Credit Articles en Copyright 2009 2009-02-12T00:41:19-05:00 Want to Improve Your Credit Score? Pay Bills On Time Paying your bills on time seems like common sense, however it is the most common reason that people have poor credit scores. If you are going through lean financial times this is certainly easier said than done. Unfortunately when hard times fall upon us we rarely have any advance notice. Things like loss of employment, a death in the family, the family car breaking down, or even unforeseen medical problems can all put a pinch on your family budget.  If you have not saved any money for a rainy day fund these kinds of problems may lead to you missing a scheduled payment with one of your creditors. This is one of the quickest ways to seriously damage your credit scores.

There are steps you can take to avoid financial trouble or at least minimize its effect on your life. The first thing each of us should do is to have a planned budget for our finances, as well as saving money for many of our purchases instead of buying most things on credit. If you don’t know how much money is coming in and going out each month you have a recipe for disaster. Your first step should be to list all of your income sources, and all of your bills and payments for the month on a sheet of paper. If your bills are more than your income you are already in trouble. Hopefully after listing all of your bills including food, gas, and entertainment you will at least have 30% of your income left over to put into a savings account or rainy day fund. If this is not a possibility you basically have two options, either you need to generate more income or reduce some of your liabilities. Ways that you might be able to generate more income are to get a better paying job or even second part time job, sell some of your possessions that are not needed, or even take on a roommate to lower your monthly expenses.

The next part of your plan would be to go through your list of bills and payments and break them down into to lists called WANTS and NEEDS. You definitely need a roof over your head with electricity, and water service. Food is definitely a need. Many people will consider their auto mobile and cell phone as a need, especially if you must have them for your job, but you need to be honest with yourself. Can you take a bus or train to work, can you carpool with a friend. If you must have a cell phone for work see if your employer will pay for at least part of your monthly bill. Find ways to lessen you food budget by not eating out often and using coupons at the grocery store. Find ways to lower your electric bill by adjusting your thermostat and turning unneeded appliances off in your home. Insurance can be both a WANT and a NEED. If you own a home or car you will need to insure them, and health insurance will keep you out of financial difficulty if you have an unexpected illness. Make sure that you are not over insured and when it comes time for renewal shop around to see if there are better deals. Remember, the higher your credit score the less you will pay for insurance of all types!

Let’s talk about your WANTS. These are items that you do not need to have to live, they may make your life more enjoyable but you do not absolutely have to have them. Things like Cable TV, Internet access, Gym or Health Club Memberships, Beauty Salons, Second Car or Phone Line. These are item that may be reduced or eliminated to help keep the budget in line. These may be tough decisions for you, but it is better for you in the long run to reduce or eliminate these payments than to pay your bills late and get Late Pays, Charge Offs, and Collections showing up on your credit report.

If you have gone through all of these steps and still find yourself having financial difficulty see if you might be able to get some temporary assistance from family, friends, or even possibly your church or a local charity. If you’re financial troubles are going to be with you over the long term you may need to see if you are eligible for some type of Government Assistance like welfare, food stamps, or housing assistance from the Department of Housing and Urban Development (HUD).

When you have truly done every thing in you power to reduce your bills, or you have an unexpected event in your life that is going to prevent you from paying your bills on time, there are still thing you may be able to do to lessen the effect on your life and your credit scores. The first instinct we all have when we cannot make a scheduled payment is to avoid our creditors and hope they will go away. We all know that they never do. It is in our best interest to call your creditors prior to your due dates and let them know you are having problems and see if they are willing to do some type of work out plan that will be in the best interest of both parties. Not all creditors will be willing to work with you but some will, you do not know until you try. If you just don’t pay your bills you know your credit will be damaged. By calling your creditors you may have a chance for a work out, or at least they might give you more time to pay. Many times a Mortgage Bank, and Auto Finance Company might let you make interest only payment for a short time and roll the principal payments into the back end of the loan. This may give you several months to catch up on your bills.

