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Boost Your Credit Score
1. Deleting Errors in 48 Hours
This is the absolute fastest way to correct errors on
your credit report and raise your credit score. However,
it can only be done through a mortgage company or a
bank. If you apply for a home loan and find errors on
your credit report, request the loan officer to conduct
a Rapid Rescore. But don't mistake it for the credit
clinic tactic of multiple dispute letters.
The Rapid Rescore strategy requires proper paperwork.
You need proof that the item is incorrect. It must come
from the creditor directly. For example, a letter
stating the account is not your account, a letter
stating the account was paid satisfactorily, a release
of lien, a satisfaction of judgment, a bankruptcy
discharge, a letter for deletion of collection account
or any relevant evidence.
This is the same documentation a bank or mortgage
company would require for the credit accounts anyways.
The difference is, now you can improve your credit score
and receive a lower interest rate. The results are not
guaranteed and will run you about $50 per account.
2. Deleting Negative Credit
This is the infamous area where you've heard of all the
scams. Credit repair clinics charge "an arm and a leg"
and promise a clean credit report. Sometimes even a new
credit profile! People spending hundreds, or even
thousands, of dollars for something they can do
themselves.
Removing errors is simple. Deleting negative credit that
is accurate requires advanced methods. But that is not
the scope of this report. So I'll focus on the deleting
the negative errors.
Credit report errors easily disappear by using a simple
dispute letter. If you have the paperwork proving the
error as mentioned above in Rapid Rescore, send copies
of that along with the dispute letter. This will make
the credit bureau's job easier and you will get faster
results.
If you don't have the documentation to prove the error(s),
send the dispute letter anyway. According to federal
law, the credit bureau's have a "reasonable time" to
validate your claim. They will contact the creditor for
verification of your dispute. Then the account will be
reported accurately - or deleted. It has been generally
accepted the "reasonable time" to complete this task is
30 days.
If you're not the do-it-yourself kind of person. Or
don't have the time. You could hire someone who is very
economical.
3. PiggyBack Someone's Credit
This is a fast and great little credit score booster.
But it requires a very trusting relationship. Simply
put, someone else adds you to their credit account. For
example, when applying for a credit card, you may have
seen the section to add a card holder. If your trusting
person adds you, their payment history is now reported
on your credit report too. If they have perfect credit,
now you have a perfect account.
To make this more effective, use an aged account.
Imagine if your trusted person has a 10 year old credit
card account with a perfect payment history and a
balance of only 50% of the credit limit. Wouldn't you
love to have this on your credit report? The easy part
is your trusted person just calls the credit card
company and requests a form to add a cardholder. Once
completed and activated, their entire account history
and future is now firmly planted on your account.
Imagine if you secured 3-5 of these accounts -
especially installment accounts. Your credit score could
sky-rocket!
The challenging part? Finding the trusted person. Since
you already have a low credit score and bad credit, how
eager will someone be to make you a cardholder? Even
your parents don't want you to damage their credit. But,
no one says you need to possess the card! In other
words, your trusted person could add you as a card
holder and never give you the card or PIN or any
information. Since the bills and all account information
is still mailed to the trusted person's address, you
won't know anything about the account. This scenario
could land you many trusted persons. And you still
benefit with a higher credit score.
4. Playing Round Robin
This strategy is one of the oldest credit building
techniques around. It used to be accomplished with
secured savings accounts. But now, it's much easier with
secured credit cards. In fact, I've used this method
myself.
Here's how it works: Take ,000 (or what you can afford)
and get a secured credit card. Once received, get a cash
advance of 70% of your credit limit. Get a second
secured credit card. Once received, get a cash advance
of 70% of your credit limit. Get a third secured credit
card. Once received, get a cash advance of 70% of your
credit limit.
Open a new checking account with the final cash advance.
Use this account only for making payments on your three
new credit cards. If you make your payments on time
every month, your credit score will increase because you
now have three new perfect payment credit cards.
