Credit and Collections

10 Ways To Boost Your Credit Score by Dave Czach1. Deleting Errors in 48 Hours This is the absolute fastest way to correct errors on your credit report and raise your credit score. However, it can onl

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10 Ways To Boost Your Credit Score

by Dave Czach

1. Deleting Errors in 48 Hours

This is the absolute fastest way to correct errors on your credit
report and raise your credit score. However,10 Ways To Boost Your Credit Score Articles it can only be done
through a mortgage company or a bank. If you apply for a home
loan and find errors on your credit report, request the loan
officer to conduct a Rapid Rescore. But don’t mistake it for the
credit 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 credit accounts anyways. The difference is, now
you can improve your credit score and receive a lower interest
rate. The results are not guaranteed and will run you about $50
per account.

2. Deleting Negative Credit

This is the infamous area where you’ve heard of all the scams.
Credit repair clinics charge “an arm and a leg” and promise a
clean credit report. Sometimes even a new credit profile! People
spending hundreds, or even thousands, of dollars for something
they can do themselves.

Removing errors is simple. Deleting negative credit 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 credit 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 credit
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.

If you’re not the do-it-yourself kind of person. Or don’t have
the time. You could hire someone who is very economical.

3. PiggyBack Someone’s Credit

This is a fast and great little credit score booster. But it
requires a very trusting relationship. Simply put, someone else
adds you to their credit account. For example, when applying for
a credit 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 credit 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 credit card account with a
perfect payment history and a balance of only 50% of the credit
limit. Wouldn’t you love to have this on your credit report? The
easy part is your trusted person just calls the credit 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 credit
score could sky-rocket!

The challenging part? Finding the trusted person. Since you already
have a low credit 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 credit score.

4. Playing Round Robin

This strategy is one of the oldest credit building techniques
around. It used to be accomplished with secured savings accounts.
But now, it’s much easier with secured credit cards. In fact,
I’ve used this method myself.

Here’s how it works: Take ,000 (or what you can afford) and get
a secured credit card. Once received, get a cash advance of 70%
of your credit limit. Get a second secured credit card. Once
received, get a cash advance of 70% of your credit limit. Get a
third secured credit card. Once received, get a cash advance of
70% of your credit limit.

Open a new checking account with the final cash advance. Use this
account only for making payments on your three new credit cards.
If you make your payments on time every month, your credit score
will increase because you now have three new perfect payment
credit cards. (Initially, your credit 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 credit score
increase. Mine increased 60 points in 60 days!!)

5. Pay on Time

This one is quite obvious. But after 12.5 years in the mortgage
business, I discovered it still needs repeating. Your creditors
were gracious enough to loan you money. Now pay your damn bills!
If you don’t, your credit score decreases. EVEN IF ONLY 30 DAYS
LATE!

That’s right folks. For some reason people think, “I’m only a
few weeks late. What’s the big deal?” Well, for the loan company,
if you pay late but consistent, they make a lot more money with
late fees and more interest (if a simple interest loan). For you,
your credit score is damaged. If you think long-term and credit
score, I’m certain you would not have a cavalier attitude.

6. Pay Down Debts

This seems like an obvious method, doesn’t it? But it is not as
transparent as you might think. Remember, we’re playing with
high-level statistics and probabilities which evaluates and
forecasts trends in your behavior. Here’s what you do…

Never pay off your revolving debt in it’s entirety! Isn’t that a
surprise? Think about it. Your credit score is a reflection of
your ability to manage your credit. Paying off your debt is not
managing your debt. If you have a zero balance, how can you manage
it? You don’t. It no longer exists. And you cannot manage what
does not exist, right? Therefore, in terms of credit score, you
have demonstrated your ability to swiftly pay off accounts to
avoid managing them. Thus, slightly decreasing your credit score.

One exception, of course, is if you’re over extended to begin
with. Pay off what’s necessary to make your credit profile look
great. Then manage the remaining credit.

7. 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 credit score. This is due to
the weighted-average in the credit score formula. Many credit
experts suggest a balance of 30% of your credit limit. That’s
ideal. But you can go as high as 70% and still maintain a
healthy credit score.

