26 June, 2014
How to improve your credit score for your real estate business
Introduction
There are many misconceptions about credit scores out there.
There are customers who believe that they don’t have a credit
score and many customers who think that their credit scores just
don’t really matter. These sorts of misconceptions can hurt
your chances at some jobs, at good interest rates, and even your
chances of getting some apartments.
The truth is, of you have a bank account and bills, then you have
a credit score, and your credit score matters more than you
might think. Your credit score may be called many things,
including a credit risk rating, a FICO score, a credit rating, a
FICO rating, or a credit risk score. All these terms refer to the
same thing: the three-digit number that lets lenders get an idea
of how likely you are to repay your bills.
Every time you apply for credit, apply for a job that requires you
to handle money, or even apply for some more exclusive types
of apartment living, your credit score is checked.
In fact, your credit score can be checked by anyone with a
legitimate business need to do so. Your credit score is based on
your past financial responsibilities and past payments and credit,
and it provides potential lenders with a quick snapshot of your
current financial state and past repayment habits.
In other words, your credit score lets lenders know quickly how
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much of a credit risk you are. Based on this credit score,
lenders decide whether to trust you financially - and give you
better rates when you apply for a loan. Apartment managers
can use your credit score to decide whether you can be trusted to
pay your rent on time. Employers can use your credit score to
decide whether you can be trusted in a high-responsibility job
that requires you to handle money.
The problem with credit scores is that there is quite a bit of
misinformation circulated about, especially through some less
than scrupulous companies who claim they can help you with
your credit report and credit score - for a cost, of course.
From advertisements and suspect claims, customers sometimes
come away with the idea that in order to boost their credit score,
they have to pay money to a company or leave credit repair in
the hands of so-called “experts.” Nothing could be further from
the truth. It is perfectly possible to pay down debts and boost
your credit on your own, with no expensive help whatsoever.
In fact, the following 101 tips can get you well on your way to
boosting your credit score and saving you money.
By the end of this ebook, you will be able to:
•Define a credit score, a credit report, and other key financial
terms
•Develop a personalized credit repair plan that addresses your
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unique financial situation
•Find the resources and people who can help you repair your
credit score
•Repair your credit effectively using the very techniques used by
credit repair experts
Plus, unlike many other books on the subject, this ebook will
show you how to deal with your everyday life while repairing
your credit. Your credit repair does not happen in a vacuum.
This book will teach you the powerful strategies you need to
build the financial habits that will help you to a keep a high
credit risk rating. It really is that simple.
Start reading and be prepared to start taking small but powerful
steps that can have a dramatic impact on your financial life!
The Basics
Before you start boosting your credit score, you need to know
the basics. You need to know what a credit score is, how it is
developed, and why it is important to you in your everyday life.
Lenders certainly know what sort of information they can get
from a credit score, but knowing this information yourself can
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help you better see how your everyday financial decisions
impact the financial picture lenders get of you through your
credit score. A few simple tips are all you need to know to
understand the basic principles:
Tip #1: Understand where credit scores come from.
If you are going to improve your credit score, then logic has it
that you must understand what your credit score is and how it
works. Without this information, you won’t be able to very
effectively improve your score because you won’t understand
how the things you do in daily life affect your score.
If you don’t understand how your credit score works, you will
also be at the mercy of any company that tries to tell you how
you can improve your score - on their terms and at their price.
In general, your credit score is a number that lets lenders know
how much of a credit risk you are. The credit score is a
number, usually between 300 and 850, that lets lenders know
how well you are paying off your debts and how much of a
credit risk you are.
In general, the higher your credit score, the better credit risk you
make and the more likely you are to be given credit at great
rates. Scores in the low 600s and below will often give you
trouble in finding credit, while scores of 720 and above will
generally give you the best interest rates out there. However,
credit scores are a lot like GPAs or SAT scores from college
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days - while they give others a quick snapshot of how you are
doing, they are interpreted by people in different ways. Some
lenders put more emphasis on credit scores than others.
Some lenders will work with you if you have credit scores in the
600s, while others offer their best rates only to those creditors
with very high scores indeed. Some lenders will look at your
entire credit report while others will accept or reject your loan
application based solely on your credit score.
The credit score is based on your credit report, which contains a
history of your past debts and repayments. Credit bureaus use
computers and mathematical calculations to arrive at a credit
score from the information contained in your credit report.
Each credit bureau uses different methods to do this (which is
why you will have different scores with different companies) but
most credit bureaus use the FICO system. FICO is an acronym
for the credit score calculating software offered by Fair Isaac
Corporation company. This is by far the most used software
since the Fair Isaac Corporation developed the credit score
model used by many in the financial industry and is still
considered one of the leaders in the field.
In fact, credit scores are sometimes called FICO scores or FICO
ratings, although it is important to understand that your score
may be tabulated using different software.
One other thing you may want to understand about the software
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and mathematics that goes into your credit score is the fact that
the math used by the software is based on research and
comparative mathematics. This is an important and simple
concept that can help you understand how to boost your credit
score. In simple terms, what this means is that your credit score
is in a way calculated on the same principles as your insurance
premiums.
Your insurance company likely asks you questions about your
health, your lifestyle choices (such as whether you are a smoker)
because these bits of information can tell the insurance company
how much of a risk you are and how likely you are to make
large claims later on. This is based on research.
Studies have shown, for example, that smokers tend to be more
prone to serious illnesses and so require more medical attention.
If you are a smoker, you may face higher insurance premiums
because of this.
Similarly, credit bureaus and lenders often look at general
patterns. Since people with too many debts tend not to have
great rates of repayment, your credit score may suffer if you
have too many debts, for example. Understanding this can help
you in two ways:
1) It will let you see that your credit score is not a personal
reflection of how “good” or “bad” you are with money. Rather,
it is a reflection of how well lenders and companies think you
will repay your bills - based on information gathered from
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studying other people.
2) It will let you see that if you want to improve your credit
score, you need to work on becoming the sort of debtor that
studies have shown tends to repay their bills. You do not have
to work hard to reinvent yourself financially and you do not
have to start making much more money. You just need to be a
reliable lender. This realization alone should help make credit
repair far less stressful!
Credit reports are put together by credit bureaus, which use
information from client companies. It works like this: credit
bureaus have clients - such as credit card companies and utility
companies, to name just two - who provide them with
information.
Once a file is begun on you (i.e. once you open a bank account
or have bills to pay) then information about you is stored on the
record. If you are late paying a bill, the clients call the credit
bureaus and note this. Any unpaid bills, overdue bills or other
problems with credit count as “dings” on your credit report and
affect your score.
Information such as what type of debt you have, how much debt
you have, how regularly you pay your bills on time, and your
credit accounts are all information that is used to calculate your
credit score.
Your age, sex, and income do not count towards your credit
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score. The actual formula used by credit bureaus to calculate
credit scores is a well-kept secret, but it is known that recent
account activity, debts, length of credit, unpaid accounts, and
types of credit are among the things that count the most in
tabulating credit scores from a credit report.
Tip #2: Keep the contact information for credit bureaus
handy.
The three major credit bureaus are important to contact if you
are going to be repairing your credit score. The major three
credit agencies can help you by sending you your credit report.
If you find an error on your credit report, these are also the
companies you must contact in order to correct the problem.
You can easily contact these organizations by mail, telephone,
or through the Internet:
Equifax Credit Information Services, Inc
Address: P.O. Box 740241
Atlanta, GA 30374
Telephone: 1_888_766_0008
Online: www.equifax.com
TransUnion LLC Consumer Disclosure Center
Address: P.O. Box 1000
Chester, PA 19022
Telephone: 1_800_888_4213
Online: www.tuc.com
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Experian National Consumer Assistance Center
Address: PO Box 2002
Allen, TX 75013
Telephone: 1_888_397_3742
Online: www.experian.com
You may want to note this information wherever most of your
financial information is kept so that you can easily contact the
bureaus whenever you need to. Your local yellow pages should
also have the contact information of these credit agencies as
well.
Tip #3: Develop an action plan for dealing with your credit
score.
Once you have your credit report and your credit score, you will
be able to tell where you stand and where many of your
problems lie. If you have a poor score, try to see in your credit
report what could be causing the problem:
-Do you have too much debt?
-Too many unpaid bills?
-Have you recently faced a major financial upset such as a bankruptcy?
-Have you simply not had credit long enough to establish good credit?
-Have you defaulted on a loan, failed to pay taxes, or recently been reported to a collection agency?
The problems that contribute to your credit problems should
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dictate how you decide to boost your credit score. As you read
through this ebook, highlight or jot down those tips that apply to
you and from them develop a checklist of things you can do that
would help your credit situation improve.
When you seek professional credit counseling or credit help,
counselors will generally work with you to help you develop a
personalized strategy that expressly addresses your credit
problems and financial history. Now, with this ebook, you can
develop a similar strategy on your own - in your own time and at
your own cost.
