Many people have suffered the ill effects of having bad credit, especially in the past couple of years when the economy has been in a recession. There are now many people who always had perfect credit that are having problems now. The fact is that many people do not quite understand exactly how credit scores are determined or what if anything they can do to increase their scores and improve their credit.
Many things are considered when it comes to determining a credit score. It is more than just making your payments on time, however that is one of the most important factors. Another crucial factor is how much credit you have available to you compared to how much credit you have used. The type of credit you have is also important along with how often you apply for new credit. Any credit lines that are maxed out are extremely detrimental to a credit score and it is best if the unpaid balance can be kept under 20% of the available credit.
If you want to make a dramatic difference in your credit score you can pay either pay down your balances to below 20% of the amount available or you can get your credit limit increased so that your balance is below 20% of the available amount. If you have credit available but you do not use it you are considered to be good credit risk.
Longer-term credit is more valuable than recent credit also. If you are trying to rebuild your credit after a financial downturn, a new credit card may be useful but if you are just trying to improve your existing credit then try to use your older credit cards and credit lines and avoid new ones.
If there is inaccurate credit listings on your credit report you can issue a dispute and possibly get it removed. You must submit a formal, written dispute to the credit bureaus explaining what is inaccurate and why you believe it should be removed. The credit bureaus will then have a specific amount of time to either verify the accuracy of the information or delete it from your credit report. A federal law called the Fair Credit Reporting Act or the FCRA gives consumers the right to dispute inaccurate credit so take advantage of that opportunity.
The credit bureaus receive many disputes and it is difficult for them to process them all. It has been estimated that as many as 40% of all disputes are not verified within the time period by the credit bureaus. Therefore, it is definitely worth your time to submit disputes and your chance of success is actually quite high.
Make sure that you keep accurate records of all of your credit repair activity. Keep copies of all correspondence both to the credit bureaus and creditors and from them. Also make sure that each disputed listing is addressed separately in an individual letter rather than combining your dispute requests into one letter.
Credit repair takes time and energy and you may need to exercise some patience and persistence but it can be completed and when you succeed at repairing your credit the results will be well worth the time and energy that it took.
