Increasing credit score- How do I go about it?

Question

I would like to increase my credit score to buy a house. My credit history is as follows.... My current score is 574.
Filed bk in 2002. Since then I have had 3 auto loans, which have been paid on time for the most part. I did have a credit card but it went over the limit. I settled for less than the actual amount due to get rid of it. I also have several medical bills in collections. I intend to pay them all off within the next few months. I know that the necessarily won't remove the account from my credit report but what wording should I ask that they add to the account. Is it best to pay the original creditor and act as if I did not know it went to collections? Also, how do I go about getting information added to a credit report? My bank reports to TransUnion, how do I get the information added to Experian and Equifax. I want possible lenders to get a complete picture.
Hope I provided enough information. Thanks in advance for all and any help.

Answer 1

For buying a house Credit History is much more important than credit score. Often, the lack of credit history is equated with bad credit. You should be aware that lenders will go through your credit report once you apply for loan for buying a house. Therefore you should polish your credit report. Anyway, in order to establish a good credit history and at the same time risen your credit score in a short time do following things:

1) Close all of your credit cards but one. It reflects in your credit report and it is a very good sign. For instance say that you have 5 credit cards with $1000 credit limit for each. Therefore you are responsible for $5000 of possible debt. But when you close 4 of them, now you are only responsible for $1000 of debt which lowers the level of risk of lending money to you.

2) If you have any loan, like car loan or any balance on your credit cards, try to pay more than your monthly payment for 6 months or something. I mean say your monthly due on your car loan is $150, try to pay $250 each month. Lenders can see these trends in your credit report and they see that you’re a responsible borrower.
If you don’t have such loans, I suggest getting a $3000-$4000 loan and paying it off in full in 5-6 months. You might pay $200-$300 of interest but you will save thousands of dollars in your home mortgage and interest rates.

Also checkout http://www.howtoestablishgoodcredit.com/Credit_Articles/index.php
There are lots of articles there, related to your question, which you can find useful to boost your credit.

Answer 2

I think I can help.

If you've been paying monthly bills on time that don't show on a credit repoty like rent, utlities, etc. then you DEFINITELY need to check these folks out

http://prbc.com/default.php?

These folks are a consumer reporting agency that reports monthly payments that's compiled in a scored report that can be considered in addition with your traditonal credit reports. This is NOT a dream, it's for REAL. PRBC has been approved, by the FHA, FDIC, Fannie Mae, Freddie Mac, and the National Credit Reporting Association. It's good stuff, check it out!

Next, as for the delinquent accounts, see if you can negotiate for a "payment for deletion". I would try to go about this in writing so that I would have a paper trail to substantiate the terms. If you're able to do it, have them send it in writng on something with their company letterhead before you send a dime. It's a crapshoot whether they will remove it, but if you're going to pay it anyway it's worth a try. Don't try to pay the original creditor becuase chances are they've already sold the account to the collection agency anyway.

As far as having the accounts reported to the other credit agencies, I would try a 2-pronged approach. I would contact where you have the account and inform them that under the FCRA, (fair credit reporting act) your information should be reported to all 3 agencies.

As far as the Bankruptcy, time will have to heal that wound to the tune of 10 years, you're 1/2way there, only 5 more years to go.

There's another thing that would help, but I'd strongly suggest that you pay off your delinquencies COMPLETELY before doing this: Ask a close friend or family member that has excellent credit to add you to one of their credit cards as an authorized user. You won't need a card as this is for reporting purposes only. If you're able to do this, their payment history will become yours as well. That may boost it some.

Don't start applying for credit. Each time that you apply a "hard" inquiry is done which knocks off 2-5 points from your score and lasts 2 years. If you're looking to buy a house, this is overly important becuase since you already have a bankruptcy, applying for credit left and right, can give lenders that "addict" appearance and that you're trying to start the binge all over again.

Hopefully, the information I've provided will help

Good Luck!

Answer 3

Obviously paying off the debts in collection is the first thing you need to do. It doesn’t matter if you pay the original creditor or the collections office.