When developing your action plan, know where most of your
credit score is coming from:
1) Your credit history (accounts for more than a third of your
credit score in some cases). Whether or not you have been a
good credit risk in the past is considered the best indicator of
how you will react to debt in the future. For this reason, late
payment, loan defaults, unpaid taxes, bankruptcies, and other
unmet debt responsibilities will count against you the most.
You can’t do much about your financial past now, but starting to
pay your bills on time - starting today - can help boost your
credit score in the future.
2) Your current debts (accounts for approximately a third of
your credit score in some cases). If you have lots of current
debt, it may indicate that you are stretching yourself financially
thin and so will have trouble paying back debts in the future. If
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you have a lot of money owing right now - and especially if you
have borrowed a great deal recently - this fact will bring down
your credit score. You can boost your credit score by paying
down your debts as far as you can.
3) How long you have had credit (accounts for up to 15% of
your credit score in some cases). If you have not had credit
accounts for very long, you may not have enough of a history to
let lenders know whether you make a good credit risk. Not
having had credit for a long time can affect your credit score.
You can counter this by keeping your accounts open rather than
closing them off as you pay them off.
4) The types of credit you have (accounts for about one tenth
of your credit score, in most cases). Lenders like to see a mix
of financial responsibilities that you handle well. Having bills
that you pay as well as one or two types of loans can actually
improve your credit score. Having at least one credit card that
you manage well can also help your credit score.
As you can see, it is possible to only estimate how much a
specific area of your credit report affects your credit score.
Nevertheless, keeping these five areas in mind and making sure
that each is addressed in your personalized plan will go a long
way in making sure that your personalized credit repair plan is
comprehensive enough to boost your credit effectively.
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The Best Ways to Boost Your Credit Score
Because of the way credit scores are calculated, some actions
you take will affect your credit score better than others. In
general, paying your bills on time and meeting your financial
responsibilities will boost your score the most. Owing a
reasonable amount of money and being able to repay it will
show lenders that you take your finances seriously and pose
little threat of lost money. There are a few tips that, more than
any other, will boost your credit score the most:
Tip # 4: Pay your bills on time.
One of the best ways to improve your credit score is simply to
pay your bills on time. This is absurdly simple but it works
very well, because nothing shows lenders that you take debts
seriously as much as a history of paying promptly. Every
lender wants to be paid in full and on time.
If you pay all your bills on time then the odds are good that you
will make the payments on a new debt on time, too, and that is
certainly something every lender wants to see. Experts think that
up to 35% of your credit score is based on your paying of bills
on time, so this simple step is one of the easiest ways to boost
your credit score.
Paying your bills on time also ensures that you don’t get hit with
late fees and other financial penalties that make paying your
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bills off harder. Paying your bills in a timely way makes it easier
to keep making payments on time.
Of course, if you have had problems making your payments on
time in the past, your current credit score will reflect this. It
will take a number of months of repaying your bills on time to
improve your credit score again, but the effort will be well worth
it when your credit risk rating rebounds!
Tip #5: Avoid excessive credit.
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 higher your debts the greater your monthly debt payments
and so the higher the risk that you will eventually be able to
repay your debts. Plus, statistical studies have shown that those
with high debt loads have the hardest time financially when
faced with a crisis such as a divorce, unemployment, or sudden
illness.
Lenders (and credit bureaus who calculate your credit score)
know that the more debt you have the greater problems you will
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have in case you do run into a life crisis.
In order to have a great credit score, avoid taking out excessive
credit. You should stick to one or two credit cards and one or
two other major debts (car loan, mortgage) in order to have the
best credit rating. Do not apply for every new credit line or
credit card “just in case.” Borrow only when you need it and
make sure to make payments on your debts on time.
You should also know that taking out lots of new credit accounts
in a relatively short period of time will cause your credit score to
nosedive because it will look as though you are being financially
irresponsible.
Tip #6: Pay Down Your Debts
If you have a lot of debt, your credit score will suffer. Paying
down your debts to a minimum will help elevate your credit
score. 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 credit. That means that if your credit card has a limit of
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$5000, make sure that you pay it down to at least $2500 and
work at carrying no larger balance. If possible, reduce the debt
even more. If you can pay off your credit card in full each
month, that is even better. What counts here is what percentage
of your total credit limit you are using - the lower the better.
Tip #7: Have a range of credit types.
The types of credit you have are a factor in calculating your
credit score. In general, lenders like to see that you are able to
handle a range of credit types well. Having some form of
personal credit - such as credit cards - and some larger types of
credit - such as a mortgage or auto loan - and paying them off
regularly is better than having only one type of credit.
Keep Your Credit Score Safe
If you have a lower credit score that you would like, odds are
that the score is caused by some small financial mistake or
oversight you have made in the past. Not every person with bad
credit has a low credit score caused by something they did,
though. Sometimes, other people’s criminal activity can affect
your credit score. There are a few tips that can keep you and
your credit safe form online and financial predators:
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Tip #8: Look out for identity theft.
Many people who are careful about paying bills on time and
having minimal debts are shocked each year to find that they
have low credit scores. In many cases, this happens as a result
of identity theft. Identity theft is a type of crime in which
people take your personal information and steal that information
to pose as you in order to get access to your accounts or identity.
For example, someone with your PIN numbers can remove
small amounts of money from your bank account each month or
someone can use your name and personal information to get
credit cards in your name and use those credit cards with no
intention of paying back the money. You are stuck with the
large debts and the poor credit score.
To prevent identity theft, always check your account statements
carefully each month. Report any suspicious activity or any
charges you don’t recognize at once. Also check your credit
report regularly and immediately investigate any new credit
accounts you do not recognize - this is the best way of detecting
and acting on identity theft.
If you have been the victim of identity theft, report to the police
at once and get a police statement. Send copies of this to your
bank and credit bureaus. Better yet, get the credit bureaus to
attach the report to your credit report, if you can. Close all your
accounts and reopen new ones. You should not have to pay for
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someone else’s illegal activity.
Tip #9: Practice safe banking, safe computing, and safe
business practices.
To stay safe from identity theft, always follow safe banking and
financial practices:
1) Keep account numbers and PIN numbers safe. Cover your
account and PIN numbers when using debit at the store and
refuse to give your PIN number to anyone. Avoid writing down
your PIN and account numbers - you never know when this
information could fall into the wrong hands.
2) Only do business with businesses you trust.
3)If you get applications for credit cards in the mail that are
“pre-approved” rip up the applications and enclosed letters
before discarding them. No, this is not paranoid. Identity
thieves sometimes go through garbage in order to find these
forms so that they can fill them out and steal your identity.
4) If you use a computer, install good firewall and antivirus
protection system and update it religiously. Better yet, take a
course in safe computing at your local college or community
center. You will learn many good tips for keeping all your
information safe while you are online.
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5) Never buy anything online from a company you do not trust
of from a company that does not have encryption technology
and a good privacy policy.
6) Even with all computer precautions, avoid providing private
information through email or your computer. Be especially
cautious if you get an email from your bank asking you to verify
your information by clicking on a link - this is a popular scam
that comes not from your bank but from criminals posing as
your bank. Ignore the email and phone your bank about the
message.
7) Be wary of unsolicited emails, phone calls, or mail
advertisements. Most are from legitimate companies but there
are companies who promise you a credit card over the telephone
only to charge your existing credit card without sending you
anything.
Similarly, letters will sometimes promise you specific items or
services. Once you send in your credit card information
(usually to a post office box) you hear no more from the
company. If you need or want to buy something from a
company, be sure to check the company’s standing with the
Better Business Bureau first.
Send a money order instead of a check (which had your account
number) or your credit card information. If you do use a credit
card, report any unusual charges or any payments you made for
a product that did not arrive to the credit card company.
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In some cases, they can stop payment or refund your money as
well as take steps to keep your credit card number safe.
8) Be wary of offers that seem too good to be true. If you get
an offer for a ten million dollar check - for which you need to
put down $5000 as a “sign if good faith”...if you get an offer for
a free state-of-the art computer - if only you provide your
account information... take a deep breath and consider before
sending in your money and your information.
Offers that are too good to be true always are. Scam artists
often rely on your belief in others and your trust to make money.
They depend on the fact that you will be so excited about a
product or service that you will throw good judgment out the
window. Prove them wrong.
When faced with an offer that seems too good to be true, do
some research on the web, through the Better Business Bureau,
or ask the person making the offer some questions. Never take
someone up on an offer that you have been given unsolicited
unless the company and the offer both check out.
9) Read the fine print. Some services or companies will have
tiny print in their contract or agreement that allows them to
charge you extra hidden fees or that allows them to retract
certain offers. If you get an offer through email or the mail,
make it a habit to read the fine print.
