I’m sorry to report that fast credit repair is a bit of a myth; truth is Fast Credit Repair is a whole lot sexier than the more honest Slow Credit Repair. That’s not to say that you can’t take some quick easy steps to start improving your credit today, only that these steps will take some time to work and yield positive results. I can’t tell you exactly how much time it will take to raise your credit score, because each case is different, but I can tell you that if you follow these steps you will dramatically improve your credit rating. This may not be the fast credit repair you were hoping for, but it’s the only thing that works.

FICO rates you credit score on 5 different criteria, weighing each according to what is considered to be the most important. This pie chart is from the FICO website and shows you exactly what your credit score is based on:

So, you can see that the areas where you would get the biggest bang for your buck are in the areas of payment history and amounts owed. These two areas alone account for a whopping 65% of your credit score so this is a good place to start your credit repair plan.

The Two Main Places to Start Your Credit Repair:

Payment History – From now on, you need to pay every single bill on time. Even if you are a “little late” this can have a bad effect on your credit, so you need to resolve to start paying all your bills in a timely manner or suffer the consequences.

Amounts Owed – You need to seriously reduce this amount. This is the amount of overall debt you carry; it includes mortgages, car loans, student loans, credit cards, business loans, and personal loans. Another important part of this Amounts Owed section is the amount of credit you are using versus the amount of credit you have available. If you have all your credit cards maxed out, this will reflect very poorly on your overall credit score, so you need to work on reducing your debt.

This may not be the article on fast credit repair that you were hoping for, but anyone selling fast credit repair is selling false hope. You can improve your credit score, you can get better loan rates, and you can qualify to buy a home, but it won’t be fast, it will take time.

You’ll see a lot of companies offering credit restoration, fast credit repair, credit report repair or other “solutions” to miraculously improve your credit rating, but the fact is that credit restoration is a slow tedious process. Most people don’t go to sleep one night with excellent credit and then simply wake up the next morning with bad credit, it’s usually a slow descent into bad credit and getting out of the hole takes both time and work.

Although some of these credit restoration companies are legitimate and may offer you some help in improving your credit, you need to be aware that some of these companies are scams, so you need to do your homework. You should check out the credit restoration company with the Better Business Bureau (BBB), verify that the company is licensed, and I’d also do a quick Google search to see if any customer complaints or lawsuits pop up. I also would strongly caution against paying exorbitant fees to use a credit restoration company, after all, you already have bills you haven’t paid, why accumulate more debt.

I think the main reason people seek out credit restoration companies is that the average individual feels that credit repair is beyond their skill set and this is usually simply not the case.  A credit restoration case worker is simply more familiar with how the system works, but this doesn’t require a special skill set, it just requires tenacity. Most people can set up their own credit restoration plan, put it into motion and achieve the same results they would using a professional company. A lot of people go with these credit restoration businesses, because they simply don’t want to do the work, or feel that they don’t have time to do the work involved in dealing with creditors. It involves a lot of time on the phone, letter writing, and more time on the phone.   

In a nut shell, what you need to do to start improving your credit is simply pay your bills on time. Every time you pay a bill late, even a day late, this is a negative mark on your credit. You should also begin paying down the debt you owe, as a big part of your FICO score is determined by how much credit you have available vs. how much credit you are using. For example, if you have a credit card with a $5,000 limit and you have it maxed out, this is not as good as having a $5,000 limit and you have only charged $400. You also do not want to cancel any of your existing credit cards because this can affect both the equation mentioned previously, but also part of your FICO score is based on the amount of time you’ve had credit. So, canceling a credit card would reduce your amount of credit available and the amount of time you’ve had this credit available, so this may negatively impact your credit.

Another thing to consider since the length of your credit history plays a part in your overall score is to occasionally rotate your credit card use. Every now and then, buy something with an older credit card and immediately pay it off. This will effectively “age” your credit and boost your credit.

If you get to the point where you are so over your head that you can no longer pay your debts then you may have to consider bankruptcy as an option. Due to the current economic climate, this no longer has the stigma that it once did. This will effectively remain on your credit report for up to 10 year, but within 2 years you could qualify for a new home loan providing that you meet all the other criteria such as work history and current good credit use.

