Fixing bad credit is a long-term process and it requires proper strategies to raise your credit as fast as possible. You can possibly achieve your excellent credit score range on your own by following these strategies below:
Strategy #1: Get everything in writing including credit dispute letter and request positive accounts reported
Artilleries: Pen and paper, Microsoft Word or any writing software or typewriter, envelop and mailing stamp
Writing is a powerful skill that can be used in your "fixing bad credit" plan. Some people would rather use their phone to communicate with the credit bureaus and creditors. In most cases, credit bureaus and creditors prefer to have their clients correspond in form of writing. For instance, a credit bureau would likely to respond to their clients' credit dispute letter than those who call them through the phone.
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Same thing happens if you request positive accounts reported from creditors. If you have a good standing account which does not appear in your credit report, it's better to get such positive account reported as soon as possible. In fact, the more positive accounts reported, the faster you can fix your bad credit score.
Here's what you should do:
Look for written samples of a credit dispute letter and a positive accounts reported request letter respectively - Take note of the format of these letters Draft the content on a piece of paper and the content has to be as specific as possible Then, finalized your writing in form of Word document or you can type it out by using a typewriter Once you have both letters done, send them accordingly via registered snail mail with acknowledge of receipt
Strategy #2: Paying off debt, live a frugal lifestyle, and start practicing healthy spending habit
Artilleries: Extra cash, Microsoft Excel or Quicken (or any personal finance related software)
Skills needed: Self-discipline or strength of mind, thrifty
You need to allocate extra cash or a personal fund to pay off your debt consistently. Some people will have to work two jobs or taking freelance jobs to earn more money to settle their outstanding debts. Besides that, you need to learn to stretch your dollar by spending your money wisely on things that you really need.
Furthermore, you need to have a habit of tracking your daily spending, which is possibly done by using Microsoft Excel's Budget Template, or Quicken personal finance management software. Here's what you should do:
Look for a part-time or a freelance job online via Craigslist, Elancer, and oDesk Always pay off your debt on time - you're recommended to use online reminders like Google Calendar, Mint.com and etc. Look for more online resources about starting a frugal lifestyle - i.e. blogs, social networking sites, online forums that provide valuable saving tips. Track your spending by using Excel's money management template, or Quicken software or Mint.com - a free web-based personal finance software which is also available for iPhone and all Android phones. Keep your account balances low - Make sure that your credit utilization is less than 5%
Strategy #3: Getting bad credit loans and applying for secured credit cards
Allies: non-bank lenders, banks, credit unions
Artilleries: secured cards, department store and gas cards
Getting loans is the most effective way to rebuild your credit but you need to understand the risk involved if you fail to repay it as agreed. However, it's not easy to obtain loans from traditional banks if you have low credit scores. So you need to apply for bad credit loans from non-bank lenders. Be sure to find a loan product which has a low APR with reasonable monthly repayments.
The cheapest way of fixing bad credit is by using a secured credit card. For instance, you can get a secured card by only depositing the minimum amount - i.e. $100-$100, into your account. By making regular on-time payments, credit bureaus will recognize your good standing account, and your card will convert into normal unsecured card after more than a year of on-time payments. Here's what you should do:
Start applying loans from banks first (although the chances are pretty slim) - If all of your applications are rejected by all banks, then proceed with the same applying process in credit unions. Non-bank lenders are your last option and be sure that they receive high ratings from Better Business Bureau (BBB). Getting a secured card is easy and you can only use that card for your daily purchase - You can raise your credit score if you continuously make repayments punctually. Apply for department store and gas cards when your secured card has been converted into an unsecured card. Again, you need to use these cards wisely to increase your credit limit.
By combining these 3 strategies in your "fixing bad credit" plan, you will be able to achieve your target FICO score effectively.
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