Sometimes in life even after you do everything we have discussed you are going to have too much month at the end if the money. If this is the case deciding what bills you should pay, and which ones you shouldn’t can be very important for your overall financial health. Your first priority should be your secured debt. Secured debt is loans that have been secured with some form of collateral. Examples of secured debt are your Home Mortgage and Auto Payment. If you do not make these payments the creditor has the legal right to take back the property that secured the loan. This can lead to the Foreclosure of your home, or Repossession of your vehicle. These should be your first priority because you need a roof over your head and transportation to your job. Remember that if these secured loans require insurance coverage as a requirement of the loan you will need to make sure that these payments are made as well. The next priority would be your utilities like electric and gas. Call the utility company to see if they may have some type of short term assistance program. Your last priority to pay is unsecured debt such as credit card payments or the items listed in the WANTS column in your budget. While missing these payments will negatively affect your credit, these creditors cannot take back any property that was purchased as unsecured debt.

In summary: Always pay your bills on time for a healthy credit report. Create a budget for you and your family. Start or add to a savings account or rainy day fund for difficult times that may pop up in the future. Save money for the things you need to buy instead of buying most things on credit. This is the beginning of a brighter financial and credit future.

Credit Repair, Credit Repair Tips 2009-01-19T20:01:30-05:00
Credit and Savings Tip: Pay Off Your Credit Card Did you know that carrying a credit card balance is costing you money each month?  It’s probably hurting you credit score as well.

Here’s a tip.  Save Money Each Month - On average, consumers who carry a balance owe $2,200, on which they pay 15.2 percent in annual interest charges. Eliminate that and you can save $28 per month on your household budget. Some 15 percent of consumers carry balances of $10,000 or more, according to Fair Isaac, the credit-scoring company; these folks can save at least $125 per month by paying off their debt. Not to mention you will raise your credit scores by having lower revolving debt!

How to Do It - Paying off your balance is easier said than done. The trick is to stop charging. Then pay more than the minimum required each month until it’s paid off. Dig up cash for this from your U.S. Treasury stimulus check, garage sales, IRS refund, or extra work part-time.

Credit Repair, Credit Repair Tips 2009-01-18T19:57:11-05:00
Building A Good Credit Record Given the state of the economy, it is more important than ever to have good credit. Good credit means having a good credit record and a good credit score. Every day we get bombarded with bad news—record numbers of homes being foreclosed… People drowning in debt.  The bad news never seems to end.  If you have hopes to buy a house, buy a car, get a good credit card ... even to get a job, you need to have good credit. Here are some tips to build and maintain a good credit record.

See Where Your Credit Report Stands

You need to see where your credit stands before you take any action. Look for any discrepancies such as other people’s information mixed up with yours. This could happen due to the credit bureau’s mistake or worse, someone has targeted you for identity theft. It is a very good idea to look at and be in control of your credit history. To view your credit report, check out our articles on getting your credit report.

Open a Checking and Savings Account

If you have a couple active bank accounts, you are seen as someone who has steady income and this provides the bank with answers to questions they may have including; do you pay your bills on time? And are you consistently using the overdraft protection?

Apply for a Credit Card

If your bank approves you for a credit card, do not allow your bank to approve you with a higher limit than you can handle. You should never reach your limit. Keep your credit use to 30% for the best possible credit and pay all of your bills on time.

Be a Part of Someone Else’s Credit

If possible, attach your name to a trusted family member or spouse’s line of credit as a co-signer. While this loan will not be used by you, the primary signer’s loan will affect your credit history. It is extremely important that you trust this person and know of his or her credit history. Be sure to request a copy of this person’s credit report. Your can build credit if you co-sign with someone who maintains positive credit.

Once you have begun to build good credit, maintain your credit by establishing a budget to pay your bills on time and consider opting for car loans, mortgages and personal loans. When you prove you can pay these loans regularly and on time, building a good credit report will be simple and will not take long to become established. 

