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Credit Repair: How You Can Help Yourself

Credit Repair

Maybe you’ve faced some difficult times. Maybe you were, admittedly, a tad bit irresponsible at some point. Whatever the case, you’re credit score doesn’t shine, and you’re probably finding yourself jumping over hurdles to obtain any kind of credit or loan. Once obtained, you are finding yourself paying higher rates, or maybe you’re hearing “No way!” far more often than you’d  like to.

The good news is there are things you can do to improve your credit situation. You have to know what you’re looking at as far as your credit score and debt, be ready and willing to face your credit score and work to improve it, and you must be committed to seeing the process through, as well as maintaining your credits score after improvement.

Hiring a Professional

Hiring a professional to help you to repair your credit is an individual choice. While it is not absolutely necessary – you can repair your credit on your own – it might e a wise idea for those who are not financially savvy or for those who fear treading the muddy water of credit repair alone. A credit repair specialist can advise you and help you to repair improve your credit score; they can even negotiate your payments for you, often saving you money off the original balance. However, the service does not come without a cost, so if you are willing to pay for help and feel you need it, there’s nothing wrong with doing so.

However, should you want to just take care of credit repair on your own, here’s some smart DIY tips to help you pay off your debt and improve your score. Even if you want to forgo the professional credit repair agent, you might still want to consider the invaluable services of a consumer credit counselor. They can help you to better understand your credit, finances and how to create a budget and stick to it.

Keep up with your credit report and score

You are entitled to one free report from each of the three credit bureaus every year. Take advantage of this and stay on top of things. Knowing your score and what’s  in your report will help you tom pay down your debt and substantially improve your credit. Review the reports, highlight important things and dispute discrepancies. You want your report to be accurate and only you can ensure that it is.

Tackle those debts!

Find out what it is that you owe and who it is owed to. Bring accounts that are past due, but not yet charged off, up-to-date.  Pay off those charge offs and work with debt collectors and creditors to make payment plans and pay off what you owe. Remember not to let your accounts in good standing wind up on the back burner while you take care of past due debts. It is not an overnight process. Take things one step, one payment at a time. Pay your current bills as usual and work to make payments you can afford on the rest.

Maxed out? Pay the limit back down

If you are maxed out on your credit cards, it is going to cost you in points on your credit score. Work to pay your cards down below the credit limit and then to pay them off completely. This will substantially improve you score. Remember, your total debt vs. your total available credit makes up 30% of your credit score.

Build that credit up

Once things are paid off, work hard to build your credit back up. Credit cards and loans that are being paid and reported on time are great ways to do this. Another way is to try and open a new credit card account and keep it below the max and paid on time. Only make one or two applications, so as not to impact your credit score with tons of credit inquiries. If your past credit negatively impacts your chances of getting approved for a regular credit card, try going for a store card of some kind. You could also try a secured credit card, which has a slim denial rate, since you pay a deposit for the card.

Follow these steps, and i due time, you will notice a major improvement to your credit score. Maintain it and you will open plenty of doors in the future that you never imagined possible before your credit was repaired.

Avoiding Credit Repair Scams

Credit Repair

A good credit history is an important and valuable element to maintain. Bad credit can impact your life, preventing you from obtaining loans, housing and these days, even a job. You want to fix that bad credit, and though it is possible to do it yourself, some people would prefer to have a professional leading the way. Call it peace of mind or having a hand to hold, it often helps to have someone who knows the industry and knows how to explain things to you, offer advice and make things happen.

Ideally, a credit repair agent only has your best interest in mind. Unfortunately, that is not always the case. In a world where it is all to common for profits to take precedence over ethics, there are many credit repair scams appearing on the scene. These companies offer promises in pretty little packages. Unfortunately, they can’t and don’t deliver.

That’s not to say that all credit repair offers are not legit. In fact, there are many out there who are reputable and don’t make empty promises. However, the scammers are the ones who want a fortune up front and leave you hanging in the end. Face it, if you had the kind of money that they want up front, wouldn’t you just start paying the debts on your own?

An informed consumer is a smart consumer. Here are a few tips to help you avoid the pitfalls of credit repair scams.

Promise #1: Erasing Information From Your Credit Report.

No wonder so many people fall for this one. The image of some guy standing over your credit report with a big pink eraser, just scrubbing away the mistakes, does have its appeal. Unfortunately, this is one of those promises that they not only can’t keep. Information on your credit report can not simply be erased. Inaccurate information can be disputed and removed if and when found to be inaccurate, however, accurate information will remain on your credit report for 7 years and as long as 10 years, if you file bankruptcy. Accurate information can not be removed just to make your credit report look better.