So, credit restoration is possible, but consumers need to realize that there is no quick fix. With a plan and deliberate action, you can begin to slowly raise your credit score. The process takes time, but you should see a small yearly increase in your FICO score for each year that you show a responsible use of credit. Although bankruptcy can be an emotionally and ethically hard decision to make, for some people it will prove to be the right decision. With upside down mortgages and no employment, even a credit restoration company can’t work miracles.

Since the economy is so bad, more and more people are facing the prospect of a bad credit rating and wondering how this will affect them in the future. There’s no doubt that having bad credit will be a liability. It affects whether you can get loans in the future, what interest rates you are charged, and in some instances having bad credit may make you ineligible for certain jobs. But know that with the current economic downturn; a lot of creditors are in the same boat. Millions of homes are in foreclosure with more on the horizon, many people are out of work and bankruptcy filings are skyrocketing.

Since everyone’s credit situation is different, this article will need to make some simple assumptions about your current credit condition. This article will address credit report repair for people who have bad credit or would like to improve their FICO score.

When starting out on your credit report repair, the first thing you want to do is get copies of your credit reports from the three major credit reporting agencies: TransUnion, Experian, and Equifax. You are allowed one free report from each one every year, so there is no need to pay for this service. Anything you pay for from these agencies is an upgrade promoted to prevent identity theft, but this is not necessary. Carefully look over the credit report to make sure that everything on each of the reports is correct. If you see anything that is reported incorrectly, you need to write that company to have the erroneous information removed. You should include supporting documents and keep records of all your correspondences. Legally, these companies are required to remove incorrect or false information, so the law is on your side if you can prove your claims and they fail to act.

When you get your 3 free credit reports, you may also want to get a copy of your FICO scores. Unfortunately you will need to pay a small fee for this but it gives you a good overall view of your credit health. Your FICO numbers are the most used indicator of credit worthiness; it’s used by banks and lenders as a tool to see whether a customer is a good credit risk. Those with the highest FICO scores are not only the most likely to get loans, but they also get lower interest rates.

Each of the three credit reporting agencies listed above have FICO scores associated with your account, so essentially you have three separate FICO numbers. Equifax uses the name Beacon Score, Experian uses the name Experian/Fair Isaac Risk Model and TransUnion calls there FICO score Empirica. When you’re just starting out with your credit report repair you’ll probably want to get all three scores, because they may be different. Because each of the 3 different credit reporting agencies will have a slightly different credit report, you may have a small spread difference in your FICO numbers. In the future you will only need to get one FICO score, but initially it’s good to know where you stand because a lot of people are completely in the dark about how credit works and what their credit score signifies.

You now should have a good overview of your credit health, now that we have a starting point, you can start a plan of attack to begin improving your credit. Once you’ve verified that everything on the credit report is correct and corrected any mistakes, now comes the easy part. Unfortunately easy does not mean fast or quick. Everything involved with credit report repair is a slow process. But, the soon you start, the sooner you can have good credit. There are no short cuts.

To start the process you need to understand exactly what determines your FICO score. You score is determined by 5 main categories that myFICO shows as follows:

This means that the categories of “payment history” and “amounts owed” are the best place for you to start since these account for 65% of your overall score. This doesn’t mean that you shouldn’t pay attention to the other categories but rather that these are the two main areas that have the worst effect on most people’s credit.

If you are late paying your bills this will be reflected on your credit score. Banks and lenders don’t want to loan money to people who can’t pay their debts on time, it puts you in a high risk category. Likewise, if you owe a lot of money in debt, bank will consider you overextended and also put you in a high risk category. Also falling under the “amount owed” category is the total amount of credit you have available to you which is weighed against the amount of credit you are actually using. As an example, if you have a credit card with a $10,000 limit and you have it totally maxed out, this is bad. If you have the same $10,000 credit card with only $300 charged on it, this is good.

So, the absolute best place to start with your credit report repair work is in these two categories. From now on, pay every bill on time and work on reducing your debt load. This is well over half (65%) of your credit score, so you can achieve excellent results by just doing these two things alone. One thing you do need to keep in mind is that credit report repair work will take time. Don’t expect to pull up your credit reports in another 3 months and boom, your credit score has shot up 200 points, it simply doesn’t work like that. It’s more of a glacial pace, slow steady improvement, so don’t get discouraged, keep at it.