Credit Repair Help - 10 Simple Steps to Improve Your Credit Score in 3 Weeks

Are you looking for credit repair help? Stop looking! Fix your credit and improve your credit score by an average of 57 points in only 3 weeks following these 4 simple steps.
Pay Your Bills on Time
It goes without saying that late payments affect your credit score. Obviously, a person with a big list of items showing “never late” will have a much better score than someone with a bunch of negative hits for late payments.

Start Early
Building a good credit history takes time. You won’t build an amazing credit record overnight. That is why it is so important to start early.

Open Savings and Checking Accounts
A lot of people still rely on cash as a main method of payment. This can be a big mistake if you are trying to build a credit history. Open at least one savings account and one checking account. And use them.

Don’t Close Old Accounts
Closing accounts can be very damaging to your credit score. Keep them open. If you have an old credit card and you are thinking about closing it because the interest rate is 30%, don’t do it. Keep it open. Make sure you keep a really small balance, even if it’s $10, so you don’t have to pay a lot in interest. But don’t close it. An old account with on-time payments history can really boost your credit score. This also applies for store cards, such as a Wal-Mart card, Sears, Home Depot, etc. Don’t close them. If you are an obsessive shopper and are afraid of spending money if you have the cards, cut them in half and throw them away; but don’t go to the store and ask them to close the account.

Keep Your Debt-to-Credit-Ratio between 10% and 30%
A high credit limit is the total amount of unsecured revolving accounts that you have in your name.

It includes credit card debt and any other kind of credit not secured by an asset. It doesn’t include mortgages or car loans, since these kinds of loans are secured by a piece of real estate and a car, respectively.

If your high credit limit is $40,000, try to have an outstanding balance of between $4,000 and $12,000. If you really need to go over that, never go past 50%. That would hurt your credit. If you have 4 credit cards and you max out all of them, it is not going to help you. If you decide to pay off your credit cards balances every month, it is not a bad idea, but keep in mind that creditors make their money when you pay interest to them. If you pay your credit card balances in full every month you will have a good score, but not as good as if you kept a 10% balance.

Something else to keep in mind is how to distribute your debt among your accounts. For example, if you have 4 credit cards with a limit of $10,000 each and your total debt amount is $12,000, it would be OK as long as your balance is $3,000 on each of those cards. If one of the cards is maxed out (you used all your credit, which was $10,000), and the other cards have balances of $1,000, $500, and $500 respectively, that will damage your score, since you are way over 30% on one of your cards (actually, the debt-to-credit ratio for the card where you have a $10,000 balance is 100%). Make sure your debt is distributed evenly among your accounts.

Increase your high credit limit
A high credit capacity can increase your credit score. But you need to be very careful about this. If you open too many accounts in a short period of time, it will hurt your score. If last week you had a limit of $10,000 and you went and got 3 new credit cards for $10,000 each within the last 4 days, it will damage your score a lot.

There is no rule for how much you can increase your limit to get your credit to improve, it is just common sense. Think about it this way: if you were a lender and you were looking at someone’s credit report, and this person had a limit of $10,000 until last week, and now she is opening more and more credit cards, taking more debt, you wouldn’t see that as a good thing. You would think that this person went crazy and you don’t know how well she is going to manage her new credit capacity. One thing is to manage a $10,000 credit limit, and a very different thing is to manage $40,000 all of a sudden. If your limit is $10,000 today and $40,000 tomorrow, some red flags will raise and your score will significantly drop.

Open new accounts slowly but constantly. Another technique that almost nobody uses but it has proven to be very effective is to call your current credit card vendors and ask them to raise your limit. Ask them to raise it by 50%-100% every 6 months. If you always paid on time and kept your debt-to-credit ratio below 50%, they will almost always agree to do it. You are a good customer to them and if they can make more money on you, why wouldn’t they?

Make Sure to Have a Mix of Revolving Debt and Installment Debt
So far, we have only talked about revolving debt, which is unsecure credit, such as credit cards and any other type of credit that is not secured against an asset.

In order to have a great credit score, you also need to have some installment debt: a mortgage, a car loan, or any other kind of loan secured by an asset.

A lot of people finance their cars even if they don’t need to, because it is very beneficial for their credit history.

Use Your Revolving Debt
Having a bunch of credit cards is not enough. You have to use them. Try to keep small balances (between 10% and 30%) and use your cards as often as you can. Try to avoid cash.

The key is using your cards lightly but regularly. If you just keep them in your wallet, they won’t do much for your credit.

Avoid Hard Inquiries
There are 2 different kinds of inquiries: soft and hard. Soft inquiries are regular account reviews and they don’t affect your credit score, so you don’t need to worry about them.

Hard inquiries take place when you apply for a firm offer of credit or insurance. They do hurt your credit score and can stay on your credit report for up to 2 years, even though FICO only takes into consideration the ones during the last 12 months to calculate your score.

A hard inquiry could lower your score up to 35 points, so only allow them if you are serious about a credit or insurance application within the next 2 months.

Note that nobody can place a hard inquiry on your report unless you authorize them to. It does happen though. Some companies will do it despite of the law. If it happens to you, contact the creditor or collector and ask them for their “permissible purpose”. If they don’t have a permissible purpose, you can ask for and collect damages for up to $1,000 ($2,500 in California). Mortgage broker inquiries are not rare, even when they did not process your application. They have to mail you an approval/denial letter and state that you did not put the application on hold. If not, they had no permissible purpose.

Show a Stable Lifestyle
Even though this might not directly affect your credit, showing stability can greatly improve your chances of getting new credit card offers, which can ultimately improve your credit score.

Credit card companies are more likely to offer you a card if you didn’t recently get divorced, if you have kept the same address for a couple of years, if your mailing address is not a P.O. box, if you have a landline listed as your primary phone number instead of a cell phone, and if you are not self-employed.

Actually, being self-employed can be very detrimental to your credit. But there is something you can do about it: you can create a business entity (corporation or LLC), and you will basically be an employee of this company. You need to own no more than 55% of this new business, or you will be considered self-employed anyway. Find someone you trust to own the rest of this company.

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