What exactly is a Credit Score? (part 4)

This is the last post from this series on your credit score.  To review, we discussed what information was on your credit report, contributing factors to your score, and how to build and maintain a strong credit score.  This post will highlight ways to repair a damaged credit score.

Part 4 – How can I repair a low credit score?

There are a couple points I must make at the outset.  First, there are no easy fix, fast track methods to repairing and rebuilding poor credit.  It… just… takes… time.  Remember your credit score (and report) reveal your track record of managing payments.  If your score is a consequence of your actions, time is how your score will be repaired.  You didn’t drop to a low score overnight, even if “life” did happen (job loss, health problems, divorce, etc.).  This situation took time.  Don’t expect to bounce back to a 780 score overnight.  You need time to prove your ability to manage your finances and to pay expenses responsibly. 

The second point is to avoid unscrupulous credit repair service companies.  These companies often prey upon unsuspecting consumers promising to “fix” someone’s credit and to remove unfavorable information for “3 easy payments of $49.95”.  Nothing could be farther from the truth.  While errors are not uncommon on reports (we’ll discuss this in a moment) truthful information, no matter how unsavory, cannot be removed from your report.  (For information on fraudulent credit repair services, what to avoid and how to report illegal activity visit our website for more information.)  If a bankruptcy or foreclosure happened, it will be reported and will be there for some time.  If you have a credit score, you are an adult.  Let’s not whine about a low score, let’s be proactive and start on a better path. 

Okay, so you are behaving.  Your bills are paid as promised, have a very low debt to income ratio, manage your money well and stick to your budget, and learn your credit score is not where you expected it to be.  Now what??

Start by reading your credit report.  Are the creditors listed, those you actually have or have had accounts with?  Are your name and aliases correct?  Are your date of birth, social security number and address(es) correct?  Many times a keystroke error is all it takes to suddenly combine someone else’s credit history to yours and negatively affect your score.  If you are a “Jr.” or “Sr.” you can certainly understand this scenario.  Other times it may be that a debt has been fully paid and the creditor has stopped reporting the information to the credit bureaus so that a remaining balance still shows.  Surprising as it may sound, even with all the computer systems in the world, credit reports are ultimately managed by people capable of making mistakes.  (No really.)

If you believe your credit report contains an error you have the right to contact the credit bureau that reported it and dispute the information.  There is no cost to dispute this information and it isn’t complicated.  The best way to communicate with any credit bureau is in writing (go old school here) with the letter sent by registered mail with a return receipt to confirm they now have your letter.  (Our website contains a sample dispute letter you can use.)  Provide your complete name and address, clearly identify the item(s) in question, explain why the item is being disputed, and your request to have this corrected or removed.  Include a copy (never the original) of the documentation you have supporting your claim.  (For example, if you paid off that credit card, include a copy of the final statement showing a $0 balance.)  Also include a copy of your credit report with the items in question circled.  Keep a separate copy of everything you are sending to the bureau along with a diary of any activity, conversations and contacts. 

The reporting credit bureau has 30 days to investigate the disputed information and provide you with a written report of the findings.  The bureau is also required to send you a copy of your updated credit report if the disputed item has been changed as a result.

In general with time, a solid financial plan, and some perseverance you can repair, build and maintain your own credit standing.

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7 Responses to “What exactly is a Credit Score? (part 4)”

  1. Brie Says:

    Excellent article, came across it on Yahoo. It’s presented me some things to take into consideration. I do have a concern for you (or the other readers), though. I found out recently that I have some erroneous information on my credit report regarding my credit cards. I experimented with hiring a nearby guy here in town to help me get the errors off, but he flaked on me. Are you able to recommend someone specialized to assist me? How about the site I posted?

  2. AwarenessHomeFunding Says:

    Hi Brie,
    Sorry to hear about the problems you had in trying to find some help. Unfortunately, there are disreputable companies out there whose only goal is to take more of your money. It is also not at all uncommon to have errors on your credit report. The good news is that you CAN do this yourself. The link in the post above contains a sample letter to use when questioning erroneous information. While this may take a little time (the credit bureaus have 30 days to respond) this is not hard to do. Make sure you make copies of your proof to send them (you keep the originals). The key is persistance and you can get the errors corrected or removed, but errors only. Truthful information, even if negative cannot be removed.

  3. debt settlement lists Says:

    Wonderful post, and I was heading for a similar article which I will probably still write, but from a slightly different angle. Thanks for sharing this with your readers…I’m sure I’m not the only one who appreciates it.

  4. Ma Strasser Says:

    Credit cards for bad credit generally fall into two categories. The first is a credit card that has a maximum limit to the amount you can charge.The second of the credit cards for bad credit is the secured credit card. These credit cards involve the consumer making a small deposit onto the credit card in order to use it. Some cards will increase your spending limit if good spending practices occur while others you can simply only spend what you put onto the card. Either way it is a great way to be responsible with your money and start rebuilding your credit.

  5. Wanita Bonacci Says:

    Will this help to boost my metabolism as well?

  6. Health insurance quotes Says:

    Thanks for the interesting content!!!

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