If you clean up your credit without opening new accounts your credit scores may go nowhere; in fact, your credit scores may fall leaving you no better off than you were before. Fortunately there is an easy way to rebuild your credit, but you have to do it right…
He Who Hesitates
Some people are under the impression they should wait until their credit repair program is well underway and derogatory information has been deleted from their credit report before applying for new credit. This makes sense in a way. Unfortunately, the FICO credit-scoring model will not cooperate with this logic.
No Credit. No Score.
Removing errors from your credit report is a good thing. Of course! But if you have limited credit to begin with the clean-up process is likely to leave the FICO scoring model with a lack of useable data. And as a result your credit score will fall.
You Are Approved!
Secured credit cards are designed to help people rebuild their credit and require a small savings deposit with the lending institution. Typically, you will be offered a line of credit equal to the amount of your deposit. There are a few cards we suggest to help your credit repair effort. Feel free to let us know if you would like a recommendation.
The Power is In Your Hands
You must manage your secured cards very carefully. Making your payments on time is critical, but even more important is the way you manage your balance. These new credit cards are very powerful; a wrong decision can make your credit scores plummet even if you make all your payments on time.
Solid Credit Repair Gold
If you run your balance up to the limit your score will plummet. New credit is untested credit, and with only a limited track record Fair Isaac will put you in a high-risk category, which means a lower score. But there is another side to this situation, and here is where you will strike solid credit repair gold…
Keeping Your Balance
Watch your balance! You will be rewarded, or punished, accordingly. The balance-to-limit ratios recognized by FICO are 20, 40, 60, 80, 100, and finally – the deadly over 100% category. If you are eager to optimize your credit scores you should keep your balance below 20% of your high credit limit. You will be thrilled with the results!