Improving Your Credit Score in Massachusetts
As a Massachusetts bankruptcy lawyer, one of the most frequent questions we get is: how can I improve my credit following a personal bankruptcy in Massachusetts? Check out the Life After Massachusetts Bankruptcy section of our website. The following is news from the feds.
The Consumer Financial Protection Bureau has provided information to consumers nationwide on how to improve your credit score. Recall that the CFPB is the brainchild of United States Senate candidate Elizabeth Warren, who assisted Congress in drafting the law and was the organizer of the federal agency.
Credit scores are undertaken by several agencies, however they use various ranges between 300 and 990. The higher the score, the more credit-worthy lenders tend to find you. The score is intended to reflect the likelihood that you will repay a loan. Mortgage lenders, credit card issuers and auto loan lenders, look at credit scores to determine, first, if they will extend credit and second, at what rate to extend the credit.
Credit scores are based on a mathematical prediction as applied to your credit history. Thus, your credit history is the key to improving your credit score. The CFPB has indicated the following regarding credit history:
First, pay your bills on time. Late payments count against you. The CFPB offers the following tips as helpful in this category: set up automatic payment plans from your bank to your creditors; don’t simply pay the minimum payment; and, evidence shows that the folks that pay off their credit cards in full each month are the folks with the best credit scores.
Second, don’t get maxed out on credit. Apparently, the credit scoring models look at how close you are to you are to your credit limit. The logic is that if you are too close too often, you are in danger of not being able to repay at some point. According to the CFPB experts, you should not use more than 30% of your total credit limit. Their tip in this category is that you should be careful when you close out some accounts and put your balances all on one card because you may be getting to a much higher percentage of your credit limit.
Third, if you are about to apply for a mortgage or vehicle loan, don’t apply for other credit at the same time, or within a short period prior to the loan application. The same goes for having too many open credit accounts; this can count against you when you apply for a specific loan. Thus, when you apply for a credit card to get a promotional interest rate, or for a free box of bonbons, be careful because this may have an adverse impact on your next, perhaps more serious, credit application.
Fourth, establish a credit history early so you can have a long record of getting credit and paying off your credit.
Fifth, credit reports are free; at least, each credit agency is required to issue a free report to anyone who asks at least once per year. Request one, the CFPB says. Online, go to www.annualcreditreport.com. By phone, call 877-322-8228. Be careful, however, these credit reports are not credit scores. You can pay for your score, however, the CFPB says it is not worth is because lenders may be looking at different scores anyway. Read the report, and report errors using supporting documentation whenever you can. If you experience problems in resolving any such dispute, you can go to the Federal Trade Commission where they have information on correcting errors on your credit report.
Sixth, don’t pay fees to get your score “fixed” as these fees will not change negative reporting that was accurate. Furthermore, there are many scam artists in this particular field.
Finally, the CFPB suggests that you act proactively in working with creditors. If you can’t make a payment for some reason, don’t be passive. Call them up. Work with them. If you need credit counseling, check the agency out very carefully, as there are many of the same scam artists here.