Credit Score: Fixing It

There are laws that enable individuals to do something about a poor credit report. They can question any section of the report that they disagree with. All it takes to repair your credit score is to communicate with the credit bureau contesting the errors.

The steps to correcting a bad credit report are not difficult. Because it is essential to have good credit, you must systematically take measures to notify the credit bureau of an error and then provide evidence. This way, the credit repair process can go smoothly.

1. The Fair Credit Reporting Act (FCRA) gives you the right to contest any mistakes in your credit report. Some of these mistakes are caused by a simple case of wrong identity. This happens frequently with individuals who have common names like Tom Jones where there are hundreds of Tom Jones in the same state and across the nation. If one Tom Jones defaults on a mortgage payment, that could be registered in your credit report even if you've never missed a mortgage payment. These clerical errors are frequently committed.

How? Write them. Attach a supporting receipt from your bank showing that you made that mortgage payment. Follow up if you don't receive a reply. Don't assume that the mistake will be corrected once you send off your letter.

2. Everyone's entitled to a free credit report once a year. To obtain your credit score, however, you need to visit the web site of FICO. There are 3 digits in your credit score. If you obtain a number that is higher than 720, this is a good score. Below that score, you need to do some credit repair. But don't let this low score discourage you. Remember that numerous people are in the same boat and are trying to fix their credit standing - just like you!

Take a look around at the FICO web site. There's a section where interest rates are provided based on your credit score. So if you wish to apply for a loan, look at your credit score. If it's above 720, there's a chance the interest rate you have to pay on a home equity loan for example won't be as high as the person with a score below 720. Want to know what the difference is? If your FICO score is good (720 and higher), you will only be charged 5.799% interest on a 15-year home equity loan. This rate was as of December 1, 2007 so you need to get an updated rate. Now, if your credit score was between 500-579, you would have to pay 10.44% interest. That's a huge difference!

3. Time, patience and discipline can you get you back on track when it comes to your credit score. If you blame yourself for your low credit score, stop it. Everyone makes mistakes. Instead of agonising over your score, take steps to fix it. While you're fixing it, make some effort not to touch your credit - if you have an emergency, then use it. Second, if you do use your credit, make sure you do so with lots of restraint. You also need to do these to get your credit score back in good standing.

avoid applying for loans or lines of credit you don't need while you're mending your credit score. Every time you apply for a new loan, the information is put on your credit record;

keep track of your bill payments. Missing payments will only tarnish your credit score further. While your creditors won't demand imprisonment if you don't make a timely payment, frequent non-payment of bills could land you in a troubled spot. Don't be stuck in a situation where you feel your bad credit is curtailing your basic freedoms.

respect your limits - if your credit cards have a ceiling on how much credit you can use, respect that ceiling;

consider debt consolidation - if you're feeling choked by a whole slew of interest rates, ask your financial adviser if it makes sense to consolidate all your loans. That way you pay one loan with one interest rate;

have enough cash in your pocket when you shop so you can pay for all your purchases in cash. Be different. Instead of reaching out for that plastic, take the greenback out;

it pays to remain in contact with the financial people you deal with (bank officer, credit union officer, trust company) and to let them know how you're doing. Goodwill and healthy relationships go a long way. Your credit union may choose to forgive one bad entry in your credit report because you've been a good customer.

If your credit score is unsatisfactory, roll up your sleeves and get it higher. Getting your credit score up to par should be your # 1 priority. Good credit is as good as gold. Contact your credit bureau immediately if you notice that your credit report contains inaccuracies.

Insist on a correction. You owe that much to yourself!

Article Source: Main Articles

Steven J. Talrechi has studied credit reports and credit report trends for the last decade. He is interested in assisting people obtain a 2nd chance checking account and 2nd chance bank account when banks turn them down.

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