Archive for category Credit Repair
Credit Restoration: A New Lease on Spending and Saving
Posted by Owen in Credit Repair on November 23, 2010
It can seem like a monumental task if you take it upon yourself to restore your credit. Of course, there are credit restoration services that can help you in this regard. Nevertheless, understanding the process can better help you to organize yourself so you can improve your credit standing. Whether your credit woes were a result of being laid off or because of non-pays or late pays, or even if you’ve been faced with numerous charge-offs you can regain what you’ve lost with time and forethought.
Take a Look at Your Credit History
The first thing you’ll want to do if you plan to restore credit is to obtain your credit report. Obviously, this is a vital piece of information if you want to make any headway in giving your credit score a boost. Obtain a report from each of the three credit bureaus – Experian, Trans Union and Equifax. This way you can decipher the information and make sure it appears the same on all three reports. It will also give you the opportunity to dispute any errors and make corrections on the reports. If you have an inaccuracy, you’ll need to submit correspondence to dispute the erroneous data on the report. You can also do this online. By having all three reports on hand, you can get a full picture of your credit situation and how it can be ameliorated.
Behavior Modification
Once you’re apprised of your credit situation, you’ll need to take the appropriate steps to alter your past behavior with respect to spending and saving. Make it a priority then to do the following:
(1) Reduce your credit card debt by paying off your high interest credit cards first and maintaining the monthly payments on your lower interest cards.
(2) Don’t apply for any more credit as inquiries can lower your credit score. Instead, concentrate on reducing your debt and making timely payments.
(3) Make sure you make your auto and housing payments in a timely manner. Don’t give yourself any reason to default if you possibly can.
(4) Reduce the amount you’re paying on your automobile or mortgage by considering the option of refinancing. The savings you’ll reap by paying a lower APR can help you manange your money so you can pay off current debts and invest in savings.
(5) Establish a regular savings routine. Get into the habit of making the most of what you make; therefore, learn to save for specific purposes and you won’t throw it all away.
(6) When using your credit cards, don’t exceed your credit limits. Don’t be tempted to use your credit cards on items you don’t really need.
Reduce your Amount of Credit
It can take time but if you’re consistent in changing how you spend and save, you’ll eventually see your way clear monetarily. If you make it your aim to lower the amount of credit you use to a couple credit cards, you’ll be able to realize a greater deal of financial freedom. Therefore, consolidating your credit card debt as well as paying off high interest credit card amounts can help you achieve this goal if you persevere.
Assess Your Spending and Saving Activities
You can help the process along by taking a good look at your credit report and seeing where you can improve with regards to how you use your credit cards. Also, make an assessment of your spending habits and what you need to do in order to save more. By doing so you can avoid the services of a credit restoration service and gain a good perspective as to how you can achieve what most people want in life economically – the chance to become financially independent so they can better provide for their family.
Make a decision to restore your credit. It may seem like a long and laborious process but you’ll be glad you did.
Do you Know Everything you should to Erase Bad Credit from your Report? A Quiz
Posted by Kate in Credit Repair on December 15, 2009
If you want to erase bad credit from your report, do you specifically know how? Or, do you know what some of the negative items mean? Take the following quiz and see if you comprehend all there is to know about erasing bad credit from your report.
(1) You’re wanting to apply for a bad credit auto loan. Besides your credit score, what are the key factors that a lender considers on your report?
(a) The types of credit cards you’ve opened and the number of inquiries.
(b) The amount of time you’ve had a credit history and the number of accounts you’ve opened.
(c) How many open charges you have and the amount of your debt load.
(d) Your payment history and how much you owe.
Answer: (d) Although the other aforementioned factors play a part in the decision-making process for a loan, your payment history and the amount you owe have a significant influence on your score as well as whether or not you’ll qualify for a loan.
(2) Which of the following items can be erased from a credit report?
(a) Tax liens
(b) Garnishments
(c) Inquiries
(d) All of the above
Answer: (d) All of the above. In addition, you can also remove foreclosures, bankruptcies, civil claims collections, late pays, repossessions, and charge-offs.
