Improving Credit Scores
The process of improving credit scores is not a difficult one, so fear not. Knowing how to improve credit score is not a magical process, there are no devious tricks or industry guarded secrets. In fact, much of the process is grounded in common sense, and because of this, anyone can, and should start the work required to raise their FICO and work towards higher scores and all the financial benefits that are the rewards of success.
As with any great journey, the first step is to determine where you are in order to set the path towards your destination. In this case, you must first get your credit reports to determine what scores you currently hold with the various credit bureaus. The process is a simple one, and luckily laws protecting consumers rights mandate the three bureaus provide you a free reporting of your scores and financial details annually. For an in depth look at how to get your scores visit our information resource provided: How To Get Your Credit Score
Once you have your credit reports in hand and have determined that your scores need improvement the process begins with fact checking and cleaning. The most common cause of lowered credit scores in your bureau reports is caused by none other than inaccurate data within your report. The extent that inaccurate data is included within your reports is astonishing.
For example, it is common for bureau reports to include accounts of similar named relatives, balances that make so sense, and even the accounts of complete strangers. This is not to state that the 3 credit bureaus, Experian, Equifax and TransUnion are incompetent boobs. Rather it is a reflection of the vast amount of data that these bureas deal with and the massive task set before them. There is simply a lot of room for error and misassociations and errors are common.
Improving credit scores is a process of isolating all of the items in your report that are negatively affecting your score and correcting them. Begin the process with the errors, taking one report at a time and contact the bureau with corrections of any item that is not correct. Fix address items that are incorrect, aliases that may not be true, dates, account inaccuracies, balance inacuraccies, and default and late payment reportings that are not accurate, (that you have evidence to support).
Cleaning your credit reports is the first step to improve credit score, as it is vital to have as accurate as possible reporting of your financial reputation. Your credit reports will serve as your score card for all the improvement work to come.
The Dispute Process
The process used to resolve errors on your report is the item dispute. Without elaborating needlessly on the dispute process it is important to follow the following guidelines with your dispute letters:
- State Clearly What You Want
- State Clearly What Credit Item Is In Error
- Provide Supporting Documents Where Possible
- Only Dispute Items That Are Reported Inaccurately
In your letter to the credit bureaus, use clear and simple language that you are filing a dispute, that you feel this or that item is in error, provide supporting proof if you have it, and attempt this only for items that are believed to be in error. The credit bureaus are required by law to research your disputes within 30 days and reach a judgement as to their validity. If they find the credit item incorrect or were unable to prove what they had documented is so, then the item will be wiped from your credit report and in the case of negative items improve credit score.
Once you have cleaned your credit report of inacurracies it is time to focus attention on the accounts and balances that are negatively affecting your scores but are accurate in their reporting
These items can include, account balances in default, judgements, foreclosures, bankruptcy, late payments, high balances, too many open credit lines, reposessions and other obviously negative credit items. So what can you do about them to improve your credit score?
Face them head on, one by one. We recommend you tackle your default accounts first as they are the easiest to organize. You might have obligations from decades ago sitting in your reports negatively affecting your credit, with very small balances, that you are capable of paying off right now, but had forgotten about. So contact the lender, pay them off and be sure to get a written statement of doing so. Report each of these obligations as having been met and provide the documentation as soon as you can. Often raising your credit scores is only a matter of dealing with a few long forgotten mistakes made in your university days.
It is vital to remember that your credit reports are an assessment of your financial health, and your past financial history. It is an attempt to numerically grade your financial reputation based on past history. To improve credit score numbers one need only face the debts of ones past so to speak. We all make mistakes but it is in meeting and fixing past transgressions that our financial reputation will improve, along with our scores reported.
Use Available Resources
We recommend you put together a plan to tackle the negative credit items on your report. Payoff those you can, if you have the means. If you do not, there are a variety of resources available to the consumer to help you manage your debts and improve your financial health. Creditors will often consider settlement of what is owed for a fraction of the balance, and you can negotiate with individual creditors for terms that you can meet. In addition, there are a number of agencies that will negotiate on your behalf, many offering free services, at taxpayer expense, to help you with the negotiations.
In addition debt consolidation loans can often help you improve credit score by reducing your monthly payments through the restructuring of your debts. This improves your credit score because your improved debt to income ratio improves. A note of caution though as debt consolidation is shown to fail in roughly 70% of cases because borrowers do not use the relief provided to pay down their debts but rather increase their debt with further borrowing. Used carefully though and they can be an invaluable resource to help improve credit scores.
Some credit score items are rather dire and only time will heal. This is a sad fact of financial reporting, but the good news is that time heals all financial scars and even a bankruptcy will only remain on your credit report for up to 7 years, and once it drops you will likely see your credit score improve. Improving your credit scores is a matter of time and will. Focus on the items that you can correct and let times passing improve the items you cannot.
Credit Repair Companies
Ultimately, dealing with the credit reporting bureaus is not my idea of a fun way to spend a Saturday evening. The dispute process takes time, the bureaus are bureaucracy in their own right, and your time in many cases can be better spent working on improving your income while you outsource the unpleasantness to one of the many credit repairing companies available to improve credit score results in your report.
As long as you are aware that you can accomplish the process on your own, knowing the credit resources that are available to you the consumer, and you choose to enlist the aid of a company to improve your scores, all well and good.
Be aware, all repair companies are not created equal, and the credit repair industry is ripe with fraud, misinformation and abuse. Working with a reputable company is priceless and researching consumer reviews before you pull the trigger will be worth its weight in lost time and money.
