Why Quick Credit Repair Is Impossible

Consumers with FICO scores south of 600 often look for fast fixes, whether it is to obtain a refinance, a new credit card, or an auto loan. Even prospective employees may seek a swift fix if companies require certain ratings of job applicants. There are numerous reasons, however, why quick credit repair is usually impossible. Even with financial changes, it still takes several months, minimally, to see a positive uptick. You probably didn’t ruin your credit overnight, so you can’t expect to fix it overnight either.

Information reported to the three main credit agencies, Experian, TransUnion and Equifax, is updated on a monthly basis by each open account. Credit cards, for example, often report account details the day after a statement closes. Closed accounts may remain on a report for up to ten years. Any delinquencies over this period can delay credit history repair. However, here are several ways to ensure score improvement.

Steps to Take

First, scrutinize your current credit report from all three reporting agencies (via annualcreditreport.com). Inaccurate information must be corrected immediately. Keep in mind that some lenders do not report to all three. False past due balances may show even if payments were made on time. This issue needs to be addressed with the lender or vendor along with a dispute with the credit bureau in question.

Also, if an open yet unused credit card is showing on one service but not another, request the lender report across all three. The unused balance on that card increases the amount of available credit, decreases the utilization ratio and adds to the credit length history. High utilization and short histories badly affect FICO scoring. Fewer accounts also negatively impact a score. This is why it is advised to keep all unused credit cards open.

Pay on time every month. The more payments are made by due dates, the better a FICO score will be. One or two timely remittances is not enough to see an upswing, ten subsequent payments is likely. Paying a collection agency off will not dismiss the account from your report. This data remains for seven years. However, with the 2008 changes made in the Fair Isaac scoring model, collection accounts less than $100, such as parking tickets or other minor debts, are not considered.

In addition to making payments on time, make a full-fledged effort to pay off all balances. This is not easy but in the end, it will make a dramatic difference in scores, a top concern for those attempting to secure a mortgage or consumers in the market for new cars. Just a slightly higher credit score can lead to hundreds or thousands of dollars saved in interest.

Stop applying for credit cards. Until your FICO score improves, you will likely be denied a new account. In addition, each request for credit deducts seven points from scores. Credit inquiries, which stay on a report for two years, affect scores in the first six months, then become less significant in scoring factors after one year.

When FICOS improve, consider a consumer loan or extending limits on existing credit cards. Many card companies will conduct a “soft pull” so a credit inquiry is not recorded. If a hard inquiry is needed, you will be notified in advance and asked for consent.

Rebuilding damaged ratings is a slow, determined process. Although it would be ideal, fast credit repair is just not achievable. By implementing changes, however, a better credit rating is certainly possible.

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Get Your Free FICO Credit Score (requires a 10-day trial in a credit monitoring service, which you can then cancel if you want).  You can also just purchase your Fico Scores/Reports outright for a small one-time fee, which is what I do.
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