How to Improve Your Credit Score

A few years ago I decided to purchase my first home for myself & my son. Because I filed for bankruptcy in 1999 my credit score was low- somewhere in the 510 range. I desperately wanted to own my own home instead of paying rent so I decided to bite the bullet and take on the only loan I could qualify for- an adjustable rate mortgage. This was in 2004. My rate was fixed for the first two years and on the 25^th month, the note would be adjuster according to the prime rate. For the first two years I paid 8.75%- not bad for someone 5 years out of bankruptcy. I received notice two months before my note was to adjust advising me that my new rate would be 11% plus sub prime, which around that time was 6%. My new rate would be 17%. My house note was to shoot up almost $500 a month. I knew going into this loan that I would refinance after two years.

After filing for bankruptcy, I made sure that I did not default on any bills that I had and made sure that everything was paid on time and more than the minimum amount was paid. I learned my lesson. I was not going to be a prisoner by debt every again.

In that two years, I took control of my credit. I paid close attention to my credit reports. I obtained copies of my report from all three credit bureau agencies (Equifax, Experian & Transunion). I went over each one with a fine tooth comb. This consumed a lot of time, but the discrepancies I found were amazing. I could not believe some of the negative information contained within my report.

The was these credit reporting agencies work is that if you dispute anything contained within the report, the agency must verify that the information is correct. Some items that may be incorrect are listing a credit card that is not yours, listing the status incorrectly (i.e. closed by creditor, write-off, partial settlement, default), the wrong account number.

If you dispute anything, even the account number, the credit bureau has a duty to verify and either confirm the information or delete the information. In my case, I had wrong information listed on about 1/3 of my report. Some examples were that cards were listed that were not mind and incorrect statuses. I actually had a Discover Card listed with a $11,000 credit limit ! I called Discover initially before filing a dispute with the agency. Discover Card told me that it was my and that they were not reporting wrong information to the bureau. After about 20 minutes of going round for round with the customer service representative, I finally said "okay, since you are claiming it is mine, I was another card issued." That seemed to give the representative a pause and she decided to send me to her supervisor. Upon being told that they could not issue another card (I never received a proper answer as to why they could not), I decided to take my complaint to the credit bureau. I filed a dispute online thought their website and within 25 days I received notice from the bureau that the information on my report regarding Discover Card was unable to be verified and was deleted.

From there I decided instead of contacting credit card companies, I would review my reports and file any disputes with the bureau directly.

Another credit card was listed in my report as written-off. The balance was only $222, but by showing it as written-off, my credit score was lowered. The fact was that this credit card was paid in full. I was over 30 days late on paying it initially, but after that 30 days, I made a payment and the following month I paid it in full. The information should have shown as "over 30 days late" as well as "paid off in full". However, it did not reflect this correct information. Luckily, for some reason, when I mailed in my payment, I copies the check and the letter I sent to them explaining my I was 30 days late previously. I simply filed a dispute with the credit bureau explaining that the status was incorrect, as this account was paid in full. Instead of filing this online, I mailed a letter to them outlining each account that I was disputing, as well as the account number and the reason. Almost all of the disputes I filed were deleted, either because it was incorrectly reported or because the company did not verify the information within the time delays.

Some companies do not take the time to verify accounts questioned by the bureaus. If they do not verify the information, it is deleted. There is a 30 day requirement for the credit card company to respond to the bureaus' inquiry. If 30 days passes and nothing is received from the credit card company, the bureau automatically deletes the information from your credit report. Because I had so many incorrectly reported accounts, once these were removed, my credit score went up.

Once these 30 days passes, the credit bureau will update your information and sent you the corrected, updated report. If you file your disputes online, you will also receive an email with a link to view the status through their site.

I decided to refinance my house two months prior to my adjustable rate mortgage changing. I was able to go directly to a national bank and receive a loan for the total amount I needed at a good interest rate. Two years after cleaning my credit, I received a fixed mortgage with a rate of 6.25%. Considering my bankruptcy is still on my report, I was ecstatic to qualify for this rate.

If you take some steps in handling and managing your credit reports, you will probably find some discrepancies within the reporting. Once negative information is deleted, your credit score will go up.

I anticipate my bankruptcy being deleted from my reports next year, after the 10 year mark. By law, your bankruptcy will stay on your report for 10 years for Chapter 7 bankruptcies- which is when you are discharged from all of your debt. If you file a Chapter 13 bankruptcy, which is a repayment plan, it will be removed from your report no sooner than 7 years. When I decided to file for bankruptcy, I had two choices. I could either take 10 plus years to pay if off or file for bankruptcy and have it on my credit report for 10 years. I made the decision to file for bankruptcy and it was the best decision that I could make in my situation. I was scared that I would never qualify for anything for 10 years and determined that I would be in my mid to late 30's before I could purchase a home, new car or anything else that required credit.

Take your credit in your own hands. Get a copy of your credit report once a year for free at annualcreditreport.com. You can print your report and begin to go over it and dispute anything that you find is incorrect. Once items are deleted, your credit score will go up, just as mine did.