When it comes to credit repair, the best results come from simultaneously cleaning up your reports and rebuilding your credit. Both are equally important, but the current formulation of the FICO model presents a special opportunity to get a big credit score boost from rebuilding – and it is not just for people without open accounts. You can get the same credit score boost (often over 100 points) from this rebuilding exercise even if you currently have several well-managed open accounts.
What to Do
Open two new credit cards today (secured cards are fine and a perfect solution for anyone with poor credit), make your payments on time, and keep your balances low. You can expect a 100 point increase in your FICO scores six months after they start to report.
FICO Loves Borrowers
Accounts opened after a period of credit trouble are the key to this big credit score bonus. FICO is not forthcoming about their formulation, but it is pretty easy to see the logic here. New accounts signal a consumer’s ability to reenter the credit market; they are a sign of life, proof that the credit trouble of the past did not cause permanent incapacity.
The Role of Time
As with any new credit, time does play a role – and the first months will cause a temporary dip in your scores. Not to worry. FICO is just waiting to see that you will manage your new accounts properly. Once you pass FICOs probationary period your scores will start to climb until they have delivered the full benefit.