5 Quick Fixes to your Credit Report
by Lisa Phillips
February 16, 2010
by Lisa Phillips
February 16, 2010
| Copyright RebuildCreditScores 2010 All Rights Reserved |
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Tackling bad credit can seem like a daunting task. Certain negative items hurting your credit
score can be easily fixed. Here are five items that can hurt your credit score and a simple
solution to fix them:
1. A zero balance can hurt your credit score.
Creditworthiness is a demonstration of how you manage your obligations over time. Once you
pay a debt in its entirety you are no longer managing that debt. It may be a positive entry but it
is no longer being managed. This may seem counterproductive but it is true. Credit card
accounts with zero balances may lower your credit scores.
Quick Fix: Always maintain a small balance (at least $10) on your credit card accounts. You
can pay in full each month but make sure you charge something to the account. Additionally, in
2008 with the onslaught of the credit crunch, many creditors began the practice of closing
accounts, in good standing, that consistently maintained zero balances.
score can be easily fixed. Here are five items that can hurt your credit score and a simple
solution to fix them:
1. A zero balance can hurt your credit score.
Creditworthiness is a demonstration of how you manage your obligations over time. Once you
pay a debt in its entirety you are no longer managing that debt. It may be a positive entry but it
is no longer being managed. This may seem counterproductive but it is true. Credit card
accounts with zero balances may lower your credit scores.
Quick Fix: Always maintain a small balance (at least $10) on your credit card accounts. You
can pay in full each month but make sure you charge something to the account. Additionally, in
2008 with the onslaught of the credit crunch, many creditors began the practice of closing
accounts, in good standing, that consistently maintained zero balances.
2. Are your credit limits being reported?
Credit card companies and lenders should report your credit limit as well as account balance.
Unfortunately not all credit issuers practice this. Some creditors may only report your account
balance and when this occurs, the credit bureaus will plug in your credit limit with the same
number as your credit balance. The problem with this practice is that it's inaccurate . But more
importantly, it distorts your balance to limit ratio. Suppose your balance is $1,300; however,
your credit limit is $5000. If the creditor only reports your balance of $1,300 and the credit
bureau plugs in your balance as your credit limit, then you have a high balance to limit ratio.
Actually it looks as though you have maxed out your available credit and other creditors may
view this as high risk. Your credit score will definitely suffer.
Quick Fix: Request your credit reports and make sure all of your creditors are reporting
credit limits as well as account balances. If not, dispute the error with the credit bureau,
informing them of your credit limit and call the creditor and request they accurately report the
credit limit along with the account balance.
3. Balance Transfer
Do not transfer all your balances to one low interest rate card. You may get many offers for the
best credit cards with low interest rates, but if you transfer all of your balances to the one card
then you run the risk of increasing your balance to limit ratio. A high balance to limit ratio
lowers your credit scores.
Quick Fix: Maintain your account balances at less than thirty percent of your available credit
limit in order to have good credit scores. Remember, a significant part of calculating credit
scores is the amount owed. It constitutes thirty percent of your credit score.
4. Duplicate Negative and Collection Agency Accounts
Collection agencies routinely sell and transfer collection accounts. As junk debt buying
continues to grow as a lucrative industry, the chances that more than one collection agency
has attempted to collect on the exact same debt. Each of those collection agencies could very
well be listed on your credit report for one single debt. The credit scoring will recognize each
entry, even if it is a duplicate, as negative information. Original creditors may also be guilty of
reporting one account twice on your credit reports.
Quick Fix: Dispute the duplicate negative items directly with the credit bureaus as this is
inaccurate information and the duplicate entries will be deleted.
5. Outdated Negative Information
Negative information can remain on your credit reports up to 7 years while bankruptcies can
remain up to 10 years. Negative information does not always automatically drop-off when the 7
year mark is reached.
Quick Fix: Get your credit reports and look at the negative items that should have been
removed after years or due to be removed within months of the 7 year mark. Dispute the items
that have passed the 7 year mark. If you are within a few months of the 7 year mark, you can
sometimes dispute and the credit bureaus will go ahead and remove them a little early.
Credit card companies and lenders should report your credit limit as well as account balance.
Unfortunately not all credit issuers practice this. Some creditors may only report your account
balance and when this occurs, the credit bureaus will plug in your credit limit with the same
number as your credit balance. The problem with this practice is that it's inaccurate . But more
importantly, it distorts your balance to limit ratio. Suppose your balance is $1,300; however,
your credit limit is $5000. If the creditor only reports your balance of $1,300 and the credit
bureau plugs in your balance as your credit limit, then you have a high balance to limit ratio.
Actually it looks as though you have maxed out your available credit and other creditors may
view this as high risk. Your credit score will definitely suffer.
Quick Fix: Request your credit reports and make sure all of your creditors are reporting
credit limits as well as account balances. If not, dispute the error with the credit bureau,
informing them of your credit limit and call the creditor and request they accurately report the
credit limit along with the account balance.
3. Balance Transfer
Do not transfer all your balances to one low interest rate card. You may get many offers for the
best credit cards with low interest rates, but if you transfer all of your balances to the one card
then you run the risk of increasing your balance to limit ratio. A high balance to limit ratio
lowers your credit scores.
Quick Fix: Maintain your account balances at less than thirty percent of your available credit
limit in order to have good credit scores. Remember, a significant part of calculating credit
scores is the amount owed. It constitutes thirty percent of your credit score.
4. Duplicate Negative and Collection Agency Accounts
Collection agencies routinely sell and transfer collection accounts. As junk debt buying
continues to grow as a lucrative industry, the chances that more than one collection agency
has attempted to collect on the exact same debt. Each of those collection agencies could very
well be listed on your credit report for one single debt. The credit scoring will recognize each
entry, even if it is a duplicate, as negative information. Original creditors may also be guilty of
reporting one account twice on your credit reports.
Quick Fix: Dispute the duplicate negative items directly with the credit bureaus as this is
inaccurate information and the duplicate entries will be deleted.
5. Outdated Negative Information
Negative information can remain on your credit reports up to 7 years while bankruptcies can
remain up to 10 years. Negative information does not always automatically drop-off when the 7
year mark is reached.
Quick Fix: Get your credit reports and look at the negative items that should have been
removed after years or due to be removed within months of the 7 year mark. Dispute the items
that have passed the 7 year mark. If you are within a few months of the 7 year mark, you can
sometimes dispute and the credit bureaus will go ahead and remove them a little early.
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