What is a credit reporting agency? A Credit Reporting Agency, or CRA, is a company that gathers and sells financial history information. This information includes: where you work and live, how you pay your bills, and whether you've been sued, arrested, or filed for bankruptcy. The most common type of CRA is the credit bureau (TransUnion, Equifax, and Experian). The information that a credit reporting agency sells to creditors, employers, insurers, landlords, and other businesses is called a consumer report (or a credit report).
What is a credit report? When you apply for a credit card, loan, insurance, or a job, a file is opened containing information about you. Information on how you pay your bills, if you’ve been arrested or sued, filed for bankruptcy, and other information pertaining to your financial habits. Consumer Reporting Agencies (CRAs) gather and sell this information to employers, insurers, creditors and landlords who, in turn, make decisions on extending you offers for credit, insurance or employment. This information is called a credit report.
What is a credit score? A credit score is a way for creditors to keep score and determine if you'd be a good risk to extend credit to for credit cards, auto loans, home mortgage loans and most recently, credit scores are being used to help insurance companies and employers evaluate the risk associated with granting you insurance or employment. To generate your score, Information about your financial experiences (bill-paying history, the number and type of accounts you have, late payments, collection actions, outstanding debt, and the age of your accounts) is collected from your applications and your credit report. Then, using a statistical program, creditors compare this information to the past performance of consumers with similar profiles. A scoring system awards points for each factor that helps predict who is most likely to repay a debt. A total number of points -- a credit score -- helps predict how creditworthy you are; that is, how likely it is that you will repay a loan and make the payments when due.
How long does information stay in your credit report? Under the Fair Credit Reporting Act, information can be included in your credit reports for seven years. There are exceptions to this rule: Information about criminal convictions may be reported without any time limitation. Bankruptcy information may be reported for 10 years. Information reported in response to an application for a job with a salary of more than $75,000 has no time limit. Information reported because of an application for more than $150,000 worth of credit or life insurance has no time limit. Information about a lawsuit or an unpaid judgment against you can be reported for seven years or until the statute of limitations runs out, whichever is longer.
How do you repair bad credit? Credit repair focuses on checking the accuracy of the reports and disputing negative items. Ultimately, we help consumers delete incorrect and obsolete information from their credit file, while also adding positive credit to their reports. These measures result in a higher credit score.
How much does it cost? Banyan offers several programs all with low enrollment fees. The program that best fits your situation will determine the cost. Contact Banyan to receive a free evaluation and learn about the program which best fits your needs.
How long does it take? The length of the process is dependent on the condition of your credit report. Once credit repair is started, results will begin to show up in 45 to 90 days while significant changes can take place in 60 -120 days. Obtaining deletions or corrections to some trade lines may take up to a year or more depending on the steps needed to complete investigations.
How much does my score need to improve to get a better interest rate? Most mortgage lenders have a minimum score that must be met in order to obtain financing. This number can vary from 540 to 620 and is dependant on the lender and the circumstances. These dependencies result from a number of factors which your mortgage lender can give you guidance on. Once scores approach 620 each 20 point rise in score will result in a reduction in the interest rates they can offer you.
Can I do credit repair myself? Yes, you may attempt to repair your own credit; however, you can also landscape your property, represent yourself in court, and paint your car a different color if you'd like. The point is, Credit Repair requires a detailed understanding of Federal and State law, the workings of Credit Reporting Agencies, creditors, collection agencies as well as the legal implications of the process (in addition to a large amount of time and persistence). Without these important pieces of knowledge, the average consumer is unlikely to complete credit repair with any amount of success. Like any other professional field, it is best to seek the assistance of a trained professional to experience optimum results.