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10) Be alert for a sudden disruption in your mail service. If you
do not get mail for some time, contact your post office and ask
whether your address was recently submitted for a “change of
address” service. It sounds strange, but it’s true.
One way that criminals steal identities is to change your address
at the local post office. They redirect your mail to a post office
box number and steal your mail looking for personal
information such as bank statements, pre-approved credit card
applications, and other pieces of mail they can use to steal your
identity.
They use this information to pose as you with lenders and run up
huge charges in your name. Simply keeping an eye out on your
mail can help you keep your credit score safe.
Tip #10: Check your credit score regularly
You are more likely to notice problems and inconsistencies if
you check your credit score on a regular basis - at least once a
year and preferably three times a year. Be sure to check your
credit rating with each credit bureau, too. If you notice anything
odd or anything you don’t recognize (such as a charge account
you did not open) report it immediately.
Sometimes, these errors are caused by mistakes made at the
credit bureau, but they could be an indication that someone is
using your identity. In either case, such mistakes could hurt
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your credit score. Fixing such errors improves your credit
score.
If you think you have been the victim of identity theft, take
action at once:
1) Contact the three major credit bureaus and ask to speak to the
fraud department. Explain that you have been the victim of
identity theft (or believe you may have been) and ask that an
“alert” be placed on your file. This will let anyone looking at
your report know that you may have been the victim of fraud.
It will also mean that you will be alerted any time a lender asks
to look at your file - each time a lender does look at your file, it
may be an indication that the identity thieves are trying to open a
new account in your name.
When the lender sees that the person applying is not you, they
will deny the thieves credit and in most cases the criminals will
stop trying to access your identity. Most alerts on your file last
90 or 180 days but you can extend this period to several years by
asking the credit agencies for an extension of the “fraud alert” in
writing.
In some states, you can even ask for a freeze to be placed on
your credit score and credit report which will prevent anyone but
yourself and those creditors you already have from accessing
your file. Any lenders the thieves contact to set up a new
account will be refused access and the thieves will not be able to
get any more money in your name.
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You are entitled to a free copy of your credit report if you have
been the victim of identity theft. Be sure to take advantage of
this offer so that you can check exactly how your credit has been
affected. Dispute those items that are not yours.
2) Call the Federal Trade Commission (FTC) at
1-877-438-4338. This is the special hotline that the FTC has
set up to help customers deal with fraud and identity theft. You
will be able to get up-to-date information about your rights and
advice as to what you can do to improve your credit score and
keep in safe in the future.
3) Contact the police. Identity theft is a crime and you need to
file a police report (be sure to keep a copy of this report) so that
you can help the police potentially catch the criminals
responsible. Contacting the police will also give you a paper
trail and proof that a crime has been committed. Keeping a paper
trail of the crime and your response will make it easier for you
to repair your credit if it has been damaged by identity thieves.
4) Contact your creditors or any creditors that the identity
thieves have opened an account with. Ask to speak to the
security department and explain your predicament. You may
need to have your accounts closed or at least your passwords
changed to protect yourself.
You may also need to fill out a fraud affidavit to state that a
crime has been committed - be sure to keep a copy of this form
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for your records. The security team of the creditors should be
able to advise you as to what you can do. Be sure to note down
who you contacted and when so that you have records of the
steps you have taken to deal with the crime.
If you have been the victim of identity theft and you are deeply
in debt to creditors you never contacted, you will not be held
responsible for the charges - but you will have to prove that you
have been the victim of identity theft, which is tricky since the
thieves are using your name and claiming to be you.
It is a frustrating experience because lenders will want to be paid
and you will want to avoid paying for charges you did not run
up. Being persistent and keeping good proof that you have
been the victim of a crime will help to clear your credit score.
In the meantime, however, you will be faced with a much lower
credit rating than you deserve and you may have to put off larger
purchases that may require a loan.
Avoid Common Credit Score Mistakes
There are a few things that people do without realizing it that
have a bad effect on their credit score. Follow these tips to
avoid the common traps that can sink your credit risk rating:
Tip #11: Beware of debts and credit you don’t use.
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It is easy today to apply for a store credit card that you forget all
about in three years - but that account will remain on your credit
report and affect your credit score as long as it is open. Having
credit lines and credit cards you don’t need makes you seem like
a worse credit risk because you run the risk of “overextending”
your credit.
Also, having lots of accounts you don’t use increases the odds
that you will forget about an old account and stop making
payments on it - resulting in a lowered credit score. Keep only
your used accounts and make sure that all other accounts are
closed. Having fewer accounts will make it easier for you to
keep track of your debts and will increase the chances of you
having a good credit score.
However, realize that when you close an account, the record of
the closed account remains on your credit report and can affect
your credit score for a while. In fact, closing unused credit
accounts may actually cause your credit score to drop in the
short term, as you will have higher credit balances spread out
over a smaller overall credit account base.
For example, if your unused accounts amounted to $2000 and
you owe $1000 on accounts that you have now (let’s say on two
credit cards that total $2000) you have gone from using one
fourth of your credit ($1000 owed on a possible $4000 you
could have borrowed) to using one half of your credit (you owe
$1000 from a possible $2000). This will actually cause your
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credit risk rating to drop. In the long term, though, not having
extra temptation to charge and not having credit you don’t need
can work for you.
Tip #12: Be careful of inquiries on your credit report.
Every time that someone looks at your credit report, the inquiry
is noted. If you have lots of inquiries on your report, it may
appear that you are shopping for several loans at once - or that
you have been rejected by lenders. Both make you appear a
poor credit risk and may affect your credit score. This means
that you should be careful about who looks at your credit report.
If you are shopping for a loan, shop around within a short period
of time, since inquiries made within a few days of each other
will generally be lumped together and counted as one inquiry.
You can also cut down on the number of inquiries on your
account by approaching lenders you have already researched and
may be interest in doing business with - by researching first and
approaching second you will likely have only a few lenders
accessing your credit report at the same time, which can help
save your credit score.
Tip #13: Be careful of online loan rate comparisons.
Online loan rate quotes are easy to get - type in some personal
information and you can get a quote on your car loan, personal
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loan, student loan, or mortgage in seconds. This is free and
convenient, leading many people to compare several companies
at once in order to make sure that they get the best deal possible.
The problem is that since online quotes are a fairly recent
phenomenon, credit bureaus count each such quote estimate as
an “inquiry.” This means that if you compare too many
companies online by asking for quotes, your credit score will
fall due to too many “inquiries.”
This does not mean that you shouldn’t seek online quotes for
loans - not at all. In fact, online loan quotes are a great resource
that can help you get the very best rates on your next loan.
What this information does mean, however, is that you should
research companies and narrow down possible lenders to just a
few before making inquiries. This will help ensure that the
number of inquires on your credit report is small - and your
credit rating will stay in good shape.
Tip #14: Don’t make the mistake of thinking that you only
have one credit report.
Most people speak of having a “credit score” when in fact most
people have at least three or more scores - and these scores can
vary widely. There are three major credit bureaus in the
country that develop credit reports and calculate credit scores.
There are also a number of smaller credit bureau companies.
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Plus, some larger lenders calculate their own credit risk scores
based on information in your credit report. When repairing
your credit score, then, you should not focus on one number - at
the very least, you need to contact the three major credit bureaus
and work on repairing the three credit scores separately.
Tip #15: Don’t make the mistake of closing lots of credit
accounts just to improve your score.
This seems like a contradiction, but it really is not. Many
people think that to improve their credit score, they just have to
pay off some debts and close their accounts. This is not exactly
accurate. There are several reasons to think carefully before
closing your accounts.
First, if you close an account you need (for example, if you close
all your credit card accounts) then you will have to reapply for
credit, and all those inquiries from lenders will cause your credit
score to actually drop.
Secondly, most credit bureaus give high favorable points to
those who have a good long-term credit history. That means
that closing the credit card account you have had since college
may actually hurt you in the long run. If you have credit
accounts that you don’t use or if you have too many credit lines,
then by all means pay off some and close them. Doing so may
help your credit score - but only if you don’t close long-term
accounts you need. In general, close the most recent accounts
first and only when you are sure you will not need that credit in
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the near future. Closing your accounts is a bad idea if:
1) You will be applying for a loan soon. The closing of your
accounts will make your credit score drop in the short term and
will not allow you to qualify for good loan rates.
2) Closing your accounts will make your overall debt balance
too high. If you owe $10 000 now and closing some accounts
would leave you with only $1000 of possible credit, you are
close to maxing out your credit - which gives you a bad credit
rating.
In the short term, closing accounts will lower your credit score,
but in the long run it can be beneficial.
Tip #16: Don’t assume that one thing will boost your credit
score a specific number of points.
Some debtors are lead to believe that paying off a credit card bill
will boost their credit score by 50 points while closing an
unused credit account will result in 20 more points. Credit
scores are certainly not this clear-cut or simple.
