The Legal Bubble

Check your credit, and check it often.  I signed up with truecredit.com and I check it every 24-48 hours.  I know… I am a little obsessed, but you have to be.  Truecredit comes with monitoring, and emails you any significant changes, but I want to see SCORES.

1. Dispute negative inaccuracies or expired accounts on your credit.  If the expired account has anything negative, I would dispute it.  Expired means older than 7-10 years.  If it’s all positive, let it stay and fall off on its own.  I’ve gone through my credit report with a fine comb and disputed anything and everything.  Sometimes it worked to get negative items removed, and sometimes it didn’t.  The key is, the company has 30 days to prove that everything is accurate.  If they do not, or there is no response, the credit bureaus remove it from your credit report.

 2. Reduce your debt down to 10% of available credit, or at the most 35% of your credit limit.  In simple terms, if your total credit limit on a card is $1000, make sure the amount you owe does not exceed $350 or your score will suffer.

3. Do not pay off old collection debts.  There’s no set number, but paying off something that’s 5 years old can hurt your credit score.  It will drop off in 2 years, so you are better off saving it or paying something down that’s more substantial.  When you pay that debt, it can show as new activity, and we all know the older the debt, the less impact is has on your score.  I’ve heard they are working/have worked on distinguishing old debt from new debt, but as recent as the end of 2007 that happened to someone that I know.

4. Lower your monthly debt!!  I have a line of credit that if I owe more than $550, my minimum payment is ~$550 until it is paid off.  When I owe about $3000, I pay that off asap.  There’s no point in carrying that debt on for 6 months when the amount isn’t that great.

5. Do not close any credit accounts.  This lowers the amount of available credit, and can hurt your score.  Even if you’re not using it, keep it!!!

6. Get someone to add your name as a signer on their credit accounts (only if they have good credit, and pay their bills on time), then it shows as good, available credit on your credit report.  Obviously this has to be a really special and/or giving person who would agree to this!  This will add to the amount of credit you have available to you (unless they’re maxxed out), and will help in raising your score.   This is quick, and helpful if you’ve found the house, but are still negotiating financing terms.  Once it hits your credit, your score should increase.

7. Pay your bills on time.  That’s obvious, huh??  This isn’t a finance blog, but I will let you know how I work my bills out.  The mortgage company hates it, but they get their $$!  I get paid every week, so I divide all my bills by 4 and pay a small portion every week.  Most of the time I will pay more than 1/4 of it so I am always ahead.  That gets some creditors off your back because they are getting some money, and see you are paying them.  Additionally, it’s brainless because you have the same amount going to each creditor every pay period.  I utilize my online billpay fanatically.  If you do set it up this way, weekly, biweekly, twice/month, etc, then make sure you have paid your bills for that month so that it’s like you’re not messing up and finding a new 30 day late on your credit.  Before, when I was paid biweekly, I split my payments into two.  A few months a year they got three payments instead of two, so I was ahead….  A lot of mortgage companies will let you set these up directly with them, but if you’re like me  you have to see it or you forget that $$ is coming out.  Remember, there’s no set way to do this, so try different ways, but make sure you have your due dates written out for reference.  It did take me over an hour to setup all of the automatic payments for my online billpay, and maneuver them so that I would not be late.

**If you are in the middle of trying to purchase or refinance, and you find some inaccurate information, you can clear it up by requesting a rapid rescore.  You would send your lender proof of the inaccuracy, and pay a fee, and within 72 hours they will rescore you and hopefully give you a better rate.  This can only be done by a mortgage company or bank.

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