Master Credit-Building in Less Than 7 Minutes

Master Credit-Building in Less Than 7 Minutes - PinterestA credit score is a three-digit number that can greatly impact your life. 

The seemingly small number reflects a measure of your creditworthiness, which can have an outsized effect on your finances. A good credit score can unlock a lower interest rate on long-term loans, which could save you thousands. But a bad credit score could bar you from accessing affordable loans for major purchases such as a home or car. 

Clearly, your credit score is important. We’ll talk about just how essential below. But how can you build credit? We’ll also cover the best strategies to give your credit score the boost it needs.  

What Is Credit-Building?

Credit-building employs strategies to improve your credit score. Wherever your credit score currently stands, credit-building can help you take it to the next level. 

The goal of credit-building is to create a history of responsible credit usage. That means opening credit accounts and making on-time payments to keep these accounts in good standing. 

To start, building credit can be as simple as that—making on-time payments to your accounts. The only downside is that it can take time to create a solid payment history for your credit report. In fact, it takes around two years for a credit account to be ‘seasoned.’ Seasoned accounts have enough age to show potential lenders that you can responsibly manage your credit. With multiple seasoned accounts on your report, your credit score should increase. 

Although it takes time to build good credit, the steady approach of making on-time payments to your accounts will pay off. 

Credit-Building vs. Credit Repair

Credit-building and credit repair both have the same goal of increasing your credit score. But each path has a different strategy for success. 

Here’s a closer look at each option. 

Credit Repair

Credit repair should be the first step if you have a bad credit score. 

Generally, credit repair involves addressing any existing negative activity on your credit report. Negative activity could stem from errors on your credit report or a case of identity theft. The process starts by pulling a free copy of your credit report and looking for any bad marks. 

For example, you might see inaccurate information about a bill sent to collections on your credit report. In that case, you can dispute the record to have it updated or removed from your credit report. 

A bad credit score could make a credit repair agency a tempting option. Typically, the operation works by going through your credit report for you to root out any errors. 

Although you can pay for this service, it is possible to tackle credit repair on your own. It will take some time and energy. But you can track down your credit report and take steps to correct any errors you find. 

You can learn more about your credit repair options with Tradeline Supply Company, LLC


While the focus of credit repair is to remove negative information, on the other hand, credit-building is focused on adding positive information to your credit report. Whether you don’t have a credit history of any kind or if you have a bad credit score, credit-building is the right move. 

Essentially, building credit is accomplished by obtaining a line of credit to pay back on time. As you create a history of responsible credit management with consistent on-time payments, you will build your credit history. 

No Credit vs. Bad Credit: Which is Worse?

When it comes to credit scores, there are good scores and bad scores. 

Here’s the breakdown of credit scores on a scale of poor to excellent:

Poor: 300 to 579.

Fair: 580 to 669. 

Good: 670 to 739. 

Very good: 740 to 799. 

Excellent: 800 to 850. 

Credit score rating scale: poor to excellent

Most commonly used credit scores range from 300 to 850.

If you have a credit score, you’ll be able to find out where you fall on the scale. But what if you don’t have any credit at all? Is it better to have a bad credit score? Or are you better off with no credit score at all?

In general, it is easier to achieve a good credit score if you are starting from scratch. That’s because you will not have negative marks on your nonexistent credit report to address. With that, you can jump straight into building credit. 

If you have a bad credit score, though, you’ll need to start credit repair before credit-building. If you have a bad credit score due to multiple errors on your report, then working on credit repair should give your credit score a big boost. In that case, the process of credit repair might be faster than credit-building. But if you have legitimate financial mistakes on your credit report that have led to a poor credit score, then it will likely take more time to improve your credit score. 

It will take some work to improve your bad or nonexistent credit score in either situation. The details of your credit report will determine whether it is preferable to have a bad credit score or no credit at all

A Fast Tour Through the Stages of Building Credit

The good news is that you can build credit from wherever you are starting. Here’s a fast tour of the stages of credit-building. 

Check Your Credit Report

If you have a credit history of any kind, the first step should be to check your credit report.

When you have your free copy, check it over for errors and mistakes. A few things to watch for include incorrect balances and incorrect payment dates. You may or may not find any mistakes. But if you do, dispute the error with the credit bureaus or the company sending the information to the credit bureaus. 

If the error is removed, your credit score could see a boost. If you don’t find any errors, this step will still help you understand where you are starting from in terms of your credit history.

Worker in business office

Bringing in a consistent income is an important consideration when you are applying for credit.

If you don’t have a credit history yet, you should not have a credit report, but it’s a good idea to check anyway. If you discover that you do have a credit report despite never having credit, this is an indication that someone has fraudulently opened credit accounts in your name, and you will need to address the theft of your identity and the fraudulent accounts.

Maintain a Steady Income

An income is not a part of your credit score. But your income will play a big role in your ability to borrow money and repay your debts in full and on time. Without the option to borrow money, it can be almost impossible to build credit. 

Borrow Funds

With a steady income, you may be able to take out a line of credit of some kind. Taking out a loan, line of credit, or credit card is a critical part of building credit. Otherwise, lenders won’t be able to discern how you manage your payments. 

Two popular credit-building choices for those with no prior credit history include a secured credit card or a credit-builder loan

Use Credit Responsibly 

No matter how you choose to borrow the funds, the most important thing is to manage your credit obligations responsibly. In order to build your credit, you need to be able to demonstrate to lenders that you have a consistent pattern of responsibly using credit. 

As you build a history of responsible credit usage, you will inch closer to your goal of having a good credit score. 

Why Credit Scores Matter: Good Credit And Bad Credit Money Differences

It will take time and effort to build a good credit score. Is it worth the effort? 

For most people, the answer is a resounding yes! A good credit score can have a big impact on your overall financial picture. If you have a bad credit score or lack a credit score, you could be missing out on big savings opportunities, or you could be missing out on opportunities to borrow money in the first place.

