How to Keep Your Credit Score 700 & Above

The Fair Isaac Corporation devised a rating system that most lenders use to determine your credit worthiness. Your FICO score, as the rating is known, ranges from 300 to 850 points. The higher your points, the more willing institutions are to extend you a credit line. Besides, when your credit score is above 700, you receive lower interest rates on loans, pay lower utility deposits and are more likely to get approved for apartment rentals, for example. Your financial records---balances owed, payment promptness, length of credit history---determine your score.

Instructions

1

Use a credit card, but keep the balance well below the credit line and pay at least the minimum by the due date. You raise your credit scores by showing you can use and pay a credit card. A major card---MasterCard, Visa, American Express and Discover---has more weight on your credit score than a retail card accepted only at one store chain.

2

Pay the credit card balance in full every month. In addition to raising your credit score, you will save on interest charges. If you can't pay your balance in full, pay the maximum you can afford. Within one month of making a large payment on a credit card, you will see points added to your credit score.

3

Contact credit bureaus to correct errors in your credit reports. Order the free annual copy you are entitled to from the link listed in Resources. Read the information, looking for discrepancies concerning late payments, bankruptcies, account numbers and names. Verify that information older than seven years about delinquent accounts and older than 10 years on bankruptcies is no longer listed on the reports.

4

Pay the bill even if you disagree with it to keep it from going to collections. File a complaint with consumer resources such as the Better Business Bureau or a suit in small claims court to have the bill charge dropped and a refund issued.

5

Keep a credit card account open while you are still paying off debt, even if the balance you owe is on another card. Closing the account reduces your total credit line, which brings your amount of debt closer to the credit limit you have available. The closer you are to that limit, the lower your score.

6

Search for a lender that is a customer of a rapid rescoring service. In general, it takes credit bureaus at least 30 days to update your credit report information. A rapid rescoring service adds points, if they are legitimate, to your credit history within 72 hours. The company charges you a fee for every account in your credit report that it has to update quickly. The service processes your requests based on information you prove to be incorrect in the current credit report. It also gives you new points shortly after you make payments.

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Will a Settlement With a Credit Card Company Show on My Credit Report?

Settling with a credit card company can shave 60 percent or more off of your original balance, but this might end up costing you much more in the long run, because it can wreck your credit score. Most creditors consider this a serious offense, and credit scoring models tend punish borrowers who do not repay a debt in full.

Identification

Assuming your creditor reports to the credit reporting agencies, settling an account will show up on your report as "settled in full." Lenders usually report this not as a way to punish the borrower, but because it is standard practice to report the status of an account as accurately as possible.

Effect on Credit

A debt settlement does not automatically ruin your credit. Bad items like a debt settlement have a much larger impact on borrowers without other negatives in their credit history. A borrower with a score of 780 who settles an account, for instance, can expect to lose up to 125 points, according to Bankrate. A score of 680 loses 45 to 65 points.

Time Frame

Settled accounts show up on your credit report for seven years. Over time, settling an account may end up helping your score by getting you out of debt. A debt settlement has the biggest impact during the first two years after the incident and the damage might be less than constantly missing payments. Also, eliminating debt boosts your overall creditworthiness with lenders.

Tip

If you want to boost your credit score, try credit counseling in lieu of a debt settlement plan. A counselor might help you work out a budget to meet your credit card payments and/or work with creditors to lower your monthly bill. When counseling cannot help, consider bankruptcy before jumping into a debt settlement plan, suggests Don Taylor of Bankrate. Bankruptcy, while worse than a debt settlement plan, may boost your score because you can wipe out unsecured debt and eliminate bad history on those accounts. The credit bureaus will report discharged accounts as "included in bankruptcy."

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How to Get a Lower Interest Rate With a Great Credit Rating

A good credit rating is not always easy to maintain, but working to maintain and improve your credit score has its perks. A person with a good credit score--from 780 to 850, the highest ranking on the FICO scale--often pays lower deposits for apartments and utilities, and gets better deals on car loans or mortgage loans. Good credit can also help raise the limit and lower the interest rates on your existing credit cards. If you have a great credit score and want to lower your interest rate, all you need to do is ask for it and be willing to switch companies if yours won't work with you.

Instructions

1

Research credit cards to find those with lower rates of interest than you currently pay. Get quotes from your bank's competition in person, online or over the phone.

2

Call your bank or credit-card company, and explain that you would like to have your interest rate lowered. Have your research on standby if the bank representative needs convincing, and tell him you'll happily switch to a bank with a lower rate if they do not work with you.

3

Ask to speak to a supervisor if the bank representative is unwilling to offer you a lower interest rate. Explain the situation to the supervisor and ask for the lower rate.

4

Sign up for a new, lower-rate card to replace your old high-interest one if your bank will not work with you. Chances are this will be unnecessary because of your great credit rating.

5

Work with mortgage lenders if you are in the market for a house--and second-mortgage or home-equity loan representatives if you already own one--to make sure you get the lowest rate possible as a consumer with excellent credit.

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How to Report a Vendor's Late Payments to the Credit Bureau

Businesses of all sizes are sometimes confronted with vendors who are unable or unwilling to pay bills. Suppliers who are late with payments can be reported to credit bureaus through a number of different methods. Deciding whether to report these late payments is up to the individual business, but the various methods of reporting give a business several options. Knowing which option is open to you and choosing the right one for your needs is important.

Instructions

1

Join the consumer credit reporting bureaus as a member. There are three consumer credit reporting agencies; Equifax, TransUnion and Experian. These companies maintain separate credit reports on consumers and businesses. Each of these credit reporting agencies (often referred to as CRAs) has different requirements for who can become a member and report credit items. Becoming a member of one, or all three, of these companies might be worth it if you have numerous items to report, but it might not be if you are reporting a single vendor late payment.

2

Report to Dunn and Bradstreet. While the three CRAs maintain credit reports on consumers and businesses, Dunn and Bradstreet (D&B) maintains them solely on businesses. D&B specializes in providing detailed information about businesses, and its reports often are used by creditors evaluating a business for its creditworthiness. Businesses can sign up with D&B and provide reports on their vendors' and suppliers' payment habits.

3

Begin a collections action through an agent. Businesses also can report to any of the credit bureaus by hiring a collection agency to initiate a collections action. Collections agencies are often members with the CRAs and or D&B, and can report to them on behalf of their clients. Having a collections agency pursue a vendor will negatively affect the vendor's credit because these agencies usually automatically report to the credit reporting bureaus.

4

File a report through a credit reporting service. Some businesses might be able to file a credit report item against a vendor by using a credit reporting company. These companies are similar to collection agencies in that they both report to the credit reporting agencies. Where they differ is that these companies do not seek to collect the debt. They make the report on the delinquent payment, but do not further damage the supplier's credit history by reporting a collections action.

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The Effects of Late Mortgage Payments on Credit Scores

Credit reports definitely do reflect all late payments, including mortgage payments, and these late payments do reduce your credit score. Exactly how much each late payment deducts from your credit score is calculated by complex formulas determined by each credit reporting bureau, but the number is largely based on your current credit score and how late the payment is.

30 Days Late

Back in late 2009, FICO released some specific information about how specific events impact credit scores. For a person with a credit score of 780, a 30 day late mortgage payment would result in a 85 to 110 point reduction in their credit score, but for a person with a 680 score, a 30 day late payment would result in a 60 to 80 point reduction.

MoreThan 30 Days Late

The exact amount a 60 or 90 day late payment reduces your credit score versus the reductions caused by a 30 day late payment is not known, but it is known that the more delinquent you get on your payments, the lower your credit score. Some sources report that at least one credit bureau is calling loans greater than 90 days late in "default," which can stay on your credit record for up to seven years. Most mortgage contracts specify that default occurs and foreclosure can begin when payment is either more than 90 or more than 120 days late.

Credit Payment History Is 35 Percent of Credit History

Keep in mind that your credit payment history generally only counts for about 35 percent of your credit score, so while late payments can significantly damage your credit score, a couple of late payments are not going to "ruin" your credit score. Many other factors, like amount owed, length of credit history, and types of credit used, are all part of your total credit score.

