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A Lesser Known Secret Tip to Increase Your Credit Score

Increase Your Credit Score Secret Tip

Today I will tell you about a very little known secret on how to increase your credit score (FICO). The only downside of this tip is that it will only those of you who have been delinquent on their payments and are now being pursued by collections agencies. It also won’t always work, but when it does it can make a very significant difference. According to a recent Business Week article, it helped one person increase his FICO score from 513 to 600!

The idea behind this tip is based on a stipulation in the Fair Credit Reporting Act. It basically goes that for a creditor to list you as delinquent on your credit report they must be able to provide you with the original paperwork. Now what happens with collection agencies is that by the time someone is trying to collect from you, your defaulted loan has probably already changed hands a few times, and because of this the ORIGINAL paperwork is likely to be lost. If it’s lost, then by stipulation of the Fair Credit Reporting Act your defaulted obligation cannot be listed on your credit report. You’ve basically wiped out your defaulted obligation!

Again, as you can see, this tip will only help those people who’ve defaulted on previous obligations. And the more the obligations have changed hands, the higher the probability of this tip’s effectiveness!

Related Article: 7 Simple Tips And 5 Secrets to Increase Your Credit Score

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  •     reno
    · February 18th, 2008  · 6:06 pm  · Permalink

    haha great tip thanks! Unfortunately as you say you need to have defaulted already to benefit from this so I can’t use this knowledge — yet. However, good to know for the future or to help out a friend.

  •     Steph
    · February 19th, 2008  · 3:44 pm  · Permalink

    Hi Reno,

    You’re welcome.

    And yes you’re absolutely right, this is also why I’ve never had a chance to use it myself.

  •     Bonnie
    · June 26th, 2008  · 11:57 am  · Permalink

    Hi Steph,

    What do I do first, could you help me get started with the process.

  •     Steph
    · June 26th, 2008  · 11:57 pm  · Permalink

    Hi Bonnie,

    I’ve personally never had a chance to use this technique so I can’t really give you the detailed steps. But the first thing I would do is contact my creditor (generally the collection agency) and ask them to provide you with the original paperwork of the debt. That would be my first step. If they have the paperwork and provide it for you that’s pretty much as far as you can go.

    If they don’t have it, I would basically follow what the Business Week article suggests you do.

  •     Kirsten
    · July 6th, 2008  · 6:27 am  · Permalink

    THANK you for this. We’re currently trying to buy our house, and are just a few points shy of what the lenders are requiring our FICO scores to be… betcha I can get a few things knocked off my report with this!

  •     Steph
    · July 6th, 2008  · 2:25 pm  · Permalink

    Hi Kirsten,

    You’re welcome. And I hope you’re able to knock off those last few points!

    Don’t be shy to come back and let me know how it went, I’m more than interested to hear.

  •     chucky
    · August 19th, 2008  · 3:02 am  · Permalink

    Hi Steph, I have requested these documents from collecdid tion agencies on accounts from 4-5yrs back and they have vehemently refused to validate these accounts. I have requested the CB’s to delete these accts and they tell me accounts were verified but will not show details on how accounts was verified. Do you have any advice on how to handle this? Thanks in advance.

  •     Stephane Grenier
    · August 19th, 2008  · 11:52 am  · Permalink

    Hi Chucky,

    In this case I would recommend you seek legal advice from a lawyer. They’ll be able to advice you in details for your specific case.

    Plus getting a letter from a lawyer is a bit more, shall we say, “motivating” than a request from someone in the general public.

  •     noel chisholm
    · November 8th, 2008  · 12:09 pm  · Permalink

    i f i payed off all my credit cards balance will my credit score goes up

  •     Steph
    · November 8th, 2008  · 4:15 pm  · Permalink

    Hi Noel,

    Of course you will, but it won’t be overnight. There are some checks and balances within the system to avoid people gaming it. For example, your score won’t jump overnight because otherwise people could just pay off their balances, get a bunch of new loans, and then go back to very negative balances.

    Give it time and everything will work itself out.

  •     Anna
    · May 20th, 2009  · 4:51 am  · Permalink

    I have a problem with getting a loan for£9000, the reason being is my default payment of 115 pounds which i paid off . Do you now how I can improve my credit score.(i have not got any debts)
    Anna Seneld

  •     Steph
    · May 21st, 2009  · 9:00 pm  · Permalink

    Hi Anna,

    You’ll pretty much have to do everything that’s been suggested here. It really boils down to continuing to pay all your loans on time. What you’ve done is shown a history of non-payment, so you now need to show a history of payment.

    The more recent the default, the harder it’s going to be. As well, you may need to start by getting smaller loans or credit cards to re-establish your payment history. Even with just basic introductory credit cards with limits of 500-1000.

    You have to remember lenders want to see a history of proper payments. Although you paid it later, a default is still a default. If you were a lender, who would you prefer to lend to: someone who has just recently defaulted or someone who has a history of not defaulting (for at least some years)? Even if the default amount is smaller, it’s still a harder mark to get rid of on your credit score.

    Give it time, pay consistently, and things will improve.

  •     Anna
    · May 22nd, 2009  · 7:00 am  · Permalink

    thanks for you advise, but how long I have to wait to improve my credit score?
    I am really desperate and need £9000 for july otherwise I lost over a £1000 which I have already paidfor mortgages chargses and others fees

  •     Anna
    · May 22nd, 2009  · 7:09 am  · Permalink

    can i still contact credit agency and ask for original paper work even if I have already paid it off?

  •     Steph
    · May 22nd, 2009  · 2:11 pm  · Permalink

    Hi Anna,

    I can’t advise you how long it will take for two reasons. 1. I don’t know your exact situation, all I have is a snippet or two. And 2. no one can really tell you since the exact calculations are kept secret and not publicly available, which means that we can’t know for sure (all we can do is imply based on knowledge and experience).

    That being said, I would recommend contacting your lender and see exactly why they won’t give you the loan. Ask them if there’s anything you can do. Is your credit card just shy of the mark they need? If you’re just a few points shy maybe you can do something. If there’s a large margin, then it’s not very likely you’ll be able to. Would a co-signer help? At the very least they will be able to tell you what they need to get you the loan.

    As for contacting the credit agency, you can try. But just be aware that to do almost anything takes time. More often than not it’s in terms of weeks or months rather than days. Also, I assume by this you’re referring to my other post about the original paperwork. I don’t know how it applies to your local area, as far as I know this is only applicable to the US.

  •     Lois
    · December 26th, 2009  · 1:37 pm  · Permalink

    We have some old IRS liens that are over 15 years still showing on our reports. We understand that we should be able to get these deleted. One of the agency says their policy is to keep these on. How to get them eliminated and the fact that it is IRS does that make a difference? Also would requesting that old addresses and work history be eliminated because I also read somewhere that they need to have 3 references to show the debt belongs to you to keep it on file.

  •     Steph
    · January 2nd, 2010  · 10:12 pm  · Permalink

    Hi Lois,

    It is odd that they are keeping 15 year old tax liens on file. As much as I’d like to help you in this regard, this is the first time I’ve ever encountered an agency that does this and says it’s part of their policy. You can try to escalate it within the agency to more senior management or talk to a lawyer to get specific advice for your situation in case there are extenuating circumstances.

    Your request to eliminate past work history and addresses is the first I’ve heard. I’m not sure I understand why you’d want to do that…

    I haven’t heard of any 3 reference requirement myself…

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