Questions and Answers Regarding Credit Repair

We have provided some information below relating to repairing credit reports, and building credit scores. Start learning how to repair your credit today!      

What Makes Up FICO Scores?

 
FICO is a score lenders will utilize to determine your credit worthiness.  FICO stands for Fair Issac Corporation. There are 5 key areas that make up your FICO scores that are listed below:

  •  35% of your score is based on your payment history – On-time payments, late payments, etc.
  •  30% of your score is based on the amounts you owe – Overall debt you have. Revolving credit with high balances over 30% affects this portion.
  •  15% of your score is based on the length of your credit history – Length of time you have been establishing and maintaining credit.  Revolving accounts are excellent for this portion, because if used properly they will never close and therefore will extend your length of credit history.
  •  10% of your score is based on the type of credit you have in use – There are different types of credit. Revolving, real-estate mortgage, installment, etc.
  •  10% of your score is based on the amount of new credit – This refers to credit inquiries and number of new accounts that have been opened in the last 24 months.
   

Establishing and Maintaining Revolving Credit

Did you know that having revolving credit (CREDIT CARDS) can help increase your score dramatically if utilized in the correct way? Here are some of the benefits and pitfalls of having revolving credit. If you already have revolving credit make sure you are utilizing it correctly. Do not charge more than you can afford to pay. You want to stay away from having your balances above 30% on ANY of your revolving accounts. Having your balance above 30% once reported to the credit bureaus will drop your credit scores. This temporary drop in your scores will continue to drop if the balance continues to increase. Once these balances are paid back under 30% and reflected on the credit report, you will notice the credit score increase again.   Keeping your balances consistently paid off or very low can be extremely difficult to do if you have multiple revolving accounts with different creditors. Sometimes just utilizing ONE of your revolving accounts on a regular basis, and utilizing your other revolving accounts every so often (EVERY 3-6 MONTHS) to avoid the creditors closing the accounts due to lack of usage is the safest way to build strong revolving credit. What you are trying to avoid is getting yourself in over your head, at the same time establishing an excellent credit record with multiple creditors. This means no late payments, no slow payments, no charging balances above 30%, and consistently being able to pay off what you have charged in the previous month.


Basic Credit Repair Strategy


  • Get and review all three of your credit reports. Equifax, Experian, and TransUnion
  • Analyze each report thoroughly.
  • Mark each item that you consider to be questionable or negative. Identify each item that you are disputing clearly, also providing your dispute reason.
  • Write your letter to the credit bureaus. Equifax, Experian , TransUnion
  • Send your letters out to the credit bureaus.
  • Wait for the bureaus to investigate your claims. They have 30 days by law, unless you are disputing initially off of an Annual Credit Report. If so, a lot 45 days.
  • When you receive your results, analyze each dispute outcome thoroughly and notate.
  • Notate whether the item was deleted or changed to your satisfaction. You may continue steps above until you feel the dispute is settled satisfactorily. Remember, there is no charge for a reinvestigation. If you don’t get the results you want, dispute the listing again.


Of course there is a lot more to it, but this is a general outline for credit repair. Seems easy enough but you must have patience, because the credit bureaus are not always very cooperative. In addition, you will want to explore how to take additional actions besides just disputing with the credit bureaus.

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