Owner Operators - Tax Tips


As consumers we are constantly dealing with finances, whether we're shopping for groceries, trying to get a loan, paying taxes, or negotiating with debt collectors. We are involved in financial transactions daily. As young adults we are thrust into a world of complex financial issues, most of us with no basic financial training.

Usually from the day we turn 18 we are bombarded with offers: "Apply Now", "Pre-Approved", "Interest Free", "No Money Down", "No Payments for One Year" and the next thing we know it's, "Past Due", "Rejected", "Foreclosed" and "Repossessed."

Then you hear your FICO score is not high enough to qualify for a loan. What is a FICO score? And how are you supposed to score if you don't know how to play the game? Well, we're going to tell you.

A FICO score is a credit score developed by Fair Isaac & Company. Credit scoring is a way of determining the probability that a borrower will pay their bills. When you apply for credit, such as, a credit card, equipment loan, or a mortgage, the lender wants to know how much risk they'd be taking by lending you money.

For a FICO score to be calculated you must have at least one account that has been opened for at least six months and at least one account that has been updated in the past six months. This gives enough information for a score to be calculated. You have three FICO scores, one from each of the three credit bureaus: Equifax, Experian and Trans Union.

Credit scores are calculated by giving points for certain things and deducting points for others. Credit scores analyze financial and credit history considering these different factors:

The length of time credit has been established
The amount of credit used vs. the amount available
Length of time at present address
Employment history
Negative information such as late payments, bankruptcies, collections, charge-off's, repossessions, etc.

Factors that increase your credit scores are:

Paying bills on time
Reducing credit card balances (using the entire available balance on your credit cards will have a negative affect on your credit score) Do not apply for credit too often since too many inquiries can lower your score If you have limited credit consider applying for more (insufficient credit can have a negative affect)

You can eventually rebuild your credit even if you've had to file for bankruptcy. It's possible to get a major credit card or loan usually two to three years after filing bankruptcy.

Beware of credit repair scams. Companies nationwide take advantage of consumers with poor credit histories. Credit repair companies can't do anything for you that you can't do yourself for free. No one can legally remove accurate information from a credit report, but you can legally dispute inaccurate or incomplete information.

You have a right to a free credit report once every 12 months from each of the nationwide credit bureaus, or if you've been denied credit, insurance or employment because of information provided by a credit bureau. Otherwise you may request a copy of your credit history directly from the credit reporting agency. A credit bureau may charge up to $12.00 for a copy of your credit report.

The three largest credit bureaus are:

Experian
(888) 397-3742
www.experian.com

Equifax
(800) 685-1111
www.equifax.com

Trans Union
(800) 916-8800
www.transunion.com

For a free annual credit report contact:

Annual Credit Report (this site allows you to request a free credit report once every 12 months from each of the nationwide credit bureaus listed above).
(877) 322-8228
www.annualcreditreport.com

If you find errors or mistakes on your credit report you have the right to dispute those items for free. Contact the credit bureau and request a dispute form or submit your dispute in writing, along with any supporting documentation (do not send your original documentation). Clearly identify every item you dispute, explain why you dispute the item and request a reinvestigation. When the reinvestigation is complete the credit bureau must give you the written results and a free copy of your credit report if the dispute results in a change. You may also request that a copy of your correct credit report be sent to anyone who received your credit report in the past six months.

Your best chances for recovery are to avoid overspending, set-up a budget, correct any errors on your credit report, and maintain a good credit standing.