Promise #2: Pay Us Large Sums of Money Up Front & We’ll Work Our Credit Magic

Nope. Not even close. Not only will this not happen, should you fall for it, it’s illegal. These companies can not ask you to pay before they deliver on their promises. They must provide you with a contract, inform you of your rights in writing and offer you a minimum of three days to change your mind and back out.

Promise #3: We Can Create a Second Credit File for You.

The idea behind this is that you can have another file to use for credit purposes, obscuring the information in the original file, allowing you to obtain credit more easily. First of all, this is what they call fraud. You can not legally obtain credit by obscuring or omitting the truth. Companies promising to create another file or “file segregation” are offering you an empty promise. It’s not only wrong;it really does not work.

Remember, you can dispute and correct mistakes on your credit report yourself by contacting the three reporting bureaus. You may also add an explanation and can easily work to improve your score on your own. However, the help of a professional is often a good idea, so look for a credit repair company that does not sound to good to be true and follows the guidelines as set above. A consumer credit counselor might also be a great choice to help you get your credit back on track.

All Credit Card Consolidation is not Created Equal

Credit Repair

You hear it all the time: credit card consolidation is the way to go. And, based on your mountain of credit card bills, credit card consolidation looks pretty darn good right now.

But what credit card consolidation programs are the best for you?

Often the easiest way to consolidate your credit cards is through a balance transfer offer from another credit card. However, it is important to realize that, although they may all seem alike upon first glance, they are, in fact, quite different according to their terms and conditions.

In order to determine if credit card consolidation is right for you, and to determine if you are getting a competitive rate on a balance transfer offer, you may want to begin by:

• Assemble all of your credit card debt. The best thing you can do, first and foremost, is to assess your credit card situation. Add all of your credit card debt up and determine your interest rate and minimum payment on each card. Then, add all payments together and compare it with current credit card consolidation offers. Make sure the offer is worth your while. For example, it certainly doesn’t make much sense to consolidate your debt if you won’t save on interest.
• Don’t just take one credit card consolidation offer and run with it. Instead, eye up the competition and check their interest rates, promotional rates, balance transfer fees and other related fees.
• Regardless of your decision, make a promise to repay your credit card debt in a reasonable amount of time and with a serious game plan. You can repay your credit card debt without consolidating your debt onto a balance transfer offer, but it may make sense to consolidate debt merely for the convenience of paying just one payment each month.
• Develop a game plan once your credit card debt is paid off. Many people, once their credit card debt is paid off, will simply recharge on their credit cards, thereby creating the same problem all over again. If you need to cut up your credit cards, then by all means so do. If you need to take them out of your purse or wallet, then make the move before your credit card debt becomes a problem once again.

Start Small: Steps you can take to Today to Rebuild your Credit for Tomorrow

Credit Repair

The past year has been tough for many people, and that goes for their credit scores, too.

If you experienced the loss of a job or other financial mess over the past year and you are now eagerly looking forward to a brighter 2010 then you must begin to assess your credit score and work towards building it back up.

In order to repair your dinged-up credit score, you must begin at the beginning again. Unfortunately, creditors simply are not willing to extend credit anymore to those with poor credit scores. So, what does that mean for you?

That means that you must begin taking small – but very necessary – steps to repair your credit so that you can once again enjoy a strong credit score and all of the advantages that go along with it.

• Start with a secured credit card. Make a point to charge purchases on that card each and every month and pay them off in full each month.  A secured credit, although backed by your cash deposit, is a great way to begin proving your credit worthiness to creditors. Check out the terms and conditions of several secured credit cards, as annual fees and charges for these types of cards can vary greatly.
• Once you have developed a consistent payment history with your secured credit card, consider taking out a small retail credit card. Continue to pay on this card, each and every month, so that you can further build up your credit score.
• Once you have shown a strong payment history of at least 12 months, you can often begin applying for unsecured credit cards. However, if you are denied a credit card after this time period, don’t automatically start applying for more cards in hopes that you may get approved for one; too many credit inquiries will only further hurt your already low credit score.
• If your poor credit history is a result of irresponsible spending, consider heading to a credit consumer counseling service. These non-profit organizations are there to help you make better decisions and to start helping you to build a responsible approach towards credit cards.

Can you Negotiate Different Payment Terms with your Creditor?

Credit Repair

Are you one of the millions of people that have been unpleasantly surprised by higher interest rates and larger minimum monthly payments? Are you worried about falling behind on your credit card payments? Are you struggling to pay the minimum payment every month?