(3) Is it true that you can erase bad credit legally from your report by filing bankruptcy?
(a) Yes. But only if you file Chapter 13 Bankruptcy.
(b) Yes. You can erase bad credit fast by filing either Chapter 7 Banktruptcy or Chapter 13 bankruptcy.
(c) Yes. But first you must file a “Statement of Affirmation” before this can be done.
(d) No. Bankruptcy will not clear the debts from you file. In fact, the bankruptcy will be added to your Credit Report further indicating to a lender of your inability to pay. Therefore, it’s important to secure the services of a mediation company such as a Credit Repair service if you want to erase bad credit of any kind from your credit report.
(4) If someone wants to go through a Consumer Credit Counseling Service in order to improve their score, how long will it take for them to see an improvement with respect to their overall credit report?
(a) Consumer Credit Counseling Services can give you the assistance to pay down your debts in a matter of 60 to 90 days.
(b) A Consumer Credit Counseling Service can assist you in management of your debts so you can remove most items in 30 days and see an improvement in your score.
(c) Simply by signing up with a Consumer Credit Counseling Service will automatically boost your credit score.
(d) Often times, if it’s shown that you have gone through a Consumer Credit Counseling Service for help with debt management and credit counseling, this will reflect negatively on your score. It’s better to learn how to erase bad credit before taking this measure.
Answer: (d) Unfortunately, many lenders will look at the fact that you had to obtain the help of a Consumer Credit Counseling Service as a negative. This is also viewed as such on your credit report.
(5) What items below can’t be erased from a credit report?
(a) Incorrect personal information
(b) Medical bills.
(c) Student loans.
(d) All of the above.
Answer: (c) If you don’t pay off your student loan, it’s normally a difficult item to erase. This, specifically, applies to government-backed student loans. Only by going back to school or through a loss of income can you lessen the burden of paying such a loan back. A private student loan can be forgiven if you file bankruptcy and have the bankruptcy removed from your report.
How’d you fare? There’s no easy solution to erasing bad credit nor can you erase bad credit for free. There’s always some kind of price you have to pay. However, if you’re diligent, you can improve your report and, as a result, your future financial security.
Erase Bad Credit: Frequently Asked Questions
Posted by Kate in Bad Credit FAQ's, Credit Repair on December 13, 2009
If you want to erase bad credit, you can either erase bad credif for free or find a company who will do it for you. Before you consider either possibility however, it’s good to know a little about the process. The following FAQs should answer some of your questions in this regard.
How long do negative items have to stay on your credit report before they can be removed?
Negative items such as late payments, non-pays, or charge-offs typically do not fall off your credit report for seven years. However, it is possible to remove these items before seven years’ time.
With regards to erasing bad credit, can credit repair companies even erase such negative items as bankruptcy?
Yes, even bankruptcies can be removed along with delinquencies and judgments.
Can you resolve a dispute with a creditor yourself and have a negative item removed from your report?
Yes. You can erase bad credit legally by contacting creditors yourself and having the negative information removed from your report. Better yet, if you do resolve a dispute with a creditor, you can have them contact the Credit Bureau and have an item erased.
With a credit repair company, can you erase bad credit fast?
Situations vary but normally it takes from a minimum of thirty days to sixty days for you to see progress along these lines even when you use a credit repair company. Typically, if you do it yourself, it may take a longer amount of time.
On your credit report, what is an inquiry?
An inquiry listed on a credit report refers to any potential lender or creditor who looks at your credit report information in order to to consider you for a loan or credit. Too many inquiries can drive down your credit score. So it’s a good idea to keep this type of activity to minimum when it comes to your credit score.
On your credit report, what does it mean to have a credit account reinstated?
It means that a previously closed account is now available for use again.
When placing a dispute, how many days does a creditor have in order to respond to a credit bureau’s inquiries with regards to your allegations?
The creditor has 14 business days in which to respond. If no response is made in that window of time, then the disputed report must be expunged and an updated file will be mailed to you for your confirmation.
On a credit report, what is the definition of a charge-off?
A charge-off on a credit report is a credit amount that could not be collected by a creditor.
