Bad credit repair

[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.

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.

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

My son's was a total mess due to stupidity. Took him a while to work on it in the above fashion and recently has just bought his own house, on his own, with no co-signer.

No magical fix overnight. These are the things folks get to sometimes live long enough to regret. You made mistakes, now pay for them slowly, as should be. Otherwise, where would the lesson learned be?
Good luck.

[neoflex]

Just have a question as I am far from a credit expert to say the least. If he closes out a lot of his credit cards at one time wouldn't that also reflect negatively on his credit report? Just asking as I have heard this in the past but never could understand how this would reflect badly on a person although a few years ago I paid off most of my debt and canceled most of my cards except for a couple. Just curious.

[Blueface]

Originally Posted by neoflex

Just have a question as I am far from a credit expert to say the least. If he closes out a lot of his credit cards at one time wouldn't that also reflect negatively on his credit report? Just asking as I have heard this in the past but never could understand how this would reflect badly on a person although a few years ago I paid off most of my debt and canceled most of my cards except for a couple. Just curious.

From personal experience, I can't see that being accurate if what you are closing is accounts with $0 balance and if you are closing them voluntarily at your request.
I had an onslaught of cards I never used. They were just there. I closed out about 10 in one month and my credit score jumped up in only a couple of months from 740 to 780. Didn't affect me anyway but positive.

[AD720]

Originally Posted by neoflex

Just have a question as I am far from a credit expert to say the least. If he closes out a lot of his credit cards at one time wouldn't that also reflect negatively on his credit report? Just asking as I have heard this in the past but never could understand how this would reflect badly on a person although a few years ago I paid off most of my debt and canceled most of my cards except for a couple. Just curious.

I just talked to my financial advisor about this same question. I'm sure that every situation is different but he advised me to not close out my $0 balance cards. He said that by far the heaviest weighted item that affects your credit score is length of credit.

[Blueface]

Originally Posted by AD720

I just talked to my financial advisor about this same question. I'm sure that every situation is different but he advised me to not close out my $0 balance cards. He said that by far the heaviest weighted item that affects your credit score is length of credit.

I guess that makes sense.
In my case, all my cards are/were so old, for so many years, it didn't make a bit of different which ones I got rid of.

[AD720]

Originally Posted by Blueface

I guess that makes sense.
In my case, all my cards are/were so old, for so many years, it didn't make a bit of different which ones I got rid of.

That's probably true, if all your cards have a lot of history then it wouldn't really matter.

PS - Carlos there was an old guy joke in there somewhere, but I took the high road.

[Blueface]

Originally Posted by AD720

That's probably true, if all your cards have a lot of history then it wouldn't really matter.

PS - Carlos there was an old guy joke in there somewhere, but I took the high road.

Something I advised my son to do that I have been doing as well for a while now, post having closed all those accounts, is using a CC for everything in lieu of my ATM card or cash.
I then pay it all off at the end of every week.
Incredible what it does to your score and I have racked up almost enough points for a free cruise soon.

[forgop]

Originally Posted by neoflex

Just have a question as I am far from a credit expert to say the least. If he closes out a lot of his credit cards at one time wouldn't that also reflect negatively on his credit report? Just asking as I have heard this in the past but never could understand how this would reflect badly on a person although a few years ago I paid off most of my debt and canceled most of my cards except for a couple. Just curious.

I would leave them open to boost my score if I was ACTIVELY working on improving my score. Once you hit a threshold you're comfortable with on your score, then I would close them if that's want you want to do.

[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%.