Credit repair made easy. I have been requested to write some on personal credit repair so my next few articles will be on that topic. I will come back to business credit after a while. In the mean time you are always welcome to ask me a question on business credit.

All I can give you is a solid foundation in personal credit repair. These articles will not go into detail. I would like to think that it will give you a better understanding of the credit repair concept. At the end you will be able to make your own credit repair plan.

FCRA: Fair Credit Rating agency. ALL of the information that is reported on your credit is regulated by FCRA.

FDCPA: Federal Debt collection practice Act regulates all collection activities.

FCBA: Fair Credit Billings Act: Its purpose is to protect consumers from unfair collection Practices. Hence you will refer to them when dealing with collection agencies.

If you notice there is a sort of over lap since FCRA regulates ALL the information that is reported on your credit. For the real technical ones among you , you might want to read copies of each of these acts !

To keep it simple, if you want to inquire about the authenticity of collection accounts, in anyway, you would refer to (or reference) FCRA. If any company is crossing the line in their collection efforts , you would refer to the FDCPA. Of course it can get as complicated as you want it to get but for now lets keep it simple.

A crash course in personal credit repair:

This might make many of you yawn but I feel it is good to lay a solid foundation first. Your credit score is dependent on certain factors. These factors effect your score in different degrees:

35% of the score is influenced by the Account history

30% – usage (the less the usage the better it is)

15% – length of credit.

10% – New inquires

10% – Variety (different types of credit).

The important thing is to realize the relative ratios and not the exact figures.

So, lets say, if your account history is “bad” (again a relative term) it will have a 35% effect on your credit score and so on. Everything on your credit basically falls within one or more of the above factors. Any steps that you carry out would be geared towards influencing one or more of the above criterions.

Personally I think we should all invest in some kind of credit monitoring service. Truecredit is one such service. What you have to realize is that the credit score provided by most of these services is not a FICO score. Most of the times they have their our methods to calculate the score. The main purpose of such a service would be to monitor changes in your report in a more or less timely manner. Removed inquires, paying off debt, fraud alerts ALL will (or should) show up on your credit a little after you make these changes. That will tell you if your credit improving actions are taking effect.

I will give you an example of an old credit improving technique. Apply for a secured loan. Go to (or call) a bank and ask them if they offer secured loans and what is the minimum amount that they will accept, you do not want a bank that will only offer a $2000 (or more) worth of secured credit, unless your budget allows it. Now instead of taking 6 months to pay off the loan, pay it all off in like 6 – 8 weeks. Than apply for another secured loan, try a different bank with slightly different terms (loan amount, length of loan etc). Again pay if off in 6 – 8 weeks. Do this 3 – 4 times and your score will shoot up more than if you apply for one secured loan and pay it off in 6 months.

Let us analyze this example: The technique will basically effect the usage (30% of the credit score) especially if it is a larger loan. It will also effect history (35% of the score) and since we are getting a number of loans it will effect variety (10% of the score). So overall, after all the loans are paid off your credit score will increase.

Needless to say that UCC filings have a similar effect. They “add” variety, account history and CAN even add length of credit . Plus you can file more than one UCC even on your personal credit. As long as you do not over do it. If your total previous credit history is like $7000.00 and a UCC appears on your credit that is for $100,000.00, it will look out of place to say the least. Anyway, using many of these techniques initially your score will go down but as the traitlines come off, the score shoots up.

Next article I will talk about how to remove negatives from your credit report. The negatives include late payments, collection accounts etc (that is “account history”).