Wednesday, November 27, 2013

Increase Your Credit Score By 100 Points or MORE Within 6-8 Months


"It is God's will for you to live in prosperity, instead of poverty. It is God's will for you to pay your bills, and not to be in debt."-Joel Osteen

Allow me to preface this post by stating that when I married my wife some nine years ago, I was in a MESS financially. I was earning poverty wages, and I had racked up a number of collections on my credit report. I was an honest person, with poor credit, due to my inability to come up with the funds that were necessary to cover my outstanding debts.

There were several instances where the thought of filing bankruptcy crossed my mind. I would never classify the act of filing for bankruptcy as being either right, or wrong. However, for some reason, my conscience would not allow ME to do it.

I felt that I was responsible for my financial obligations, and I decided that if I could ever discover a way to pay the debts that I owed, and to increase my credit score to a level where I would no longer be either denied credit, or charged 20-25% for everything that I applied for, then I would absolutely do it.

I made a commitment to God that I would pay every single creditor that I owed, if he would increase my income to the level where I could afford to do so. In addition to seeking help from God, I started reading books, and conducting research on credit repair, as well as working to improve my credentials and skill-sets, which would in turn increase my earning potential.

I discovered a book from Dave Ramsey, called "Financial Peace," and this book, along with several videos, articles, and conversations with lenders, provided me with the knowledge that I used to increase my own credit score by 150 points. I am going to share the lessons that I have learned with you today within this post.

The Tools

Prior to starting this process, there are a few tools that will come in handy, to expedite this process for you. These tools are as follows:

 1.  Monthly credit monitoring service. I would suggest The subscription for this site runs just $14.99 per month, and for a one time fee of $29.95, you can gain access to your credit reports from all three of the major credit bureaus. (Transunion, Equifax, & Experian).

2.  Money. There is no way around it. You will be required to pay off your outstanding collections. I would suggest using a debit/credit card, as this is much more "time-friendly" than mailing checks.

3.  A credit dispute letter template. Later on within this post, I will provide you with a credit dispute letter that is GUARANTEED to produce speedy responses from the credit bureaus. You can save this template in your computer, and use it as needed.  

The Process

Now that we have arranged each of the tools that will be necessary in order to complete this process, we will now be able to advance into discussing the actual process. This is a simple seven-step process, and the steps that we will cover within this process, will include each of the following:

1. Reviewing credit reports

2. Identifying outstanding collections

3. Negotiating and paying off outstanding collections

4. Identifying inaccurate accounts

5. Disputing inaccurate accounts

6. Establishing positive tradelines

7. Patience


Reviewing Credit Reports

Once you have signed up for your monthly credit monitoring service, you will be able to review your credit report (s). Your credit report will provide you with the information that creditors are reviewing whenever you apply for credit. The report will include any positive accounts, late payments, derogatory accounts, write-offs, bankruptcies, judgments, etc, that you may have had within the past seven years.

Most credit repair services charge a monthly subscription fee of $59.00 or more, and many of these services will take 90-120 days or more to simply identify inaccurate collections on your report, and to dispute pretty much, EVERY SINGLE ITEM on your report.

The purpose of this "lengthy" process is to maximize profits on your monthly subscription fees, and this approach is a waste of time. These companies will then add on several other fees, for additional services. You can complete this entire process on your own within 6-8 months, provided that you do have the necessary funds readily available.

I will cover disputing inaccurate information at a later point within this post. However, my primary focus, and our starting point will focus on dealing with the outstanding collections that you ACTUALLY OWE. In my humble opinion, there is no point in playing games, and trying to dispute items, that you KNOW to be outstanding.

Identifying Outstanding Collections

In Dave Ramsey's book "Financial Peace," he talks about using a "snowball approach" to paying off debt. In using the snowball approach to paying off debt, you would start with the smallest outstanding collections that are on your report ($100.00 or less), and work your way up to the BIG boys.

Hence, the very first thing that you will want to do is to identify every outstanding collection that you have on your report. I would suggest creating an online document where you can track every outstanding creditor, the amount owed, and the contact numbers for each creditor, which will be located at the bottom of your online credit report.

Negotiating and Paying Off Outstanding Collections

Everything is negotiable. However, I would avoid wasting time, by simply contacting the creditors with accounts that have balances of less than $100.00, and asking them if they will agree to delete these outstanding accounts from my report, if I can pay the accounts off in full over the phone.

I stress having the accounts "deleted," because most creditors will report these items as "paid" on your report, unless you have in fact requested to have the items deleted. I would also request a letter in writing, confirming payment of each collection, prior to making each payment. Once you have reached an agreement on having the items deleted....or not, and once the creditor has confirmed that they will be sending you a "Paid in Full" letter, then you can proceed with your payments.

Eventually, as you are advancing through this snowball process, you will start to come across the higher accounts, with balances of $500.00 or more. 95% of these accounts can be settled for less than the amounts that are showing as "owed" on your credit report.