Home mortgage loan

Most consumers need to take out a mortgage to be able to buy a house, which is much easier to do if you have a good credit score.

Big Purchases

With a better credit score, you are poised to take advantage of loans for big-ticket items with reasonable interest rates. 

Let’s say that you want to take out a loan to achieve your dream of homeownership, as the majority of home buyers do not have the cash to pay for such a large expense outright. Your credit score will impact whether or not you are approved for the loan and decide what interest rate is attached if you do get approved. 

In this scenario, a good credit score could make the difference between becoming a homeowner or not. In addition, a good credit score could save you thousands of dollars in interest over the life of the loan. 

Insurance Savings
Home insurance

Those with higher credit scores benefit from lower insurance premiums.

A good credit score could impact your insurance premiums in some states. This is because insurance credit scores have been shown to correlate with a consumer’s likelihood of filing an insurance claim.

In fact, a recent WalletHub survey found that people with no credit pay 67% more for car insurance than people with excellent credit. 

Imagine how quickly those costs add up when you have to pay a higher premium every month!

Credit Card Perks

When used responsibly, a credit card can be an extremely valuable financial tool. But if you have a bad credit score, you could be stuck with a credit card for bad credit that offers no perks and a sky-high APR. 

In contrast, a good credit score can open the door to many credit card options that come with helpful perks. For example, you might find a cashback opportunity or built-in savings when you use the card, as well as other benefits. 

What Lenders Want to See in Your Credit History

As you build your credit history, you might wonder what lenders are looking for in a creditworthy customer. Although there is no hard and fast rule, since each lender has their own underwriting process, the breakdown of a credit score gives us insight into the most important characteristics that lenders generally want to see when evaluating your credit profile.

Wallet with credit cards

Credit card perks such as cash back are typically reserved for consumers who have high credit scores.

Payment History

Payment history accounts for 35% of your credit score. In other words, on-time payments represent a critical component of your credit score. Lenders want to feel confident that you make it a priority to repay your debts so that they will not incur a financial loss by extending credit to you.

Even one missed payment can make a serious dent in your credit score, so do not take this category lightly. Making your payments on time 100% of the time is the most important thing you can do to earn a good credit score. 

Credit Utilization

Your credit utilization rate represents 30% of your credit score. Your credit utilization rate, also referred to as your utilization ratio, revolving utilization, or your debt-to-credit ratio, measures how much debt you owe on your revolving accounts compared to the amount of revolving credit you have available. 

A lower overall utilization rate will result in a better credit score, meaning that lenders will be looking to see how you manage your balances relative to your credit limits. Using too much of your available credit shows that you are a greater credit risk and lenders will be less likely to be willing to work with you.

Furthermore, having too many accounts with balances can also hurt your credit score.

Length of Credit History

Lenders want to know that you are someone they can count on to repay their funds consistently over time. To that end, they’ll be looking to see how long you’ve been able to manage your credit accounts responsibly.

Your actual age is not considered in this, but older consumers do tend to have longer credit histories simply because they have had more time in their adult life to accumulate credit accounts and make on-time payments. In order to improve this factor, all consumers can do is open accounts early on and wait for their accounts to age while diligently making payments and managing their balances.

This factor accounts for 15% of your credit score, but in reality, it is far more important than it seems on the surface because more credit age also means more on-time payments in your payment history, which adds another 35% of your score.

Credit Mix

Your mix of credit is determined by the types of accounts you have open. In general, lenders want to see examples of both revolving lines of credit (e.g. credit cards) and installment loans (student loans, auto loans, personal loans, mortgages, etc.) on your credit report. 

This factor accounts for 10% of your credit score.

Learn more about account types and account diversity in our credit mix infographic.

New Credit

Last but not least, credit inquiries account for the final 10% of your credit profile. Hard inquiries appear on your credit report when lenders check your credit when you are looking to open a new credit account with them.

Creditors don’t want to see very many of these hard credit inquiries acquired within the past year. Having too many credit inquiries could be a red flag because it shows that you are seeking a lot of new credit and may not be in the best financial position to pay your bills.

Keep in mind that soft inquiries, which occur when you check your own credit report and other situations when your credit is pulled for something other than a lending decision, are not seen by lenders and are not considered in credit scores.

7 Epic Credit-Building Master Moves

Now it’s time to tackle your credit-building goals. Here are seven strategies to help you take your credit to the next level in no time. 

Become an Authorized User

A trusted friend or family member may be able to add you to their credit account as an authorized user. As an authorized user, your credit report will reflect the credit limit and reliable payment history of the account. 

If you don’t have someone you can ask to become an authorized user, other options are available. You can purchase accounts with high limits and perfect payment histories from Tradeline Supply Company, LLC

Open a Joint Line of Credit

Opening a joint line of credit can be a helpful step in your credit-building journey. If you have someone to manage your finances with, a joint line of credit can provide an opportunity for you to build credit along with the joint account holder.

However, there are some downsides to joint lines of credit. They are not available with all lenders, and if you do choose to open a joint account with someone, you may not be able to remove the joint account holder if the relationship sours. 

Consider a Secured Credit Card

A secured credit card requires an upfront cash deposit to mitigate financial risk to the lender in case you do not pay your bill. In most cases, the deposit is equal to your credit limit. So, if you deposit $1500, your spending limit will likely be $1500.

Since secured credit cards typically have low credit limits, you will want to keep your balances low so that your credit report does not show a high utilization rate.

If you are just getting started with credit, a secured credit card can be a good way to get the ball rolling. 

Set Up Automatic Bill Payments
Automatic bill pay calendar on computer

Setting up automated bill payments on your credit cards can help you avoid getting negative marks on your credit report.

If you open any lines of credit, it is critical that you make on-time payments in order to build up a positive credit history. A good way to ensure that you always make on-time payments is to set up automatic bill payments. With an automatic payment system in place, you won’t have to worry about missing a payment and hurting your credit score.

