What is the fastest way to boost my credit score?

[moneymatters]

My score is not all that great right now, and I'd really like to increase it by 40 to 60 points within the next 6 months. Is this possible?

Also, if an account on my credit report shows delinquent payments, can the 'late payment' record be removed when I pay the account in full or does the record stay on my credit history forever?

[buzz]

You will need to provide much more info to get a realistic answer. Credit limits, balances, ages of accounts, number and severity of late payments and other strikes on your credit report, bankruptcy, etc.

You can try this calculator to get a rough idea.

Click

[skydivingchic]

Whether or not it is possible to raise your score by 40-60 points and what you need to do depends why your score is low in the first place.

You mention late payments. Once you pay the late payments, the record of having a late payment will stay on your record for 7 (I think) years. If the payment was indeed late, no, you can't get it removed. If the late payment is in error, then you can dispute the item. The sooner you bring the payments up to date, the better. Credit reports have show the number of payments late by 30 days, 31-60 days, 61-90 days, and 90+ days. The score looks at how late you were, how recently you've been delinquent, and how many times you've been delinquent. So one payment late by 30 days that happed 4 years ago will not have as negative an effect as a payment missed by 60 days 2 months ago.

Payment history makes up about 35% of the score. So consistently paying all your bills on time has a big impact.

Another big factor is amounts owed compared to your credit limits. So if you have a few cards that are maxed out, paying down your balances will help. Aim to keep your credit utilization below 25% of the credit limits.

If your score is low simply because you have a very short or non-existant credit history, there isn't much you can do about that besides get a credit card (secured if necessary), charge a small amount to it, and pay it off before the due date.

[pennrj430]

I agree with skydivingckic. But, I would dispute all of the lates, even if they might be legit. If you dispute them, the company you were late paying must provide proof to the credit companies within 45 days that you were indeed late. Often these companies are backed up and slow, and do not provide this proof in time. So, there is a chance that a few might be removed. It's legal, and worth a shot.

Other then that, just pay Everything On Time, and chip away at the debt like skydivechic says.

[wishes2bfrugal]

Are you paying down your revolving accounts? These type of accounts (credit cards) make a significant ding in your credit score once your balance is 50% or more of the credit limit.

[moneymatters]

OK, here it goes:

Car Loan 1: $10,460 (Account Current)
Car Loan 2: $0 (Account Paid but shows 3 late payments back in 2005 & 2006)

Student Loan 1: $4,417 (Payment Deferred)
Student Loan 2: $3,403 (Payment Deferred)
Student Loan 3: $4478 (Payment Deferred)

Credit Card 1: $553 (Account Closed & shows 3 delinquent payments in beginning of 2006)
Credit Card 2: $410 (Account Closed & shows 2 delinquent payments in beginning of 2006)
Credit Card 3: $276 (Account Closed & shows 2 delinquent payments in beginning of 2006)
Credit Card 4: $0 (Account Paid but shows 2 delinquent payments in beginning of 2006)

Recently Added Accounts:
Cell phone: $304 (Collection Agency)
Victoria Secret: $171 (Collection Agency reported 3 delinquent payments)

Now, I plan to sell my car within the next 2 to 3 months. It's value is about $1500-$2000
above the remaining balance I owe on it, so there should be no problem paying the auto loan
off in full.

My student loans began in August of 05', so I don't have to pay on them until
August 09' or until I graduate from college.

Next, I have about $1250 of credit card debt, which would be paid off in no time if I sell my
car at least at the current amount I owe.

The two recently added accounts are accounts I may need to dispute. When I first established
my cell phone service with Nextel (June 2005), I chose the cheapest and most basic
plan they offered because I don't really talk on the phone that much. Anyway, they started billing
me some outrageous charges three months before I cancelled my service (around March/April this year).
They said since I was cancelling before my two year contract, I'd have to pay a $300 cancellation fee.

Also, Victoria Secret claims I made a purchase with them on credit in December last year when I remember
using my debit card to pay for my items. The cashier asked me if I wanted to apply for credit with VS, but
I told her, NO because I knew I wouldn't have been approved. When I signed up for debt consolidation on my
personal loans, and they said I could not apply for any additional credit until my credit card debts were
paid in full. My bank statement even shows the amount credited from my account. So, how and why do I owe
them $171?

