If your score is lower than 760 you are likely paying higher interest rates and not getting the most out of life. You should take action to improve your credit score, after all this three digit number impacts your lifestyle is so many ways! If you rent or own your home, what sort of car you own, you're interest rates, and most importantly your hard earned money and how much you can keep.
1. The first thing you need to do is figure out what is on your report. You can request a copy from each bureau annually for free by visiting annual credit report. You may be surprised out how much your reports will vary from one bureau to another.
If you discover errors or inaccuracies on your report you should file a dispute. It is estimated that 25% of all reports carry errors on them. These errors could be costing you real dollars and cents!
2. Next you should settle outstanding debts. Before you just start paying old bills it is important to use debt validation. This will require the collection agency to provide legal evidence that they own your debt and can collect on it. If the agency is unable to do this then you do not have to pay them and when you dispute the item on your report it will be removed. It is not unusual for debt collectors to be unable to prove they own an account.
If the agency is able to show they own your account then you should make a settlement offer. We suggest you start your offer at 50% of the total debt. Remember these agencies purchased your account for pennies on the dollar and have also added in fees and charges that they assessed to you. In other words not money you borrowed from the lender or interest rates you agreed to with your original lender.
You should never pay the full amount unless you feel morally obligated to. Additionally as a stipulation of your settlement you must get the agency or debt collector to agree to stop reporting this account negatively to the bureaus. If you do not get them to agree to this then just paying your bill will not improve your score.
The negative credit item will remain on your report, it may be changed to paid but that will not improve your score. Make sure to get this stipulation added to your settlement and don't worry it is standard practice. You need to do this so when you dispute this item on your report and file a dispute. Once the bureau investigates and contacts the debt collector due to your settlement agreement they will not verify your debt with the bureau and thus the item must be removed from your report.
3. Have available credit that you are not using. The best example is with a major Visa or MasterCard if you can keep your balance at roughly 30% of your limit it will help your score. This is because it shows you have money that you could borrow but are not using it. In other words it gives the impression that you are in a comfortable financial situation and not in dire straits borrowing anything and everything you can.
For a free credit consultation call us at 1-800-232-2903 or visit us to learn more about how to Improve Your Credit Score or how to Fix My Credit.
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