But even with automatic payments, it is a good idea to check out your bills each month to keep an eye on your spending as well as any potentially fraudulent charges.

Increase Your Credit Limit

If you already have existing credit cards, then consider asking your credit card provider for an increased credit limit. You will effectively lower your credit utilization rate with an increased credit limit. With a lower credit utilization rate, you might see an increase in your credit score. 

Pay Off Existing Debt

On the flip side, you can also lower your credit utilization rate by paying off any existing debt you currently have. Although paying off debt is never easy, it could provide the credit score increase you’ve been looking for. 

Want tips on paying off debt? See our article on the debt snowball method vs. the debt avalanche method.

Get Credit For Your Bills

Did you know that you can get credit for some of the bills you already pay? There are alternative credit data services out there designed to add your utility, rent, and subscription payments to your credit report. 

For example, Experian Boost, eCredable Lift, and RentReporters can help you get credit for the bills you already pay on time. If you pay your bills on time, having that information on your credit report could boost your credit score. 

Fighting Credit Misinformation

According to Possible, 4 in 7 Americans are financially illiterate, so it should come as no surprise that many Americans are mystified by their credit score. Not only that, but many believe in detrimental credit myths, leading to poor credit choices due to misinformation.  

If you are working with someone to build their credit, you may have to work through some deeply embedded credit score myths. For example, you might hear that checking your credit score lowers your credit score. But that is completely inaccurate. Other common myths include the belief that carrying a balance will boost your credit score or the idea that your credit score doesn’t matter to your personal finances. 

As you dive into the process of building credit, utilize reliable resources to learn more about good credit practices and take action to help you reach the credit score of your dreams. 

The Bottom Line: Credit-Building Is Achievable 

A good credit score can open a world of financial possibilities such as low-interest loans on major purchases, valuable credit card perks, lower insurance premiums, lower security deposits, and more. Although the process of building good credit will take time, it is an achievable goal no matter where you are starting from. 


Want to learn more about your credit? Take advantage of the free resources offered by Tradeline Supply Company, LLC.

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Are Credit Sweeps Legal? – Credit Countdown

Credit Sweep Fraud - PinterestCredit sweeps are a heavily advertised and promoted service among credit repair companies. Unfortunately for many unsuspecting consumers looking to improve their credit, the credit sweep is a fraudulent and illegal practice.

John Ulzheimer, one of the nation’s most prominent credit experts, explains why you need to watch out for credit sweep scams in an episode of Credit Countdown.

Disclaimer: The views and opinions expressed in this article are strictly those of John Ulzheimer and do not necessarily reflect the official stance or position of Tradeline Supply Company, LLC. Tradeline Supply Company, LLC does not sell tradelines to increase credit scores and does not guarantee any score improvements. Tradelines can in some cases cause credit scores to go down.

Credit Repair: Legal vs. Illegal

To be clear, credit repair as a whole is not illegal. Credit repair—the legal kind at least—is simply the process of removing inaccurate or unverifiable information from a consumer’s credit report. This is done by disputing the negative items with the credit reporting agencies (CRAs, AKA credit bureaus). Alternatively, credit report information may be challenged through the financial institution that is furnishing the data to the CRAs.

Credit repair is legal as long as it complies with federal and state rules and laws that govern the industry of credit repair.

Hiring a Credit Repair Company to Fix Your Credit

Although the credit dispute process is free to everyone, consumers who want help repairing their credit can choose to pay a credit repair company to try to get negative information removed from their credit reports.

Although trustworthy credit repair professionals do exist, there are also plenty of “scumbags,” in John’s words, in the industry who take advantage of consumers and use illegal and fraudulent practices to make money.

For this reason, it’s extremely important to do your due diligence before deciding to work with a credit repair company.

The Credit Dispute Process

Typically, the credit repair process involves sending letters on the behalf of consumers to challenge the validity of the data in question and ask the CRAs to validate the items. This process is not illegal; it is commonly used and has been around for decades.

Disputes Under the Fair Credit Reporting Act

The Fair Credit Reporting Act (FCRA) gives you the right to dispute information on your credit reports that you believe to be incorrect. If you do challenge an item on your credit report, the credit bureaus are required to perform an investigation. They then look into your claim and determine if the dispute is valid or if the challenged information can be verified as correct.

Section 605B of the FCRA

Section 605B of the FCRA is a section that is entitled “Block of Information Resulting From Identity Theft.”

This section of the FCRA states that if you have been the victim of identity theft and someone else has fraudulently opened accounts in your name, then you have the right to have the fraudulent information resulting from identity theft removed from your credit reports.

In addition, in the event of identity theft, Section 605B obligates the CRAs to do two things that are not normally required as a part of removing negative information:

They have to remove the fraudulent information from your credit report within four business days of receiving all of the valid documentation that proves identity theft has occurred. This is a very short period of time in comparison to the 30-45 days that are typically allowed for the credit bureaus to complete their investigations and remove the information.
They have to block the information from ever appearing on your credit reports again. 

Scammers have abused this section of the FCRA by selling a service that takes advantage of these policies even when identity theft is not the cause of negative information appearing on someone’s credit report.

What Is a Credit Sweep?

This particular scam that disreputable credit repair companies often engage in is called the credit sweep.

The goal of a credit sweep is to cause the credit bureaus to remove negative information from your credit reports prior to the time that they are legally required to do so. The FCRA mandates that negative information must be removed from a credit report after seven years (with the exception of a Chapter 7 bankruptcy, which can stay on your credit report for up to 10 years).

A credit repair company tries to get the negative marks deleted from your credit report immediately rather than waiting until it is seven years old, when it will automatically be taken off of your credit report.

How Do Credit Sweeps Work?

