How to Fix a Credit Score and Eliminate Charge-Offs & Repossessions

Your FICO credit score is calculated based on several factors: payment history, age of accounts, types of accounts and number of inquiries. An adverse credit history, including charge-offs and repossessions, will lower your credit score. Conversely, removing adverse credit records will improve your FICO score.

Instructions

1

Obtain your credit report from each of the three credit reporting agencies: TransUnion, Experian and Equifax. You can obtain your credit report via their websites. Your credit report will have a section for negative credit information. Highlight each charge-off or repossession on your credit report. Each record will have contact information for the creditor or debt collector who entered the information.

2

Submit a dispute for any inaccurate information on your credit report. A valid charge-off notation or repossession will stay on your credit report for seven years. Submit a dispute for any charge-offs or repossessions that are older than seven years. Indicate on the dispute that the record has gone beyond the statute of limitations.

3

Contact each credit reporting agency and dispute the negative record. They will have 30 days to validate the information. Records that cannot be validated with the record creator during this time period will be removed from your credit report.

4

Negotiate with the creditor or debt collector who created the negative record. Offer a settlement or agree to pay the bill in full if they will remove the negative mark from your credit report. Be sure to get their agreement in writing before issuing payment. Submit payment to the creditor along with a letter requesting they remove the negative record, per your agreement.

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The Best Ways to Ruin Your Credit Score

A good credit score is more important these days than ever. Not only can you not obtain a loan with favorable terms without one, but employers and rental agencies often require a credit check as well. Your quality of life can depend on your good credit score. A good credit score is easy to get, but equally easy to ruin. Avoid making mistakes that can run your score into the ground.

Mismanage Credit Cards

Credit cards can make your credit score, otherwise known as a FICO score, take a dive if you don't manage them properly. Max out your credit cards and your credit score will take a hit. The amount that you owe the credit card companies should never be close to your maximum line of credit. This is like waving a red flag saying Financial trouble over here.

Your credit score will also suffer if you have too many credit cards. Getting into deep debt affects your score, even if your cards arent maxed out.

Another credit card pitfall is closing accounts too soon. Raise your credit score by keeping longstanding accounts in good standing open. Likewise, take a pass on that 15 percent discount you get for signing up for a new card at that department store you dont shop at very often. Collecting high-interest store cards or closing accounts quickly can both affect your score.

Make Payments Late or Never

If youre concerned about your credit score, it pays to be current on your bills. This includes unexpected payments such as parking tickets, doctor bills and even library fines. Cities commonly turn over unpaid tickets and fines to collection agencies, according to CNN Money. Organize your finances so that you never inadvertently go over the 30-day grace period before companies report a late payment to the credit bureaus. Pay bills early and have money stashed away in a savings account to pay any unexpected expenses. And whatever you do, dont default on a loan. Thats the knell of death for your credit score.

Become a Victim of Identity Theft

Victims of identity theft often struggle with regaining good credit scores after the theft has occurred. Maxed out credit cards, missed payments and more await people who have had their identities stolen. It is difficult make a payment if you dont know that you opened an account. Protect yourself from identity theft by being careful who you give your personal information to. Shred documents containing personal information, keep an eye on your credit card when you hand it over in public, and never give your Social Security number to anyone other than a legitimate employer. Check your credit report at least once a year to make sure that it is clean.

Cosign a Loan

When you cosign a loan, it is a guarantee that you will make payments if the person for whom you are cosigning defaults. People generally do not need cosigners if their credit is in good standing and they have a favorable income-to-debt ratio. Dont let yourself feel pressured into cosigning a loan, even if it is for a good friend or family member. If they default on the loan, you will have to pay it off or face the consequences--collection agents, possible legal action, and a lowered credit score. Cosign a loan only if you have enough money to comfortably pay off the loan should the person default.

