What should you do when you’ve been denied a loan or charged a higher rate of interest because the lender says you have a bad credit score?
Your credit score may not be great if you’ve missed or been late with payments, had collection agencies calling you or declared bankruptcy within the last few years. But if you’ve done a fairly good job of handling your money, there could be an error on your credit report. A bad credit score may also be an indication that someone has been using credit improperly in your name.
When you’re denied credit, the lender is required by federal law to give you the reason why, your credit score and the name of the credit reporting agency it used. Federal law also requires each of the three nationwide consumer credit reporting companies--Equifax, Experian and Transunion--to give you a free credit report each year. Go to AnnualCreditReport.com to obtain a copy. (Beware of other websites that may advertise free reports but have some strings attached, like credit monitoring services for which you’ll pay a fee.)
Carefully check your credit report for:
When you find an error, notify the credit bureau and also the company from which it got the report. Include information about the error, a copy of the portion of your report that contains the error, and any back-up information that shows you have actually paid off the account. (The web pages of the three credit reporting agencies have detailed information about how to do this.)
If the information listed on your credit report is correct and you’re still not happy with your credit score, look for ways to improve it. Educate yourself about how credit bureaus calculate your score and look for areas where you can do better: