3. Add Information Showing Stability:
Creditors like to see evidence of stability in your file. If any of the items listed below are missing, send a letter to the credit reporting agencies requesting that the information be added. Include any documentation that verifies the information you're providing.
• Date of birth
• Current residence (rent or own)
• Past residence – if less than two years in current place
• Current employment – company name, address and job title
• Past employment – if less than two years in current job
Since credit reporting agencies aren’t required to add this information it might not be included in your credit report.
4. Avoid Unnecessary Inquiries: Every time your credit is accessed, for any reason (e.g.: credit card application, loan application, etc) it will be listed on your credit report as an inquiry. Having too many inquiries can be misconstrued as you shopping for credit and might appear that you are anticipating the need for many credit lines.
Inquiries created when you review your own credit report or for pre-approved credit card offers you didn’t accept do not count against you.
When applying for a car loan or home loan through a dealer or mortgage broker, a sudden flurry of inquiries on your credit may appear. This is due to the fact that they show your application to many lenders, but when it comes to that type of credit inquiry (made within 30 days of each other) they only count as one. This is so that you are not penalized for shopping around for the best deal.
5. Close Unneeded Accounts: When it comes to a potential lender or creditor, the less credit you have the less risk you will pose. Limiting your credit cards to two or four can give you a better credit score. If you have unused or unnecessary accounts open, close them. Cutting your credit cards and tossing them does not count as closing your accounts. The safest and surest way to close your credit card account is by sending a certified letter to the customer service department of the lender or issuer. Ask the lender or card issuer to close your account and report it to the credit bureaus as “closed by costumer.” The lender or card issuer should send you a confirmation letter in approximately 10 days. Be sure to follow up by calling the lender or card issuer to verify that your account has been closed and it has been reported properly to the credit bureaus. Lastly, get another copy of your credit report to confirm that it has been reported properly.
6. Build a Excellent Payment History: Unfortunately there is not much you can do to remove late payment information; but by making your payments on time from now on can make a good impression. Negative information loses its strength with time; a late payment five years ago is looked at with less severity than a recent one.
7. Pay off Credit Cards: Paying off your credit cards shows that you are using your credit wisely, try to maintain your credit limits and all outstanding balances down; using your credit conservatively is very important.
8. Keep your debt reasonable.
In order to get a good credit score, you must maintain a 75% of available credit on all of your accounts. For example, if you have a $2000 credit limit, you should have a balance of no more than $1500.
8. Take Care of Collection Accounts. Collection accounts must be paid and listed as paid on your credit report. Some collection agencies will negotiate a reduced settlement in order to get the debt paid, but there may be consequences.
9. Satisfy any Public Records: Make sure all your public records, such as tax liens or judgments, are satisfied.
The Reason Codes: When your credit score is received by a lender, it usually includes “score reason codes” these scores explain why your score wasn’t higher. Reason codes can help you get an idea of where and how you should start improving your score.
Lenders are not required to tell you your credit score, however if you were turned down for a loan because your score is low; the lender must give you the reason for your low score. Your credit score can contain a maximum of four “Reason Codes” which explain the reason your score wasn’t higher. These codes are usually listed in order of impact on the score.
FICO reason codes show how many aspects of your credit report are used in a FICO score. Your four reason codes would be from this list:
• Amount owed on accounts is too high;
• Delinquency on accounts;
• Too few bank revolving accounts;
• Too many bank or national revolving accounts;
• Too many accounts with balances;
• Consumer finance accounts;
• Account payment history is too new to rate;
• Too many inquiries in last 12 months;
• Too many accounts opened in last 12 months;
• Proportion of balances to credit limits is too high;
• Amount owed on revolving accounts is too high;
• Length of revolving credit history is too short;
• Time since delinquent is too recent or unknown;
• Length of credit history is too short;
• Lack of recent bank revolving account information;
