Building Your Own Credit & Raising Your Score
Like many others, my credit history began as a child when a family member decided to use my credit information to open up a cellphone line. By 17, I was starting to be sent credit card offers with $250 credit limits. I maxed those cards out on Air Force Ones and Miskeen outfits. Fast forward, I was 18 and about $3,600 in debt before I could figure out how to pay it back.
One day I decided to stop avoiding my growing debt and face my credit report and score. I immediately went to work repairing my credit. The steps I took are a little less traditional (joined the military for money) but the key points are universal to all those willing to fix their credit themselves.
Why should my credit score be important to me? Nearly everything needed to live life requires some sort of credit. Higher credit scores earn lower percentage rates on credit cards, car loans, and home mortgage rates, meaning more money for you to save or spend. Your credit score can also determine your next apartment approval or even certain employment.
Step 1: Obtain your credit report
Obtain a totally free credit report every year from FreeCreditReport.com. Once you have it, go over your accounts and check for accuracy and discrepancies, tardy accounts and inquiries. Many bank accounts and credit cards also come with a free credit score option.
Step 2: Begin drafting letters to dispute credit inquiries
A lot of credit inquiries in a short period of time can damage your score. Prepare letters to each inquiring creditor asking them to remove unknown inquiries, citing the Fair Credit Reporting Act. Send via Registered Mail and keep dated receipts as proof. If after 30 days you haven't heard back, send a follow-up letter: the bureau has 30 days to investigate or must delete the information.
Step 3: Contact creditors and initiate payoff plans for outstanding accounts
Call the billing department and arrange a payment plan; ask if any late payments can be removed or if they offer a payoff discount. Note that paying off a collection account does not remove it from your credit report or improve your score on its own. If the account hasn't gone to collections, you can send a goodwill letter pleading your case as a previously good customer.
Step 4: Commit to paying all bills on time
Paying your bills on time is the most important part of a good credit score. Add all your bills to your bank's bill-pay section so you can send payments easily. Paying more than the balance due can also have positive effects. Most negative items stay on your credit report for seven years, but a 30 or 60 day late payment is less damaging than one 90 days past due.
Since doing all these steps myself, I've attained a credit score of 763 and climbing! My goal is to be 780+, since that's in the same tier as the 800+ scores.
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- INVESTING IN STOCK - I just started using STASH, currently investing in marijuana stocks.
Q&A
I sent my dispute/plea letters, set up my pay-off plans and organized my bills. Now what?
Be patient. As the months pass, you will begin to receive letters from the creditors you've contacted, some notices of removal and some validated inquiries.
I don't feel like doing all this work myself. Can you refer me to a trusted company that can?
I hope this post helps!
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