The way a credit sweep works is the credit repair company asks you to pretend that you have been the victim of identity theft so that they can get the credit bureaus to remove accurate, valid negative information from your credit report.

The credit repair company has you go to an enforcement agency such as the police and file a police report claiming that your identity has been stolen. They can then show the identity theft report to the credit bureaus as “evidence” that the negative information on your credit report is there as a result of your identity being stolen.

If the credit sweep is successful, the CRAs have to remove all of the implicated negative information within four business days and prevent it from ever reappearing on your report, thus “sweeping” all the negative items off of your credit report.

Credit Sweep Fraud

As John puts it, it is clear that credit sweeps are fraudulent and illegal.

Not only are you lying to the CRAs, but also to the police, and filing a false police report is against the law. 

In addition, lying to the credit bureaus and then defaulting on your credit obligations can land you in court, criminally charged with fraud.

Conclusions on Credit Sweeps

Is it worth it to try to fix your credit by purchasing a credit sweep and possibly being prosecuted for fraud? Or is it a better idea to pay your bills on time so that negative information does not hit your credit report in the first place? It’s up to you to consider the pros and cons.

If you learned something from this article, please share it so that others can be aware of the dangers of credit sweep scams.

You can watch the Credit Countdown video below. Find more content like this on our YouTube channel and in our Knowledge Center!

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Metro 2, e-OSCAR, and the Credit Repair Dispute Process – Credit Countdown

Metro 2, e-OSCAR, and Credit Disputes - PinterestIn credit repair, the credit dispute process involves the use of two systems called Metro 2 and e-OSCAR. If you are unfamiliar with these terms, as is likely the case for most consumers, then keep reading this article. Credit expert John Ulzheimer takes us behind the scenes of the consumer dispute process and explains the importance of the Metro 2 and e-OSCAR systems in consumer credit disputes.

The Right to Dispute Information on Your Credit Reports

The Fair Credit Reporting Act (FCRA) is a federal statute that confers rights to consumers with regard to their personal credit reports. 

One of these rights you have under the FCRA is the right to challenge information on your credit report that you believe to be inaccurate.

Where Does the Information on Your Credit Reports Come From?

The information on your credit reports is provided by data furnishers, such as your lenders, to the three major credit reporting agencies (CRAs): Equifax, Experian, and TransUnion.

According to the Consumer Financial Protection Bureau (CFPB), there are approximately 16,000 of these data furnishers in the United States.

Here are some examples of data furnishers that may report information about your credit accounts to the credit bureaus every month:

Credit unions
Financial service providers
Mortgage lenders
Auto lenders
Student loan servicers
Debt collector

Disputing Information With the Credit Reporting Agencies (Indirect Dispute)

One way to dispute something on your credit report is to file a dispute with the CRAs. This method is called an indirect dispute because rather than taking your dispute directly to the furnisher itself, you are asking the credit bureau to investigate the claim on your behalf.

The credit bureau is then obligated to conduct a “reasonable investigation” into your dispute, which typically includes contacting the furnishing party and asking them if there is any validity to your credit dispute.

To understand how indirect disputes work, we first need to define Metro 2 and e-OSCAR. Then, we can take a look at each step in the procedure and see how Metro 2 and e-OSCAR play important roles in the dispute process.

What Is Metro 2?

Metro 2 is the “language” used by data furnishers to communicate information to the credit bureaus. It is the standard (and only) language used for this purpose. The previous version of this language, Metro 1, is outdated and is no longer used.

The Metro 2 language consists of alpha, numeric, and alphanumeric characters. These characters go into different fields on your credit report which indicate certain things.

Metro 2 is communicated through the Consumer Data Industry Associate (CDIA) using a manual called the Credit Reporting Resource Guide (CRRG).

When the data furnishers receive dispute forms from the credit bureaus, the information on those forms is encoded in the Metro 2 language.

What Is e-OSCAR?

e-OSCAR is a communication protocol analogous to a phone line between the credit bureaus and the companies that furnish data to them. It is used to transmit information such as dispute forms back and forth between the credit bureaus and data furnishers.

Like Metro 2, e-OSCAR is universal, meaning it is the only communication method used in the dispute process and therefore it is used by all three credit bureaus.

How the Indirect Dispute Process Works

You challenge information on your credit report by filing a dispute with a credit bureau.
The credit bureau assigns a dispute code to your claim, which is meant to indicate the nature of your dispute.
The credit bureau sends an automated consumer dispute verification form (ACDV) to the data furnisher using e-OSCAR.
The furnishing party logs into the e-OSCAR system to view the disputes.
The data furnisher looks at the dispute code on the ACDV indicating the reason for the dispute. For example, the consumer may have stated that the disputed information does not belong to them.
The data furnisher goes into their internal system to review the consumer’s account in order to verify or refute the disputed information.
The furnishing party then reports the results to the credit bureau by indicating this on the ACDV and sending the ACDV back to the credit bureau via e-OSCAR.
The credit bureau updates your account in their records to reflect the correct information and sends a copy of the report to the consumer.

You can read more about the forms used in the credit dispute process in another article.

Filing a Dispute is Free for Consumers

As a consumer, you do not have to pay to dispute information on your credit report or to have that information corrupted. The right to be able to dispute items for free is mandated by the FCRA.

This includes the updated credit report that the credit bureau sends to you once their investigation is complete.

Summary of Metro 2, e-OSCAR, and the Credit Repair Dispute Process

The FCRA gives you the right to dispute information on your credit report for free.
Data furnishers, e.g. lenders, report information about your accounts to the credit bureaus every month.
You can dispute something on your credit report by going to the CRAs, which is called an indirect dispute.
The CRAs and data furnishers communicate dispute information using forms and codes via the e-OSCAR platform and the Metro 2 language.
Once a credit bureau finishes their investigation into your dispute, they confirm or update the information on your credit report and send you a copy.

