Credit Questions? Just Ask Nicole

How to Remove Inquiries from Your Credit Reports

I was recently asked how to remove inquiries from credit reports. This is a very common question that a lot of people have.

[Thanks, Jason from Livonia, MI for bringing this up!]

I first want to make it clear that I'm going to give you some general guidance on how to deal with "unauthorized" inquiries on your credit reports - not just any 'ole inquiries! :)

But before I go into any details on how to remove unauthorized inquiries from your credit reports, let me give you this little tid-bit of useful info first:

• Inquiries are classified into 2 categories: "hard" inquiries and "soft" inquiries.

• "Hard" inquiries are the ones that appear on your credit report as a result of you applying for some type of credit or insurance, such as a credit card, apartment, car lease, auto insurance, mortgage, etc. These are inquiries that are initiated by you. Hard inquiries will be the subject of this post.

• "Soft" inquiries appear on your credit reports as a result of you being "pre-screened" for credit offers (marketing purposes), applying for a job, requesting your own credit reports, or from one of your existing creditors taking a "peek" into your credit report to "manage" your account.

• "Hard" inquiries are the ones that can affect your credit score. They account for 10% of the top-secret calculation of your FICO credit score. "Soft" inquiries do not affect your credit score.

• Excessive hard inquiries, especially within a short period of time, signal trouble in the credit scoring system. They make you look "credit-hungry," which could be a sign that you're in some sort of financial trouble and that you are desperately looking for access to credit.

• Hard inquiries remain on your credit reports for 2 years. However, only the ones that occurred within the last year affect your credit score.

• There is no hard-and-fast rule on how many points your credit score loses for each inquiry. The impact could range anywhere from 2 to 50+ points, depending on the other things going on in your credit report and how many recent inquiries you have. So it all becomes relative. How much an inquiry will impact your credit score will depend greatly on your overall credit report.

• Inquiries don't have a long-standing impact on your credit score. The more recent they are, the more impact they have on your credit score. The older they get, the less impact they have.

Now... if you have cause to want to remove inquiries from your credit reports, I'll assume it's because you feel strongly that they should not be there. And you must feel that way because you do not ever recall authorizing those inquiries into your credit. And if you did not authorize those inquiries, they should not be on your credit reports. Right?... Right!

Well, here are the general steps I've used to help many of my student clients successfully remove "unauthorized" inquiries from their credit reports...

1.   Carefully review your Equifax, Experian and TransUnion credit reports to identify all of the "unauthorized" hard inquiries that you do not recall initiating. You can get free copies of your credit reports here.

2.   Focus particularly on the unauthorized inquiries dated within the past year. These are the ones impacting your credit score.

3.   Draft a letter - in your own words - to each of the credit bureaus containing language to the effect of the following:

• you recently reviewed a copy of your credit report and would like to bring some errors to their attention
• you are alarmed because you noticed some inquiries that you did not authorize (or you do not recall authorizing)
• list the unauthorized inquiries, including the names of the companies that made the inquiries, and the dates of the inquiries - make it plain and clear!
• as you understand it, they (the credit reporting agencies) did not have the right to provide your credit report to anyone without a permissible purpose or without your express written permission, as mandated by Section 604 of the Fair Credit Reporting Act
• the companies you listed (you can list them out by name again if you choose) did not have a permissible purpose and you did not authorize the inquiries into your credit report
• the unauthorized inquiries are damaging to your credit score and therefore, currently have a significant negative impact on your financial status and/or financial future
• the unauthorized inquiries are inaccurate and you request their removal from your credit report immediately
• once the inaccurate, unauthorized inquiries are removed from your credit report, you'd like an updated credit report sent to you
• you look forward to having them (the credit reporting agencies) resolve this highly sensitive matter within 30 days of receiving your certified letter

4.   In your letter, remember to:

• use the Equifax, Experian and TransUnion mailing addresses provided in your credit reports for disputes
• reference your credit report confirmation number
• include your name, address, date of birth and social security number
• sign it!

5.   Mail your letters to Equifax, Experian, and TransUnion via certified mail with return receipt. They will have 30 days from the date they receive your letter to investigate your complaint and respond.