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What is a Tier 1 Credit Score?

A credit score is a rating from 300 to 850 that is assigned to those who use credit. Lenders use the scores to determine whether to give loans, the interest rates on credit cards and loans and for other financial purposes. A Tier 1 credit score is considered to be between 760 and 850.

Background

There are three major credit bureaus, as of 2009, that keep track of every American's credit rating: Equifax, Experian and Trans Union. These institutions compile data based on bank records, tax information, bankruptcy filings, law suits and other relevant financial information to determine a person's credit score.

Function

Most creditors and lenders use the FICO score that utilizes reports from the big three bureaus to determine credit scores. The higher the score, the easier it is to secure loans, get credit and buy a house or a car. The average score is about 725, while a score below 660 is regarded as more risky.

Factors

The major categories that are used to determine a credit rating are payment history, amounts owed, credit utilization, length of credit history, new credit and types of credit used.

Considerations

In a 2004 study conducted by the United States Public Interest Research Groups, or PIRG, one in four credit reports contain errors that could make it difficult for a consumer to buy a house, secure a loan or rent an apartment.

Advice

Experts recommend checking your credit score at all three credit bureaus once a year and at least six months before buying a house or making a major purchase. This way, you can remedy any errors in your report that might affect a purchase.

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Roles of a Credit Bureau

A credit bureau is a credit reporting agency, charged with collecting and reporting credit data. In the United States, there are three credit bureaus--Equifax, Experian and TransUnion. These agencies have a variety of roles, all centering on the monitoring of credit.

Credit Scores

One of the primary roles of a credit bureau is to issue credit scores for individuals. There are two credit score types: custom and generic scores. Where generic scores are used by a variety of businesses and lenders, custom scores are customized to a specific business's needs. Prior to the development of credit scores, a lender had to review an applicant's lending history to decide whether or not to issue her credit. This process, according to Experian, was both time consuming and subject to human error. Today, credit bureaus issue credit scores that allow lenders, and other businesses, to make more objective decisions with a quantifiable number that can be compared against other scores.

Lending History Central Repository

Related to the issuance of credit scores, another role of credit bureaus is to act as a lending history repository. Prior to credit bureaus, an individual's lending history was kept only by each individual lender. If an organization wanted to inquire about an individual's lending past, it would have to inquire with each and every past account. Of course, if an individual was not upfront about his credit past, lenders may not have known know about accounts that weren't paid as agreed upon. Today, organizations report their account information to the credit bureaus, and when organizations seek information, they receive all reported information, not just information the applicant provided.

Identity Theft and Fraud Prevention

Because of the centralized nature of credit information within the credit bureaus, another role of credit bureaus is the prevention of identity theft and fraud. Consumers now have access to all of the information reported on credit accounts that are open, just as potential lenders do. This allows them to monitor their personal credit activity and rectify fraud, identity theft and mistakes. Prior to credit bureaus, individuals often didn't learn about identity theft and fraud until the negative ramifications, such as late payment notices, began to show up.

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How to Remove a Credit Freeze While in Collections

Many states require that credit bureaus allow consumers to "freeze" their credit. This action stops anyone (including yourself) from accessing your credit. Even if you're dealing with collection issues, you can still place and remove credit freezes on your credit file, according to the Federal Trade Commission. However, before removing a credit freeze on your account, you'll need to have your PIN handy (given at the time of the credit freeze).

Instructions

1

Contact the bureaus to temporarily remove a credit freeze. When freezing your credit, each credit bureau (Experian, TransUnion and Equifax) will provide a PIN number. Call each credit bureau and provide your special PIN number. During this call, you must provide a date range for your credit report. For example, you might decide to remove it for a day while making a large purchase.

2

Remove a credit freeze permanently. To unfreeze credit permanently, you'll need to specify a permanent "unfreeze" when calling to lift the credit freeze. You'll still need the special PIN number to accomplish this. Some companies, such as TransUnion, allow consumers to unfreeze credit online if they purchased credit monitoring services (which costs $14.95 a month, as of 2010).

3

Ask about fees. Each state has different rules for the cost of unfreezing your credit. For victims of identify theft, some states require the credit bureaus to waive costs. Other states may allow the bureaus to charge $10 per request. For example, to remove a credit freeze with all three credit bureaus would cost $30 total ($10 each). Learn your state's restrictions by checking out the Consumers Union (see References).

4

Correct collection reporting errors. Many people freeze their credit in cases of identity theft. If you plan on unfreezing your credit, make sure to monitor your credit carefully. Most of the credit bureaus offer reporting services for less than $20 a month. You are also entitled to a free credit report from all three credit bureaus every 12 months, according to the FTC.

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How to Raise My FICO Score Fast

Lenders use a FICO score to determine credit risk. These scores range from 300 to 850. A consumer with a low FICO score (lower than 600) may have difficultly accessing affordable financing. She may even struggle securing housing or getting employment. This can make everything more expensive, from getting an auto loan to paying rent. Cleaning up credit issues and focusing on areas that have the largest impact on your FICO score will raise credit quickly.

Instructions

1

Catch up on missed payments. According to My FICO, payment history has a large affect on your FICO score. This category alone accounts for 35 percent of your score (the largest percentage for a single category). Focusing on the areas that have the greatest affect on your score will raise a FICO score faster.

2

Avoid carrying high balances on credit cards. High credit balances, especially on revolving credit, negatively affect your FICO score. This issue accounts for 30 percent of the score. Start paying down credit balances. Look for ways to find more funds. For example, trimming down transportation expenses through carpooling or taking public transpiration could free up extra cash each month to pay debt obligations.

3

Use existing credit. If your credit file is new, don't open a lot of new accounts. Instead, focus on using and paying off the credit you already have. Using your oldest accounts will have a positive impact on the FICO score. Length of credit history establishes a stronger FICO score and accounts for 15 percent of your score.

4

Use a variety of credit accounts. Credit bureaus award a higher FICO score to consumers who use both revolving credit, such as lines of credit and credit cards, and installment loans, which include auto loans or personal loans. Twenty percent of the score comes from this behavior; use both types of credit responsibly and your FICO score will benefit.

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Legality of Credit Reporting Agencies

Under the Fair Credit Reporting Act (FCRA), credit reporting agencies are legal in the United States but must follow specific laws, according to the Federal Trade Commission (FTC). Even if you did not pay a debt such as a credit card bill as promised, credit reporting agencies must follow the applicable federal codes.

Significance

Almost every type of debt, whether paid on time or placed into collections because of nonpayment, could potentially end up on your credit report, according to both the FTC and the credit reporting agency Experian.

Function

Credit reporting agencies furnish information to companies considering extending employment or credit to an applicant, according to both the FTC and Experian. You can also access your own credit information, upon identity verification, for free once a year under federal laws.

Time Frame

The FCRA governs just how long negative information can be reflected on your credit reports. Generally, unpaid debts in collections, late payments and Chapter 13 bankruptcies can only legally reflect on your credit reports for 7 years from the date of delinquency. Some types of debt issues, such as Chapter 7 bankruptcies, can stay on your report for 10 years.

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How Do Credit Reporting Agencies Make Money?

Credit reporting agencies can have a profound effect on a consumer's ability to borrow money, get insurance, or get a new job. It's well-known that agencies provide information on a person's credit history to potential lenders, employers, and insurers, but that is not the only way these companies make money. Credit reporting agencies actually have several sources of income.

Definition

Credit reporting agencies are agencies that compile consumer information. This typically includes demographics, employer information, payment history on credit cards and loans, and information on debt-related civil judgments.

Types

There are three major credit reporting agencies in the United States. These companies are Transunion, Equifax, and Experian.

Function

Credit reporting agencies compile information about consumer credit histories. The information is sold to potential creditors, landlords, insurers, and employers.

Additional Methods

Credit reporting agencies also make money by selling information to solicitors who use it to send offers to consumers. This can be stopped by visiting the official opt-out website.

