5 Ways To Improve Your Credit Score
1. Deleting Errors in 48 Hours
This is the absolute fastest way to correct errors on your report and raise your score. However, it can only be done through a mortgage company or a bank. If you apply for a home loan and find errors on your report, request the loan officer to conduct a Rapid Rescore. But don't mistake it for the clinic tactic of multiple dispute letters.
The Rapid Rescore strategy requires proper paperwork. You need proof that the item is incorrect. It must come from the creditor directly. For example, a letter stating the account is not your account, a letter stating the account was paid satisfactorily, a release of lien, a satisfaction of judgment, a bankruptcy discharge, a letter for deletion of collection account or any relevant evidence.
This is the same documentation a bank or mortgage company would require for the accounts anyways. The difference is, now you can improve your score and receive a lower interest rate. The results are not guaranteed..
2. Deleting Negative Credit
This is the infamous area where you've heard of all the scams. repair clinics charge "an arm and a leg" and promise a clean report. Sometimes even a new profile! People spending hundreds, or even thousands, of dollars for something they can do themselves.
Removing errors is simple. Deleting negative that is accurate requires advanced methods. But that is not the scope of this report. So I'll focus on the deleting the negative errors.
Credit report errors easily disappear by using a simple dispute letter. If you have the paperwork proving the error as mentioned above in Rapid Rescore, send copies of that along with the dispute letter. This will make the bureau's job easier and you will get faster results.
If you don't have the documentation to prove the error(s), send the dispute letter anyway. According to federal law, the bureau's have a "reasonable time" to validate your claim. They will contact the creditor for verification of your dispute. Then the account will be reported accurately - or deleted. It has been generally accepted the "reasonable time" to complete this task is 30 days.
3. PiggyBack Someone's Credit
This is a fast and great little score booster. But it requires a very trusting relationship. Simply put, someone else adds you to their account. For example, when applying for a card, you may have seen the section to add a card holder. If your trusting person adds you, their payment history is now reported on your report too. If they have perfect credit, now you have a perfect account.
To make this more effective, use an aged account. Imagine if your trusted person has a 10 year old card account with a perfect payment history and a balance of only 50% of the limit. Wouldn't you love to have this on your report? The easy part is your trusted person just calls the card company and requests a form to add a cardholder. Once completed and activated, their entire account history and future is now firmly planted on your account. Imagine if you secured 3-5 of these accounts - especially installment accounts. Your score could sky-rocket!
The challenging part? Finding the trusted person. Since you already have a low score and bad credit, how eager will someone be to make you a cardholder? Even your parents don't want you to damage their credit. But, no one says you need to
possess the card! In other words, your trusted person could add you as a card holder and never give you the card or PIN or any information. Since the bills and all account information is still mailed to the trusted person's address, you won't know anything about the account. This scenario could land you many trusted persons. And you still benefit with a higher score.
4. Playing Round Robin
This strategy is one of the oldest building techniques around. It used to be accomplished with secured savings accounts. But now, it's much easier with secured cards.
Here's how it works: Take 1,000 (or what you can afford) and get a secured card. Once received, get a cash advance of 70% of your limit. Get a second secured card. Once received, get a cash advance of 70% of your limit. Get a third secured card. Once received, get a cash advance of 70% of your limit.
Open a new checking account with the final cash advance. Use this account only for making payments on your three new cards. If you make your payments on time every month, your score will increase because you now have three new perfect payment cards. (Initially, your score might drop a few points due to the rapid, multiple accounts being opened. However, be patient because within 4 months of no new accounts or any delinquencies of any account, you will see your score increase. Mine increased 60 points in 60 days!!)
5. Don't Close Accounts
Even if you pay off revolving debts, do not close the account. The longer an account is open with no negative reports, the better it reflects in your overall score. This is due to the weighted-average in the score formula. Many experts suggest a balance of 30% of your limit. That's ideal. But you can go as high as 70% and still maintain a healthy score.
Dennis Alexander - leading insurance and financial services consultant. For any additional information and assistance with all of your financial service and insurance needs visit our websites
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