Bad credit repair

[forgop]

Originally Posted by Blueface

Not an expert on this but I believe it is critical to not only look at what you did in the past but also what is it you are doing now.

Reduce your debt to credit ratio.
If you owe over a certain amount of your total credit line, it very negatively impacts you.

True. Ideally, you won't exceed 25-30% of your balance/limit ratio in a typical month.

Originally Posted by Blueface

Reduce the number of credit cards you have.
Close out as many as you can. The more cards you have, the less credit worthy you are and hence lowers your score.

False. Closing accounts can negatively impact your score because you decrease your available credit. If you have $20k in available credit and you eliminate $10k in available credit, you DECREASE your score in that you have a much harder time lowering the balance/limit ratio if balances are any issue at all.

Originally Posted by Blueface

Pay all your accounts on time, without any exceptions. Don't hit 30, 60, etc, lists.

True

[Blueface]

Originally Posted by forgop

False. Closing accounts can negatively impact your score because you decrease your available credit. If you have $20k in available credit and you eliminate $10k in available credit, you DECREASE your score in that you have a much harder time lowering the balance/limit ratio if balances are any issue at all.

I should have been clear.
I meant close them as you pay off.
In my case, when I closed down those accounts, the only debt I had was my home and I had an open equity line of credit with a zero balance.
I kept two cards only with about $20K credit line with no debt.

[forgop]

Originally Posted by Blueface

I should have been clear.
I meant close them as you pay off.
In my case, when I closed down those accounts, the only debt I had was my home and I had an open equity line of credit with a zero balance.

I understand what you meant, but I would leave them open because if someone has a high balance/limit ratio, closing out an account after you pay it still means you may have a high balance/limit ratio. For example:

Scenario A: $20k balances/$25k limits
Your balance/limit ratio is very high at 80%. Let's just say you pay $10k off the top and leave it open. You lower your balance/limit ratio to 40% which will boost your score.

Scenario B: $20k balances/$25k limits
Your balance/limit ratio is very high at 80%. Let's just say you pay $10k off the top and close out $10k in available credit. You lower your balance/limit ratio to 40% which will boost your score. Here, your balance/limit ratio drops to just 66% rather than 40%.

Word of advice: Do not drop any available credit unless you are going to be less than 30%.