I have been in the real estate and mortgage lending business for nearly 17 years. For most people, life's biggest desire in the material world is to be a homeowner. Often this dream is thwarted by one thing, bad credit scores. The fact that this is a very prevalent circumstance in our society, you would think that someone would have created a clear path to resolving this problem.
Fantasy and reality definitely do not agree at all when it comes to cleaning up someone's bad credit. The first thing to realize is that the creditors and credit reporting agencies are not on your side. They have little to no incentive to help you clean up your credit report and improve your fico score. The only thing that you have to work with are the consumer protections afforded by the legal system. The good news is that they do exist.
One of the quickest things to do that won't cost you a dime is to opt out of all the credit and credit card offers that you are receiving in the mail on a daily basis. You can do this quickly at www.optoutprescreen.com. Not only will you be saving a lot of trees, but you will be improving your fico scores. The credit reporting systems rates part of your credit score by the amount of new activity you are involved with around obtaining new credit. Even though you did not ask to receive these credit offers, the system interprets it as you looking for more credit. This in turn lowers your score. So if your credit is on the cusp, I would definitely recommend taking this step.
The other thing the creditors don't tell you is to not go over 50% percent of your available balance on a credit card. For example, if you have a credit card with a $5000 available credit line, you don't want to go over a $2500 balance. If you go over this limit you start to show up on the radar screen of the credit reporting agencies as more of a credit risk which does impact your score fast. You may want to move some money around on your credit cards that you achieve balances less than 50% of their respective limits.
The mix of the types of credit that you have is important as well. What do you think would be better for your credit, a department store card or a Discover card? The Discover Card is better, of course. In fact the credit cards that you get from the departments stores can have a negative impact on your credit score. They are considered in a category that would be described as “poverty of use.” You will get dinged because they give those cards to anyone that wants them. The fact that you are looking for this type of credit indicates to the credit bureaus that you may be in trouble. If you were in good financial condition you would not need to obtain this type of credit.
The other reality of credit cards is that you don't want too many. You really should not have more than 4-6. Anything over this will impact your score.
Let's talk a bit about the world of credit repair and credit restoration. I often hear consumers say that they thought credit repair is illegal. First of all, the process is completely legal and supported by many reputible agencies that offer it as a service. Second, why would the process of having your credit report cleared of inaccurate items that either, never belonged on it in the first place, or, the issues that they reflect have been taken care of already? The credit repair industry itself has a bad reputation in the marketplace. However, a good credit repair company can do a lot of good for you. Removing items that have no business on your report will improve your score and allow you to obtain better interest rates on the loans that you can obtain. You want to make sure that the credit repair company is reputable. The highest level of certification a credit repair company can get is to be licensed with the state banking authority of the state that they are operating in. I like the service that is offered on www.getprequalified.com through the Lexington Law. It is cheap and effective. I recommend this to all of my clients if they are in need of this type of service.
The better business bureau would be a good place to research as well. The other thing I wanted to say is that you don't need a good credit repair company to do this type of work. You can do it yourself and there are a lot of good 'do-it-yourself' credit repair manuals out there on the web. Most of this is just a function of you writing to the credit agencies and disputing the items in question on your credit report. I would also recommend visiting GetPreQualified.com and reviewing the various credit articles that are listed on the website. The articles are written by the industry experts who deal with real credit issues everyday. You will find them insightful and very powerful in completing your debt and credit issues.
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