Credit Repair, Credit Repair Tips 2008-12-19T01:56:26-05:00
Build a Good Credit Record Now: Enjoy It Later! Some things just get better with time.  Wine.  Some cheeses.  Good friendships.  All of ‘em take a little time to reach their best.  The same is true for credit reports.  It takes a little time to improve your score.  But the time and effort is well worth it.  A good credit score can save you thousands of dollars over time.

What does your credit report look like? If you don’t know you will want to find out. Even if you have a bad credit record you can change this over time. Believe it or not, building a good credit record is not as hard as you may think. Once you get on track and know how to move forward you can build better credit soon enough.

Building a good credit record can often times be frustrating. Many people find that in order to build credit they need credit. But of course, if you stick with things you can make headway soon enough.

First things first, open a checking and/or savings account. This will not help you establish credit, but it can be used to show that you not only have money but that you also know how to manage it. For the majority of consumers this is the most obvious first step to take.

As you move forward you may want to look into opening a store credit card. But remember, just opening the account is not good enough. You must use it and then repay the money when it is due. Remember, when building credit your main goal is to show that you know how to manage your money. If you begin to miss payments you are not building good credit but instead giving creditors a reason to turn you down in the future.

Some people, no matter how hard they try, cannot get started. In this case you should seek a cosigner. For example, you may not be able to get a car loan on your own but with a parent as a cosigner you can. As long as you keep this account in good standing both you and your cosigner will build good credit.

It may seem like a lot of hard work to build a good credit record, and it can be. But remember that the hard work you put in now will pay off later when you have a good credit record and high credit score. 

Credit Repair, Legal Credit Repair 2008-12-16T13:32:17-05:00
Free Credit Repair: You Can Do It Yourself Did you know that you can repair your credit yourself?  In fact, the Federal Trade Commission thinks that self credit repair is the best way to go.  Here are a few thoughts about free credit repair.

Are you looking for information on credit repair and self help?  How much help do you need when you are looking for credit free repair?  Before you answer that question consider three ways to “fix” credit. 

The first way is rather obvious.  You pay off all of your debts and thus are given more credit to spend.  This is problematic for some because money is often times scarce and interest charges can be predatory.  The second way to pursue credit free repair is by negotiating with creditors for a lower price than what is stated on file.  You the consumer may perform this, or you may get help from a debt relief agency or by a debt relief lawyer. 

Is there any difference between the three?  A debt relief lawyer would have experience in this situation so might be more knowledgeable in his negotiating strategy.  Debt relief agencies may refer you to an attorney or have their own financial specialist help you on a case.  However, you must beware of some debt relief companies that are actually scam operations.  The usual model of a legitimate debt relief agency allows the debt-ridden consumer to refinance through the company.  In turn, the company negotiates with the many creditors to create a consolidated balance.  However, scam operations may simply offer to negotiate balances and not actually do anything—all the while requesting more money.

The third type of credit repair service is even more concerning—some companies will offer to create a new credit file, or a new credit identity, so you can wipe the “slate” clean and start over.  This is an absurd promise, and you should hope it’s a scam.  Otherwise, you may be committing a crime.  There is no way to fix a repair file other than to satisfy your creditors.  The credit bureau merely reports on what financial transactions have been taking place.  The individual creditors have the most power to remove an item.  Only by legal dispute can a credit bureau remove items from a credit file.  This can only be done after a thorough investigation into the matter.  If you want to dispute charges, be sure to provide as much evidence in your favor as possible.

If you want to repair your credit it’s time to start analyzing your credit history.  You can do this by requesting a free copy of your file from any or all of the big credit agencies, Experian, Equifax and TransUnion.  You are legally entitled to one free review every 12 months, as well as unlimited access through one of the commercial providers.

