Option 1.
- - Create a private match and invite your friends

Option 2.
- - In freeplay mode, change your match type from Standard to Competitive

After trying both I can attest that the lag is almost completely gone, yes there are the occasional hiccups but it works 100% better than before. Post your results after trying please =]

i agree completely this works and also try to download the game to ur harddrive

I couldn't install it to mine because of the slim version, maybe if i could though the lag would be completely gone hmmm

Another solution to share:
http://www.gamesas.com/index.php?/topic/1189228-temp-lag-solution-360/

thanks for the suggestion, gonna give this a try