(Initially, your credit score might drop a few points
due to the rapid, multiple accounts being opened.
However, be patient because within 4 months of no new
accounts or any delinquencies of any account, you will
see your credit score increase. Mine increased 60 points
in 60 days!!)
5. Pay on Time
This one is quite obvious. But after 12.5 years in the
mortgage business, I discovered it still needs
repeating. Your creditors were gracious enough to loan
you money. Now pay your damn bills! If you don't, your
credit score decreases. EVEN IF ONLY 30 DAYS LATE!
That's right folks. For some reason people think, "I'm
only a few weeks late. What's the big deal?" Well, for
the loan company, if you pay late but consistent, they
make a lot more money with late fees and more interest
(if a simple interest loan). For you, your credit score
is damaged. If you think long-term and credit score, I'm
certain you would not have a cavalier attitude.
6. Pay Down Debts
This seems like an obvious method, doesn't it? But it is
not as transparent as you might think. Remember, we're
playing with high-level statistics and probabilities
which evaluates and forecasts trends in your behavior.
Here's what you do...
Never pay off your revolving debt in it's entirety!
Isn't that a surprise? Think about it. Your credit score
is a reflection of your ability to manage your credit.
Paying off your debt is not managing your debt. If you
have a zero balance, how can you manage it? You don't.
It no longer exists. And you cannot manage what does not
exist, right? Therefore, in terms of credit score, you
have demonstrated your ability to swiftly pay off
accounts to avoid managing them. Thus, slightly
decreasing your credit score.
One exception, of course, is if you're over extended to
begin with. Pay off what's necessary to make your credit
profile look great. Then manage the remaining credit.
7. Don't Close Accounts
Even if you pay off revolving debts, do not close the
account. The longer an account is open with no negative
reports, the better it reflects in your overall credit
score. This is due to the weighted-average in the credit
score formula. Many credit experts suggest a balance of
30% of your credit limit. That's ideal. But you can go
as high as 70% and still maintain a healthy credit
score.
8. No New Credit
You must be vigilant in your credit behavior if you want
the bestcredit score. Therefore, do not get any new
credit unless it is absolutely necessary. Each time you
apply for credit, an inquiryis added to your report.
This usually drops your credit score slightly. When you
have fresh credit, there is no track record how you will
manage (or pay) this account. Therefore, it's a higher
risk which results in a minor drop in your credit score.
Remember, your credit score is about risk assessment.
Here's what you do: obtain credit for your housing,
transportation,college or continued education and 3-5
credit cards. That's reallyall you need for personal
credit. If you want more credit, requesta credit limit
increase on your current cards rather than apply for new
ones.
9. Maintain A Mix of Credit Types
If you show you can handle different types of credit at
the same time, you are rewarded with a great credit
score. In other words, get installment loans like
vehicle, personal loan or mortgage. Get revolving credit
like credit cards: Visa, Mastercard, Sears, Sunoco Gas,
Costco. By mixing it up, you demonstrate you can manage
your credit because you will have short term and long
term credit with a fixed payment. As well as a
"variable" monthly payment on your credit cards.
Keep these accounts open with a balance of 70% or less
and paid on time and you will witness your credit score
climb to great heights.
10. Don't File Bankruptcy or Foreclosure
Here's the most obvious advice: Don't file for
bankruptcy or foreclosure. These stay on your credit
report for 10 years and always decrease your credit
score. The older the bankruptcy or foreclosure account
becomes, coupled with re-built credit history, the less
of an impact they play on your credit score.
Contrary to popular beliefs, you can legally delete a
bankruptcy and foreclosure. It's not easy. But it's
possible. See the advanced methods for that solution.
To quickly rebuild your credit history after a
bankruptcy or foreclosure, use the Round Robin strategy
above and get secured credit cards. Now you can even get
a car loan or mortgage right after bankruptcy.
By: David Czach.
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