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Credit Repair Guide
There are thousands of books and websites on the internet who claim to help you repair your credit for free. Ever notice how all of those sites need a credit card number or phone number or email address? Well I ask for none of that. This is my totally free site about what I have done to help repair hundreds of people's credit with proven results. On this website I will give you the step by step procedures to fix your credit. But First some credit basics:
Your FICO score is a complex formula that ranges from 350 to 850. Most banks and credit card companies require you to have a credit score of at least 680. I have used these methods below and watched people's credit scores increase 150 points in just one month. So what are the major criteria of your credit score and what percentage do they contribute to that score?
Total Credit Balance: 30%
This amount is the amount amount that you current owe as compared to the amount of available credit you have. In other words if you have $5,000 available credit on your home equity loan and/or credit cards and you have a $1,000 current balance on those loans then you Credit Balance percentage is 20%. You want to always try to keep this balance less than 20% even if it means that you have to open up another credit card account and immediately shred the card and not use it.
Past Payment History: 30%
One late payment can dramatically affect your credit score. Paying your bills on time should always be your first step in attempting to repair your credit. There are many techniques that can help you pay bills on time such as 1) using online bill pay, 2) setup automatic drafts, 3) using a budget.
Credit History: 20%
Credit History on your credit report refers to the amount of time that you have had established credit. Opening too many "new" credit accounts can actually hurt your credit report. Having several 3-5 accounts that are seasoned (2-10 years old) will help your credit report.
New Credit: 10%
When you apply for credit this becomes a "hard inquiry" on your credit report and too many of these will negatively affect your credit score. Be sure that you only apply for credit when you need it.
Type Of Credit: 10%
They type of credit that you have on your credit report is also important. Mortgages and longer term debt is good but too many "revolving" credit accounts like credit cards can be bad if that is the only type of credit that you have.
So now that you know the basics of what makes up good or bad credit and what lenders look for on your credit report your next step is to pull a copy of your credit report. Did you know that by law the major credit reporting agencies have to give you a copy of your credit report for FREE every 12 months?
Follow this link to get your TOTALLY FREE credit report:
Free Annual Credit Report
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The 6 Steps to Rebuilding your Credit:
1) Pay All Bills On Time. If you can't pay on time call the company you owe and see if you can make an alternate payment schedule. Even on a $10,000 twenty dollars a week will go a long way and keep you from being delinquent.
2) Hold Less Credit Accounts. Start with your smaller balance accounts and pay them office and cancel them. More than 3 credit cards hurts so review your credit report and close the jewelry store and belks cards.
3) NO NEW ACCOUNTS. Do not open any new accounts while trying to rebuild your credit. The new accounts and the inquiries can hurt your credit score
4) Try to get all accounts at less then the maxed out value. Maxed out cards and accounts negatively affect your credit. A higher score is given when you have available credit to use! In the beginning pay down each account below their maxed out value.
5) Review Your Credit Report and Promptly Fix All Errors.
6) ****The Granddaddy of All Repair Options ****** You have the right to confirm with proof any balance on your credit report. Any company that cannot confirm to the credit reporting agency with proof your balance due within 30 days MUST remove the account. Recently a friend of mine had 20 delinquent accounts on his credit report. He sent verification requests for all of them to the credit reporting agencies and half of them ended up getting removed in 30 days. Think about it.......With all the credit card company sales and mergers over the years very few actually still have documents relating to delinquent accounts. Cut and paste this form and send it to each reporting agency:
Credit Reporting Agency (see List Below)
123 Elm St.
Anywhere, TX 30815
Re: Inaccurate information appearing on credit report
Creditor:
Account Number:
Dear Sir or Madam:
Please review your informaiton regarding the above account. I believe you have inaccurate information and I would like it removed.
Thank You,
Date
Your Name
Your Address
Your Social Security Number
Your Date of Birth
Previous Addresses for Past 5 Years:
Send above to all 3 credit bureaus for each account:
ExperianP.O. Box 2104 Allen, TX 75013-2104 www.experian.com888-397-3742
EquifaxP.O. Box 740241 Atlanta, GA 30374 www.equifax.com1-800-685-1111
TransUnionP.O. Box 2000 Chester, PA 19022 www.transunion.com1-800-916-8800
Saturday, November 15, 2008
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