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Sculpting your score - top ten ways to chip away at poor credit

By Trulia | Published: Oct 14, 2009 | 21 Comments

What's harder to improve—your credit score or your bowling score? I'd say the latter. In bowling, eventually you'll hit a wall (not literally) where you've exhausted all the ways to improve. If you ever miraculously roll a 300, you're definitely done. As they say in the beer commercials, it doesn't get any better.

If your credit score is 300 (or even 600), you have a long way to go in the "uphill" direction. There are enough ways to improve a low credit score to fill many books (and they have). Here are our top ten.

  1. Pay your bills on time

    (This just in, courtesy of the Duh Department.) Delinquent payments and collections can have a major negative impact on your score. If you have missed payments, get current and stay current. The longer you pay your bills on time, the better your credit score.

  2. Don't open new credit accounts you don't need

    "Fifteen percent off today's purchase" can be an attractive offer. Consider the effects on your credit, particularly if you're over-carded already.

  3. Spread it around

    If you have two accounts each with credit limits of $5,000 apiece, it's better to carry $2,500 on each than $5,000 on one. Rating agencies frown on maxed out accounts.

  4. Dispute significant errors

    Your credit report (available for free at FreeCreditReport.com) may include misinformation about late payments, charge-offs, and credit limits lower than they really are. Write to the reporting agency and correct the record. Negative items more than seven years old should automatically fall off your report.

  5. Marry Donald Trump

    Nobody said this would be easy.

  6. Get professional help

    There are many free resources for consumer credit counseling and you can locate an agency through the National Foundation for Credit Counseling.

  7. Call your creditors

    Tell them your situation. Many of them have temporary hardship programs that will reduce your payments until you can get back on your feet.

  8. Buy a home

    No single thing boosts a credit score more effectively than a long-term record of staying current on a mortgage. This tactic has the double benefit of putting a roof over your head.

  9. Be patient

    A significant credit cleanup takes time—at least a couple of years. Think of it as a lifestyle change rather than a quick fix.

  10. And the number 1 tip for improving your credit and your life in general

    ... Make more money! There are so many ways to increase your income and asset base through some targeted training and creative thinking. Real estate investing, for one, has created more millionaires than any other single path to wealth. We live in a land of opportunity. You can't scrimp and save your way to affluence. Get out there and get educated to get rich.

Comments

By D,  Tue Dec 8 2009, 21:02
insted of using freecreditreport.com, use freeannualcreditreport.com
It's a website put together by the credit agencies and is the ONLY true way to get your credit report free online. Other sites require a credit card # and will charge you if you forget to notify them within 30 days.

Crystal Beard
Ambient Home Lending
http://www.ambientlending.com
By Carl Ashton,  Sat Dec 19 2009, 10:48
We look for these Items

A 620 + Beacon Score
2 Years Verifiable employment
29% Income ratio
41% Debt Ratio
2 Years tax returns that correspond to the income
Sales Contract.
This loan I can close most buyers with 100% USDA or FHA 3.5% Financing in Suburban and rural areas in 5-7 days.

Seller consessions and Gifts take a little longer.

Other types of credit and loans we have to work on and work with the situation we can assist you in getting to a 620 score sometimes in as little as two days, verifying income through other sources such as small business owners option is a CPA's review of financial statements and Co signers for those that cant make the debt ratio's.

25 months out of Bankruptcy and letters of explanation and alot of me begging my Executives you can buy a home with a 620+ Beacon.

How much you put down is really not viable anymore except to lower the debt and income ratios to get a loan.
By Gordon Cuffe,  Tue Feb 16 2010, 22:20
get a co-signor for your fha purchase loan.
By Amy,  Sun May 9 2010, 21:09
Crystal is right to say don't use freecreditreport.com because you will end up getting charged if you don't cancel the trial thing.
BUT
The website for your free credit report every year is http://www.AnnualCreditReport.com .
Only AnnualCreditReport.com and its members (Equifax.com, Experian.com, Transunion.com) are legally authorized to provide the free credit report as described in the FACT Act.

Don't get frustrated whenFreeAnnualCreditReport.com doesn't seem to be loading...that website doesn't exist!
By House Hunter NYNJ,  Tue May 18 2010, 12:28
Some of these "tips" are not the least bit helpful...OK so obviously #6 is a joke, but "Buy a Home"? How are you going to buy a home with a low credit score? Who's going to give you a mortgage if you're below 600, and if you had the cash lying around to buy a home outright I'm guessing you wouldn't have credit problems, right?

Also - "Make more money"? Gee, thanks for the sage advice! And how do they recommend increasing income: real estate investment (read: house-flipping)? Uh, yeah OK, see above. Besides, all that flipping was part of what got us into the mortgage/housing crisis in the first place wasn't it?

How 'bout "Win the lottery," that's a useful and practical tip! lol
By Carolamm Coleman,  Sat Dec 11 2010, 19:11
Keep your ears open to what real estate people tell you when looking-let them do the talking and ask a few prepared questions about properties- ask the same questions of a few others in real estate and compare answers- you will see who is really helpful and who is not. I was able write my own lease purchase agreement for a home in Ga- it did not sell so the leasee forfeited the security deposit 4k- per our agreement if not purchased after a year and I used the security to clean, paint, lay new carpet and sold in 6weeks with a good profit -just make sure it is legal in your state.
To own try lease purchase or land contract-less choices but a could be a way to buy a home-if not advertise to your friends,co-workers, church group,or organization and anyone who will listen you want to own your own home and would be willing to consider any reasonable offers. If you don't belong to any organization join one that is of interest..
By Don Rosier,  Mon Feb 21 2011, 23:03
I'm not defending those who abuse credit but realize that things happen such as divorce, loss of income, deteriorating health that make it difficult to maintain great credit. One could only wish our education system would focus more on life skills and the importance of credit and understanding how scoring works.

