Low credit scores are fairly common these days and the recession in the economy has just made it more acute. You can have an excellent credit score and miss just one payment and your score can dip as much as 100 points or more. One concern is that many people do not have any idea about how credit scores are measured, how they can drop and how to increase them.
There is a variety of different things that make up your credit score. It is crucial to make your payments in a timely manner of course, but there are also other crucial considerations. One big determination is how much credit you have accessible compared to how much credit you have used. If your lines of credit or credit cards are maxed out at the limit, you are thought to be a high risk.
In order to increase your credit scores you need to make sure that you use no more than 30% of the credit limit you have accessible. You can do this by raising your limits, paying down your balance or not going over the 30% in the first place. You are considered to be a lower risk if you have a higher credit limit but you are not utilizing it.
Long-term credit is attributed more consideration than short-term credit. If you have an older credit card that you haven’t used much, start using it but make sure that you do not exceed the 30% rule and of course, be diligent in making your payments. It is always wise to carry a zero balance on a credit card if that is possible for you.
You can dispute negative information on your credit report. The Federal government enacted the Fair Credit Reporting Act in an attempt to protect consumers. If you have a negative mark on your report you have the opportunity to dispute it.
The bureaus and the creditors must then prove the validity of it within a certain period of time. If they neglect to prove that the information is correct within the allotted time period, then the information must be removed from the report.
The creditors and the bureaus have 30 to 45 days from receipt of your dispute to prove the validity of their reporting. However, the benefit you have, as a consumer is that it is estimated that as many as 40% or all disputes are never verified. That means that up to 40% of all disputed information is removed from the reports. You can use that fact to your benefit.
Make sure that you keep accurate and detailed records of your disputes. Make sure that everything is sent by certified mail and you have all of the receipts along with copies of the disputes. Do not dispute more than one item per letter. Send separate correspondence for each negative mark.
It may take time, energy and determination to repair your credit but it can be done. You have the legal right to repair your credit and it is worth every effort.
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