How much any one action will affect your credit score is impossible to gauge. It will depend on several factors, including your current credit score and the credit bureau calculating your credit score.
In general, though, the higher your credit score, the more small
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factors - such as one unpaid bill - can affect you. However,
when repairing your credit score, you should not be equating
specific credit repair tasks with numbers. The idea is to do as
many things as you can to get your credit score as close to 800
as you are able. Even if you can improve your credit score by
100 points or so, you will qualify for better interest rates.
Tip #17: Don’t think that having no loans or debts will
improve your credit score.
Some people believe that owing no money, having no credit
cards, and in fact avoiding the whole world of credit will help
improve their credit score. The opposite is true - lenders want
to see that you can handle credit, and the only way they can tell
is if you have credit that you handle responsibly. Having no
credit at all can actually be worse for your credit score than
having a few credit accounts that you pay off scrupulously. If
you currently have no credit accounts at all, opening a low
balance credit card can actually boost your credit score.
Tip #18: Never do anything illegal to help boost your credit
score.
It seems pretty obvious, but plenty of people try to lie about
their credit scores or even falsify their loan applications because
they are ashamed of a bad score. Not only is this illegal, but it
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is also completely ineffective. Your credit score is easy to check
and not only will you not fool lenders by lying but you may
actually find yourself facing legal action as a result of your
dishonesty.
Dealing With Your Credit Report to Deal With Your
Credit Score
If you want to improve your credit score, you need to go right to
the source - your credit report. Your credit report contains the
information and data on which your credit score is based. If
you can alter or update the information in your credit report,
your credit score will change to reflect the alterations. For this
reason, getting and checking you credit report is one of the first
things you should do when you attempt to repair your credit
score. There are a few tips that can help you deal with your
credit report so that you can give your credit score a boost:
Tip #19: Dispute errors on your credit report
Contact each of the three major credit bureaus - TransUnion,
Equifax, and Experian - and get copies of your credit reports and
credit scores. Carefully read over the reports and note any
errors. In writing, contact the credit bureaus and ask that
mistakes be removed or investigated.
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This is called a dispute letter and once it is received, credit
bureaus have to investigate your dispute within thirty days of
receiving your letter. It is important to keep a copy of your
letter and it is important to note the date the letter was sent.
You should not be accusatory or abusive in your letter - calmly
and clearly state the problem and request an investigation.
Note that you are aware the agency is required to investigate the
claim within thirty days and note that you will follow up. Be
sure that you do follow up with the issues you raised in your
letter - just because the agency investigates does not always
mean that your credit report will end up error-free.
Many credit bureaus now make it possible for you to correct
errors on your credit report online - and many have information
on their web sites that tells you exactly how disputes must be
handled to be effectively removed. It is important that you
follow this information exactly so that the inaccuracies on your
credit report are removed promptly and your credit score is
updated as soon as possible.
Tip #20: Add a note to your credit report if there is a
problem you can’t resolve
Sometimes, there are legitimate reasons why you didn’t pay a
bill. If a contractor refused to finish a job or did a poor job,
then you may have refused payment, but the non-payment may
still count against you on your credit report. If there are any
unusual circumstances surrounding your credit report that may
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affect your credit rating - such as a case of identity theft - you
can ask that a note be attached to your credit report to explain
the problem.
Some lenders will pay attention to this and some will not, but it
is a better solution than nothing at all. Such a note will not
affect your credit score but will affect your credit report. More
importantly, it leaves a paper trail of the problem that lenders
can look at if they choose.
Tip #21: Make sure you know who is looking at your credit
report and why
Many inquiries look bad on your credit report, but more than
that you likely want to know who can see your personal
financial information, now that you know that your personal
information is stored in a credit report. If you sign a document
with a lender or apply for credit online, you can be sure that
someone is looking at your credit report.
However, you may want to look over other documents in order
to see who is taking a peek. Insurance agents will often look at
your credit report, for example. Some landlords and potential
employers will, too. You need to be careful about online
sources, too. In general, when you provide someone with your
social insurance number, you may be giving permission to look
at your credit report. You shouldn’t bar people from looking,
but knowing who is looking is good financial practice.
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Tip #22: Know the difference between soft and hard
inquiries
When you pull your credit report to look at it, it is counted as a
“soft inquiry.” Only “hard inquiries” from lenders will affect
your credit score dramatically. Although checking your credit
score too often is an expensive habit, you should not avoid
checking your credit report because you fear it will make your
credit rating worse.
Tip #23: Contact creditors as well as credit bureaus when
correcting inaccuracies in your credit report
When debtors find mistakes on their credit report, they often
only contact the credit bureaus. While this is the most effective
way to resolve the issue, you should in some cases contact the
creditors whose account has caused a ding on your credit report.
This can help future dings and resolve problems faster.
Consider an example: Let’s say that you were late sending a credit card payment two months ago because you were sick. The late payment is listed as a ding on your credit report even though you have paid it already. You should contact the credit bureau in order to get the error removed.
However, if you notice that the same credit card company has
you listed as having late payments three months when you paid
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on time, then it is time to contact the credit company and ask
how to resolve the problem.
The information reported about you to credit bureaus should be
accurate - if it is not, then the credit company should work to
make sure that they correct the problem so that it does not
happen again. You have an advantage in this - the credit
company, unlike the credit bureau, depends on your business for
their money.
This means that the credit company (or any other bill company
presenting inaccurate information about you) is well motivated
to correct the problem or risk losing you as a client.
If you find that a company consistently reports inaccurate
information about you to credit bureaus, consider making a
formal complaint to the company about it or switch companies.
There is no reason why one company’s poor organization should
cost you your good credit score.
Tip #24: Look out where you get your credit report - and
what it contains
You can get your credit score from any number of resources.
One place you can get it from is from credit bureaus themselves.
You can pay for the service, but you qualify for one free credit
report a year or qualify for a free credit report if you have
recently been turned down for credit or if you think you may
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have been the victim of identity theft.
If you can, get a copy of your free credit report from each of the
three major credit bureaus. If you can’t get a free credit report,
you should still try to get one, even if costs a few dollars. The
savings you will enjoy on your loan rates when you improve
your credit score will more than pay for the cost of the reports.
There are a number of online companies that offer free online
credit reports. These offers are very attractive because you get
an online report without having to wait for a report to be sent to
you, and you often can get several reports from the different
credit bureaus at once, which can save you time.
However, these online companies vary widely, so you will want
to compare a few different firms before choosing one. You will
also need to read the online company’s agreement very carefully
- some promise free credit reports only with the purchase of a
credit repair program or some other kit. In some cases, you can
decline the offer and still get the report but in other cases you
cannot.
Buyer beware.
Also, some companies will offer you free credit reports that are
really a combination of reports from the three major credit
bureaus. This is not useful, since you will want to compare
each of the three credit bureau reports and fix each credit score
separately. You will want to look out for online companies that
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offer credit reports that are very condensed and you will want to
avoid companies that will spam you (send you unsolicited
emails) trying to get you to subscribe to some service. Always
read carefully to see whether the free credit report offer is
legitimate.
That said, there are a number of online companies that offer
credit reports and credit scores at no charge and these can be a
useful way for you to start your credit repair, especially if you
are comfortable around computers.
If you don’t qualify for a free credit report from the credit
bureaus, a legitimate online company may be your best bet of
getting your credit information so that you can start repairing
your credit risk rating.
You do qualify for one free credit report per year. You can get
this credit report through email at www.annualcreditreport.com
or by calling 877_322_8228.
You can also ask for your free credit report by mail by sending a
letter to Annual Credit Report Request Service, P.O. Box
105281, Atlanta, GA 30348_5281 or by filling out the form
available at the Federal Trade Commission's Web site at:
http://www.ftc.gov/bcp/conline/edcams/credit/docs/fact_act_req
uest_form.pdf.
No matter where you get your credit score and credit report,
make sure that you get the most complete information package
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you can. Credit reports are not very exciting or even easy to
read. If you are ordering your report online, look for one that
includes graphs or lots of details that are easy to understand.
Make sure that you get both your credit report and your credit
score - even if you have to pay extra. If you get just your
report, you will not be able to follow the secret and complicated
math formulas used to arrive at your score and the report itself
will not make as much financial sense to you if you don’t have
your score in front of you, as well.
When you do get your credit report you will notice that it
contains lots if information about you, including:
1) Your personal and contact information. This will include
your name and your address, as well as your past several
addresses, your social insurance number, your employers (past
and present) and your birth date.
2) Your personal information about credit. A credit report
notes all the details of your loans, including the types of loans
you have now and have recently had, the dates these loans were
opened, the credit limit on each loan, how well you have been
repaying those loans (this is important - skipped or late
payments count heavily against you in your credit score), and
who your lenders are.
3) Information about you that is on the public record. This may
include bankruptcies, unpaid taxes, unpaid child support, tax
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liens, your dealings with collection agencies, foreclosures, loan
defaults, civil lawsuits that you have been involved in, and other
information. Much of this will stay on your credit report and
will seriously affect your credit score.
