By Michelle Simms
If you’re thinking of buying or refinancing a home, make sure
you repair your credit history before you apply for financing. Doing so, can
speed up the loan approval process, plus lower your loan fees.
Repairing your credit history includes correcting false
information, updating outdated items and adding missing details. If there is
negative — but accurate — information in your file, it generally will drop off
your records in about seven years. In the mean time, you should work on
counteracting this information by updating positive items to your credit file.
Having a positive credit report is important because it’s one of
the main factors lenders consider when approving you for a mortgage loan. Most
lenders use credit scores to quickly and automatically judge if you’re a good
investment. The higher your credit rating, of course, the greater your chances
of getting the best interest rate for your home or refinance loan.
Understanding the Impact of Credit Scores
Credit scores, also known as FICO® scores, generally range from
300 to 850. Most lenders will work with you if your score is at least 620. If
your rating is 720 or higher, they’ll consider you the most trustworthy type of
borrower and offer you their best rates.
Your credit scores are based on the information in your credit
report. This detailed consumer report tells everything about you, including
where you work and live, how you pay your bills and whether you’ve ever been
arrested, sued or filed for bankruptcy. Consumer reporting agencies (CRAs) or
credit bureaus collect and sell your credit report to banks and other
Your payment history for the latest two years generally will
determine your credit score. But technically, CRAs calculate your score using a
closely-guarded mathematical formula. TransUnion, for example, determines credit
scores using a variety of factors based on your credit and payment history,
you’re paying your accounts
much money you currently owe
long your accounts have been open
different types of credit you use
much credit you use compared to the amount of credit you have available
often and how recently you’ve applied for credit.
How to Repair Your Credit History
Your credit score is calculated using the information that’s
available the same day your lender requests it. That means you can work on
raising your score on a daily basis. You can obtain a copy of your credit report
from any of the three major credit bureaus — TransUnion, Experian or Equifax —
or you can get a three in one report from www.get3reports.com and handle this
yourself. Or you can seek help from credit experts such as Credit Repair Whiz, a
consumer advocacy company that helps educate and protect people from credit
abuses and unfair practices.
Under the Fair Credit Reporting ACT (FCRA), CRAs and their
information providers must work with you to correct any inaccurate or incomplete
items in your credit report.
Here’s what it takes to start improving your credit file
1) Tell the CRA in writing what information you believe is
inaccurate. Include copies (NOT originals) of documents that support your
position. Clearly identify each item in your report, state the facts and explain
why you dispute the information, and request deletion or correction. Send your
letter by certified mail, return receipt requested, so you can document what the
CRA received. Keep copies of your dispute letter and enclosures.
2) CRAs generally must investigate the items in question —
usually within 30 days. They also must forward all relevant data you provide
about the dispute to the information provider. After the information provider
receives notice of a dispute from the CRA, it must investigate, review all
relevant information provided by the CRA, and report the results to the CRA. If
the information provider finds the disputed information to be inaccurate, it
must notify all nationwide CRAs so they can correct this information in your
file. Disputed information that cannot be verified must be deleted from your
3) CRAs must make necessary repairs to all appropriate items. If
your report contains erroneous information, the CRA must correct it. If an item
is incomplete, the CRA must complete it. For example, if your file showed that
you were late making payments, but failed to show that you were no longer
delinquent, the CRA must show that you're current. Or if your file shows an
account that belongs only to another person, the CRA must delete it.
4) When the investigation is complete, the CRA must give you the
written results. They must also give you a free copy of your report if the
dispute results in a change. If an item is changed or removed, the CRA cannot
put the disputed information back in your file unless the information provider
verifies its accuracy and completeness, and the CRA gives you a written notice
that includes the name, address, and phone number of the provider.
4) At your request, the CRA must send notices of corrections to
anyone who received your report in the past six months. If an investigation
doesn’t resolve your dispute, you could ask the CRA to include your statement of
the dispute in your file and in future reports.
5) In addition, tell the creditor or other information provider
in writing that you dispute an item. As with the CRAs, include copies (NOT
originals) of documents that support your position. If the provider then reports
the item to any CRA, it must include a notice of your dispute. In addition, if
you are correct and the disputed information is not accurate, the information
provider may not use it again.
6) If your credit file doesn’t reflect all your credit accounts,
work on updating it. Most national department store and all-purpose bank credit
card accounts will be included in your file, but not all creditors supply
information to CRAs. Some travel, entertainment, gasoline card companies, local
retailers, and credit unions are among those creditors that don't.
If you start improving your credit history today, you can look
forward to having lower loan rates tomorrow.
© Michelle Simms. CreditRepairWhiz.com is dedicated to helping individuals
restore their credit. Learn more about credit restoration and read our
recommended resources page at