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Want To Fix Your Credit Score?

Jan 22, 2008
Individuals can contest their credit report if it has errors. The laws provide for this. If you have evidence that your credit report has inaccuracies, there should be no problem fixing your credit score.

Having a good credit record is of paramount importance. This is the reason you must make the effort to have wrong information on your credit report corrected. If you provide proof that the mistake is not yours, you can fix your credit report and hence your credit status. Here are the steps to follow.

1. The Fair Credit Reporting Act (FCRA) gives you the right to contest any mistakes in your credit report. Some of these mistakes are caused by a simple case of wrong identity. This happens frequently with individuals who have common names like Tom Jones where there are hundreds of Tom Jones in the same state and across the nation. If one Tom Jones defaults on a mortgage payment, that could be registered in your credit report even if you've never missed a mortgage payment. These clerical errors are frequently committed.

How? Write them. Attach a supporting receipt from your bank showing that you made that mortgage payment. Follow up if you don't receive a reply. Don't assume that the mistake will be corrected once you send off your letter.

2. Everyone's entitled to a free credit report once a year. To obtain your credit score, however, you need to visit the web site of FICO. There are 3 digits in your credit score. If you obtain a number that is higher than 720, this is a good score. Below that score, you need to do some credit repair. But don't let this low score discourage you. Remember that numerous people are in the same boat and are trying to fix their credit standing - just like you!

Take a look around at the FICO web site. There's a section where interest rates are provided based on your credit score. So if you wish to apply for a loan, look at your credit score. If it's above 720, there's a chance the interest rate you have to pay on a home equity loan for example won't be as high as the person with a score below 720. Want to know what the difference is? If your FICO score is good (720 and higher), you will only be charged 5.799% interest on a 15-year home equity loan. This rate was as of December 1, 2007 so you need to get an updated rate. Now, if your credit score was between 500-579, you would have to pay 10.44% interest. That's a huge difference!

3. Time, patience and discipline can you get you back on track when it comes to your credit score. If you blame yourself for your low credit score, stop it. Everyone makes mistakes. Instead of agonising over your score, take steps to fix it. While you're fixing it, make some effort not to touch your credit - if you have an emergency, then use it. Second, if you do use your credit, make sure you do so with lots of restraint. You also need to do these to get your credit score back in good standing.

avoid applying for loans or lines of credit you don't need while you're mending your credit score. Every time you apply for a new loan, the information is put on your credit record;

prompt payment of your bills is strong encouraged. We get into a cash crunch at some periods of our life leading us to skip a payment or two. While it's not a criminal act, habitually missing payments will give you that "trapped" feeling - perhaps a worse feeling than actually being behind bars;

like everyone else, you have a limit of how much you can use from a revolving line of credit. If your bank offers you say, overdraft protection of up to $1,000, stay within that limit;

if your financial adviser recommends that you consolidate all your debts - go for it. It's difficult to keep track of all your loans with different institutions. You also pay several kinds of interest rates. If you choose debt consolidation, you'd have one interest rate to monitor, and streamlining all your loans into one loan makes life and accounting a lot easier;

why not pay cash for everything you buy from now on? Keep that credit card at home so you're not tempted to reach out for it;

communicate often with your bank officer or loan officer. Time to turn on the public relations person in you. Let them know about your financial plans, show them you care about your credit standing. Maintain regular contact - who knows, your banker may just increase your line of credit even if your credit report is not so outstanding.

Credit is sacred. If you have a bad credit score, don't wait to get it repaired. Keep your receipts and send copies off to your credit bureau, if you need to submit proof.

Insist on a correction. You owe that much to yourself!
About the Author
Steven J. Talrechi has studied credit reports and credit report trends for the last decade. He is keen in assisting people obtain a 2nd chance checking account and 2nd chance bank account when banks turn them down.
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