Want to see the video version of this article? Watch it below or visit our YouTube channel, where we drop new educational credit videos every weekday!


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How to Remove Derogatory Entries From Your Credit Report

How to Remove Derogatory Entries on a Credit Report - PinterestDerogatory entries on your credit report, such as 30-day late payments, 60-day late payments, collections, and more, can seriously damage your credit score. Is there a way to get derogatory items removed from your credit report so that your score can bounce back? Let’s find out.

What Are Derogatory Entries on Your Credit Reports?

The term derogatory simply means negative, so derogatory items on your credit report are any items that reflect negatively on your credit. In other words, they indicate that you have failed to make timely payments on your debt.

Derogatory entries can be divided into two categories: minor derogatories and major derogatories. They both can hurt your credit substantially and contribute to bad credit, but major derogatory items have a greater negative impact on your credit score than minor derogatory items.

Examples of Derogatory Items on Your Credit Reports
Minor Derogatory Entries

30-day late payments
60-day late payments

Major Derogatory Entries

90, 120, 150-day late payments, etc.
Short sales
Public records (bankruptcies)

Read more about derogatory items and how they affect your credit score in this article.

Bankruptcy on your credit reports

A bankruptcy on your credit report counts as a major derogatory entry.

The Good News: You Can Dispute Inaccurate Derogatory Information on Your Credit Reports

As a consumer, you have the right to have your credit reports be accurate, as dictated by the Fair Credit Reporting Act (FCRA).

Therefore, if there is information on your credit reports that is wrong, then you have the right to ask for the incorrect information to be either corrected or removed from your credit reports.

In order to challenge inaccurate information on your credit reports, you can file a direct dispute with the party that furnishes your data to the credit bureaus (e.g. a lender, financial services company, debt collector, etc.) or an indirect dispute with the credit reporting agencies (CRAs).

If you choose to go the route of an indirect dispute, you contact the CRAs about the problematic information and they then investigate the dispute with the company that is furnishing the data.

You can use either type of dispute to ask for the inaccurate derogatory information on your credit report to be corrected or deleted altogether.

The Bad News: You Do Not Have the Right to Have Accurate Negative Information Removed From Your Credit Reports

According to the FCRA, accurate and verifiable negative information can remain on your credit reports for up to seven years.

Unfortunately, that means if the derogatory information on your credit reports is accurate and verifiable, then the CRAs are under no obligation to remove it before the 7-year clock runs out.

Derogatory information that is accurate and verifiable can stay on your credit report for up to seven years.

Derogatory information that is accurate and verifiable can stay on your credit report for up to seven years.

How to Dispute Derogatory Entries on Your Credit Reports

It is free to dispute inaccurate information on your credit reports, and you can do this process yourself. Another option is to hire a reputable credit repair company to do this work on your behalf.

If you choose to complete the dispute process yourself, you can do this in a few different ways:

Go to the CRAs’ websites and file your dispute online

Mail your dispute through the postal services
Contact the CRAs over the phone
Dispute the information directly with the furnishing party

You can submit your disputes online on the CRAs' websites.

You can submit your disputes online on the CRAs’ websites.

Which Dispute Method is Most Effective?

While there is not necessarily a “best” way to file a dispute, often, plaintiff’s lawyers advise consumers to file their disputes with the credit bureaus because this method may leave you in a better positioned to take legal action if the credit bureaus fail to remove the incorrect information.

The Benefits of Disputing Directly With the Furnishing Party

When you file a direct dispute with the company that is furnishing the inaccurate information to the credit bureaus, you are addressing the information at its source. For this reason, the data furnisher has an obligation to correct the error with all of the CRAs they report to.

If a mistake is showing up on more than one of your credit reports, the direct dispute strategy can save you some time since you are only filing one dispute to have the information corrected on each of your credit reports where it is applicable.

Working With a Credit Repair Company to Remove Derogatory Information

Although the consumer credit dispute process is free to use, some consumers may choose to work with a credit repair company to accomplish their goals.

In this case, the credit repair company goes through the dispute process on your behalf.

While a credit repair organization cannot charge you in advance of providing a service as per the Credit Repair Organizations Act (CROA), if they successfully get the information corrected or removed, they can then charge you for this service that has been fully performed.

How Do You Know if You Need to Dispute Incorrect Information on Your Credit Reports?

To find out if there are errors on your credit reports, you need to get copies of your own reports.

Typically, you can do this for free once every 12 months with each of the three credit bureaus. However, due to the COVID-19 pandemic, the CRAs have made it easier to check your credit more often by making it free to check your credit reports every week until April 20, 2022.

To order your free credit reports, go to, which is the only website that is federally authorized to provide your free credit reports, and request them there.

How Long Does the Dispute Resolution Process Take?

The credit bureaus are technically allowed to take 30 days to complete their dispute investigation process, but this rule is decades old. These days, with the technology we have now, it is more likely that your dispute will be resolved in only 10-14 days.

Consumer disputes are usually resolved within two weeks.

Consumer disputes are usually resolved within two weeks.

We hope this article has been informative for those wondering about how to get derogatory information removed from your credit reports! To learn more about how to use credit report disputes effectively, check out our article on How to Fix the Most Common Credit Report Errors.

Want to see the video version of this article, featuring credit expert John Ulzheimer? Watch it below and then subscribe to our channel on YouTube to see more helpful videos about the credit system!


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Are There Negative Items That Can Stay on Your Credit Forever? – Credit Countdown With John Ulzheimer

Negative Items That Can Stay on Your Credit Forever - PinterestIn credit reporting, negative information can only stay on your credit report for a maximum of 10 years for a Chapter 7 bankruptcy and seven years for everything else—right?

The Fair Credit Reporting Act (FCRA) does mandate that the credit bureaus remove negative information from consumers’ credit reports within 7-10 years depending on the type of information. 

While this is true most of the time, there are three exceptions to this rule, meaning that certain negative items could potentially stay on your credit report permanently.

