Examining and Fixing Your Credit Score

This might not be strictly GQ but I’m looking for as much factual information as possible coupled with a substantial amount of personal anecdotes and opinions. If it turns into IMHO hopefully that’s where it ends up, but let’s start here.

I’ve been neglecting learning about my credit score for quite some time now. I’m not particularly in need of it at the moment since I’m not looking to buy a car or a house at the moment, but I also know that I do most of my business in cash and have vacillated between paying my balances in full and paying just the minimum based on my cash flow for any given stretch. Not ideal no doubt, but it’s high time I took a proactive approach and started sorting it out and fixing what can be fixed.

So, that comes to the question: What is the best method to go about doing this? I see ads on TV all the time for various free credit score providers but I’m sure all of those come with strings attached and I wonder which ones have gotten the best reviews. I also know that some time ago laws were passed that were supposed to make getting this information cheaper, easier and more fair. I know nothing about the specifics of this and would like to hear what my rights are.

Additional advice about people who have done this before is welcome as is advice on what to watch out for and what methods to take in order to do everything possible to bolster/fix a credit score.

Fire away.

if you are in the US, go to www.Annualcreditreport.com

Well, what do you know of your situation? How much credit have you used? Do you have a lot of delinquencies? Do you have a decent income?

This may affect your ability to get credit now.

What country are you in? I’m assuming that you are in the US or somewhere that is similar in terms of credit.

If you just haven’t used credit in a while, but have some history, just apply for a middle of the road prime credit card (e.g., if you are in the US, a Bank of America, Chase, Discover, American Express, Citi, or other card). Thus, you are “building” credit.

If you have no history whatsoever and can’t get one of these, try to get a secured card. Credit unions are good for these. My first credit card was a secured card from a credit union. I still have a card from them, but it’s now unsecured.

If you have negative marks, check for a secured card. They are likely to have lower fees than the “subprime” credit cards you see advertised all over the place.

First: go to www.annualcreditreport.com, which is the official site that all the big three agencies link to. You can get your report from each agency, free, once per year. That will let you see what kind of things are being reported in your name - and you should check carefully to make sure there aren’t errors, accounts you don’t know about etc. Some folks like to get one from each agency at a time, spread out over the year (e.g. Equifax in January, Experian in May, TransUnion in September).

You can get your actual FICO score, but not for free. Well, you can usually get it by signing up for a trial with any of a number of places but you need to be careful to NOT let the trial period expire. I used myfico.com to do that, when we were looking at refinancing a year or so back. There would have been a monthly charge of something like 7-8 bucks a month if I hadn’t canceled it.

That site (and probably some others as well) gives guidance on what sort of things have harmed or helped your score - e.g. in my case, I had opened up 2 new lines of credit about 9 months before that.

When you request your annual credit report, each of the agencies will offer to sell you additional info (i.e. your score) at that time, but that’s NOT required. One of them (Experian?) will give you a fake-o (i.e. not true FICO) score, I found.

Info needed for the annual credit report: They’ll ask some identifying questions like “which of these 5 banks do you hold a mortgage with” and “check on the box that most closely matches your mortgage payment” and “which of these cities have you lived in”. Oddly, the mortgage amount is the most challenging for me - I sorta remember it, and we always pay some extra, so I don’t remember the official amount :).

Even if you’re not looking for credit right now, it’s an excellent idea to check up on things to see where you are - that will help, and of course there’s always the chance you’ll find that “you” have 18 credit cards charged to the max, that you don’t remember opening!

Oh - and if you google “how to improve credit score” you’ll get hits from a lot of reputable sources, including


I’m sure there are shoddy “credit repair” places out there as well, obviously avoid them.

But the gist of those sites is fairly consistent:

  • Pay your bills on time!
  • Get your balances down
  • Keep balances to a low percentage of available credit
  • Don’t close existing credit cards (see above; if you owe 5,000 on a 6,000 card, versus 1,000 on each of 5 6,000-limit cards, your utilization is much higher and that’s bad).
  • Avoid opening new accounts unless needed - a recent hard inquiry dings your score.

An interesting place to see what varying credit scores do to your loan rates is lendingclub.com. I’m a lender/investor there, and the rates on the loans I’m invested in range from 5% to 14% - all based on credit score and some other factors.

No one except the reporting agencies can ‘fix’ your credit score. They just report the information they get. Please note that the information included in credit reports is not what many people assume it is. It is not a summary of all your bills and whether or not you paid on time. Most of the bills you pay like utilities aren’t included in your credit report at all because they aren’t credit. You can pay them on time or somewhat late for life and it won’t help or hurt your credit score. It is a report of true credit accounts which includes things like credit cards, car loans, student loans, and mortgages.

