FICO Credit Score

Look around the internet and you’ll discover a number of articles about fixing a credit score. Some offer quick fixes and others dictate a longer waiting period before achieving the desired result. The fact is there is no one way to fix a credit score. There are several different approaches – i.e. hire an attorney, dispute items on the credit report, go to a credit advising company.

Truth Hurts

The fact is every consumer’s credit report is different and the difference lays with the consumer in most cases. A bad credit score is the result of information contained in the credit reports issued by one of the three consumer credit rating bureaus in America. Equifax, Experian, and TransUnion are the players consumers must contend with when attempting to correct or improve their credit score. While most credit reports are pretty accurate, occasionally misinformation finds its way into the report and, sometimes, outright errors exist which must be corrected. The Consumer Data Industry Association testified before Congress that less than 2% of those reports that resulted in a consumer dispute had data deleted because it was in error. The credit bureaus don’t seek out the information contained in their files; the information is reported to them by various sources and then incorporated into the report.

Who Says?

Consumers understand that any credit account they maintain can report to the credit bureaus. Likewise, several other types of organizations and companies report information to the credit scorers, including rental agencies, insurance companies, federal and state tax agencies, and courts. This amalgamation of reporters makes the information contained in the file a detailed snapshot of a consumer’s life at any given time.

Start At the Beginning

Consumers can receive their credit report from each of the main three credit bureaus for free once each year. Go to to access a free credit report from each of the agencies. Once received, consumers must scour the information for inaccuracies and errors. Though rare, it is possible misinformation is contained within the data of the reports and only by reading each report, line by line, can a consumer determine the validity of the information contained in their report.

Beware of False Promises

Many companies promise “perfect credit” or a “200 point increase” in an effort to bring in customers. The fact is that these companies do what a consumer can do themselves. The reality is that consumers pay a lot of money for, in most cases, very little difference at all. If negative information contained in the report is accurate and the consumer attempts to remove it by filing spurious disputes, they will find a high level of frustration and a low level of results. Claims of cleaning up credit reports should be investigated thoroughly before any money is paid to attempt the clean up.

The Real Deal

The fact is most consumers already know what they’ve got to do to make their credit report more positive:
1) Pay bills on time
2) Pay bills in full
3) Pay down high balances
4) Limit the number of credit accounts or credit cards
5) Use different types of credit accounts – revolving credit, installment accounts, etc.

Know What Goes Into the Credit Report

What many consumers don’t understand is the data going into the information contained in credit reports. The following categories of information are given weighing factors when included in an individual’s credit score:

Payment History – 35% weight

  • Account payment information on specific types of accounts (credit cards, retail accounts, installment loans, finance company accounts, mortgage, etc.)
  • Presence of adverse public records (bankruptcy, judgments, suits, liens, wage attachments, etc.), collection items, and/or delinquencies (past due items)
  • Severity of delinquencies (how long past due)
  • Amount past due on delinquent accounts or collection items
  • Time since (recent or not) past due items, adverse public records, or collection items (if any)
  • Number of past due items on file
  • Number of accounts paid as agreed

Balances Owed – 30% weight

  • Total amounts owing on accounts
  • Amounts owing on specific types of accounts
  • Lack of a specific type of balance, in some cases
  • Number of accounts with balances
  • Proportion of credit lines used (proportion of balances to total credit limits on certain types of revolving accounts)
  • Proportion of installment loan amounts still owing (proportion of balance to original loan amount on certain types of installment loans)

Age of Credit History – 15% weight

  • Time since accounts opened
  • Time since accounts opened, by specific type of account
  • Time since last account activity

New Credit Accounts– 10% weight

  • Number of recently opened accounts, and proportion of accounts that are recently opened, by type of account
  • Number of recent credit inquiries
  • Time since recent account opening(s), by type of account
  • Time since credit inquiry(s)
  • Re-establishment of positive credit history following past payment problems

Types of Credit Accounts Used – 10% weight

  • Number of (presence, prevalence, and recent information on) various types of accounts (credit cards, retail accounts, installment loans, mortgage, consumer finance accounts, etc.)

How to Dispute an Error

If there is an error in the credit report, it is important to notify the credit bureau immediately. The credit bureau must investigate the item(s) in question within 30 days, unless they consider the dispute claim frivolous. In addition to providing the consumer’s complete name and address, the dispute letter should also clearly identify the item in dispute. Include copies (NOT originals) of documents that support the disputed item’s removal. The letter must state the facts concerning the disputed item and provide an adequate explanation of the dispute. Also, the letter must specifically request the deletion or correction of the disputed information. Enclose a copy of the printed credit report page which contains the disputed information and be sure to mail the letter by certified mail, return receipt requested, to make sure the credit bureau received the letter. And always keep copies of the dispute letter and enclosures.

Time Heals All Wounds

It will take some time to correct the problems experienced by a poor credit report. Following the guidelines established above will help move the process forward faster and should result in an improved credit score in the long run.