Published: Wednesday, 1 Jul 2009 | 5:59 PM ET

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By: John Ulzheimer
On The Money Contributor

Question:  I'm trying to raise my credit score to purchase my first home. My credit score is 635. I have four credit cards. They don't have very high limits, but all four together total about $2500.00.

I know I have to pay down the $2500.00. But I noticed the four credit card companies are not updating with the credit bureaus monthly its like every other month even if I make large payments and I have to call the credit bureau and dispute the balance.

And I was late a few times on a couple of loans. I've since paid them all off. But when I purchase my score the formula uses those old accounts that I've paid off to formulate my score. Is that fair or correct?

Thanks for your help.

-Rob T.

Answer:  Rob - You need a take a credit scoring 101 class.  Any account on your credit report, old or new, open or closed, good or bad...is fair game.

Just because an account is paid off and closed doesn't mean that it doesn't count in your score.  If you're doing business with lenders who only report to the credit bureaus every two months then you've found four very unique lenders.  Most lenders report once a month and the data is based on your previous month's statement. 

I think what you're interpreting as being every other month is really every month but information that's one month old.  Can I suggest doing some research about credit scoring and get yourself up to speed on what's good, what's bad, what counts, what doesn't count, etc. 

You can find some great info at myfico.com or at credit.com. 
-John Ulzheimer

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John Ulzheimer is a nationally recognized credit expert, president of Consumer Education for Credit.com and contributor to On The Money. Learn more about him at CreditExpertWitness.com.

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