Ways To Improve Your Credit Score
Fixing your credit is relatively simple. Anyone can do it without hiring an expensive lawyer or credit repair firm. There are only a few basic steps to it, and they are outlined in this document. Expect the process to take anywhere between six months and one year depending on how "exotic" your credit reports look. Bankruptcies, judgements, and charge-offs are the hardest to deal with, but with enough patience and fortitude, they can be gotten rid of as well.
OBTAIN A COPY OF YOUR CREDIT REPORTS
One of the first things you want to do to earn better credit is get a good idea of what your credit report looks like. Every year, you are allowed to request a free copy of your credit report from the three major credit bureaus. You can use this site to make your requests:
Alternately (and I recommend going with this option), sign up at www.truecredit.com for their service. There is a cost associated with it, but you get updated credit reports every month, and you can get a good idea of how your credit score is improving while you earn better credit.
Once you have copies of all three credit reports, you are ready to begin working on credit repair. The first thing you will want to do is remove all old addresses from the credit reporting agencies' databases. There is a theory that doing so will make it difficult for them to verify tradelines that are associated with addresses that do not appear on your credit report. I don't know how much validity this theory has, but even if it is completely false, having fewer addresses on your credit report will make you look a lot less shifty than someone who has moved to a new address every six months. Try to get your reports down to a maximum of three addresses, with your current address being one of them.
Here are the addresses of the three major credit reporting bureaus:
To have your old addresses deleted, use the following letter, sent to each credit reporting agency:
The credit reporting agencies should answer back within 30 days with an updated copy of your credit reports. If they don't, send the letter again, wait 30 days, and check results. Repeat as often as necessary.
STATUTE OF LIMITATIONS EXCEEDED?
While you are waiting for the credit reporting bureaus to handle your address deletion request, deal with any debts listed on your reports that may be beyond the statute of limitations for your state. For example, the statute of limitations is 4 years for credit card debt in California. Under no circumstances should you ever pay anything on any of these debts. Legally, you are no longer responsible for paying them. Here is a site that lists all states:
If any of the debts listed on your credit reports fit this scenario, send off the following short letter to the collection agency or creditor:
This very short letter states to the debt collector that you are disputing their ability to collect the debt and that they either have to stop trying to collect on it or prove that it not outside the statute of limitations.
OTHER COLLECTION ACCOUNTS
Now is the time to deal with any other collection accounts on your report. A collection account is an account that was sent to a collection agency from your original creditor or an account that was outright bought (for pennies on the dollar) by a bottom feeder law firm or collection agency. Here is a simple validation letter that you can use to deal with such accounts:
Send this letter to all collection agencies listed on your credit reports while you wait for the credit reporting agencies to fix your addresses.
For the credit reporting bureaus, whenever you dispute tradelines, the envelopes you use should be hand-addressed and use real stamps, not postage meters. This is important. If you hand address your envelopes, the credit reporting agency assumes they are from unsophisticated individuals and not credit repair firms. They will put them into a "deal with later" pile, and deal quickly with the requests that appear to be from credit repair firms, so that they can get rid of those quickly. They assume that most consumers don't know what they are doing, so they figure they have all the time in the world to deal with your requests, which means that they will most likely take more time answering them, and because of this, they may go beyond the normal timeframe that they are allowed to handle your inquiry. This is good news for you, as they only have 30 days to answer your request. Send a hand addressed dispute letter to Experian, Equifax, and Transunion, disputing as many accounts as needed in each letter. Here is an example:
If they decline your request or you don't hear back from them within 30 days, send this 2nd letter:
RINSE AND REPEAT
Once you have received a new credit report from one of the credit reporting bureaus, check it for errors and immediately send a copy with items circled and another tradeline dispute letter. Then, give them 30 days to answer, then if they don't answer, send them the 2nd letter. Once there are no more derogatory accounts listed on a particular credit report, you are done with them! You can focus all your attention on the other credit reporting agencies at this time. This will help you earn better credit in short order.
NEW COLLECTION LETTERS
If during any of this time, you receive a new collection letter, send them this letter, along with a copy of theirs:
If you want to earn better credit, it's not an overnight job. Like I stated above, it can take anywhere from six month to one year. But after that time, most if not all of the negative items on your credit reports should be gone. When it is, your credit score should dramatically improve. To give it a further boost, once your FICO score is above 640, you should start applying for new credit. Here is a list of some of the best places to try:
Because inquiries are a negative tick on your credit report, you should apply for these cards all on the same day, so that they won't see that you've applied to many different places all at once. By using the Internet, it's a fairly easy task. You can repeat these steps every six months until you get all the cards you want.
HANDLING CREDIT FROM NOW ON
Make sure that for any new card or credit line you get, you use it at least once a month and pay it off in full every month. After about six months, call the customer support line and request a credit line increase. Most companies will give this to you if your credit score is high enough and you have maintained an excellent payment record with them. Just make sure you keep paying your balances in full every month and never use more than 20 percent of your credit line on a particular card in any given month.
After following all the steps here, you will earn better credit, and your FICO score should be well above 700. Buying a home? At over 700, you would be in the perfect position!
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