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List of Credit Score Providers

In the United States, a credit score is a numerical value, which represents a potential borrower, mortgagor or lessor's creditworthiness--the likelihood that he'll repay a debt. Three main credit bureaus tabulate scores for individuals based on factors such as past payment history, frequency of credit history inquiries and the total amount of present debt. Lenders, on the other hand, make use of a different scoring body, which may provide different results.

FICO

Lenders use the Fair Isaac Corporation (FICO) scoring model to determine a potential borrower's creditworthiness. It's important to note that while FICO scores and those from consumer credit bureaus draw on the same sources of information, they are determined independently--and may thus vary, even when they're calculated around the same time. According to the official myFICO website, 90 percent of the largest banks consult your FICO score when making lending decisions. You can check your FICO score online at myfico.com.

Experian

If you run your Experian credit report, you'll receive what's called a "PLUS" score. Although its determinations are often similar to those contained in the FICO reports lenders see, PLUS is consumer-geared and provides you interpretation of elements of credit scores, rather than just numerical values. PLUS also gives you suggestions on how to improve your credit. For example, if your score is suffering due to excessive inquiries into your credit history, it might suggest you make an effort to limit them. As is the case with FICO, you can check your Experian PLUS score online at experian.com.

Equifax

Equifax uses the "Equifax Credit Score" to provide you information on your creditworthiness. As is the case with Experian's PLUS score, the Equifax Credit Score, measured from 280 to 850, is separate from FICO, whose values range from 300 to 850. Equifax states that although it may use your FICO score to determine your Equifax Credit Score, this may not result in identical or even similar results. Visit equifax.com to check your Equifax Credit Score.

TransUnion

TransUnion provides consumers with their TransUnion credit scores via its "ZenDough" portal. When you access your TransUnion credit file at ZenDough.com, you will not only see numerical values such as your total indebtedness in dollars, but also explanations as to what certain values mean in terms of your overall creditworthiness and tips as to how you might remedy problem areas in advance of future evaluations.

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How to Get Your Complete Credit Report History Online

Federal law allows consumers to access their credit report for free once a year and if they are denied credit or employment based on the information on their credit report. The website AnnualCreditReport.com gives consumers access to reports from the three big credit bureaus, Equifax, TransUnion and Experian. Each one can report different accounts and other credit history information, so you must have all three reports to get your complete credit history.

Instructions

1

Go to the annual credit report website. Select your state from the drop-down box and click the "Request Report" button.

2

Fill out the following page with your name, date of birth, Social Security number and current address. If you have lived there for less than two years, you must provide your previous address. Enter the security code at the bottom of the page and click the "Continue" button.

3

Choose the correct answers to the questions on the next page. These verify your identity by requesting information about previous addresses, creditors and vehicles you have owned.

4

Select the credit bureau's report you want to view on the next page. The link will take you to your credit report on that bureau's website.

5

Review the information on your report. It contains your personal information, any judgments or bankruptcies in your name and your credit card and loan payment history.

6

Print the pages or save them on your computer when you are done reviewing. Click the "Return to AnnualCreditReport.com" link at the top of the page to return to the credit bureau listing page.

7

Repeat steps four through six for each of the remaining bureaus to get your complete credit history.

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How to Get Rid of a Late Credit Card Payment

A late credit card payment affects you in more ways than one. The late payment will more than likely be reported to credit agencies resulting in a blemish on your credit report. In addition, you may incur additional fees through your credit company for paying late. While a 30-60 day late payment is bad, a 90-day-plus late payment is worse because it can be just as damaging as filing for bankruptcy. Get your credit back on track by getting rid of a late credit card payment.

Instructions

1

Get in touch with your credit card company to pay off any 30-60 day late payments. These late payments are only damaging to your credit score while it is currently being reported as past due. So by phoning your credit company, explaining why you were late, paying the past due and then requesting that the late payment status be removed will get rid of this late credit card payment being reported.

2

Contact your creditor to remove the 90-120 day late payment from your credit history. A 90-120 day late payment can be much more difficult to remove since accounts that are this late are likely to be closed down through the creditor and written off. In addition, this type of late payment is on your credit report for the next seven years.