1. If the consumer is applying for a job with a salary of $75,000 or greater.

If a consumer is going to apply for a job that pays $75,000 or more, and the employer uses a credit report as part of the employment screening process, the credit bureaus are allowed to include information on this report about derogatory events that occurred more than 7-10 years ago, such as an old bankruptcy or old collection accounts.

2. If the consumer is applying for a life insurance policy with a value of $150,000 or higher.

If a consumer applies for a life insurance policy with a value of $150,000 or higher, then the credit reporting agencies are technically allowed to include negative information that is more than 7-10 years old on the person’s credit reports.

3. If the consumer is applying for $150,000 or more in credit.

If the consumer applies for credit in the amount of $150,000 or more, this also qualifies as a case where the credit bureaus could include old negative information that normally would not be listed on the consumer’s credit report.

The interesting thing about this exception is that it includes most mortgages, meaning that if you apply for a mortgage today, there is a good chance that you could fall into this category of exceptions to the FCRA regulations regarding negative information.

Applying for $150,000 in credit qualifies as an exception to the 7-10 year rule, which means most mortgages could be included.

Applying for $150,000 in credit qualifies as an exception to the 7-10 year rule, which means most mortgages could be included.

Should You Be Worried About Negative Items Staying on Your Credit Report Forever?

By now, you may be concerned that derogatory credit items that you thought were ancient history could haunt you in the future, in the event that you apply for a high-paying job, purchase life insurance, or apply for a mortgage.

However, there is no need to panic. While the credit bureaus are theoretically allowed to do this under the FCRA, that doesn’t mean that they choose to do so—and fortunately, they don’t.

Rather than maintaining old information to be used in specific situations, they simply default to applying the same 7-10 year policy across the board.

So if you do apply for a job that pays $75,000 or more, a $150,000 life insurance policy, or $150,000 in credit, you don’t have to worry about old negative items being revealed on your credit report.

Check out credit expert John Ulzheimer’s explanation in the video below. Visit our YouTube channel to see more educational videos on tradelines and credit!


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Credit Myth Busting: The Opt Out Myth – Credit Countdown With Consumer Credit Expert John Ulzheimer

Credit Myth Busting: The Opt Out Myth - Credit Countdown With Consumer Credit Expert John Ulzheimer - PinterestThe “opt-out” myth is one of many myths that lead consumers astray when it comes to credit. What is the opt-out myth and why does it not work?

What Are Pre-Screened Credit Offers?

Pre-screened credit card offers are preliminary offers of credit that credit card companies send to consumers who have a credit profile that matches with that of the company’s desired customer base. The way that the banks determine this is they purchase pre-screened lists of consumers from the credit reporting agencies.

For example, a credit card issuer could request a list of a million consumers who have a credit score between 650 and 725, do not have any bankruptcies on their records, and have not opened a new credit card in the past six months. The credit bureaus would then compile a list of consumers who fit that set of criteria and sell this list to the lender so that the lender can offer credit cards to these consumers.

Is It Legal for the Credit Bureaus to Sell Your Information on Pre-Screened Lists?

Yes, it is completely legal for the credit reporting agencies to include your information on pre-screened lists of consumers for lenders to purchase. It is not a controversial practice.

In fact, credit card issuers very commonly use these pre-screened lists as a way to acquire new consumers, as you may already know if you regularly receive such offers in the mail yourself.

Do You Get Inquiries on Your Credit Reports From Pre-Screened Credit Offers?

Because your credit report is generated and accessed by a business during the pre-screening process, this results in you getting a soft inquiry on your credit report.

For this reason, you may see soft inquiries on your credit report from companies you do not recognize who may have extended a pre-screened offer to you.

Can You Get Your Name Taken Off These Pre-Screened Lists?

You have the right to order the credit reporting agencies to not include your name on the pre-screened lists that they sell to banks. In other words, you are allowed to “opt out” of the pre-screening process.

Opting out is free and easy to do. All you have to do is go to, which is a website that is operated by the credit bureaus because they are obligated under the Fair Credit Reporting Act to allow consumers the ability to opt out of having their names on these pre-screened lists.

At this website, you can opt out permanently, or, alternatively, you can choose to opt out for just five years.

If you want your mailbox to stop filling up with pre-screened credit card offers, then opting out via this website is the way to do it.

What Is the Opt-Out Myth?

The myth regarding opting out is the belief that if you opt out of receiving pre-screened credit offers, your credit score will go up.

The reasoning behind this myth comes from the misconception that soft inquiries on your credit report will hurt your credit score.

Soft Inquiries vs. Hard Inquiries

There are two types of credit inquiries: hard inquiries and soft inquiries.

Hard inquiries on your credit report are the result of you applying to obtain credit from a lender. When you do this, the lender pulls your credit report to see if you are creditworthy by their standards.

Because your credit report has been accessed by a lender for the purpose of approving or denying your application, a hard inquiry goes onto your credit report, indicating that you are actively looking to borrow. This implies that you are now a higher credit risk, so your credit score may go down a few points as a result of a hard inquiry.

Soft inquiries, on the other hand, may show up on your credit report when businesses check your credit for other reasons, such as a landlord pulling your credit before approving you for a rental or a prospective employer looking at your credit report as part of the job application process. This also applies to credit card issuers including you in groups of pre-screened consumers in order to solicit your business.

That means you can be confident that being pre-screened for credit offers only results in soft inquiries being added to your credit report.

Soft inquiries do not represent applications for credit on your part, which means they do not reflect your risk level as a borrower. For this reason, they do not impact your credit score at all. They just serve as a record of who has accessed your report.

Why the Opt-Out Myth Is Wrong

The myth that opting out helps your credit score would make sense if we were dealing with hard inquiries on your credit report because hard inquiries can hurt your score.

