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Self-help Credit Repair - How to improve your score

Posted on: 26th Oct, 2005 01:28 pm
Self-help credit repair is where you make a conscious effort to improve your credit scores. A number of factors affect your credit score; and improving your score requires you to take care of those factors so that you can manage your credit better.

Follow these simple steps to improve your score.

Improve your payment history:
  • Avoid making late payments on your bills.
  • Clear up all your past-due bills as soon as possible.
  • Request an alternative plan with lower monthly payments from your creditor.
  • Negotiate with your creditors to remove charge-offs from your credit report and re-open those accounts.
  • Ask your creditors to erase late payment entries after you start paying on time.
Reduce your outstanding debts:
  • Pay off high interest debts first.
  • Keep your balances low and try to keep your revolving debt to 30% of your available credit.
  • Don't close old and unused accounts rapidly in order to lower your available credit. It will raise your debt-to-credit limit which has a negative impact on your score.
  • Try to close accounts gradually over several months. Verify that the accounts closed are reported as "closed by consumer".
Improve Your Credit History:

If your credit history is less than 3 years you should not open a lot of new accounts within a short period of time. Adding too many accounts within a short interval implies that you are not able to manage your credit properly.

Manage new credit efficiently:
  • Ignore your creditor's suggestion to open up an account with a large credit limit and restrict yourself to a medium credit limit.
  • Do not try to open too many new accounts if you have gone through credit problems in the past.
  • Take your finances and credit into account when planning your budget.
  • Avoid several credit inquiries within a short period; otherwise it will mean that you are about to open multiple new accounts, and this will affect your score.
Use a proper mix of credit:
  • It is better not to have too many installment loans, as they can reduce your score. This is because the payments remain unchanged until you pay off the balances.
  • You can have a combination of credit cards and installment loans or loans with fixed payments as they help improve your score. You need to handle your credit cards efficiently.
You can also contact a credit counseling agency for tips on managing your debts. These agencies are different from the credit repair companies, and they can guide you on how to improve your financial situation.

Once you have checked through the various factors influencing your credit score, try to maintain a stable credit report. A few simple steps will help you in this regard.
  • Try to include positive details regarding your credit profile.
  • Ask your creditors to send your account details and payment history to the credit reporting agencies.
  • Create a savings account at your bank. Your creditors will be convinced that you have started to save and maintain extra funds to pay down your debts.
Apart from practicing good payment habits and updating your credit report, you should monitor your credit report and remove any errors from your report. This will also help you to get a better score.
Related Forum Discussions
Hi Blue,

This is a great topic to discuss. People often require knowing about the ways to go for a credit repair. I am sure that many will get benefited from these suggested steps.

But Now-a-days it involves a lot of scam charging borrowers against false promise. To know about the different scam on credit repair go through the article "Common Credit Repair Scams Affecting Debtors" written by Jessica.

God bless you.

Thanks,
Samantha
Posted on: 26th Oct, 2005 02:00 pm
Some of my friends are suggesting that I should consult the credit repairing companies while others are saying that it may not help? What I should do?
Posted on: 26th Oct, 2005 02:17 pm
Hi,

It is always better to go for bad credit repair on your own rather than contact the credit repairing companies. This is because credit repairing companies often make false statements and try to take advantage of you.

If you want to go for credit repair services, then look for the past records of companies offering these services and try to select the firm that has a very good track record. You should be well aware that often these firms make false promises for an easy repair to your credit. In most of the cases they take the money from you without doing much to improve your credit profile.

It is a fact that none can erase or manipulate a credit report if the information contained in it is correct. If you have a poor credit report due to some genuine mistakes on your part, then you can rectify it yourself without taking the help of the repairing firms and paying them unnecessarily.

So, I would suggest you to go for credit repair yourself.

God bless you.

For MortgageFit,
Samantha
Posted on: 26th Oct, 2005 02:41 pm
I am divorced and have recently refinanced my house to lower my monthly payments. In the past, I have been late (but within the month) on paying my mortgage. I am going to pay biweekly on the new loan, having it deducted which should improve my credit. Is there any way to improve my credit score quickly, or will it take a while(and if so, how long?)?
Thanks
Posted on: 03rd Feb, 2006 11:41 am
Hi Leeann,

It will take some time before your credit score gets improved. Since you have not been too late on making payments, so it may affect your credit profile but not to that extent.

