(1 votes, average: 3 out of 5)
Loading ...While you may not be able to wipe the slate clean, there are ways you can improve your credit record. Here are steps we suggest:
Dispute Information
If you find mistakes on your report, you absolutely should dispute them. Some might not result in a change in your credit score (closing old accounts, for example), but others may result in a dramatic improvement (getting an inaccurate judgment or old collection account off your file, for example).
If you dispute information with the credit reporting agency, and it comes back to you saying that it has verified the information with the lender, your next step is to go directly to the lender reporting the mistake. The revised federal Fair Credit Reporting Act says that lenders may not report information they “know or consciously avoid knowing” is wrong. That means they have to take your dispute seriously, investigate it, and confirm that it is correct before continuing to report it.
Establish New Credit
Establishing positive new credit references can really help your credit if you need them. The best? A couple of major credit cards paid on time. If you already have one (or more), use it to charge only what you can afford to pay at the end of the month, and make sure you mail the payment well in advance of the due date. If you don’t have one, get a secured card, which requires a security deposit.
Negotiate a Better Rating
Though this tactic is frowned upon by credit reporting agencies and lenders, it is sometimes possible to negotiate an improvement in a particular tradeline in exchange for payment, or just because you are a good customer. You’ll probably have the most success with this technique if you are working with a collection agency early on in the debt collection process. For example, as soon as you are contacted, you may offer to make a lump-sum payment to settle the debt as long as they agree not to report it to the credit reporting agencies. Caution! You must get that agreement in writing. If you do not, you may find they report you anyway. Some balk at doing so, but if they agree to your proposal, they should be willing to back that agreement up in writing.
In other cases, a company may be willing to remove or stop reporting a negative remark if you can show that your late payments were temporary or due to unusual circumstances and if you otherwise have a good credit history with them.
If a company has gone out of business or sold your loan, you may be able to simply dispute the account through the credit reporting agency. If the agency cannot confirm it with the lender, the account will be deleted.
No company is obligated to remove negative but accurate information, but neither are they obligated under federal law to report an account in the first place. Some lenders or collectors may, however, have agreements with credit reporting agencies stating that they will not change or delete accurate consumer information.
Go to the Source
Believe it or not, lenders want to make loans. But they also want to make sure you’ll pay them back. Most lenders use some form of credit scoring system to evaluate applications. If you have unusual circumstances, such as divorce or medical bills that ruined your credit, make it a point to apply for loans only when you can talk to a loan officer to whom you can explain your circumstances. Otherwise, you’re likely to be judged only by the numbers. Even then, a scoring system may prevail—but it’s still worth a shot.
Remember, Time Heals
While you can’t remove truthful, negative information, the older it becomes the less important it will be. A thirty-day late payment last month will probably hurt your credit rating more than a ninety-day late payment five years ago. People buy homes, get credit cards, and buy new cars, even after bankruptcy. So hang in there, and keep building good credit references by paying your bills on time all the time. It may take a little while to get your credit where you want it to be, but it will happen over time.