However, as we pointed out, the only inquiries you get from the pre-screening process are soft inquiries, and while soft inquiries do appear on your credit report, credit scores do not consider them as a scoring factor. Credit scoring systems don’t even know whether you are opted in or opted out of pre-screened offers.

Therefore, pre-screened credit card offers do not affect your credit score at all, so opting out of receiving them will not make a difference to your score either.

Avoid Opt-Out Scams

If you try searching for information about the opt-out myth, you might come across some offers to “help” you opt out and increase your credit score—for a fee. Avoid scam artists who try to sell you products and services to accomplish something that:

Will not actually improve your credit score,
You can do yourself,
Is free to do, and
Takes just about a minute.

Conclusions on the Opt-Out Myth

Despite the fact that misinformation about this topic is commonplace, we can safely say that opting out of pre-screened credit card offers will not help your credit score because being pre-screened does not affect your score in the first place.

However, if you do not want to be included on lists of pre-screened consumers for other reasons, you can quickly and easily opt out on for free.

View the Credit Countdown video on this topic below and then check out our YouTube channel for more informative videos!


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Date of Last Activity (DLA): What Is It and Does It Really Matter? – Credit Countdown With John Ulzheimer

Credit Countdown: What Is a Date of Last Activity? - PinterestThe “date of last activity,” also known as the DLA, is often discussed within the field of credit repair in a way that is inaccurate or misleading. Because of this, many consumers do not understand the true significance (or lack thereof) of the DLA as it relates to their credit reports and credit scores.

Credit expert John Ulzheimer busted some myths about DLAs in a Credit Countdown video on the Tradeline Supply Company, LLC YouTube channel. Here’s what he had to say about DLAs on your credit report.

What Is a DLA (Date of Last Activity)?

The date of last activity is exactly what it sounds like: it is the most recent date on which activity was reported for an account.

It is a “legacy” data point that used to be included on credit reports for users (lenders), but this is not the case anymore, In fact, DLAs have not been shown on credit reports for lenders in decades, according to John.

Why Does a DLA Appear on Your Credit Report?

If John is saying that DLAs do not appear on credit reports, then why do you see DLAs when you pull your own credit report?

Two Types of Credit Reports

If you’ve watched our other Credit Countdown YouTube videos, then you may recall that there are two types of credit reports: “real” credit reports, and credit report disclosures.

Credit Report Disclosures

When you check your own credit report from or from the credit bureaus, you are actually looking at a credit report disclosure.

Disclosures are provided to consumers and presented in a format that consumers can understand.

This is not the same as the version of your credit report that lenders see, and it contains different types of information, such as DLAs, that may be helpful to you as a consumer.

Credit Reports

Real credit reports are written in code using software known as Metro 2 and these documents are provided to “users” such as lenders, insurance companies, collection agencies, credit unions, credit card issuers, and mortgage brokers.

Actual credit reports do not contain DLAs. If you were to search the Credit Reporting Resource Guide (CRRG), which is essentially the Metro 2 manual, you would not find any information about DLAs because they do not exist within this credit reporting system.

Credit reports provided to lenders are communicated using the Metro 2 language.

Credit reports provided to lenders are communicated using the Metro 2 language.

Conclusion: Do DLAs Affect Your Credit?

You can rest assured that you do not need to worry about DLAs as they pertain to your credit reports and your credit scores (although they may be important for legal reasons, such as determining the statute of limitations for old debts).

Since DLAs do not appear on your actual credit reports that your credit scores are based on, they cannot impact your credit.

If you’d like to watch the video version of this post, hit play below. You can find the rest of our Credit Countdown videos over on YouTube!


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Can Inquiry “Bumpage” and “Choppage” Help Your Credit?

Can Inquiry "Bumpage" and "Choppage" Really Help Your Credit? - Credit Countdown With Expert John Ulzheimer - PinterestSome folks in the field of credit repair claim that hard inquiries can be “bumped” or “chopped” off of your credit report through the processes of inquiry “bumpage” and “choppage.”

What do these terms mean, and do they actually work?

Credit expert John Ulzheimer, who has worked in the credit industry for 30 years, gave us his take on this trend in a Credit Countdown video on our YouTube Channel. We’ve outlined the main points of the video for you in the article below.

How Much Do Inquiries Impact Your Credit Score in the First Place?

Credit scores factor in five categories of information when calculating your score, and they are not all given equal weight.

The most important piece of the credit score pie chart is your payment history, or in other words, your track record of making your payments on time. This factor accounts for 35% of your FICO credit score.

The next largest piece is how much debt you owe, which relies heavily on your revolving utilization metrics, among other factors. Your debt comprises 30% of your credit score.

Your length of credit history, AKA your credit age, represents 15% of your score, while credit mix, or your diversity of types of credit accounts, makes up 10%.

Finally, the last 10% of your credit score comes down to the new credit category, which includes hard inquiries.

For this reason, focusing on trying to remove inquiries from your credit report usually does not make sense as a credit improvement strategy. Even if you are 100% successful in removing all of the hard inquiries that may be bringing down your credit score, you will only move the needle a small amount relative to what you could accomplish by focusing on the more important credit score factors.

What Is Inquiry Bumpage?

The concept behind credit inquiry “bumpage” is the idea that the credit bureaus only have a certain amount of space allocated for each consumer’s credit report. Therefore, the theory goes, if you can fill that limited amount of space with new information, you can “bump” the oldest inquiries off of your credit report.

What Is Inquiry Choppage?

Inquiry “choppage” is theoretically what happens when the soft inquiries get “chopped” or removed from your credit report before the hard inquiries can be “bumped” off.

Do Inquiry Bumpage and Choppage Really Work?

According to John Ulzheimer, aside from the speculation and marketing tactics you may see in credit repair space online, there is no reason to believe that bumpage and choppage even happen in the first place, let alone that they are effective strategies to help get hard inquiries removed from your credit report.