What are the two acts that protect your rights with respect to erasing bad credit information from your file?
The two acts instituted to protect your rights in this regard are the Fair Credit Reporting Act (FCRA) and the Fair Debts Collection Practices Act (FDCPA).
What does the Fair Credit Reporting Act say with regards to the information on your credit report?
The Fair Credit Reporting Act (FCRA) stipulates that the information on your credit report must be accurate, timely and verifiable in order for such information to stay on your report.
What is the key area that affects your credit score on a credit report?
Your payment history is the primary factor that affects your score. Also the amount of your debt has a significant influence.
The FAQs above should assist you if you’re wondering how to erase bad credit from your report. There are a number of credit repair companies as well who can help with erasing bad credit. Research the Internet and you can find answers to your questions and receive further help in this area for you and your family.
Take the Bull by the Horns and Erase Bad Credit
Posted by Kate in Credit Repair on December 11, 2009
Bad credit items can be eliminated if we go to the proper professionals to get our negative financial past erased. If you want to secure a better financial future for yourself and your family, it’s important to take the bull by the horns so you can erase those negative details that make your credit score less than acceptable in the eyes of the “conventional” lending community. To get off the rocky road you’re on financially takes some effort but it can be accomplished if you find someone who has the expertise to erase bad credit legally.
Erasing Misconceptions
Legally, we’re told that bad credit items normally stay on one’s credit report for seven or ten years depending on the item. However, this isn’t true. The law only stipulates that accurate credit may stay on your report for a period of seven years. This doesn’t mean that erasing bad credit before 7 years isn’t an option.
Paid Charge-offs
However, one must remember even if they pay off an older account, it may be shown as a “paid charge-off” meaning this item will remain on your report for another seven years. So, paying off your older credit card debt can actually hurt you with respect to how it’s conveyed on your report.
Erasing a Previous Item
You can erase bad credit fast, even listings such as judgments and bankruptcy if you hire the right company to handle it for you. Part of understanding how to erase bad credit is noting what the Fair Credit Reporting Act says about erasing bad credit. According to the Act, if a negative item is not verified within a 30-day span of time, the item should be deleted permanently from the report. If you see an item that was previously removed appear on your report, you can have it removed immediately by alerting the credit bureau in this regard.
Declaring Bankruptcy does not Clear your Report of Negative Items
Some people believe if they declare bankruptcy that by doing so they can erase bad credit legally; however, this isn’t the case. You still have to seek the aid of a professional to erase bad credit from the report. It isn’t surprising then that the Federal Trade Commission (FTC) gets the majority of their complaints issued against credit bureaus over all other kinds of businesses.
CCCS
What’s more if you’ve opted to go through a Consumer Credit Counseling Service, you do nothing to help your bad credit situation either as many times creditors or lenders, upon hearing you went through such an organization with respect to debt mediation, will treat you no better than if you’d actually declared bankruptcy. As stated, there is no hard and fast rule in the law that any type of credit must be reported at all; therefore disputed items can definitely be erased.
To find a company to erase bad credit for free will not likely happen soon. Nonetheless, paying the cost for erasing bad credit is a necessary expenditure to make amends for your financial history.
Debt Negotiation – Eliminating Debts Can Bring Financial Solace
Posted by Kate in Credit Repair on October 27, 2009
If negotiating with your creditors can reduce your debt load, it is worth giving it a try. This is because many debtors have done so and achieved financial freedom. Debt negotiation that is done with the help of a debt negotiation company will help you to manage debts effectively. These may include negotiating store cards, medical bills, payday loans etc. Most commonly debtors opt for debt negotiation to settle credit card debts.
You can opt for debt negotiation with the help of a debt negotiation company. The company will talk to your creditors so that the debt amount you owe is reduced. There is one disadvantage of debt negotiation also known as debt settlement or debt arbitration. You don’t make payments to the creditors directly. A trust account is created and you make payments into that account. When half of what you owe is accumulated, you negotiate with the creditors. Till the time you don’t pay the creditors directly, your credit score drops. However, this is just temporary. The moment you start making payments again, your credit score improves. Debt negotiation reduces your debts by as much as 40% to 60%.