Prior to paying off ANY of these accounts, you will want to contact the creditors (with the numbers that are listed on your online monitoring report), and you will use the following script:

"Hello, I am in the process of repairing my credit, and I was wondering if you would be able to settle on the amount of ($$$) that my credit report shows that I owe to (fill in creditor)?"

The creditor will then either offer you the amount that they are willing to settle on, or, they will ask you to make an offer for a settlement. There is no such thing as a ridiculous offer. If the creditor requests that you make an offer, then make your offer, based upon the amount that you have available. The creditor will then either accept your offer, or counter with the best offer that they can present to you.

IMPORTANT: Prior to paying off ANY settlements, verify that the creditor will be reporting these accounts as "PAID IN FULL" on your credit report, AND, that they will be mailing you "PAID IN FULL" letters. Believe it or not, some of these collections companies will try to take advantage of you, if you allow it.

Credit Dispute Letters

 I will pause here for a moment to go into the credit dispute letters, prior to moving on to identifying, and disputing inaccurate accounts on your credit report. After you have paid off your accounts, and received confirmation from your creditors, and or/collection agencies, that they will be providing your updated information to the three major credit bureaus; your next step will be to send dispute letters (VIA CERTIFIED MAIL), to each of the major credit bureaus.

Your goal will be to mail letters with BULK listings of PAID accounts, as opposed to sending one or two accounts at a time, if you can help it. Once the credit bureaus have received your dispute letters, they will confirm receipt via email, and they will then have 30 days to verify the information, to update your report, along with your scores, AND to respond to you with a letter (via mail), that details the changes that have been adjusted within your credit reports. The dispute letter template will be provided at the end of this post.

Identifying Inaccurate Accounts

Now that you have handled the ACTUAL debts that are outstanding, you can then move on to searching for, and identifying inaccurate information. Negative collections can only remain on your credit report for seven years. So the first thing that you will be doing here, is searching for any collections that are older than seven years.

Next, you can look for any accounts that have been paid, but are still reporting as outstanding. You can also check for inquiries, where creditors may have pulled your credit without your permission. Excessive inquiries can drastically impact credit scores.

If you should discover any inaccurate items during this portion of the process, then you would simply include these items, along with your credit dispute letters. I will add here, that although most credit repair companies base a great deal of their advertising on promoting this idea of disputing "inaccurate" information within our credit reports; I have found that the majority of the information within our credit reports will in fact be accurate.

Building Positive Credit

I would hold off on trying to build positive credit, until you have addressed the issues of paying off outstanding debt, and/or disputing inaccurate information. The reason for this is that the process will move along MUCH faster without these negative accounts showing up as glaring weaknesses within your report, and regardless as to how you might maintain a credit card, lenders will continue to be turned off by negative collections, until they have been paid off.

 Now we will move into building positive credit, and within this section, I would like to discuss three items:

1. Credit mix
2. Available capacity
3. Avoiding hard inquiries

Credit Mix

There are a number of factors that go into the making up of your credit score. One of those factors is your "credit mix," or your ability to maintain various forms of on time credit payments. The two types of credit that I am going to discuss here will be: installment accounts, and revolving accounts.

Installment accounts-These are accounts that have fixed payments for a fixed amount of time. Installment accounts would include: auto loans, mortgage loans, student loans, or secured loans.

Revolving accounts-Revolving accounts are accounts that have different payment amounts each month, depending upon your outstanding balance. Credit cards would be revolving accounts.

Your goal here is to establish two installment accounts (you may already have one or two), and at least one revolving account. Due to the fact that you are in the process of repairing damaged credit, you will be limited in the number of credit cards that you have available.

This is not a problem. I would suggest going with a secured credit card from Capital One. This card allows you to send a set amount of cash to Capital One (usually $300.00), to use as collateral, and in turn, you will receive access to a credit card that will report to all three of the major credit bureaus each month, thus raising your credit score. You may increase your credit limit, by increasing the amount of your deposit.

Chances are that you may already have outstanding student loans, a mortgage, or an auto loan. If this is the case, then you can simply focus on maintaining on time payments each month, as ONE late payment can drop your credit score significantly.

If you do not have installment accounts, then I would suggest going with a secured bank loan, as well as a small auto loan, which unfortunately will have high interest, at least initially. You can refinance your auto loan at a lower interest rate after six months of on-time payments.

In order to obtain a secured loan from a bank, you will need to provide your bank with the amount of money that you wish to borrow. A loan of as little as $500.00, spread out over a six month period will do the trick. The bank will then provide you with a loan, equal to the amount of your deposit, and the bank will then report your loan to the three major bureaus each month.

Available Capacity

It is VERY important that you maintain all of your credit cards at 30% or less of the available credit capacity. Ex. If you have a credit card with a $1,000.00 limit, then you will want to avoid using more than $300.00 of that card within a single billing cycle. The greater your available credit capacity, the greater the impact of your having these credit cards will be on your credit score.

I would personally suggest avoiding the use of credit cards altogether throughout this process, so that you can dedicate all available funds to paying off your outstanding accounts. The one exception that I will add here, is simply using the card for small purchases like gas, or treats that use a very limited portion of your available capacity, and then paying these balances off IN FULL with each billing cycle, so that you are being reported for the MAXIMUM amounts of available capacity each month.

