Things to Avoid During Credit Score Repair

Things to Avoid During Credit Score Repair

Although the majority of credit scores under the FICO system will tend to fall between the five hundred and seven hundred point margins, the technical extremes are three hundred on the low end and eight hundred and fifty as an absolutely perfect credit rating.

In order to attain an ideal credit score according to the FICO model or, more realistically, to achieve the best credit score possible given the borrower's personal situation there's a few things that consumers ought to endeavor not to do. We shouldn't need to tell folks to get at least the minimum payments in to the lenders well before they're due, for instance. In the event of domestic budgetary crises making this functionally impossible, the heads of household should at least see that the debt payments arrive in time to avoid the thirty day late notice.

In the best of all possible worlds, citizens would completely satisfy their lenders each month so that they wouldn't even need to worry about interest charges at all, but the demands of modern society do not always allow for such responsible measures. As a standard rule, should money be that tight, borrowers should first take care of their secured debts such as home mortgages or vehicle loans to avoid the threat of foreclosure or repossession, and only afterwards should the credit card debt or other unsecured debts be paid. Gas, electricity, water, and other utilities should not only be paid last and the family book keeper might consider ignoring these obligations for a month or two since publicly owned companies are far more lenient about submitting evidence of delinquencies to the credit bureaus. Not only do past due utility bills rarely damage FICO credit scores but they'll have to be truly late to be sent to collection agencies.

If borrowers simply call representatives of the utility companies, they'll be more than likely to arrange some beneficial payment plan. Along the same lines, though it's less of a guarantee, the same could be true with credit cards or even mortgages so long as the borrowers initiate talks before a thirty day late notice is sent to the credit bureau. Once that happens (and the credit scores fall proportionally), the borrowers have already lost their leverage and may not even be eligible for refinancing of mortgages or other secured loans due to the credit score hits. If finding sufficient money to satisfy the minimum payments of every debt becomes a regular problem, the debtors should consider cutting expenses, taking an additional job, or even looking at the possibility of bankruptcy (which has surprisingly little impact upon the FICO credit scores, though the presence of a Chapter 7 or Chapter 13 bankruptcy upon a credit report will have lingering repercussions, to be sure).

Bankruptcy protection only stays on the credit report for seven years, and virtually any lender of value will not hold the bankruptcy against the borrower after four. During those four years, the bankruptcy will undoubtedly hinder attempts to find a loan without sky high interest rates, but, since the unsecured debts are wiped clean, the credit scores themselves could actually improve following a Chapter 7 discharge. Bankruptcy certainly has a far more positive impact upon credit reports than a formal judgment for unpaid debts. Worst of all would be tax liens or student loan debts, which effectively stay upon credit reports for the borrowers entire life and act as a constant anchor overwhelming the best efforts for credit score improvement.

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