Updating a Permanent Credit File

A consumer with problematic credit can and should obtain a copy of his/her credit history from each of the three national credit-reporting repositories:

If incorrect information is reported, or if other information (such as paid accounts showing as open) need to be updated, the consumer should contact all three of the repositories to ensure that corrections are made in all three systems. Typically it takes 30 days for the national repositories to investigate and update a credit file when requested to do so by a consumer. Another option for clearing up your credit is through such programs as "Bureau Direct" or "Rapid Re-score". There is a cost associated with the service, but credit can be corrected in 48 to 72 hours rather than the usual 30 days.

Credit Scores

Credit scores are predictive indicators of a borrower's likelihood of repaying a credit obligation. They are weighted according to the following criteria (example below, can vary per reporting agency):

1. 35% -- Major and minor delinquencies including late payments, collections, judgments, and bankruptcies.
2. 30% --Amount of outstanding debt and balance to high-credit ratios.
3. 15% -- Length of credit history (how long accounts have been open).
4. 10% --Inquires or applications for new credit
5. 10% Type of credit (revolving versus finance company credit).

Note - Information that is not considered in credit scoring includes race, religion, gender, marital status, borrower's address, wages, height, weight, or birthplace.
* There are four factor codes listed on a credit report, which point out the actions that are impacting your score. These are the areas you need to address to change a score.

How to Improve a Credit Score

Credit scores reflect a borrower's credit payment patterns over time with the most emphasis placed on recent information (24 months). There are some other strategies a potential borrower can employ that may have a positive effect on his/her score.

1. Pay down the balances on revolving accounts. Credit scores are more negatively affected by delinquencies on revolving than installment credit. In addition, high outstanding balances on revolving accounts can have a major impact on the score. By reducing the balance, but not closing the account, the borrower will improve their balance/high credit rations and positively impact his/her score. It will take the bureaus at least 45 to 60 days to reflect a lower balance. The credit bureaus can ONLY change lower credit balances with time, not with ANY repair program.
2. Pay past due accounts current.
3. Avoid credit surfing. This is the practice of shifting revolving credit balances from one card to another, usually to take advantage of low introductory interest rates. The combination of inquires and newly opened balances, especially since new balances will show on a credit report before old ones are reported as paid, can make a consumer appear to be in search of new credit.
4. Avoid finance company credit. New credits in the form of cash loans from a finance company have more of a negative impact on a borrower's score than other installment or revolving debt. Borrowers should also avoid 90-day 12 months same-as-cash finance company transactions in the months preceding their loan application.
5. Have erroneous information corrected or updated. Borrowers should pay particular attention to the accuracy of the credit history, such as the dates of last activity and/or delinquency, since recent information has the greatest impact on credit scoring.
6. Avoid creating numerous inquires. Each inquiry can lower your score.
7. Have your scores corrected as soon as possible. Some useful websites to visit are:

• www.creditexpert.com
• www.transunion.com
• www.experian.com
• www.myfico.com
• www.equifax.com