What can I realistically do to raise my credit score?
I have a crappy credit score. My situation in a nutshell:
In the divorce, the ex got the home, which was then foreclosed on. My name was still on the mortgage. That was in 2009 or so.
I attempted to buy a house earlier this year, but after being initially pre-approved, the underwriter subsequently significantly lowered pre-approval amount and attached a ton of conditions which made it nearly impossible to purchase a home. Thus the desire to raise my credit score.
My score has generally improved since the beginning of the year. It was around 570 on all three credit rating agencies at that point. I subsequently disputed most of the entries on the credit report. On Equifax and Experian, the score slowly improved to 650 and 675, respectively. On TransUnion, the score jumped around madly, at one point reaching 720 before settling at 690. Part of fixing the score included paying off things that my ex has accumulated in the final year of marriage (but didn't pay).
Besides the foreclosure, there is still the credit card debt (down to k from k at the beginning of the year). There is also a collection account from 2008 in the amount of ,500. In my opinion, it's not mine, but the collection agency won't budge, so for the time being, the entry is on the credit report. I am pondering just giving in and paying it and be done with it.
I do have a credit card that I use regularly and pay off completely at the end of the month.
Not sure what else I can share that is relevant.
So, given the situation, what can I realistically do to raise my credit score?
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I have not used this method myself, but I have read online of some success by entering a "pay-to-delete" contract with the creditor. A sample is available.
I would recommend that you think carefully about paying the debt without some agreement from the collections agency that they will delete it from your report. If they simply report it as a delinquent account that has now been paid in full you won't be much better off than you are today.
See also this discussion on metafilter.
Time: you will simply have to wait because as far as the computers are concerned, you are a credit risk and only time will heal those wounds.
Be credit worthy: during the waiting time you have to build the credit worthiness. Standard things are:
Pay your bills on time, every time.
Live within your means
Fix past mistakes you are responsible for, or work it out with the lender when you are not.
If you still have a credit card, use it carefully and be sure to pay it off every month on time. (if you don't have a credit card, visit your local credit union to see what product they have that will best fit your situation.)
Monitor: get your once a year free credit reports. Don't pay for a monitoring service, but watch the yearly ones. I would also freeze your credit to put yourself on hold.
I hate to put it so bluntly, but there really isn't a better way. There are pretty bad reports from people who pay to have their reports fixed, and if what you say is true the rating agencies will certainly mark you down.
I'd consider paying the collection amount. Otherwise, just keep doing what you're doing. Your score will reflect your continued good behavior.
These are the components of the FICO score. When you analyze this a bit, you see that both Payment History and Length of Credit History are time-based. You can have good payments going forward but only in real time. "Bad" things will take 7 years to fall off the back end.
The 'amount owed' is really credit utilization. If I am going to need to charge say K, I should have over 0K in credit lines. This will produce a <20% utilization. And it's actually better than the guy with a K credit line who only uses K. Even if he pays in full every month and I am making payments, it's what the bill shows each month that goes toward this score portion. On a similar note, the scoring doesn't care whether the K I pulled off one card (true situation) at zero interest, went to pay toward my 5% mortgage (it did) or to a wild week in Vegas.
While getting the actual FICO score would cost you, I found that Credit Karma offers a score that's in the range of the 3 major credit scoring agencies. It also offers a report card that shows the pieces making up your score that I discussed here. It was there I learned that zero utilization is worse than having over 40%.
As commented below Quizzle offers a score as well. I've not yet used it. I look to others to comment on accuracy/ ease of use.
Disclaimer - I have no relationship to Credit Karma, other than being a user.
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