Increase the number of accounts.

Most people will only work on fighting / removing derogatory information and they forget to build positive credit.

If all you have on your credit report is one account, and that account is negative, 100% of
your credit is negative. On the other hand, if you had 4 other  accounts, 20% of your credit
would be negative instead of 100%.

One of the easiest ways to get positive credit instantaneously is to become an authorized
user in someone else's account that has a low balance, high credit on an credit card that
has been opened for a very long time. Upon you doing so, you will instantly inherit all their
good (and bad) payment history. The results of this one little trick have been nothing short
of remarkable.

Another way is to Google "best secured credit cards" and take your pick. Get three
$500.00 credit cards, do not spend more than $100.00 and pay the entire bill every

If your debt is older than seven years.

If you have bad credit whereas the first payment default (and the last payment you
made) is older than 7 years, the Fair Credit Reporting Act says it must be removed - by law.
I personally researched the statutes (I am not a lawyer nor a credit restoration agency) and I created this letter
to write to the bureaus:




Pursuant to the Fair Credit Reporting Act [15 USC 1681]  Section 605 (a) (4) ; 605 (c) (1) and 605 (c) (2), the
requirements relating to information excluded from consumer reports must be followed by the credit reporting
agencies. In my report, there are a number of delinquencies that are still reporting which antedate the report by
more than seven years, as evidenced by the creditor self reported date of first delinquency. It is your obligation
to delete the negative items, as follows:

NAME OF CREDITOR – account number. DATE was the last activity on the account, making this account older
than seven years. Please remove.

Do this for each account that is older than seven years. Be aware that while you dispute items, you will not be
able to secure a mortgage as all disputes must be closed before we pull your credit.

  • For Experian, the address is P.O.Box 2002 Allen, TX 75013
  • For Equifax, the address is P.O. Box 740241 Atlanta, GA 30374
  • For Transunion, the address is P.O. Box 1000 Chester, PA 19022

Get a copy of your credit report, see what is bad, get the address from the bureaus, and mail them a letter.

If you have collections:

This paragraph works really well with medical collections from hospitals or any collection where you have not
signed anything. In the same letter format as outlined above, add to the above letter the collection account
information with the following:

NAME OF COLLECTION AGENCY account number ACCOUNT NUMBER. This collection is not valid. Please
provide documentation with my signature indicating that I have contracted or agreed for this company to
perform any services for me.

On the other hand, if you have a small collection from a service provider (like a cell phone or cable bill), you
can call them and apologizing profusely say that you were not aware that you owed them money, and to please
delete the collection from your credit report upon you making a full payment for your "had no idea" debt. The
key word is deletion from your score. If this collection is within the last 12 months, it will increase your score
significantly (after the deletion). Within 4 years it will increase it as well.  

To increase your score by 10 - 15 points.

Opting out of unsolicited credit offers via mail, phone calls, and email will rapidly increase your credit score,
sometimes even 15 - 20 points. Of course there is no guarantee on the increase, but certainly worth trying. Visit
FTC website and follow the prompts.

Understanding how the credit score works so you know how you can improve it.

You could manipulate your credit score if you knew how your score is scored. Then use the information to make
adjustments, so you can buy or refinance a home and have a lesser monthly payment. Although I don’t do
credit restoration, I spent a considerable amount of time researching the project for my clients, and this is what I
have found.

Your credit score is largely impacted by five factors:

•        35% of the score is Payment History. Perfect score is 297.5 points.
•        30% Amounts Owed. Perfect score is 255 points.
•        15% Length of Credit History. Perfect score is 127.5 points.
•        10% Types of Credit In Use (Credit Mix). Perfect score is 85 points.
•        10% New Credit. Perfect score is 85 points.

A perfect overall score is 850, the lowest is 300. Most of the time, the minimum score you need to buy a house
is 620. If you are less than 620, by making some adjustments on your credit you could reach the 620 score as
fast as two weeks if your lender does a “rapid rescore”. The best interest rate is obtained with a score of 720
and above.

A good way to find out how many points your score would go up if you were going to work on it is to ask your
lender if he has a “what if credit score simulator”. This eliminates the guess of how many points would your
score go up if you pay this or do that.

Alternatively, you can intelligently “guess” how much it could improve on your own if you know your score. After
you understand how your score is computed, I will tell you the simple formula that it may give you an idea of
how much it could improve.  

Payment History – 35%

This category represents 35% of your score and includes the amount of credit you have used, your borrowing
and repayment habits, and if creditors have had to resort to using collections agencies or the legal system in
an attempt to get you to repay your debts.

When considering whether or not to lend you money, the primary goal of a potential lender is to determine what
the odds are that you will not repay the debt. Your payment history is one of the primary indicators that they
have of you whether or not you'll repay your debt. The assumption is that you will continue to pay in the future
as you have paid in the past.

  • Do not pay anything more than 29 days late.
  • 30 days late or more in the past 12 months are the most damaging to your score.
  • It pays off to hire a credit restoration company to remove negative reporting.

Account Balances – 30%

This category considers both your installment loans (e.g. a mortgage or car loan) and your revolving accounts
(e.g. credit cards, lines of credit). However, your revolving balances typically cause this category to fluctuate
(positively and negatively) more than your installment accounts.

It is how much you owe compared to the credit card's limit. If you have a $5,000.00 limit card and you owe
$2,500, your utilization ratio is 50%. Add up all your limits on all your balances and divide your total balance by
your total limit, and that's your overall debt-to-limit ratio. The lower the overall ratio, the better the score. The
maximum score you could have in this category is 255 (30% of 850) having all accounts with zero balances
considering two types of utilization ratios:

1) your overall utilization ratio (discussed above) and
2) your individual utilization ratio (per each account)

•        If you can’t pay down the debt, ask for higher credit limits from your credit card companies. Higher limits
equal better debt-to-credit-limit ratios.

