There is never a better time than the present to take the necessary steps to raise your credit score. Your credit score says a lot about you and can either open or close doors for you in the world of credit.
Starting Point
In order to raise your score, you must know what it is. Start with ordering your credit reports from Experian, Equifax and TransUnion and pay the fee to receive your credit scores (see Resources). When you go to these websites, they seem to offer free reports and free scores. You get the scores if you sign up for their different credit monitoring systems, which have a temporary free trial service that lasts anywhere from seven to 30 days, but after that there is a monthly membership cost. If you are not interested in the credit monitoring system, the best way is to order your credit reports by writing a letter to each of the credit bureau agencies and paying the fee to obtain the score. This way you know what your score is before you take any steps.
Locating Inaccurate Information
Once you receive the credit reports, begin highlighting inaccurate and negative information. The purpose of locating inaccurate information is so you can dispute it and have it corrected. When disputing misinformation, it is important to provide a copy of the documentation that proves what you are saying is correct. Understand that when it comes to negative information on your credit report, there is a timeline that negative accounts can remain on your file. For example, a charge off is allowed to stay on a credit report for seven years. If the seven years have passed, then you can dispute that account. Each state has a statute of limitations pertaining to credit remaining on your file. Check your state's statute of limitations by reviewing the chart provided by BCSAlliance.com. For inaccurate information and negative accounts, send a letter to each bureau disputing the misinformation if the dispute is on all three reports. If it is only on one, then send it to that specific one. The goal is to make sure your credit report is accurate.
Settling Old Debt
Once you are in the financial position to settle an old debt, contact the creditor and enter into negotiations to settle the debt. Explain that you have had some financial difficulties, which is why the account went unpaid or entered the category of slow pay, and now that you have gotten back on your feet, you would like to negotiate a settlement to get it paid off. Then begin talking with the creditor about what you can afford to pay as a settlement and that you can settle it now for a certain amount. Upon your reaching an agreement with the creditor, ask them to make sure it is reported to the bureaus as "Settled in Full" or "Paid in Full." Those three words carry a lot of weight when creditors are reviewing your report to consider extending you credit. Make sure you have the creditor fax you a copy of the settlement agreement. Keep copies of all documentation for your files in case a collection agency purchases the old debt and attempts to collect again. You need to have proof that it was paid off.
Timely Account Payments
Paying your outstanding accounts on time until they are paid off is one way to raise your credit score. Late payments tend to lower your credit score, and the lender could raise your interest rate. If other lenders are aware of this, they could in turn raise your rates
Don't Apply for Credit Cards
Do not apply for more credit cards. One credit card in itself generates an inquiry being made. Every time you fill out an application in the mall for credit, they make an inquiry into your credit report. All those inquiries can add up and lower your score.
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