Fix Credit Report and Increase Credit Score

Fix Credit Report and Increase Credit Score

by Stephen Lau

Credit is lifeline of an individual's financial future. Smart money management is smart credit management. Do everything you can to fix credit report and increase credit score.

Credit Bureaus

Credit bureaus make money by gathering and selling your credit information to banks, credit card companies, credit unions, and mortgage lenders. In addition, they may also provide a consumer’s personal information, such as name, address, and employment.

The three major credit bureaus in the United States are Equifax, Experian, and Trans Union.

A Credit Report

Your credit report is composed of 5 categories:

Personal information

The essential personal information on a credit report includes:

· Name, including any former name(s)

· Past and present addresses

· Social Security number

· Employment history, including salary.

Monthly reports

Monthly reporting information comes from banks, savings and loans, credit unions, credit card issuers, large department stores, and other creditors receiving regular monthly installments.

Accounts in default

Past due accounts or accounts referred for collection reflect the following information:

· The name of the creditor

· The type of account

· The account number

· The delinquency status.

Public records

A credit report includes all information in public records:

· Bankruptcy filings

· Court judgments and judgment liens

· Criminal arrests and convictions

· Foreclosures

· Lawsuits

· Mechanic liens

· Tax liens.

Inquiries

A credit report also includes a list of creditors and others who requested a copy of your credit report.

Smart steps to improve credit score

A credit report may include a credit score, which reflects the risk that you will default on your payments.

Most credit scores range from lows of 300-400 to highs of 800-900. A low credit score affects your cash flow: you simply pay more interest on everything you borrow.

To fix credit report will increase credit score.

Lenders use credit scores to decide if the borrower is a good credit risk for new credit.

Credit scoring is fundamentally based on the following:

· Payment history

· Length of credit history

· Amounts owe on credit accounts

· Recent and new credit

· Types of credit.

There are many different ways to increase credit score.

Getting a copy of the credit report

Get a copy of your credit report from each of the credit bureaus. Review them, and dispute any incorrect, outdated, and misleading information.

Check and monitor your credit report at least every six months or so.

Adding an explanatory statement to a negative mark to fix credit score

You have the right to include an explanatory statement concerning a particular unfavorable entry on your credit report. It is important to make the statement brief and concise. The credit bureau is only required to provide a summary of your explanatory statement: a concise statement stands a better chance of being passed on in its original version without being edited.

Volunteering positive account histories

Banks, lenders, and credit unions may not have reported your positive credit histories to credit bureaus. Request credit bureaus to add positive account histories, such as a new bank saving account.

Request for addition of information showing credit stability

You may also request credit bureaus to include information showing stability to your credit files, including the following:

· Bank account number

· Date of birth

· Employment, including past and present

· Residence, including present and past

· Social Security number

· Telephone number.

Building credit in your own name

Credit bureaus must include in a credit report any joint account. Always build your own credit in your own name.

Smart use of credit cards to increase credit score

Most credit reports show payment histories for 24-36 months.

· Be consistent with the name you use (e.g. the use of middle initials) on your credit cards.

· Apply for a credit card only when you are most likely to get it. Don't apply for too many credit cards within a short period of time.

· Close any credit card account that you do not use.

· Charge your credit cards every month.

· Avoid maxing out your credit cards.

· Make more than the minimum payment (preferably repay the full amount owed i.e. zero balance).

Paying off a collection account

Negotiate a promise to remove the negative mark from your credit reports, and get it in writing. This fixes your credit report.

Getting a smart bank loan

A smart way to repair your credit is to obtain a bank loan.

· Open a savings account with a local bank.

· Obtain a loan against the money in that savings account. Make sure that the bank reports your payments to the credit bureaus.

· Make monthly payments on time.

Shopping for the best credit rates

Always shop for the best rates within a short window of time. Your requests will be lumped into one inquiry. However, don't shop for the best credit rates for a car loan or new credit card right before applying for a home mortgage: hard inquiries will hurt your credit score rating (hard inquiries with an excellent credit will hurt less than those with a poor credit).

Avoiding bankruptcy

Bankruptcy filing will stay on a credit report for 10 years, whereas credit counseling will not impact your credit score (a successful completion of a credit counseling program will drop the negative information from a credit report).

For more information on bankruptcy, go to Smart Debt Control.

Protect yourself from identity theft

Identify theft has become rampant. Identity theft occurs when someone has stolen your name to obtain a loan, open accounts, rent an apartment or buy a car, using your credit scores.

· Don’t give personal information over the phone or in an email.

· Don’t use easy to decode passwords and pin numbers for your
accounts.

· Don’t give out your Social Security number to strangers.

· Don’t throw away receipts of credit cards or ATM transactions in public.

· Don’t throw away offers of pre-approved credit cards: shred them!

· Don’t ask banks to send new checks by mail: pick them up yourself!

Be aware of the signs of identity theft:

· Monthly bills not arriving as expected

· Denied credit application

· Receiving credit cards or account statements you didn’t open

· Receiving phone calls about a purchase you didn’t make.

Copyright© by Stephen Lau

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