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Low Credit Score?: 6 Immediate Steps To Raise It
Posted by: Dave Landry, Jr. from Independent on Wednesday October 23, 2013 at 10:25 AM   (-07 GMT) | Comments (0)
Tags | Loans | Categories: | Debt - Credit Card, | Finance - Managing your money
Low Credit Score?: 6 Immediate Steps To Raise It

When taking out a loan, a borrower's FICO score sums up his or her reliability in the eyes of the lender. While many other factors may come into play, credit conveniently represents in a number the score of risk which a person presents when borrowing money. As a result, borrowers with lower credit scores receive less beneficial interest rates to compensate for this increased lending risk, ultimately paying more in interest.

However, there are many methods and services available online that boast the ability to boost your credit score. Although many of these options are dubious at best, find out these tried and true methods to raising your credit score as soon as possible:

1. Find and Fix Credit Report Errors:

First and foremost, get a copy of your credit report for evaluation. Typically, borrowers are entitled to one free credit check per year, although additional requests are generally inexpensive. Once you have received the report, thoroughly review it for any misrepresented figures or errors. If you find any inaccuracies, report them to your credit agency for immediate results.

2. Pay Off Any Accounts That Have Gone Into Collection:

If you have an account that has been transferred to a collections agency, you may be able to expunge the outstanding debt from your credit report by agreeing to pay the balance. Referred to as "paying for deletion" or "paying for removal," this little-known option can resolve collection debt with minimal hassle, although borrowers should always obtain an agreement in writing prior to making any commitments. Specifically, request a written contract stating that the company will delete the outstanding balance from the three major credit agencies: Equifax, Experian, and TransUnion.

3. Request a "Good-Will Deletion":

For those who have only had a few credit slips here and there, a good-will deletion will remove one or two minor incidents from a credit report, raising the borrower's FICO score. Only available to good credit borrowers, these requests will often be granted, provided no evidence indicates habitual lateness on payments. In other words, if you have regularly missed payments, you probably will not be granted a good-will deletion. For those who do, this deletion can rapidly raise FICO score.

4. Pay More Than the Minimum Payment:

While this may tip seem like common sense, it can be easy to fall into the habit of only paying off the minimum necessary, making the original purchase significantly more expensive as interest accrues. If you want to improve your credit, try never making just the minimum payment and make an effort to pay any outstanding balance down as soon as possible. A site like National Debt Relief can also provide information on lowering your credit score and staying out of debt.

5. Keep Your Credit Balance Low:

While credit cards often allow for a decent amount of spending considering their maximum limits, it is a fatal credit mistake to continually draw out a significant portion of this limit. Despite having this spending power available, borrowers should always maintain a credit balance that is less than 25% of the maximum allowable limit.

6. Maintain Old Lines of Credit:

When managing your credit card debt, closing a line does not make that credit history disappear. In fact, when trying to build a solid credit score, keeping open older lines of credit can be tremendously helpful. Essentially, credit reports attempt to evaluate how reliable a borrower is when making payments, and removing part of that history will make evaluation difficult. Instead, borrowers should keep these lines open and practice better payment habits to avoid credit damage. This will demonstrate a clear desire to take control of one's finances and make payments on time, sending a much more clear message than a deleted credit history.

While some of these options may provide an immediate credit boost, the most effective way to get and maintain good credit is to practice responsible payment habits. Most often, low credit scores derive from missed or late payments, and those who want to achieve high credit should avoid these delinquencies at all costs. Remember, when trying to raise your credit score, good credit is not simply given; it is earned.
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The Danger of Debt Settlement to Your Credit Score
Posted by: Ethel Wilson from Credit Score Resource on Tuesday November 6, 2012 at 1:48 PM   (-08 GMT) | Comments (0)
Tags | Legal, | Loans | Categories: | Debt - Credit Card, | Debt
The Danger of Debt Settlement to Your Credit Score Rating

Your credit score ratings could be negatively impacted by what you may consider a positive and responsible act. Though you might feel that making arrangements to settle a debt with someone you money to is a good, positive thing, it could seriously damage your credit score and ability to obtain credit at some point in the future. A settlement is when you make an agreement to pay off less than what you owe as a final settlement of the debt. Though it relieves your debt and helps the lender avoid the expense of hiring a collection agency, it could leave a big black mark on your credit score rating.

How Working With a Debt Settlement Company Can Affect Your Credit Score Rating

You can come to an agreement with a lender yourself, but more often settlements are made by arrangement through a debt settlement company. These are the companies you see advertising to consolidate all of your debt into one grand sum. They take an upfront fee from you, and then you pay them over a period of around six months instead of paying to those you owe. At the end of that period, the settlement company negotiates a deal with the lenders, usually to pay about thirty to fifty percent of what is owed, or what they have collected so far. If your account is more than ninety days overdue, credit card companies will generally accept the offer. They follow the “bird in the hand” philosophy in such cases.

The Effect Settling Has on Your Credit Score Rating

Your credit score rating will already have taken a good beating by the time it has reached the settlement stage. Your credit history will show a number of late and missed payments, many of them possibly more than ninety days overdue. Some will be at least thirty and sixty days over. Such a string of late payments can lower your score by as much as two hundred or more points. The way a settlement affects your report depends on how the lender reports it. If they report it as “paid as agreed”, or “paid in full”, your score will not be damaged any further. If they report it as “settled” however, your score could drop even further.

Negotiate How Your Settlement is Reported to Save Your Credit Score Rating

It is possible that you or the settlement company you are working with can negotiate with your creditors that they report your settlement as “paid as agreed” as part of the conditions of your settlement. They are not obligated to do so, but many will want to have the situation put behind them. In any case, it doesn’t hurt to ask, and their agreeing will benefit your credit score rating.

How to Have a Debt Settlement Removed From Your Credit History

Debt settlements and related payments should be automatically removed from your credit report after seven years. Sometimes, either because it wasn’t correctly reported by the lender, or just because of human error, they are not. If you have had any debts go to settlement, it is crucial that you obtain a copy of your credit report to check how it is listed. Wait about six months before doing so to give the lender time to report it. It should show up as “paid in full” or the account being closed. If it is still recorded as an open account with credit due, you need to contact the lender to have them fix it. If after seven years it is still in your record, you need to contact the credit bureau by means of a credit dispute letter to have it corrected. Debt settlement may not be the best tonic for your credit score rating, but it is better than having a debt go to a collection agency.

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