8. No New Credit

You must be vigilant in your credit behavior if you want the best
credit score. Therefore, do not get any new credit unless it is
absolutely necessary. Each time you apply for credit, an inquiry
is added to your report. This usually drops your credit score
slightly. When you have fresh credit, there is no track record
how you will manage (or pay) this account. Therefore, it’s a
higher risk which results in a minor drop in your credit score.
Remember, your credit score is about risk assessment.

Here’s what you do: obtain credit for your housing, transportation,
college or continued education and 3-5 credit cards. That’s really
all you need for personal credit. If you want more credit, request
a credit limit increase on your current cards rather than apply
for new ones.

9. Maintain A Mix of Credit Types

Like It Or Not, You Have A Score To Settle! (Part 1 of 2 on Credit Scoring) by … Just when most people finish with school and can stop worrying about test scores, there’s a n

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Like It Or Not,Like It Or Not, You Have A Score To Settle! Articles You Have A Score To Settle! (Part 1 of 2 on Credit Scoring) by http://www.creditandyou.com

Just when most people finish with school and can stop worrying about test scores, there’s a new kind of scoring that enters the picture. It’s called credit scoring. And, its impact on your financial future can mean more to you than a college degree.

You may never know your precise credit score, but you need to know if you’re at risk!

Credit Scoring … Why It’s So Important:

Ever wonder how a creditor decides whether to grant you credit? For years, creditors have been using credit scoring systems to determine if you’d be a good risk for credit cards and auto loans. More recently, credit scoring has been used to help creditors evaluate your ability to repay home mortgage loans.

Precisely what is credit scoring?

Credit scoring is a system creditors use to help determine whether to give you credit. Information about you and your credit experiences, such as bill-paying history, the number and type of accounts you have, late payments, collection actions, outstanding debt, and age of your accounts is collected from credit applications and your credit report.

Using a statistical program, creditors compare this information to the credit performance of consumers with similar profiles. A credit scoring system awards points for each factor that helps predict who is most likely to repay a debt. Total number of points (credit score) helps predict how creditworthy you are; how likely it is that you will repay a loan and make payments when due.

You may never know your precise credit score, but you need to know if you’re at risk!

Why is credit scoring used?

Credit scoring is based on real data and statistics, so it usually is more reliable than subjective or judgmental methods. It treats all applications objectively. Judgmental methods typically rely on criteria that are not systematically tested and can vary when applied by different individuals.

To develop a model, a creditor selects a random sample of its customers (or a sample of similar customers if their sample is not large enough), and analyzes it statistically to identify characteristics that relate to creditworthiness. Then, each of these factors is assigned a weight based on how strong a predictor it is of who would be a good credit risk.

Each creditor may use its own credit scoring model, different scoring models for different types of credit, or a generic model developed by a credit scoring company.

How reliable is the credit scoring system?

Credit scoring systems enable creditors to evaluate millions of applicants consistently and impartially on many different characteristics. But to be statistically valid, credit scoring systems must be based on a big enough sample. Remember that these systems generally very from creditor to creditor.

Although you may think such a system is arbitrary or impersonal, it can help make decisions faster, more accurately, and more impartially than individuals when it is properly designed.

In fact, many creditors design their systems so that, in marginal cases, applicants whose scores are not high enough to pass easily, or are low enough to fail absolutely are referred to a credit manager who decides whether the company or lender will extend credit. This may allow for discussion and negotiation between the credit manager and the consumer.

What happens if you are denied credit or don’t get the terms you want?

For the answer to that crucial question and how to improve your credit score, be sure to read Part II of “Like It Or Not, You Have A Score To Settle.”

Credit and You are a group of expert on credit and the authors of “CREDIT AND YOU … Secrets To Improving Your Credit Rating.” Feel free to pass this article along to family and friends. And be sure to pick up your FREE 7 day course on “Credit Basics” at http://www.creditandyou.com

Copyright © 2002-2003 Credit and You | All Rights Reserved |

Like It Or Not, You Have A Score To Settle! (Part 2 of 2 on Credit Scoring) by Credit and You.com

In part 1, we covered the basics about credit scoring – what it is and how it is calculated. It’s time to address the critical question …

What happens if you are denied credit or don’t get the terms you want?

