I lied to boost my credit score
By Erica Sandberg
August 30, 2013
When I was unemployed, I got into emergency credit card debt that I couldn't pay, so it went into collections. I'm back on my feet now, and these items are a year and a half old. They were ruining my credit, as my FICO score from TransUnion was 563. I want a credit card again, and I was told to dispute the negative items and say they aren't mine so my score would go up. It did — by almost 100 points! Is it high enough to get credit now? What happens when they find out I lied? Can I get in trouble? — Loren
Oh, how I burn when I read letters such as yours! There is just so much wrong with what you've written.
|Raise your credit scores the RIGHT way
Your credit scores are enjoying a temporary lift because, when an account is in dispute, FICO can't use it in its mathematical model. Therefore, your scores will spike for about 30 days, which is the length of time the investigation typically takes. However, they will fall back down to earth when the truth comes out, as those debts will be refactored in.
Do not use this 30-day window to try to get a card. Your entire way of thinking about credit is backwards, and you need to turn it right-side up before you even think about seeking more credit.
- Never rely on credit cards for emergencies. I've said it before, and I'll say it again: Plastic is a payment tool, not a paycheck. When you charge something, you're borrowing money from a creditor and are obligated to make at least the minimum payment. While it may have made sense to swipe a necessary but unaffordable expense, you still needed to come up with enough cash to meet the required payment. If you couldn't have done so, you shouldn't have used the card.
- Don't take advice from immoral people. It is absolutely fine to dispute errors on a credit report. In fact, the Fair Credit Reporting Act gives you that right. If you spot problems, such as bills that aren't yours, balances that aren't right or accounts that are too old to appear anymore, sure, ask that they be expunged from your record. But timely, accurate information stays, even if you don't like it. Whoever told you to dispute negative and true information is either a fool or unscrupulous.
- Tell the truth and nothing but the truth. Still, I'd hesitate to blame the other person for giving you substandard advice. Ultimately, it was you who made the decision to lie to the credit bureaus. It's not a good practice even if the results are favorable. Remember the story of the boy who cried wolf? Brush up on it. The bureaus will pay attention to your claims if you make them legitimately. Misuse the process, though, and they might dismiss future disputes as frivolous. You probably won't get into legal trouble, but because your reputation will be shot, you may have trouble ridding your report of items that really are mistakes.
- Deal with your debts the right way. Right now you have a false set of credit scores because the items that should be factored in are out of the mix. So instead of trying to beat the clock, just pay what you owe. Your reports will still show that the accounts went into collections, but a satisfied debt is better than an outstanding one, and your scores will reflect that.
- Understand scoring. Even if your FICO scores were to stay in the mid-600's, that's still not considered a great credit rating. FICO scores range from a low of 300 to a high of 850. To qualify for a premium loan or credit line, you'll usually need it to be about 100 points above even your false score. To really elevate it, use credit but pay your debts on time and in full. Payment history is the weightiest component in a score. Because you don't have a card now, don't rush out and start applying for anything with your fake but still inadequate numbers. After you've paid your collection accounts down, get a secured card, a type of credit card designed for people with less-than-perfect credit. You'll have to put down a cash deposit to secure the credit line, but you can use the card (by charging something small and paying on time) to build up your credit. After about a year, check your credit scores and apply for the best card you qualify for.
In the future, go to quality sources for credit guidance, and forget about cheating the system. That way your credit rating will rise, naturally and permanently.
Got a question for Erica? Send her an email.