R1s, inquiries, charge-offs. What do these terms mean, and what do they have to do with knowing how to read a credit report? Well, in this article we help you understand a very this important document.

If you’ve followed our articles so far, it means you’ve decided to get your free credit report, and are most likely looking at it right now.

But most people that receive their credit report simply stare blankly at the myriad of numbers, abbreviations, and somewhat alien terms. What does it all mean? What’s a trade line, a charge-off, or an account review inquiry?

As we now know, there are three primary players when it comes to credit reporting bureaus in the United States. In no particular order, they are TransUnion, Equifax, and Experian. Once annually, you are entitled to a free copy of your credit report from all three agencies.

Let’s make this very clear up front. There really is no point in looking at only one of the agency reports. You really need to obtain and look at all three. A common mistake that most people do, is they pull one credit report from one agency, and assume that the information is the same on all three. This typically is not the case.

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The revolution of credit card usages enable us to use the card virtually everywhere from gas station to the grocery store to even the fast food outlets down the street. It has made our life much more convenient, but it has also caused debt burden to many card holders who fail to manage their credit properly.

Credit card interest rate can be quite high if compare to other loans, so for those who are not clearing their credit card balances especially those who just pay the minimum due each month, the interest can be snowballed to become a finance burden. The debt need to be taken care of immediately before it gets worse and debt consolidation is among the common solutions.

There are a few options which you can use to consolidate your credit card balances and reduce the burden due to overwhelming debt. The common options for credit card debt consolidation include:

1. Consolidate Debts With Personal Loan

You can simply take out a personal loan which has lower interest rate as compare to the rate of your credit cards to pay off the balances. Basically, there are two types of personal loans, unsecured and secured loan that you can apply to clear your multiple debts. If you have asset to pledge for a secured loan, you should be able to get a much lower interest-rate’s loan that can helps to save money in term of total interest needs to be paid; however you will risk your asset if you default the loan. Unsecured personal loan will have higher interest rate than a secured loan, but if you have averagely good credit score, you should be able to find good personal loan packages that have low interest rate and choose among the best that fit your financial affordability to consolidate your debt and reduce your finance burden.

2. Consolidate Debts With Home Equity Loan

If you are a homeowner who has equity on your home, you can also choose to use a home equity loan to retire the high interest rate debts and consolidate them into a lower interest rate home equity loan. The qualified loan amount will depend on your home equity; you will normally allow applying up to 70% to 90% of your home equity. However, if you don’t need that much of loan to retire your debt, don’t get that much because you will add more debt which may risk your home if you default it. Just apply for sufficient loan amount that can cover your debts and consolidate them into the home equity loan to reduce your debt burden.

3. Consolidate Debts With Mortgage Refinancing

Another option of debt consolidation is refinancing your mortgage to cash out the money which can be used to pay off your debt. With today’s lowest mortgage interest rate ever, it will be a good option to refinance your mortgage to enjoy the interest saving. Moreover, if you have high interest rate debt such as credit card debt, refinancing a mortgage enables you to cash out some money to pay off the debt and reduce your debt burden with the low-interest rate on 2nd mortgage.

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A debt consolidation loan is much like any other loan you would get. The interest rate and the terms of the loan are closely tied to your credit score and your credit report. There are no down payments to make, so your interest rate is more closely tied to your situation that it could be with a different kind of loan.

The purpose of visiting a debt consolidation professional is to determine what is the best alternative for your situation, and what kind of program should you and your debt advisor put together.

There are basically two types of loans for consolidation; the secured loan and the unsecured one.

Your debt consolidation organization can help walk you through the differences between the two and they can also analyze your situation with you to determine which debit consolidation loan is the best for you to purchase. The company will use factors such as your credit score, your debt ratio, and your credit history to determine which kind of loan best suits your situation.

Once the loan type is determined, the next set of parameters to outline is things such as the interest rate and the term of the loan. Your counselor will work with you and your monthly budget to put together a program that you can afford and will help you pay off that high interest debt once and for all.

In the end, the goal is to get your high interest debt into a situation that is more affordable for you which will free up your cash flow and allow you to purchase the things you need for your every day life.

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Late payments are not created equal; a 30 or 60 day late pay will not damage your score much, and can often be removed. However a 90 day or 120 day will cause significant damage to your score.

This mark can be deleted by the lender as a way to keep your business and keep you happy. We suggest you contact the lender and ask them to delete it.

A phone call and a letter including the reason is the most effective method. Also be respectful and nice to them because they do not have to remove it.

A 90 or 120 day mark is much harder to erase. If you account is still open, we suggest you contact the lender.

Make sure your account is up to date before you ask them to remove the mark. Lenders will often make this decision based upon your payment history and the frequency of delinquency.

If they will not remove it then we suggest you file a dispute directly with the bureaus. This is done through a letter; you can create it or hire a service to do on your behalf.

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Do you want to take advantage of the slow housing market to get a great price on your first or a bigger home? Are you trying to buy a new car – maybe one that gets better gas mileage than your SUV? Do you want to go back to school and need to borrow money? All of these sorts of things, and lots of others, often make people look into ways to clean up their credit report. And for good reason, too. The better your credit score is, the easier it is to get a loan, the less interest you will have to pay, and the overall better terms you will be able to get.

If you want to clean up your credit report, do you know how to go about doing it? Of course, the best and easiest way to have a great credit history is to pay all your bills on time, keep some outstanding debt, but only a little, and make all payments on time right from the very start. Not everyone has the life circumstances to be able to do that, however; that does not mean, though, that there is just no way to make your credit score shine.

If you want to clean up your credit report, you should take some time to look into the ways that credit scores are determined by the three major groups who provide them, and once you do that, you should look at your own personal financial situation and take the appropriate actions.

Would you be better off to close that account you only use in extreme emergencies? Would it be better to take a second job for a short time to increase your cash in hand? Should you use the money in your savings account to pay off your outstanding credit card debt? These are all the types of questions that you should get answered before you start to do things in an effort to clean up your credit report.

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