•        Become an authorized user in someone else’s account positive credit card account (with their
permission). This will allow the additional available credit to appear on your report and lower your overall
utilization ratio--which could lead to score improvement.

•        Pay down any cards that are over-the-limit until they are within the limit. This should help you avoid
additional over-the-limit fees too.

•        Pay down your balances so that no debt's "utilization ratio" is higher than 50% - ever.

Once below 50%, start paying cards completely off one at a time. Don't close them once they're paid - ever.

•        If financially possible, pay off your credit card balances to zero monthly. Alternatively, to less than 20%.

Credit Length – 15%

The "Length of Credit" category analyzes how long your credit accounts have been open. Typically, the longer
your credit history, the better your score will be. The maximum score you could have in this category is 127.5
(15% of 850). For you to have the perfect score you need 30 years of history -  4.25 points per year you have
had an account open.

A good idea would be to become an additional card holder on someone else's positive credit card account (with
their permission). This will in turn allow that positive credit to report on your credit report as well. So if you have
zero credit history and your friend's card was opened ten years ago, you may then automatically see ten years
of positive credit history added to your credit bureau report very quickly (automatically raised by 42 points).

Negative history will count against your credit score all the same. Moreover, if he or she maxes out the card,
this will negatively affect your credit score as well. Remember that you always have the right to be removed as
an authorized user should the account turn negative.

To positively influence your credit score, the accounts you add must reflect an excellent credit history, have
very low balances (less than 20% of the credit limit), and, ideally, should have a positive credit history of at
least two years.

Credit Mix – 10%

"Credit Mix" category represents 10% of your score. Interestingly, if your credit portfolio includes unsecured
credit lines from a Bank (other than credit cards) like personal signature loans, the scoring model may consider
you a higher credit risk. These type of accounts are most often acquired by consumers who can't manage their
other credit accounts without them. Unfair as it may seem, the FICO® score model may penalize those who
apply for and obtain this type of credit.

Additionally, if you only have credit cards, gas cards, or store card accounts (revolving accounts), and have no
record of repaying an automobile or mortgage account (installment account) over a period of years, your score
may also be negatively impacted.

New Inquiries – 10%

The "New Credit" accounts for 10% of your credit score. This category is impacted by the number of times you
apply for credit. Most scoring models consider consumers that open or apply for new credit accounts in a short
period of time as a higher risk. Every time a credit grantor (e.g. car dealership, bank, credit card) looks at your
credit file, a hard inquiry appears on at least one of your credit bureau reports. These hard inquiries remain on
your report for two years, however they only impact your score for the first year.

Most scoring models will also account for rate-shopping. Basically this means that any mortgage, auto, and
student loan related inquiries within a 14 day period are only counted as one inquiry. This way you are not
penalized for looking for the best rate on one loan. Keep in mind this only accounts for mortgage, automobile,
and student loan installment loans; not credit cards or other revolving accounts.

In addition, if you find a loan within 30 days, the inquiries won't affect your score while you're rate shopping.
The score counts those inquiries as just one inquiry when determining your score.

How do you build credit with no credit?

You can start with a secured credit card, which requires a deposit as collateral to secure the card's line of
credit. Secured cards, because they require you to deposit money, are easier to obtain than a regular
unsecured credit card. You need to check that the secured card's issuer reports account activity to the three
major credit bureaus
(Experian, Equifax and TransUnion).

Then, you should use that secured card for small purchases and pay off the entire balance each month. The
credit bureau doesn't care how much you're paying. They just want to see those on-time payments and that
your history is being built up.

Closing Accounts. While you might consider closing an unused or unwanted credit card to be a smart financial
decision, because of the way your utilization ratio is calculated, the FICO score doesn't always see it that way.  

Say you have a 20-year-old credit card and a 5-year-old credit card and no other loans. That means your
credit history, in FICO's eyes, is 20 years long. However, when you cancel the oldest card and it eventually falls
off your credit report (in either 10 years or 7 years, depending on your circumstances) that card will no longer
be counted
in your credit history. You will have basically trimmed your credit history by 15 years, the difference between the
ages of the cards, and that can have an impact on your credit score.

Closing an account can have a more immediate impact on the borrower's utilization ratio - the amount you owe
compared to your credit limit - which could also hurt their FICO score. When considering length of credit history,
choose to close carefully."Always go with a high interest account you haven't had for too long,"

As an example, imagine you have two credit cards, each with a $500 credit limit, for total available credit of
$1,000. One of the cards hasn't been used for a while and has a zero balance, while the other card has a
balance of $250. That gives you a utilization ratio of 25 percent -- your $250 balance divided by your total
$1,000 credit limit. You then close that unused card, eliminating the $500 credit limit associated with that
account. Now, you've only got $500 in total credit available on that one card, but you still have $250 in debt.
Suddenly, your credit utilization ratio has jumped to 50 percent. If you max out a credit card account by using
up an entire line of credit, expect your FICO score to drop by 10 to 45 points.

Just how much damage does a hard inquiry do? For most people, it amounts to a loss of fewer than five points.
But it can vary. Inquiries can have a greater impact for someone with a short credit history and few accounts
than for someone with a long history and wide range of credit experience.
Equal Opportunity Lender
Florida Closing Cost Assistance - CCAP