Here Are Some Tips to Rebuild Your Credit
Maintain Credit. If you already have a credit card stay current on your credit cards.
Monitor Credit. Take a few minutes each month to review your credit scores, monitor your progress, and set your goals for the coming month.
Use Credit Wisely. Credit scores come from the use of credit, so make sure you use credit and not just cash to fund purchases. Your credit score is based on the amount of credit you use and your recent credit activity. Credit Agencies like to see that you use 10-30% of your available credit limit. Apply for new credit at department stores or you can apply for a secured credit card at your local bank. While you certainly want to be cautious and avoid getting in over your head again, getting credit is going to be essential to building your scores again.
Finance a Car. You will have to weigh the cost of the auto loan interest payment versus the benefit of the credit score improvement.
Pay Your Bills on Time. By reviewing your credit reports, you’ll know which lenders report to the credit reporting agencies, and you can be extra careful about paying them on time, every time. If you can’t pay the balance in full, pay at least the minimum amount so that it will not count as late on your credit reports. Keep in mind that some lenders only report negative information. That means that even a lender who doesn’t report positive payment history may report if you fall behind.
Try to Stay Out of Trouble. One late payment can mean a big drop in your credit scores. Set bills up on autopay or set up automatic payment reminders by email and/or text message so you don’t forget a bill. Tax liens, judgments, foreclosure, collections and bankruptcy are likely to affect your credit. Try to avoid these issues if you can, but if these issues have already occurred, try to resolve the debt by settling with your creditors so that you can be on your way to rebuilding credit. If you need assistance, you can hire Van and Associates Law Firm to assist you in resolving these debt settlement issues (702) 529-1011 or firstname.lastname@example.org.
Shop Carefully for New Credit. While a single inquiry into your credit or a new account won’t ruin your credit scores, they can have an impact. Multiple inquiries such as shopping for new credit accounts or opening several accounts at one time can severely impact your credit score. As FICO representatives are fond of saying, “Be a credit grazer, not a credit gorger.”
Get a secured card. If your credit score was lowered, it can be hard to get another loan, yet proof that you can repay loans is exactly what lenders want to see. Rebuild your credit history positively by getting a secured credit card (which is a credit card that requires you to deposit some money first as security). If you choose a card that is reported to all three major credit reporting agencies, you’ll establish a new positive credit reference.
Borrow Someone Else’s Credit Rating. You can also ask a family member who has good credit to add you onto their credit account. That way you can piggy back on their good credit. Please make sure they add you to their account and not add you on as an authorized user, because authorized user accounts do not help your credit score.
Verify All Personal Information on Your Credit Reports. The personal information on your credit reports is also important. A misspelling of your name, or an address you’ve never lived at, could indicate your credit information is getting mixed up with someone else’s.
Mark your calendar. The Fair Credit Reporting Act addresses how long negative information can remain on your credit reports. There are limits on how long negative information can be reported:
- Late payments: 7 years from the date the payment was late
- Collection accounts: 7.5 years from the date of delinquency on the original debt (leading up to collection)
- Charge-offs: 7 years from the date charged off
- Tax liens: 7 years after they are paid or satisfied
- Judgments: 7 years from the date entered by the court if paid, possibly longer if unpaid
- Repossession: 7 years from the date the repo occurred
- Bankruptcy: 10 years from the date filed (Chapter 13 cases will be removed 7 years from the date of filing)
You typically don’t have to request that the credit reporting agencies stop reporting negative information that is too old; they do that automatically.
Watch out for credit report double jeopardy. Collection accounts that go unpaid may be sold from one collection agency to another. When that happens, both the number of collection accounts and the amount of debt you owe can be inflated.
Don’t be afraid to bargain with debt collectors. As far as your credit scores are concerned, it doesn’t make much of a difference whether you pay a collection account in full or settle the balance for less than the full amount. Just make sure that you get any deals in writing.
Kiss your tax lien goodbye. If you pay or settle a tax debt that resulted in a tax lien on your credit reports, you may be able to get that lien removed completely from your reports. The same may apply if you enter into an installment agreement with the IRS. Find out if you qualify and if you do, your credit scores may improve significantly when the tax lien is removed.
Dispute mistakes the right way. If the mistake is a serious one, it’s a good idea to send a letter rather than filing an online dispute. You’ll need to challenge the error with each of the major credit reporting agencies that is reporting the error, since they don’t share information with each other.
Transfer Account. Collection accounts that go unpaid may be sold from one collection agency to another. When that happens, both the number of collection accounts and the amount of debt you owe can be inflated.
Invisible accounts. If you disputed an account previously and the credit reporting agency could not verify it, the CRA may have “suppressed” that tradeline so it would not be included in your credit reports. The information is still available to the CRA, but it’s essentially invisible because it is not included in your reports.
These types of disputes are hard to pursue because you don’t necessarily know when information is suppressed or missing altogether. If you’ve already received your credit report through another source such as AnnualCreditReport.com or a credit monitoring service, is to file a dispute asking the credit reporting agency to include the “missing” account if that information is available. If you go that route, include the full account number in your dispute. Paperno says that makes it easier for the CRA to find the account. You can also file a dispute with the lender that should be reporting the account.
Closed accounts that disappear. Old accounts are normally reported for quite a while after they are paid off, but that’s not always the case. The lender may stop reporting them, for example, or the credit reporting agency may drop them from your credit file if they become quite old and you have a lot of other newer accounts. Again, it’s hard to get these kinds of accounts added back to your reports since there are no requirements that they be included. However, you may try reaching out to the lender and/or filing a dispute with the credit reporting agencies.
Please feel free to contact us today so that we may discuss the options that are available to you.
Van and Associates Law Firm at 702-529-1011