The Definitive Guide (2023)
This is a complete guide about how to rebuild your credit and how long does it take.
Topic Covered in this new guide:
- Rebuilding Your Credit Just After Bankruptcy Discharged
- How to dispute any Mistakes or misreported items – can boost your score
- How to Fix your credit with FCRA Loopholes
- How to Force Creditor to Validate Debt – Debt Validation
- How to negotiate a debt settlement – Pro Tips and Tricks
- Optimize your debt ratio without really having to change your spending behavior – do it in a proven way as explained
- How you can Increase Your Credit Limit – use these hacks
- Pre-Due Date Payments – a trick to boost the credit utilization
- Credit Bumpers – a trick to Protect History
- Know which Credit Cards to Use and avoid When you have bad credit
- No Credit Check Loans and Cryptocurrency – Opportunity to start your credit repair journey
- What do you do if you Sued Legally in court? Let’s get started.
Total 6 Chapter In This Blog Post
|Chapter 1 – What is Credit Repair & How it Works|
What is credit repair & how long does credit repair take
To understand how long it takes to rebuild credit, you need to understand the background of how credit repair works. Credit repair is easier than it looks. A lot of companies claim to have credit repair secrets, but they won’t tell you what they are. That’s because at best, credit repair companies are charging a fee for things you can do yourself. At worst, they’re encouraging you to break the law. So it’s better to understand how to improve your credit score and make it better.
I have no problem telling you credit secrets and hacks that I know work. Banks don’t like you knowing this information because they make money off bad credit loans with high fees and expensive collection actions. Credit cards for bad credit have much higher interest rates and will ultimately just make your situation worse. Stop letting the banks bully you into overpaying today based on mistakes you made years ago. Credit repair is an achievable goal, and that’s what we’re going to talk about today.
How long does it take to rebuild credit?
Take control of your credit by using this information the financial industry doesn’t want you to know about. They’re all legal, and we know they work based on how credit reports work. If you planning to buy a house in three months or a car in the near future and wants to improve your credit. Unfortunately, there is no quick way to fix your credit.
The time it takes depends on how serious damage happened to your credit history in the past. Also, depending on the types of damages that mention in your credit report. It can be a few months to several years of continuous commitments.
A quick look at a Few Simple Steps: How to improve your credit
Improving credit score have these simple steps.
- Strictly follow your FICO score factors
- Always paying your bill on time can help to build a good credit history
- Maintain Low Credit Utilization. Manage and use your credit responsibly to improve your credit
- Avoiding Multiple Credit Applications
- Build a good Credit History
- keeping your “old” credit cards or old accounts
- Avoid Paying Only Minimum Due
- Pay off your high Interest and “New” Credit Accounts First
- Maintain an Account for Diversity
- Check your credit report on a fixed time interval (for any Derogatory Mark, any error from Data Furnisher, or any Identity Theft)
- Dispute any mistakes or misreported items
All these steps are explained in detail later in this blog post.
General Outlook of Credit Scoring Model & Credit Rating
Before you can change your credit rating, you need to understand what it is. Your FICO credit score, created by the Fair Isaac Corporation, is used by lenders, creditors, landlords, and even employers to assess your credit risk. FICO scores range between 300 and 850. The criteria for good credit depends on what you’re applying for. Although 650 isn’t necessarily bad credit, it won’t be enough for a high-end condo rental or mortgage. It also depends on where you live.
In cities like Boston, MA; San Francisco, CA; Seattle, WA; Minneapolis, MN; and Philadelphia, PA, the average credit score of renters is over 700. But in cities like Greenwood, MS; Albany, GA; Laredo, TX; or Riverside, CA, the average credit score is below 650.
Credit scores are used by lenders to calculate the risk of lending money. It’s a tool to help creditors determine how likely you are to repay their loans. Most of the major credit agencies in the United States use the FICO score to evaluate your credit health. Your FICO score normally ranges between 300 and 850. So, what’s a good credit score? While each creditor may have their own calculation, generally the following breakdown applies.
- A FICO score under 630 is considered Poor Credits
- An average or Fair score is between 630 and 690
- A good Score is between 690 and 720
- An excellent score is anything above 720
The Major Three Credit Reporting Agencies and How they perform
We may not tell you the exact details of how the FICO credit score is calculated but FICO gives us information about what kind of information matters on its scoring algorithm.