If so, then it may be time to consider contacting your credit card company and asking them for payment assistance with your credit cards. Often times, a creditor will respond positively to a customer who recognizes a problem and chooses to deal with it before it gets out of hand. In other words, dealing with your debt problems head on instead of ignoring your mounting debt is not only better for you, but also better for your creditors.

But will your creditor bite?

Maybe and maybe not. There are some credit card companies who simply will not negotiate different payment terms for your credit card bill, while others will work with you to find a plan that will suit both parties. The only way you can find out how your creditor will respond to your request is to simply ask them. After all, you really don’t have anything to lose except a lot of worry over your debt load.

How to Negotiate Changes for your Credit Card Debt:

• Don’t wait until you fail to pay your credit card bills to ask for assistance; instead, make every effort to cover your card’s minimum payment so that you can show good faith on your part. Your creditor will be more willing to negotiate with a customer that has a strong payment history.
• Document all contact you have with your credit card company, including dates and times of phone calls and names of representatives you talked to. Then, ask for a written agreement from your credit card company that details the terms of your new agreement.
• If your credit card company is unwilling or unable to assist you with coming up with more reasonable repayment terms regarding your credit cards, you should seek help through a nonprofit consumer debt agency, who can help you find ways to manage your debt.

Credit Repair Companies: Why you shouldn’t have to Pay for Repairing your Credit

Credit Repair

The tough economic conditions this past year have left millions of consumers in financial straits. From the effects of the recession and credit industry to the tumbling housing market, credit card consumers across the country are finding it difficult to keep up with their credit card payments and are slowly destroying their credit in the process.

If you have been a victim of the economy and you are drowning in a sea of credit card debt, you may be tempted to contact one of those credit repair companies you often see advertising on television, radio and even on billboards. They often offer to repair your credit so that you can get approved for a car loan, a home loan or personal credit.

It may sound quite tempting, actually. The thought of paying a company to pull a quick fix on your credit may just solve a host of problems. But before you jump into the arms of one of these credit repair companies, there are a few things you should consider:

•  No one can legally remove information from your credit report. Regardless of what these companies may promise you, it is simply illegal to have any information removed – unless, of course, you find an error or discrepancy, in which case you must request an investigation by the appropriate credit bureau.

•  The only thing that will remove your bad credit rating is time – and responsible credit behavior.  Your negative credit card information can only be reported for seven years (bankruptcy is ten years). Unpaid judgments go back seven years, or until the statute of limitations ends.

•  Improving your credit score can only be accomplished one way: paying off your debt. In other words, instead of trying to hide from your creditors, contact them and set up a reasonable payment plan, if possible. You will feel relieved to end the stress of avoiding the creditor, and you will immediately begin repairing your credit.

•  If you choose to contact a credit repair company, make sure you receive the brochure, “Consumer Credit File Rights under State and Federal Law.” This brochure should clearly outline the company’s fees, as well as your rights and obligations.

•  Consider seeking help through a non-profit consumer credit counseling service, which is almost always free of charge.

What to do when you can’t Afford to Pay your Credit Card Bill

Credit Repair

If you find yourself in the difficult situation of not being able to pay even the minimum payment on your credit card, there are a number of things you can do – and ignoring the problem is not one of them.

Many of us, in the midst of financial despair, may choose to ignore the creditor phone calls and letters; but this simply doesn’t solve anything. Instead, face the problem head-on and figure out what you can do today to get out credit card debt tomorrow.

• Sit down and make a budget. Not just a general budget, but a detailed budget that accounts for every penny going in and out of your household each month. Examine your monthly expenses and look for ways to cut back.

You may want to consider abandoning your land line if you have a great cell phone plan; you may want to drop your expanded cable television package for its basic counterpart; or you may want to make an effort to cut down on your grocery bill every month by clipping coupons and shopping sales. The bottom line is that most everyone can find an extra $50, $100 or more in their budget if they just take the time to re-examine their spending.

• If you’ve lost your job, make immediate, drastic cuts in your lifestyle. Don’t wait until you are behind on all your payments to start making changes. Immediately cut out all unnecessary expenditures and live lean until you can find another job and regain your financial footing.
• If you’re simply in over your head in credit card debt, and can’t seem to find a solution, you may want to consider contacting a non-profit, credit counseling service. These agencies can help you find ways to meet your financial obligations without getting bogged down by late payments and over-the-limit fees.
• If you find yourself struggling to make your minimum payment, you may be able to negotiate a lower, monthly payment with your creditor. Always remember that it never hurts to ask. Many creditors, aware of the financial problems of so many Americans, understand that it is in their best interest to help consumers find a solution to their credit card debt.

