1. Order fresh new copies of your credit reports from all 3 bureaus: Equifax, Experian, and TransUnion. *We can assist you with this step.

Credit reports are constantly changing. Therefore it is important to get up-to-date copies. A good rule of thumb is: If someone else runs your score or reports, this will hurt your score. However, ordering a full credit report yourself, (which we will help you with) will not affect your score. You also may want to sign up for a credit monitoring service to see your reports and scores and track changes as they happen.

2. Correct all inaccuracies on your Credit Reports. *We will assist you with this step.

Go through your credit reports very carefully. Especially look for Late payments, charge-offs, collections, or other negative items that aren’t yours, accounts listed as “settled,” “paid derogatory,” “paid charge-off” or anything other than “current” or “paid as agreed” if you paid on time and in full, Accounts that are still listed as unpaid that were included in a bankruptcy, Negative items older than seven years or 10 in the case of bankruptcy that should have automatically fallen off your report. You must be careful with this last one because your credit score can decrease when bad items fall off your report. It’s a quirk in the FICO credit-scoring software, and the potential effect of eliminating old negative items is difficult to predict in advance.

Also, make sure you don’t have duplicate collection notices listed. For example; if you have an account that has gone to collections, the original creditor may list the same debt the collection agency is listing. Any duplicates must be removed and ensure your proper credit lines are posted on your credit reports. Often, some creditors will not post your proper credit lines to show you as less desirable to their competitors. Showing less available credit can negatively impact your credit score. If you see this happening on your credit report, you have the right to complain, and you should bring that to their attention. If you have bankruptcies that should be showing a zero balance…make sure they show a zero balance. Very often the creditor will not report a “bankruptcy charge-off” as a zero balance until it’s been disputed.

3. If you have negative marks on your credit report, negotiate with the creditor or lender to remove them. *We can assist you with this step.

If you are a long-time customer and it’s something simple like a one-time late payment, a creditor will often wipe it away to keep you as a loyal customer. Sometimes they will do this if you call and ask. However, if you have a serious negative mark (such as a long overdue bill that has gone to collections), always negotiate a payment to remove the negative item and ensure you have this agreement with them in writing. Do not pay off a bill that has gone to collections unless the creditor agrees in writing that they will remove the derogatory item from your credit report.

This is important when speaking with the creditor or collection agency about a debt that has gone to collections not to admit that the debt is yours. Admission of debt can restart the statute of limitations and may enable the creditor to sue you. You are also less likely to be able to negotiate a letter of deletion if you admit that this debt is yours. Instead, say “I am calling about an account number ” instead of I am calling about my past due debt” Again, as your credit specialist, we will help you with this step.

4. Pay all credit cards and any revolving credit down to below 30% of the available credit line.

This step alone can make a huge impact on your score. The credit scoring system wants to make sure you aren’t overextended, but at the same time, the lenders want to see that you do use your credit. 30% of the available credit line seems to be the magic “balance vs. credit line” ratio one should keep. For example; if you have a Credit Card with a $10,000 credit line, ensure you never spend more than $3000 (even if you pay your account off in full each month). If your credit card balances exceed 30% of the available credit line, pay them down. Alternatively, you can ask your long-time creditors if they will raise your Credit Line without checking your FICO score or credit report. You can tell them you’re shopping for a house and you can’t afford to have any hits on your credit report. Many will not but some will.

5. Do not close your old credit card accounts.

Old established accounts show your history and show your stability and paying habits. If you have old credit card accounts that you want to stop using, just cut up the cards or keep them in a drawer, but keep the accounts open.

6. Avoid applying for new credit.

Do not apply for any new credit! Each time you apply for new credit, your credit report gets checked. New credit cards will not help your credit score and a credit account less than one year old may hurt your credit score. Use your cards and credit as little as possible until the next credit scoring.

7. Have at least three revolving credit lines and one active (or paid) installment loan listed on your Credit Report.

The scoring system wants to see that you maintain a mix of credit accounts. It also wants to see that you have at least 3 revolving credit lines. If you do not have three active credit cards, you might want to open some (but keep in mind that if you do, you will need to wait sometime before rescoring). If you have poor credit and are not approved for a typical credit card, you might want to set up a “secured credit card” account. This means that you will have to make a deposit equal to or more than your limit, which guarantees the bank that you will repay the loan. It’s an excellent way to establish credit. Examples of an installment loan would be a car loan, or it could be for furniture or a major appliance. In addition to the above, having a mortgage listed will increase your score even higher.

Through this process, always remember:

It takes up to 30 Days for any of these items to get reported and often longer to reflect on your Credit History Reports. Very often we must write a series of letters challenging the credit bureaus. Each time we must allow them 30 days to respond. It can feel like a slow process, but hang in there because it does work and the result will save you a tremendous amount of money.