How Can I Improve my Credit Score? (Part II)
In our desire to improve our credit score we need to remember that the MOST BENEFICIAL EVENT that will help us accomplish our goal is TIME. That is correct. If we maintain our credit obligations with on time payments the days, weeks, and months that pass will create higher and higher credit scores for us.
Each month that passes will help us just a little bit. Coupled with that is the fact that a late payment, collection, or judgment will drop off our credit report after seven years from the date we pay it off. That is why you should pay off a collection or judgment as soon as you are able to do so. Therefore, for two reasons, time is on your side.
How to pay off collections and judgments..
Rushing to pay off a collection or judgment will not necessarily increase our credit score however. That should surprise us, because we would naturally expect that paying off a collection should improve our score immediately. Unfortunately, that is not always the case.
IF your collection was posted on your credit report more than six months ago, then paying it off creates new activity on a collection. That causes the computer software program to think that the negative activity happened once again, and it decreases our credit score as a result. Not good. If your collection was posted within the last six months then the computer will not think your activity is brand new. (Sorry, I didn’t write the program. Wish I had! It would have been different.) Therefore, it will improve your score if it was posted within the past six months and you paid it off recently.
So, here is how you should respond. If you can obtain the loan you need with your current credit score, pay off the collection or the judgment in the close of escrow after your credit score has been used to obtain your loan. If you have the time and your score is not good enough, then pay it off soon and wait about six months to proceed with a new score. Time will have had its positive effect and your score will more than likely have improved.
I recommend some good credit counsel!
Since this is difficult to make sense of, I recommend that you seek someone like our firm to obtain good counsel. Your credit score can be improved. It may take some time, or it may also be able to be achieved in just a few short weeks. You need an experienced eye to take a good look at your history, give you a copy of your report, and explain it thoroughly.There is always hope for improvement in your credit score if basic principles are followed. You may be pleasantly surprised.
Peter M. Galde is the founder and principal at Cornerstone Capital Funding, 14520 Mono Way, Suite 110, Sonora Ca. 95370. Peter has 28 years experience in the finance industry. E mail Peter or call him on 209 532 7711 for further information.