The only way non-credit accounts get sent to them is when they get sent to collection agencies after a lengthy delinquency. Payments less than 30 days late also never hurt your credit even though the company you are paying may charge a late fee the 1st day it is late. When working on getting a better credit score, you need to keep this in mind so you know what you are being scored for and what you aren’t. The credit score formulas are secret and proprietary so it is hard to tell exactly how to get the best possible result but you don’t need to know that anyway.

It isn’t a contest. Anything over 720 is good enough for almost any practical purpose. Slightly lower than that you can still get some credit but you may be charged a higher rate for it. Your income never matters for credit reporting and doesn’t appear on the reports at all.

I said above that no one can fix your credit score for you. That isn’t quite true. There is a trick that the credit score fixer-upper services exploit that you can do yourself for free and it is often worth it. After you get copies of your free credit reports, look for any errors on them. A significant percentage of reports do contain errors. Call the reporting company and talk to a customer service person that starts the mistaken entry investigations. They all have them. Dispute whatever is negative that you believe is in error.

In theory, you can dispute even things that are yours as well but I will leave that to your conscience. They send request back to the company that reported the delinquency in the first place and require a response within a certain time. If they don’t get it, the entry gets dropped from your report forever. The chances are good that some companies won’t reply to their inquiry or can’t substantiate the claim well enough so you will get a very fast boost in your credit score for a few hours work. That is what the services do behind the scenes.

I had tons of errors when I applied for my first mortgage because my reports were mixed with people you don’t want to be lumped in with. Three calls later, I went from very bad credit to stellar credit.

Thanks for the advice and information so far. Very helpful. Tomorrow I will get one of my freebies and get started on the process of reviewing it. I’m sure there will be questions.

This is all excellent advice. I would add one point.

Check your score for all three credit reporting bureaus (Equifax, Experian, Transunion). At least when I tried to get a free annual report, maybe 1.5 years ago, it was a pain in the ass. I could get one bureaus’ score, but for the others…I don’t remember, but it was difficult. I ended up just paying for one of the commercial reports to get my scores without hassle. I didn’t renew, or opt for any of the stupid “CREDIT MONITORING!” services; I paid for one full report and that was it. Maybe now you can get a full free report without as much hassle, I dunno.

But the advice of getting all three bureaus’ scores is important. When I bought my condo in 2009, my credit was near flawless (~790). Somehow, in the move, I neglected to set up auto online payment for the gas company. Since everything else was set up that way, I routinely threw away all paper bills without even opening them. I only learned of my major fail about a year later when I got scores from all three bureaus and only one of them had a huge ding. I was over 6 months behind on the gas bill, and they had only not shut me off because I went into collections <6 months in the winter, when by law they couldn’t shut me off.

Point is, only one of the three credit bureaus reported this major ding. It would have been much worse had I not caught it before years went by.

That was my mistake, and it was a huge one. I sent the gas co a letter of apology and explanation and paid off my bill (~8 months of gas at once - that stung my checkbook.) I’m fully paid off now, and by now I’m nearly back to my pre-mistake score. Lesson learned.

And scores do matter a lot these days if you want to buy a house. At least in 2009, my banker/lender and I were astounded. With nearly perfect credit it was fuck-all difficult to get me approved for a mortgage for ~2.5x my annual salary. It took me nearly a month to get the thing to go through. Before the bubble burst someone like me would be approved in minutes. I shudder to think what it’s like for someone with only decent credit.

Gah, this got me interested again so I went to check my credit scores

The “free” reports - I checked all three bureaus - they all had useful and correct info. Again, only one of the three noted my significant ding (missing a gas bill for a months.) But none of them would give me a “score” without paying. Maybe I didn’t click around enough, but a proper score was withheld unless I would pay.

So, still curious, and it is good to check once per year or so, I paid for a proper “3-bureau score”

I guess now it’s scored out of 990, instead of 850? When did this happen?

From an MSN webpage (no clue if this is authoritative, suddenly I’m new to credit scores again :slight_smile:

Now I’m confused again.

Among the three, my “new” credit scores are B, A and A.

Jeez I’ve got a lot of new research and reading to do.

GameHat - you’re right, there’s no way to get a score there unless you pay.

In fact the only way to get a FICO score at all is to either pay, or use one of those ‘free’ services that are only free for a week or two trial period. Like the singing guy who advertises on TV, or like myfico.com.

I hadn’t actually heard of the Vantage score. Most people are more familiar with the FICO score which does indeed top out at 850.

Good for you for checking! And yep on the utility; from what I understand, most utilities don’t report positive history, just if you get into arrears they’ll ding you. At least I’ve never seen anything on my credit report.

Ouch on the gas bill!! I agree, it’s worth checking all 3, especially initially. Now that we’ve got a good handle on things, we stagger them as I noted above, figuring that way it’ll be easier to catch some unauthorized accounts earlier in the process.

