Indeed, nothing to do with credit repair happens overnight. But there is definitely more to it than simply paying your bills on time and waiting for negative comments on your credit report to disappear after 7-years.
There are things you can (and should) do to build your credit worthiness and improve your score at a much faster rate than paying, waiting and hoping. Typically, it takes multiple techniques to make major changes in a person’s credit/FICO score. Some of the methods people are using (that I don’t necessarily approve or disapprove of) are:
1)Yes, pay your current bills on time!
2)Diversify your credit account types (i.e., credit cards, auto loans, cash lines of credit, home loan, etc). Lenders like to see you can manage different credit properly.
3)Improve your credit to debt ratio on your credit cards. Ideally you want to use no more than 35% of your available credit card limit (i.e., If you have a $1000 credit limit, only use $350 of it.). One way to make your overall card account credit to debt ratio improve w/o paying it down (if money is still tight and you don’t already have too many cards) is to get another card(s) and only use a very small portion of the credit limit which leaves the rest of the available credit to decrease your over all credit to debt ratio. Example; You have one card with a $3000 limit and it’s maxed out. You can pay it down to $1000 and meet/exceed the 35% goal OR you can get three more $2000 limit cards which gives you $9000 worth the card credit ($3K + $2K + $2K + $2K = $9K) and a credit to debt ratio of 33%. They say you can even use those pesty “Pre-approved” (typically useless for any other purpose than to buy their products) merchandise only credit cards to do this IF you confirm first that they report to the credit bureaus (there are certain ones that work better for this than others – talk to an expert or do some research on it).
4)Contest the accuracy of your negative credit accounts (to get them removed) with the credit reporting bureaus (repeatedly and with method – if you’re unsure on how to do this, use an expert but don’t get roped into anything that costs more than $300 to $600). It can take anywhere from 45-days to 120-days (typ.) to get inaccurate, or unverifiable, negative/derogatory (closed) credit accounts removed (permanently) from your credit reports. That’s the short-n-sweet version of it.
5)Have the credit bureaus remove all inquiries on your account that are over 2-yrs old (some have to be removed after 1-yr). Excess credit report inquiries can dramatically affect your FICO score (5 to 10 pts/inquiry over 2 per year). If you’re applying for new credit, do the applications for the different companies at the same time so anyone evaluating the inquiries later can see that they were for a specific purpose.
6)If you don’t qualify for any cash loans/lines of credit use the infamous “Around the Money Tree” method to develop personal cash lines of credit that will improve your score and help diversify your credit portfolio.
7)Become an authorized user on someone else’s credit card or credit account – their good credit account then shows up on your credit report (obviously, they have to have excellent credit them selves, know you (I’ve heard of some people paying for this too though), and would not actually give you one of their credit cards to use, etc). Also, I hear they may put an end to this – some say the loophole will be to use a “Joint” account status instead of an “Authorized User” account status.
8)Make sure the creditors you plan on using report BOTH the good and bad to the bureaus (some only report negative incidences only – boycott the companies that don’t report your good payment practices and the ones that don’t report at all!).
A good friend of mine is doing the credit report repair thing and has already raised his mid score from 631 to 658 in 40-days and says he hopes to be over 680 in another 40 or 45-days. He’s using a credit repair guy that, I think, cost him $400.
There are truly more ways than I could ever possibly list here to improve your credit score (Internet is loaded with this stuff), but I hope this gives you some ideas, incentive, and direction on how to get your credit rating back on track and ready for financing. I asked the REIClub the other day to start a Credit Forum but I haven’t heard back from them yet. I think it would generate some very useful talk and ideas for people getting started in RE or having issues like yourself. It would also keep credit talk in an easy to find area.
Best wishes for you! I hope you get it worked out.