Take these steps to build a stronger score:
When’s the last time you checked your credit report? Errors on your credit report can lower your credit score – and you may not even be aware of them. The FTC (Federal Trade Commission) says one in four people found an error on their credit report that could affect their credit score. And if you’re looking to apply for a mortgage or make a big purchase, fixing your credit first is smart. But before you can fix any problem, you need to determine the root cause. The tough part with credit is that there are many factors that make up your credit score, and it takes time for changes to be reflected with the credit bureaus. But don't stress out. Coastal Credit Union has some tips to help you get your credit back on track.
Step 1: Get Your Free Credit Report
- The first step toward fixing bad credit is to know what is being reported on your credit report
- By law, every U.S. citizen is entitled to a free copy of their credit report every twelve months, available at each credit reporting company
- You’ll need to pay extra or use a different service to get your actual credit score, but your credit report will show you what’s being stated
Step 2: Look For Credit Report Errors
One of the easiest ways to improve your credit score is to fix errors on your credit report. Here are some of the common credit report errors to look for:
- Incorrect street address
- Incorrect name (look out for a similar name or suffix being reported on your report)
- Fraudulent accounts, otherwise known as accounts that you didn’t open. Beware, as this could be identity theft.
- Incorrect account information such as:
- Inaccurate credit limits
- The wrong origination date on a loan
- Wrong Social Security Number
- Wrong birth date
- Spouse’s information is inaccurate
- Accounts that are mistakenly shown as being open or closed. Look to see if there’s a notation on the account saying if you or the creditor closed the account (and if that’s accurate).
- Wrong payment status information
Step 3: Dispute Credit Report Errors
Once you’ve reviewed your credit report for errors, next you’ll want to dispute those errors with the credit bureaus. You can do this using a letter (like this sample from the FTC), or you can dispute them online through each of the three credit bureaus. In both scenarios, you’ll want to point out the errors, and state why the information is inaccurate, then request that the items be fixed and/or removed.
It’s a good idea to send a copy of your credit report and, if you are disputing by mail, send it via certified mail. If you prefer to dispute your credit errors online, use the links below for each of the three credit bureau’s pages with information on their process:
After you file a dispute, be diligent and follow up to make sure it was resolved.
Step 4: Lower Debt
- Keeping a lower debt-to-credit ratio can help improve your credit score
- Lenders want to make sure that you’re living within your means before they allow you to take on more debt
Strategies for lowering your DTC:
- Pay down your current debt and get an increase on your credit limit, without utilizing it
- Avoid racking up big balances
- Limit your charges to 30% or less of a card's limit
Step 5: Set up Automatic Payments
The most important factor in credit worthiness, 35% of your credit score, is your ability to pay bills on time.
- Utilize Coastal’s Online or Mobile Banking to set up recurring payments for bills that are the same each month to make sure those are always paid on time – especially your credit cards and loans
- Use Bill Pay to set up a payment each month for at least the minimum balance to ensure payments are made on time