Sometimes things in life happen that are beyond your control and you will need to look very intensely into Credit Recovery. This could be the loss of a job, divorce, reduced income or maybe even a personal tragedy. These events can be life altering and usually have an effect on your credit rating. If your credit score declines you need to look for ways to help repair credit. You may not even realize that your score has been reduced until you apply for a credit card or a loan and get rejected. After the initial shock you have to take action to fix that score.

One of the first things you need to do is order a copy of your credit report. There are three main credit reporting bureaus, so you need to see copies from each of them. Looking at your credit report is the best way to know what you need to work on and if there are any incorrect facts. After you review your reports then you need to take action to get your numbers as high as possible. To do this make sure you pay all your bills on time. Past due means low scores. 35% of your score is related to how timely you pay your bills. In addition to timely payments, try to start paying down your loan and credit card balances. The lower your balance, the higher your score.

Credit repair agencies help Credit Recovery for hundreds of people every day. A reputable agency will never pressure you to into hiring them and will begin their relationship with you by offering counseling on your consumer rights and responsibilities. They are experts at credit repair and know exactly what has to be done and how to do it. This means a much faster and more efficient process for you than if you chose to attempt to do it yourself. Your credit score dictates how interest rates are calculated for loans and credit cards as well as things such as insurance rates. The agency’s goal is to raise your score as quickly as possible.

It is possible to attempt to help repair credit on your own. After you translate your credit report you can duplicate many of the same processes that credit repair agencies use. You’ll need to get examples of credit repair letters and use them to create your own individualized forms and begin sending them to the credit bureaus. Do not allow yourself to be overwhelmed and totally give up. Your persistence will be the key to success in Credit Recovery and the avoidance of filing bankruptcy.

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FICO score formula is very complicated and it really depends on what else is on your credit report. A limited history will be more affected than an extensive history.

Mortgage lenders will also require that you settle all derogatory items on your credit report. Get a copy of your credit report (AnnualCreditReport.com) and see what shows. Start with the newest derogatory item and work back to the oldest. If something is close to the 7 year mark, just let it age off.

You should be able to settle old debt for 25% to 50%, depending on how old the debt. Get any settlement agreement in writing and keep that agreement, along with your payment proof, forever. Do not give collectors direct access to your bank account.

Besides cleaning up your credit, there are other major factors that go into the approval process. These include minimum 2 year stable work history, income, debt to income ratio, other assets, downpayment and closing costs.

My guess is that you would have to really work on it for at least 4 years to put yourself in a position to qualify for a mortgage. And even then, you might not qualify for $150K.

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So what ways can i improve my credit score???

Also i read something about how credit score isnt the same as FICO score. How can i improve that too if it’s different?

A good credit score is essential in today’s economic climate. A poor credit score can prevent you from purchasing a home or car, and limit you in getting approved for some of the simplest transactions, like buying a cell phone. There are two main reasons for poor credit scores. The first is simply a lack of credit. Many young people find themselves in this situation. A simple way to improve credit in this instance is to start getting small accounts in your name. Some ideas are store credit cards and a cell phone account. A major purchase like a car with a monthly payment can dramatically improve your credit score. The key, however, is to never let your accounts become delinquent past thirty days. This is the limit at which your delinquency is reported to the three major credit bureaus: Experian, Equifax, and Trans Union. The second, more serious reason for a poor credit score is delinquent credit accounts. Paying more than thirty days beyond a due date will result in a negative report to the credit bureau. A foreclosure or bankruptcy will have a serious impact on your credit score for several years. Many people do not realize that entering into credit counseling will seriously damage your credit score. Also, credit cards maxed to the limit and an overabundance of accounts in general can have a negative impact. Paying on time, paying down, and paying off accounts are all ways to improve your score. Anyone can contact Experian, Trans Union, and Equifax every year for a free copy of your report. It is good to review your credit report for accuracy.

For budgeting advice and tools check out DaveRamsey.com and Mint.com.

But the thing that is causing you more problems is the collection account. When talking to the company about the medical bill. Be sure to negociate with them to have them actually remove the item before you pay it. Only when they send the agrement to you in writting you should pay it. Once they have the payment, and they remove it you should see a boost in your score. As the score only takes into account what is currently on your report, so once it is off the effect is immediate.

Not knowing what major debt you took care of and how much of a negative that is having it is hard to say how much it will improve when you take care of these two issues.