| It helps to know some credit repair secrets when your FICO score isn't quite what you would like. The first step is always to obtain your credit report from the three different agencies. You would think one was enough but Transunion, Equifax and Experian all report things slightly differently.
You must go through each report with a fine tooth comb to make sure that all the information they contain is accurate. Mistakes often happen and they will have an adverse effect on your file. It is bad enough when you are refused a loan due to financial mismanagement but when it happens as a result of an error it is worse. For this reason, you should always get a copy of your reports once a year to check everything is as it should be.
Next you need to calculate the amount of credit you have outstanding as a ratio to the potential borrowings you could make. Companies will reward you if this figure stands at less than 60% so that is the magic number you are working towards. People often rush to close accounts as they have heard that too many facilities will count against you and this is true. But don't close any arrangement unless it has no impact on this magical 60% ratio.
When closing an account never assume that it will be done when you return the card. You need to confirm the account closure in writing and ask for your file to be marked as "closed by consumer". This will give you the biggest benefit.
Start a savings account with your bank so that future creditors can see that you have a track record of savings and also have collateral to repay your debts. Do not make too many applications for new credit as these will count against you. If you do need to borrow funds, work out exactly how much you can afford to borrow and apply for a loan from the provider you have the best record with. This will give you a better chance of being successful.
If you are struggling to make repayments on your existing facilities, do not bury your head in the sand. Contact every creditor and try to negotiate a lower repayment figure or change the date to a more convenient one. You will often find that they are happy to help when you are proactive in this way. If you have a lump sum available, you could offer it in full and final settlement of your debt. Just be aware that this can cause a tax issue with the IRS if the difference between what you pay and what you originally owed is over $600. Also if you are going to repay your debt in this way, get written confirmation from the financial company that no further action will be taken against you. Only pay once you have this letter.
Try not to move home that often as this will also affect your score. And above all try and live within a budget so in future you won't need to worry about knowing credit repair secrets. |