If you’ve recently applied for a loan or credit
card and been turned down because of your credit
rating, there are a number of things you can do
to improve that rating. Exactly what those things
are depends on your individual situation. Here are
some steps to take to bring your credit rating up.
Ask the credit card company specifically what it
was that prevented them from issuing credit to you.
By law, any time that you are turned down for credit,
the issuing company has to tell you which credit
reporting agency they got your report from and what
their denial of credit is based on. Usually, your
rejection letter will tell you both of those things.
Read it carefully and see which factors affected
your credit rating negatively.
Get your credit report for ALL THREE REPORTING
AGENCIES so that you know what is being reported
to credit card companies about you.
The three companies are Experian (www.experian.com),
TransUnion (www.transunion.com)
and Equifax (www.equifax.com).
You are entitled by law to receive one report from
each company for free annually. The easiest way
to do that is at www.annualcreditreport.com, a site
sponsored by all three reporting agencies. This
law is going into effect across the country in stages
– if you live on the East Coast you’ll
have to wait until September 2005 to be eligible,
but in the meantime, you can buy them for less than
$10 each.
What to do if:
Your credit report shows erroneous information.
Immediately contact the reporting agency that shows
the erroneous information in writing to correct
it. They are required by law to show that the information
is in dispute immediately, and to correct it when
they have proof of the error.
Your credit report shows late payments
on one or more debts.
Many lenders view a single lapse – and even
a cluster of lapses in a small time frame –
more forgivingly if they’re offset by six
or more months of on time bill payments. If your
late payments were due to an unforeseen circumstance
that has since been corrected (for instance, if
you were ill and were out of work for two months,
but have now returned to work), you can ask the
credit reporting agency to note the mitigating circumstance
and its resolution on your credit report. Of course,
you must be sure to make payments on time in the
future.
The lender said that you have too many
credit cards.
If there are credit cards that you seldom use, consider
paying them off and closing the accounts. If possible,
pay debts off rather than moving them around. Closing
accounts but maintaining the same amount of debt
will lower your score rather than raise it.
The lender said that you are carrying too
much debt.
Pay down your existing credit accounts for several
months with the largest payments you can manage
to lower your outstanding debts, and apply again
in 6 months.
