I am a former a Mortgage Broker and due to the tremendous size of the Subprime Market I worked with several Credit Repair companies and attended numerous credit repair seminars and have helped hundreds of people improve their credit scores several hundred points. I wish to share this information with my fellow ETers. Keep in mind that credit has a major impact on insurance premiums as well. So, here you are. Steps to a 720 Credit Score I. Keep credit card balances under 30% of the limits. Example: $10,000 credit limit.. NEVER let balance go over $3,000 You have 4 options: 1) Ask Credit Card Company to increase your limit 2) Transfer funds to different cards 3) Open another credit card (never open multiple cards in 6 month span) 4) Pay the debt II. Have at least 3 revolving credit lines. Have at least 3 credit cards at all times of Visa, AMEX, MC, Discover Banks and Bureaus like to see that banks have given you credit and you havenât used it even if you donât plan on using the entire limit. 18-24 months of no use the card becomes inactive! Secured Credit Card will be given to ANYONE! (Make sure it reports to all bureaus and make sure the secured card converts to a normal credit card after 18 months) Do NOT close ANY accounts! The oldest cards with HIGHEST credit limit have THE GREATEST impact on your credit. III. Verify accuracy of your reported credit limits. Credit limits are not reported because CC companies want to protect you as clients, they do not want you to be stolen away by another credit card company. If your credit report isnât showing your proper limits your utilization rate will be out of wack. This accounts for 30% of your credit number! IV. Have at least 1 installment loan on your credit. Installment loans are auto, leases, furniture, and personal property This is vital if you are in the rebuilding phase of your credit; HUGE impact. V. Remove all errors from credit. 85% of Americans have an error on their credit report. 25% of the credit reports have an error that stopped them from getting a loan. Concentrate on high priority errors that have happened in the past 24 months Types of errors to fix: Incorrect limits Duplicate listings of collections or past due accounts Accounts in the last 24 months VI. Negotiate for a letter of deletion before paying a bill in collections. Your recent payment history is more important than your PAST payment history. Stop paying bills until you can pay them in full! A letter of deletion is a letter that states âThis collection for Mr. or Ms. Jones should be deleted from the credit reportâ ***A paid current collection is worse than an unpaid collection past 24 months*** (If you pay an old collection it reinstates the collection and makes it active) When negotiating your deletion letter determine whether it is in the collection phase or the charge off phase. If in collection: Never admit any guilt! For two reasons: 1) Admission restarts limitations by the creditor 2) Not likely to get letter of deletion because youâre admitting debt DON'T say things like âI realize I have been late, itâs my faultâ Say this exactly..... âIâm calling regarding this account number, it shows that it is a charge or collection and I am concerned because I am careful about my creditâ Once you do negotiate the debt you need to write âBy cashing this check you agree that account number is paid in full AND you will provide a letter of deletionâ (This is called a ârestrictive endorsementâ) Make copy of check and send through certified mail. 3 possible answers from collections 1) Yes 2) No 3) Only provide you with letter of payment Hang up before you say âyesâ to 2 or 3!!! Call back another day until you are able to get a commitment to a deletion letter and have it faxed to you immediately. Donât get angry! Donât let them talk to you about payment plans or your responsibilities. If you have a charge off do the following: 1) Send verification form and letter to verify that the debt is yours 2) Send validation letter to prove account belongs in collections (proof of late payment, copy of original signed agreement) If this does not happen within 30 days the item will be removed off your credit! Collection Companies may only contact you from 8am-9pm, must respect your right to contacted in writing only, and must be honest with you. VII. Create a structured plan to protect your credit. 10 points: 1) Create budgetâWrite down and log your expenses! Account for every penny! Write down everything in your monthly expenses. It is better to be a realist than an optimist! 2) If in debt live like a rich personâBe frugal. How much money do you have left at the end of a month? 3) Use technology to keep bills currentâMany banks offer online payment options, make use of it! 4) Review monthly statementâEach month review them and make sure youâre not exceeding 30% utilization rate, look carefully at all charges, this is where identity theft starts! 5) Pull credit once every 6 monthsâInquiries hurt your credit ONLY when you go to multiple locations and have your credit pulled. Look for late payments and misreported credit limits. 6) Use same name when applying for creditâSame first, middle, and last name each and everytime! 7) Avoid being cosignerâThis is critical to your credit! It has the same impact on your credit in either event! 8) Keep accounts activeâIt does no good to tuck credit cards in drawer and not use them, eventually cc will show inactive and it takes away from the average age of your accounts. Even if you have to pay a utility bill on your CC, DO IT. 9) Protect credit during and after divorceâRefinance your home and cancel ANY joint cc accounts! 10) Review steps regularly!