November 5, 2004

Real Estate Update

How’s your credit?

By Donna Nardi
Special to the Times

Life has a way of running along with a few bumps here and there, while we assume all is well. Then we decide to purchase something using credit: car, home, home improvement, for examples. We suddenly discover, to our dismay, that our credit is (yikes) a real problem!

To top it all off, we don’t even KNOW a creditor named Bogus Roof Repair. And, they’re saying we owe them $3,500 that we never paid! Plus, that tiny dispute with the doctor’s office is glaringly obvious. Hey that was small, and besides, it was all settled. What to do now?

Well, granted, it’s a hassle, but there are ways to fix your own credit. First of all, determine if the derogatory claims belong to you. There are sometimes honest mistakes, but even honest mistakes can take a toll on your credit. Or, if it is fraud, you have another problem altogether.

Here are some good repair tips:

Don’t cancel your credit cards. You get points for each open trade line. The longer the better.

Don’t pay off a collection that’s over a year old. Wait until after escrow closes. Paying before will reduce your score, while paying after escrow will increase it.

Late payments cost you plenty. On credit cards 30 days late, the hit is 15 to 35 points. Mortgages late by 30 days will cost you 25 to 50 points; 35 percent of your FICO score is based on your history of payments.

Each inquiry will cost two to 10 points. There are some buffer periods that will not affect your credit score. But to play it safe, unless you really need the credit, avoid it.

Check your credit report annually to be sure there are no fraudulent claims. It can take one to two years to correct identity theft cases.

Fix problems with the creditor first, then the credit bureaus. The source of the issue is with your creditor. The credit bureaus will then have the proof they need to adjust your credit information. Their contact information is at the end of this article.

Scores range from 350 to 850. Above 700 is high, with below 600 considered quite low. The national average is 750 to 799.

Fixing a problem doesn’t mean it will not show on your credit report. Derogatory information will be deleted after seven to 10 years. It will, however, show that it was paid/resolved, while it will improve your credit score. It takes about a year a to recover your points if there are no new derogatory issues.

When the issue is identity theft/fraud/forgery, gather all information and proof available and submit it to the credit bureaus and law authorities. Be sure to get a police report.

They will not necessarily prosecute, depending on many criteria, but it can help your own case with creditors and credit bureaus. The law actually considers the lender the victim due to the fact that the lender was out the money. Once cleared up, your credit score will rebound.

Tip: To get instant credit history, some misnomer, huh?, go to a relative that loves you a LOT and ask them to put your name on one of their long standing lines of credit as an authorized user. You will instantly have that trade credit line on your credit history as your own.

Last, but certainly not least, be sure NOT to enroll in credit counseling in the attempt to improve your credit score to buy a home or any other large purchase. Lenders won’t lend to those involved in credit counseling.

As promised, here are the three credit bureaus:

- Experian, P.O. Box 2104, Allen, Texas 75013, (888) 397-3742, www.experian.com;
- Trans Union, P.O. Box 2000, Chester, Penn. 19022, (800) 916-8800, www.transunion.com;
- Equifax Credit Info Systems, P.O. Box 740256, Atlanta, Ga. 30374, (800) 685-1111, www.equifax.com.