Keep in mind that nothing in the world of consumer credit happens at “lightning rate”, but I have personally seen the following strategies implemented, and have seen 40+ point ficos appear in less than 2 weeks. Let’s go for it:
1. Get a triple merge of your credit report. This is a report that consists of your credit information from the 3 major credit repositories: Equifax, Experian, and TransUnion. If necessary, spend a couple of extra bucks to see your real scores; If you don’t know what your starting scores are, how can you tell if they’ve improved?
2. Get a “quick sense” of your credit. If it’s bad, why? This isn’t as difficult as it sounds, and you don’t need to be an expert to figure it out. Some examples are collections, judgments, tax liens, bankruptcies, late/late payments, mortgage delinquencies, liens… that’s the kind of thing. Find out what affects your scores the most. We will come back to this in a moment.
3. Count your active accounts… you need at least 3. The credit bureaus like a mix of accounts: revolving credit, installments, and long-term installments like a mortgage. But for now, you need at least 3 active accounts. If you don’t have any open account, Do not do Start applying for credit cards! New lines of credit like this will actually lower your scores. Instead, here’s the lightning-quick fix: Take advantage of someone’s good credit card. Here’s how you do it: Identify someone in your life (family member and/or friend) who you trust and, more importantly, who trusts you. Tell them you’re working to improve your credit scores. Ask them if they have a credit card that meets the following criteria: at least 2 years of flawless payment history and never late; a balance not to exceed 40% of the credit limit (ie, a $400 balance on a card with a $1,000 limit). If they have a card, or ideally a couple of them, that fit this bill, then you’re in luck! Now, this is where trust comes in: it will get you added to this credit card. They will call your card company and ask you to be added as an authorized user on the account. Once again, the trust factor is paramount! You’ll No be receiving a copy of the card in the mail; You’ll No be using the card… it’s not your card. You’re just being added to the account, and in turn, this nice credit-friendly account is being added to your credit history. It will show up as a joint account…and the credit history, whenever it is, will show up on your credit report, as if the account was yours all along!
4. Pay off your debt! When I talk to people about their credit scores, they always want me to magically fix them with no effort on their part. Well, you accumulated the debts, it is your responsibility to pay them. Here’s the formula: Your first goal is to pay off the balance up to 50% of the limit (so a card with a $1,000 limit must be paid off up to $500). Do this for all of your accounts before you target a single account and decide to pay it off in full. At 50% balance, you should no longer be penalized for out-of-control balances. Second step: reduce those balances to 30% of the limit. If you do this, your scores will really skyrocket! It is a fact that the credit bureaus reward you with positive points when your balances are at 30% or less.
5. Finally, DO NOT CLOSE YOUR CREDIT CARD ACCOUNTS ONCE YOU HAVE PAID THEM OFF. This is a huge mistake that I see people make over and over again. If you can get your balance down to zero, have a party (pay cash, not credit), but don’t close the accounts. Closing accounts hurts your credit because it’s a bridge you’re burning: you’ll never get good credit points from a closed account again.
As someone who helps people through credit repair situations every day, trust me… these things work. There is hope! Do not give up!