In the previous parts of this article we discussed how FICO score can impact your financial status as well as the initial steps that you can take to begin restoring your FICO score. We covered handling collections first since they do have a big impact on your overall score, but there are a few other ways that you can quickly see a big jump in your score.

After you have the collections on your account either settled or verified, double check to make sure that they were removed from your credit report. If a collections agency agreed in writing to remove the entry upon payment and did not, you can send copies of the letters and your cancelled check to the credit bureaus to have it removed by them.

Now that collections are out of the way, let’s move on to more ways to restore your FICO score. If you have abused your credit in the past, opening a new card can be difficult. Establishing a good payment history is one way to get a bounce of 30 or more points on your FICO score, but that can be tough if you can’t get any new credit.

Open up a secured credit card and use it once a month for a small purchase. (Here are some bad credit credit card recommendations.) Pay that off completely before the due date. After six months, you should start to see a change in your FICO score. Keep the balance on that card as low as possible to show that you are utilizing your available credit wisely. The lower your debt to limit ratio is, the better your FICO score will be.

Continuing on that theme and assuming that you still have accounts that are open, start paying those balances down each month and stop using the cards. You do not want to close the credit card accounts, since a closed account may actually reflect poorly on your rating. But, that doesn’t mean that you have to use them either. Keep paying on them each month, and try to shoot for paying more than the minimum balance requirement. This will help you chip away at a high balance and lower your debt to limit ratio nicely.

It can typically take anywhere from six months to two years to completely restore a FICO score, depending on your personal situation and just how badly in debt you are. However, with diligence and time, that score will change for the better. The key is making your payments on time, freeing up your balances and keeping an eye on any collection efforts.

It is also a good idea to read through the Fair Debt Collections Practice Act, especially if you are dealing with creditors. They do have rules that they have to follow, but it’s up to you to know your rights. This act will protect you from harassment, but only if you take action. Take the time to read through it, and don’t be afraid to tell a creditor that you will report them if they overstep their bounds.

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Originally posted 2008-09-30 05:16:02. Republished by Blog Post Promoter

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