Insufficient information on your credit report can also cause trouble. Bad credit isn’t the only culprit. The best way to get positive information inserted into your credit report is to pay your creditors on time and in full every month. Do so for a year or more and you’ll make great strides in improving your credit history and your credit score.
Called a thin file in the industry, a file that contains very little information may not be able to be scored. To get around this problem, you can request that an expansion score be used. An expansion score uses information from alternative databases to get enough data to form a valid score. Expect to pay for this. The major supplier of this type of data is a company named MicroBilt.
Open new credit accounts
Another way to get positive information into your data file is to open new credit accounts. Opening types of accounts that aren’t already on your credit report is particularly helpful. For example, you may have several credit cards, so you could add an installment account, which can enhance your “type of credit used” profile.
Be careful when using this tactic to improve your credit score. You may do more harm than good if you open an account with a large amount of available credit, which can push your available credit over the limit of what lenders find acceptable. Also, do so well in advance of applying for a loan, because opening a new account may have a short-term negative effect on your score.
Add a 100-word statement
Don’t like what others are saying about you? You can add a 100-word statement to explain certain items on your credit report. Although a statement doesn’t change your credit score, it may help answer questions that are raised when a lender or employer reviews your report. Yes, the score is important, but so is the analysis by the person looking at your record. Your statement can accomplish several things:
Explain your side of the story for a series of late payments, collections, or charge-offs. These may be due to a life event such as a job loss, divorce, or illness.
Document your dispute of information that you believe is incorrect but that the credit-reporting agency won’t remove from your report.
Tell your side of a dispute. For example, you may have ordered a product that wasn’t delivered on time or was unsatisfactory and refused to pay for it. Although the situation wasn’t resolved in your favor, you may be able to explain it more clearly in your 100-word note.
You may be able to add more than one statement. Each bureau has its own policy. Experian lets you add several statements: a general statement giving an overview of your credit report woes, as well as individual statements for up to ten items. You may add more after calling Experian. TransUnion lets you file 100 words in dispute and another 100 for a general statement. Equifax allows one 100-word statement.
Do these 100-word statements really help? It depends on who reviews your credit report and what you say. The statement stays on your report for at least as long as the disputed item does, so take time to make your statement clear and concise.
You can contact the bureau’s customer service department for assistance with your writing if you need it. Send your written statement with your credit file number and the last four digits of your Social Security number.
If you decide to put a statement on your report, don’t forget about it. In a year or two, negative information becomes less of a factor in your score, and eventually it drops off your report. Statements don’t affect your score but can highlight past payment problems, especially if the credit report shows no recent delinquencies.
Your outdated statement could call attention to situations that no longer apply and thus could hurt more than it helps. To remove an outdated statement from your credit report, send a request to the three major credit bureaus.
