If you search for ways to improve your credit score online you’ll see the same suggestions over and over.
Where’s the creativity?
If you have bad credit, you can increase your FICO score significantly in just 30 days. How do I know?
Because I’ve not only done it myself for my credit. I have personally helped hundreds of homebuyers raise their scores so they could get approved for a mortgage. And I did it in 30 days.
In this article I will explain some of the things I did to improve credit scores by as much as 100 points in 30 days.
RATE SEARCH: Get Approved for a Mortgage Loan
8 things you can do now to improve your credit score in 30 days
Yes, you can improve your credit score fast. Just follow these steps and see your credit score increase by up to 100 points in 30 days. These methods have been tested with some consumers increasing their score by over 100 points in 30 days. It is not unusual to see a 600 credit score jump to a 700 credit score, I’ve seen this happen before. I would not go in expecting a 100 point increase in your score, an increase in the double digits is certainly feasible.
1. Get your free credit report and scores
Before you start working on your credit, you will need to check your credit report. It’s also a good idea to find out your FICO score with all three credit bureaus. You can get your free credit report once a year on the Government website www.annualcreditreport.com.
Free credit scores are available from Credit Sesame and Credit Karma. They even have great apps for android and iPhone where you can check your credit scores anytime and get credit alerts anytime there is any activity on your credit file.
2. Identify the negative accounts
Now that you have your credit report, go through it and highlight accounts with a negative status. You will also need to highlight any late payments and credit inquiries. Make sure your personal information is correct, including your address, employer and phone number.
3. Pay off your credit card balances
Your credit utilization ratio is the amount of credit card debt you have compared to the credit limit. Keeping this ratio below 15% is important. Your credit utilization ratio has a huge 30% impact on your FICO (Score model used by mortgage lenders) score. Only your payment history (30%) has a bigger impact on your overall credit rating. If you’re carrying high debt on your credit cards then your credit rating is suffering, majority.
Pay your credit card balances down to zero, or as close to zero as you can the have your credit utilization rate as low as possible to maximize your FICO score.
Secured credit cards
If you don’t have a credit card, you will need to get one or two to help improve your credit score. Getting a credit card when you have bad credit is very difficult if you don’t know where to look. Creditcards.com is a great site where you can find and compare all types of credit cards for people with bad credit.
A secured credit card works similarly to an unsecured credit card. The only difference being that with a secured card you will need to pay a deposit equal to your credit limit.
As an example: If you get a secured credit card with a $500 credit limit you will be required to pay a refundable $500 deposit to secure the loan. After 6-12 months of on-time payments the credit card issuer may convert your account to an unsecured card and refund your deposit.
4. Contact the collection agencies
If you have collection bills with small balances on them, or balances you don’t mind paying you should call the collection agency. Tell them you wish to do a pay for delete. A pay for delete, is just what it sounds like, you pay the amount owed and they remove the negative account from your credit report entirely. Make sure you write down the persons name and extension you spoke with.
You also need “pay for delete” letters in writing from the collection agency showing they agree to remove the account from your report completely if you pay the agreed upon amount. In some cases you can settle the account for less than you owe, but many will want you to pay in full if they are deleting it from your credit history.
5. If a collection agency will not complete remove the account from your credit report, don’t pay it!
Purposely not paying a debt (even if it helps you and sees you thousands) sounds incredibly immoral to lot’s of people. If you’re one of those people then this tip isn’t for you.
Look, a collection account is a collection account, it affects your credit score the same regardless if it has a zero balance, or a $20,000 balance. Don’t pay collection accounts without a “pay for delete” letter. A pay for delete is an agreement that you will pay the outstanding debt if the collection company will delete the account from your credit report entirely. Having collections removed from your report like they were never there in the first place is the only way it will improve credit scores.
If a creditor says they will report it as paid but can’t remove it, don’t pay it, it won’t improve your credit score. Beware, these collection agencies can be sneaky with their wording, they may tell you the account will now show paid as agreed, or it will help your credit to pay it. Do not listen to them.
It doesn’t help your score AT ALL to have a bunch of collections that show a zero balance. If they will not remove the account from your report like it was never there in the first place, move on to the next step.
6. Dispute the negative account information on your credit report
Remember the credit bureau has 30 days from the date they receive your dispute request to complete their investigation. If the creditor cannot verify the accuracy of the account, late payment, balance or whatever you disputed, then they will delete that item. This is credit repair in a nutshell.
I have seen people get 10-15 accounts removed in 30 days just by disputing them. Of course, these people had many negative items on their report so a large number of accounts being deleted is not unusual. This is help improve your credit history significantly. Sometimes the credit bureau will not remove anything you dispute, that is okay too.
How to get late payments removed
If you have an account or late payment with the original creditor you need to know that a goodwill letter won’t work anymore. It’s against the agreement the Credit Bureau has with creditors to remove a negative item as an act of goodwill or for any reason other than it’s incorrect.
Instead you should first contact the creditor and tell them you believe the late payment is incorrect. They will most likely have their credit reporting team investigate the item. I have personally had much success having the original creditor remove a late payment from my credit report by simply asking them to. If that doesn’t work you can start disputing it with the three major credit reporting companies.