Warning

Credit reporting agencies must provide consumers with a free copy of their credit report every year upon request. The agencies often try to make money by trying to convince consumers to buy other services, such as credit monitoring, when they request their free report.

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How Settling Debts Impacts a Credit Score

Collections accounts on your credit report will have a damaging affect on your credit score and will hinder your ability to obtain credit for home and car loans. Settling these accounts instead of paying off the account in full will do more to hurt than help your credit score.

What Is a Debt Settlement?

Creditors will offer a debt settlement to account holders whom they have not received payment from, or haven't received payment from in a long time. In the eyes of a creditor, it's best to receive some payment rather then no payment at all. The creditor will agree to reduce the balance of the unpaid account if the settlement balance is paid in a set time frame, usually with a promise of reporting this settlement payment to the credit bureaus.

Settling Vs. Paid-As-Agreed

Settling a collections account will not have the same affect on your credit score as paying the debt in full. When a debt is settled, the account will show up as "settled-as-agreed" on your credit report. When a past due account is fully satisfied, the account will show "paid-as-agreed." A collections account paid in full will have a more positive affect on your credit score than a debt that was settled. Regardless, having a collections account paid (or settled) is significantly better than having an unpaid collection on your credit report and will increase your credit score in time.

Impact of Debt Settlements

Always pay unpaid collections accounts in full, if possible. Settling debt can have negative affects on your credit worthiness. Future creditors that view your credit report will notice collection accounts that have been settled instead of paid in full. This may lessen your chance of obtaining new credit or loans as the creditor will view you as a risky client.

Rebuild Your Credit History

Start rebuilding your credit by paying off all unpaid collections accounts on your credit report. Make sure your current account payments are always paid on time and in full. Good payment history with current accounts will have a positive affect on your credit score and will help you rebuild your credit worthiness making it easier for you to obtain a bank loan in the future. If your credit is bad, you can help rebuild your credit by obtaining a secured credit card or secured bank loan.

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Does Paying Charge Offs Raise Your Credit Score?

When you are delinquent on a debt (typically after at least six months of non-payment), a creditor may declare your debt as a charge-off. A charge-off can significantly lower your credit score and remain on your credit report for seven years. Though a charge-off is assumed to be noncollectable, you are still expected to pay it.

Lawsuits

While paying your charge-off won't guarantee that your credit score will improve, failure to pay your charge-off could result in a lawsuit. It's always a good idea to pay off any charge-offs.

Credit Report

Paying off a charge-off will not remove it from your credit report, though it will reflect as having been paid. A paid charge-off may reflect better than an unpaid charge-off.

Removing a Charge-off

The only way to make sure that paying your charge-off will improve your credit score is by having it removed from your credit report. Before paying your charge-off, contact the creditor and request (in writing) that he remove the charge-off once it's paid. He may not agree, however it doesn't hurt to try. Keep records of your correspondence.

Misconceptions

Making payments on a charge-off won't reset the 7-year clock. The 7-year time limit is based on the original delinquency date, regardless of any future payments.

Considerations

If you have more than one charge-off, focus on the most recent charge-off first since older charge-offs will eventually fall off of your report (though you should still pay those when possible).

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Credit Line Increase & Credit Score

Just because a credit card issuer surprises you with a credit line increase to show you how much it values your patronage, it doesn't mean you should celebrate by buying a new pair of shoes. In fact, while the impact of a limit increase is good for your credit score in general, the way you treat the account will determine how your score is impacted over time.

Credit Line Increases

Credit card issuers reward good behavior like making on-time payments, keeping low balances and maintaining a long history with the company by increasing your credit line. However, this "reward" may be mostly beneficial to the credit card company if you take the limit increase as your signal to spend. Creditors like when customers carry higher balances because it means that they get to suck more money out of them each month.

Debt Utilization Ratio

When your credit line increases, it has a positive impact on your debt utilization ratio. This ratio is the amount of debt you have in relationship to the amount of credit available to you. The lower your debt utilization ratio, the wider of a gap there is between your debt and your limit, which is a good reflection on your credit. Your debt utilization ratio makes up roughly 30 percent of your credit score; therefore, a credit line increase positively influences your overall score.

Warnings

The positive impact on your credit score caused by an increased limit disappears if you increase your balance. To maintain the positive effect on your score, you need to keep your balance as low as it was when the limit was enacted. To boost your credit score even more, pay down your balance or eliminate it all together. The Better Business Bureau recommends keeping your balances to 25 percent of your credit limit or lower.

Considerations

For those who feel like they won't be able to control their spending, it may be a good idea to turn down the credit line increase. According to Bankrate writer Don Taylor, declining a credit line increase will have no negative impact on your score or your account. Spending more because you have more credit available will only damage your credit score, so by declining a limit increase you may be doing damage control for yourself.

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How Long Does a Negative Credit Score Last?

The negative items on your credit report that result in a poor credit score may have an expiration date, but the quicker you break bad credit habits, the faster your score will improve.

Identification

A poor credit score is the result of negative items on your credit report. Negative items include payments 30 days or more overdue, charge-offs, accounts reported to collection agencies, foreclosures and bankruptcies. These items can remain on your credit report for seven to 10 years.

Time Frame

When it comes to the length of your negative credit history and poor credit score, the choice is truly yours. The quicker you begin to amend the behaviors that result in a poor credit score, such as making payments late, skipping payments, and allowing accounts to go into collections or become charge-offs, the quicker your credit score will begin to rebound.

Expert Insight

Prevent any further damage to your credit report by paying down credit card debt, refraining from accumulating any new debt, not opening any new accounts and paying bills on time. MSN Money's Liz Pulliam Weston states, "The No. 1 way to raise your credit score? Pay all of your obligations on time. Your payment history constitutes 35 percent of your credit score."

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How to Get Your FICO Score Online

The Fair Isaac Corporation was founded in 1956 and the agency created a credit scoring module called the FICO Score (Fair Isaac Corporation Score). This score ranges from 300 to 850. Since the birth of the FICO score, credit providers and employers have utilized it to determine creditworthiness. A low FICO score will often result in a denial of credit. For that reason, it is wise to check your score often to ensure it is accurate. This can be done through several online resources.

Instructions

1

Visit the Experian website. Click the option to "Get Your Credit Report And Score." Complete the online order form. Enter your credit card information to receive your FICO score.

2

Visit the Equifax website. Click the "Get Your Scores And Reports Button." Complete the online order form. Enter your credit card information to get your credit score. By ordering through Equifax, you will be able to see your FICO score for all three agencies.

3

Visit the TransUnion website. Select the "Click Here" button to get your credit report. Complete the online order form. Enter your credit card details to view your FICO score. TransUnion will also allow you to see all three FICO scores.

4

Order your FICO score through a third party website, such as MyFICO and CreditScore. Depending upon the company you choose, you may get a lower price on purchasing your FICO score.

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A Credit Check by a Landlord

Credit checks are not just executed by lenders to judge your creditworthiness; landlords also run a report on potential tenants as standard practice in tenant screening. Landlords can also use a credit report to corroborate the story of a tenant, because credit files also contain demographic information. Sometimes, however, credit checks can be illegal.

Identification

Most landlords pull reports from a potential tenant via one of the major credit reporting agencies. The landlord might require a certain minimum credit score from tenants or check his debt-to-income ratio to gauge whether the applicant can reasonably afford the dwelling. The credit agencies count a request for a report from a landlord a hard inquiry, which takes up to five points off your score.

Considerations

Federal fair housing laws bars landlords from picking and choosing whom they want to screen. Thus, landlords should run credit checks on all applicants or none at all to prevent a housing discrimination lawsuit. Consumer credit reports also contain previous addresses and employers, so even if an applicant has a good credit score, the landlord might consider previous changes in address or employers a sign of a risky and unstable tenant.

Tenants

In addition to a credit check, a landlord usually purchases a tenant history report---sometimes just a tenant report---and might verify income and bank account statements. Tenant history reports contain your rental history and any previous evictions. Thus, if you have financial disasters in your recent past, you probably won't escape them.

