June 16th, 2011 8:12 AM by Preston Ware
Here are 5 subtle ways in which a credit report can be tweaked to improve a score, even for good credit customers.
1. Account balances you recently paid down or off. If you’ve just finished paying a bill down or off, you might not dispute the elevated balance that remains on your credit report because it’s not actually an error, per se. But the whole point of paying the balance down was to bring down your credit utilization ratio, which is a heavily weighted factor in your overall credit score.
2. Incorrect former addresses. This one is my favorite. Of the 19 percent of consumers who spotted an error on their report in a recent study, nearly 40 percent of those errors were in what the credit bureaus call “header data," things like the consumer's previous street address. Many elected not to dispute these sorts of line items because the error doesn't seem like it would impact their credit score. A misreported address can come from anywhere but usually it happens when you are applying for a card or a loan and the credit representative creates a typo in your application. The credit bureau recognizes this as different and creates a red flag. As years go by and you truly move around or apply for more credit with typos the bureaus will look upon this as instability. You want to clean out, old , old addresses or typos with your address as well as your jobs and your name.
3. Bills that were never yours in the first place. As with completely bizarre former addresses, accounts listed on your credit report that you never opened by you in the first place can be a red flag that tips you to the fact that someone else might have stolen your identity and opened a credit card or loan in your name If someone is using your identity to obtain credit and you fail to dispute that the bills belong to you, they might continue to use it, which can cause you real problems
4. Limits listed as lower than they really are. As with closed accounts that were never yours in the first place, accounts that are listed on your credit report as having limits that are lower than they really are might seem like a battle not worth fighting. But the fact is that only two inputs go into the credit utilization ratio that comprises about 30 percent of your credit scores: how much credit you have available, and how much credit you have used. If you have account balances that show up on your credit report as lower than they actually are (i.e., that you have less credit available to use), that inaccuracy can lower your overall scores.
5. Derogatory items that should have aged off. Although the impact a derogatory item has on your credit score wanes over time, it’s still your right (and your responsibility) to make sure negative items disappear from your credit report when they are supposed to – that’s 7 years for a late payment, 10 years for a bankruptcy. If you are still seeing credit dings on your report after more than the relevant time frame has elapsed, dispute them and claim the rehabbed credit (and score) you’ve since earned. The problem here is that collections get bought and sold and the new collection will restart the clock all over again. If you clear an item you have to make sure each and every creditor is made aware that you settled the debt. The problem with settling old debts, sometimes this will temporarily reopen an old would on your report . Best not to do this,during the application process.
Beyond that, if you’re close to a credit tier cutoff, like 600-620, 620-640, 640-660,680-700, depending on your loan type, even a few points’ difference can be the difference in the interest rate you will receive.