All these agencies mainly collect and maintain your credit information and then resell it to other businesses. The Experian credit score is a FICO 8 score which ranges between 300 and 850 TransUnion score also ranges from 300 to 850. Like others, Equifax also provides FICO and Vantage Score and uses different scoring models which range between 300 and 850.
All the CRA’S have different methods of determining your FICO score
There are mainly three major credit reporting agencies typically used by lenders – Equifax, Experian, and TransUnion. Each has different methods of determining your FICO score, and some present you with an educational credit score that differs from the actual FICO score your lender will pull. Even official FICO scores are different, depending on the type of lender. Auto lenders use FICO Auto Scores, while credit card issuers use FICO Bankcard Scores and mortgage lenders use FICO Score 8.
To calculate your FICO rating, Equifax uses FICO Score 5, Experian uses Fico Score 2, and TransUnion uses FICO Score 4.
Different lenders query different credit agencies, and they report your payments and credit history to different agencies too. This means a debt, credit card, or default could show up on one, two, or all three of these agencies.
The only way to protect yourself and your money is to stay on top of Big Brother. All three agencies are required by federal law to provide you with a free annual credit report at your request once every 12 months. You also have 60 days to report a free copy if you’re denied credit, insurance, or employment based on bad credit.
Two widely used credit scoring models – Just for your information
There is two widely used credit scoring model used in the USA, namely Fair Isaac Corp’s FICO and Vantage scoring model. Both models range between 300 and 850 – the higher the score, the better. The average FICO score in the United States is currently at an all-time high of 695. Although there a different scoring model exists, which causes this figure to fluctuate by a few points between 660 to 720.
How long does it take to repair credit Using Your Credit Card
Rebuild Your credit score Using Your Credit Card
To rebuild your credit, the most important is how responsibly you manage and use your credit card. You should never be late to pay your credit card bill. Use the online payment option to manage and set your bill payment automatically. Always spend less than you earn. For this, you need a budget that you should follow strictly.
Rather than these, the short answer to your question about how long it takes to rebuild credit is dependent on how you efficiently manage your credit card. Here are some hacks that will help you definitely.
What is the debt ratio and why it is important
Now we get to the fun part, where I’ll teach you the magic number credit agencies really want you to carry in debt and why. Optimize your debt ratio – do it without really having to change your spending behavior. Your FICO credit score is calculated using the following formula:
35 percent payment history
30 percent amount owed
15 percent length of history
10 percent new credit
10 percent types of credit
This means the bulk of your credit score is made up of on-time payments and how much available credit you have. Obviously paying your bills on time will improve your credit history over time, so we’ll focus on the debt-to-credit ratio.
Maintaining low balances on credit cards can raise your score by up to 100 points -Credit hack
Many experts will tell you to stick to 30 percent of your available credit. This means if you have $1000 of credit, you should only have balances totaling $300.The truth is the more available credit you have, the better your score will be. Maintaining low balances on credit cards can raise your score by up to 100 points.
I recommend keeping your available credit at 94 percent. So does Experian. I checked my own credit report one day and that’s the advice they gave me to raise my own credit score. You should only be spending $6 for every $100 of available credit you have to successfully raise your credit to the best possible score.
What this shows creditors is that if something bad happens in your life (medical emergency, job loss, etc.), you still have access to funds to pay your bills for the next six months. This lowers your credit risk and makes you someone lenders love to work with. I have another game-changing trick up my sleeves to boost your credit score.
Tricks to increase credit limit fast – Powerful Lifehack
Only spending six percent of your available credit makes it difficult to gain credit increases from your credit card companies. They’re not going to raise your limits on a card you never use.
So, I use this powerful life hack to boost my credit score into the stratosphere, and you can have massive success with it too!
What I do is charge and maintain a high balance on each card for two months. In the third month, I pay it all off and let it sit for two months. This way, I’m using my credit card enough for the bank to continue raising my limit (thus raising my available credit) while maintaining enough available credit to keep the credit agencies happy.