3

Dispute the late credit card payment with each credit bureau. If you have made an effort on your end, such as paying any late payments, accrued fees and contacting creditors and there is still a late payment reflected, contact each credit bureau, Equifax, TransUnion and Experian, to dispute them.

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How Long Are Repossession and Foreclosure on a Credit Report?

A credit report lists a consumer's credit history, including loans and other accounts, balances, limits and payments. It shows whether a person pays on time, is late or skips payments. It also shows negative incidents like repossessions and foreclosures, when property is seized by a creditor.

Definition

A repossession means that a lender takes property used to guarantee a loan if the borrower stops making payments. It most commonly refers to a vehicle taken when a car loan is defaulted. US Legal says a person can get the car back by paying the owed amount, fees and penalties. A foreclosure means that a mortgage holder takes possession of a house when the buyer does not make the payments. The lender sells the house to recoup the money.

Time Frame

Both repossessions and foreclosures stay on a person's credit report for seven years, according to Credit.com. These items show up on the Equifax, Experian and TransUnion reports and are visible to lenders, employers and anyone else who views the reports. They are also considered when companies like FICO calculate the consumer's credit score.

Effects

Repossessions and foreclosures have a negative effect on consumer credit records. Lenders see these items as an indication of financial trouble or a person who cannot manage finances properly. They may refuse to give the person a loan or credit card, or they may offer an account with a higher-than-average interest rate. These effects last throughout the seven-year reporting period, although FICO says that they lessen if the consumer rebuilds a good record. The influence of a repossession or foreclosure ceases completely when it is erased after the reporting period ends.

Solution

There is no way to legally remove a repossession or foreclosure before the seven-year reporting period ends. Consumers can focus on credit rebuilding to offset their past problems. This includes getting new accounts and making every payment on time, FICO says. People who cannot get regular credit cards can save money to open secured accounts. They make a deposit and get a card with a limit equal to that amount. The deposit is frozen and guarantees repayment because it can be seized if the consumer defaults on the account. They eventually qualify for regular accounts and the past credit blemishes will be less important to lenders.

Considerations

The credit bureaus do not always remove repossessions and foreclosures automatically after seven years. Consumers should check at the end of this period to ensure the information is erased. They can complain if it is not, according to the Federal Trade Commission. Annual Credit Report gives yearly access to free credit reports, and the three credit bureaus are required by the Fair Credit Reporting Act to investigate disputes. They will remove the disputed repossession or foreclosure if the proper time period has passed.

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How Does a Repo on a Lease Vehicle Affect Your Credit?

Your leasing company has the right to repossess your vehicle if you are even one day late on your lease payments. However, many companies wait longer before taking back the car. Before you break your lease, consider the negative impact a repossession will have on your credit score.

Impact

When your leased vehicle is repossessed, this damages your credit score. The missed payments appear on your report, as does a notation that the car was repossessed. Whether the repossession was voluntary or involuntary does not affect how it appears on your credit report. The exact amount of points your credit score will drop depends on what your credit looked like before the repossession. The higher your score was, the more you stand to lose. If your score was already very low, the lease repossession will not subtract as many points as if your score was very high.

Time Frame

The impact of the repossession begins to lessen right away. The longer it has been since the repossession, the less of an effect on your credit score. After seven years have passed since you were first delinquent on your lease payments, the repossession drops off your credit report.

Ripple Effects

In some cases, the impact of the repossession on your credit goes beyond the repossession itself. The leasing company can sue you to try to collect the difference between what you owed on your lease and the value of the vehicle when it was repossessed. If the leasing company succeeds, the court judgment appears on your credit report and causes additional damage to your score.

Alternatives

One option to repossession, if you have not yet missed a payment, is to call the leasing company and ask for a lower monthly payment for a short time while you get your finances back together. Another idea is to find somebody who wants to assume the remainder of your lease. Some websites allow you to advertise your lease and connect you with a potential buyer.

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