FICO SCORE DEMYSTIFIED

In order to participate in this hobby you have to be able to open premium, top tier credit cards. A minimum credit score at least around 650-700 is required. Mine was around 640 when I started due to a lack of credit history and a couple late payments that were 6 years old at the time. I was able to increase my score enough to get started with a trick called credit piggybacking that we'll learn about later. 

Credit scores are calculated based on a very basic formula, payment history (35%), amount owed to available credit (30%), length of credit history (15%), new credit accounts (10%), and types of credit used (10%). Payment history reflects whether payments have been made on time, amounts owed consider the ratio of outstanding debt to available credit, length of credit history evaluates how long your accounts have been open, new credit accounts consider recently opened accounts, and types of credit used assess the mix of credit accounts like credit cards, loans, and mortgages. These factors collectively determine your "creditworthiness' aka FICO score.

Make a free account, go to ExperianBoost.com (or click that link for convenience) and click "Sign In", NOT Start your Boost, then "Sign Up For Free". Always scroll to the bottom and select "No, Keep My Current Membership" they are trying to sell you their "boost" and we just want to check the score, it does not ding your credit, it is not a hard or even soft pull, you are allowed to check your credit report whenever you want. Look now and then come back here! 

If there are no surprises and your FICO score is over at least 650 you can move on to the section on Credit Cards. But if you'd like to know more about FICO scores read on!

I was terrified of credit cards before I began this hobby. I did not have a single credit card. I only used debit cards because I believed that opening and using credit cards was bad for my credit score and I was afraid of spending outside my means. It was a healthy fear before I learned how to budget, be financially mature and responsible. 

Having lots of credit cards isn't actually bad for your credit score, because your credit score reflects how you manage debt not just the fact that you have debt. So, having multiple credit cards can potentially improve your credit score if you use them responsibly. 

Here's how it works:

1. **Credit Utilization Ratio**: Having multiple credit cards increases your total available credit limit. As long as you keep your personal credit balances low relative to your total credit limit across all cards, your credit utilization ratio remains low. A lower credit utilization ratio reflects positively on your credit score.

2. **Payment History**: Timely payments across multiple credit cards demonstrate responsible financial behavior, which positively impacts your credit score. That's why the first thing you should always do the second you receive a new card is put it on autopay statement balance on due date, also enroll in paperless statements to save some trees and your mail carrier's back.  

3. **Mix of Credit Types**: Having a variety of credit accounts, including credit cards, can positively influence your credit score by demonstrating your ability to manage different types of credit responsibly.

Having lots of credit cards can only be harmful to your credit score if you're unable to manage them effectively, leading to missed payments, high balances, or excessive new credit inquiries. It's important to use credit cards responsibly, INSTANTLY put each new card on autopay.

Remember how I was afraid of credit cards? Well, I had no credit history at all. My husband had one business card that his business bank gave him with his banking account. I used a simple trick called credit piggybacking. My dad added me as an authorized user to his oldest credit card with a perfect payment history. He had the card mailed to himself and just put it in his sock drawer, well probably his safe actually, or he could even just shred the card. The point is the piggybacking, not the credit card with my name on it. So, after his next billing cycle I had my dad's whole entire decades long credit history attached to my FICO score and I was ready to start opening travel cards!

Writing a goodwill letter to a credit reporter is a strategy aimed at requesting the removal of a late payment record from your credit report. Here's how to write a goodwill letter effectively:

1. **Addressing**: Address the letter to the specific creditor reporting the late payment, like Macys, Old Navy, Toyota Financial... You can find their contact information on your credit report.

2. **Personal Information**: Include your full name, address, account number, and any other relevant identification details to ensure they can locate your account.

3. **Explanation**: Provide a brief explanation of the circumstances that led to the late payment. Be honest and transparent about any challenges you faced, such as a financial hardship, medical emergency, or oversight.

4. **Acknowledgment of Responsibility**: Accept responsibility for the late payment and emphasize that it was an isolated incident. Highlight your otherwise positive payment history and your commitment to maintaining it in the future.

5. **Request for Goodwill**: Politely request that they please consider removing the late payment from your credit report as a goodwill gesture. Explain how the negative mark is impacting your ability to secure credit or obtain favorable terms.

6. **Express Appreciation**: Express gratitude for their consideration and willingness to review your request. Acknowledge the importance of accurate credit reporting while emphasizing the potential benefits of removing the negative mark.

7. **Closing**: Thank the credit bureau for their time and attention, and provide your contact information for any further communication.

8. **Follow-Up**: If you don't receive a response within a reasonable timeframe (typically 30-45 days), consider following up with a phone call or another letter to inquire about the status of your request.

It's important to remember that creditors are not obligated to remove accurate negative information from your credit report. However, they may consider your request based on factors such as your payment history, overall creditworthiness, and the severity of the late payment. Be polite, concise, and sincere in your letter, and maintain a professional tone throughout the correspondence.

Otherwise, just wait 7 years when it will fall off anyway and don't ever make a late payment again. 

Writing a pay-to-delete letter can be a strategic approach for individuals with accounts in collections who want to improve their credit score. In most cases the collection agency purchased your debt for pennies on the dollar so you do not have to offer to pay in full. Maybe 50% is a good compromise.   Here's a basic outline of how to write a pay-to-delete letter:

1. **Contact Information**: Start by including your name, address, phone number, and any other relevant contact information at the beginning of the letter.

2. **Date and Recipient Information**: Include the date of the letter and the recipient's information, such as the name and address of the collection agency.

3. **Reference Number**: If applicable, include any reference numbers associated with the collection account to ensure proper identification.

4. **Explanation of Situation**: Briefly explain your situation and why you're reaching out. Express your willingness to resolve the debt and improve your credit standing.

5. **Request for Pay-to-Delete Agreement**: Clearly state that you're requesting a pay-to-delete agreement. Explain that you're willing to pay 50% in exchange for the collection agency removing the negative information from your credit report. But make sure it is an ammount that you ahve available and ready to pay. 

6. **Request for Written Agreement**: Request that the collection agency provide a written agreement outlining the terms of the pay-to-delete arrangement before you make any payments. This helps ensure that both parties are clear on the agreement.

7. **Deadline for Response**: Specify a reasonable deadline for the collection agency to respond to your letter and provide the written agreement. 30 days is reasonable. State in your letter that you will assume it is a no if they do not respond. 

8. **Contact Information for Response**: Provide your contact information again and encourage the collection agency to reach out to you with any questions or concerns.

9. **Closing**: Thank the collection agency for their attention to your request and sign the letter.

Remember to keep a copy of the letter for your records and send it via certified mail with a return receipt requested for proof of delivery. Additionally, be prepared to negotiate with the collection agency and be flexible in finding a resolution that works for both parties. Keep in mind that not all collection agencies will agree to a pay-to-delete arrangement, but it's worth attempting if you're seeking to improve your credit score.

10. If that fails, then your next best bet is to pay in full. It looks better on your credit report to have the collection account marked as closed and paid in full than settled. 

As soon as your FICO score is around 700 come back here, you're ready to begin!