Should I dispute these accounts and hope they be removed or just pay them off since the balances are low?
Nextel has offered me a settlement amount of $228 if I don't want to pay the full $304. Would paying off
both accounts be the best thing to do?

I'm not very knowledgeable in filing credit report disputes, so any advice on this would be much appreciated.

[pennrj430]

Hi Moneymatters, I send you a PM.

[moneymatters]

Originally Posted by pennrj430

Hi Moneymatters, I send you a PM.

OK, I'm checking my inbox right now. Thanks much!

[loanstar]

Originally Posted by moneymatters

My score is not all that great right now, and I'd really like to increase it by 40 to 60 points within the next 6 months. Is this possible?

Also, if an account on my credit report shows delinquent payments, can the 'late payment' record be removed when I pay the account in full or does the record stay on my credit history forever?

if your parent or partner has a good credit rating, they can temprarily add you to their credit card as a named user.
a missed payment normally stays on their for a number of years.

[InDebtInDC]

To be honest, other than cleaning up all incorrect information on your credit report and trying not to miss payments, there is no sure way to boost your credit score.

The algorithms used to calculate credit score are proprietary, and nobody really knows what variables can be tweaked to boost a score. Different people have different theories, but ultimately nobody really knows.

I think your best bet is just to lick your wounds and focus on paying off debt. I personally think that helps your credit more than anything else.

[momof1in150]

Originally Posted by loanstar

if your parent or partner has a good credit rating, they can temprarily add you to their credit card as a named user.
a missed payment normally stays on their for a number of years.

Not anymore. Authorized Users are no longer part of your credit score. If you are a co-signer then it will help but not an authorized user. Missed payments will stay on for 7 years but after 2+ years they have less impact on your score.

[dayana]

5 ways t0 improve your credit score you can follow these tips to improve your rating:

Pay your bills on time. Delinquent payments can have a major negative impact on your score and the longer you pay your bills on time, the better your score. For example, someone with an average credit rating of 707 can raise their score by as much as 20 points by paying all their bills on time for one month.

Keep balances low on credit cards. High outstanding debt can affect your score. Maxing out your credit cards could lower your average score by as much as 70 points.

Don't open a number of new credit cards that you don't need. New accounts will lower your average account age, which could actually lower your score by up to 10 points.

Have credit cards - but manage them responsibly. In general, having credit cards and installment loans (and making timely payments) will raise your score. Someone with no credit cards, for example, tends to be higher risk than someone who has managed credit cards responsibly.

Closing an account doesn't make it go away. A closed account will still show up on your credit report and may be factored into the score.

[InDebtInDC]

Originally Posted by dayana

5 ways t0 improve your credit score you can follow these tips to improve your rating:

Pay your bills on time. Delinquent payments can have a major negative impact on your score and the longer you pay your bills on time, the better your score. For example, someone with an average credit rating of 707 can raise their score by as much as 20 points by paying all their bills on time for one month.

Keep balances low on credit cards. High outstanding debt can affect your score. Maxing out your credit cards could lower your average score by as much as 70 points.

Don't open a number of new credit cards that you don't need. New accounts will lower your average account age, which could actually lower your score by up to 10 points.

Have credit cards - but manage them responsibly. In general, having credit cards and installment loans (and making timely payments) will raise your score. Someone with no credit cards, for example, tends to be higher risk than someone who has managed credit cards responsibly.

Closing an account doesn't make it go away. A closed account will still show up on your credit report and may be factored into the score.

I strongly agree with the first 3 points. Credit score aside, having no debt is always a good thing.

But with all due respect, the credit score is not a measure of risk or ability to pay. Instead, it's a measure of profitability for the creditor, because ultimately in the end that's what lenders care about.

So it follows that the way your credit score is calculated depends on the creditor's idea of profitability. A lot of creditors will pull your raw credit report and run their own algorithm to calculate their own assessment of your credit worthiness.

Respectfully, the bottom line is that there are hundreds if not thousands of variables that go into your credit score, and each company will rate you with a different score. So it follows that what works well for one person may not work well for another, and the credit score is in the eye of the beholder as well so it depends on the company that's rating you.

My best advice is to manage your debt and increase your income above everything else. Anything else won't have nearly as much an impact on your score as those 2 things.

Thoughts?