Perhaps you just checked your credit score and were pleasantly surprised to see that the three-digit number has jumped up since you last looked at it. Or maybe you peeked at your report, and to your dismay found that your score dropped from where it once was.
In the worst of cases, perhaps you are actually too afraid of the outcome to even order a credit report, even a free credit report at that, for fear of what it will reveal.
The fact is that sooner or later you need to confront it, and if it’s lower than you prefer, take some smart action to get the numbers moving up.
As you know, what is listed on your credit report has a direct influence over your credit score, and your credit score carries some serious weight. It’s what lenders look at to determine whether you are a responsible borrower, and you are rewarded for a good credit score by lower interest rates. A bad credit score can earn you higher interest rates and can even prevent you from taking out a mortgage or a loan.
The good news is, there are ways to increase your credit score by making some changes to your credit report. I’ve put together a series of questions that you should be asking when it comes to your credit and to your credit report, questions that could potentially result in a cleaned-up credit report and a positive impact on your score. So don’t be scared—check your credit report and score, and get cracking on these questions to clean that bad boy up!
1 – Can I get a goodwill adjustment?
A goodwill adjustment is akin to a “get out of jail free” card. Even the best of us have had late payments at some point, and these count as strikes against our credit history. It is possible to get late payments stricken from your record by asking for a goodwill adjustment, especially if you have had the account for over a year and a half and have not requested such an adjustment recently (within a year or so.) Granted, creditors don’t HAVE to remove this information, but many will. And you don’t know unless you ask! Jim Wang of Bargaineering.com provides a template here for writing a Goodwill Adjustment Letter.
2 – Will you please re-age this credit account for me?
Re-aging is a term used to describe the process of a creditor removing negative information (such as late payments) from the data that they report to the credit bureaus. For example, if you have a past-due account and asked a creditor to re-age your account, the negative information would never make it to the credit reporting agencies and your account would be marked as “current.” This tactic works best in a situation where a borrower went through a difficult financial time, such as a job loss, and is now back on their feet again.
The best way I’ve found to succeed in getting your account re-aged is by giving a good explanation as to why you fell behind in payments, and then assuring the creditor that you are in a good financial position once again. It’s not a bad idea to offer to pay down a lump sum of money right then in return for a re-aging as a negotiation tactic. It also proves to the creditor that you had a short-lived blip of bad finances and that you’re doing great now. Streedirectory.com gives some more advice and information on re-aging your account.
3 – Can You Assist Me with Disputing an Error on my Credit Report?
That’s right, sometimes credit reports contain actual inaccuracies. In fact, just recently a Nebraska teenager was declared dead by the credit bureaus, and as a result is having trouble getting both a car loan and student loans to pay for college. That’s pretty much the most extreme case I’ve ever heard, but as you can see it proves that credit reports are not always 100% accurate.
If you do find a discrepancy on your report, it’s very important that you file a dispute with the credit bureau to have it eradicated. The Federal Trade Commission has put together a comprehensive guide to disputing any errors you may find on your credit report.
4 – May I have a higher credit limit?
This one might not necessarily work if your credit report is still a bit rocky, and your score is in tough shape. You could always flag this tip and save it for later, because it really can come in handy for boosting your credit score. The way it works is that creditors look at the gap between your available credit limit, and how much of it you’ve used.
The less available credit you use, the better it looks. So if your credit limit is higher, but you’re still spending the same amount, it appears as though that gap is larger which boosts your credit. Just make sure that you don’t request a higher limit and then actually use it. It’s important to keep spending the same amount—I recommend just a little each month, for things you would purchase already like groceries or gas—and then pay it off each month.
By following the above steps, you may be able to make dramatic improvements to your credit report and credit score. Remember that once your credit score is in good shape, you need to take the necessary steps to keep it there, including only charging what you can pay off each month, making timely payments, and sticking to a monthly budget so you do not overspend and can put aside ample savings.
About the author: Dk enjoys blogging, especially about topics related to money and personal finance. Check out more of his work at RoadFish.com.