Quote:
Originally posted by billclinton
I have been slowly rebuilding my credit over the past 2 years. I applied for a home loan, and was approved, right at 2 years ago. My credit score at that time was about 560 and I had several derogatory issues on my report, such as late payments and collections. In the past two years I have had perfect credit activity....paying bills on time, no collections, etc. My score only increased about 30 points. Last month, I had a 30 day late sent in to the credit agencies (I have disputed it because the payment was sent two weeks prior to 30 days late, but the company didnt process until it was EXACTLY 30 days late), my score dropped 62 points from 592 to 530!!!! My credit score is now lower after 2 years of perfect credit than it was when I first began my credit improvement journey.
Any advice on how to deal with this "one step forward, two steps back" journey?
Thanks!
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Ah, welcome to the wonderful world of your FICO score - Hey, Everyone enjoys being scored on rules they don't understand, right?
I know it can be extremely frustrating, and the exact calculations of the score are surrounded in mystery. Basically, the score is based on a variety of factors, including payment history, late payments, judgements, collections, length of credit history, amound of secured/unsecured debt, spending habits, how often you apply for credit, and even how long you are employed at the same job.
Here's the good news - derogitory marks on your bureau hurt less and less as time goes on. The best way to improve your score is to make payments on time, carry low balances on credit cards, only have a few open lines of credit, try to avoid applying for credit, and let time pass.
You didn't mention how many open lines of credit you have, nor how much you owe according to the limits, but try to keep your credit card/unsecured balances under 50% of the limit. Try and pay down all your debt, starting with high interest/close to limit credit cards, before any secured (ie vehicle) loans and finally the mortgage. As you experienced, the better your score, the more a single derogitory mark affects you. Another thing I would consider doing is closing any credit cards/unsecured loans until you are down to 2, maybe 3 open lines of credit. Also, when using credit cards in the future, it looks much better on your bureau to have to $5000.00 limit cards with balances of $2500.00 than a single card maxed out. Unfortunately, that's pretty much all the advice I can give you...
If you have any more questions, just ask!