Though the Fair Isaac Corporation does not release the formulas used to calculate your credit score, they do release the components of the credit score: your payment history, how long you've used credit, the balances on your accounts, the different types of account you have and the number of new credit applications you've submitted recently. Based on these categories and information from the company, there are a number of steps you can take to repair your credit score if you've made mistakes in the past; however, there are no instant fixes.
Check Your Report for Errors
Under federal law, each of the three major credit bureaus--Experian, Equifax and TransUnion--are required to give you a free copy of your credit report each year. You should check this report to make sure all of the accounts listed on the report are correct. If there is an error, you need to submit a written dispute to the credit bureau explaining what the error is and provide copies of any evidence you have to dispute it. Do not send originals in case they get lost or damaged in the mail. Once the credit bureau has received your dispute, they must investigate your claim within a month. Usually you will receive a letter explaining whether your claim was accepted or denied within 2 months. If your claim is accepted, the incorrect information will be removed from your account.
Contact Your Creditors
Contacting your creditors can lead to alternative payment plans or occasional goodwill adjustments. If you have trouble paying the account minimums, call or write to your creditor to ask if you can set up an altered payment schedule to help you pay your debts. In many cases, lenders are open to working with you because they also lose out if a collection agency has to be used. Any time a collection agency is used, it gets reported on the borrower's credit report, which brings down the credit score. In addition, the collection agency charges the creditor a fee for its efforts to get the debtor to pay so even if the full amount due is recovered, the creditor still ends up with less than they were owed. Also, if you have had a positive relationship with a creditor, you may be able to get them to make a goodwill adjustment, such as taking off a late payment from your record.
Keep the Accounts You Have
If you are trying to bring up your credit score, keep the accounts you currently have open and do not apply for any new sources of credit unless absolutely necessary. Even if you do not plan to use an account again in the future, and it carries no balance, that account will still be reported as being current on your credit report, which will help improve your score. You do not want to apply for any new accounts because each time a lender pulls your score to determine whether or not your can get a new account, an inquiry is recorded on your credit report. These inquiries bring down your score because the more credit you are applying for the more desperate you appear to lenders.
0 comments:
Post a Comment