I had 4 late payments with 2 different creditors at one point. I contacted the creditor to remove one and disputed the other 3 with the Credit Bureaus. All 4 were removed and my credit score jumped up by 84 points in one month!
7. You can Dispute Credit Inquires on your Report
Hard inquiries stay on your credit report for 24 months. They will affect your credit score for 12 months. But, you can dispute hard inquires on your credit profile and have them removed. Call the credit bureaus to dispute inquiries, the creditor has to verify you authorized them to pull your credit. Inquires aren’t often removed but I have seen a couple removed from credit reports before so it’s worth a shot. This is a great, fast way to improve credit scores in a hurry.
8. Get added as an authorized user
An authorized user means you are allowed to use the credit card account. Authorized users can have their own card with their name on it to make purchases. However, authorized users are not the primary account holder, authorized users are liable if the account goes to default. Authorized users also reap the benefits of a positive account with good payment history.
Most likely someone that is willing to add you on as an authorized will not want you to have a card, and that’s okay. You do not want any access to the credit at all, you’re simply using the authorized user status to add a positive account to your credit file. Make sure the account you are being added onto is in good standing. No late payments, low balance, and the longer it has been open the better. Once the creditor reports your new status on the account, the entire account information will appear on your report.
This can improve your credit score by several points, and help build credit for those with no FICO score. Make sure you ask financial responsible people you know well to add you on as an authorized user, it can be very beneficial is raising your credit score fast.
How to dispute collection accounts on your report
There are three ways to dispute items on your credit report and all 3 work equally as good.
- Online – TransUnion, Equifax and Experian all allow credit disputes to be filed online. You just need to create an account with each credit bureau’s website to get started. Once you have an account you will be able to view your report and dispute any negative items online.
- By phone – You can call each credit bureau and speak to a live person. Make sure you have your highlighted credit report with you. Just go through each negative item and let them know you would like to dispute it.
- By mail – You can also send a letter to each credit bureau disputing the items on your report. The downside to this method is the mail time it takes to send and receive your investigation results by mail. Here are some sample dispute letters you can send to the credit bureaus.
Credit Bureaus Dispute Information
Consumer Dispute Center
P.O. Box 2000
Chester, PA 19016
Phone: 800-916-8800 – 8am-11pm EST
P.O. Box 4500
Allen, TX 75013
Phone: (714) 830-7000
Equifax Information Services LLC
P.O. Box 740256
Atlanta, GA 30374
Phone: (800) 846-5279
How your FICO credit scores are calculated
Your FICO credit score is calculated using an algorithm created by FICO.
Payment History – 35% – Payment history includes on time payments, late payments, account status and collection accounts. Late payments negatively affect your score for 36 months.
Credit Utilization Ratio – 30% – The total amount of debt you have includes car loans, mortgages, credit card balances, and any other loan. Collection accounts that have been charged off aren’t included.
Length of credit history – 15% – This includes the average age of your current open accounts. If you have a bunch of accounts you recently opened it will shorten your average account age and lower your score. Keep revolving accounts such as credit cards and lines of credit open for as long as possible.
New Accounts – 10% – This is made of credit inquires and recently open credit accounts. The more credit inquires you have in the last 24 months the lower your score will be. The good news is that after 24 months the inquiry drops off your report and no longer affects your FICO credit score.
Credit mix – 10% – The different types of credit accounts you have has an impact on your score. It is not good to have 5 credit cards open and nothing else. If you have credit cards, student loans, a mortgage, personal loan, and car loan it shows credit mix diversity.
What is considered good and bad credit?
An excellent and good credit score is generally anything above 720. A bad credit score is generally anything below a 620.
- 720+ = Excellent credit
- 680-719 = Good credit
- 620-679 = Fair credit
- 580-619 = Poor credit
- 579 and lower = Bad credit
Multiple inquires when you are looking to buy a car or get a mortgage will count as a single inquiry. This is known as “Rate Shopping” a grace period for consumers to apply with multiple lenders to get the best rate. If you are looking to buy a car and go to a hundred dealerships and have your credit pulled, it will only count as a single inquiry as long as it is done over 14 days. The rate shopping period for Mortgage credit pulls is 30 days.
How to improve your credit score in 30 days summary
I hope you find these techniques helpful and they work for you as they have for many others.
- Step 1. Get a copy of your credit report
- Step 2. Identify the negative accounts
- Step 3. Pay off credit card balances
- Step 4. Contact collection agencies
- Step 5. If a collection agency will not remove the account from your credit report, don’t pay it!
- Step 6. Dispute every negative item on your report
- Step 7. Dispute credit inquires
- Step 8. Get added as an authorized user
If you’re like many people who are concerned with increasing their credit scores, you inspire to get a mortgage soon. The Lenders Network is partnered with lenders that can accept a credit score of 580 or higher for FHA loans. You can complete this form to speak to a lender now.
Randall Yates, is the founder and CEO of The Lenders Network, an online mortgage marketplace that helps homebuyers find reputable mortgage lenders. As a part of Randall’s successful entrepreneurial career, he spends a chunk of time helping consumers understand their credit and lending his mortgage expertise to help them find the right type of loan. Randall Yates lives in Dallas, Texas with his two sons.