4) Information about who has looked at your credit report and
credit score. Every time that someone looks at your credit
score it is called an “inquiry.” Your credit report lists who has
looked at your credit report in the past two years and how often
you have applied for loans and credit in that period of time.
Too many inquiries tends to look bad and tends to affect your
credit score.
When you get your credit report, it is important that you look at
all parts of your credit report and understand what you are
reading. Mistakes in any area of your credit report can affect
your score, so be sure to check the entire report for inaccuracies
and errors.
Dealing With a Credit Score after a Big Problem
Big, bad problems can happen to you - bankruptcies, divorces,
law suits, non-payment of taxes. These are big problems that
can affect your credit score in as big way. If you have faced a
large problem that has ruined your credit, you need to take
action fast and work consistently to boost your FICO score:
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Tip #25: If you have bad credit, establish better credit by
taking out credit and repaying it quickly
If you have terrible credit following a bankruptcy or other major
financial upheaval, you may need to get back into a good credit
rating by taking out a loan you can handle. Make an
appointment to see your bank or bad credit lender a few months
or years after the problem in question and arrange for a small
loan.
You should have enough savings to pay for the loan before you
do this. Pay back the loan quickly. It will not hugely boost
your credit score but it will show lenders that you are having an
easier time paying your bills. Taking out a small loan you can
repay is part of the slow process of reestablishing good credit
following a big financial problem.
Tip #26: Try secured credit if you cannot qualify for other
types of credit
Secured credit is credit or a loan which uses something as
collateral. In some cases, this could be an asset like a house.
In some cases, this collateral could be money frozen in an
account by the bank for just such a purchase.
If you need credit following a big problem with your credit
score, secured credit may be something you can qualify for. You
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can use this secured credit to reestablish a good credit rating so
that you will qualify for other loans in the future. You may
have to pay slightly higher interest if your credit score is quite
low, but in the long term repaying this type of loan can improve
your credit score.
Tip #27: Give it time
Many people believe that simply paying off debts will improve
their credit score at once. This is not true, unfortunately. If
you have experienced a bankruptcy, have been reported to a
collection agency, or have had charge-offs, the record will
remain on your credit report - even after you have repaid your
debts and resolved the problem.
In fact, major problems such as a bankruptcy will remain on
your credit report for seven or ten years, affecting your credit
score. Even if your credit problems stem from simply not
paying bills on time, it will take some time for the mark to fade
from your credit report and for your credit score to reflect your
better repayment.
Paying off your debts and resolving problems will help your
credit score (since overdue accounts will be marked as “paid” on
your credit report), but only time will remove the mark of the
problems from your record entirely.
This means that if you have faced a major setback such as a
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bankruptcy, you may have to wait in order to get the best
interest rates on larger purchases. The good news is that the
further away you are from a major financial problem, the less
dire it appears.
For example, if you have declared bankruptcy, you can expect it
to have a huge impact on your credit score for the first two
years, during which time you will have a hard time getting any
credit at all.
However, after two or three years, if you have been paying your
bills on time, then the bankruptcy from two years ago will
matter less because you have been rebuilding your credit. Your
credit will still suffer - but you will slowly be starting to work
your way out of the credit problem. Persistence and good
financial habits will get you there.
This means that if you plan on making a major purchase (such as
a house of car) that may require a loan, you should start working
on improving your credit well in advance - even years in
advance - of your actual purchase. This is because you simply
will not have enough time to radically alter your credit score in
time if you wait too long.
Even if your credit score is already fairly good, you may need to
give yourself several months of time to boost your credit rating
enough to get the best loan rates.
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Tip #28: Contact your banks and ask credit limits to be
reduced.
If your credit risk rating is poor, and especially if it has taken a
beating lately due to non-payments or other problems, you can
ask that your bank reduce the credit limits on your credit cards,
credit lines, and other debts. You should do this if:
1) You can pay off at least 50% of your debt loads as they are
readjusted. For example, if you have a credit limit of $5000 on
your credit card and get it reduced to $2500, you should make
sure that you can leave a balance of $1250 or less. If you owe
$4000 and have no way of repaying it, getting your credit limit
reduced can actually hurt you. On the other hand, if you need
to get a larger loan and can pay off your credit card in full and
reduce your limit to $2500, you may be able to improve your
credit score in this way.
2) You have lots of credit. If you have several types of debts and
credit accounts - lines of credit, credit cards, store charge cards,
a mortgage, a car loan, and a personal line of credit - you may be
close to overextending your credit, especially if each of these
accounts is fairly large. You can’t always close down your
accounts - especially if you are still paying your debts off - but
reducing the limit may make you eligible for a loan should you
need it.
3) You have some credit but you don’t want to close your
accounts entirely because you have not had credit for very long.
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Sometimes, if you have several types of credit, it is not wise to
close them, even if you can, since lenders like to see long-term
relationships with lenders. Reducing the limits can make
monthly payments more affordable and can actually give you a
bigger credit boost than closing long-standing credit accounts.
4) You will not be taking out a loan very soon. In the short
term, reducing your credit limits may actually lower your credit
rating because your balances will make up a larger portion of a
smaller credit, but in the long run smaller charge accounts will
actually boost your credit score by making repayment of loans
easier and by making you further from overextending your
credit.
Tip #29: Start repairing your credit right away after a big
financial upset.
A big financial problem is an emotional as well as a monetary
burden. Plenty of debtors feel so terrible about their financial
problems and so uncertain about their money that they go into
deep denial, refusing to think or work on their financial
problems. This is likely to only make the problem worse.
Everybody suffers from financial difficulties once in a while and
every professional in the field of finance - from loan managers
to bankers - knows this. Plus, financial professionals -
including lenders - want your business and so are willing to
work with you to help you solve your problems.
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If you have had a financial problem, or are even headed towards
one, start working on repairing the situation right away. If your
credit is suffering because you have not paid some bills, for
example, don’t make it worse by waiting until you are reported
to a collection agency (by which time your credit rating will
have taken an even worse hit). Instead, work on paying off your
bills or arranging a payment schedule right away.
Tips #30: Consider co-signing for loans - but consider well
before taking the leap.
If you have very poor credit scores following a bankruptcy or
other disaster but need to get a loan, consider getting a
co-signer. If your co-signer has assets or a better credit record,
you may qualify for a better loan rate.
However, be wary - if your co-signer refuses to make payments,
then both of you will suffer the credit fallout. Co-signers share
responsibility for loans and credit - both of you will have worse
credit scores if one of you does not pay.
On the other hand, if your cosigner has good credit and makes
payments, then the co-signed loan can actually boost your credit
score.
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Tip #31: Don’t overlook bankruptcy.
A bankruptcy will affect your credit score more than just about
anything. Worse, it will affect it for many years. In the first
few years after a bankruptcy, you may not be able to get loans at
all.
In short, a bankruptcy is a legal proceeding that either forgives
you of your debts or allows you to pay off just a small fraction
of your debt. It will nearly ruin your credit rating at first, but it
will also allow you to dig out from overwhelming debt and
reestablish a good credit rating again after years. A bankruptcy
will no longer show up on your credit report after ten years.
If you are very seriously in debt and have no way of repaying
your bills, a bankruptcy can help you by stopping collection call
agencies and other problems. Also, if you have been very
negligent in paying your large debts, your credit rating has
already likely suffered greatly.
While a bankruptcy will depress it even further, at least it will
give you the chance to repair your credit by giving you a “clean
slate” free from large debts.
Tip #32: Don’t choose bankruptcy as an easy out.
Bankruptcy is a serious credit problem - it is not just a “ding” on
your credit report - it is a huge red flag to lenders. After a
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bankruptcy, you will be ineligible for credit cards, many types of
credit and will even be told what you can and cannot buy. The
procedure of bankruptcy can also be draining. Bankruptcy
should only be chosen as a last option if you really require your
debts to be forgiven because you have no way of repaying them.
Tip #33: Learn from your mistakes.
Everyone makes some credit mistakes sooner or later - it is very
rare for someone to go through their entire lives without at least
a few dings on their credit risk record. Don’t beat yourself up
over your mistakes - even if they are large ones. Instead, learn
from your mistakes by analyzing them. Think of your credit
mistakes as clues which can help you in the future to avoid the
same problems:
Do you develop credit problems because you overspend while
shopping?
Are you so disorganized that you forget to pay bills?
Are your bills simply too large for your current income?
Do you routinely get overcharged for things and fail to notice
until much later?
Knowing what your mistakes are and finding solutions to the
problems can go a long way towards helping you develop a
good credit risk rating.
