The 5 Worst Ways to “Fix” a Credit Score

The 5 Worst Ways to

( – What’s your number? Having a solid credit or FICO score is one of life’s most valuable assets. That is why many people are on a mission to fix their credit report in the first place. There are several ways to do this, but there’s no one easy solution that works for every person. Slow and steady wins the race — as does avoiding these five disastrous “credit repair” methods.

Get a Co-signer

Your heart is set on that new car, but the dealership turned you down. Your credit score is just too low; they can’t help. What about getting a co-signer?

First, let’s talk about how credit scores are composed:

  • Payment history (35%)
  • Lines of credit owed (30%)
  • Length of credit history (15%)
  • New lines of credit (10%)
  • Credit Mix (10%)

Scores range between 300 and 850. Even if you’ve never been late on a payment, having too much or too little credit can keep a score in the low range.

The idea of getting a cosigner can seem smart. But if you cannot fulfill the new loan obligations, you’ll affect their credit too. Work on raising your score by paying off existing debt using the snowball method. Tackle your largest debt first, driving your motivation to chisel away at high balances.

Hire a Credit Repair Agency

Be extremely cautious about contacting shady credit repair agencies. While there are a few legitimate options out there, many focus on collecting an upfront payment and fees along the way. They claim they will offer you financial guidance and remove negative data from your credit report, which will boost your credit score. The reality is that you end up paying far more than you would have by just working on your debt.

Instead, make all of your minimum payments on time. If you have trouble with a rising payment, call your credit card company directly. Ask about your options for bringing the debt down. You might be surprised to find out how willing they are to work with you.

Transfer Balances to a High Interest Card

You get an offer in the mail to transfer all of your cards to just one card, with the promise your score will go up. This is not necessarily the case. Amount owed plays a strong role in factoring your score. It may result in a temporary boost in your score, but it will still show a high balance, too.

The truth is problematic. This does not decrease your debt-to-income ratio; in fact, it may lower your score. It will take you longer to pay off that debt if the APR is high.

Filing Bankruptcy

Bankruptcy can be a bit of a dirty word. Depending on who you ask, it’s either the best or worst solution for severe debt — but it’s far from simple or easy.

Bankruptcy falls into three distinct categories. Chapter 7 clears most debt out completely and requires liquidation of assets. Chapters 11 and 13 require some repayment over time. All affect your credit score negatively, but they do halt collections actions from creditors.

So, is it really right for you? Working with your creditors on a repayment plan is often a much better choice. But if you really don’t see any other way out, talk to a lawyer first.

Fall for a Phishing Scam

They promise you the world in that email: an offer to wipe out your debt and give you a new credit score of 750. You apply, only to realize a few days later they stole all of your personal information.

Scammers prey on desperate consumers looking for a fresh start. If a phone call, website ad or email seems too good to be true, it probably is. Good credit can’t be bought. You must work hard to legitimately build up the score and pay off debt.

A score of 800+ gives you buying power at the most affordable market rates available, but it comes with a cost. You have to have the perfect balance of income and debt and maintain it over time. It IS, however, an attainable goal. Like any sweet reward, it just requires a bit of hard work to achieve.

~Here’s to Your Success!

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