Reparing credit is not easy therefore you should continue with your bi-weekly payments as and when required.

You can also go through the steps for credit repair from the post given above.

Thanks,
Caron.
Posted on: 03rd Feb, 2006 07:16 pm
Hi---

If my score is very low now, mostly because of student loans, how long would it take for me to get the score back up to 650 or better? Approximately 6 months or 1 year, or longer?
Posted on: 12th Feb, 2006 04:19 pm
Hi,

The 1st thing to do is check the report for any possible errors such as accounts that aren't yours, late payments that were actually paid on time, debts you paid off that are shown as outstanding, or old debts that shouldn't be reported any longer.

Once this is done then comes the actual task i.e. improvement of credit score in a faster way.

The fastest way to a better score is paying down balances on credit cards. Through this there is a possibility of improving the score by 20points in 60 days.

Hope this will give you a start.
Posted on: 12th Feb, 2006 07:59 pm
One million dollar suggestion, dont close you unused a/c for improving your credit score as i have seen majority of the people doing the same but let me tell you it not going to put any impact on the score rather it can be harmfull.

Thanks
Posted on: 12th Feb, 2006 08:16 pm
really? it could be harmful? oops? so should I simply go ahead and cancel the unused credit cards?
Posted on: 17th Feb, 2006 06:27 pm
If you want to repair your credit score then it is not necessary that you cancel your credit cards but just make sure that you pay off their debts in time.

And if in near future you are planning to take a mortgage then dont think of canceling your credit cards in your dreams also.

Zeal_Deal
Posted on: 17th Feb, 2006 06:58 pm
Hi,

There are several peoples who used to cancel their credit cards just to increase there current credit score. But remember, that doing so won’t increase your credit score. That is it is not a good idea to cancel your unused credit cards just as a short term strategy to increase your credit rating.

That is, make yourself clear why are trying to get rid of a credit card. The next step is to check whether there is any balance to be paid for the credit card you are about to cancel. Don’t try to cancel your credit card while you are paying the balance. Cancel the credit card after you have completely paid the balance amounts.

Thanks,
Jerry
Posted on: 17th Feb, 2006 07:17 pm
It would depend on how many open good tradelines you currently have. If you have one or two then I would suggest you keep the unused credit cards open and charge maybe gas or something small on it and keep paying them. If you have no activity on the credit cards the credit bureaus cannot measure it and therefore you will not have an increase in fico score.
If you are trying to get a mortgage it is important that you have these tradelines open and in good standing. That is what lenders look for.

As for credit repairing companies, my personal opinion is they are not worth getting involved with. The reason why I say this is because a lot of them are strictly in it to make money off of you. I would attempt fixing credit by doing what Blue states by doing it yourself. It does take time but the end result is worth it.
Posted on: 17th Feb, 2006 07:28 pm
I had several charge off accounts on my credit report. I just recently paid all of them off. How long will it take for my credit score to increase and by how many points?
Posted on: 22nd Feb, 2006 12:01 pm
Hi Chevaunne,

Welcome to MortgageFit Forums.

After making the payments, it will be reported as "paid charged-off" which is slightly better than a "charged-off".

This reflects consumer's willingness to pay his bills so future creditors might like "paid charged-off" in comparison to "charged-off".

After it gets reported with the bureau, the credit score gets updated accordingly. The reporting is done by the creditors receiving payment from you. However you may check the score after six months from the date of payment for a possible change.

Since the bureaus use specific credit scoring model which is kept secret, it is quite difficult to assume on how much the credit score will increase.

But it will always help you to raise your score with the payments made.:)

God bless you.

For MortgageFit,
Samantha
Posted on: 22nd Feb, 2006 12:40 pm
Hi,

Charged off accounts remain for seven years on your report starting from the date of initial missed payment, which led to charge off.

This will remain even if payments are later made on the charged off account. However paying it off will definitely improve your score within some time after getting reported.

Steve
Posted on: 22nd Feb, 2006 12:45 pm
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