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Dealing With Professional Credit Help
Credit repair is big business, and there are many companies that
will promise to help you get out of bad credit problems. There
are a number of legitimate resources that can help you in
improving your credit score but there are also a number of less
than reputable companies out there that will take your money
but offer you few (if any) valuable services. A few basic tips
will help you see the difference:
Tip #34: Seek professional help
If you are in over your head, and your credit is so bad that you
cannot get a loan and may even be facing bankruptcy, you may
want to seek help from professionals. There are a number of
financial professionals that can help you with credit repair:
Bankruptcy lawyers and bankruptcy advisors: Bankruptcy
lawyers can help represent you in bankruptcy proceedings.
Advisors can help you decide whether to apply for a bankruptcy
and how to proceed once you do decide to file.
While getting a bankruptcy lawyer and filing for bankruptcy can
be upsetting and can dramatically affect your credit score for
many years, it can also give you a chance to start over
financially and can help you reestablish good credit again in the
long run.
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Credit repair companies and credit counseling companies:
These companies can help you by acting on your behalf with
credit companies, by advising you on what you can do to repay
your bills faster, and by helping you make better financial
decisions.
Accountants and tax services: Accountants and tax filing
services can help you make the most of your money by making
sure that you do not end up overspending on taxes.
Bankers and bank officers: Most banks today want to not only
help you keep your money but are willing to work with you to
make the most of it. As a banking service, many banks today
offer free investing advice, saving advice, and personalized
meetings with bank officers that can help you figure out your
money situation.
Lenders and bad credit lenders: How you deal with lenders
will determine how well your credit score works. Avoiding too
many inquiries by not applying for too many loans, establishing
long-term business relationships with bankers, and doing
business with bankers in an organized and professional way (i.e.
paying your debts on time) will go a long way towards giving
you a credit rating. In turn, a good credit rating will make it
easier to deal with lenders.
Tip #35: Look out for credit repair companies.
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Many companies out there advertise that they can help you with
credit repair, but the quality of these services - not to mention
what they offer - varies widely. Some companies really can
help you with credit repair while others are actually under
investigation for suspect business practices. If you decide to
seek help from a credit repair company, be sure that the
company is legitimate and offers you viable services.
In general, you should be looking for non-profit credit
counseling services rather than credit repair companies (some of
which are really just lenders offering home equity loans anyway,
which are of limited use to you if you want to improve your
credit).
Check to make sure that the company has good standing with
the Better Business Bureau and clients who are happy with the
credit repair services they received from the company. Always
read the paperwork carefully before you sign and make sure that
you understand how much you are paying for and how much
you are paying.
Before deciding to seek help from a credit help or credit
counseling service, be sure that the problem cannot be resolved
on your own. Indications that you may need credit counseling
include:
-You cannot pay your bills and avoid the necessities of life.
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-You avoid the phone, the mail, and the door because you are
being harassed by collection agencies.
-You have avoided going out because you feel terrible about
your financial state.
-You have no idea how you will repay your bills and loans - you
do not know where to start.
Tip #36: Seek free or inexpensive help before seeking paid
credit repair help
If you need credit repair, odds are good that your finances aren’t
in the best possible shape. That likely means that you should
attempt to spend as little as possible on credit repair - the money
you save can be channeled into repaying your debts. Before
seeking credit repair services, follow the tips in this ebook in
order to repair your own credit.
Also, seek out free or inexpensive sources of credit repair help.
Some non-profit credit counseling services are actually
registered charities and will work on your behalf. If you can
get help from one of these companies or undertake credit repair
yourself, you will be able to save money quite easily.
In addition, these companies tend to be more legitimate than
credit repair companies that take your money, anyway.
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Tip # 37: It will be easier for financial experts to help you if
you seek credit repair help sooner rather than later
If you do decide to seek credit repair help from the experts, it
makes sense to seek that help before your financial situation
spirals too far out of control. After all, credit repair experts can
do little for you if your credit and financial situation is so bad
that the only option left to you is bankruptcy.
Tip #38: Look out for credit repair scams
There are a number of credit repair scams out there. These
scams often promise to help free you of bad credit, when in
reality the “experts” offering these services will either
overcharge you, involve you in illegal activity, or actually put
you in a worse financial situation. Look out for these most
common scams:
1) Credit repair companies that tell you to lie on loan
applications or suggest that you develop a second identity. This
is illegal and dishonest. If a company suggests that you open
accounts in a new name or falsify your information on loan
applications, run, don’t walk, away.
You can be charged with fraud for doing this - and you will be
held responsible for your actions, even if you were acting under
the company’s advisement. You certainly don’t want to add
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legal troubles to your credit woes.
2) Credit repair companies that charge you fees or hidden fees
for things you could do for free yourself - such as work out a
budget. Also be wary of companies that ask for money up
front.
3) Credit repair companies that promise to pay your creditors
from money you pay to them and which they keep in an escrow
account. This is a common scam and it presents a huge
problem for the debtor.
Here’s how it works: the debtor gives money to the credit repair
company, presumably for paying off debts. The company
places the money in an escrow account where it grows. The
idea is that the company will eventually pay off your debts when
the amount reached in the account matches the debts. The
problem is that in the meantime, the credit repair company is
removing some money from the account for administrative fees
while creditors are becoming more and more anxious, increasing
the interest on the debts and even starting legal action against
the debtor. This type of “credit help” can actually ruin your
credit rating!
4) Credit repair companies that pressure you, don’t listen to you,
or want you to sign a contract you have not read. Such
companies are not to be trusted and should be left well enough
alone.
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5) Companies that offer you fast or instant credit repair - no
matter how bad your credit. This is simply a misleading a
claim that no company can legitimately deliver on. If you have
very bad credit, it may take years to fully repair.
In many cases, these companies will claim that they can remove
your poor credit history from your credit report by disputing it.
This is false information. You simply cannot remove true and
accurate information from your credit report. It is true that a
credit bureau must investigate a claim of inaccurate information
within thirty days, but this does not mean that the company will
automatically remove the information.
In fact, if the information is accurate, the data will stand. Credit
bureaus are aware of this common credit repair scheme and have
become very good at detecting it. Many credit repair
companies (and even some individuals) will try to dispute every
ding on a credit report, hoping that the backlog of disputes will
cause the credit bureau to automatically remove the offending
items from the report (the credit bureau is legally required to
remove disputed items it has not investigated within 30 days).
This technique is a scam and is dishonest since you are not
disputing inaccurate information.
Refuse to do business with credit help companies that use this
practice.
6) Companies that don’t tell you your rights or try to take money
for things you could do yourself. You can get copies of your
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own credit reports and have the errors on them fixed for free
yourself - a company that does not tell you can do this yourself
ifs taking money form you for things you can easily do yourself.
It is a dishonest practice, and companies who follow such
business practices should be avoided at all costs.
Also, if a company does not advise you of your credit rights,
then that is an indication that they are not really on your side in
the first place. Why would you want to do business with a
company that does not help you?
Tip #38: Get a good team on your side to help you with your
credit score
A good team of professionals can help you get your credit score
back in shape. Your most important member of your team is
yourself - you are the one with the financial agency and (with
this ebook) the knowledge to become your own best advocate in
credit repairs. Besides this, you may want to check with your
local library for financial help books. You may also want to
include financial experts such as credit counselors or others to
help you. If you decide to seek a team of experts to help, be
sure that you check each person’s credential, standing with the
Better Business Bureau, and past clients to make sure that the
person or company can really help you. Beyond this, make sure
that you sign a contract or agreement with each professional
member of your team.
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Tip #39: Your bank has good and reliable credit information
One free and professional source of credit information is your
bank. Your banking officer may be able to offer you a great
deal of professional, free advice, especially as banks are trying
harder and harder to provide good personal services to
customers.
Your bank may also have a number of credit solutions - such as
overdraft protection - that can help you keep your credit in good
repair. Banks are realizing more and more that many of their
clients are dealing with less than ideal credit. Banks are trying
to meet the demands of this new group and can actually be a
powerful ally for those who are trying to improve their credit.
General Good Financial Habits Build Good Credit
Scores
Your credit score in some ways is meant to be a snapshot of
your overall financial habits - especially your habits surrounding
debts and other financial responsibilities. Developing some
good financial habits can help your credit score by putting you
in a good financial position.
Good financial habits will ensure that you don’t get into too
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much debt and that you are able to meet your financial duties
easily. There are a few financial habits that are especially
credit-friendly:
Tip #40: Learn to budget
One of the biggest reasons that people develop poor credit is
overspending. In many cases, this overspending is caused by a
lack of budget. A budget can tell you how much you should be
spending on each item in your life. This allows your financial
life to stay nicely organized.
Contrary to popular belief, a budget does not have to be
constricting or boring or complicated. Simply note how much
you earn each month, and on a piece of paper, write down how
much you really need to spend on savings, rent, utilities, food,
personal care, transportation, spending money, entertainment,
hobbies, education, and other items. Make sure that you
account for every expense.
