Looking for some tips on Do-it-yourself Credit Repair? Or maybe you’re still deciding if you want to take the D-I-Y route to better credit yet and need some more information? We’ve made list of some of the worst credit mistakes, so you don’t have to make them. Once you decide DIY credit repair is for you, check out our #1 rated DIY credit repair book, Credit Secret by Scott Hilton.
BEST SELF-HELP CREDIT REPAIR TIPS AND WORST CREDIT MISTAKES
The 100 Word Statement — Don’t do it
This is a credit repair tip everyone should know. Even if you choose to believe the 100-word statement does you no harm. It’s hard to argue that it will do you any good. The 100-word statement was an addition to the consumer credit report made by the Credit Reporting Agencies (sometimes more well known by their commercial names, the big ones are Equifax, Experian, Trans Union) to help consumers who had problems on their reports.
The statement does not affect your credit score, and considering credit applications are decided almost entirely on credit scores, what’s the point? What’s worse, it is the one of the most difficult parts (if not impossible part) of a credit report to change. Let’s just say, you have some bad things on your report, and you put a 100-word statement on your account explaining it. Then through credit repair you are able to clear up the credit report errors, you’re now stuck with an account of why have problems on your credit report. And even though it’s not normal for a creditor to examine the statement, it is possible a creditor would look at it, especially for something like a home mortgage loan.
Closing Credit Card Accounts the Wrong Way
This is one most people don’t get. Not using the card. Close it right? Not so fast. Closing accounts is one of the worst things you can do if you do it the wrong way. Because most people just call up and ask it to be closed, sometimes it leaves your credit report with an account marked “Closed by Guarantor” (and makes it look like the credit card company took your card away.) Instead, make sure that you request the account be labeled “Closed by request of Customer,” it may even be advisable to send written notice, that way you have proof if you get a surprise on your credit report.
Do-it-Yourselfers don’t always know this one, and it’s just another part of the information consumers need to know to take care of their credit. Before you decide to close the account read the next free credit repair tip, for more info…
Closing Credit Card Accounts with Good Histories
You hear it again and again. Don’t use too much credit. Close any unused accounts. And if you’re in a situation where you can’t control your spending, then this may be a good tip. Only you can decide whether you think you can control yourself and your spending wisely. But in terms of improving your credit score, keeping an account with a positive payment history active and using the credit line responsibly is probably the best tip.
In most cases, account information on your credit report will remain for no longer than seven years from the Date of Last Activity or “DLA” on the account. So, once you close the account, the seven-year clock starts ticking and, unless activity resumes, the account will be gone from your credit reports, and so will all the good credit history of on-time payments. In addition, a small percentage of your credit score is calculated on the length of your credit score. It may not have a huge effect on your credit scoring but any one of those little things could mean the tipping point between you and a higher credit score. So, the longer your credit history the better.
Applying for Credit to Get the 10% Off Special
This is a great free credit repair tip that could save you a lot of money. Say, you’re at the mall and a department store offers you “10% Off Your Purchase” if you apply for a credit card with them. We can’t tell you whether it’s worth it for you to apply for the credit card (you’ll have to do the math on that), but we can tell you it’s probably not a hot idea in terms of your credit score. Here’s why. Every time you apply for credit, a “hard inquiry” goes on your credit report, and they will lower your score (at least by a few points) especially if you have been applying for a lot of credit. The good news is the effect is not permanent. And the inquiry will not show up at a ll after 24 months. T
he bad news is that your score is going to take a temporary hit, and for what? To save $15 on a new coat? It’s not worth it for small ticket items, especially if you are not going to pay the account off right away anyway, because department stores do not have competitive Annual Percentage Rates (APR). You’re better off getting the best deal you can on a regular Visa, Mastercard or Discover Card, and using the lower APR to pay it off. And if you’re thinking about applying for a home or car loan, then you need to be even more aware of the harm that something so seemingly harmless (like applying for a department store credit card) could do to your credit report.
Even a couple of points on your credit score could mean the difference between qualifying a lower interest-rate loan.
Not Checking Your Credit Report Because You Think it Will Lower Your Score
One of the best credit repair tips we can give you, and one of the worst mistakes many people make. You need to know that checking your credit report yourself will NOT negatively affect your score. There are two kinds of inquiries that show up on your credit report “Hard Inquiries” and “Soft Inquiries.” A Hard Inquiry (the kind that happens when you apply for credit) will appear on your credit report for 24 months and will negatively affect your score (especially if you have been applying for a lot of credit over a short period of time.
While a Soft Inquiry also known as a “Promotional Inquiry” (happens when you run your report yourself) and whenever a credit card company looks at your report to send you a promotional offer, like a credit card offer. Soft inquiries will not negatively affect your score. And not checking your credit report on a regular basis is just plain dangerous. It’s been estimated that more than 79% of all credit reports contain errors, yours could be one of them. Checking your credit yourself is also the one best ways to protect yourself against ID Theft.
Thinking All Late Payments are Created Equally
This is always one of our most popular free credit repair tips. It seems that a lot of people think a late payment is a late payment (no matter how late). In terms of your credit report score though a 30-day, 60-day, and 90-day payment are NOT all the same. If you know you’re going to make a late payment, a great credit tip to know is that you should still try to pay it as soon as possible. An extremely overdue payment will count more heavily against you on your credit report scoring. So don’t drag it out. Pay it as soon as you can, even if it’s only the minimum. The important thing is you pay on time, or as close to on time as you can get.
Size Doesn’t Matter
At least not when it comes to making minimum monthly payments and your credit report. While it’s not a great long-term financial strategy to only make the minimum payments on your credit cards, if know you’re going to be going through a period where you will be a little short of cash you may want to reduce your payments down to the minimum. In terms of DIY credit repair tips, it is better to reduce your payments to to the minimum monthly payment and pay them on time. The important thing for your credit report score is that you have a history of making on time monthly payments (not how large they are).
FOR SELF-HELP CREDIT REPAIR TIPS, KNOWING THE LAW IS THE FIRST STEP
We’ve put together some of the best and most effective credit repair tips we know so that consumers just getting started with learning more about credit won’t make the mistakes we’ve seen so many other beginners make. But going through the credit repair process yourself means that you understand the Consumer Credit Laws that protect your legal rights, namely the Fair Credit Reporting Act (FCRA), the Fair Debt Collections Practices Act (FDCPA), and the newly passed FACT Act.
Understanding those laws is crucial to how successful you will be at repairing your credit. Make sure that you or someone you hire understands the laws, so that your legal credit rights will be protected. Whether you decide to repair your credit yourself or hire us to perform the service for you, the best credit tip anyone can give you is to learn the important laws that protect the rights of consumers just like you. Get more info on the consumer credit laws that protect you and your right to legal credit repair in our credit laws section. We encourage you to read the full text of these laws if you are interested in doing your own credit repair yourself.