5 Easy Credit Repair Tips

Reading about credit score rankings can feel reminiscent of getting your report card in grade school. There is a lot of talk of “good” credit, “bad” credit, “poor” credit and “great credit.”

Consumer scoring is linked to an organization called FICO, which stands for the Fair Isaac Corporation. FICO is not the only organization that develops consumer scoring guidelines, but it is arguably the largest and best known, as well as one of the most widely referenced and used.

Another commonly referenced scoring organization is VantageScore. VantageScore is a collaboration between the big three reporting bureaus, Experian, TransUnion and Equifac (Equifax).

According to one of these bureaus, Experian, scores can range from 350 to 850. Generally speaking, you can consider yourself to have a “good” score if your score is 670 or greater.

But what if your score falls below a 670? What if your ranking sits on the cusp of a higher rating, which would net you better loan rates or interest rates? What can you do to fix and repair your report? Read on for repair tips you can put to use right now!

At The Law Offices of Adam C. Gomerman, we offer credit repair services for those that would like professional help on Long Island. For more information, contact our office to schedule your no obligation consultation.

1. First, get your annual free report.

This isn’t a marketing ploy. Under the Fair Credit Reporting Act (FCRA), you are entitled to a free copy of your report once per year.

You can get a free copy from each of the big three reporting bureaus by visiting this website.

You can request all three reports at one time or get one every quarter to monitor your credit report as the year progresses.

This can be an important decision if you are following a specific strategy to repair your score, clear up discrepancies and improve your overall rating with either FICO or VantageScore.

But understand this: each of the three bureaus are not legally required to follow the same exact methodology to track your activity. For this reason, they may report slightly different data.

This is why you need to get your report from each of the three. It is also why it may not work to request different reports at different times of year if you are working to repair your report with a certain bureau.

Legally, no reporting bureau is allowed to charge you more than $12.50 for additional copies of your report. So if you do need to request additional reports at later dates throughout the year, at least it will be affordable.

2. Identify any questions or discrepancies to address on each report.

Your report is essentially a basic overview of your financial transactions as they relate to spending, payments, credit utilization, loans, bankruptcy, and similar items.

Once you have each report in hand, you can start scanning for discrepancies.

Discrepancies can arise for any number of reasons, but these are some of the most common errors:

– Identity theft/fraudulent account errors.
– Errors related to an ex-spouse.
– Personal identity misspellings or mistakes.
– Same debt listed under different names.
– Resolved issues popping back up as unresolved.
– Incorrect account balances or spending limits.
– Incorrect loan amounts or payments history.

The Federal Trade Commission (FTC) states that you should always seek to dispute (correct) any payment history, credit utilization inaccuracy or other financial mistakes in writing directly with TransUnion, Equifac (Equifax) or Experian.

The FTC also provides a step-by-step outline for how to do that and what supporting documentation to provide.

The FTC also provides sample dispute letters you can use to make inquiries with the bureaus and any entities that are reporting discrepancies.

When you are anticipating any activity that might result in new inquiries with the reporting bureaus, such as applying for a mortgage loan, it is important to allow time to fix issues that are lowing your score.

By law, the reporting bureaus have 30 days to research written inquiries and provide their findings to you and to the reporting entity. But it can take longer before errors are removed from your report and improvements to your overall score are updated.

3. Understand what can and what can’t be quickly resolved.

It can be understandably frustrating to go through bankruptcy, foreclosure, repossession, judgement, short sales, tax lien or similar financial issues and work so hard to resolve them, only to discover they stay on your credit report.

Unless the reporting is incorrect, by law the FTC allows these financial incidents to remain on your report as follows:

– Negative financial transactions: up to seven years.
– Foreclosure: up to seven years.
– Short sales: up to seven years.
– Repossession: up to seven years.
– Judgement: up to seven years.
– Tax lien: up to seven years from the date of repayment.
– Charge-off: up to seven years from the date of charge-off.
– Bankruptcy: up to 10 years.
– Criminal incidents: no time limit.
– Application for more than $150,000 of life insurance or loan: no time limit.

In some cases, information (whether negative or positive) may not be reported to any of the three big bureaus. Some creditors are not required to report information (examples include local merchants, credit unions, travel companies and gas card companies).

4. Know how your credit report is compiled.

One of the most important strategy tips for improving your overall score from year to year begins with grasping how your score is compiled.

The method can vary depending on the reporting bureau or entity.

There are two main umbrella categories that reporting entities look at: revolving and installment.

– Examples of revolving include: credit cards, lines of credit.

– Examples of installment include: mortgages, student debt, car notes.

MyFICO offers an outline of how the typical numerical data is compiled:

– 30 percent: amount outstanding (owed).
– 10 percent: new debt.
– 35 percent: payment history.
– 15 percent: length of time for reporting.
– 10 percent: mix of debt instruments.

Together this equals 100 percent. So you can see how, by adjusting even one variable, your score might change accordingly.

VantageScore, the service that aggregates data from Equifac (Equifax), TransUnion and Experian, has a different mix to calculate your score.

As VantageScore explains, the typical score includes these variables, listed in order of importance and influence:

– Total usage, balance, available credit.
– Debt mix and experience.
– Payment history.
– Time period of reporting.
– New accounts opened.

While the actual numerical value of your numerical ranking may vary from VantageScore to FICO, there is one thing that remains constant: a lower number indicates you are a higher risk while a higher number indicates you are a lower risk.

5. Adjust your financial habits and patterns towards score increases.

Earlier here we addressed fixing errors or discrepancies you see on your report from each of the three reporting bureaus.

When you see something on your report that is flat-out wrong or something you don’t recognize, you need to be proactive and take steps to resolve it.

It can take time to resolve these issues but generally if you persist you will be successful.

There are other proactive actions you can take to change your financial habits and patterns and improve your ranking.

Here are tips you can start using right away that will improve your report over time:

– Keep credit utilization (the amount of debt you carry relative to the limit on each card) under 30 percent.
– Pay all of your bills on time to at least the minimum required payment.
– Pay off the oldest outstanding debt first.
– Open a new card to start building your history and boost your score.
– Try not to close old card accounts unless you simply have to.

With these helpful tips, you can be on your way to improving your reporting with each of the three bureaus.

At The Law Offices of Adam C. Gomerman, we offer credit repair services for those that would like professional help on Long Island. For more information, contact our office to schedule your no obligation consultation.