Then, simply commit yourself to spending that particular
amount on each item on your list. Of course, some expenses on
your list will change each month - you may spend more on
heating bills in the winter than in the summer, for example - but
estimating can help ensure that you can meet all your financial
responsibilities.
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Tip #41: Live within your means
Many people believe that if they only had more money, they
would not have to worry about credit. In fact, this is not true.
Many people who have money - or at least have all the trappings
of money, including cars and nice homes - in fact have terrible
credit.
The secret of this is that it is not your income that decides
whether you are a good credit risk or a bad one but rather how
you handle money. You could be earning $7 per hour and still
paying your bills and meeting your financial responsibilities - in
which case you will have terrific credit.
You could also be earning $300 000 a year and be in terrible
debt and financial shape due to unpaid bills and excessive debt.
The best way to ensure that you have a good credit rating - no
matter what your income - is to spend less than you earn. That
means living below your means. If you have a very small
income, you may need to live with roommates in order to keep
costs down. If you have a medium-sized income, that may
mean saving more and entertaining less.
You may be interested to note that your income is not a factor in
determining your credit score. Although your past and current
employers are listed on your credit report - and although lenders
may be able to guess your financial status from your loan
amounts - your income does not count.
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This means that if you won the lottery today or suddenly
inherited a large sum, your credit score would not increase.
With your credit rating, what matters is how you manage your
money, not how much you make.
Tip #42: Get out of the spending habit
We are surrounded with advertisements that tell us to buy, buy,
buy. When we want to read a book, we buy it. When we want
to go somewhere, we take a cab or drive rather than walking.
Stopping spending consciously can be hard, but heading to your
local library, walking instead of taking a car, buying a used
computer instead of a new one - all can help you spend less and
save more. There are several ways you can save money and pay
off your debts faster by spending less:
1) When you head out, carry a small amount of cash with you
and leave your credit cards at home. That way, you will not be
able to overspend.
2) Stop catalogs from arriving at your house or discard them unread -
advertisements and catalogues encourage you to spend and buy when you don’t need to.
3) Do it yourself. Eat in rather than dining out. Dining at
restaurants or getting food delivered is always more expensive
than doing your own cooking. Also, do your own taxes rather
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than farming the job out to someone else. Wash your own car,
run your own errands, mow your own lawn. When you do
something yourself, you spend less.
4) Watch less television. It sounds strange, but television can
make you overspend - television contains many
professionally-created advertisements pushing us to spend and
spend. These ads are so well done that not spending after
watching them is sometimes very difficult (just what advertisers
want!). Switching off your television can help you avoid
temptation.
5) Make do or do without. While you are repairing your credit,
channel all your extra money into paying off debts and
reestablishing good credit. Make so with what you have and
avoid shopping as much as possible.
6) Buy discount or used. Whether it is furniture or shoes, you
can save money by refusing to pay retail price.
Saving your money by spending less can let you pay off your
debts faster, something that can improve your credit score
dramatically.
Tip #43: Save
One of the best ways to ensure that your credit rating stays good
is to save money each month. Whether you are able to save
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$25 a month or $200 or even more, saving and investing your
savings will prepare you for financial emergencies, will get you
out of overspending, and will allow you to build investments
that can help you in later years.
With savings at your bank, you don’t have to worry that sudden
illness will make you unable to pay your bills, resulting in dings
on your credit.
Saving ten percent of your income is a nice, reasonable goal.
You can use your invested savings to make certain that your
debts never get overwhelming. Most employers and banks will
even deduct a certain amount of money from your paycheck or
account each month to be put into investments.
This can be a very convenient way to save, as you are unlikely
to miss or spend money you have taken out before you can get
your hands on it.
Tip #44: Keep track of your money
Most people are surprised by how quickly their money seems to
be spent. This is because impulse spending and small-change
spending really adds up. Small-change spending is small
spending we do without even thinking about it - buying a coffee
or a newspaper we don’t need.
Impulse spending refers to simply buying things we don’t use or
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need. In both cases, we end up spending too much
unnecessarily, and this is a problem in credit repair because you
want to be channeling as much money as you can into savings
and debt repayment so that you can repair your credit.
For a month, try keeping a daily record of every penny you
spend - including the money you spend on phones, the money
you spend on tips, everything. You will be amazed where your
money goes. Keeping track of your money this way does two
things:
1) It automatically cuts down on spending. If you have to write
down where you spend your money, you will be much more
careful what you spend your money on.
2) It allows you to see where you waste your money and take
steps to stop the bad habit. If you notice that you always buy
the newspaper on Saturday but never read it, for example, you
can stop buying the paper on that day. Small savings can add
up over the years and can put you in good financial shape which
will be reflected in your credit risk rating.
Tip #45: Take out one pleasure and save it up
Do you have cable?
Do you subscribe to lots of magazines?
Do you build your DVD collection so fast that you can’t even
watch all the movies you collect?
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We all entertain ourselves with money, but most of us have at
least one or two entertainments that we have either outgrown or
don’t enjoy as much as we once did. Cutting that expense out
and investing the savings can put us well on our way to saving
for retirement or paying off our bills. If you give up your cable
television, for example, you can pay off your credit cards that
much faster, improving your credit score.
Tip #46: Build assets and capital
Whether it is buying a car, a home, or creating an investment
portfolio, having assets can help improve your credit score by
allowing you take out secured credit, or credit in which your
assets are used as collateral.
When you take out secured credit (such as a mortgage) you
enjoy lower interest rates and easier approval. As you repay
your secured debt, your credit score will improve. Even better,
lenders do look at the types of credit you have. If you have a
mix of secured and unsecured credit, you will enjoy better risk
rating scores as it will indicate that you have the means to repay
your debts.
Building assets and capital is also a way of building financial
stability which can help protect your credit score. If you have
assets such as savings or investments, then you have a way of
generating income or repaying debts in case of an emergency.
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You also have ready money you can use in case of unexpected
medical bills or other problems.
Tip #47: Find more ways to income
While you are repairing your credit, you will want to channel as
much money as you can into savings and debt repayment. For
this, having a second income or even just a few hundred dollars
a month more can mean that you get your credit into shape
faster.
Having a secondary form of income can also keep your credit
safe - if you lose your job, you can use the money you make
from a secondary source to repay your bills until you find
another form of employment.
There are many ways to get more income:
You can ask your employer for a raise.
You can start to sell something through the Internet or through
a company.
You can establish your own small business that can be tended
to on the side.
You can rent out part of your home to make some extra money.
-You can get a part-time or weekend job.
Whatever you do, finding an alternate source of income can help
your credit immensely.
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Tip #48: Prepare for financial emergencies
Few of us think about what would happen if we lost our jobs or
suddenly became too ill to work. The thought is simply too
terrible to contemplate in many cases, especially if we are living
paycheck to paycheck with a job as it is.
The fact is, though, that financial emergencies happen to almost
everyone at some point and they can have devastating impact in
your credit. In fact, most people who declare bankruptcy do so
because of a huge financial disaster such as sudden
unemployment, huge medical bills, a lawsuit, or divorce.
Despite this, few people plan for these problems, even though
they can happen to anyone.
If you want to keep your credit score in good trim, you should
know exactly what you would do in case of an emergency.
Developing an actual written plan can help you by letting you
take action to save your credit as soon as an emergency occurs.
Some items that could be on your financial emergency plan
could include:
1) A list of all assets you could liquidate if you had to.
2) A list of all extras or luxuries you could cut out of your life
right away if there was a problem (i.e. newspaper subscriptions,
cable television, water delivery service, Friday nights at the
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movies).
3) A list of any resources you have that could help you in case of
an emergency. Maybe you know a lawyer who deals in
financial facets of the law. Maybe you have insurance that
could help you. Maybe your employer offers a severance
package. Whatever it is, write it down. Keeping a list of these
resources will make them easier to access in case of an
emergency.
4) Other ways you could get money if you had to - jobs you
could take, things you could rent out to others.
Tip #49: Get overdraft protection, insurance on your credit
cards, or other services to keep your credit in good shape
Talk to your bank and lenders about services they offer to keep
you safe. Overdraft protection, for example, is a basic service
that often costs nothing or very little extra but which protects
you in case you withdraw too much money from your bank
account.
With overdraft protection, you do not get a “ding” on your credit
report or a charge for insufficient funds. In most cases, you get
a day or two to add more money to the account to cover the gap.
Some credit cards and other loans offer a similar service or offer
insurance which protects you in case you lose your job and are
unable to pay for a few months.
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Tip #50: Get insurance
Insurance for health, your car, your home, and for liability can
help you avoid the huge legal and medical bills that can occur
from an accident or sudden problem. For a small monthly fee,
you are covered against unexpected events that can drain your
finances and leave you with out-of control debt.
Tip #51: Get a prenuptial agreement and have a lawyer go
over all your business contracts
Most bankruptcies are caused by the fallout that occurs as a
result of business failures, law suits, health costs, and divorces.
