Clear Your Credit Report and Raise Your Credit Score
Your finances are like your body. You should take care of both while you can. Your commitment to buying real estate can be like committing to exercise three times a week. Real estate is the most reliable way to financial health. However, as with physical health, you have to be active. Write a $100,000 promissory note to yourself. Starting tomorrow, deduct $1 for each day you do nothing about your longterm financial health.
When you have problems in your credit report which lower you credit score, you must deal with them before approaching a lender. In other words, make sure you qualify for a mortgage loan before asking for one. Just consider what happened to Joan and Kevin when they applied for a mortgage loan. They were turned down because of something on Kevin’s credit report.
“You said you were clear of debt,” Joan said in disbelief.
“I am,” Kevin claimed.
It turned out that a dispute with a store over a defective electronics system, four years prior, was recorded as an unpaid debt of more than $2,000 on his credit report. This happened although the dispute had long since been resolved. Kevin had the store contact all three credit bureaus and his credit report was corrected. However, the sting of having been turned down still remained.
According to a 2004 study by the U.S. Public Interest Research Group (PIRG), one in four credit reports contain errors serious enough to cause your application for a mortgage loan to be rejected. It is up to you to correct such errors. Kevin didn’t bother to do his homework. There is really no excuse for receiving a bad credit rating for mistakes. Then again, many of us wish we had mistakes to correct. In our cases, the items on our reports have a strong basis in reality. Anything derogatory on your credit report that is less than a year old, kills you. It has to be fixed. More than a year old is serious, but not deadly.
Some of the unfavorable things on your credit report may be minor, involving sums as small as a dollar. You must clear all of them. Contact the firms or individuals involved. If you have to, go from person to person within a company. Make call after call. Tell everyone that you speak with that you are a great customer. Tell them that on one occasion you were neglectful, but you are a decent person. Ask them to please remove the item from your credit record. Do not make demands. People rarely respond well to direct demands if they don’t have to.
When you get a favorable reply to your request from a company or individual to remove something from your credit report, don’t leave it to them to remove it. Fax the favorable reply to all three credit bureaus. When it comes to the credit bureaus, always communicate in threes.
Your credit report may contain inquiries or unfamiliar items. Fax the credit bureau involved with these, asking for the names and addresses of the parties associated with them. When the bureau identifies the party responsible, fax that party a request to remove the item.
If a company won’t make any concessions, close your account. Your credit report will read: Account closed by customer. This is better than letting a derogatory statement stand unchallenged. To contact the credit bureaus, I’ve found that fax is the best way to communicate. Do not type the letter. If you type it, your letter will look like everyone else’s. Big companies receive thousands of look-alike letters. Most companies don’t log in and respond to letters in the order by which they arrive. Letters or faxes that need processing are collected in sheaves and those that stand out are more likely to receive attention on a preferential basis.
When you continually keep at them, credit bureaus often get tired of you and drop things from your record. Be careful never to accidentally dispute an item that has been dropped, because this will cause it to be reinstated. Credit bureaus have to correct your report within a reasonable time, usually thirty days. If you have a complaint, contact the Federal Trade Commission or send them a letter from an attorney.
This all sounds like a lot of work and it may be tempting to call a credit-repair agency to clean up your credit report. Such an agency will probably charge you hundreds of dollars and deliver little or nothing in the way of a better credit rating. Make the effort and do the job well yourself.
