Essentially credit repair is broken down into two categories – positive and negative. Positive is based off active accounts only and their on time payments or balances. Negative credit covers missed payments on open contracts or collection/public records.
Let’s look at the positive side first. Roughly 65% of your FICO credit score is based solely upon positive accounts and how you utilize them. With credit repair we seek to better align your behavioral patterns with how FICO heavily awards points. Here are a few questions to consider as the answer can directly impact your credit.
- When and where do you pay your revolving balances?
- When should you open or close an account?
- How many cards are too many cards?
- When does adding an authorized user help or hurt?
- What credit card vendors will report an authorized user?
- What happens if you pay your credit cards to $0?
There are options to handle negative credit. First, you need to understand how the FICO scoring models interpret most negative accounts. In most cases, as in collections, the items are not weighted by balances or the type of collection. Collections are however weighted by your Date of Last Activity (DLA). When you pay a collection, you update the DLA and more often than not, penalize your score. Scores can drop over 100 points simply by paying collections which is counter-intuitive to what you think should happen.
Credit repair takes a different approach in handling negative credit as we work on activity that is your best interest. It is important to remember that the FCRA Fair Credit Reporting Act requires all information to be 100% complete, accurate, not misleading or obsolete and also must be verifiable. Every item on the report must explicitly meet the FCRA minimum requirements in order to remain on a credit report. Requesting removal of an old late payment, or negotiating the deletion on an account in exchange for payment are a couple of ways that companies experienced in credit repair will handle negative credit.