Why Debt Settlement Agencies Continue to Flourish in Today’s Economy

Credit Repair

If you are in over your head in credit card debt, and you don’t know where to turn, you may consider a debt settlement agency. They have become increasingly popular over the last year or two because of the millions of Americans struggling to pay their bills.

Many Americans have lost their jobs, exhausted their savings and have begun living off credit in order to get along. However, as this solution is only temporary, at best, many individuals find themselves in serious financial straits and with more credit card debt than they know what to do with.

Avoiding Bankruptcy

Throughout all of this mess, many Americans want to avoid bankruptcy at all costs; which is why debt settlement seems to appealing. They are often looking for a quick and easy way to clear their debt without filing for bankruptcy.

The process of debt settlement seems pretty straightforward: the consumer contacts the debt settlement company who, in turn, makes deals with the consumer’s creditors to repay a portion of their debt. The consumer then begins making payments to the debt settlement company who, in turn, pays off the creditors.

But is this the best solution?

Avoiding Scams and Fraud

Many times, consumers find themselves paying significant fees to debt settlement agencies who do nothing more than act as a third party to pay on the debt. Even worse, many debt settlement agencies take the money and run, never paying off the debt and leaving the consumers in more of a mess than they started with.

Although there are certainly upfront debt settlement agencies that do their job, there are just as many that do not. Your best option is to avoid using a debt settlement agency and instead turn to nonprofit debt counseling services.

Make sure that the debt counseling service that you use has a strong history and a positive reputation. Check the company’s credentials and follow up with a search with the Better Business Bureau.

Remember: you should never have to pay a fee for consumer credit counseling services, as they are generally nonprofit companies who help you manage and pay off your debt, without filing for bankruptcy.

Why Cutting up your Credit Cards may not be the Right Move

Credit Repair

Many consumers, worried about an overabundance of credit card debt and rising interest rates, have chosen to take matters into their own hands and cut up their credit cards, once and for all.

But is this really the best decision, both for yourself and your credit score?

The first thing you need to know is that your ability to borrow virtually any kind of money is dependent upon a strong credit score, especially in today’s economy. It is because of this that cutting up your credit cards, although a seemingly smart idea, may really be detrimental to your credit score.

For example, cutting up your credit cards and canceling your accounts immediately affects your FICO score, as your available credit is now much lower. Because part of your FICO score is related to your available credit, canceling your accounts may do much more harm than good.

Consider All of your Options

Instead of cutting up your credit cards and closing your accounts, consider paying down the balances. This is simply the easiest way to protect your credit score and keep your debt manageable.

Your timely payments will allow you to establish a good credit history which will, in turn, improve your credit score. In addition, your low credit card balances will keep your available credit open, which will therefore produce a stronger credit score.

The Basics of a Good Credit Score

A good rule of thumb is to seek consumer credit counseling services if you are drowning in debt; otherwise, it is best to manage your debt by making timely payments and by keeping your credit card balances to a minimum.

It is also a good idea to regularly check your credit score. Order a copy of your credit report from all three credit reporting agencies at least on a yearly basis to make sure that your report is accurate and free of any errors or discrepancies.

How to Begin Repairing your Credit Following a Foreclosure or Short Sale

Credit Repair

There are many of us in financial peril due to the housing crisis and the subsequent meltdown of real estate market values. Many homeowners have been forced into foreclosure or short sale, leaving many homeowners wondering where they go from here.

Although it may be quite overwhelming and frustrating to go through the loss of your home, you do need to understand that it is possible to repair your credit and move forward. In fact, if you begin repairing your credit now you may be able to purchase another home in as little as two years.

Make no doubt about it: your credit score will greatly affect your lifestyle for the next one to two years, but it is quite possible to take that time and rebuild your credit score so that you can move forward and rebuild your life and your credit rating.

It is important to realize that we live in a society that is dominated by credit, so repairing your credit now will make your life easier in the years to come.

What you can do now to repair your credit:

1. Order a copy of your credit report from all, three national credit reporting agencies. Although it may be hard to face, there is no time like the present to take a good, hard look at your credit report. What we don’t know CAN hurt us, and our credit report is no exception. Take the plunge, order a copy of your credit report and review it carefully so that you can take care of unpaid bills and correct any errors or discrepancies. Most importantly, immediately contact the credit reporting agency if find any incorrect information on your credit report.
2. Don’t fall victim to credit counseling/repair scams. There is one business that has done quite well during the recession: credit scammers. Be very wary of any company offering to repair your credit for a fee, as many times these are just scams in disguise. Unless you are dealing with an accredited credit counseling service, be very cautious about dealing with any type of credit repair company.
3. Pay your bills on time. Simply put, there is no easier way to begin repairing your credit today than to pay your bills on time and in full, every month, with no exceptions.