Section #5: Improve Your Score

Improve your score. Toward this end, you need to know where you stand. The Fair Isaac Corporation now sells the scores, one for each of the three major bureaus (and you need to buy all three, an unfortunate circumstance that keeps that company happy), at their otherwise excellent consumer web site, MyFico.com.

Once purchased, you'll have your credit reports as well as your FICO® scores in hand. At that point, consider hiring an inexpensive credit score coaching service like PerfectYourScore.com. Otherwise, very generally, here are the steps you need to take to elevate your scores:

1) Eliminate any negative items. Whichever way you choose to handle the matter, whether you elect to take matters into your own hands or hire an attorney (anyone care to guess why I heartily recommend Lexington Law in this context?), the deed must be done. Negative items are score killers.

2) Pay down any credit card with a balance of more than 50% of its overall line of credit. If you have no cards at 50% utilization, then pay down any outstanding revolving credit balances at all.

3) If you have a limited payoff budget, don't bother allocating resources to any accounts which have charged-off at this point, unless you can negotiate what credit pros call "payment for deletion," where the creditor agrees to mark your credit report positive after receiving the money. It isn't the outstanding balance on a charged-off account that lowers your credit score. Rather, it's simply the fact that the account EVER charged-off which depresses your score. Keep in mind, though, that some action on your part must eventually be taken with these accounts, whether you eventually pay them or challenge them in some way, in order to prevent further collection activity or possible legal consequences.

4) No matter what some well-meaning friend or relative advises, don't start closing accounts willy-nilly. If you need expert consultation on this or any other point, go get it.

Throughout the 1960s, 1970s, 1980s, and 1990s, consumers couldn't even buy their credit scores. By 2001 the State of California had fixed all of that for everybody, ruling that California residents were entitled to know everything the credit bureaus were reporting about them. Very quickly, Fair Isaac and the big three credit bureaus realized that it wouldn't make sense to allow only people who lived in California to view their scores, so they reluctantly opened it up to all of us.

Ironically, Fair Isaac and the bureaus now celebrate their newfound openness, because selling the scores is apparently quite a sizeable revenue source. The last laugh, however, may well belong to the consumer as professional scrutiny like that found in this article begins to undo the monopolistic, secretive, and ultimately consumer-unfriendly practices engaged by the prevailing credit score purveyor.

SUMMARY: Credit scores...

provide speculative "best guesses" rather than factual descriptions about consumers.
may violate federal law when included with a credit report.
introduce an element of secrecy into government-overseen mortgage programs.
are difficult to understand since their underlying mathematics are constructed for-profit.

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(Your results will vary)