports and find out for any errors, if any. One needs to ensure that their credit reports are free of ambiguities and error free. This would ensure a smoother loan sanction.

Free Annual Credit Report

Anyone who wishes to apply for a credit card, mortgage loan, car loan or debt consolidation loan needs to be familiar with his/her credit report and the information contained inside. So, just what is included in a credit report? The answer is an entire listing of an individual’s payment history for the past 7 years, current debt load and any public record information, such as judgments, bankruptcy and/or foreclosures. These factors, along with a debt to income ratio, combine to create a FICO score. This is a number that potential lenders use to calculate the interest rate that will be paid during the life of the loan, which is usually determined by any determinable credit risk.

Most consumers are surprised to learn that they are permitted to request a free copy of their credit report, every 12 months, from each of the three major credit reporting agencies. These include Experian, TransUnion and Equifax. These are the three agencies that respond to credit report requests from banks and other potential lenders. They supply the credit report, which is used to determine whether or not a loan is approved, the amount of any loan granted and an interest rate. While the credit reporting agencies are not involved in the actual credit decision, they are the ones who provide the information that leads to that decision.

These days, many businesses promise to provide a free credit report, but there is almost always a subscription requirement or paid service that must be honored before the individual can receive their free credit report. One website, however, is much different. Once every 12 months, consumers may visit website and request instant online access to their free credit report from each of the three previously mentioned credit reporting agencies.

Upon viewing each credit report, which may be slightly different from each of the reporting agencies, individuals will be able to review every entry and confirm their accuracy. If anything is determined to be incorrect, including an account balance, status or payment history, the consumer has a right to dispute that information with the credit reporting agency directly. At the time that a dispute is lodged, the agency will launch an investigation to determine whether or not the entry needs correcting.

At any time during the year, if an applicant is denied credit, he/she has a right to receive a free copy of the credit report from the agency who supplied the information to the denying lender. The lender must supply the name, address and telephone number of the credit reporting agency that supplied the applicant’s credit report. Within 60 days of the notice of denial for credit, the applicant may request a free copy of his/her credit report. A final consideration recommended to all consumers is that, in order to prevent identity theft or any type of fraud, a credit report should be monitored every six months.

Credit Reporting Help

Credit score decides whether your offer for a loan would be accepted or rejected. There are few bureaus which cater to this. Some of the bureaus which specialize in this are Experian, Equifax and TransUnion. These bureaus draw out reports based on the credit score and submit it to the lenders. The lenders would then decide on further course of action. With a score of less than 650, your application would get rejected by the lender. Every credit score report also distinctly states the score reason, stating why your credit score has fallen so badly etc.

It is the responsibility of every individual to understand what is it that your credit report states and ensure the information available is up to date. There could be instances where your credit report does not reflect the payments effected by you. You need to set that right, by getting in touch with the right person. This is because if your credit score does not reflect the accurate data, then there are chances that your application for loan could be rejected outright, for no fault of yours.

There is always room for correcting your credit score. What you need to understand is that your credit score should be in tune with your income. Your credit score should not be less than your income. One needs to ensure that he clears the payments on time and before the due date. This would have a positive effect on your credit score, which would help you in the long run. Try and avoid partnership deals, where you would be signing as a co partner. The danger her is that in case your partner defaults payments, your credit score would be affected. The credit amount in your bank should be neither too low nor too high. If it is too high, then the lender would get an impression that you would lavishly splurge all the loan money. If it is too low, he would not get the confidence in you whether you would be able to disburse the loan amount.

Before sanctioning the loan, lenders normally check your financial records of the previous two years. One is advised to check one’s credit score and keep it on track. Ensure that your records are correct and free of ambiguity or errors. If there is an error, ensure its correctness before approaching the lender or a financier for a loan. Inaccuracy of your credit score results in your application getting rejected. There are still chances that your request for a loan is granted, but then you would have to shell quite an amount of money by way of interest charged by your lender, since he would have got the impression that you could default payments.

Companies like Equifax provide you with a credit report for a fee. Individuals should ensure that your report is updated and free of errors. These bureaus provide reports twice in a year. They would also warn you regarding the expiry of your credit limit. You could get these reports absolutely free as per the Federal law provisions.

One needs to ensure that the credit report is set right. Ensure that you approach the right bureau. There are cheats and frauds in this line of business who might promise to set straight your credit reports by now showing your late payments etc. try and avoid such bureaus. Such non professional bureaus are after your money. Try and beware of such manipulators.

