Repairing Your Credit

Real Estate Broker/Owner with The Real Buyer's Agent

Obviously, the first step to fixing up your credit report errors is to identify what the problem is.  Step one is obtaining a copy of their credit report and review it for accuracy.  Everyone is entitled to one free report per year from each of the three credit bureaus: Experian, Equifax and TransUnion. There are many ways to get the report but using an online service such as is pretty easy.

When working on repairing your credit here are some things to look out for:

• Late payments- there should be no late payments over seven years old on the report.  This is important because 35% of a credit score is based on timely payments.

• Collections- the report shouldn't show any collections or charge-offs more than seven years old.

• Payment records- all paid-in full installment loans and all collections that have been paid in full or settled for less than the amount due should show a zero balance.  Some times collections are not updated after they've been paid or settled.

• Mysterious accounts- consumers should be able to recognize all accounts listed on  the report.  Incorrect accounts do sometimes appear, either by mistaken identity or by identity theft.

• Original dates- length of credit history is 15% of a credit score, so consumers should be sure the original dates they opened their accounts are accurate.  Original account dates could be reported wrong if a credit card company is acquired or merged, or if a credit card is reported lost or stolen.

• Available credit- credit limits on the credit report should match up with credit card statements.  Debt accounts for 30% of your credit score.

• Types of account- sometimes accounts are not categorized correctly.  A home equity line of credit should be listed as a second mortgage, not just a line of credit.

• Reason codes- consumers should read what the credit bureau has to say about why their score is what it is.  These so-called reason codes appear in the credit report to explain what factors played into the credit score and what actions can be taken to improve the score over time.

Think twice before closing that credit card account, which shrinks the available credit listed on your report and hurts the credit utilization ratio.  The key to good credit is being proactive in reviewing credit reports regularly.  If consumers find their credit score is a respectable 680 or higher, removing minor dings may not be worth the effort.  Finding and eliminating errors is one way to get the high credit rating they deserve.  An exclusive buyer's agent can also help you through this process by directing you to the right financial advisor to help you fix your credit if it needs it.

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I’m the owner of Charleston's first exclusive buyer's agency. Everyone at our company only represents buyers which means we are able to act as our clients advocate throughout the buying process. The Real Buyer’s Agent is a full service company focused on one basic objective: ensuring that clients find and buy the home of their choice at the best possible price and terms. Learn more about Buyer's agency and the Charleston area at our website!

Comments (1)

Bryan Robertson
Los Altos, CA

This is a very concise overview of what many folks need these days.  It's so much easier to understand when laid out like this versus a pamphlet that reads like an insurance policy.  Good post!

Nov 12, 2010 04:30 AM

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