You may also want to check out our tips at: 3 Things You Can Do Now To Improve Your Credit Score.

Credit Repair, Credit Repair Tips 2008-12-09T10:26:18-05:00
Want to Save Tons of Money?  Do a Little Credit Improvement Have you ever sat down and added up how much you spend each month on credit?  Think about it: most of us have car loans, credit cards, and some of us have mortgages and student loans.  Did you know that the price you pay (the interest rate) for these types of credit depend on your credit score?  Someone with a low credit score pays more than someone with a higher credit score.  Why not save some money by improving your credit?

There are plenty of options available to you if you have bad credit.  However, are they really worth it?  Some of these options may end up costing you much more money than legal credit repair would.  Independent lending companies that offer bad credit loans often subject their borrowers to predatory lending.  They insist on high interest rates, strict terms and not much room for negotiation.  Payday loans have low limits and must be paid back immediately.  Car title loans and Refund Anticipation Loans are also flawed, mainly because of their high interest rates as well as the high-profit scheme of the lending companies.

In some cases, it really pays off to invest in credit improvement.  How can you work to improve your credit when you’re thousands of dollars in debt?  You may pursue a solution in the way of refinancing, negotiating with creditors or disputing charges on your credit report.  When it comes to debt consolidation, this is a profitable idea that you may want to consider.  However, investigate the company you are working with thoroughly.  The mission of a debt relief agency is to refinance a loan while negotiating with creditors for a lower payoff.  This way, they can consolidate all of the consumer’s bills into one convenient payment.  Without refinancing, this option is useless.  You can try negotiating with creditors on your own.  All that a debt relief company or credit score repair attorney can do, short of taking on your debt, is inform you of any illegal items listed on your credit report.

Some creditors may be willing to reason.  Creditors have been known to drop a consumer’s dated charges just to keep the customer happy.  If you are in major debt, then this may not be an option for you.  However, you can pursue credit improvement by negotiating terms with your creditors as to how much you can send. 

What about the matter of credit disputes?  This is definitely an area of credit improvement that needs attention.  You can contact the creditor directly or the credit bureau for more information.  You will be required to dispute the charges in writing and give the bureau about a month or so to respond.  As per the Fair Credit Reporting Act passed, the bureaus are required to investigate your dispute claim at no charge to you.  Know that the same act also made it illegal for consumers to take advantage of this system and dispute a charge that is obviously valid. 

Credit improvement is an investment that pays off.  Your negative items are stored for seven years (or ten for bankruptcy) and then wiped clean.  If you make an effort to pay off your most important bills one at a time, you will be returned to a clean slate and be respected by all major credit companies.  This will mean better terms, with lower interest rates, more generous time frames and lower monthly prices.  Having good credit saves you money!

Credit Repair, Credit Repair Process 2008-11-14T19:23:58-05:00
Settling a Past Due Debt? Here’s How to Make Sure it Helps Your Credit Score One of the biggest factors that hurts your credit score is whether you have past due (or uncollected) debts.  Past due debts can drop your credit score by hundreds of points.  If you are working with a creditor or debt settlement agency to pay off an old debt, you need to make sure that you do it right to make sure that paying off the debt actually improves your credit score.  Learn how here.

According to the folks at Fair Isaac, one of the biggest factors that affects your credit score is your history of paying debts.  If you have one or more debts that are in “collections”, your credit score has probably taken a big hit.

So it makes sense that if you were to pay off the bad debt, that your credit score would rise. 

Unfortunately, that is not always the case.  Here’s why.  If you negotiate with a creditor to pay off an old debt, the creditor will happily take your money and list the debt as paid off on their books.  However, they will not necessarily ask the credit bureaus to delete the debt from your credit history.  In fact, they most likely will NOT ask for the debt to be deleted.  It will continue to show up as an “uncollected” item on your reports for years, continuing to hurt your credit score.

So what can you do?