Tip

Before you go looking for an apartment, run a credit check on yourself. You receive a free one each year from all three major bureaus. If the credit agencies list erroneous accounts on your record, dispute them. The credit bureaus have a right to list legitimate negative marks on your credit history, but you can leave a personal comment on any item. If you have medical debt in collections, for example, you might pay it off and then state that it was a sudden disaster---which might be enough to sway a landlord's decision.

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Why Do I Have Three Credit Scores?

Most people do not know what a credit score signifies, according to the Consumer Federation of America. Add into the mix three different scores from the major national bureaus and figuring out your risk calculation can be nerve-racking. However, this is normal and you have different scores from the three credit bureaus due to variance in their databases.

Identification

The major credit bureaus -- Experian, Equifax and TransUnion -- control almost all of the consumer credit reporting industry in the U.S., but they are three separate companies, so they do not trade information amongst themselves. The bureaus use slightly different scoring formulas, but they are all based on the FICO formula from the Fair Isaac Corporation. The lack of some data, such as a collection account or trade line, can lead to a 50 point or maybe more difference in scores.

Considerations

Lenders probably pull credit reports from all three agencies on a customer, so they are well aware of variations in scores. How lenders handle this is up to them. Some creditors may take the highest score, the lowest score, an average of the scores or disregard your scores all together and use a completely different formula, according to Experian.

Different Names

Only the Fair Isaac Corporation can sell a FICO score, because it owns the trademark to the name. The major bureaus have no relation to FICO, but they frequently do business with each other. Thus, Equifax calls its FICO-based score a BEACON calculation, Experian has the Experian score and TransUnion has the EMPIRICA.

Effect

You can have an OK score with one bureau and an excellent credit score with another. Most lenders require a FICO of 760 or better to get the best rates. If one of the bureaus misses a few good payments, you score could drop below 760 with that bureau and raise the rate on your loan.

Tip

Initiate a dispute with the credit bureaus if they list anything in error on your report, such as a charge-off that does not belong to you or a missed payment, but also accounts in good standing not there. You can try to get the bureaus to add an account to your file if you have ample evidence, such as statements and canceled checks, but they are free to ignore your request.

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How to Raise Your Credit Score Without Credit Repair

Your credit score is very important for the terms of any credit you receive, such as the interest rates, the amount of credit, and the length of time you have to pay it back. It can affect your credit cards or loans, your insurance premiums, and even whether or not you get a job. The good news is that you can take steps to improve your credit score on your own, and it is not necessary to have to go to a credit repair agency to do so.

Instructions

1

Correct errors on your credit report. You can get one free copy of your credit report each year from each of the three big credit reporting agencies--Equifax, Experian, and TransUnion. This will let you see if there are any mistakes or errors that need to be corrected.

Correcting errors is necessary because if you have had any identity theft problems, they would show up here. It is also possible that wrong information was put on your report. This is not at all unusual.

2

Pay your bills when they are due. According to Experian, this is the single most important thing you can do to raise your credit score. It takes time, however, for this to affect your credit score, but it is certainly the best tool you have and it will pay off in the long run.

3

Reduce your credit card debt. Having too high of a debt-to-credit ratio is a warning to potential lenders. It is recommended that you limit your debt to about 20 percent of your income. They like to see that you have some credit, but continue to keep your debt under control and not regularly try to max your credit cards out.

This ratio is important, but you should not close out credit cards just to correct it. This will be recorded on your credit report, and it will reduce the number of open revolving accounts, which will lower your credit score. Closing cards will also reduce the amount of credit you have available, which may also lower your credit score.

4

Avoid moving balances around. When balances are moved, it can be seen on a credit report. This makes it look like you could be having trouble paying your debts, or you continually like to get new credit cards--both of which spell potential trouble to lenders. MyFICO suggests that paying down your debt is better than moving it around.

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How to Clear Old Items Off a Credit Report

To clear old items off a credit report, you have to file a dispute with the credit bureau reporting the account. Account information can vary between Equifax, TransUnion and Experian, the three major credit reporting agencies. When requesting the removal of old accounts, order a copy of your credit report from all three agencies. This ensures all your credit reports are reflecting accurate and up-to-date information.

Instructions

1

Order a copy of your credit report from all three bureaus. You can do this by contacting the credit reporting agencies separately or by visiting Annual Credit Report.

2

Look at all account dates. The statute of limitations for account reporting is seven years. You can legally clear any accounts older than that off your credit report.

3

Contact all three credit bureaus to file a dispute for the outdated items. An account still showing up on your credit report after seven years is an error, which is why you have to file a dispute to clear off old items. You can file a dispute online, by phone or mail with Equifax and TransUnion. Experian requires you to file a dispute online.

4

Contact the credit bureaus 30 to 45 days after the date they receive your dispute. The 30- to 45-day time frame is what credit reporting agencies give creditors to verify the account in question and respond to your dispute. If the creditor finds the account is outdated, the creditor will submit this information to the credit bureaus to remove the account from your credit report.

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How to Re-Establish Credit After Bankruptcy

Reestablishing credit after bankruptcy is the key to repairing your damaged credit history. You can anticipate a drop in your FICO score after a proceeding. But low credit scores aren't permanent fixtures on your credit report. There are many ways to raise a low score and prove that you're capable of managing your money and debt after a bankruptcy. Although bankruptcies stay on your report for 10 years, a better credit score will prompt a lender to look past your mistakes and focus on your new credit score.

Instructions

1

Use a secured credit card to help your FICO score after a bankruptcy. Banks provide secured credit cards to people with a low credit score and no credit history. Submit an application and pay the required security deposit to begin re-establishing your credit.

2

Open an additional account to manage multiple debts. Acquiring one credit card may not be enough to quickly rebuild your credit. Visit your favorite department or retail store to see if you can get a high-rate charge account to help your credit rating.

3

Reaffirm your auto loan or apply for a new or used car loan. Having an auto loan on your report and paying this loan on time after your bankruptcy can help you acquire a better rating after filing. Talk to your lawyer about reaffirming your auto loan, wherein you're allowed to keep your car and continue making payments. If not, check into subprime auto loans.

4

Rebuild your credit with timely payments. Sign up for automated payments to guarantee that your creditors receive payments by the due date.

5

Manage your debt responsibly. Continuously carrying a balance on your credit cards can trigger debt problems. Keep your debts low by paying off new charges within a month.

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Debt to Credit Ratio Score

The debt to credit ratio score is a very important calculation for many reasons, including an indication of an individual's financial health. The score, which is used by financial institutions to determine whether or not to grant a loan, and if so, the terms including interest, can be expressed in a range from zero percent to 100 percent.

Debt

Credit card statement outlines debt.

Debt is the total amount of money owed, which for debt to credit ratio scores, is the amount owed on all credit cards. The debt goes up each month based upon spending and interest, and goes down based upon payments. In order to reduce debt the payment each month must exceed the total of the new charges plus interest.

Credit

Credit available is the sum of all credit card limits.

Credit is the total amount that a credit card company will allow to be charged to an account. On a credit card statement it is listed as the credit limit. This amount can be changed by the credit card company. According to CNN Money, an individual can also ask for a raise in the credit limit, with the company making the final decision based upon the history of the customer.

Ratio

This is not a good ratio.

Ratio is the relationship between debt and credit, that is, if debt on credit cards is equal to the credit limit then the ratio would be 100 percent. That would obviously not be a good ratio to have or to maintain. CNNMoney states that the ratio should be under 30 percent.

Score

It is important to know your debt to credit ratio score.

The debt to credit ratio score is calculated as the percentage of debt to credit limit, or the ratio, so the score and ratio are the same. According to Clever Credit Repair, any score over 50 percent is bad, with a score from 30 to 35 percent being ideal from the perspective of potential lenders.

Warning

A zero percent debt to credit ratio score may not always be desirable.

