Helpful Tips on Improving Credit Score and Credit Standing

Start Strong – Learn How Your Score Is Calculated

• Payment History (35%). Avoid late fees and a ding to your credit score by paying your bills on time. A late payment over 30 days can remain on your history for a few years.
• Amount Owed (30%).  A good rule of thumb is to owe less than 30% of your total limit(s) on revolving credit lines.
• Length of Credit History (15%). Accounts in good standing that you’ve held for two years or more will show up favorably on your credit report. In other words, keep those old accounts open – they’re helping you!
• New Credit (10%). Each time you apply for credit, your score decreases a few points, so only seek loans and credit you truly need. This goes for balance transfers too, while a 0% teaser rate might sound attractive, too many transfers on new cards can negatively impact your credit.
• Credit Mix (10%). It’s helpful to diversify your credit with a mix of revolving (e.g. credit cards or lines of credit) and installment (e.g. auto loans and home loans accounts). Well managed accounts, no matter the number, will give you a higher score, which tells lenders that you’re a stable borrower.

Build or Repair Credit

• Obtain a secured credit card. Many financial institutions will issue you a credit card if you put a specified dollar amount on deposit with them. The funds are held as security, and a line of credit equal to the amount you have on deposit will be issued to you. Essentially, you are borrowing and repaying your own money, while simultaneously building your credit.  
• Open a Credit Builder Loan. Some, like our Personal Assistance Loan, are relationship-based and do not require an initial credit check. You can borrow a limited amount for a fixed term, and positive repayment history is reported to the credit bureau. 
• Ask someone with good credit to cosign. Another option is to have a friend or family member with good credit history cosign a loan or credit card for you. Do use caution with these arrangements - any late payments you make will not only reflect poorly on your credit report, but your cosigner’s as well.

Correct Inaccurate Information

Many credit reports contain mistakes. Causes of credit report inaccuracies include incorrect identity (information on someone else’s account showing up on your report because you share a similar name), old information not being dropped from the report on time, or, more seriously, identity theft or fraud. If there is inaccurate information on your report, you can and should correct it:

• Dispute the information with the credit bureau. Using the “request for investigation” form provided with the report (or in a letter if you don’t have the form), indicate which information is incorrect, and explain what the true information is. Enclose any supporting documents you may have. If you received the report online, you may use the dispute process on the bureau’s website. Whichever process you use, the credit bureau must investigate your claim, usually within 30 days. If an item is deleted or a dispute statement is filed, you may ask that anyone who has recently received your report be notified of the change.
• Dispute the information with the creditor. If the investigation results in no change to your report and you believe the information is still inaccurate, contact the creditor directly and request documentation of the debt. If they can’t provide it, let the credit bureau know —only verifiable debts can be reported. Remember to document everything as you file your dispute. Keep copies of letters, mark your calendar, and get the names of everyone you talk to. Also, send the letters certified mail, return receipt requested, so you can be sure it was received.
• Add a statement to your report. If the investigation and your efforts still do not resolve the dispute, you may add a statement to your file (in 100 words or fewer) explaining your side of the story. Your statement will be included with future reports for as long as seven years. If you want to remove it before it automatically drops off, send a written request.

Be Wary of Credit Repair Claims

There is no such thing as a quick credit fix - only time and positive activity will mend credit damage.

Some companies claim to “repair” credit reports, and often for a very high fee. They frequently operate by flooding the credit bureaus with letters that dispute negative, but accurate, information. If the credit bureau is unable to investigate the claim within 30 days, the information is removed. This rarely works. The credit bureaus are generally able to respond in time, and even if the information is removed due to a backlog of requests, it will simply be re-reported by the creditor later.

Another common tactic credit repair agencies use is to issue consumers a “new identity,” complete with a tax identification number to use as a social security number. This is an illegal practice for which the consumer often ends up paying the legal price. There is no legal way to remove accurate and timely information from your credit report.