How To Improve Your Credit

Fair Isaac reports that the American public's credit scores break out along these lines:

National Distribution of FICO Scores

Source: Fair Isaac Corp.

How To Fix Your Credit Report

Credit repair is not something you can accomplish overnight. If you want to improve your credit report just follow these simple steps and watch your credit will improve.

Request a Copy Of Your Credit Report.

The first step to improving your credit report is to see what’s on your report, and understand how the information that’s being reported affects your score . You can request a free copy of your report.

- Proof of name, such as a copy of your driver's license.
- Two proofs of address, such as copies of your driver's license, pay stub or utility bill.
- Proof of Social Security number, such as a copy of your Social Security card or a copy of a pay stub or tax documentation showing the number.
- The relevant pages of your credit report.
- The relevant letters from collection agencies connecting to the original creditor account.

Review Your Credit Report and Look For Mistakes

You want to check for inaccurate or incomplete information such as:

- Lawsuits, paid tax liens, accounts sent out for collection, criminal records, late payments, overdue child support payments and any information older than 7 years.
- Bankruptcies older than 10 years.
- Incorrect or incomplete name, address, phone, social security or employment information.
- Accounts or lawsuits you were not involved in.
- Incorrect payment history that mentioned late payments.
- Closed accounts listed as open.
- Accounts listed more than once.
- Any account that you closed and that doesn't say "closed by consumer".
- Any and all other information that you think is inaccurate

Contact The 3 Main Credit Reporting Agencies: Write to the credit report agency and always send letters via certified mail, return receipt requested, telling them which items are incorrect or incomplete, and why; make sure you have documents supporting you disputing any negative item. The credit reporting agency will have 30 days to investigate your dispute. If the agency is unable to verify that the information they are reporting is accurate and complete, they must correct it or remove it from your credit report. Contact The Creditor: Write to the creditor and inform them of the item you believe is inaccurate. As above, include any copies of documents which support your claim, and send your letter via certified mail. The creditor must report the item as disputed until they have verified or corrected it. If they are unable to verify the information, they must stop reporting it.

Ask that Accounts in Good Standing Be Reported on Your Credit Report: If you don’t have a lengthy credit history, and that is damaging your credit score, you can request that a credit agency to report any credit accounts you have (i.e. a department store card, gas card, credit union card), which have not been previously reported. Although the credit agency is not required to do so, many will agree to report accounts they are able easily verify if you request it.

Credit Report Facts

The FICO© Graph Shows:

Other Tips

- Pay your bills on Time.
- Don’t max out your credit cards. You should only use about 35% of your credit limit.
- Establish good credit history with all your creditors.
- Having a mortgage will actually improve your credit. Average credit score for homeowners is 50 points higher than someone who does not have a mortgage.

Actually you do not need anyone to help you with repairing your credit. You can buy books for $10 to $20 that will show you repair your credit. You may potentially save hundreds or thousands of dollars. www.Nolo.com has incredible books to help you repair your credit.

Credit Inquiries

A credit card company will check your credit report before it sends you a pre-approved offer. This type of inquiry does not hurt your credit score. It also doesn't show up when others request your credit report. Inquiries made by your existing creditors also are not part of your credit score.
It's only when you apply for a credit that it shows up on your report for other lenders to see and it does then impact your credit score. So, you taking the company up on that pre-approved offer will generate an inquiry that impacts your credit score.

You can opt out of having credit card providers send you pre-approved offers. You can call (888) 5-OPT-OUT or (888) 567-8688.

Closing Your Credit Card Accounts Can Hurt Your Credit Score

Closing a credit card account can sometimes be good for your credit score, or for your intention to stop using credit cards, but it can also affect your credit score.

Approximately 15% of your credit score is based on the length of your credit history, so if you cancel older credit card accounts, you may shorten the length of your credit history, and that may lower your credit score.
In addition to shortening the length of your credit history, by cancelling a credit card account, you may change the ratio of used credit to unused credit, which accounts for approximately 30% of your score, and that can ding your score as well if you're carrying a balance on your other cards.
If you're considering closing a credit card account, make sure you understand how it may affect your overall credit score.

How is Your Credit Score Calculated 

Here's The Formula Breakdown:

35% of your score is based on your payment history.

30% is based on the amount of debt you owe.

15% is your credit history. The longer you have had credit the better. That's why it's not always a good idea to close credit accounts you've had for a long time.

10% is based on the type of credit lines you have.

10% is based on new credit card accounts.

What Counts in a Credit Score?

You can make a large impact on the score by targeting just one area, your payment history. Pay your bills on time and improve your credit score.




How To Get Your Free Credit Report

Be sure to look at each of your reports every year. It's simple, it's free and it's VERY CRITICAL: Old or inaccurate information could cost you a job, an apartment or a lot of money when you borrow.
All Americans are entitled to free credit reports every year from each of the three major credit bureaus. The credit reports used to cost as much as $9.50 each.

The three major credit-reporting agencies, Equifax, TransUnion and Experian, are each required to provide consumers, upon request, a free copy of their credit report once every 12 months.
The reports will not be sent automatically. Each consumer must request reports one of these ways:


7 Steps To 700 or higher Credit Score

Step 1: Remove All Inaccuracies on Your Credit Report

This may seem awkward to you but about 80% of all credit reports contain some sort of inaccuracies that may prevent individuals from getting a higher credit score. By removing erroneous information you may see your score increase by as much as 20 to 50 points, within a short period of time.

Step 2: Keep Credit Card Balances Under 30 Percent of Your Limit.

To increase or maintain an excellent credit score your balance on any credit card should be no more than 30 percent of your limit. If for example you have a $20,000 credit limit on a credit card, keep the balance bellow $6,000.

Step 3: Have at Least Revolving Credit Lines.

The three credit bureaus tend to give higher scores to individuals with at least three revolving credit cards. If you have less than three, you might want to apply for more credit card. In the beginning your credit score will go down since you are asking for more credit line, but as time goes by and you establish your credit line, your credit score will increase. Make sure you never close a credit card account as you will hurt your credit. You need to maintain a good line of credit card and show you’ve had them for a longtime.

Step 4: Always Pay on Time

This is definitely one of the most important factors in maintaining and achieving a high credit score. Make sure you always pay all your bills on time. If you are late, creditors will report it to the credit bureaus. It is never a good idea to be late on your bills. It may be a good idea to have some companies debit your account automatically. This will ensure you are never late.

Step 5: Get a Good Mix of Credit

Credit bureaus likes to see individuals with a good mix of credit, such as credit cards, car loan and a mortgage. You may also increase your score if you have already paid off a loan, such as a car or student loan.

Step 6: Negotiate a Letter of Deletion Before Paying a Bill in Collection

Paying off a bill after it has been in collection may even further damage your credit score. Bills that are due and turned to collection agencies will be erased from your credit score after 4 years. If you have a bill in collection, you should consider not paying it until you negotiate for a letter of deletion, which the creditor or collection agency provides to the three credit bureaus asking a derogatory item to be removed from the credit report.

Step 7: Monitor Your Own Credit

For about $10 per month you can monitor your own credit and regularly review your credit report from one of the three major reporting agencies. If there is any change, the reporting agency will alert you via email. This may be important, as if someone steals your identity they will try to open new line of credits. If you are suspicious of any fraudulent activities on your credit, you will be able to stop the problem early and before someone ruins your credit.


Go to www.AnnualCreditReport.com which is the only authorized source for consumers to access their annual credit report online for free.  Call (877) 322-8228.


 

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