Better Ways to Increase Your Credit Score

While the methods of bumpage and choppage are not recommended when trying to improve your credit, fortunately, there are more legitimate and effective things you can try.

Remove inaccurate derogatory information. If there is damaging information on your credit report that is not supposed to be there, filing a dispute to get it removed or corrected should be your top priority.
Pay your bills on time. Since your payment history has the greatest amount of influence on your credit score, getting more on-time payments onto your credit report will go a long way toward attaining a higher credit score.
Maintain low balances on your credit cards. Factors having to do with the amount of debt you owe also play a sizeable role in determining your credit score, and your credit card utilization ratios are the key metrics in this category. The lower your credit card balances are, the higher your credit score can climb.
Limit the number of accounts that have balances on your credit report. In addition to utilization ratios, credit scoring models also consider how many of your accounts have balances on them. Even if the balances are small, if you have too many accounts with balances, this can bring down your credit score.
Increase your credit age. All you have to do to increase your credit age is wait patiently for your accounts to get older!
Plus, try some of the other credit tips we’ve published in our Knowledge Center, such as our list of easy credit hacks that will actually get you results.

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Fair Credit Reporting Act

Using a credit card is easy — you use the card to buy things and then pay the credit card bill.

A credit card can sometimes be difficult, however, when dealing with your credit file.

From a  missed payment to a loan that isn’t yours that’s incorrectly listed on your credit report, there are all kinds of ways your credit score can drop.

And not all of them are from something you did wrong.

What Is the Fair Credit Reporting Act?

Consumers have protections under the law regarding their credit reports — which is where credit scores and credit problems are listed for lenders to check before offering you credit.

Errors on a credit report can drop your credit score, making it harder to get a loan, credit card, rent an apartment, or qualify for insurance coverage, among other things.

The main law that protects consumers from credit errors is the Fair Credit Reporting Act, or FCRA.

Your Rights Under The FCRA

Here are some of the rights you have under this law and how to use it to protect your credit:

View Credit Reports

The FCRA entitles you to review your credit file from each of the three main credit bureaus for free once every 12 months.

You can do one check every four months from each of the three — Equifax, Experian, and TransUnion — if you really want to be on top of it.

Start by going to to request your credit file online.

Only use that website and don’t use a copycat site that charges fees for what should be a free service.

You’ll need to verify your identity to get online access. You can also request your credit file through an automated phone system or the mail.

The FCRA applies to all consumer reporting agencies.

You can also look at reports from other consumer reporting agencies that collect noncredit information about you.

These include rent payments, insurance claims, employers, and utility companies.

The Consumer Financial Protection Bureau lists the reporting companies and how to request a free report from each.


Getting a credit report in your hands can lead to all sorts of eye-opening concerns. Anything that’s listed as negative should be checked for accuracy. Here are some things to look out for:

Eviction that wasn’t legal.
Creditor listed that you didn’t have an account with.
Loan default.
Wrong name.
Wrong address.
Wrong Social Security Number.
Incorrect loan balance.
Closed account reported as open.
A loan you didn’t initiate.

Some errors may be simple to resolve and others you may need to do more research on before disputing them to ensure they’re incorrect.

For example, you may not recognize the name of a creditor and assume you don’t have an account with them. But it may just be a store credit card you recently applied for that is listed by the issuing bank’s name. Or maybe a home or auto loan was sold to a new loan servicer.

Other errors could be reason to suspect identity theft, or there could just be wrong information that’s bringing down your credit score.

If you suspect identity theft, such as someone taking out a credit card in your name, then file a police report and report it to your credit card company and the credit reporting agencies.

To dispute erroneous information, use certified mail to send the credit bureau a letter and copies of documents explaining the error. If a loan still shows an outstanding balance and you have written proof that it was paid off, for example, send a copy to the credit agency.

The Federal Trade Commission has a simple sample letter to dispute errors on your credit report.

Credit agencies have 30 days to investigate and respond to your dispute, unless they deem it frivolous.

If it corrects an error, it must send you a free copy of your credit report through so you can see that the corrections have been made.

Check Your Credit Score

The law allows you to request a credit score, though it’s legal for credit agencies and other businesses to charge you a fee for this service.

Some credit cards provide scores for free, so check with your credit card issuer first.

A credit score isn’t the same as a credit report.

Information in a credit report determines a credit score, and each credit bureau can use a different scoring model that requires it to provide different information.

You have different credit scores, depending on which factors are weighed more heavily.

Monitoring your credit is vital. Make sure that you review your credit report for any inaccuracies.

Know Who Can View Your Credit Report

The FCRA doesn’t allow a credit reporting agency to share your credit file with someone who doesn’t have a valid need.

Some inquiries, such as from a potential employer or landlord, require your written consent.

And, they can only check your credit report, not your credit score.

The credit reporting agencies can share your credit report for legitimate reasons, such as when you’re applying for credit, insurance, housing, or with a current creditor.

A Time Limit To Negative Information

The FCRA doesn’t allow credit bureaus to report negative information that’s more than seven years old, though it allows some forms of bankruptcy to remain on a credit report for 10 years.

There’s also a time limit for positive credit information such as on-time payments and low balances — up to 10 years after the last date of activity on the account.

Rejections Based on Credit Report

If your application for credit, job, insurance, or housing has been denied because of information in your credit report, the law gives you the right to know this information.

The landlord, employer or other entity that denied your application must notify you and give you the name, address and phone number of the credit reporting agency that provided the information.

The FCRA allows you to get a free copy of your credit report from that reporting agency within 60 days of the action against you. That’s in addition to the three free credit reports allowed annually.

To best deal with a potential rejection ahead of time, it’s smart to check your credit report before applying for credit, rental unit or related use of your credit report and check it for errors. Give yourself enough time to fix them.

The post Fair Credit Reporting Act appeared first on Better Credit Blog | Credit Help For Bad Credit.

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