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Your Credit Report: Five Steps to Improving Your Credit Rating

June 30, 2006

By: Jim Oosterman
Melrose Bank

Your credit report is one of the most important elements of your financial life. Lenders and other companies rely on your credit report to make decisions about granting you a loan or a mortgage. Since your credit history demonstrates financial responsibility, a poor credit record may cause you to be turned down for credit or a loan, or your rates will be a great deal higher. A good credit report is essential to your financial well being. By following these simple steps, you can build and maintain a solid credit history.

Step #1: Order credit reports
You are entitled to one free credit report per year from each of the three major credit bureaus (Equifax, Experian, and TransUnion). These are the nationwide consumer reporting companies. To order your reports, visit online at, call 1-877-322-8228, or complete the Annual Credit Report Request Form and mail to: Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281. You may order your free credit report from each of the credit reporting companies at the same time.

Step #2: Check your report for errors
Review your credit report every year and read it thoroughly. Approximately one-third of credit reports contain some form of error that can cause problems for you, the consumer. It is your responsibility to keep your credit report up-to-date and honest. Look for information that is incorrect or outdated. If you find errors, report them to each of the credit bureaus to ensure they get corrected. If there is evidence of fraud, contact the credit reporting agencies immediately, and ask that a fraud alert be placed in your file. Report any fraud activity to your local police and your bank as well. If there is legitimate negative information on your credit report, only time and improved credit behavior will change your credit status.

Step #3: Document all communication with your credit bureau
You can contest a poor credit report by calling the credit bureau company reporting the information in dispute. They will provide you with appropriate forms, and phone numbers to contact the lender(s) directly. If the lender has made the error, request a written correction. Have the corrections sent to the major credit bureau companies and to you. It is essential that you keep copies and accurate, detailed records of all forms and letters. Send the information by certified mail, and ask for a return receipt. Under the Fair Crediting Reporting Act (FCRA), the credit company is obligated to investigate your claim within 30 days. Any discrepancies or inaccuracies found on your report will be removed. These items cannot be put back into your report unless a creditor verifies them for accuracy and documents them in writing.

Step #4: Manage your debt and request your FICO Score
Remember, the single most important step you can take in repairing your credit is to pay your bills on time. Pay the minimum amount or more every month, on or before the bill’s due date. Pay down high credit card balances and avoid running up your credit cards to the limit. Do not cancel credit cards. Doing so can shorten the length of your reported credit history, and may lower your FICO score. FICO scores are available from the credit bureaus, and rank potential borrowers based upon the likelihood of credit obligations being paid as contractually agreed to. FICO scores range between 350 and 850 points. The higher your FICO score, the more likely you are to be granted more credit with better credit terms.

Step #5: Add stability to your credit file
You may have good credit, but may have been denied additional credit due to an insufficient credit file. Ask your creditors, who may not be reporting your credit history to the bureaus, to report your account information and payment history. This will add positive information to your credit file. Contact the credit bureau directly to provide the name and telephone numbers of your creditors. For a small fee (typically less than $5 per account), most credit bureaus will agree to call any creditor you specify and add their account information to your file. Open a savings and checking account, and make regular deposits. Obtaining a secured credit card (one backed by assets) is another way to help you build good credit, or repairing poor credit. Apply for only one or two cards, as credit bureaus look at how many new “inquiries” you make. Applying for more than two credit cards within a short period of time can result in lower credit scores.

Building and maintaining a good credit record is one of the best ways to insure that you consistently receive the best credit rates available to you, and will give you financial peace of mind.

James Oosterman is the Vice President of Melrose Bank. He can be reached by telephone 781-665-2500, online at or on Facebook at

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