The Equal Credit Opportunity Act requires that the creditor give you a notice either with the specific reasons your application was rejected, or stating that you have the right to learn the reasons if you ask within 60 days.

NOTE: Indefinite and vague reasons for denial are illegal, so ask the creditor to be specific.

If you were denied credit because you are too near you credit limits on your charge cards, or you have too many credit card accounts, you may want to reapply after paying down your balances or closing some accounts. Credit scoring systems consider updated information and change over time.

You also can be denied credit because of information from a credit report. If so, the Fair Credit Reporting Act requires the creditor to give you the name, address and phone number of the credit reporting agency that supplied the information. You should contact that agency to find out what your report contains.

NOTE: This information is free if you request it within 60 days of being turned down for credit. The credit reporting agency can tell you what’s in your report, but only the creditor can tell you why your application was denied.

If you’ve been denied credit, or didn’t get the rate or credit terms you want, ask the creditor if a credit scoring system was used. Be sure to ask what characteristics or factors were used in that system, and the best ways to improve you application.

If you get credit, ask the creditor whether you are getting the best rate and terms available and, if not, why. If you are not offered the best rate available because of inaccuracies in your credit report, be sure to dispute the inaccurate information in your credit report.

Under the Equal Credit Opportunity Act, a credit scoring system may not use certain characteristics like: Race, Sex, Marital status, National origin, or Religion. However, creditors are allowed to use age in properly designed scoring systems. But any scoring system that includes age must give equal treatment to elderly applicants.

What can I do to improve my score?

Credit scoring models are complex and often vary among creditors, and for different types of credit. If one factor changes, your score may change. But improvement generally depends on how that factor relates to other factors considered by the model.

NOTE: Only the creditor can explain what might improve your score under the particular model used to evaluate your credit application.

Nevertheless, scoring models generally evaluate the following types of information in your credit report:

• Have you paid your bills on time? Payment history is a significant factor. It is likely that your score will be affected negatively if you have paid bills late, had an account referred to collections, or declared bankruptcy, if that history is reflected on your credit report.

• What is your outstanding debt? Many scoring models evaluate the amount of debt you have compared to your credit limits. If the amount you owe is close to your credit limit, that is likely to have a negative effect on your score.

• How long is your credit history? Generally, models consider the length of your credit track record. An insufficient credit history may have an effect on your score, but that can be offset by other factors, such as timely payment and low balances.

• Have you applied for new credit recently? Many scoring models look at inquiries” on your credit report when you apply for credit. If you have applied for too many new accounts recently, that may negatively affect your score. However, not all inquiries are counted. Inquiries by creditors who are monitoring your account or looking at credit reports to make “prescreened” credit offers are not counted.

• How many and what type of credit accounts do you have? Although it is generally good to have established credit accounts, too many credit card accounts may have a negative effect on your score. In addition, many models consider the type of credit accounts you have. For example, under some scoring models, loans form finance companies may negatively affect your credit score.

Scoring models may be based on more than just information in your credit report. For example, the model may consider information from your credit application as well: your job or occupation, length of employment, or whether you own a home.

Bottom Line: To improve you credit score under most models, concentrate on paying your bills on time, paying down outstanding balances, and not taking on new debts. It’s likely to take some time to improve your score significantly.

Credit and You are a group of expert on credit and the author of “CREDIT AND YOU … Secrets To Improving Your Credit Rating.” Feel free to pass this article along to family and friends. And be sure to pick up your FR

Credit can be a sore subject with many Americans. Rebuilding and increasing credit scores does not have to be a difficult task. Here are some quick tips that you can do yourself to start rebuilding your credit.