Here’s one (important!) tip that you can use when settling old debts—as a condition for paying the debt off, demand that the creditor ask the credit bureaus to remove or delete the account from your credit reports.  That’s right, tell your creditor that you will pay off the old debt, but only if the fact of the old debt is eliminated from your credit history.

This simple tip will usually cause your credit score to skyrocket. 

Credit Repair, Credit Repair Tips 2008-10-19T14:24:44-05:00
3 Things You Can Do Now To Improve Your Credit Score Your credit score is a number (or actually several numbers, depending on who is doing the scoring) that is based on your credit history.  Having a good credit score can save you lots of money.  Who doesn’t need to save money?  Here are three things you can do to improve your credit score.  Start now, and enjoy better credit.

Your credit score is a measure of your financial reputation and is based on the credit history that has been reported by your creditors to the credit bureaus.  Only actions that are reported to the credit bureaus affect your credit.  Because of the way credit scores are calculated, some actions affect your credit score more than others.  In general, paying your bills on time and meeting your financial responsibilities will have the biggest impact on your credit score.  Other actions, such as not being overextended with credit also affect your score.  The credit score algorithms reward people who have demonstrated an ability to repay their debts, and who do not appear to be a financial risk.

Here are three tips you can use right now to boost your credit score:

  1. Pay Your Bills On Time! This should be a no-brainer.  To boost your credit score, you need to pay your bills on time.  Responsible repayment of debt is the single biggest factor that affects your credit score.  The credit score algorithms figure that if you have a history of paying bills on time, that you will continue to do so in the future.  Experts estimate that up to 35% of your credit score is based on your paying of bills on time.
  2. Don’t Get Overextended Lenders want to know that you will have enough money left each month to pay them back.  If you have many lines of credit or several huge debts, you make a worse credit risk because you are close to “overextending your credit.” This simply means that you may be taking on more credit than you can comfortably pay off.  Even if you are making payments regularly now on existing bills, lenders know that you will have a harder time paying off your bills if your debt load grows too much.  The credit score algorithms take your debt load into account.  If you have too much debt, your score will plummet. 
  3. Pay Down Existing Debt This is related to tip number 2 above.  If you have a lot of debt, your credit score will suffer.  Paying down your debts a manageable level, and your credit score will improve.  For example, if you have a $1000 limit on your credit card and you regularly carry a balance of $900, you will be a less attractive credit risk to lenders than someone who has the same credit card but carries a smaller balance of $100 or so.  If you are serious about improving your credit score, then start with the largest debt you have and start paying it down so that you are using a less large percentage of your credit total.  In general, try to make sure that you use no more than 50% of your available credit.  That means that if your credit card has a limit of $10,000, make sure that you pay it down to at least $5,000. What counts here is what percentage of your total credit limit you are using - the lower the better.
Credit Repair, Credit Repair Tips 2008-10-16T22:49:15-05:00
How To Dispute Credit Card Charges Under the Fair Credit Billing Act Have you ever checked out your credit card statement and saw a charge that you did not authorize?  Or, have you been billed for something you returned to the store, or never actually received? Have you been charged twice for the same item, or never received a refund that you were supposed to?

It happens all the time.  It’s frustrating, and can lead to credit problems if you don’t take action (and we never want credit problems!  They turn into credit score issues eventually).  Here’s the good news: These errors can be corrected. Here’s how. 

Correcting billing errors on credit card, private label card, and other revolving credit accounts takes some patience and familiarity with the dispute settlement rules provided in a Federal Law called the Fair Credit Billing Act (FCBA).

Here’s how you dispute a credit card charge (also known as a “chargeback"):

First, make sure the charge is a type of charge covered by the FCBA: 

  • Unauthorized charges (Federal law limits your responsibility for unauthorized charges to $50);
  • Charges that list the wrong date or amount;
  • Charges for goods and services you didn’t accept or weren’t delivered as agreed;
  • Math errors;
  • Failure to post payments and other credits, such as returns;
  • Failure to send bills to your current address (so long as you provided the creditor with a written change of address, at least 20 days before the billing period ends;
  • Charges for which you ask for an explanation or written proof of purchase along with a claimed error or request for clarification.

