Credit Repair: Techniques to Improve Your Credit Score

Tackle with credit repair by yourselves

There comes a time when you need a loan for personal reasons. For instance, you may need extra cash to buy additional furniture in your house, pay for your medical expenses among many others. Personal credit is a loan in which a person possesses as an individual.

Lenders usually give personal loans to borrowers based on their credit score. This means that if you have a good credit score (above720), then your odds of qualifying for a low-interest loan are high. On the other hand, if you have a poor credit score, then it is very difficult to get a loan from lenders and if you are lucky to get one, then the interest rate will be high.  You need a credit repair.

What exactly is credit score? 

A credit score is actually a 3 digit number that is usually generated using a complex mathematical algorithm based on information on your credit card. The credit score is usually used to determine risk, particularly the likelihood that you will be committed to your credit obligation in the next 2 years after scoring.

The figure generated on your credit score usually represent your score at that particular moment meaning that it is likely to change with time-based on your subsequent behavior. Credit score usually ranges from 350 to 850 with good credit score considered to be above 600. Credit score above 750 is considered excellent.  If you find out that your credit score is below 600, you simply need a credit repair.

How credit score impact on your credit line 

The data provided on your credit report are usually divided into 5 major categories that make up your FICO score. The scoring model usually put more weight on some factors more than others. For instance, credit utilization rate and your payment history usually have more weight on your credit line than other factors such as types of credit accounts that you have, recent applications for credit and age of your credit history.

However, all these five categories play a crucial role in determining the overall credit score. Negative information on your credit report such as late payment can remain on your credit report for about 7-10 years while bankruptcy can stay for 10 or more years. There is no one formula that is used to calculate a credit score. The formula used to depend on the information on your credit report.  To do credit repair, you need to learn few techniques for credit repair.

Techniques to get your credit repaired 

First, it is very important to note that boosting your credit score or repair your credit is like losing weight. This means that there are no quick ways to fix a poor credit score. In fact, most quick fix methods usually backfire making the situation worse. The only way to effectively do a credit repair to a figure that you will be proud of is by managing it responsibly over time.  Additionally, you can get your credit repair by yourselves.  Hiring a credit repair company to do credit repair is completely unnecessary and half of “so call” credit repair companies are nothing but scammers.

1. Update your accounts

Late payments have the heavy negative impact on credit repair process. It is therefore very important to update your accounts that are already past due and ensure that you make at least minimum payment before the due date. If you pay all your past debts and also ensure that you update your monthly payment on time, then your credits score will start improving.

2.  Check your credit report

Your credit score actually begins with your credit report. If you don’t have one already, request a free copy of your credit report and check if it has errors. Your credit report usually contains crucial information that is used to calculate your overall credit score. It is therefore important to check it to see if it has an error of late payment and if the amount that you owe is correct.

To do so, go to www.annualcreditreport.com for more information on your credit report and credit repair.  Please also note that you are entitled to a free copy of credit report from any credit reporting companies for every 12 months without additional charge.

3. Lower your credit utilization rate down to less than 30%

One major factor that plays a crucial role in determining your overall credit score and credit repair is how much revolving credit you have versus the amount that you are using. If the percentage is smaller, your credit rating will improve. The figure should be less than 30%. Your credit score will significantly improve if you pay down all your balances as well as by ensuring that those balances are low.

4. File for dispute if there is an error in your credit report

It is very important to note that you are eligible to file for dispute if there is an error on your credit report without being charged the additional cost. You will greatly boost your credit score if you fix all errors listed on your credit report.  As mentioned earlier, you can do credit repair by yourselves.  Researches have shown that 70% of negative information can be settled with this credit repair method.  Anyway, do not bother to hire any credit repair companies.  Just save your money for paying down your balance.

5.  Pay credit card balances with a personal loan

This is a great technique that many people are not aware of. If you can afford to arrange a personal loan with low interest, then that is the great way to do credit repair. You can do so then use that money to service your credit card debts.

However, you need to be very careful not to use consolidation technique (put all debt balance into one account) for your credit repair because it will hurt your credit history and credit score.

Tips to boost your credit score on time

Credit Repair: multiple credit cards

According to FICO score, your credit score plays an important role if you plan to apply for a loan or home mortgage.  To be eligible for a home mortgage, you need a credit score of 620 or more.  If you are a veteran, a required credit score is down to 580.  Let’s see how to boost your credit score to 750 with these secret techniques.    

  • You have to maintain your credit utilization rate to 5-10% for each credit card you are carrying.
  • In case that your credit line has already been maxed out or exceeded 5-10% credit utilization rate, you need to apply for new credit cards or simply request for credit line extension.
  • If you want to quickly boost your credit score or credit repair within one year, you have to get as many credit cards as you can.
  • In the meantime, you also need to negotiate with credit card companies to extend your existing credit line. The minimum credit line should be US$ 10,000 or more for each credit card.
  • The credit score usually plummets when your new credit card is approved. Do not panic, it will recover over time.
  • Do not terminate your existing credit card account. It will affect your credit history and credit score.  If you don’t want to use it, pay down all your balance and keep the card in a safe place.
  • Simply ignore retail store credit cards. Those cards are likely to charge you a high-interest rate.  Do not forget that you need to maintain your credit utilization rate at 5-10%.
  • Aim to apply for your new credit card with reputable financial companies such as Bank of America, Citibank, Chase Manhattan, Discover, Capital One, US Bank, and Barclays. Try to apply for 3-5 new credit cards annually.  The more credit utilization rate, the more credit score you earns
  • Keep track with your monthly minimum payment.  You can set up the monthly minimum payment online for each account.

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