If you have any questions about this post, feel free to ask them using the "Comments" link below, or by clicking here.

Hope this helps!

"Can a utility company report a delinquent account to a credit reporting agency?"

Answer:

YES!

Unpaid Cell Phone Bills and Your Credit

I was asked not too long ago the following question:

"Can an unpaid cell phone bill affect your credit?"

My answer: ABSOLUTELY!

When you don't pay your outstanding cell phone bill, you are in breach of the contract agreement you have with your cell phone provider. You agreed to pay them for the cell phone services they provided you, and when you don't pay, that causes a big problem.

So, your cell phone company will most certainly come after you for the outstanding balance owed on your cell phone account.

The first course of action your cell phone company will most likely take will be to restrict or terminate your cell phone service.

Secondly, they'll pursue collection efforts themselves, by calling you (perhaps on your home phone since they've probably already shut off your cell phone), sending you email notices, and sending you "final notice" bills and/or collection notices in the mail.

And lastly, if the cell phone company doesn't get an acceptable response from you, they will most likely wash their hands of the situation and outsource their collection efforts to a third-party collection agency, or turn your account over to their own internal collection agency/department.

When you have an outstanding cell phone bill and you don't pay it, your cell phone provider and/or the collection agency will, in most cases, report the delinquent account to the credit reporting agencies.

And that negative entry on your credit report(s) will have an adverse affect on your credit and credit scores. Something you DO NOT want!

So, if you have an outstanding cell phone bill out there, contact your cell phone provider, and see if you can work something out to get the situation resolved.

If there's already been negative reports made to your credit reports about the account, even go so far as to negotiate the removal of any negative entries made to your credit reports in exchange for the payment of the account.

And do it in writing!

Top 10 Resolutions to Make to Get Your Credit Straight in 2008!

On today's broadcast of Just Ask Nicole LIVE!, I discussed the top 10 resolutions you can make to help get your credit straight in 2008.

If you missed the show, you can catch the replay at your convenience 24-hours-a-day by clicking here.

If you don't have time to listen to the 30 minute segment, you're still in luck! A summary of the show is below.

The top 10 New Year's resolutions to make for your credit in 2008 are...

~~ drum roll please ~~

1.   Obtain and review copies of your credit reports.

If you haven't checked your credit reports in a while, this is something you should do right away. Log on to www.annualcreditreport.com to request a free copy of your credit reports from Experian, Equifax, and TransUnion. Don't wait... get them NOW!

2.   Correct any errors in your credit reports.

Review your credit reports closely. If you find any errors in your credit reports, work diligently to have them corrected ASAP.

3.   Pay down and pay off high-interest, revolving credit card accounts.

Don't carry high balances on high-interest revolving credit cards. That's a BIG no-no! Pay them down and pay them off!

4.   Pay more than the minimum amount due on outstanding credit card accounts.

Paying more than the minimum amount due will help you pay your credit card bills off sooner and pay less in interest.

5.   Pay all of your bills on time, all the time.

No excuses. Just do it! Create a pay-your-bills-on-time system that works for you and stick to it. And make sure to pay your bills a little early so you don't have to worry about last minute payments not posting to your accounts properly and in a timely fashion. No late fees and penalties in 2008 and beyond!

6.   Ask for a credit line increase on your credit cards.

Not so you can shop or take a trip or party! But so you can help boost your credit. If you have a history of paying your credit cards on time, you are in a good position to ask for a credit line increase. The credit line increase will give some extra padding to your credit limit, which will make the amount you have outstanding seem smaller. The credit scoring system likes low balances and low credit utilization. So, having higher credit limits with a relatively low balances will help boost your credit scores.

7.   Ask for an interest rate reduction on your credit cards.

An interest rate reduction will help you save money by paying less in interest, and will consequently help you pay off your outstanding balances quicker. Ask for an interest rate reduction on all of your credit cards - even the ones that don't have really hight interest rates.

8.   Save some money and establish an emergency fund.

Lots of people have a hard time saving and run into financial trouble by not having a stash of cash to fall back on in case of an emergency or if unexpected expenses arise. So, in 2008, give it all you can to try to save some money and establish an emergency reserve fund. Start small if you have to, even if it's just a dollar month or a dollar a day. Just put some amount aside into your savings on a regular basis, and increase the amount as time goes on. It will add up and accumulate before you know it. Resolve to pay yourself first in 2008!

