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Repairing Your Credit Score: Other Options

October 29, 2012

If you’re interested in learning more about repairing and maintaining a good credit score, particularly if you need to improve your own credit score, then read on. Perhaps, as a potential first-time homeowner, you’re in the market for a mortgage—or maybe you need your mortgage refinanced; either way, good credit is important!

Fixing and repairing your credit score is more than simply paying off debt regularly and in a timely manner, however. Yet it seems to be commonplace for consumers to be ignorant of what affects their credit score and what they can do to repair it and maintain a higher score.

But as already mentioned, there’s a lot more involved with what goes into a credit score. Here are five other, perhaps lesser-known ways you can fix and then improve your credit score.

Negotiate in a mortgage short sale

In the event of a mortgage-related short sale, you can help protect your credit score—at least to a degree.

A short sale refers to the sale of your home for less than the mortgage balance. This is a foreclosure-alternative option if you can no longer pay your mortgage, but it can still be very damaging to your credit score. For example, if you and your bank (mortgage lender) agree to a short sale, the bank can (and often will) report to credit bureaus that the loan was settled for less than the full amount. The bank can also make a note that there is a “balance owed” even though the debt was technically settled.

However, you can lessen the impact to your credit score simply by asking your bank not to report any balance owed—before the deal is done. Sometimes, all you have to do is ask.

Request a “goodwill deletion”

Speaking of asking, another way you can improve your credit score is to ask a lender for a “goodwill deletion”—basically, getting a specific bad credit report expunged.

For example, if you always pay on time, but one time you pay late and your credit score dips, you can ask the lender to “give you a break.” If you’re generally a good borrower with a good credit history, there’s a good chance this will work. Just remember to make the request soon after the error, and to be prepared to take the request past customer service, if necessary.

Pay for deletion

When asking isn’t enough, you can always offer to pay. This option for improving your credit score is a good idea if your account has gone to a collection agency and you want to avoid the ensuing bad credit report. If you offer to pay off the debt in exchange for the collector removing the debt from your credit reports—or “paying for deletion”—you might just get your wish. But get the agreement in writing.

Make multiple payments

Do you normally make credit card payments once a month? This is typical, but it’s not necessarily the best idea for repairing and improving your credit score. Paying more often—such as twice-monthly, weekly, or every time you make a large purchase—can lower the balance on your statement date, which can improve your credit score. Be sure to find out if your credit card company places a limit on the number of times you can make a payment per month.

Pay early

Finally, pay your bills before the statement date. Most lenders report to credit bureaus the balance as of the last statement date. If you pay before this date, rather than the “due date,” you can lower your utilization ratio (the total revolving credit you use per month), which can equal a higher credit score. Some lenders don’t use the statement date to report the balance, but another date; call to find out.

"By being open and recognizing our strengths and weaknesses, we can see opportunities for growth and ways to help each other."

- Jayson Hardie on Growth

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