subject: Clean Up Your Credit Legally With These Tips [print this page] You see the advertisements in newspapers, on TV, and on the Internet. You hear them on the radio. You get fliers in the mail, and maybe even calls offering credit repair services. They all make the same claims that your credit problems are no problem. Or that they can erase your bad credit guaranteed.
The Federal Trade Commission (FTC) says do yourself a favor and save some money, too. Don't believe these claims: they're very likely signs of a scam. You can improve your credit report legitimately, but it takes time, a conscious effort, and sticking to a personal debt repayment plan.
Everyday, companies target consumers who have poor credit histories with promises to clean up their credit report so they can get a car loan, a home mortgage, insurance, or even a job once they pay them a fee for the service. The truth is, these companies can't deliver an improved credit report for you using the tactics they promote.
It's illegal: No one can remove accurate negative information from your credit report. So after you pay them hundreds or thousands of dollars in fees, you're left with the same credit report and someone else has your money.
If you see a credit repair offer, here are some ways to tell if the company behind it is up to no good. The company wants you to pay for credit repair services before they provide any services. Under the Credit Repair Organizations Act, credit repair companies cannot require you to pay until they have completed the services they have promised.
The company doesn't tell you your rights and what you can do for yourself for free. The company recommends that you do not contact any of the three major national credit reporting companies directly. The company tells you they can get rid of most or all the negative credit information in your credit report, even if that information is accurate and current.
The company suggests that you try to invent a "new" credit identity - and then, a new credit report - by applying for an Employer Identification Number to use instead of your Social Security number. The company advises you to dispute all the information in your credit report, regardless of its accuracy or timeliness.
If you follow illegal advice and commit fraud, you may find yourself in legal hot water. It's a federal crime to lie on a loan or credit application, to misrepresent your Social Security number, and to obtain an Employer Identification Number from the Internal Revenue Service under false pretenses.
You could be charged and prosecuted for mail or wire fraud if you use the mail, telephone, or Internet to apply for credit and provide false information. So it is just not worth it to follow these claims from illegitimate companies.
Here will we show you ways you can clear up your credit on your own, and legally. The single most important thing you can do is the simplest: Pay your bills on time. More than a third if your FICO score is based on your payment history: how often you're late paying credit cards, car loans, mortgages and student loans. The later you are, the more you hurt your score.
The next biggest chunk of the score is based on how much you owe. The simplest solution: Pay down your credit cards and other installment loans. Moving money from one card to another won't help: you have to reduce the overall balance.
Even if you have had credit for along time, a lot of newer accounts will lower your score. That's why closing old accounts may reduce your score: it may shortens the average length of your credit history.
Opening up a lot of accounts all at once can also hurt your score - even if you pay all your bills on time and don't carry big balances. You may also hurt your score if you're constantly changing cards and chasing a lower rate.
Your score can also take into account how many inquiries lenders make to credit agencies asking about your credit. Too many request for information may mean you're embarking on a borrowing binge.
On the other hand, it doesn't count inquiries form lenders who want to pre-approve you - without your approval.
And shopping among several lenders all at once, without opening more than one account, also shouldn't have an impact.