9.   If you're planning on starting a business in 2008, don't use your personal credit to finance your business.

Ideally, you should establish corporate business credit to finance and run your business. Don't put your personal credit on the line, or max it out, for your business ventures. If at all possible, establish corporate business credit in the name of your business without using your personal credit.

[To join the wait-list for the class I teach to help entrepreneurs and small business owners establish and build corporate business credit, click here.]

10. Don't procrastinate.

If you have issues with your credit or finances, it's best to address them right away. Do not put it off. If you try to ignore the matter, you'll still have those same lingering issues later. Don't put off the inevitable, or risk the situation getting worse. Get started correcting your financial blunders NOW! The longer you wait to do something about your credit, the longer it'll be before you get to enjoy the financial benefits that come with having better credit.

[To join the wait-list for the class I teach to help consumers improve their personal credit, raise their credit scores, and correct errors on their credit reports, click here.]

If you resolve to do one, some, or all of these things in 2008, surely by the end of this new year, you'll be able to look back and reflect on the positive progress you've made with your credit and finances.

Make every effort to be in a stronger and better financial position in 2008.

Don't procrastinate... get your credit straight in 2008!

Again... Happy New Year!

If Your Credit Score Drops, Chase Won't Raise Your Rate!

Pretty soon, Chase will no longer increase their cardholders' interest rates based on negative credit bureau information!

This is being done as part of their Clear & Simple program, which is designed to help Chase customers better understand and manage their credit card accounts, alongside their new and improved and clearer pricing practices.

This change will take effect March 1, 2008.  <<===  <<===

So if you have a Chase credit card, and for some reason your credit score drops, Chase will NOT hike up your interest rate as a result!

Doing such a thing is an ugly and controversial practice often exercised by credit card companies known as "universal default."

A universal default clause in your credit card agreement allows the credit card company to punish you somehow - like by hiking up your interest rate, lowering your credit limit, or even closing your account - for something that may have happened with your credit that is negative, but that has nothing to do with your account with them!

Chase is the first, and so far the only, credit card company to announce doing such a thing. And they are definitely going against the grain of what is common practice in the credit card industry.

There's many reasons why a consumer may experience a negative change in their credit reports and credit scores. And a lot of them are unwarranted! At least with Chase, you won't have to worry any longer about being further punished with higher interest rates on your credit cards while trying to remedy a negative credit situation.

For right now, I'm kinda liking Chase!

My Interview with Ralph Roberts of Ralph Roberts Realty and FlippingFrenzy.com

Hey there!

Hope you were able to tune in to Just Ask Nicole LIVE! yesterday and catch all the info on authorized user accounts.

If not, you can catch the replay at your convenience by clicking on this link: www.BlogTalkRadio.com/JustAskNicole

My interview with Ralph Roberts, of Ralph Roberts Realty (www.RalphRoberts.com) and FlippingFrenzy.com (www.FlippingFrenzy.com) was really good!

We talked about some of the crazy stuff people have done with authorized user accounts and how their use has impacted the current real estate market with the high rate of foreclosures across the country.

And when asked if authorized user accounts were useful or useless, Mr. Roberts weighed in with... USELESS! And I tend to agree.

Later!

Reminder! Tune in TODAY: Just Ask Nicole LIVE! @ 2 PM EST

Don't forget about today's show at 2:00 PM EST!

Headphones are one of the greatest accessories to have when it comes to listening to my show live!

If you're at work, put your headphones on so you can concentrate and your boss won't have to know what you're listening to...

If you're going out to lunch, take your laptop with you so you can log on to a Wi-Fi connection while you grab a bite to eat, and put your headphones on so you won't disturb others...

Just don't miss this show! It's going to be GOOD!

I even have Ralph Roberts, nationally recognized real estate and mortgage fraud expert joining the show to give us his take on the whole authorized user account phenomenon.

Today at 2!

Click the button below and tune in for the 411 on authorized user credit card accounts and how they affect your credit!