It is important to find out how reliable the debt negotiation company is. More and more debtors are getting tricked into fraudulent activities of debt help companies. The firms that take care of debt settlement or debt negotiation charge very high upfront fees but in most of the cases, the services they offer are not satisfactory.
Another important aspect that you should keep in mind is that when you enroll for a debt settlement program, don’t leave it midway. If you leave the program midway, you will not only lose the cash you have paid as upfront fees but you will also lose the opportunity of getting financial solace that was inevitable had you carried the debt negotiation program to completion.
Bad Credit Loans | Part One: Loans for People with Bad Credit
Posted by Kate in Bad Credit Auto Loans, Bad Credit Mortgages, Bad Credit Personal Loans, Bad Credit Refinance, Credit Repair on September 8, 2009
In this series of articles, I will be giving an overview of different types of loans for people with bad credit. Many of these loans have features in common. Feel free to jump to the article that applies most to the subject you’re interested in. Each article has a table of contents at the end, as well as a link to the next article in the series.
Overview
Most of us have had financial hardships at least once in our lives. It doesn’t take much to upset the normal flow of finances – a loss of a job, unexpected medical expenses, auto accident – in my case, it was the unexpected closure of my small business. Regardless of the cause, bad credit is one of those things that many of us have to deal with. Just because you’ve got bad credit doesn’t mean that you don’t have the same financial needs everyone else does when it comes to borrowing. It just means that in order to get a good rate, you have to work a little harder and a little smarter. You may also have to look at bad credit loans as more of an opportunity to meet your financial needs while rebuilding your credit.
What is your situation?
Before you start your search, know what kind of loan you need. Are you looking for personal loans for people with bad credit, or a bad credit refinance? Knowing the type of loan you need will speed up the process of finding the right financial solution for you.
Know your Score
Regardless of the type of loan you need, the first thing you should do is know your credit score. Order your credit reports from all three reporting agencies – Equifax, TransUnion and Experian. You can usually find a way to get these reports for free, especially if you have been turned down for credit in the last 30-90 days. Once you’ve got your credit report, look at it for errors and be sure to write to each credit agency to report the errors right away. Know the meaning of credit scores and use that knowledge to improve your credit. Your credit score will be a factor with almost any loan you apply for, but will be most critical for home loans for people with bad credit.
Have a Plan
When you start shopping for a bad credit loan, have a rough idea of what you’re looking for. If you need student loans for people with bad credit for example, know when you expect to be able to start making payments. You probably don’t want to sign up for a loan that requires you to begin making payments when you’re still attending classes. If you are looking for car loans for people with bad credit, have in mind the price range of the car you’re thinking about buying. With all loans know the upper limit of what you can afford in monthly payments.
Shop Around
Most financial needs are immediate. You have pressing bills or expenses that need to be paid now. It is very tempting to take the first loan that you qualify for. It can make a huge difference though to shop around – especially for mortgage loans for people with bad credit. Small differences in interest rates or closing costs can cost you thousands of dollars over the life of a loan. Auto loans for people with bad credit can be costly as well – know in advance the total cost of financing your new car and the total monthly payments. Don’t forget to factor in insurance on a new vehicle – newer cars generally cost more to insure and can come as a surprise later on.
Summary
Bad credit doesn’t have to be the end to borrowing. You just have to know your situation and be prepared to look for the right product to suit your needs. Once you find the right loan for people with bad credit, think about how you can restructure your finances to improve your credit to eventually get better rates.
In the next article, we will be going into more detail on a particular type of bad credit loan – mortgage loans for people with bad credit.
Bad Credit Loans | Part Two: Mortgage Loans for People with Bad Credit
For reference, the entire series of articles is listed below.
Bad Credit Loans | Part One: Loans for People with Bad Credit
Bad Credit Loans | Part Two: Mortgage Loans for People with Bad Credit
Bad Credit Loans | Part Three: Car Loans for People with Bad Credit
Bad Credit Loans| Part Four: Personal Loans for People with Bad Credit
Bad Credit Loans| Part Five: Bad Credit Refinance
Ins and Outs of a Bad Credit Mortgage | Part Two: Should I Repair my Credit?