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Millions of consumers have less than perfect credit and it can be frustrating. Credit has permeated our society and having low credit scores costs you money. Credit scores are the No. 1 determinant in a bank’s decision to approve or decline credit. You may be approved for credit even though your scores are low but you will undoubtedly pay higher interest rates. The following are tips to begin rebuilding your credit:

(1) Authorized Buyer or Piggyback Credit. Becoming an authorized buyer also known as piggyback credit can be an instant way to boost your credit score. If you know someone who has a good credit history and score and is willing to add you to their account,15 Tips to Rebuild Credit and Improve Scores Articles this can immediately raise your credit score. There are companies that provide authorized buyer accounts for a fee. The credit card company will report to your credit files as well as the card holders’. The downfall of becoming an authorized buyer is that if the person ever becomes delinquent, it will also reflect on your credit report. However, if this happens, you can always dispute the account and the credit bureaus will have to remove it because an authorized buyer is not financially responsible for the account.

(2) Retain Old Credit. Maintaining older credit gives you a longer credit history. This is important because credit history constitutes 15% of your overall credit score.

(3) Apply for Easy Credit. There are many companies that do not require strict credit guidelines. These companies extend credit to consumers with little to no credit history and less than perfect credit. You may have to pay higher interests rates but if you pay on time and keep your balances to less than 30% of your available credit limit, you will build positive credit. Seek credit at your local appliance, furniture, jewelry and tire stores. In addition Radioshack, Fingerhut and Chevron Gas extend easy credit.

(4) Balance Transfer. Do not transfer all your balances to one low interest rate card. You may get many offers for the best credit cards with low and even zero percent interest rates, but if you transfer all of your balances to the one card then you run the risk of increasing your balance to limit ratio. A high balance to limit ratio lowers your credit scores. You should always maintain a balance less than thirty percent of your credit limit in order to have good scores. (Amount Owed is 30% of credit score)

(5) Decrease Your Credit Card Balance. Pay down your credit card and decrease your balance to thirty percent (30%) or less than your credit limit. Your credit score will increase. The great thing about this technique is that it works whether it is a $5000 limit credit card or a $500 limit credit card, your credit scores will instantly improve.

(6) Get a Credit Line Increase. In the alternative, if you do not have the cash on hand to pay down your credit card account, request a credit line increase but don’t spend it! Many credit card issuers can increase your limit without running a credit report. Make sure you inquire before you request the credit line increase if you do not want to create inquiries.

(7) Get a Bank Loan Secured by a Savings Account. If you have at least $500 cash on hand obtain a savings account secured bank loan. Most banks and credit unions do not run credit reports when you apply for a secured loan. However, they do report these loans to the major credit bureaus, Experian, Equifax and Transunion. Bank loans rank high in credit scoring. But don’t stop at just one secured loan. Once you obtain the first secured loan, take those funds, go to another bank and repeat the process. Now you have two bank loans that will report to the credit bureaus. Make sure these loans are small enough that you can handle making at least two payments per secured loan before the actual due dates. When the banks report to the credit bureaus they will show these payments and you will have established an excellent payment history within (30) days of obtaining the loans.

(8) Get a Secured Credit Card. Secured credit is a good option for those who cannot qualify for regular credit. Not only will you have the benefits of a regular credit card but you will also get an opportunity down the line to convert that secured credit card into a regular one. The same rules apply with a secured card in that you must pay your credit card bill on time and you should keep your balances low. When seeking secured credit make sure the bank reports to all three major credit card agencies, Experian, Equifax and Transunion.

(9) Limit Hard inquiries. Hard inquiries can take up to five (5) points off your credit score. Applying for new credit will lower your credit score. Keep inquiries at a minimum. Additionally, any company that pulls your credit report without your authorization is in violation of the Fair Credit Reporting Act which allows only authorized inquiries to appear on your credit report. According to FCRA rules you are entitled to $1,000 for each unauthorized hard inquiry. (New Credit Applications is 10% of your credit score)

(10) Know the Information reported by Credit Card Companies. Make sure your credit card companies report your limit and balance. Some may only report your balance and not your credit limit. Lenders who engage in this practice may actually be causing your credit score to be lower. The scoring system will plug in your highest balance as your credit limit and if you are currently at a high balance