In our last post, we covered how to begin the process of restoring your FICO score, as well as how changes can affect this score. Now that you are ready to begin, there are a few steps that you will need to take. Many of these steps require diligence on your part and a little hard work. However, they can result not only in a higher FICO score, but also lower interest rates on loans, and a higher chance of getting approved for loans in the future. It is definitely worth the effort, since higher FICO scores can actually help you save money over the long term. So, let’s get started.
Since collections have one of the biggest impacts on a FICO score, let’s start there. If you do have any current collections on your credit report, you will need to work to get those removed. Before you open your checkbook, there are a few options that you should consider. First, remember that collection agencies purchase bad debt from original lenders at a fraction of the cost. This means that any money they receive is pure profit.
This also means that are usually willing to work out a settlement with you. This may not always be the case, but it is definitely worth a try. The first step to take is to send out what is called a Pay for Delete letter, or PFD. This is basically telling the collection agency that you will pay the debt, but only if they agree, in writing, to delete the record from your credit report. Do not take any further action on the matter until they have agreed to this in writing. Send your PFD letter certified so that you have a record of when it was received.
If you do not believe that the debt from the collection agency is legitimate, you can send them what is called a Debt Verification letter. This is a request that will ask the collection agency to provide you with proof that you did indeed open the account and that you are responsible for it. The more detailed questions you ask in your debt verification letter, the higher your chances are of having them remove the debt since it will require a good deal of legwork on their part.
A DV letter will give the collection agency 30 days to respond to your inquiry. Again, you will need to send this letter certified so that you have proof of when the collections agency received it. They will have thirty days to respond from the date that they got your letter. If after that time period has elapsed, you have not heard back (you will need to wait around a total of 45 days from the day you mail your letter to allow time for the mail) you can contact the credit reporting bureaus to have them remove the entry from your report.
There are also a few other ways that you can restore your FICO score, which we will cover in final part of this post.
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Originally posted 2008-09-29 05:11:48. Republished by Blog Post Promoter
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