Master this method, and you’ll notice your score go within months. And there are a few more insider loopholes to instantly transform your life. All these tricks have the tremendous potential to increase your credit score that is already been proven.
Pre-Due Date Payments – a trick to boost the credit utilization
One trick to boost the credit utilization piece of your score without really having to change your spending behavior is to pay your bill approximately 10 days before your due date.
Monthly Spend: $500
Credit Limit: $1065
Due: 25th of each month
Monthly Spend Paid On Due Date (25th of the month): 53% Utilization
Monthly Spend Paid 10 Days Pre-Due Date (15th of the month): 6% Utilization
Credit Utilization Formula: Credit Used / Total Credit
Credit Bumpers – a Trick to Protect Credit History
Just one late payment that happened years ago, maybe when you were back in college, could significantly impact your score today. One trick to absorb some of the impacts of a negative on your Credit History is to use Credit Bumpers by adding more Accounts to your total number of Open Accounts. This example shows how much faster you recover from one late payment when you have 5 open accounts instead of just one.
1 Account with 1 Missed Payment:
Year 1: 11 On-Time / 12 Total = 91.67% Very Poor
Year 2: 23 On-Time / 24 Total = 95.83% Very Poor
Year 3: 35 On-Time / 36 Total = 97.22% Poor
Year 4: 47 On-Time / 48 Total = 97.92% Poor
Year 5: 59 On-Time / 60 Total = 98.33% Fair
5 Accounts with 1 Missed Payment:
Year 1: 59 On-Time / 60 Total = 98.33% Fair
Year 2: 119 On-Time / 120 Total = 99.17% Good
Year 3: 179 On-Time / 180 Total = 99.44% Good
Year 4: 239 On-Time / 240 Total = 99.58% Excellent
Year 5: 299 On-Time / 300 Total = 99.67% Excellent
Credit History Formula: On-Time Payments / Total Number of Payments
Best Credit Cards to Use when you just start Rebuilding Your Credit
When you have bad credit, a secured credit card is the only option you have. That’s what we got for Brian, and by maintaining a good payment history on his secured credit card, he raised his credit rating by nearly 50 points in less than a year. Here’s a list of the best-secured credit cards to apply for, including the Open Sky Secured Visa and Discover It Secured.
Also, keep a credit card issuer’s customer service track record. J.D. Power releases a study every year on credit card customer satisfaction, and the top three card issuers are American Express, Discover, and Capital One. These are the companies most likely to resolve your issues on the first call. As for banks, Capital One, BB&T, and Chase take the top marks.
Also, find that a piggyback hack can boost your Credit Score. Piggybacking is probably one of the most underutilized and effective ways of boosting your score tremendously with little effort or time.
No Credit Check Loans and Cryptocurrency – an opportunity to start
For those who haven’t caught on, Cryptocurrency has the promise to potentially turn the banking system on its ear. Since 2009, the BitCoins market has emerged along with BlockChain technologies. From then on it’s starting to usher in a new era of making and receiving payments.
It’s completely separate from the old status quo banking institutions, while substantially raising privacy. Banks are scared! Already we’ve seen larger banks like Bank of America, Chase, and Citi bank users buying BitCoin with their bank’s credit cards. Today you can easily find crypto debit cards. However, debit cards don’t do anything to build your credit history or improve your credit score.
You may leverage the cryptocurrency sitting in your crypto wallets to build your credit score.
A crypto-secure credit card may give you the opportunity to start. Although No Credit Check Loans and Payday Loans sometimes get a bad rap. But they have their place in the market when used responsibly. For cryptocurrency holders, No Credit Check Cryptocurrency Block-Chain-backed loans offer liquidity. Like Margin Accounts that you may have if you trade stocks. With Cryptocurrency Block-chain backed No Credit Check Loans there is only a small chance of a credit reporting issue.
A Margin Call happens when If by some chance your equity falls below the maintenance margin value established by FINRA or your creditor. When you don’t have enough equity to repay the loan, you become personally liable. Only then you can send it to Collections to end up on your credit report. Like Margin Accounts, failure to pay back your outstanding Cryptocurrency loans when your margin value drops below the liquidation level may affect your credit score.
How long does it take to fix credit Just After Bankruptcy Discharge?
