Are you thinking about buying a house or a brand new car but fear being turned down by creditors? Are you afraid that your FICO score might not be enough to qualify you for a favorable loan? Are you wondering "how to repair my credit score"? Contrary to the general myth, fixing credit doesn't have to be that hard. Time, careful budget planning, financial discipline and perseverance will produce positive results in the long run. Credit knowledge, on the other hand, has proven to work much faster. The more you know about the inner workings of the credit system and the various loopholes in it, the better your chances to raise your score in no time.
Here are 3 simple tips that will help you understand how fast credit repair works.
1 Knowledge is your most powerful weapon.
There are so many things you can do to fix your credit IF you have enough credit knowledge. Paying off your debt in full will not necessarily raise your credit score. In certain occasions it will actually lower it, because it will make the negative accounts more current. Don't waste your cash and your efforts. Try to play it smart instead. Rank your negative accounts in order of importance (bankruptcies, foreclosures, judgments, collections, loan default, late payments, credit inquiries). While there is little you can do about bankruptcies and foreclosures, your can definitely erase the other types of negative accounts from your record. How to reach a settlement with collection agencies for 25% or less of the amount you owe? How to convince debt collectors to erase certain negative items from your credit record? How to dispute with credit bureaus and the original creditors? How to erase credit inquiries? How to request debt validation? How to deal with court officials and erase paid judgments from your record? Once you have the answers to such questions, it will be easier for you to come up with a winning credit repair strategy.
2 Your FICO Score - the mystery unveiled.
Your three digit FICO score is the final result of a complex mathematical algorithm which credit bureaus use. There are 5 major factors that are taken into consideration when calculating your score. Of those 5 factors two account for more than 70 % of your final score-payment history and balance to credit ratio. Any late payments or maxed out credit cards will significantly lower your score. Take care of your late payments and bring your card balance to the healthy 30 %. These actions should produce immediate result in your FICO.
3 Exercise your right to dispute.
You have every right to dispute out-of-date, inaccurate or unwanted information on your credit report that affects your score adversely. Out-of-date info includes bankruptcies that are reported more that 10 years after the date of the last activity, collections, late payments and judgments that stay on your credit for more than 7 years, credit inquiries that are reported for more than 2 years. Inaccurate information includes wrong personal data (name, address, SSN, date of birth, employer info etc), wrong account history( account number, balance on the account, account credit line, date of last activity etc). In general you have the right to dispute any negative item on your report. Credit bureaus are required by law to conduct an investigation within 30 days. If they find the information to be correct, you can use the so called 623 Dispute. It is named after the section 623 of the Fair Credit Reporting Act which allows consumers to dispute a negative listing directly with the company reporting it. Since most of your debt got resold to various collection agencies along the way, not all of them have the proper paperwork to validate the debt. And this is a powerful weapon in your hands.
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