After several years of employment with a National Credit Reporting Agency, I came to the conclusion that many of the services that were ordered could be done yearly, with minimal cost. When a consumer decides to buy a large ticket item, from houses to boats to cars, there is always panic involved when they see that their credit score was not as expected. In fear of being stuck with a large interest rate or not being able to secure a loan, many consumers feel they are left at the mercy of the mortgage brokers and their CRA’s. In most cases the consumer will pay 300 to as much as 800 dollars to update tradelines and remove items from their credit reports.

Please know that with the constant monitoring of your credit score and some dedicated initial cleanup you can be free. You can be independent of the fear that comes with needing to check your credit score. Let’s try to keep some extra cash in your pocket!

1) Obtain a copy of your credit report annually.

You can access your credit report annually from the three repositories online and at no cost to you. There are two different methods to assure that you can monitor your report. The first method is to pull the report for all three bureaus. The alternative will allow for three pulls throughout the year. You can pull a different bureau every four months. This will allow for a more up to date form of credit monitoring.

2) Highlight anything on your report that does not look familiar.

It is important to identify any items on your report that you did not initiate. After identifying those items call the associated number and inquire when and why your credit was pulled through their systems. If you find that any items were not initiated on your behalf, file for fraud alert to be placed on your credit file.

3) Take another look for items that are over 7 years old.

After seven years, any negative items should drop from your report. The bureaus keep record of every individual in the nation therefore occasionally these items remain after their expiration date. Be sure to clear these negative marks to help boost your score and clean your record. Again you will have to take incentive to contact the bureaus to remove these marks.

4) Keep note of debts that are over 3 years old.

This is important because if you have not made a payment on the debt in three years, the older it gets the less it is affecting your credit score. Be aware that there are collection companies that buy old debt and try to contact you to set up payment plans. If you fall into the trap of setting up a payment arrangement, or even making one payment, it will pull your score back down to the level of a newly incurred debt.

After you have combed your credit report for fraud, erroneous marks and outdated debt you will be free to start a few rebuilding steps.

5) Establish revolving credit and keep it!

This step takes will power. The best way to deal with credit cards and not abuse them is to be sure you have the income available to pay all of your bills in full, monthly. When you get a credit card, get one with a limit that is around $5,000; when the bureaus see that you have a credit card with an outrageously high limit they view it as potential debt. Your debt ratio will be destroyed. Start off by putting two bills on the credit card and paying off most of it at the end of the month. Eventually move most of your bills over to the credit card and pay the credit card bill down monthly but don’t pay it off.

6) Do not shred old cards with reasonable limits.

If you have a Victoria’s Secret, Lowes, Sears… card, keep it! Even if you are not using it or have not used it in years, the open line of credit helps. It helps your score and it gives you an emergency net as well (…maybe not the Victoria’s card). Be cautious with these cards as well, don’t overdo the credit limit.

7) Pay off your outstanding debt.

Start to pay down any outstanding debt that does not fall under the categories previously discussed. Always contact the debtor and discuss payoff amounts, often times they will work with you if you would like to pay in full by offering a reasonable settlement. In many cases, when you are unable to pay in full, a payment plan that will work with your schedule will be offered. After making your payment in full or completing a payment plan, request a letter with your payoff and zero balance so that you can provide it to the bureaus in order to have it processed as quickly as possible.

There is a certain amount of dedication that comes with repairing and monitoring your credit report but the benefits greatly outweigh the inconvenience. When it comes time for a large note to be entered into, it will be these steps that may save you money, lower your interest rate or allow for you to obtain a line of credit. Take control of your future and don’t be fooled into investing hundreds of dollars on a credit repair scam or last minute expensive patchwork job for the loan you needed yesterday but are still waiting to secure. Don’t sit around, get started now…good luck!

http://annualcreditreport.com
http://ftc.gov/opa/2000/02/idtheft.shtm