While a 0 percent debt to credit ratio score would appear to be optimal, Clever Credit Repair indicates that such a score may not be best if the desire is to borrow money. Lenders like to see a history of borrowing and then paying back the debt, so an individual who always pays their credit card balance in full each month, while being a very responsible person, may not have the highest credit score. A person who maintains small balances and makes timely payments may be rated higher.

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Which Is Worse on Your Credit: Bankruptcy or Foreclosure?

When you are having money problems, options like foreclosure or bankruptcy start to become realities. While no one wants to go through either one, sometimes you have to choose one over the other. If you are looking at the decision from a credit standpoint, bankruptcy will do more harm almost immediately.

Function

Foreclosure is a process that a mortgage lender goes through in order to repay an outstanding mortgage debt. If you owe money to a mortgage lender and you do not make your payments, the lender will foreclose on the property and sell it in order to get their money. Bankruptcy is a process that you can go through that will eliminate your debts or help reorganize them into a repayment plan. With bankruptcy, you may be able to keep your house and get rid of other debts.

Credit Impact

Both of these processes can significantly harm your credit score. When it comes to going through foreclosure, this action could lower your credit score by as much as 160 points. When dealing with a bankruptcy, you could lower your score by as many as 240 points.

Time Frame

The credit impact will not only be immediate for both options, it can also linger for many years. In fact, with a foreclosure, it will stay on your credit report for seven years. When you file for bankruptcy, this will remain on your credit report for 10 years or more. Any lender can pull up your credit report and look in the judgments section to see either one. While your credit score could improve sooner, both of these will still be visible for a long time.

Benefits

The benefit of either of these processes is that you can get a fresh start. In the case of foreclosure, you will have to leave your house, but you can rid yourself of your largest monthly payment. In the case of bankruptcy, you can eliminate all of the debt that you have with the possible exceptions of student loans, child support, alimony and taxes. This can be a huge relief for those who are in trouble financially.

Alternatives

When you get in financial trouble, foreclosure and bankruptcy are not your only options. If you are behind on your mortgage payment, you could qualify for a loan modification or a short sale. You might even use a deed in lieu of foreclosure in which you simply give the deed to the property back to the lender without going through foreclosure. In the case of bankruptcy, you could try a debt settlement in which you pay your creditors less than you owe to settle your accounts. There are many credit counseling companies that could help you explore your alternatives other than filing bankruptcy.

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Privacy Guard Credit Reporting

Identity theft is becoming more common. Once a thief gets personal information such as your Social Security number, credit card numbers and bank account information, he can quickly drain your accounts and open new ones using your identity. Even if you are able to recover some of the losses, it can take a lot of time and effort to undo the damage to your credit report. Because of this, services such as PrivacyGuard are becoming more common to prevent identity theft.

Definition

PrivacyGuard is a credit monitoring service that helps protect subscribers against identity theft. Users pay a monthly fee, and PrivacyGuard continually monitors their credit reports and provides a credit score, composite report and other helpful information. This monitoring is designed to quickly detect signs of fraud so it can be stopped before significant damage is done to your finances and credit score.

Features

In addition to credit report monitoring, PrivacyGuard provides other services. Members can get Social Security benefit estimates and their Medical Information Bureau file. It offers various loan calculators and information on disputing incorrect credit bureau items. A PrivacyGuard membership also includes identity theft insurance to help recoup the costs associated with identity theft and special support services to make the recovery process easier.

Scope

PrivacyGuard monitors your credit report at all three of the major credit bureaus (Equifax, Transunion and Experian). Items can different between each bureau, so a composite report lets you catch suspicious items that may only be appearing on one report.

Cost

PrivacyGuard offers a trial offer of one dollar for a 30-day subscription. Consumers who sign up for this trial must provide payment information. If they do not cancel the service after 30 days, their PrivacyGuard subscription will continue and the credit card they signed up with will be billed for the monthly $16.99 fee. They can cancel the subscription at any time to stop further charges.

Alternatives

There are several free or lower-cost alternatives to PrivacyGuard. Each major credit bureau is required to provide a free copy of your credit report annual upon your request. You can use these copies to monitor them yourself. If you have reason to believe that you are a fraud victim, you can get a free copy at any time. You can also choose to freeze your credit for a cost ranging from free to $10, depending on your state of residence. This prevents any new accounts from being opened without a password or PIN.

Warning

If you sign up for the PrivacyGuard trial and decide that you don't want to keep it but forget to cancel, you will continue to be charged for the service. The deduction will only stop when you finally do your cancellation.

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Income Information on a Credit Report

A person who makes the minimum wage can be a far better risk than a millionaire, because repaying debt has little to do with what you earn. This does not mean the national credit bureaus do not know your income or that your income cannot affect your credit. Even if you never reveal a salary to your lenders, the bureaus are exceptional at guessing it.

Identification

Lenders report anything you put on an application to the credit bureaus, even your salary. However, the credit bureaus do not list this on your report, because verifying total income for the millions of consumers with credit profiles would be an administrative nightmare. You could, for example, have several sources of income, such as dividends and side income like selling items on eBay, that come with little documentation.

Effect on Score

Salary affected credit scores during the early years of the FICO model in the late 1980s, according to MintLife. However, the credit bureaus dropped this because of difficulty in obtaining accurate salary information because most salaries were reported by consumers. Also, salaries have only a slight correlation to a willingness to repay a debt and are more important for determining an ability to pay. A FICO score calculates a person's diligence in paying back a creditor, not whether he can afford a loan.

Considerations

Lenders can predict a person's income based on information from his credit report. The credit bureaus have done this for years with 75 to 85 percent accuracy, according to Wallet Pop. Most lenders do not practice this, but the CARD Act allows creditors to predict income, and some lenders have no choice but to use a statistical model. Retailers, for example, will do this for instant credit approval rather than require W-2's or hard proof of income at the checkout line.

Warning

On any application, you must state your income as accurately as possible or it could be construed as fraud. Also, lenders may use their own credit scoring systems that include salary into a risk calculation. Thus, getting a raise or a higher salary before shopping for a loan can help your credit-worthiness.

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How to Order a Credit Report From 3 Places

No matter what you've heard on credit report jingles and seen on commercials, there is only one place to get a completely free credit report. By law, at your request, the three credit reporting agencies, Equifax, Experian and Transunion, have to provide you with one free credit report every 12 months.

Credit Report

About Credit Reports

A credit report is a collection of your credit history.Each credit agency collects information about your credit history and it is outlined chronologically. The Fair Credit Reporting Act guarantees consumers a free copy of their credit report from each of the three credit reporting agencies. According to The Fair trade Commission (FTC,) AnnualCreditReport.com is the only centralized service for consumers to request free credit reports every 12 months. It is a quick and relatively simply process to obtained a free credit report from all three agencies at once.

How to get your Free Credit Report

Annualcredtreport.com was created by the three nationwide consumer credit reporting agencies; Equifax, Experian and TransUnion. You may request your free report in one of three ways:

Online: www.AnnualCreditReport.com and follow the steps there

Phone: 1-877-322-8228

Mail: Print and complete the Annual Credit Report Request form and mail it to :

Annual Credit Report Request Service,

P.O. Box 105281,

Atlanta, GA 30348-5281

Get the Right Credit Score

Federal law mandates credit bureaus give you a free credit report annually, at your request. The score is not included. As of 2010, cost for a credit report that includes a score can vary from $5 to $15. There are several types of scores available and creditors are free to use any score available to assess your credit worthiness.

FICO is the most widely used score and it ranges from 300 to 850. Your FICO score can vary across credit bureaus based on the number of credit bureaus to whom your creditors report.

While the FICO Score is the most widely used, other scores such as VantageScore, Equifax Score Power, Experian PLUS, and TransUnion TransRisk Credit are sometimes sold to consumers. If you want your FICO score or any other score, ask for it by name. If you have been denied credit, asked the creditor for the credit rating agency used and the score on which your credit worthiness is based.

Number of Free Credit Checks

Number of Free Credit Checks

If you haven't looked at your report in a while, obtaining all three at once will provide the most accurate picture of your credit situation. However, if you have been monitoring for a while, try staggering your requests, thereby ensuring you can look at one of your credit reports every four months.