Free Credit Report

Why is it that so much of importance is given to credit rating of a person? Many people are not even aware of their credit rating, till the time they have to approach the bank or a lender for a loan. A person with a good credit rating stands to benefit in the sense that they can avail loan facility with minimum interest rate as compared to a person who does not have a good credit rating. This could add a few extra dollars to your bank account, since you would have saved a considerable amount of money by saving this extra amount, which you would have otherwise paid to the bank or the lender. It is noted that lenders, banks and financial institutions respect you based on your credit rating. In case a person has a reasonably good credit rating, he is definitely preferred and valued above customers with a low credit rating. Now how is this achieved? People with a reasonably good credit rating are the ones, who would not have deferred payments, have taken care of their finances pretty well, have not defaulted vendors and clients etc.

Credit report and how you can have it?

A credit report is basically similar to that of a balance sheet. It gives a brief idea about your assets and liabilities. The assets imply the cash balance, the value of your property, land etc. The liabilities include the amount you owe your debtors, loan amounts to be disbursed. There are bureaus which generate these reports so as to enable you to have a fair understanding of your credit standing.

Some of the bureaus connected with these services are Experian, Equifax and transunion. These bureaus normally send reports at least twice a year enabling you to know about the credit worthiness.

FICO score:

Now how does one arrive at the FICO score? A FICO score enables a lender to understand your credit worthiness. It gives him an idea about your ability in disbursing the loan amount. FICO score normally ranges from 300 to 850 score. The higher your score is, the better is your credit worthiness. The better are the chances for you for the future. This FICO score does not appear in your credit report. You need to shell out some money to any of the 3 bureaus mentioned above. They would go through your reports and enable you to find out the FICO score. In case you do not find out your FICO score, your lender would ensure that he find out your score, before sanctioning your loan.

Your FICO score also decides the interest rate. Let us take for example Mr.A’s FICO score is 700 pts and Mr.B’s FICO score is 850 pts, assuming both of them are sanctioned the loan, the interest charged for Mr. A would be greater than the interest charged for Mr.B. This is because Mr.B has a superb FICO score.

FICO score is the deciding factor not only for the loan amount but also the interest charged on that loan.

What’s next once you have got your credit report?

Ensure that your credit report is absolutely free of errors. There could be entries in your credit report which would state incorrect facts like defaulted payments, late loan installments. Ensure that you set everything right. There could also be mention of credit cards, which are not owned by you. Ensure that your credit report is as transparent as it can be to ensure your credit rating.

Foreclosure and Your Credit Report

People who have faced foreclosure need to hire a credit advisor who will help them clean up the tarnished report. Besides the payment defaults that appear on the report, there are other issues like” Notice of Trust Sale” and the “Trust Deed Sale” which worsens things. Since there are so many things you need to deal with, hiring a credit advisor would be beneficial and can work with you to suggest ways to improve the credit scores from the current levels.

Though a clean up will not mitigate the negative impact of the foreclosure for close to a year, you can breathe easy for the next 7 – 10 years. Since the report will reflect prominently the last year details, it is in your interest to iron out the gaps to achieve financial bliss.
The bad news is that you will encounter refusal of credit, for a car or for your personal use over the next 3 – 5 years once the foreclosure is mentioned on your credit report.

You will need to get a score of 740 or higher to avail of a 30-year home loan at fixed rate of interest and even then, banks will want a 20% margin payment upfront. Some banks may permit a score of 620 and a 10% margin payment, but the fact is that you need to clear the report of its bad elements at the earliest.

Now the question is, what can be worse – foreclosure or bankruptcy. Opinion is divided on this, though many feel that a foreclosure is viewed more seriously by the creditors, the assumption being that bankruptcy excludes the house. Borrowers need to quickly start making up on the payment of the defaulted ones to retain the house.

You have two options – to restructure the agreement to procure a lower rate of interest or to ask for some time during which the creditor accepts suspension of payments till you can start making them again. As a desperate third option, if you absolutely struggling for finances, you can request the creditor to postpone foreclosure till you can dispose off the asset. You may still not get the amount you seek and have debt to be settled, but at least you can work out a “deed in lieu of foreclosure”, wherein you pledge your house to the bank.

Many people look at bankruptcy as an option but this needs to be used as a last gambit, since it can be very destructive to your credit report. You anyways need to make the monthly payments even when you declare insolvency. The only relief is you have the court on your side till the time you make up for the missed payments.

It is better to work out a restructured plan with the creditor and start making the payments slowly over an agreed tenure. This will not impact your credit score very harshly and you can set it right in the next 12 to 18 months.You can also request for some time from the creditor, to recover from a temporary problem of finances. You however, need to then meet the commitment made without fail.

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