If your FICO score is low then It also restricts you to access a product or services offered by the bank or other financial institutions.
10-30 days after discharge
Check your scores
All three agencies are required by federal law to provide you with a free annual credit report at your request once every 12 months. You also have 60 days to report a free copy if you’re denied credit, insurance, or employment based on bad credit. To order, visit annualcreditreport.com or call 1-877-322-8228.
30-90 days after discharge
Apply for a credit card
In this case, a visa or master card is most favorable even if you pay an annual charge for that. Try hard to avoid ‘secure’ or ‘store’ credit cards because, in the long run, they can actually hurt your score.
Apply for a Loan That Helps to Build Credit
You need the right mix of credit accounts to rebuild your credit score so an installment loan reporting to your report is important.
6-9 months after discharge
Get a second credit card
Five to six months later of taking your first credit card, you should apply for the second one. To successful rebuilding of credit score, you need to open five to seven credit accounts. But never apply all these at once. Take at least seven to eight-month intervals for approval. Also, limiting the number of ‘inquires’ is important.
12-13 months after discharge
Check your score again
After completion of 12 months from the first request for the free credit report, you can make a new request for another free copy of your credit report from all three credit agencies and check for any changes.
1 day to 24 months after discharge
Spend within your means
First, two years following bankruptcy is not for any big purchase or unnecessary spending, or too many loan quires.
Most importantly, Be aware of anyone charging monthly fees for credit-repair services instead of fixed, flat fees.
How long after bankruptcy can I get a credit card?
30-90 days after discharge, You can apply for a credit card. You can try for a Visa or Master card and try hard to avoid secure or stored credit cards but at starting a secure credit card is the only option if nothing is work out.
How to rebuild your Credit Score Fast
In this Chapter you will learn:
- Dispute any Mistakes or misreported items
- Fix your credit with FCRA Loopholes
- Force Creditor to Validate Debt – Debt Validation
- Negotiate a debt settlement – Some time helps to boost your credit
- Optimize your debt ratio – do it in a proven way as explained here
- How you can Increase Credit Limit – use these hacks
- Know which Credit Cards to Use and avoid When you have bad credit
- No Credit Check Loans and Cryptocurrency – Opportunity to start your credit repair journey
- What do you do if you Sued Legally in court
The only way to protect yourself and your money is to stay on top of Big Brother. Keep in mind there are laws about what can appear on your credit report, and disputing these can double the rate your credit score rises, so you’ll achieve your goal of financial freedom much faster.
Of course, disputing items on your credit report can be a bit daunting. There are two ways to do it. The first option is to use various methods to remove the negative items from your credit report by yourself (Do it yourself way). Find the step-by-step details here how to dispute a credit report here.
The second option is to take professional help (credit Repair Services) to remove your negative from your credit report. Obviously, they will charge you but they can do it faster.
You can also dispute the debts directly with your creditors, which is what the next section is all about. We’re going to discuss the secret to defending yourself against collectors.
Now we’re going to discuss another secret that will help you with improving your credit. You should know the various excuses that are valid to dispute your debt and force your creditors to validate the debt so that it can remove from your credit report.
As I mentioned before, documentation is the key to disputing your debt. Be sure to keep copies of payment receipts, court papers, and anything else that will prove that you don’t owe the money. Use the same letter which I already discuss and add whichever specific phrase applies to you and back it up with documentation.
If you no longer have a relationship with the company, make them validate the debt. This is done through your credit report dispute. It’s also the successful defense used by many debtors in court during foreclosure, repossession, and collection hearings.
Robo-signing was an abusive practice uncovered after the 2010 foreclosure crisis. Banks illegally falsified loan documents through a third party and used those documents to foreclose on people’s homes. It’s one of many secret practices used by creditors to stick you with debts you don’t know they can fight.
How to negotiate a debt settlement – You must know
It’s always good to stay on top of all three credit reporting agencies. When you contact a collector for settlement, you should try to agree with them to a “payment for deletion”. There is a good chance it will help to boost your score. You have to check whether you paid the collection or remove the collection account, and in both cases how many points you can earn.
In this regard you have two options: 1) A mortgage company can pull your credit in the last 30 days and they can run such a simulation. or 2) you can sign up for a three bureau-monitoring site for www.privacyguard.com and run the analysis.
