Question about raising credit score

iVillage Member
Registered: 02-19-2004
Question about raising credit score
4
Wed, 09-21-2005 - 7:21pm
Hello everyone. I am hoping to refinance my student loans in about a year and half or so, to get my interest rate lower and get my mother (known to my loan company as "co-borrower") off the note. My loans are all private loans, as I have stated before due to the crappy federal student loan system. I am embarrassed to admit this, but my credit score is only 550 and it is holding me back severly in terms of qualifying. What does it take, besides the obvious of paying bills on time, to raise a credit score? Also, do you think a year to a year and a half is sufficient time in which to raise my score to 650-700 range? I need help!
iVillage Member
Registered: 12-12-2004
Wed, 09-21-2005 - 7:28pm
Hi. Credit scores. Well, we paid off the IRS last yr, so our scores improved. Yes, your score can improve in a year. That's how we finally got the fixed mortgage rate. You need to check your credit scores from the big three each year (not the free thing, but the detailed thing). Why? About 60% contain errors. Or surprises. Imagine when I checked mine--it still had my Mervyn's card as still "open" with a fairly big limit on it. That can go negatively for you. Do NOT fall for those "I can fix your credit score" scams. Whiz.
Avatar for cl_phocid
iVillage Member
Registered: 03-26-2003
Fri, 09-23-2005 - 7:32pm

When my credit score was in the toilet, it was because of too many recently-missed payments.

All my best,
Danni

iVillage Member
Registered: 02-19-2004
Sat, 09-24-2005 - 2:31pm

Thanks for the advice. Credit and FICO scores, beacon this and beacon that really confuse me and I'm trying to understand it better, so I can do everything I can to get my stinking 550 out of the gutter.

I love this board! :) Everyone is so helpful.

iVillage Member
Registered: 03-27-2003
Sat, 09-24-2005 - 10:22pm

Yeah, a year and a half is probably plenty of time to raise your scores significantly. We did it in less than that, and, yes, dh's score was about where yours is--in the, "won't loan me money without collateral and loan-shark rates plus a hefty fee and a signature in blood" range.

A year later his score looked pretty nice--now we're in the "everyone sends us offers of fee-free 0% transfer we'll lick your boots if you borrow from us offers" range.

It will help to take a look at your score and the list of items usually provided as explanations for why your score isn't higher. Then you can work on that list.

For us, the *biggest* thing was that we had too much debt--we were told that the best thing we could do was to lower each of our balances to under 50% of our limit (so, for instance, if we had a card with a $5000 limit, we should pay it down to $2500, then move on to the next card and lower it to 50%, etc.). So we worked on that.

The second biggest thing for us was a charge-off and a collection item. Frankly, part of the reason we were able to raise our score dramatically is that we successfully disputed these charges. It's somewhat controversial, but it is in fact possible to get even accurate negative information off your credit report under the right circumstances. In our case, we had paid both items in full, but they were not reflected as such. So, we wanted to dispute that, but on the advice of a financial website, we worded the disputes in such a way that we did not admit (we didn't lie, just worded it carefully) to ever having owned the accounts at all. Well, the upshot was that they were unable to prove we had ever owned the accounts, and all but one bureau removed them from our record altogether, and the one that still shows the charge-off did remove the collection item altogether. The key to know is that when a credit bureau receives a properly documented dispute (and they can require quite a bit of documentation, so make sure you send everything they ask, even if they ask several times for more information), they are required by law to investigate within a certain number of days (30, I think). The creditors are required by law to provide written documentation of the accuracy of their report, or the bureau must remove the disputed information. The key word is "written." Once an account is paid, most creditors no longer maintain written records--everything is electronic. So if you have a paid and closed account with a negative mark on it, sometimes it will work in your interest to dispute it, and often the original creditor will not be able to produce adequate evidence to maintain the mark. So the account can get wiped off your record altogether, even if everyone involved knows it really was your account.

As one person already said, DON'T pay someone to do this for you. Credit bureaus are understandably wary of dealing with "credit doctors," and they will work much harder at proving themselves right if they smell one in the works. If they get the letter from you directly, however, they may not even bother trying very hard, as the proportion of people who will go to this trouble is small and in statistical terms negligible, and more work than they probably reckon it's worth.

The other thing, as someone has already pointed out, is the obvious but boring task of simply putting time between you and the negative marks. It will get better that way. Eventually they'll drop off altogether. But of course you want to do what you can to make it happen as quickly as possible.

Good luck and blessings,

Heather