Personal Finance 
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Request & Check Your Specialty Reports Annually

Antique Magnifying GlassMost people are now aware that they can get a copy of their credit history from each of the three major credit bureaus every twelve months. We can thank the Fair Credit Reporting Act (FCRA) for that right (which you can exercise by going to annualcreditreport.com). What most people aren’t aware of is that the FCRA also gives you the same level access for other “specialty” reports as well. There are several companies that don’t create “credit” reports but do collect your data into what are commonly referred to as special reports. Fortunately, you are afforded the same rights to those reports as well!

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 Credit 
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Don’t Carry Debt To Improve Your Credit Score

Shackles of Debt!One of the biggest misconceptions I hear and read about regarding your credit score is that you need to carry debt to improve your score. Some articles say that you should get a car loan because it’ll boost your credit score. Others will recommend that you leave a little balance on your credit card rather than pay it off in full each month. While all of them are technically correct, those strategies will improve your score, they are financially wrong.

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 Credit 
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How Secured Credit Cards Work

Padlocked Green DoorI’ve been reading a lot of credit and credit scores lately because a lot of people are focusing on cleaning up their personal finances during this recession. For folks to have no credit or poor credit, rebuilding or building up your can be difficult and expensive. If you can’t get unsecured credit to establish your history, the next best option is to get secured credit. If you need a car and can get a car loan, that’s the best way. If you don’t need a car or you can’t get a loan, the next best thing out there appears to secured credit cards.

Read on to learn more about secured credit cards, how they compare to a debit card, how they improve/build your credit score, and what to watch out for if you’re looking for one.

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 Reviews 
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Your Credit Score by Liz Pulliam Weston

I’ve always been a big fan of Liz Pulliam Weston, not because she’s taken the time to answer several Bargaineering.com reader questions about simplifying your finances in the past, but because she’s so good at taking complex personal finance topics and translating it into terms that ordinary people like us can understand. We live in an imploding world where financial alchemists are turning sub-prime adjustable rate mortgages into solid gold rated bonds, it’s refreshing to know that at least one of the anointed personal finance experts is able to talk to us like regular people. And that’s exactly what Liz Weston has done in her latest book about a three digit number that has the potential to “shape your financial future.”

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 Credit 
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Best Student Credit Cards & Tips For Smart Credit Use

Student StudyingDuring a recession, the flow of credit tends to tighten up as banks and lenders take fewer “risks.” The result of this is that people who are credit-worthy but have no credit history, such as students, are caught in the middle. Without a credit history, they can’t get credit cards and loans. With credit cards and loans, they can’t establish a credit history.

An old standby practice, piggybacking, was recently eliminated as the new FICO score rules changed how it treated authorized users. In the past, someone with poor or no credit could “piggyback” as an authorized user on an account of someone with good credit. Many parents put their children on their credit card accounts to help them establish credit, the parents were “co-signing” their child’s debts, so it was perfectly acceptable. Unfortunately, people started abusing this and selling “authorized user positions” on their accounts, some for as much as $500 or $1,000 a piece, so FICO had to respond.

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 Credit 
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MyFICO ScoreWatch Review: Perfect for Credit Score Junkies!

30-Day Free TrialA few years back I saw Cap track his FICO scores as he went about his personal finance business. In that eight chapter epic (here’s chapter one, there’s a list of each chapter at the top of the post), his score fluctuated as he took on 0% balance transfers for arbitrage, took advantage of credit card offers, and otherwise just did typical consumer stuff. At the time, his tracking tool of choice was a service offered by Providian, nowadays there’s a better option – MyFICO.

MyFICO is run by Fair Isaac Corporation, the company that designed the FICO score equation. The main idea behind their services is that your credit score is one of the most crucial statistics you have about yourself and, much to their benefit, a reflection of your ability to repay debts. So many things depend on your FICO score these days. I’m sure you’re aware that your credit is pulled when you request a loan or a credit card, but did you know it’s used when you apply for a job? It’s used when you apply for an apartment? It’s used a lot more often than you probably think. While I personally don’t track my credit score every single day, many people do and when they do, they use MyFICO. If you’re less hardcore about your score, you might do as well just using free credit score estimates.

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 Credit 
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Monitor Your Free Credit Reports

Reader David recently commented about how an error on his report had him pay more than he was supposed to on a recent mortgage loan. The gist of the story is that before a credit card company wrongly reported a late payment or some other adverse note on his credit report, his FICO was 830. (he says bankruptcy, but credit card companies can’t put that) Afterwards, his score fell to 750. He called the credit card company in June of this year to fix it, which they said they would, and then he forgot about it. This week, at the closing, he learned that his score was still in the 750 range because the credit card company didn’t do what they said they would and he failed to follow through. The end result is that for the next 30 years, or however long the loan is, he will be paying for the mistake and him not following through. It’s a terrible situation but there’s little left to do.

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 Credit 
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Goodwill Adjustment Letters

If you’ve ever gotten an insufficient funds fee or a over-the-limit penalty fee or a late payment penalty fee, you probably have tried to get it removed by asking nicely. My wife is really good at this, she could probably sweet talk a Citi CSR into giving her a refund and a bouquet of flowers for the hassle of calling them up! Whether you’re nice like my wife or simply good at pointing at the financial benefits of keeping you as a customer (that’s how I roll… d20 save vs. financial realities sucka), you can employ this strategy in a vareity of places… including your credit history.

If you have some legitimate negative items (late payments) on your credit history, you might be able to get them removed by using a Goodwill Adjustment Letter. Some companies won’t report 30-day and 60-day late payments, it’s really not worth it, but if you review your report and see some late payments, you might be able to use a Goodwill Adjustment Letter to get those things removed.

While you could try this for any negative items, it’s most effective for negative items that are a year old or more. It’s important to show that those late payments were an aberration and that you’ve improved your finances such that it won’t happen again.

Goodwill Adjustment Letter Template

[Your Name]
[Address]
[Date]


[Company Name, Department]
[Address]

[Company Representative],
I understand that you’re extremely busy but I hope you can find time to consider this request for me. I have been a [Company Name] customer since [Year] and during that time, I have enjoyed my experience with your company.

I am contacting you to see if you would be willing to make a “goodwill” adjustment to your reporting to the three credit agencies. I have [Number] late payments on the above referenced account that date back [Number] months. Since that time I have been an exceptional customer paying every month on time.

Because of my overall exceptional payment history with your company over the last [Number] years, I would like you to consider removing the negative payments from my credit report. I have been a very happy customer in the past and hope to continue a long relationship with [Company Name].

I look forward to your reply.

Sincerely,

[Your Name]

Making A Case

The template, while a good starting point, can’t be all that you write. It’s important to build a case to the company as to why they should adjust your report. If you can explain away some of the late payments, it will go a long way to convincing them to do it. For example, if you were a college student and simply careless, say that. If you were lost your job or moved, let them know. If the majority of your lates were of the 30 day variety, tell them that too.

Good luck!


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