Repair and Prepare

Credit repair brings incredible results, perhaps it will change the entire look of your report and raise the scores beyond what you thought was possible. It may happen fast or it may take time, this all depends on your report. One thing is for sure . . .credit repair is not the only cure for your sickly credit, it will take work. It is important to understand what credit repair is and to set a realistic mind set of expectations.

Prepare for the Repair

There are three things you must do to ensure that credit repair brings the best possible results. Get control of your existing obligations by building a practical budget. You must learn how to manage your account balances to promote higher credit scores, and you must learn the effect each type of credit will have on your credit report.

Fail to Plan;Plan to Fail

Creating a budget is an emotional process. The more you know about your finances the better off you will be. When the time comes to make a decision that will affect your monthly cash flow it should be made unemotionally. Too many financial errors were made out of emotional decisions or purchases. You are going to work hard on your credit repair. Look at the numbers . . .numbers don't lie. You can’t afford to fly blind.

Get a pad of paper and list everything that you spend money on. Take your time and make sure that you have included everything from the big monthly obligations to your daily incidentals. Don’t forget an item because it occurs only occasionally, like an annual vacation. Just estimate the total amount you will need and divide it by twelve to determine the amount you should set aside each month. The goal of this exercise is to get a complete picture of your expenses.

Your Balances and Your Credit Scores

There was a time when you would have great credit if you paid your bills on time. This is no longer enough. Making timely payments for years and still having terrible credit scores is very common. For best results you must understand the relationship between your balances and the scores. The FICO scoring model grades you on the amount of available credit that you use, commonly referred to as the balance to limit ratio.

For the best credit score you should reduce your balances so that you are using less than 33% of the credit. The lower the balance, the higher your score will be. Don’t underestimate this. You could lose over 100 points by running up a revolving balance to the limit.

Using the Right Kind of Credit

The FICO scoring model likes certain credit types, but will penalize you for others. If you want to improve your credit you should use common cards like MasterCard, Visa, American Express, and Discover. Avoid consumer credit, including store cards and financing offered by furniture and electronics stores.

Soap Box

This country is ridden with debt and borrowing money we don't have. The government has announced that Americans are in trouble with credit card debt and imply that we, as Americans should not be in such debt and have been carilous with our spending . . .while this is true, the Goverment is now borrowing more money than ever with a unsurpassed deficit with no solid recourse in balancing back to zero. This goes to show that credit can be misused. Credit is a wonderful thing in many cases. Being able to buy a home and manage a payment has helped our country grow and prosper, sometimes even made the economy boom and create millions of jobs. On the other hand credit can be dangerous and cripple family by leading them into debt and ultimately ruin your marriage, split families apart, and foreclose on homes. Use credit wisely and ask yourself . . ."Do I really NEED this?" and "At what cost am I really prepared to pay for this so called NEED?" When you purchase using credit you are gambling on having the money to pay it off later, their are few guarantees in life and this is not one of them.


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