Credit repair is an industry that typically gets a bad rap. The reason for this is because most credit repair companies string you along for months (or years) charging a monthly fee. They dupe most people by making up excuses or misguiding them into thinking that what they’re doing is helping them. But I’m going to share with you what absolutely will help you move a credit score higher.
- Settling your collection accounts. Collection companies “re-age” or “re-report” the collection every month in most cases, keeping it new on your report. When a collection account is paid, this “re-aging” stops. Over time the collections impacts your scores less as it’s no longer “re-reporting”. After 7 years from not paying the original creditor (120 days late) the collection is removed from your report naturally.
- Disputing to delete your paid collections is a highly successful way of getting them off of the report. Collection companies typically will answer a dispute of the account if it’s not been paid. This is the motivator that collection companies use to get you to pay, the reporting of the debt. Once paid, a lot of the time they don’t care to put up a fight to keep it on your report, because they received money on the account.
- Paying down your credit card balances. Your revolving credit accounts (credit cards, charge cards) are 30% of your FICO score. Your credit scores can move significantly based upon the balances reporting to the credit bureaus. If you have a credit card maxed out or over the limit, and then you pay it down below 30% of the credit limit you will see a significant credit score increase. I’ve seen a credit score move up over 100 points by paying down credit card balances.
- Open new credit. If you don’t have any open credit that you’re using (credit cards, auto loan, signature loan) you have no accounts to show banks your credit responsibility. A credit score is built upon making payments on time and maintaining low balances on revolving accounts. It’s prescribed to have at least 2 to 3 revolving accounts and 1 installment loan. If you’ve been turned down for credit cards, go to Open Sky Secured Visa and First Progress to apply. They don’t pull credit to approve you, their approval is based upon having a checking account. For a new installment loan, research your local bank or credit union for a “credit builder loan”. These are small loans that will report installment payments.
If you follow these 4 actions in credit repair you will have a better credit score. If you’re not following these steps, you’re wasting your time with credit repair. Credit repair companies mislead people by telling them not to settle collections. This entices people as they feel they can have it removed without having to pay the collection. In the slim chance you may have of a deletion without payment, the account will most likely re-report the next month.
They also state the disputing multiple credit issues may cause a “red flag” of the dispute and the bureaus won’t process the investigation. This is absolutely false. You have the right to dispute any and all of your credit issues you feel need to be verified or removed.
For more credit advice about your current credit report, feel free to contact me direct. I’d be happy to give you honest feedback on how to deal with your credit issues.
President and Certified Credit Expert