Credit Repair Quick Fix By Ian Webber At Isnare.com Ezine Articles

Change Your Life

The words echo though the canyons of the Internet, “there is no credit repair quick fix”. This could not be farther from the truth. If you make the mistake of believing this you will have done yourself grave financial harm. Credit repair can, in fact, clean up the errors on your credit report and dramatically improve your credit scores in a very short amount of time. And in the current credit market environment this can mean a life changing difference in the interest rate you will get on a mortgage, or a car loan, and even in your ability to obtain financing when you need it. So how does it work?

The Mystery of Credit Repair

There was a time when a timely payment history meant that you had great credit. Would you be aghast to discover that this is no longer true? In fact, it is so far from the truth that it is quite possible to make every payment on time for years on end and still have a dismal credit score. And herein lays the mystery of credit repair. The days of common sense credit are all in the past. Credit score optimization now requires a virtual roadmap. How did this come about?

The End of Common Sense Credit

The era of common sense credit begin its demise in the mid 1950s, when two then unknown researchers at Stanford University first conceived of a predictive model of credit behavior. Their concept was that it would be possible for prospective lenders to make lending decisions based only on a numeric representation of the credit worthiness of a loan applicant. The two researchers were engineer Bill Fair and mathematician Earl Isaac. The company they founded to develop their visionary algorithm was Fair Isaac Corp. and the world changing number they invented is called the FICO score.

It’s a Predictive Model

The FICO score is commonly perceived by consumers as a report card score, a grade reflecting the quality of their financial responsibility. This is not quite correct. The FICO score is designed to predict, specifically, the future credit behavior of a consumer. And future credit behavior is not at all the same as a predictable continuum of past payment history. There is so much more involved; and it is in these details that a credit repair professional is able to guide you through the maze of obstacles to the goal of credit score optimization.

My FICO.com

If you visit the excellent Fair Isaac website you will find a wealth of credit repair guidance coupled with some worthwhile explanations of the mechanics of the FICO credit score formula. I recommend a thorough reading of the website for anyone considering starting a credit repair effort. You will find that the scoring model puts different weight on five discrete categories of data; 35 percent of your score is based on payment history, 30 percent on amounts owed, 15 percent on length of credit history, 10 percent on new credit, and 10 percent on the types of credit used. This is somewhat helpful, but there is much unsaid. Here are a couple of highlights that may assist your credit repair project.

Managing Your Credit Repair

If you are starting a credit repair effort you should vow to avoid late payments at all costs. But there is so much more involved. Your credit score is influenced by both the negative and positive information on your credit report. It is clear that you should clean up the erroneous derogatory information, but as importantly, you must feed positive information to the credit bureaus each month. It is essential that you have at least two open revolving accounts. But be careful, because if you get the wrong type of revolving accounts, or manage them improperly (and I don’t mean making late payments), your credit scores can plummet.

Good Credit Bad Credit

There is good revolving credit and there is bad revolving credit. Your credit repair success depends on understanding this. All consumer credit, such as store cards and furniture store loans are bad. You cannot optimize your credit scores with this type of debt. You need mainstream credit cards; MasterCard, Visa, American Express, and Discover are winners. If you can’t get approved for regular unsecured credit cards, get secured cards. They are easy to get and they make for great credit repair tools, if you manage them right! Here’s how.

Watch Your Balance!

We noted above that FICO puts 30 percent weight on amounts owed. They also put 15 percent weight on age of accounts. What they don’t tell you is that the amount owned on new accounts carries almost double the weight of an older seasoned account. This makes for both a great credit repair opportunity and a potential credit repair land mine. If you max out a new card you can lose up to 150 points on your score, but keep that balance down, ideally under 20 percent of the available credit line, and watch your scores take off. Good luck with your credit repair!

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