If your credit score is low, it is most likely costing you money. The lower your score, the higher interest rate you will pay on everything if you can get credit at all. The following list is comprised of things that people have done to successfully raise their credit scores by hundreds of points in just a few months. It does take work but it is possible to do it yourself without spending hundreds of dollars.
Things to do with the Credit Reporting Agencies
- Pull your credit report. It is best to pull all 3. Transunion, Experian and Equifax. They can have different information and you will need all three to dispute items. I recommend Fico Scores/Reports because you can get all three reports and the score is what the lenders actually see. You will need to pull them on a regular basis so you might want to look at the options available.
- Look for errors. Often there are accounts listed that were not yours. These need to be removed. Write a letter of dispute to each Credit Reporting Agency (CRA)
- If the account is a charge off or old collection account, dispute that it is your account with the credit reporting agency. You want these items totally removed from your report. A collection account that was paid on time or paid as agreed is still a collection account and will be counted negatively.
- The easier items to have removed are items older than 2 years, charge offs, inquiries, accounts that were late but are now paid off, repossessions and older discharged bankruptcies. Even if you know that these are correct, dispute them. The credit agencies have to verify them and often companies do not have the records to verify older closed accounts.
- Always write a fresh letter and do not use any type of letter head or photocopies. This raises red flags with the credit agencies and may inspire them to work harder to verify the debt.
- Always send any letter to CRA or collection agency by certified, return receipt mail. You need to be able to prove the dates of the request. If the credit agency does not verify the debt within 30 days, they must remove it from your report.
- Do not fill out the online version of the dispute with the credit agency. People who have successfully had negative items removed from their reports have had much better success with sending a hard copy.
- If the account is paid off but is showing past due amounts, do not dispute that it is your account but dispute that it was ever past due. It is better for your credit history to have a clean closed account than to have it removed.
- Look for unauthorized inquiries. Having inquiries on your credit report lowers your score. If you have not authorized the company to make an inquiry, you can request that they remove it.
- Look at the dates of last activity. A favorite among collection agencies is to restart the date of last activity when they purchase the debt. This is illegal. The date of last activity starts from the time you were late or the late payment went into collection, not from the last time you made a payment on the account. Challenge these with the credit reporting agency and they will change the date.
- Look for any small recent outstanding debts and call the creditor. Negotiate payment in full if you can in exchange for them changing the credit report to paid as agreed. Get it in writing first. If you can’t pay them the full amount, negotiate a settlement for what you can afford. Insist that the credit report be changed.
- If you have a credit card that is close to the limit, transfer some of the balance to another card to even up the available credit.
- Don’t close old paid off accounts. These can actually help your credit score.
- Write letters to collection accounts asking that they prove that the accounts are yours. If they can’t prove it, they have to remove the entry on your credit report. Give them 7 days to respond and then dispute it with the CRA again.
- Ask for judgments to be vacated. You can have judgments reversed if you weren’t properly served or notified or if the debt isn’t yours as well as countless other legal reasons. This requires that you petition the court to have it vacated but it is possible to do this yourself.
- If you have tried to dispute the account with the credit agency to no avail, the next step is to dispute the account with the collection company and creditors. Write them a letter stating that you do not believe the account is yours and asking them to provide written proof that it is. Most companies keep their records on the computer and after a few years, the written documentation is either destroyed or put into cold storage. This is similar to debt validation and if they cannot provide you with proof, they must remove the item from your credit report.
- If the creditor does not remove the item from your report, you have two options.
- Contact the attorney generals office in the city of the creditor. Tell them that there is a creditor that is damaging your credit by reporting a debt that is not yours. Let them know that you have requested proof and they could not provide it. This is free and the AG will contact the creditor and have the item removed.
- If you want to get nasty about it file a suit in small claims court. All localities are a bit different so call your clerks office and ask how to go about it. You can sue for the damage to your credit report, expenses involved in getting it removed and emotional stress. Remember, they are in violation of the law. In most cases, the creditor or collection agency will not show up and you will win by default.
- Pay your Bills on Time – I hate to include this one as it seems like a no brainer but no list on increasing your credit score would be complete without it.
- Pay down your credit cards. Your credit score is partially based on the availability of credit. If you are running balances on your credit cards near the limit then you need to make an effort to pay them down to around 50%.
Avoid Credit Repair Scams
- If you are considering a credit repair or debt counseling company read this story from a debt settlement company worker before you call or contact anyone.
- If you choose to pay someone else to repair your credit, they have to give you an explanation of your legal rights, a detailed written contract and three days to cancel.
- Avoid Emailed Credit Repair Offers – these are often fraudulent and you will be giving them way too much personal information such as SSNs, addresses, phone numbers, etc.
- It is illegal to create a second credit file. This involves creating a new identity. Don’t do it. Some credit repair companies will offer to do this. Again, it’s illegal.
- If you are going to use a credit repair company, check them out thoroughly before signing or paying anything. Is it guaranteed? References? Better Business Bureau complaints?
- Be VERY CAUTIOUS about giving any information out over the internet. Remember that in order to even pull your credit report, the company will need your personal information. I can’t stress this enough.
- For debt & credit counseling, call CCCS. They are non profit and charge a very small fee for their services. They have tons of good information on their website.
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