Home Loans Help: Credit Tips

Increasing Your Credit Score

If you are planning on purchasing a new home or buying a car then you have to check to ensure that your credit score is as high as it can be. The credit score is a calculation of points based on entries compiled on your credit file, these point are used to determine your creditworthiness, and your ability to repay the debt. Because your credit report is an important part of many credit scoring systems, it is very important to make sure it's accurate before you submit a credit application, but you have to know what factors determine the credit score.

The credit score is based on information about you and your credit experiences, such as your bill-paying history, the number and type of accounts you have, late payments, collection actions, outstanding debt, and the age of your accounts. This information is collected from your credit application and your credit report, and use to determine your score. Using a statistical program, creditors compare this information to the credit performance of consumers with similar profiles. A credit scoring system awards points for each factor that helps predict who is most likely to repay a debt. A total number of points -- a credit score -- helps predict how creditworthy you are, that is, how likely it is that you will repay a debt, and make the payments when they are due.

Your credit report influences your purchasing power, as well as your chances to get a job, rent or buy an apartment or a house, and buy insurance. A history of timely credit payments helps you get additional credit. Accurate negative information can stay on your report for seven years, and a bankruptcy can stay on your report for 10 years. The fact is that the percentage of consumer purchases that are completed through the use of cash transactions is steadily declining, and the trend in spending has been linked to the use of credit.

With so much at stake, it is very important to take the necessary precautions to maintain a clean credit report. Many people learn the hard way that it is much easier to maintain good credit from the beginning than it is to repair credit that has been damaged. However, if you find yourself on the wrong end of the credit score, don’t despair, because there are measures that can be taken to increase your credit rating. But, you have to be willing to put forth the effort needed to restore a good credit score, and this requires time and patience that is needed to deal with consumer reporting agencies. Although repairing your credit yourself is often recommended, another option is to hire a credit repair organization like Millennium Credit Service whose website is located at http://www.millennium-credit.com.

Your credit report contains information about where you work and live and how you pay your bills. It also may show whether you've been sued or arrested or have filed for bankruptcy. Companies called consumer reporting agencies or credit bureaus compile and sell your credit report to businesses. Because businesses use this information to evaluate your applications for credit, insurance, employment, and other purposes allowed by the Fair Credit Reporting Act, it's important that the information in your report is complete and accurate.

The consumer reporting agency and the organization that provided the information to the agency, have responsibilities for correcting inaccurate or incomplete information in your report. To protect all your rights under the law, contact both the consumer reporting agency and the information provider in writing what information you believe is inaccurate. Include copies of documents that support your position. In addition to providing your complete name and address, your letter should clearly identify each item in your report you dispute, state the facts and explain why you dispute the information, and request deletion or correction. You may want to enclose a copy of your report with the items in question circled.
The consumer reporting agency must reinvestigate the items in question, usually within 30 days unless they consider your dispute frivolous. They also must forward all relevant data you provide about the dispute to the information provider. After the information provider receives notice of a dispute from the agency, it must investigate and review all relevant information provided. If the information provider finds the disputed information to be inaccurate, it must notify all nationwide consumer reporting agencies so they can correct this information in your file. Disputed information that cannot be verified must be deleted from your file. If an item is changed or removed, the agency cannot put the disputed information back in your file unless the information provider verifies its accuracy and completeness, and the agency gives you a written notice that includes the name, address, and phone number of the provider.
By using the laws provided by the Fair Credit Reporting Act to make sure your credit file is accurate and up-to-date, and by paying your bills in a timely manner you will be able to increase your credit score dramatically. If you do not have the time to restore your credit, you can hire a credit repair company to repair your credit for you, and they can provide a great deal of services in a professional manner

T.B. Collins is the president of Millennium Credit Service, and has been offering credit repair advice for over 10 years. To find out more visit http://www.millennium-credit.com

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