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Small Business Digest



Bad Credit Rating? A Reporting Agency Tells How to Raise Your Score

Having credit is good. But not everyone has good credit.

To ensure that you fall into the former group instead of the latter, a national credit firm is offering consumers tips to help improve their credit reports, which in turn will raise their credit scores.

Because a person’s credit can change frequently, Samuel S. Ambrose, vice president of marketing and operations for, advises consumers to check their credit report at least twice a year, more often if they are applying for a loan or trying to improve their credit history.

“Checking your credit report quarterly will give you a better idea of your progress toward meeting your credit goals,” he explains. “We also recommend that you monitor your credit file with one or all three of the credit-reporting agencies. Credit monitoring is a great tool that can help you keep up-to-date on all of the activity in your credit file, as it happens.”

Credit-monitoring services provide a rapid-notification e-mail alert to the subscriber of any new activity on their credit file, including account changes, credit fraud and identity theft. These e-mail alerts are the first indication of a legitimate credit-report inquiry, credit discrepancy or fraudulent activity within a credit file.

Under the Fair Credit Reporting Act, consumer-reporting agencies are required to provide consumers with information about themselves in the agency's files. If a consumer disputes information in their file, the agency is also required to take steps to verify the accuracy of that information.

“Contact should be made in writing so you have documented proof of reporting the inaccuracy and your request to correct your information,” says Ambrose. The error could be as simple as an incorrect previous address or as complex as an outstanding loan balance.

Left unresolved, says the company vice president, the inaccuracy could affect whether a financial institution will lend you money, and if so, at what interest rate. The process for rectifying the inaccuracy typically takes 30 to 60 days, depending on the issue.

A poor credit report usually leads to a poor credit score, says Ambrose, which is the primary tool used by lenders to determine how much interest a person will pay on a loan.

The highest credit score consumers can have is 850; the lowest is 300. The average American consumer’s credit score is 690.

Ambrose says it’s never too early to begin shaping your financial future. College students, who are often bombarded with credit-card offers, should maintain their finances to ensure they qualify for competitive interest rates for a car, a home or another student loan.A more established person should also be mindful of maintaining a good credit score. And when it comes to picking a life partner, know that one spouse’s credit history can affect the other.

“Previous credit history of both spouses plays a major role in the purchases or major loans that a couple will obtain jointly,” Ambrose explains.

If one spouse has a weak credit score, the couple should focus their credit-strengthening efforts on improving that. Start by doing line-item reviews of the credit report from all three credit bureaus. If there are errors, correct them.

Then the focus can shift to paying down debt - on time, and when possible, early, the executive says.

“Also, if you can afford to overpay some of your larger revolving-credit bills every month this will help to decrease your total outstanding debt which will also improve your credit score,” Ambrose advises. “By reminding consumers of ways to improve credit reports, we encourage them to take an active role in managing their financial health.”

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