Next, to dispute a charge, you need to:
  • Write to the creditor (bank) at the address given for “Billing Inquires”, do not write or send to the address where your payment is made. Include your name, address, account number and a brief description of the billing error or problem.
  • Send your letter by registered mail. You will then have proof the letter was sent on a specific date. Send copies of any supporting documents, receipts, etc. (not originals). Keep a copy of the entire document sent. 

*Important! --You need to make sure your letter reaches the creditor within sixty (60) days after the bill containing the error or contested charge. The creditor must acknowledge your dispute, in writing, within thirty (30) days of receipt unless the dispute has been resolved. The creditor is bound to resolve the dispute within two (2) billing cycles (but not longer than 90 days) after receiving your letter.

In some situations, you may be able to dispute a charge online (at your bank’s website).  Check your banks website to see if they have this feature (it is a great time saver).

Here’s what you should expect if you take the steps above (and the dispute is valid).  By law (under the FCBA), the credit card company must credit your payment to your account the same day it is received. If a credit card company is found to have not done so, in addition to being subject to fines by auditing authorities, it cannot charge you interest for the period in question nor can it assess you late fees or additional charges. 

Don’t pay for fraudulent charges or billing errors!  Make sure to check your statement regularly, and act quickly to fix any errors.  Your credit score will thank you!

Credit Repair, News and Resources 2008-09-25T14:08:06-05:00
In a Credit Fix? Reports from the Credit Bureaus Can Have Errors Are you looking for a boost to your credit rating?  You may want to consider repairing your credit history.  Fixing your credit can be complicated, especially if you are disputing some of the negative items that are appearing on file.  What is the best way to approach this credit fix and report situation?  The first step is to get a copy of your credit file.  This can be done by contacting any or all of the three major credit bureaus: Experian, Equifax and TransUnion. 

Are you looking for a credit fix report?  Fixing your credit can be complicated, especially if you are disputing some of the negative items that are appearing on file.  What is the best way to approach this credit fix and report situation?  The first step is to get a copy of your credit file.  This can be done by contacting any or all of the three major credit bureaus: Experian, Equifax and TransUnion.  You may be offered pay services or a free annual credit report, as provided by the Fair Credit Reporting Act.  Try and look for a tri-merge report, as this report gives information from all three bureaus.  If you focus all of your attention on one, you may be missing out on other items, since this information is not standardized. 

After you review your credit fix report it’s time to report any suspicious activity you find.  It has been known to happen—errors have been made by the bureaus and by credit companies, as have cases of fraud.  Though it is not your fault, these debts can do major damage to your credit rating.  Unless you check your credit history on a regular basis, how can you know if you are being charged erroneously? 

Once you identify negative items on the credit fix report you can write out your dispute.  It may be best to try and contact the creditor first, especially if you recall having dealings with the company but don’t remember the charge.  Creditors have the right to remove any charges to a credit file, even beyond the power of credit bureaus.  However, in many cases many consumers have no choice but to contact the credit bureau directly.  Depending on which bureau you write (and you may have to write to all three) you may write a letter of dispute, call in a dispute or send a dispute online. 

Explain your case thoroughly and provide as much information as possible.  No one has ever been rejected for being too thorough, though there are plenty of cases where consumers have disputed charges with no evidence to produce.  Try and send the letter through certified or registered mail and document all communication with the bureau.  It may take about a month or so for the bureau to contact you, so be patient.  Remember though, that there is no charge for a second investigation.  If you have new evidence that could help your case then appeal, appeal, appeal!  This is the best way in how to fix credit reports.

Credit Repair, Credit Repair Tips 2008-08-17T23:52:01-05:00