We refinanced in early 2009 and it was as you noted a pain. Same lender, but they were MUCH stricter about documentation, insisted our HELOC be capped at its current balance (not at its credit limit), took over 2 months. There are refi horror stories elsewhere on the Dope as well (one I’m thinking of, where the owner was also refinancing with the same lender, and the lender deliberately dragged things out and demanded more and more unreasonable documentation to force them to give it up). In our case: stellar history, we’d been prepaying, perfect credit, well over 20% equity in the house…

You also might want to check out Credit Karma, which will give you a free estimate of your credit score. From some of the research and reviews I’ve seen, the score they give you is reasonably accurate (one source said it seemed to be based on the TransUnion report); if anything, some users report that when they got their FICO score from their bank the Credit Karma one was lower. I’ve used it for a while, and I’ve never been charged anything, nor have I noticed any increase in my spam. They will offer suggestions on how you can improve your financial situation, but there’s no hard sell on anything they suggest.

Vantage Score is a collaboration started several years back between the three major credit reporting bureaus Equifax, Experian, and TransUnion. Most likely to get out of paying licensing fees to Fair Isaac Corporation (the F, I, C and O in FICO).

There were a bunch of lawsuits filed by Fair Isaac in response to block the development and to essentially try and ensure their continued monopoly. However they got trounced pretty thoroughly in the courts. Had they had there way you’d have had to put a little © next that 850. :dubious:

I tried this, and while it’s not as awesome as I’d like, it is worth checking out if you’re new to the credit game. I wish the what-if machine they have was a little more developed: you can, for instance, see what would happen if you ditched your oldest credit card (hint: score goes down), but you can’t see what happens if you drop your newest card. Maybe my score is just high, but there was nothing I could do to simulate my score going up. Sometime soon I’ll be adding and dropping accounts, so it’ll be nice to see the graph of historical scores.

If I can piggy back on this question…

I have a ding on my credit report (as reported by Credit Karma), I still have to get my official credit reports but I am 90% sure it is a bill that I am disputing with my local cable company. Do I have to do anything special to get this removed? Am I entitled to any damages for this fraudulent negative mark on my credit report?

Well, one credit agency’s report has been printed and reviewed. All in all, it’s not so bad. I didn’t pony up for the score yet and I disputed a few items, but there’s nothing too scary on there. Bizarrely my Gas utility has like 5 different accounts listed under my name, 4 of which are closed. The “payment history” is good on all but one, which I disputed, but the dates they are listed as “closed” doesn’t correspond to the dates where information was reported. That company is such a mess.

I’m somewhat regretting closing a handful of high APR credit cards which I had that had zero balance on them. Those cards would have greatly upped my credit limit and lowered my utilization percentage. Also, I apparently need to get cracking on paying off that stupid student loan.

The most worrisome thing is that my name is listed incorrectly on the report. I tried to update it, but we’ll see if that takes.

Quick question: I’ve got a modest student loan amount that I’ve been carrying and deferring for a long time while I was in between jobs or paying down other debts. Once my cash flow stabilizes I could pay it off in one lump. Is there any benefit to stretching that out over a period of time and building more positive credit history, or is a zero balance the ideal?

That depends on a bunch of factors.

To the extent that it’s your oldest account on your report, and you’ve got nothing else on your report, it MIGHT be helpful to keep it open.

If you’ve got two credit cards in good standing that date back to your 18th birthday, have paid off 3 different car loans in a timely fashion, and a home loan that’s in great standing and several years old, it CERTAINLY won’t be helpful to keep that student loan open.

The computerized models that the credit scoring guys use are SICKENINGLY complicated and it’s really hard to handicap what a given change to your credit report would do.

Frankly, I’d pay off that student loan the first time I had $1000 in savings + the money to pay off the student loan.
No matter how bad my credit…

Well, I’ve got one car fully paid off and in good standing. One credit card in good standing with a couple late payments 4 years ago or so. No mortgage, no other loans. A couple credit cards with spotty history that were from college that have been closed for years now. The student loan is pretty much my only active credit line in addition to my one active credit card.

That said, it’s debt not credit. Not sure how seriously that factors in.

Okay. Answering this one out of order.
To get incorrect reporting off of your report, you can either dispute it with the credit bureau or ask the company in question to correct the information.
It’s your call.
If you straighten it out with the alleged creditor, then once they pull it off your report, it’ll stay off.
If you dispute it with the CRA (credit reporting agency) then it may get removed, but it also may get slapped right back on there next week the next time the creditor does a bulk upload of credit reporting to the the CRA.
I’ll leave specifics to lawyers, but the way I’ve seen this go in the past, the damages show up once you try to re-fi your house and can’t do so because of the cable company’s stupid note on your report. Prior to anyone actually pulling your credit and seeing the derogatory note, the damages due you are certainly minor…

Yeah. I’d pay that student loan off as soon as I could find the money. I doubt it’s helping at this point.