How Will Fixing Your Credit Report Will Raise Your FICO Score
Once you discover that your credit score is low, there are a number of avenues you can take to raise your score. One of the fastest ways to raise your FICO score is to remove all of the errors from your online credit report. In some cases, your score can increase in 48 hours, in others it can take up to 6 months. Either way, it is often the fastest way to increase your score.
How Does Fixing Errors on your Online Credit Report Raise Your FICO Score?
In order to understand how fixing credit reporting errors will raise your FICO score, you need to know how your FICO score is created. Here is a quick look at the 5 components of a FICO score and how fixing errors can improve each component.
- Payment History
Your payment history is largest contributing factor to your FICO score at 35%. Your payment history includes items like payment information for accounts like credit cards, loans, retail accounts, and the like. It also includes negative records like bankruptcies, liens, garnishments, and past due items.
There are a number of errors that can occur on your payment history. You could have a record of late payments or non-payments on credit cards or loans, even though everything was actually paid on time. Clearing this up can have a huge impact on your FICO score. Another common error is that someone else’s problems got placed on your account by mistake. Maybe a court clerk entered the wrong social security number on the court paperwork and now you have a bankruptcies or lien on your record. This is easy to fix and well worth the effort. This area is often the first place that you will see records that could indicate identity theft. If your identity is stolen, you should make sure that none of those actions get reported as being yours.
- Amounts Owed
The amounts owed component is the second biggest component of your FICO score at 30%. An online credit report can quickly show you errors that could be fixed and would raise your FICO score. This component includes information like debt owed on current accounts like loans, mortgages, and credit cards as well as the number of accounts you owe money.
Common errors that can be fixed regarding your amounts owed include: accounts that are not yours, wrong balance amount, and number of accounts with balances. These errors are either the result of human error or identity theft. If someone steals your identity, they can open a number of accounts and rack up huge debts that will reported as yours. By getting this additional debt off of your credit report, your FICO score will skyrocket.
- The Rest
The other three areas include length of credit history, new credit, and types of credit used. Most of the errors in these three areas will stem from information that you have previously found in either the amounts owed or payment history. However, when you are correcting the errors, you need to make sure that these areas get corrected along with the main error that you find.
Fixing errors from your online credit report is easily the easiest way to raise your FICO score. It only takes 2 days to 6 months, whereas other techniques can often take years to take their full effect.