Posted by Kate in Bad Credit Mortgages, Credit Repair on September 4, 2009
The decision of whether or not to repair your credit before applying for a mortgage or a mortgage refinance is a difficult one. Obviously, the better your credit, the better deal you will be able to qualify for. However, sometimes there is only so much repair that can be done and it can be quite time consuming. If you need to get into a house right away, or you have a deadline to refinance, you may need to compromise.
Get your Credit Report
You have to be informed. The first thing to do is to pull your credit report. You can do this through one of the major credit reporting bureaus, such as Equifax, Experian or TransUnion. If you have been denied credit recently, you may be able to qualify for a free credit report. There are also other agencies out there who specialize in free credit reports. When you do get your credit, be sure to select the type that comes with your credit scores – and if you can get scores from all 3 credit agencies so much the better.
Know your Credit Score
Some bad credit mortgage lenders go with your high credit score, others go with a blended rate. That is why it is important to know what your scores are.
What do credit scores mean?
720 and above: Excellent credit. You will probably be able to get the best rates available – and you should certainly shop around to get the best deal. You will most likely be able to borrow more and you may not have to purchase mortgage insurance.
675 – 719: This range of scores is considered to be an Average-Good credit rating. You may not be able to get the best rates, but you should have little trouble qualifying for a good loan. You will most likely have an interest rate about half a percent above that of someone with excellent credit.
620 – 674: This range of scores is considered to be below average. Expect to pay about two percent more on your loan than if you had excellent credit. You will likely need to provide more documentation and you will
Under 620: This is considered bad credit and you will most likely need to shop for subprime or bad credit mortgages.
How are credit score calculated?
- Payment history – 35% or so is made up of how well you pay your bills on time
- How much you owe – 30% of the score is determined by what % of your credit limits you owe on
- Length of your credit history – 15% or so of the score is dependent on how long you’ve been using credit.
- New Credit – 10% of your score will be based on your new credit. New credit applications and approved credit can lower your score. If you know you are going to be borrowing, try to do all your applications in a short period of time to avoid lowering your credit score.
- Other – 10% of the score will be made up of other factors, like variety of credit sources for example. The more different types of credit you have – mortgages, car loans, credit cards, student loans – the better your score will be.
Before you meet with a mortgage broker, document any reasons for late payments, overlimit issues and so forth. The more prepared you are before your meeting with the lender, the better. They may be able to negotiate with the bank on your behalf to get you a better rate.
Now that you have all this information, you may be thinking, “Yes, but tell me how to repair my credit.” When I had credit issues, the first thing I did to repair my credit report was to look for inaccuracies on all 3 reports. If you find mistakes, write to the credit bureau explaining the error. They have only 30 days to reply – if they don’t respond with proof of the problem, they must remove the item from your credit report. Repairing my credit wasn’t easy, part of it was writing to the agencies, but part of it was understanding how the score is calculated and starting to change my spending habits. Over time I was able to repair my credit rating and I am now able to qualify for much better loans. But I started out with credit well below 600 – and my first mortgage was a bad credit mortgage. However, I was able to buy a house and build equity as I was fixing my credit.
In the next article, we will discuss determining how much you can afford.
Here is a list of all the articles in this series:
Ins and Outs of a Bad Credit Mortgage | Part One: What are Bad Credit Mortgages?
Ins and Outs of a Bad Credit Mortgage | Part Two: Should I Repair my Credit?
Ins and Outs of a Bad Credit Mortgage | Part Three: How Much of a Bad Credit Mortgage Loan can you Qualify For?
Ins and Outs of a Bad Credit Mortgage | Part Four: Types of Mortgages for People with Bad Credit
Ins and Outs of a Bad Credit Mortgage | Part Five: Finding the Best Bad Credit Mortgage Lenders
Ins and Outs of a Bad Credit Mortgage | Part Six: Getting the Most out of Mortgages for Bad Credit
photo credit: Casey Serin