Credit Repair Best Practices For Improving Credit Report Scores Part1

What you probably did not know is that you could end up doing more harm than good with the wrong approach in repairing your credit report. You could very well cause a downward spiral of bad effects on your credit score instead of rectifying it. This series of articles on Key Credit Repair Skills describes the common pitfalls that laypersons commit without having sufficient understanding of the credit reporting system and the solutions to resolve them.

Keep Only Credit Accounts That You Need And Get Rid Of The Rest, Over Time.
Just about a year or 2 earlier, almost every other day, you receive phone calls from credit card telemarketers or from banks trying to sell you the idea of signing up for more credit cards or getting another credit line. And so your applications were easily approved. It seemed so handy then to have more credit to buy more high ticketed items, then. It seems you might have forgotten about it until now.

You realized from reviewing your credit report that the credit accounts remained in your credit report and have been culprit to reducing your credit score since the accounts are still open. You are deemed a greater credit risk as you have been over leveraged on your debt. And if you have a large number of accounts you do not need and use, you will probably not remember you had them and even stop payment on them, hence eventually negatively affecting your credit score.

Your solution to this is simple. Keep only your active accounts and ensure that all your other accounts are closed. Update your credit reporting bureaus with supporting documentation on your accounts closures. Over time, your credit scores will improve.

Over Time, In Time.
Note that the operative word here is over time. If you close all your dormant accounts within a short span of time, your credit reports are unable to immediately detect the closures and hence leading to a temporary dip in your overall credit score as you will have higher credit balances spread out over a smaller overall credit account base. But over time, it will balance out.

Do not adjust your credit score by dormant account closures in the following two scenarios. Firstly, if you are applying for a loan, you might be disadvantaged by the temporary drop in your credit score, giving rise to less favorable loan rates. Secondly, never close your dormant accounts when you have a high overall debt balance.

The Mindset Of Credit Reporting Bureaus.
And finally, from the perspectives of the Credit Reporting bureaus, most view it more favorably with good long term credit history. So if you wish to close your dormant accounts, close the most recent accounts first and only if you do not need the extra credit.

Essentially, you would be ill advised should you actively close up all dormant credit accounts within a short span of time or without correctly timing the closure with your financial needs.

Understand that improving your credit score and eventually getting a good credit report takes time and effort.

Stay tuned while we discuss more Credit Repair skills in the next parted of this series and visit my site for more information.

Source: http://www.ArticlePros.com/author.php?Joey Lee

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