How to settle the debt when settlement isn’t accepted by the creditor
If a settlement isn’t accepted by the creditor, settle the debt with the debt collector. Even though they purchase the debt for pennies on the dollar, debt collectors still attempt to collect the full balance. Debt collectors also continue charging interest and late fees on your unpaid debt. This increases the amount of debt they can eventually sue you for.
In most states, third-party collectors can continue adding interest for three to seven years, although sometimes it’s indefinite. This is why it’s important to settle all your debts as fast as possible. Check your state laws to determine the statute of limitations in your specific circumstances. For example, in California, collectors have four years to legally collect.
Things to remember when negotiating a debt settlement or cancellation
When you negotiate a debt settlement or cancellation, be prepared to receive a 1099-C tax form for the cancellation of the debt. The IRS considers canceled debt to be taxable income that must be reported when you file your taxes.
What do you do if you are sued legally?
To find out if you are being sued in court or have any judgments against you, call your county’s superior court. Most counties have online public records searches you can also find by typing “____ County Court Records” and entering your first and last name into the court’s search engine.
If sued legally, contact the creditor listed as the plaintiff in the court summons. Even after entering a judgment, they are often willing to negotiate. Here’s documentation from a real client we successfully negotiated down $4000 of debt for:
How to Search Courts Records for Judgments
If you don’t pay a creditor, they can sue you in your county’s superior court. If they win this case, they may be able to garnish your wages, but you won’t go to jail. Debtor’s prisons are illegal. To sue you, they must then serve you with a court summons. If you ignore it, it can result in a summary default judgment against you. It’s important to always respond to court notices. This isn’t always easy. Sometimes process servers will serve you at old addresses.
You may be deployed for the military, be in the hospital, take care of family emergencies, or simply miss the notice. Even worse, some collection agencies will hire law firms (or often are law firms themselves). So they’ll send collection notices with the law firm’s header to scare you into paying. These are not official court documents, that need to deliver to you either by certified mail (requiring a signature) or a process server.
Documentation is the secret sauce to defending yourself against debt collectors
Sued for a debt isn’t the end of the world. Because you can use all the documentation that you have in your defense. This includes payment records, hospital records, court records, and documentation of any collection efforts used against you.
I’ve said it before and I’ll say it again – documentation is the secret sauce to defending yourself against debt collectors. If you can prove they violated the law in collecting your debt, you can win the case against them. The strategy explained above could be the answer to the question of how to increase credit scores. If you’re having trouble mastering these tips, don’t hesitate to contact us. We’re always happy to help people achieve their financial dreams.
Do you know, how creditors treat your credit report is also regulated by federal law, specifically the
Section 604 – Permissible purposes of consumer reports
Section 604 provides guidelines for what constitutes a permissible hard inquiry, including a signed contract from you. What most people don’t know is these hard inquiries aren’t typically tracked by the credit agencies themselves. Instead, they use a third-party company called SageStream to track this data. This gives you a chance to increase your credit score.
Section 609 – Disclosures to Consumers
On top of the FDCPA letters you send to collectors, you should also send an FCRA 609 letter to credit agencies. This piles the work onto the creditors and makes their lives more difficult. They now must respond to both your request and the credit agency’s request.
Section 623 – Responsibilities of furnishers of information to consumer reporting agencies
You would think creditors would keep accurate records of all information and accounts, but this isn’t the case. They often lose information, and this is the most solid defense used in foreclosure cases. Most of the time the mortgage company can’t provide the original paperwork and the court dismissed the case.
You may continue reading to know more here about credit repair loopholes, you may skip if you already know.
Section 605 – derogatory information verification
If the accurate derogatory information in the consumer’s file cannot verify, the reporting agency is required to remove it. Not just for the original company, this law required all the company that reports negative credit events needs to produce verifiable proof of the negative event. It cross-checks the accountability of credit reporting agencies for the negative information they pass on.
Due to this section, the reporting agencies need to investigate and remove any disputed, negative item from your credit report within 30 days if it cannot verify.
Now I’d Like to Hear From You
Now I’d like to hear what you have to say: Which tips from today’s post do you want to try first? let me know by leaving a comment below right now.-