MYTH #11: It Will Take 7 Years to Improve My Credit Score
REALITY: You Can Quickly Rebuild by Following Our Tips
Many consumers think it will take seven years to improve their credit, when in actuality it’s an ongoing process and does not have to take as much time as you may think to improve your score following proven methods. Most negative items will remain on your credit report for seven years, as long as they are accurate, verifiable, and within that period of time.
CNN recently reported 96.7% of credit reports contain errors. Of them, 32.4% were serious enough for credit denial! These items must be deleted and removed immediately.
Unfortunately in the credit world with the three big Credit Bureaus (Trans Union, Experian & Equifax), consumers are considered guilty until we can prove ourselves innocent. The bureaus often find ways to stall, delay and play games in response to disputing efforts. We expect this behavior from them and know how to play their games. Many consumers tend to give up before achieving their desired results.
You can also speed up the process by following these tips:
Review Your Credit Reports — Get a copy of your credit report from each of the credit bureaus. It is important to get a copy from each bureau since not all creditors report to all bureaus. As stated above and reported by CNN, a majority of credit reports contain errors costing consumers thousands of dollars per year. A site we recommend to get an easy to read 3-bureau merged credit report is http://bit.ly/lbvlhB.
Make Your Payments on Time — It is important for having a good credit score. Likewise, if you have a history of late payments, collections or charge offs, your credit score will be negatively affected. The more negative items you have on your report, the more your score will suffer. The more recent your delinquencies, the more this will impact your score. Time will heal this category.
An exception: If you are delinquent on an account that has gone to collection, paying it could cause more harm than good.
Amount of Debt You Carry — This is also important and has a large impact on your credit score. Your mortgage and auto loans (installment debt) are included in this part of your score, but it is the credit card debt you carry that is really the most important. This includes anything from MasterCard, Visa, American Express and any other revolving accounts you have such as gas cards and department store charge cards, etc. The balances you carry on your cards versus your available credit, calculates your “revolving utilization percentage.” The higher your utilization percentage, the more of a negative impact this has on your credit scores. You can calculate your “utilization percentage” by adding up all of your charge card balances and dividing them by the total credit card limits you have available, then multiply that number by 100.
Age of Your Credit History — The longer your accounts have been open, the more this will positively affect your credit score. Never request to have old, good accounts (even if you haven’t used them in years) removed from your credit report because this will shorten the history of your credit file. As your accounts get older, your credit score will gradually and automatically increase.
Credit Mix — It is best if you have a diverse list of accounts on your credit file. The ideal mix is 3-5 revolving accounts, a mortgage account and an auto loan. DO NOT close accounts if you have more than 5 revolving accounts. As discussed in the previous paragraph, closing established accounts with a good, lengthy history can potentially have a much more devastating impact on your score than having the proper mix of credit.
The best advice: If you have less than 3 revolving accounts, open a new account. If you have more than 5, only close an account if it has been opened for a short period of time.
Credit Inquiries — When you apply for credit, you are giving the lender permission to check your credit history and credit scores. Each time this happens, your credit report will reflect an “inquiry” which can lower your credit score. To maximize your score, only apply for credit when it is really needed.
IF YOU FIND YOURSELF NEEDING CREDIT ASSISTANCE
CALL OUR OFFICE TODAY AT 480-502-5554 OR 866-575-1414
ALL CONSULTATIONS ARE CONFIDENTIAL AND IN-OFFICE OR VIA TELEPHONE
WITH MICK BERNARD, FICO PRO CERTIFIED CREDIT EXPERT (FPCCE)
LEGAL DISCLAIMER: The advice provided is for informational purposes only. It is not to be construed as Legal Counsel or Legal Advice.