How to Improve Your Credit “Story”

Your credit report is the story of your financial life, so if you’re planning on refinancing your home it makes sense that you’d want anyone reading your credit report to have the benefit of reading the whole story – the way you want it told

Fortunately, there are a few little things you can do to improve the appearance of your credit report, increase your credit score, and – in essence – improve the way your story reads.

One of the best things you can do is to obtain a copy of your credit report and read through the report to ensure that the entire cast of characters is present and accounted for. Are all of your accounts listed? Is your payment history accurate? Every entry on the story that is your credit file is either a good guy or a bad guy.

Just as every story has a villain, your credit report has them as well. You may know them as late payments, charge-offs, etc., but these things tend to cast you in an unfavorable light when you apply for credit. If the entry is accurate, but out of date, you can get it kicked off your report and out of the story

Everyone loves a feel good story, and the more good guys your credit report has, the better. It’s always to your benefit to have a credit report loaded with a solid record of on-time payments and accounts with perfect payment histories. These positive payment histories move your credit application closer to a happy ending.

When you review your credit report, make sure all of the characters (the accounts) are yours. You don’t want to see your chances of loan approval being shot down by a cameo appearance by a villainous account that doesn’t even belong to you. If you find one, contact the credit reporting agency in writing and tell them that there are inaccuracies on your credit report. They’ll be required to investigate these entries and remove them if they’re not yours.

Some stories have characters with allegiances that don’t become clear until later in the story. In a way, you could say the same thing about your credit report. An open credit account with no balance could potentially harm your chances of an approval because you have the potential to access that credit. If you do, it can hurt your chances. However, if you use the account regularly, but pay the balance off each month, you can actually help your chances of approval.

If your credit report has an account that was reported as unpaid and there has been no account activity for a period of time, the best thing you can do is leave well enough alone. For instance, if you have an unpaid bill from three years ago, you’ll be better served to wait until after your loan goes through to pay it off. By the same token, if it’s a recent item, you’ll get a slight credit score bump if you pay it off before you apply for your loan.

Your credit report tells a unique story about your payment history. By making sure your report has accurate information, you’ll help to ensure that anyone reading it gets an accurate interpretation of your financial situation. Hopefully this will result in a loan approval and you’ll live happily ever after. 

Need to unlock your home's equity - but have a few questions? Why not consider a free private email consultation with me, Darrin Roseborsky? There's no obligation or commitments to worry about. Just helpful answers to your questions. Use the short form in the top-right corner to get started. And in a few minutes, you'll have the answers to all of your questions.