Five Steps to a Better Credit Profile, Part One
While you may not be able to wipe the slate clean, there are ways you can improve your credit record. Here are steps we suggest:
Dispute Information
If you find mistakes on your report, you absolutely should dispute them. Some might not result in a change in your credit score (closing old accounts, for example), but others may result in a dramatic improvement (getting an inaccurate judgment or old collection account off your file, for example).
If you dispute information with the credit reporting agency, and it comes back to you saying that it has verified the information with the lender, your next step is to go directly to the lender reporting the mistake. The revised federal Fair Credit Reporting Act says that lenders may not report information they “know or consciously avoid knowing” is wrong. That means they have to take your dispute seriously, investigate it, and confirm that it is correct before continuing to report it.
Establish New Credit
Establishing positive new credit references can really help your credit if you need them. The best? A couple of major credit cards paid on time. If you already have one (or more), use it to charge only what you can afford to pay at the end of the month, and make sure you mail the payment well in advance of the due date. If you don’t have one, get a secured card, which requires a security deposit.
Negotiate a Better Rating
Though this tactic is frowned upon by credit reporting agencies and lenders, it is sometimes possible to negotiate an improvement in a particular tradeline in exchange for payment, or just because you are a good customer. You’ll probably have the most success with this technique if you are working with a collection agency early on in the debt collection process. For example, as soon as you are contacted, you may offer to make a lump-sum payment to settle the debt as long as they agree not to report it to the credit reporting agencies. Caution! You must get that agreement in writing. If you do not, you may find they report you anyway. Some balk at doing so, but if they agree to your proposal, they should be willing to back that agreement up in writing.
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