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Free Tips to Make Sure Your Credit Report is Accurate and Increase Your FICO Credit Score

Low Credit Scores will cost you a lot of money in higher interest payments on loans, credit cards, and insurance. There is no reason for you not to increase your Credit Score before making any large purchase. You can save a huge amount of money by making sure your Credit Score is as high as possible, since this will lower your interest rates on loans, insurance, and mortgages. For example, a borrower who applies for $250,000 Home Loan and who has a 580 Credit Score will pay over $350 per month extra than if they had a 720 Credit Score.

Signup Now and See Your Free Credit Report and Score Instantly Online!

A word of caution: there are many Internet sites that charge you a small fortune for either trying to increase your credit score themselves or trying to sell you a book that will tell you "secret ways" to increase your Score. What you need to understand is that they all try and fix your credit report the same way as you would, mainly by disputing items and getting them removed from your report.

With the free tips available on this page, you can fix your credit report yourself, and keep it high for the future. Remember, whatever time or money you spend on increasing your credit score and keeping it high will pay for itself many times over because of the lower interest costs you will pay over time.

Here are the steps to help Increase your Credit Score:

First, Enroll in a Credit Monitoring Service (First 30 days free, $9.95/Month after) to get your Free Credit Score and Credit Report. You can run your Credit Report monthly and monitor how things are being changed - without paying each time you check for updates that have been posted. Without this key information, you won't know what your score is or how to possibly increase it by removing inaccurate information.

(You can also get your credit report free once a year from the government, however it wont include your credit score)

It will cost you some money to get your Credit Report and Score, but you will make it back many times over if you fix something wrong or use the information provided to increase your credit score. The three credit reporting agencies are Experian, Trans-Union, and Equifax. Since some lenders only report to one of these companies, you will probably have three different credit scores.

You can have 3 different Credit Scores since each credit reporting agency might have different information about you. Your credit score is determined by the following % breakdown:

35% Payment history
30% Outstanding debt
15% Length of your credit history
10% Recent inquiries on your credit report
10% Types of credit in use

Below is a table showing a sampling of possible different score ranges and how they can affect your loan payment:

Score Range	Rating	% of US Population	Extra Cost Per month for 200K Loan
780+	Perfect	20	$0
720-780	Excellent	20	$0
675-720	Average	20	$86
620-690	Fair	20	$242
Below 620	Low	20	$353

Some lenders will look at the scores from all three reports, while some might only look at one Remember, you don't lose any credit points for checking your own credit report. You will lose some points if there a number of credit inquiries over time for applications such credit cards, auto loans, department store credit cards, etc. However, you will not lose any credit points from vendors checking your score for marketing purposes. (Credit Card mailings, etc.) Remember, you can only affect your score if you initiate the credit check by applying for mortgages, auto loans, credit cards, etc.

Another key thing to remember is your Credit Score is not based on how "clean" your credit report looks. You may have many things on your credit report that drag on for years, but remember these are good things since they show credit history. As long as they don't show very late payments, they are adding points to your score since you have proved a reliable consumer. Don't contact these vendors and close accounts since it might hurt your score. The items you are interested in are late payments, judgments, delinquencies, etc.

So now you know that repeated inquiries into your credit standing will hurt your overall credit score. Think about this next time you get an offer for 10% off your purchase just for signing up for a store credit card, and just say no! You might save $20 now, but could lose much more than that later due to a worse credit score. Also, if you are shopping for a car or mortgage, try and keep all the inquiries to within two weeks since credit scoring companies will only treat all these as one "inquiry."

Once you've received your credit report, look at the percentage breakdown above and focus on the thing that will help you increase your score, such as payment history and outstanding debt.

First thing is to make sure everything on your credit report is right. If you see something wrong, make sure you dispute it with the agency. You can dispute it by way of phone, letter, online or via email. By law, the creditor must prove the accuracy of what you are disputing within 30 days. If they don't, it simply gets removed from your report. If you have evidence that something is wrong, then submit the evidence via USPS registered mail to the credit agency and they will have to remove the inaccurate data with 30 days or prove that it's accurate. Even it you don't remember if it's 100% accurate, dispute it since the creditor will have to prove that the information is accurate. Many times they can't do this since they might have lost the records, etc.

