Bad news sticks to credit score longer

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Dear Debt Adviser,
I have been through credit repair agencies, read tons of information on how to raise your credit score … you name it. I just need to know how I can actually get my paid items off my credit report. I have come to the conclusion that although I have paid my bad debts, the items will remain for so many years according to the time limits on my report. I have made excellent money for the past year and a half and paid off my debts and car loans, and really want to purchase a home. However, my score is still in the 500s. I just don’t know what to do anymore.
— Mindy

Dear Mindy,
Welcome to the club. Most people don’t know what to do about their credit scores either. How anyone’s FICO score is exactly calculated is never revealed. But after helping readers improve theirs, I can give you some sound suggestions that might help. You, unfortunately, have reached the correct conclusion. Accurate negative information stays on your credit report for seven years from the date of the first delinquency. There are some exceptions that stay on for longer such as a past bankruptcy or IRS debt.

Life is full of ups and downs, and this downer will soon be behind you if you do a few simple things that I suggest in the box below.

Three quick tips to improve your credit score:
  • Accurate, negative information can’t be erased.
  • Add new positive data to your file.
  • Get more info at

As a refresher for you and my readers to help improve your FICO credit score, below are the five factors that go into its calculation:

  • Paying on time: This represents 35 percent of your score. Payment history is the biggest factor for determining your score. This category includes the number and severity of any late payments. Payments of 120 days or more are the worst. The more credit problems you have, the lower the score.
  • Amount and type of debt: These make up 30 percent. This includes the total amount you owe, the amount you owe by account type such as revolving, installment or mortgage, the number of accounts on which you’re carrying a balance and how much of the credit lines you have drawn down. Using your entire credit limit on a card lowers your score. Having credit cards with no balances ups your score.
  • The length of time you’ve been using credit: This encompasses 15 percent of your score. This one you can’t do much about today. But “paid as agreed” accounts that have been open for at least two years will help to increase your score.
  • The variety of accounts: This element represents 10 percent. A mix of credit accounts is good, but riskier types of credit will mean lower scores. For example, if most of your debt is in the form of finance-company loans, your score will be lower than if your debt is from student loans and mortgage loans, all other things being equal.
  • The number and types of accounts you’ve opened recently, generally in the last 6 months or so: These generate 10 percent of your score. Opening new accounts raises the question, “Can you afford a greater debt load and also why have you opened them.” So, initially your score will go down. Once you show you can handle the new credit, the new credit will help your score.
Elements of your credit score

To learn more about your credit score, better understand the factors affecting your score and what you can do about them, I suggest you go to Fair Isaac Corp., the FICO score firm, has recently redone its Web site and has some excellent new educational features that you may find helpful. Finally, I want you to go to to get a free copy of your credit reports and make sure there are no errors on them that are hurting your score. Around 20 percent of reports have some errors and yours may be one!

Finally, you will need to balance your desire to have a home now with the home and mortgage that you can afford with your current credit score. In today’s tight credit environment, it will be super hard and super expensive to get a mortgage with your current credit. My advice is to work on rebuilding your score and wait until it improves before shopping for a home.

Good luck!

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