Improving Your Credit Score

IMPROVING YOUR CREDIT SCORE
By: Felicia Harris

Step 1: Order Your Credit Reports
Cost for each report from each bureau is around $9-10. It will cost more to include your FICO credit score A FICO score is a credit score developed by Fair Isaac & Co. to determine the likelihood that credit users will pay their bills There are really three FICO scores computed by data provided by each of the three bureaus Experian, Trans Union and Equifax. Lenders typically use the middle score (e.g. 650, 670 , 700) If you live in certain states such as Georgia , you can obtain 2 free copies per year If denied credit, you are entitled to a free copy of your report You have 60 days after denial to request your copy.

Step 2: Examine your reports carefully
Every consumer has at least one error on a report from one of the major credit bureaus It is a good idea to request a combined report with all information from the three bureaus Credit bureaus generate your report from information received from creditors Charge-off accounts (creditor writes off account), Judgments, Collection Accounts remain for seven years Bankruptcy remain for seven to ten years Chapter 7 (complete liquidation) is the most common Ten years from the bankruptcy filing date Chapter 13 (restructuring) repay debt in three to five years Seven years from the filing date

Step 3: Dispute and Document
Clearly identify each mistake and state why its wrong (see example credit dispute letter) Send a photocopy of credit report with mistakes circled to credit bureau and include supporting documents Keep copies and records of forms, letters documents sent Credit bureaus have 30 days to investigate Any item not verified as accurate is removed

Step 4: Solve and Dissolve Debt
Call creditors to negotiate to keep your account current and from being reported delinquent You can ask for reduced monthly payments or change due dates Unpaid collections are worst than paid collections Negotiate a pay-off settlement that reduces your bill Demand all derogatory remarks be moved or report balance paid in full Close unneeded or unused credit accounts Recommended to carry two to four major credit cards.

Step 5: Add Stability to your credit file
If you file for bankruptcy, undergo foreclosure, or have late payments, start to re-establish your credit If a derogatory statement is not removed from your credit report, you can add a brief (100 words or less) Consumer Statement (a note explain your side of a credit dispute) The faster you can improve your credit score, the sooner you can take advantage of the this historically low credit environment Open a secured credit card to help re-build your credit Shop around for best deals Sudden flurry of inquires results in low score.