Fixing Your Credit

There are a growing number of “rapid rescoring” services that offer to fix your credit in 72 hours or less. It’s important to understand, however, that there are a number of things these services can and can’t do:

1. They can’t work directly with consumers. Instead, you’ll need to work with a loan officer or mortgage broker who subscribes to an agency that offers this service.

2. They can only help if you have evidence that you’ve been wrongly scored, such as a letter from a creditor acknowledging that your payment was reported as late when it was actually on time. Sometimes re-scorers can help obtain such proof, but that can add days or even weeks to the process.

3. They can fix legitimate mistakes, but can’t resolve disputes. If you don’t have proof, you’ll have to deal with your creditor to solve the problem.

4. Even if they remove a mistake, they can’t always help your score. Ironically, removing mistakes can sometimes even hurt your score by moving you up in to a higher scoring bracket, where you may be unfavorably compared to others in that bracket.

Rescoring typically costs $50-$100 for each account that’s corrected, although some agencies provide the service at no cost as part of a package of services provided to lending professionals.

Rebuilding your credit rating can be a slow process, but there are a number of shortcuts:

Pay down your debt. That’s the simplest way to lower your debt utilization ratio – the difference between how much you owe and how much credit you’re allowed.
It’s also possible to take out a 401(k) loan, but the risk is that if you lose your job you’ll probably have to pay the loan back quickly or face taxes and penalties on the balance.
Never cash out a 401(k) loan or withdraw money from an IRA account to pay off credit card debt. The short-term gain isn’t worth the long-term costs for premature withdrawal.
Don’t dispute more than three or four negative items in your credit file at a time (unless they’re related). A credit bureau could get the idea that your complaints are frivolous and might refuse to investigate.

While it’s always a good idea to pay off old debts, you should make sure that the old account is dropped from your report as a condition of payment. Otherwise, the payment may make the negative seem more recent than it actually is, depressing your

This article is provided for information use only. It does not take the place of an attorney, a tax advisor, or an accountant. Always seek out the advice of a licensed professional before undertaking any significant change in your financial situation.