How to Improve Your Credit in 2010

Your credit rating is more important in 2010 than any other year in recent memory. There is less available credit than any other time in recent history. Credit card companies launched a massive wave of cut backs. You may have noticed your available balance was slashed overnight.

It is now even more difficult to be approved for a home mortgage. In order to be approved for a mortgage today, you must now have a minimum credit score that is 40 points higher than a few years ago and, if you are hoping for reasonable rates, you will need a minimum score in the high 600′s.

You can rest assured that it will be almost impossible to obtain new credit in 2010, especially if your credit score isn’t up to par.

What this means is that you need a plan to get your credit in top shape for the new year.

I spent several hours last weekend writing down my financial goals for 2010, which included my FICO score goal of 775.

I hope that you have decided on some financial goals for yourself. Once you have made a list of goals, you will need a plan for obtaining success. Erasing negative items from your credit report and improving your FICO score should be included in your overall strategy. A formula for achieving these goals follows:

Credit Strategy #1: Questionable Negative Items Should Be Deleted From Your Credit Reports

You should immediately attempt to remove any questionable late payment, repossession, collection, charge off, bankruptcy, or other negative item, by disputing the information.

To accomplish this, you can use the dispute form letter which you will find here.

Sometimes, items such as judgments, charge offs, and repossessions are particularly stubborn to remove from your credit report. As these items have a tendency to be a bit more “sticky,” you may require something more forceful than a standard dispute letter.

You might consider a process called “debt validation” where you demand that the original creditor validate a debt. (It’s a lot different than disputing with the bureaus – yet super effective for removing collections and charge offs.)

It is probably best not to attempt debt validation on your own. I tried to do it myself and failed miserably. In fact, I did such a poor job that the creditors just ignored my correspondence altogether.

Credit Strategy #2: Build Good Credit

The good news is that this is easy to do if you already have an unsecured account. Keep paying those accounts on time. In fact, I suggest setting up an auto payment system so you never slip up. Plus, this saves postage so you are saving twice!

However, if you don’t have an unsecured account, like a MasterCard or Visa, it can be a bit more difficult. If your credit score is in the 500 range, it will be hard to obtain an unsecured card.

Credit Strategy #3: Stay the Course

Don’t lose sight of your goal and what you want to accomplish. Rebuilding your credit will take time. The sooner you get started the better. It is wise to keep track of your credit score by maintaining a detailed log. Begin your log by noting your credit score as of today’s date and tracking it as you rebuild good credit and as questionable negative items are removed. If you are successful with your goals, your credit score should increase each month.

Don’t become down-trodden if things don’t work out the way you think they should. Different strategies may be available to tackle an issue.

We raised our credit scores from the upper 500 range to 745 and 763 in under six months and got approved for our dream home. See proof of our credit repair success at www.creditforcouples.com