Fix Errors on Your Credit Report

Fix Errors on Your Credit Report

Review your credit report thoroughly. If you come across inaccurate information on your credit report, write a dispute letter to the credit agency. Include copies of all documentation that proves that there is an error. By law, the agency has to respond within 30 days. Your credit report and your credit score can cost you money or save you money. It is your responsibility to monitor changes and ensure accuracy.

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How to Restore Positive Information to Credit Bureau File

Positive information on your credit file helps you get mortgages, auto loans and credit cards. Consumers who hit a rough patch, due to layoffs or a drop in income, will find it hard to keep up with payments to creditors. Bad credit isn't permanent and you can restore positive information to your personal credit file.

Instructions

1

View a copy of your credit report yearly. Go to AnnualCreditReport.com and order a free credit report once a year. Checking your report is key to detecting mistakes early.

2

Approach creditors and have them remove misinformation. Creditors can send wrong information about you to the bureaus. Dispute errors such as unfamiliar accounts and request immediate removal to help restore your positive rating.

3

Face collection accounts and old debt. Schedule installment payments with old creditors to pay off delinquencies and collection accounts. Negotiate a debt settlement in exchange for the creditor removing the negative remark from your credit file.

4

Remove a high credit card balance. Pay off or pay down your credit card balances. Creditors will update your account balance once you're reduced the debt and low debts help improve your credit rating. Keep balances below 30 percent of the credit limit.

5

Add months of positive payments. Creditors report late or missed payments to the bureaus and these entries lower your rating. Start paying bills on time. Creditors will report the account as paid or current, and this positive information helps your credit rating.

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How Long Do You Need an Active Credit Line to Achieve a Valid Credit Score?

Nearly every American adult has a credit score, but few know what it is or why it is so important. Lenders use credit scores to evaluate how likely you are to repay any money they lend you. Scores are computed using factors from your credit history, such as how good you are at making payments, the amounts you borrow, how long you've had credit, how much new credit you have taken on and which types of credit you have used.

Why It's Important

A low credit score can prevent you from receiving the lowest interest rates, which means you'll pay more money on interest over the course of repaying your loan. Scores range from 350 to 800, but the gap between a "risky" 620 and an "excellent" 750+ is a mere 130 points. In addition, your score may vary between the major credit reporting agencies because each agency only uses the information they have in computing the score.

What's Important

According to FICO, the length of your credit history accounts for only 15 percent of your total credit score. The quality of your payment habits and the amount of credit you carry are much more important, together comprising 75 percent of your score. Six months should be viewed as the minimum amount of time required to establish a credit score, if for no other reason than sometimes it takes that long for your information to reach the reporting agencies.

Tips for Establishing Good Credit

If you cannot qualify for a credit card, apply for store credit or take out an installment loan. Never max out your credit limit. Good scores are bestowed on those who use just 30 percent of their available credit. Don't open several new accounts all at once, and don't apply to tons of lenders at the same time. Of course, the most important action you can take in establishing a high credit score is to always pay your bills on time. Be proactive; educate yourself about how credit works and how it affects you (see Resources).

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How Much Does a Car Foreclosure Hurt a Credit Score?

When you obtain a car loan to buy a car, your lender typically requires that you give it a security interest in the car that allows the lender to take the car back if you don't pay the loan on time. This failure to pay back the loan will negatively effect your credit score regardless of how good a credit history you had before it happened.

Repossessions

A car foreclosure, usually called a car repossession, occurs when a car buyer uses a car loan to buy the automobile and later fails to repay the lender in accordance with the terms of the loan. When this happens, the creditor reports the failure to pay to the credit reporting agency that creates the consumer's credit report, and this negative report is reflected in the consumer's credit score.

Credit Score

How much a repossession affects your credit score depends on the company that created the score as well as on other factors, such as your current score and your other credit-related activity. Though exact numbers are difficult to pinpoint, Yahoo Finance reports that a home foreclosure lowers your score by 85 to 160 points. A single late payment, on the other hand, lowers your score from 60 to 110 points. A car repossession likely falls somewhere between these two examples.

Collections

When a lender repossesses your car, this typically comes after numerous other negative factors have already impacted your score, such as numerous late payments or a referral to a collections agency. For example, if you fail to pay back your car loan for 30 days, that single late payment will lower your score. Once the lender repossesses your car or refers the account to a collections agency, that will add another negative item to your report that will negatively impact your credit score.

Impact

When your credit score falls because of a car repossession, you will have a more difficult time obtaining a new loan. Individual lenders have different interpretations of what qualifies as a good or bad score. Credit scores range from 300 to 850, and, in general, a person with a score of 720 or higher is considered a safe borrower, according to the Federal Citizen Information Center, while anyone with a score of 600 or below is considered "sub-prime," meaning he is a risky borrower. A car foreclosure is likely to lower your score below 720, and maybe below 600.

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Why Don't All Three Credit Bureaus Agree?

Each of the three credit bureaus, Experian, Equifax and TransUnion maintain a credit file on you that lists your debts and payment history. It is possible, however, for each credit bureau to assign you a different credit score.

Facts

All three credit bureaus use the same formula to calculate your consumer credit score. If the information contained in each credit report differs, however, you will be assigned a different score by each bureau.

Features

The data contained within each of your credit reports are provided by your creditors. Not all creditors will report your debts to all three credit bureaus. This accounts for any discrepancy in your credit scores that you may notice.

Significance

Lenders are aware of the fact that your credit score may vary depending on which credit report they pull. Because of this, lenders will sometimes pull all three of your credit reports to review.

Time Frame

Each account within your credit history can only appear within your report for a limited amount of time. Even if the account was originally reported to each credit bureau on a different date, all three are legally required by the Fair Credit Reporting Act to remove the information at the same time.

Considerations

Disputing an inaccurate entry with one credit bureau and having it removed does not guarantee that the other bureaus will also remove the item. Unless you report an incident of identity theft to the credit bureaus, they will not share your credit information with one another and thus your reports are not automatically modified.

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Will It Improve My Credit Score if I Consolidate Debt With a Home Equity Loan?

Debt consolidation can seem like a solution to many of your financial problems. It gives you the scenario of trading in several expensive loans for a single cheaper loan that would allow you to be debt-free sooner. The reality of debt consolidation is less rosy. If done correctly, it can save you money and even raise your credit score. For many people, however, a consolidation loan is just one more debt hanging around their necks.

Debt Consolidation

The basic concept of debt consolidation is simple. Take out one low-interest loan. Use that money to pay off all your small, high-interest loans. Instead of managing lots of bills, you only need to keep track of one. For most people who are in debt, though, a low-interest loan is a pipe dream. Lenders don't offer cheap credit to people with bad credit histories. To get a better deal, people take out home equity loans, using their houses as collateral. Secured loans come with lower interest rates, because the lender isn't taking as much of a risk as with an unsecured loan.

Debt Consolidation and Credit Scores

The biggest factor in determining your credit score is your repayment history. If you've missed payments in the last seven years, it will show on your credit report. Being as little as a day late can hurt your credit score. So if you're the sort of person who has trouble juggling lots of bills, a single loan may be right for you. It's easier to remember to pay one bill a month than a dozen. If a single loan means you won't miss any payments, then consolidating may be for you. However, there are some downsides. Lenders like to see a diverse range of debts, such as credit cards, car loans, mortgages, bank loans and store cards. By consolidating, you may be getting rid of that diversity. Moreover, consolidating can actually increase your overall debt, hurting the crucial debt-to-credit and debt-to-income ratios.

Warning

Even if you're willing to put up your house as collateral, consolidation loans aren't cheap. Watch out for hidden fees and massive charges. Before you sign on the dotted line, be sure that you can keep up with the payments. With a home equity loan, you risk losing your home.