If you have any accounts in collections or that are very past due on your credit report, you need to get them removed to really increase your credit score. Again, by getting your credit report you may find things you never even knew about! For these items you will have to contact the creditor or collection agency directly. Our advice is to offer to pay 50% of your debt and negotiate upwards from there, however only if they remove you bad credit history off your credit report. (Not Just Marked Paid by Them) Make sure you get this in writing, most agencies will take the opportunity to collect the bad debt and thus help your credit score. Removing these items will dramatically increase your credit score since the derogatory item will be completely removed from your report and thus your credit history. Note: If you have already paid off these derogatory items, sometimes disputing it with the agency again may work since it will be their burden to prove it, and they usually wont bother disputing it since it's already been paid off and it's more work for them.

If your credit needs some quick boosting, and you have extra cash, pay down as much of your debt as possible. The lower your ratio of current debt to available credit limits the better you look to a lender, and the higher your credit score will be. The flip side of this is to call existing credit card accounts you may have and ask them to increase your limit, though you won't actually use it. This will also increase your credit score. Note: Do not open additional credit card accounts to increase this ratio, since that may hurt your credit. But increased credit limits on existing accounts will help since you will be lower your overall debt ratio. For example, if you have 10K in debt with a 15K credit limit, your ration is 2/3 or 67%. However, if you increase your credit limit or pay down your 10K, you will lower your ratio 50% or less. This will help your credit score.

Cancel some cards if you have too many, but if you are carrying debt try keep the ratio of debt to available credit limits at around 40% with about four cards for the best credit score. Don't cancel cards if it will put you below this ratio, and if you have to cancel cards make sure you only cancel ones with less than one year of history with. Do not cancel cards that are older then one year, remember your credit report does not get points for being clean of old accounts. Focus on doing the right things in order to increase your score, not cleaning up your report of old accounts that may actually have a negative impact on your credit score.

Another great way of helping your score is by spreading your debt to different cards. Although you may pay more interest, your score will improve since not all your debt will be on one card will that is close to it's limit. For example, if you have 20K limit on one card with 18K of debt, and have another card with a 15K limit with 2K of debt, its better to move 8K of debt from the higher card to the lower card. By doing this you will lower your ratio of debt to available credit, helping your score even though you haven't really paid anything down.

If you have no debt and have had no credit history within two years, go get some! Even though you don't need to fix your credit score, you do need to create some credit history. This may sound strange, but it works very well since it shows you can borrow and pay back large amounts of cash. Begin responsibly using a credit card for as much as possible and pay it back in full every month. Or take out one of those promotional 0% loans from one of your credit cards for as much as possible, put the cash into an account, and pay it back slowly (but before the 0% interest rate expires -- and don't spend it!). You will notice your scores dramatically improve after you have paid back the debt. This will also create credit history for you, and it's never too late to start building your credit.

If you have a partner/spouse or relative with good credit, have them add you to their credit card. This works very well since you will get credit for their payment of bills, and this will create more positive credit history for you.

Pay your bills on time by having them automatically deducted from your bank account or paid online before they are due. Being consistently late with payments is the easiest way to lower your score, and also the easiest way to keep your credit improving month after month is just pay your credit card bills on time or early! Even if you can only swing the minimum payment, get the payment there before the due date. Most credit card companies allow you to pay online, so make sure you take advantage of this and don't waste time and money on stamps and mailings.

By looking at your credit report, find out how often and when your lenders report. By timing your payments to right before they report to the credit agency, you will be able to show less debt and thus have a higher score! Again, this is why it's important to get your credit report to learn what is out there so you can find out what and when things are being reported. Even though you may have the same debt, by timing payments you can increase your score since your debt will appear in the best possible light for that time of the month.

It is estimated that on a new car purchase for $20,000, the difference in payments between a person with good credit and bad credit is almost $10,000 over the course of five years. This number gets much bigger if you are looking for a mortgage since you are paying very high interest over five to 30 years. You should do everything you can to increase your credit score and remember to check it before making a big purchase (house, car) so you can minimize your interest costs.

So, before making any large purchases, you should always check your credit report and increase your credit score as much as possible. If you don't, you may needlessly pay a lot more for financing due to high interest costs, thereby increasing your total debt. By making sure your credit score is as high as possible before hand, you will save yourself a lot of money in the long run.

There are better things in life to spend your money on than high interest costs.

Signup Now and See Your Free Credit Report and Score Instantly Online!


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