Finance Blog
3 Steps to Taking Control of Your Credit Report
3 Steps to Taking Control of Your Credit Report
Mechel Glass, CredAbility.org
Over the past three years, counselors at CredAbility have seen a rise in the average credit score among people seeking counseling. More people, and people with better financial histories, are seeking credit counseling.
A person seeking basic budget counseling from CredAbility in 2007 had an average credit score of 560. This score rose to 576 in 2008 and 588 in 2009. In December 2010, it was 589. While the average credit score appears to be leveling off, a rise of nearly 30 points over three years shows how more people with credit card debt have needed help reining in their finances over the past three years.
For people seeking foreclosure-prevention counseling, the average credit score in 2009 was 565, but it rose to 572 last year. Homeowners seeking counseling to avoid foreclosure now have an average income of over $50,000. The rising credit scores are a reflection of who we’re seeing—people with more income and assets.
According to the CredAbility Consumer Distress Index, a quarterly index that tracks the financial distress of average U.S. households, credit scores for all Americans have been relatively stable for the past two years.
Instead of letting the economic crisis decimate their finances, millions of people have been rebuilding their credit as they pay down their debt. Creditors and lenders are still going to report your payment history and loan balances, but there are a few steps you can take to present a positive credit report.
1. Make sure you pay your bills on time.
If keeping up with your credit card bills is still a problem, call the issuer to explain your situation and attempt to negotiate a payment that you can afford. Ask the issuer how this will be reported to the three major credit reporting agencies: Not paid as agreed? Or now paying as agreed, per the new terms? Make certain you get any agreement in writing.
Assess the damage to your credit by getting a free copy of your credit report from each of the three major credit-reporting bureaus through annualcreditreport.com.
2. Write a personal statement for your credit report.
Since prospective employers may pull a copy of your credit report, consider adding a one-hundred-word statement to each of your reports explaining your hardship, whether it’s a job loss or an overwhelming medical debt. All three major credit reporting agencies allow you to add a brief statement through their websites. Most scoring models don’t consider consumer statements in the scoring formula , however, so don’t expect it to sway lenders.
3. Stay away from bogus credit-repair companies.
You’ve probably seen ads for credit-repair companies who say they’ll clean up your credit in a few short weeks—stay away from these organizations. Some companies manage to clean up your credit for a limited time by disputing all of your accounts and sending letters to the bureaus claiming the accounts aren’t valid. But after the credit bureaus validate the accounts and debts, they’ll reappear on your report, and your score will plummet again.
Legitimate credit-repair companies exist, but there’s nothing they can do that you can’t do for yourself—for free.
For people committed to improving their credit score, CredAbility offers online classes at www.CredAbility.org. However you decide to attack your credit, it starts with you. The best way to improve your credit score is to set a goal, create an action plan with specific steps, and follow through on those steps.
How To Dispute Credit Report Errors
Four Things College Kids Need To Know About Credit
Four Myths About Your Credit History
Debt Reduction: Why Paying Down Your Credit Card Debt Helps Your Credit Score
1 comment
Leave a Comment
We welcome your interest and participation on this forum, but be aware that comments will be published at Equifax's sole discretion. Please don't use this blog to submit questions or concerns about your Equifax credit report or raise customer service issues. Instead, you should contact Equifax directly for all such matters and any attempts to do so in this forum will be promptly re-directed.
Some other factors to consider when commenting:
- Registration and privacy. While no registration is required to visit our forum, participants wishing to post a message must register by creating an account. All personal information provided by forum members incident to registration is governed by our Terms of Use and Privacy Policy.
- All comments are anonymous. We'll delete your name, e-mail address, and any other identifying information, including details about your investments.
- We can't post or respond to every comment - As much as we'd like to, we can't post every comment, nor can we guarantee that we will respond to each individual message. All questions or comments about your Equifax credit report or similar customer service issues should be handled by contacting Equifax directly.
- Don't offer specific legal, tax or financial advice. All of the materials on this Site are for information, education, and noncommercial purposes only and this forum is not intended as a means of expressing views or ideas regarding any specific legal, tax, or investment advice. While offering general rules of thumb is both permitted and encouraged, recommending specific ideas or strategies regarding investments, taxes, and related matters is prohibited.
- Credit Repair. This blog is not intended as a venue for the discussion or exchange of ideas regarding credit repair or other strategies intended to assist visitors and community members improve or otherwise modify their credit histories, ratings or scores.
- Stay on topic. Your comment should be concise and pertain to the specific post in question.
- Be respectful of the community. The use of profanity, offensive language, spam, and personal attacks will not be tolerated and egregious or repeat offenders will be banned from future participation. We encourage disagreement and healthy debate, but please refrain from personal attacks on our WordPresss and contributors.
- Finally: Participation in this forum may be terminated by Equifax immediately and without notice for failure to comply with any guidelines or Terms of Use. As such, you should familiarize yourself with all pertinent requirements prior to submitting any response through the blog or otherwise. All opinions expressed in this forum are solely those of the individual submitting the comment, and don't necessarily represent the views of Equifax or its management.
Equifax maintains this interactive forum for education and information purposes in order to allow individuals to share their relevant knowledge and opinions with other members and visitors. We encourage you to participate in discussions about personal finance issues and other topics of interest to this community, but please read our commenting guidelines first. Equifax reserves the right to monitor postings to the forum and comments will be published at our discretion. Do you have questions or comments about your Equifax credit report or customer-service issues regarding an Equifax product? If so, please contact Equifax directly. All opinions and information expressed or shared in blog comments are solely those of the person submitting the comments, and don't necessarily represent the views of Equifax or its management.
RSS Feeds
IT seems credit reporting agencies are more much comfortable placing negative information in credit files than placing positive information into consumers credit files.
I note how deaths, divorces, tax liens, defaults, foreclosures & bankruptcies are automatically entered in credit files.
Are marriages & unreported discharges of debts entered automatically ?