Other Options

There are many reasons people fall into debt. The most common is chronic overspending. Consolidating your debt with a home equity loan will not change your spending habits. The only way to get out of debt is to consistently spend less than you earn. This will also increase your credit score. While they may seem complicated, credit scores are actually pretty simple. They tell potential lenders how creditworthy you are. If you want a higher credit score, you will need to become creditworthy. That means changing the habits that got you into debt in the first place.

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Can You Stop a Collection Agency From Reporting to a Credit Bureau?

When a collection agency receives a defaulted debt from your original creditor, it has the right to report that debt to the credit bureaus. Collection accounts that exceed $100 have a significant negative impact on your credit rating. In some cases, you can prevent a collection agency from reporting your debt to a credit bureau.

Features

Many collection agencies use the threat of bad credit as a negotiation tool, by noting that if you pay the debt immediately, the company won't file a report with the credit bureaus. Thus, paying the collection agency quickly can help you avoid the credit damage that its credit entry would cause.

Facts

If you know you don't owe the debt, the Fair Debt Collection Practices Act gives you the right to demand that the collection agency provide written proof that the debt is yours. Until the company does so, it cannot conduct any form of collection activity-- including reporting the debt to the credit bureaus.

Time Frame

The Fair Credit Reporting Act stipulates that records of your debt can appear on your credit report for only 7.5 years from the day you defaulted on the original account. If any collection agency threatens to insert a debt on your credit report beyond the legal time frame, threatening to sue the company for violating the FCRA demonstrates that you're aware of your rights. That threat will often motivate the company to follow the law.

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Is It Better for Your Credit Score to Close a Zero Balance Credit Card?

Lose Good Credit Reporting

When you have a credit score with no balance, the credit card company will report the card as being current every month, which will contribute to a positive credit score. In addition, your credit score will also benefit because you have a lower debt to available credit ratio.

Too Many Cards

The Motley Fool warns that the FICO scoring algorithm, the most widely used credit scoring model in the United States, penalizes people who have over seven credit cards.

Bottom Line

The Fair Isaac Corporation, the company that created the FICO credit scoring algorithm, warns consumers not to "close unused credit cards as a short-term strategy to raise your score." If you have more than seven cards, you may want to close some accounts, but you have better ways to raise your credit score that closing accounts with zero balances.

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How Long Does Eviction Stay on a Credit Report?

Introduction

The actual eviction is not usually found on a credit report, but the collection action to collect the past due rent is on the credit report and becomes part of your credit history. The actual collection attempt that shows on your credit report is what hurts your credit. The collection action lowers your credit score and can make it difficult to get another rental and other forms of credit, including credit cards or a mortgage.

Time

An eviction is a civil suit against a person for non-payment of rent. Pursuant to the Fair Credit Reporting Act, civil judgments (the results of civil suits) stay on your credit report for seven years. The seven-year time the collection stays on your credit report starts to accrue at the end of a 180-day waiting period, after the first attempt at collection.

Evictions

The actual eviction appears on tenant screening reports. A tenant screening report includes your rental history, credit history and criminal record. The tenant screening report may also contain your driving record, depending on the landlord. Information obtained for a tenant screening report is acquired from various agencies, including public records, motor vehicle departments and at least one of the credit reporting agencies.

Public Records

When you are evicted, a court action is filed against you. Court records are public records, which means that the public gains access to the information contained in your court file. When the landlord checks your history, he also checks public records for eviction and foreclosure actions.

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How to Rebuild a Credit History on Your Own

Living with a low credit score reduces your chances of acquiring a mortgage loan and other types of financing. There are numerous ways to rebuild or establish your credit history. And while some people choose to improve their FICO score with credit or debt management companies, it's possible to raise a low score on your own. The key is identifying factors that reduce your score, and making smarter decisions.

Instructions

1

Start a new line of credit. Rebuild your credit history by applying for a new line of credit. Open a secured credit card account with your bank, or consider applying for an auto loan to help boost your low score.

2

Be aware of your due dates. Open statements upon arrival and record due dates on a calender. Pay bills several days before their due date to avoid a late payment, or consider signing up for online bill pay.

3

Maintain self-control. Use credit cards for emergencies only to avoid incurring a large debt.

4

Regularly pay off balances. Get into a routine of paying off your credit card balance every month to keep your debts low.

5

Avoid judgments and collection accounts. Failure to make payments on your credit accounts can result in collection accounts and credit judgments. These remarks remain on credit reports for seven years. Negotiate payment arrangements with creditors to avoid negative accounts.

6

Monitor your report. Keep track of your credit report and score by ordering your report annually from websites such as Annual Credit Report. Check for errors and dispute inaccuracies.

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How to Improve a Credit Score in 2 Months

There is no magic way to immediately improve your credit score, but there are certainly things you can do in order to move toward raising your score. Don't expect an instantaneous increase, but if you monitor your credit score while aggressively working to improve it, then you will soon start to notice an improvement. Even small increases in a credit score can increase your chances of getting approved for credit at a reasonable interest rate.

Instructions

1

Review a copy of your credit report and then get aggressive. If you truly want to increase your credit score in two months, then you need to be very intentional in your actions. It takes some work to improve a credit score, so the more quickly and aggressively you pursue your goal, the quicker you will notice an improvement. The only way to see a difference in your credit score in a short period of time is to work quickly and with your eventual goal in mind.

2

Bring all your accounts into current status. If you have any bills that are unpaid, you should pay the past-due amounts right away in order to get rid of any delinquent listing on your credit report. You should pay delinquent accounts even if the account is closed, because delinquent accounts drag your credit score down substantially. When paying the delinquent accounts, be sure to also pay any additional fees because you want to ensure the account appears completely up-to-date on your credit report.

3

Remove errors on the credit report. It's not uncommon for individual credit reports to have errors that can be removed once the consumer alerts the credit bureau to the mistake. If you find errors on your credit report, contact both the credit-reporting agency and the creditor listing the account. You will have to be particularly aggressive with this step if you want to see results within two months, because removing errors from a credit report is a notoriously slow process.

4

Pay down debt. The amount of available you credit you have is one of the deciding factors for your credit score, so paying down any balances that are close to hitting the maximum credit limit will help your score quite a bit. You don't have to pay everything off in order to see an improvement in your credit score, but the more you can pay down your balances, the better.

5

Don't apply for any more credit. Every time you apply for a new credit product, whether it's a credit card, a loan or some other form of credit, an inquiry is placed on your credit report. Too many inquiries can drag your credit score down. Stop applying for credit while you're trying to improve your credit score. This is not the time to go out and get more credit; instead, concentrate on raising your credit score.

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Does Paying Judgements Affect Your Credit Score?

Nobody wants to end up in court, defending themselves from a debt collection lawsuit. If you lose the case, however, the creditor that filed the lawsuit receives a legal judgment from the court. Like a bankruptcy, tax lien or foreclosure, a judgment is a public record that appears on your credit report and has a detrimental effect on your credit scores. Depending on when the creditor received its judgment, paying off the debt could protect your credit from damage.

Paying a Judgment

In most cases, paying a judgment has no impact on your credit rating. The entry itself is inherently negative. Paying off the debt neither awards the judgment a positive status nor causes it to vanish from your credit history. While paying a judgment doesnt generally affect your credit scores, doing so protects you from such judgment enforcement methods as liens, property seizure and garnishment.

Docketed Judgment

The court does not consider a judgment final until it is docketed. The creditor dockets its judgment by filing a copy of the final judgment with the court clerk. Only then does the court add the judgment to your countys public record making it available to the credit bureaus which will then insert it into your credit file. If your creditor agrees not to docket its judgment against you, provided you pay off the debt, paying the judgment prevents it from ever appearing on your credit report. While this does not actively benefit your credit scores, it does protect them from further damage.

Considerations

If the creditor has already docketed its judgment against you, that does not mean that paying off the debt is not worthwhile. Even though paying the judgment does not help your credit scores, the fact that you paid off the debt shows up on your credit report whenever a lender reviews your history. Paid judgments reflect better on you than unpaid ones. All companies lending policies differ but some will require that you pay off your judgment before granting you a loan.