When you request a copy of your credit report you will get a couple dispute forms (or you can go to the credit bureau's website and print one off. Put down any changes you wish to see (additions and deletions) on the dispute form. The credit bureau will investigate your disputes and make the changes if it is a legitimate request.

Also, look over all three reports very closely. If you have a common name you make have a few accounts reporting to your report that aren’t yours. Some things people don’t know lowers their score is frequent address changes (shows instability), high interest rates on loans, and closed credit cards. If you only have one or two cards it is better to leave them open with a zero balance than to close the account.

Most banks are looking for about a 660 FICO score to finance a home in this market. Every point counts!
Good Luck!

Answer 4

There is no arguing that a better credit score means better interest rates for your mortgage, auto, and all other areas where credit is used. By implementing these tips you could save hundred of dollars in interest in the long run and put cash back in your pocket in the short term.

1) Avoid using cash and borrowing from family for all your purchases. In the eyes of creditors no credit history is the same as a bad credit history. You may get away with paying cash for your car but when you buy your first home it will come back to haunt you. Even if you can afford to borrow or pay cash try opening an account to buy your furniture, automobiles, or home improvements. A diverse credit background will help with your credit score.

2) Your credit report tells all. Do not lie or stretch the truth to lenders, banks, or employers. They will easily catch you and the consequences are not worth it.

3) Do not cancel credit card accounts to improve your credit. The intended affect may be the opposite of what you expect. You can hurt your credit by canceling your credit cards; especially if you have a long history with the account. Losing a ten or twenty year credit history isn't worth it. If you absolutely must stop using a card, try shredding it. An open account that doesn't have a balance looks far better then no credit account at all. Read more about it at: http://www.credit-card-gallery.com/article/136,Seven_Must_Know_Credit_Tips

Answer 5

When you said that the auto loans had been paid on time "for the most part", I take it you have some lates? If so, you might send a goodwill letter to the lender and ask them to remove the lates. Late payments are a major score killer.

You might also try a goodwill letter to the credit card provider and ask them to show it as paid as agrees. They "might" work with you, but chances are you may have to live with it.

As for the medical bills, you could try using HIPAA to take care of it. Using HIPAA you would be dealing with the original medical provider "only". You should have no contact what so ever with the collection agency or you would reduce or waive your HIPAA rights.

When you use HIPAA, you would have to make a "full" payment to the medical provider - unless the account was supposed to be paid by insurance or the account is not yours, then you would still use HIPAA, just a different section.

Using HIPAA and paying the original medical provider means that the original provider must recall the account from the collection agency and demand the collection agency remove anything they had placed on your reports

HIPAA is a huge beast of a government program (but aren't they all lol) I know of only one person who fully understands the program.

Click on the following links. The first one is for the HIPAA information. The second one is if you have any questions on using it (go to the credit forum and then to the medical subforum)

http://whychat.5u.com/hipltr.html
http://creditboards.com/forums/

As for your bank only reporting to one CRA, you might ask them to report to the other two. But reporting costs money and they may not be signed up with the other two to be able to report.
A creditor legally does not "have" to report your accounts to the CRA's.

Answer 6

The most important thing you can do right now is pay off the debts in collection and bring anything that is poast due, current. It takes time to re-establish your credit history/score but it can be done!

You can get your free dcredit score at:

www.annualcreditreport.com

Be careful what sites you access for this, there are a lot that ask for money and/or credit card for payment. I did pay the $7 to receive my FICO which is legit.

Answer 7

My understanding is that you have to start paying on those debts. Start with the ones that are in collection. If it is medical, send the credit bureau a letter explaining the circumstances and ask them to remove this from your report, if you paid it.

Answer 8

credit scores run from 350 to 850. i've got been in lending approximately 10 years and that i think of the utmost score i've got seen is approximately 830. the backside i will undergo in recommendations is around 4 hundred. Your scores are impressive. despite you're doing now, you're doing suitable. in case you verify out your credit checklist, you will see some "components" that impact your credit. lots of the look very contrived to me. specific forms of credit are extra effective than others, with finance businesses being in the direction of the backside of the heap. maximum human beings could be extra effective than thrilled with your scores.