Adding Tradelines And Other Ways To Improve Your Credit Report



For many people, a credit report is something akin to a mystery novel.

It's a little hard to understand, and you never know how it's going to

turn out if you don't read the whole thing. But you really do have the

power to take the mystery out of understanding what your credit report

is, how it affects your life, and what you can do to improve that all

important credit score. Let's begin with some basic definitions.



Credit Report



This is a written record of your financial transactions. It details the

amount of your current debt, and how well you are repaying it. It also

includes a record of past debts, and how/if they were repaid. Every

open account you have will be listed, as well as any record of

bankruptcies, foreclosures and judgments.



Credit Score



Based on the details in your credit report, you will be given a

numerical score, that reflects your level of 'credit worthiness'. This number

is based on:



* The number and types of accounts you have open.

* How long you have held the accounts.

* How many late payments you've made, and just how late.

* Your current total accumulated debt.

* Any attempts you've made to open more accounts.



Every company you apply for credit with will examine this score, to

determine how likely you are to repay them any money they advance to you.

Would you like to apply for a home or auto loan? A credit card account,

or home improvement loan? Your current credit score will be the biggest

determining factor in whether your request is approved.



The Big 3 Credit Reporting Agencies



*Equifax, based in Atlanta, Georgia.

*Experian, based in Costa Mesa, California.

*TransUnion, based in Chicago, Illinois.



Each of these nationwide credit-reporting agencies maintains a credit

report on you. Since you have no way to know which one of these agencies

a potential lender will contact, you need to keep track of the info

contained in all three reports.



How To Improve Your Credit Report Score



Your credit report is a living, breathing document, changing with every

entry made. If your score is bad now, there are a few things you can do

to improve it.



* Examine each report thoroughly to make sure there are no mistakes.



If you find a company listed with debt outstanding, but you know you've

paid it and have a receipt or cancelled check to prove it, you can make

a challenge to that item on your credit report. The company you are

challenging has up to 90 days to respond and defend the item, or remove it

from the report. You should resist the urge to make a challenge without

proper documentation of your payment.



* Close old credit card accounts.



Even if you aren't actively charging on them, these old accounts that

remain open still add up in your total amount of credit available. This

total line of credit is compared to your income, and alerts lenders to

the fact that you can become overextended any time you choose.



* Never use more than 50% of your available credit.



Potential lenders want to see that you have money left over after

paying your debts. They take this as a sign of good money management skills.



* Add favorable items (tradelines) to your credit report.



You can boost your credit score by making sure that debts you are

paying on time now, or in the past, are listed in your credit report. These

accounts are referred to as tradelines in the industry. It is entirely

possible that a company you deal well with hasn't even made a report in

to one or all three of the nationwide credit reporting agencies, so

it's up to you to see that the good info makes it's way into your report

to counteract the bad info.



Examples of tradelines:



* Installment loans



Car loans are a good example of an installment loan. Your current car

loan may already be in your report, but what about car loans past? You

can add a former car loan that was appropriately repaid onto your

current report, adding favorably to your overall score.



In-store accounts for items like refrigerators, washer/dryers, and

jewelry that are being paid for on an installment plan should also be

included on your credit report if you are making your payments according to

schedule. Many of these smaller stores only report to the credit

bureaus if an account is placed in collections, ask them to send in a report

of your payment history to add a positive tradeline to your credit

report. Make sure the creditor notifies all three credit bureaus.





* Mortgage Loans



Again, a current mortgage would likely be listed already, but if this

is not your first mortgage, and you have other successful mortgages in

your financial past, make sure they are listed. This all still weighs in

your favor. If you have paid your mortgage on time with an individual

who holds the lien to your home, you should get credit on your credit

report for it. Most individuals would be fairly baffled at your request

to add a manual tradeline to your credit report, simply write the three

credit bureaus and ask that they account be added and give your point

of contact's name and phone number for verification. The bureaus will

verify the information and have it added to your credit report. Repeat

this process a few times a year to keep your information current.



* Secured Loans/Secured Credit Cards



These are types of tradelines that you have secured by putting up

something as collateral, such as your vehicle or home. You can obtain a

secured credit card by depositing a pre-determined amount of money in an

account with the individual company. You can then use that credit card to

charge up to that amount and your deposit guarantees the company of

being repaid, even if you miss a payment. Secured accounts are a viable

way to rebuild credit after a bankruptcy, as long as you pay on time.



* Utility Accounts



Do you pay your monthly utilities in full and on time? Then try to add

them to your credit report. Utilities usually only find their way onto

your report if you're behind in your payments. Paying these items

faithfully each month should boost your credit record, but if your local

utility companies don't actively report in to the credit bureaus via a

tape system the firm may decline your request to add your history to your

credit report. Most will comply and the benefit of having a positive

tradeline on your credit report makes it well worth the try.



While there is really no substitute for paying your debts on time each

month, it's good to know that there are ways to improve your credit

report. The key is knowing what's in your report, and making sure it's

kept accurate.



Liz Roberts is a loan consultant with NewHorizon Finance and has been providing consumers and business owners with financing since 1989. Bad Credit? Join our mailing list for tips on building and repairing your credit yourself, without hiring a credit repair service. Click here for a list of credit cards for bad credit

Copyright 2006