How Can You Improve Your Credit Score?

It’s virtually impossible to improve your credit score in the time between when most people decide to buy a home, or refinance their mortgage, and when they apply. So the short answer is, you really can’t improve your credit score “on the spot.” But there are strategies you can live with to make sure when you apply for a loan your score is as high as possible.

Make sure that the information each of the three credit reporting bureaus about you is consistent and up to date. Order a copy of your credit report about once a year and dispute any inaccuracies. Keep in mind though if a series of credit reports are requested on your behalf during a limited amount of time your score goes down until time passes without any inquiries.

Changes in the law have made “consumer-originating” credit report requests not count as much. Also, a series of requests in relation to getting a mortgage or car loan is not treated the same as a number of credit card requests in a limited time. This is because the credit bureaus, and lenders, realize that people request their own credit reports to keep up with what’s on them, and smart consumers shop around for the best mortgage and car loans. As for unsolicited credit card advertisements you receive in the mail, they don’t count against your credit report.

Reasons For Mistakes On Your Credit Report

Credit report errors occur for a number of reasons, but they can all have a negative impact on your eligibility for any future credit. It’s important to stay on top of your credit report and to address errors made by the creditors and credit bureaus (Equifax, Experian and TransUnion).

Some common reasons for mistakes on your credit report include:

  • The individual has applied for credit under several different names (i.e. John Doe and Jonathon Doe).
  • Someone has made a clerical error in entering or reading information (names, social security numbers, addresses, etc.) from a handwritten application.
  • A name mix-up has occurred. For example, there is likely more than one John Smith living in New York City; as a result, there is a good chance that information intended for one John Smith might appear on another John Smith’s credit report when he applies for a mortgage.
  • The individual has given an inaccurate social security number or the creditor has misread the number.
  • Loan or credit card payments have been inadvertently applied to the wrong account. ** Where to Turn For Help**

The Fair Credit Reporting Act (FCRA), enforced by the Federal Trade Commission (FTC), is designed to promote accuracy and ensure the privacy of the information used in consumer reports. Under the FCRA, both the credit reporting agency (CRA) and the organization that provided the information to the CRA (usually the credit card company) must correct any errors or incomplete information in your report.

If you do encounter a mistake, several steps need to be taken when disputing credit reports:

  1. The first thing to do is get a copy of your credit report from each of the three major CRAs: Equifax, http://www.equifax.com; Experian, http://www.experian.com; and TransUnion, http://www.tuc.com.
  2. In a written letter, tell the CRA what information you believe to be inaccurate. Include copies (not originals) of documents that support your position. Provide your complete name and address, identify each item in your report you dispute, and request a deletion or correction. Also, be sure to make copies of your dispute letter and enclosures.
  3. When disputing credit reports, always send your letter by certified mail and return receipt requested so you can document what the CRA received.
  4. The FCRA mandates that all CRAs reinvestigate the items in question – usually within 30 days – unless they consider your dispute frivolous. They also must forward all relevant data you provide about the dispute to the credit card company. After the credit card company receives notice of a dispute from the CRA, it must investigate, review all relevant information and report the results to the CRA.
  5. If the disputed information is found to be inaccurate, the credit card company must notify all nationwide CRAs so they can correct this information in your file. Disputed information that cannot be verified must be deleted from your file.
  6. When the reinvestigation is complete, the CRA must give you the written results and a free copy of your report if the dispute results in a change. If an item is changed or removed, the CRA cannot put the disputed information back in your file unless the credit card company verifies its accuracy and completeness, and the CRA gives you a written notice that includes the name, address and phone number of the credit card company.
  7. In addition to the CRA, you should also write to the credit card company about the error. Again, include copies of documents that support your dispute. If you are correct – meaning the information you disputed is found inaccurate – the credit card company cannot use it again. Further, at your request, the CRA must send notices of corrections to anyone who received your report in the past six months.

Main Factors to Improve Your Credit Score

The two main components of your credit score are your payment history and the amounts you owe. Bankruptcy filings and foreclosures, which can stay on your credit report for as long as 10 years, can significantly lower your score. It’s never a good idea to take on more credit than you can handle.

This means late payments work against you. It’s extremely important to pay bills on time, even if it’s only the monthly payment. Also, don’t ‘max out’ your credit lines. Since the size of the balance on your open accounts is a factor too, lower balances are better to improve your credit score.

It’s said that by carefully managing your credit, it’s possible to add as much as 50 points per year to your score. But if you’re not sure about financing and your credit call us at 1-888-848-1880 for details. We’ll be happy to help.

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