Time Frame

The degree to which a judgment, either paid or unpaid, affects your credit changes over time. Your credit scores serve as an indicator of your financial reliability. More recent items have a greater impact on your scores than older entries because they more accurately reflect your current responsibility level. Thus, as the judgment ages, it has less of a derogatory effect on your credit rating giving you the opportunity to rebuild your credit.

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What Happens to Your Credit When You Get a Charge Off?

If you stop submitting payments to your credit card company on your outstanding card balance, the company will eventually write off the debt. Referred to as a "charge off," this process does not mean that you no longer owe the debt. Rather, it reflects the fact that your credit card provider is no longer willing to carry the liability of your bad debt in its accounting ledgers. A charge off can have severe credit consequences.

Significance

After your credit card provider charges off your unpaid credit card debt, it will report this fact to the credit bureaus. The charge off will then appear on your credit report. A charge off is a derogatory entry and negatively affects your credit score. Your lack of credit card payments prior to the actual charge off, however, can damage your credit even more. According to MyFICO.com, a subsidiary of the Fair Isaac Corp., your payment history to your creditors accounts for 35 percent of your score. Therefore, the missed payments that caused the charge off have a significant negative impact on your credit.

Time Frame

Most credit card companies will charge off your delinquent account after 180 days pass without you making a payment on your overdue debt. The record of your charge off--and the late payments preceding it--will remain on your credit report for seven years from the date the account was charged off. If your creditor waits longer than 180 days to charge off your debt, however, the seven-year reporting period begins on the day that your credit card debt first went 180 days delinquent.

Considerations

Once the credit card company sells the account to a collection agency, the collection agency may also report the delinquent debt to the credit bureaus. The appearance of a collection account on your credit report will further damage your credit score, provided that the amount you owe is greater than $100. The collection account can also appear on your credit report for seven years. This time period is calculated from the date the original debt was 180 days late rather than the date the collection agency either received the debt or initially reported the account to the credit bureaus.

Effects

Lenders who review your credit report will see the charge off and subsequent collection account within your file and consider you a much higher lending risk than someone who had kept up with his debt and made timely payments. This may result in your lender charging you a higher interest rate or even denying your application. Some lenders will approve financing for you, but only under the condition that you pay off the amount that you owe. Unfortunately, while doing so may help you get financing, it doesn't improve your credit score to pay off an old charge-off if your account has already been turned over to collections.

Warning

If you ignore the debt, the collection agency that purchased the debt--and in some cases, the original creditor--may file a lawsuit against you. You have the option to fight the lawsuit in court, but if the creditor wins a judgment against you, that judgment will appear in your credit file. A judgment will cause additional damage to your credit. Even worse, if the statute of limitations for judgment collection in your state is longer than seven years, the negative record will remain from the date of the court's decision until the statute of limitations in your state runs out. In some states, this can be 10 years or longer.

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Five Factors in the Development of Your FICO Score

If you're like most consumers, you might look at those three digits of your FICO score and scratch your head. You know that the Fair Issac scale falls between 350 and 800, with anything north of 700 considered the elusive "good" credit. Understanding the different categories of your FICO score and how they rank can demystify the numbers -- and help you take steps to improve a weak score and get in the habit of regular credit report checkups.

When You Pay Your Bills

Your payment history accounts for approximatelty 35 percent of your FICO score, according to Fair Issac. A pattern of late payments, accounts in collection and severe delinquencies will ding your report and chip away at your your score. And it can sneak up on you with little warning. For example, paying a utility bill or car note past the grace period for six straight months gets reported in your payment history as late payments of "30 days" or more. If possible, create an electronic auto payment program with your creditors to avoid this trap.

Outstanding Debt: What You Owe

The amount of debt you owe totals 30 percent of your score. This includes revolving credit lines, mortgages, auto loans, school loans and credit cards. Watch your debt-to-credit-ratio -- how much credit you use compared to the amount available. For example, using only 10 percent of your available credit (low utilization) versus 30 percent (high utilization) makes a difference to lenders. The lower the ratio, the better your overall score.

Established Credit

How long you've held a credit card, line of credit or department store card can work in your favor. In the eyes of the credit bureaus and Fair Issac, the longer the credit history, the better -- and it's 15 percent of your FICO score. When considering which credit cards to cancel, always pick the youngest of the bunch with the highest interest rate.

Credit Types

Fair Issac calculates the different types of credit you use and ranks this category 10 percent of your score. Think of types of credit in classes, such as retail credit cards, or gas cards, your mortgages and signature lines of credit (these don't require collateral). Different loans have varied levels of risk. For example, taking out high-interest loans, such as payday loans, places you in a high-risk profile: Lenders believe you have a stronger likelihood of defaulting than a consumer with a 30-year mortgage with an excellent payment history.

New Accounts

Every time you open a new account you create a record in your credit file. Impulsively opening accounts, signing up for credit card offers or multiple loans can whack your score -- FICO measures the final 10 percent of your score based on how much new credit you carry. But if you're trying to re-establish credit, a new account can benefit your score. By keeping the account active, with small purchases paid off in full at the end of the billing cycle, you gain points for responsible credit usage.

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How Long Does it Take for Inquiries to Fall Off Your Credit Report?

Credit inquiries come from a number of sources. An inquiry appears any time you apply for a new credit card, a car loan or a mortgage or even rent an apartment. Too many inquiries can lower your credit score, but they do fall off your credit report with time.

Significance

Inquiries are important because they hurt your credit score if you have multiple credit applications in a short period of time. Rate shopping, though, does not lower your score, as long as it's done in a short period of time. For example, going to multiple lenders for a quote on a single car loan won't harm your score as long as it's done within a 30-day window. Applying for multiple credit cards in the same period of time would negatively affect your score.

Time Frame

According to FICO, the company that compiles and create credit scores, inquiries stay on your credit report for two years, but they affect your score for only one year.

Neutral Inquiries

There are several types of credit inquiries that do not affect your credit score. One is a promotional inquiry, when a company wants to offer a solid, preapproved line of credit. Another is an account monitoring or account reporting inquiry, when an account that you already have reviews your overall credit. Internal inquiries, as when Equifax reviews an item you've disputed, also do not affect your credit score.

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How to Build Credit With a Credit Union

Credit unions provide members with the same kinds of products and services that you can obtain from banks. If you have very little credit history or poor credit, credit unions offer certain kinds of accounts that can help you to build your credit. When you improve your credit score, you can obtain credit more easily and pay less to borrow. However, not everyone can join a credit union so before you can start working on your credit you must first find a credit union that you are eligible to join.

Instructions

1

Call credit unions in your area and find out whether you meet the membership eligibility requirements. Some credit unions base membership on where you live while others base membership on where you work. If you qualify to join more than one credit union, choose the one that offers the widest variety of products and services at the lowest cost.

2

Contact Equifax, Experian and TransUnion online or over the phone to obtain your free annual credit reports. Review the reports for accuracy and if you find any inaccurate information, contact the credit bureau in question to correct the info. It can take several weeks for corrections to show up on your report, so do not open any accounts at the credit union until errors on your credit report have been corrected. Correcting errors may improve your credit score and make credit easier to obtain.

3

If necessary, find a family member or friend willing to act as a co-signer for a loan or credit card. Go to credit union with your co-signer and submit an application for credit. You only benefit from having a co-signer if that person has good credit and sufficient income to qualify for the loan. Also that person must meet the credit unions membership eligibility guidelines. In many instances, if you are unable to qualify for a loan by yourself, you can qualify for a loan if you have a well-qualified cosigner.

4

Open a deposit account if you cannot find a willing co-signer. Submit an application for a secured credit card or cash secured loan. Generally, you can borrow an amount equal to the sum of money that you deposit in your account. The credit union places freeze on the deposit account so you cannot access that money until you have paid off your debt. Cash secured debts and credit cards are reported to credit bureaus in the same way as unsecured debts. Therefore, these types of loans enable you to improve your credit score. If you make your payments on time then over the course of many months you gradually improve your credit score.

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