A couple of tips of improvement pertain to an isolated late payment or collection/charge off

If you have a good history with a seasoned account and then forgot to put the payment in the mail that results in a 1 X 30 day late, plead your case and ask the creditor to remove the adverse history.

On a collection / charge off don't settle for a simple negotiated settlement that is updated to read "satisfied". They want your money and agree on better terms. Negotiate the amount under the stipulation and that they send you a letter stating that is is satisfied and the adverse action should be removed from your credit profile. In turn you can apply for a rapid rescore or wait for the cyclical update.

We're seeing creditors and collection agencies agree to this on several occassions and as a result credit scores are improving. Subsequently folks become eligible or find better terms as a result of higher scores.
By Trina,  Tue Feb 22 2011, 13:59
I have a score of 649 and want to by my first home. How can I do this with my score ?
By Fran Rokicki,  Sat Feb 26 2011, 13:28
Trina, Call a Realtor to help you. There are tools and systems in place, that will help you to get into your first home! If you were looking in my area of Connecticut, I would be happy to have you as my client. Good luck on your new home search!
By Sarah Vazquez,  Mon Feb 28 2011, 20:57
how long after forclosure do you have to wait to buy a home
By Gold Bug,  Sun Mar 6 2011, 09:03
I have no credit card debt, pay my bills 99% of the time on time, have a paid off house and a second one that I am trying to refinance (and which I was actually several months ahead of the mortgage payment) and Equafax gave me a 676??!! - Do you have to be God to get an 800???!!!
By Steel77man,  Sat May 21 2011, 08:55
To Gold Bug: With these credit scoreing companys GOD couldent buy a Fago pop on credit. I owned my own construction co. for 27 yr's and must of had great credit cause I never had trouble getting material ,Concrete ,or Steel buildings untill I retired and didn't use my suppliers for a year. Then I seperated from my wife at the time in 03 and found out when I changed my mailing address that I had 6 other credit cards forged buy my ex and coulden't prosicute her. There should be a CLASS ACTION LAW SUITE on ALL 3 CREDIT SCORING COMPANY's To GET THE INFO CORECT. I GOD WE TRUST NOT PLASTIC. steelman
By Steve Morgan - (302) 541-5363,  Mon Sep 19 2011, 11:18
Pay your bills on time, reduce debt, save verse spending, if needed reduce 401k to miniums so you can pay down high credit card balances, even borrower money from family paying a higher rate than CD's verses paying higher rates to Credit Card Co.

Steve Morgan
Fairfax Mortgage Investments
302-541-5363
By Jd-sahmom,  Thu Dec 1 2011, 15:55
Thanks Steve Morgan for stating the obvious. Read Don Rosier's comment and contribute something more specific.
By Leolends.com,  Wed Jan 11 2012, 06:22
Great tips, you should get a free credit report @ http://www.annualcreditreport.com They do not charge or ask for any credit card or payment but they do not give you scores free. You can use this to check and see if there are any issues being reported that are not correct, you can challenge anything you think is false. They will give you a free report one time per year. It's a good way to make sure your report is accurate.

Leo Namiot
http://www.LeoLends.com
By Ineedtobuyahouse,  Mon Feb 13 2012, 23:44
I have a credit score of 660 - been trying to rebuild my credit...(I pay my credit cards on time) so I should qualify for a FHA loan correct? NOT. I also have tax liens for a few years and couldnt get a loan if I tried. The "620 score will get you into a house" does not work for everyone.
By Joan,  Thu Jun 7 2012, 00:16
I hired lexingtonlawyers the dispted letters they wrote to the reporting agencies, two of the negatives is off. One credit reportng agency has not drop any. I had four negatives and now I have one negatives and five inquries. I applied for a car loan and i was approved but i change my mind. The next thing i notice on my credit report was other dealers was on my credit report and there was ten car dealers inquries. The inquries reduces your credit score the lower your score the highest interest yu pay. What a rip off. My score was 528 now its 644. This is not andadvertisement this a true story. I also found out that I had a 10,000 limit which i close and I also found out that I had a $1,000.00 limit That i have not use since 2003, the account is stll open. I apply for a credit card so that i can have possitive credit rating. So I have two positives. Building good credit can increse your score. Learn about buildng possitive credit. Remember credt counseling does not help they can note to the reporting agency if u dont continue with them remember they working for the creditors s if u dont folow their quidlines this will effect your fico score by lowering ur numbers. I pay the lawyers $100.00 monthly and in the past month $400.00 has been remove and my credit score has increase. I also gonna make arraigment to pay off the one and only negative and by the end of this year i should have at least a 700-780 score. Remember Educate yourself to the world of credit.
By Matie,  Tue Jul 17 2012, 07:01
Great article.
Remember credt counseling does not help they can note to the reporting agency if u dont continue with them remember they working for the creditors s if u dont folow their quidlines this will effect your fico score by lowering ur numbers. I pay the lawyers $100.00 monthly and in the past month $400.00 has been remove and my credit score has increase. I also gonna make arraigment to pay off the one and only negative and by the end of this year i should have at least a 700-780 score. Remember Educate yourself to the world of credit.

Totaly agree.
http://www.indexpost.com/
By jen,  Sat Aug 18 2012, 09:09
My credit score is 590 and my husband has a score of 635. Do you think we'll be able to get a mortgage?
By Zubin Smith,  Thu Oct 25 2012, 05:22
Great post. Another bit of advice is that always read your credit report carefully and try to find out which factors are most likely having a negative influence on your credit score, and then start work to improve them.
http://www.kwikcash.co.uk
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