Avoiding Hard Inquiries

There are two types of credit inquiries: hard inquiries, and soft inquiries. Hard inquiries will have a negative impact on your credit score. Soft inquiries will not impact your credit score. If you are utilizing your monthly monitoring service at a site like the one at, which was previously mentioned, then you will be able to pull your credit report as often as you may like to do so, without negatively impacting your score.

However, each time that your credit is pulled by business establishments (automobile dealerships, cell-phone companies, banks, credit unions, retail stores, etc), this will drop your credit score. Thus, my suggestion for you would be to hold off on allowing ANY hard inquiries on your credit report, until you have reached a satisfactory score on your credit report.

Your online monitoring subscription will provide you with the credit scores of all three major bureaus. Some creditors will make decisions based exclusively upon individual scores (Transunion, Equifax, Experian), while others (mortgage loans primarily) will take the average of all three of your scores to make a decision.

Ex. The requirement for most mortgage loans will be a 640 score or higher. If you have the following scores: Transunion 650, Equifax 645, Experian 588, then you would not qualify for the 640 score, because the average of ALL THREE scores has to exceed 640. (645+650+588 = 1883). (1883/3 = 628).

This is why it is VITALLY important to mail credit dispute letters to ALL THREE of the major credit bureaus each time that you are mailing off your letters. The goal is to have all three of the bureaus reporting the same information.


Most of you have had access to credit for 15, 20, or even 30 or more years. It should not be asking too much, for you to hold off trying to establish new credit, and/or racking up credit card debt for 6-8 months, or until you have reached your desired credit score.

Everything takes time. This is no different than the individual who takes 10 years to build a sick, and obese body, and then quits an exercise program within 30 days, due to the lack of progress. If you will follow each of the steps that I have shared here, and if you will stick to this process, WITH PATIENCE, then you are GUARANTEED to see tremendous results, and you will not have to pay thousands of dollars to an outside credit repair source to do so.


The last thing that I will discuss here is the idea of "Piggybacking." I have saved this item for two reasons:

1. Most of us will not have access to this option

2. I did not wish to shortcut the process, because Piggybacking is useless if you have 30 outstanding collections on your credit report.

That said, with Piggybacking, you would simply identify a family member with a well-aged credit card (two years or older), that has a perfect payment history. You would then request to have this family member add your name as an authorized user.

If this family member agrees to add your name as an authorized user, then you would not receive access to the cards, and/or the card numbers. The only benefit to you would be that the full payment history of the card would be added to your credit report within 30-60 days, which would in turn increase your credit score by as much as 40-70 points.

This is a quick option, that produces a quick hike in your credit score. This option of Piggybacking has a number of pros and cons, and I would encourage you to do your research, prior to utilizing this option, just so that you will be in position to make a well-informed decision.

Credit Dispute Letter 

Your name
Your mailing address

Credit Bureau address info

Dear (credit bureau name)

In reviewing my credit report, which was issued by your agency, I have detected several errors, regarding the following accounts, in that they are being reported inaccurately.

Company name
Account number reflected on your credit report
Amount oustanding

Under the provision set forth in the 1977 Federal Credit Reporting Act, I hereby request that your agency prove to me in writing the accuracy of the reporting of these accounts. Under the terms of the Act, and succeeding court cases, you have 30 days to prove such accuracy, or to remove these accounts from my report, and I ask that you do so.

You will note that this letter was sent by certified mail, and that I do expect a response within the said 30-day period. Should I fail to hear from you promptly, then I will follow up with whatever action is necessary to cause my report to be corrected.

Please feel free to call me if you have any questions. My cell-phone number is (fill in number), and my home phone number is (fill in number).

Your name.

Mailing Info For All three Bureaus

P.O. Box 2000
Chester, PA 19022

Equifax Information Services Inc.
P.O. Box 740256
Atlanta, GA 30374

P.O. Box 9701
Allen, TX 75013


As you can see, this process takes time and effort on your part. However, destroying credit also takes time and effort on your part. What would a credit score increase of 100 or more points do for you? Well, it could be the difference in being charged 2% for an auto loan vs. 25%. It could be the difference in being forced to rent for the rest of your life, vs. being approved to purchase your dream home.

It could be the difference in your being hired for that dream job (thousands of employers now pull credit for new hires) vs. being denied employment. I could go on and on, but I will just tell you from personal experience that being buried in debt, with negative credit impacts your self-image, your reputation, and your stress levels.

 If this post has been of some value to you, then feel free to post a comment below, and to share this information with others who may be able to benefit from it.

"It is God's will for you to live in prosperity, instead of poverty. It is God's will for you to pay your bills, and not to be in debt."-Joel Osteen

It's God's will for you to live in prosperity instead of poverty. It's God's will for you to pay your bills and not be in debt.

It's God's will for you to live in prosperity instead of poverty. It's God's will for you to pay your bills and not be in debt.


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