Getting a prenuptial agreement helps to ensure that a divorce
will not adversely affect your finances and lead to a ruined
credit rating (keeping accounts separate while married is also a
good idea, as your spouse’s own financial troubles can all too
easily become your own). Having a lawyers look over
contracts can at least reduce the risks of unfavorable agreements
that can put you at a disadvantage in business.
Think Like a Lender
If you think like a lender, you can see which habits and traits
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you need to develop in order to be considered a good credit risk.
Thinking like a lender will help you understand how you must
manage your money to be appealing to lenders. There are few
tips that can put you into the right mind set:
Tip #52: Know how money works
Reading books about money and understanding how your
accounts and loans work can go a long way towards helping you
keep your credit in good repair. For example, if you know that
some loans will charge you extra if you pay off your loan faster
while others will not, you will be in a better position to make
financial decisions.
Plus, the more you know about money in general, the more
comfortable you will feel with it and the better decisions you
will be able to make, which will help improve your overall
financial state and will help you keep your credit in good shape.
You don’t need to do heavy-duty research to appreciate how
money works. One easy way to consider money is to think of it
the way you think of time. You likely hate to waste time and
you want to make the best use of it possible. Apply the same
attitudes to your financial life and watch your finances soar!
If overspending has caused you to have a bad credit score,
consider the following sneaky mind set trick: equate your money
with your time. For example, if you make twenty dollars an
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hour, then a magazine subscription of $20 will represent one
hour of your work.
Imagine an hour of your work and ask yourself whether the
subscription is worth the time you put into the twenty dollars.
Once you start seeing money as something that comes from your
hard work rather than a general “thing” impulse spending will
seem much less attractive, and it will be easier to keep your
credit card limits low and you bank account stocked up with
cash!
Tip #53: Take care of those things besides a credit score that
affect how lenders view you
Lenders will often look at not only your credit score but at other
financial indicators, such as your income, employment record,
and savings. Keeping these things in order can complement
your credit score and can help you get good overall credit. Some
lenders have their own ways of calculating credit scores, so
keeping your overall financial system in good shape is one way
to ensure that you are in good shape in all lenders’ eyes.
Be aware that when lender ask to see your credit score, the
credit bureaus send not only your credit score, but also the top
four reasons why your credit score is lowered. The most
common reasons for lowered credit scores are:
1) Serious delinquency in repaying accounts or bills.
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2) Public record of bankruptcy, civil judgment, or report to a collection agency 3) Recent unpaid or late paid debts or accounts
4) Short-term credit record
5) Lots of new accounts
6) Many accounts have late payments, defaults, or non-payments
7) Large debts or amounts owed.
Knowing that your lender sees these possible problems can help
you see the need to develop the best possible face to present to a
lender. Lenders who look at your entire credit report may get a
more positive picture of you than lenders who see only a number
and four reasons for a lower score.
Tip #54: Follow up on closed accounts
You closed a store card years ago - but is it still listed as an open
account? Bureaucratic mix-ups happen, often quite frequently.
If you want to keep your credit score good, you need to follow
up on financial details.
Whenever you close an account - whether it’s a credit account,
bank account, or utility company account, make sure that you
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get written confirmation that the account is closed and paid in
full and then follow up a few months later with the company to
confirm the closed account. This simple precaution can save
you hours of frustration - not to mention a lowered credit score.
Tip #55: Don’t move around a lot
Lenders like to see stability - it suggests stability in financial
matters as well as in your life, and makes you a better credit
risk. Plus, every time you move, you may have to change your
credit information - including switching banks. This actually
negatively affects your credit score by not allowing you to
develop long-term relationships with lenders.
Remember: Your current and past addresses are listed on your
credit report even if they do not directly affect your credit score.
Any lender looking at your full credit report will be pleased to
see that you create a stable life for yourself. Not moving too
frequently can also save you money on moving costs, which can
add up quite quickly.
Tip #56: Don’t change jobs frequently
Of course, there will be times when you will have to change
jobs. However, avoiding changing jobs unnecessarily will help
improve your credit score by allowing you to stay in one place
and build a steady financial situation.
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Your credit report also shows your current and past jobs - if a
lender sees that you change jobs frequently, he or she may
wonder whether you have the life stability required to handle
debt responsibilities. Also, the lender cannot see why you left a
job. If there are many employers listed on your credit report,
the lender may wonder whether you have not been fired from
jobs and whether that is an indication that you will be unable to
pay your debts due to unemployment at some point in the future.
A lender makes their money by the interest charged on a loan.
If you default on a loan, you cause the lender to lose money.
Above all, the lender wants to see evidence in your credit record
that you have the traits that will make you repay the loan - with
interest.
Frequent job changes may indicate - to some lenders - that you
will simply disappear with the money or default on a loan.
Having a stable life - including a longer-term job and one place
of residence - may indicate to lenders, on the other hand, that
you are building up roots in a place and so will be unlikely to
move and default.
Tip #57: Avoid changing switching credit companies and
credit accounts a lot
Credit companies will often offer you special introductory rates,
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generous free gifts or other incentives to switch companies.
However, you should resist the temptation unless you have a
reasonable reason to switch. Establishing a good credit
relationship with one company - having one credit card from
your college days, for example - is a good way to show lenders
that you are a steady sort of person who is likely to take money
matters seriously. That is exactly what lenders want to see.
Switching accounts and lenders makes you appear fickle and
less than reliable.
Tip #58: Keep your records up to date
Not knowing what is going on in your own financial life is
courting disaster. Keep one file folder in your home which
contains your financial information - and review this
periodically. If something changes in your life - you get
married, you start a family, you move or change jobs, look
through your financial folder and contact everyone who needs to
be contacted to update them on the change. This will help
make sure that all your creditors have the information they need
about you. Keeping your own records up to date will help you
make sure that everyone who handles your finances is also
up-to-date.
Tip #59: Always be sure that your creditors know your
current address
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If you move and forget to inform all your creditors of your new
address, you may not get all your bills, making you look like a
deadbeat debtor and making your credit score plummet. Make
sure that you either close your credit accounts or get your new
address and contact information to your creditors.
When you move, make sure that you inform credit card
companies, stores you have credit cards with, banks, credit
unions, and anyone else you do financial business with. Better
yet, also arrange with the post office to have your mail
automatically forwarded to you at your new address. This will
ensure that any creditors you may have overlooked will still be
able to contact you - and you will have a second chance to
remind them of your address change.
Tip #60: Talk to lenders and creditors
Many people are hesitant to keep an open line of communication
with their lenders because they are embarrassed about their
financial state or because they feel unsure about the position.
Lenders can’t read your mind, though. They do not know that
you can’t make a payment this month but will be able to make a
double payment next month because of a banking error. They
simply see that you have failed to make a payment - this may
indicate a temporary problem or a decision on your part to
default on your loan.
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Without your input, your creditors have no way of knowing, and
since their profits and money are at risk, they tend to take the
more conservative view and even assume the worst. Keeping the
lines of communication open as soon as a problem develops can
help reassure your lenders and can help your creditors see that
you are responsible with their money.
Talking to lenders as soon as a problem develops can be an
effective way to prevent a ding on your credit score that can
affect your credit score. For example, if you are giving trouble
paying your bills, you can often work out a more reasonable
payment schedule.
In most cases, you will not get a ding on your credit record if
you do this because the lender will have some assurance that
your financial obligations will still be met. In fact, one of the
things that most credit repair companies do is to arrange for
more reasonable payment schedules. With a simple phone call,
you can do this for yourself for no charge.
Lenders want, above all, to be repaid so that their interest rates
can earn them a profit. By communicating whenever there is a
problem and showing that you are willing to work hard to meet
your responsibilities, you show your creditors that they will get
their money and this makes lenders more willing to work with
you to ensure that your credit rating is not badly affected by one
missed or late payment. Speaking with your creditors can help
establish a good working relationship that can help keep your
credit rating in good shape.
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Tip #61: Get lenders to waive late fees and charges
If you have missed some payments or made some late payments,
lenders will often charge you a fee for non-payment. This not
only adds insult to injury - you have to pay more on your bills
and get a ding on your credit - but also makes bills more
difficult to repay since the bills are now higher. You can phone
the lender and get the charge waived in most cases, though.
This is a secret that credit repair companies have long known
and is one of the first services they will perform on your behalf.
You can easily accomplish this for yourself, however, at no cost.
Lenders want to get paid, and if they think that you will pay
your bill more quickly by waiving the late fee, they will most
often gladly remove the fee in exchange for prompt payment.
Develop an Organized Strategy to Repair Your Credit
Score
Staying organized and on-track is very important when you are
trying to boost your credit score, because there are so many
details to follow up on and so many things to remember. A few
basic organization tips can help make sure that you do not
overlook anything that can cost you your good credit score:
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Tip # 62: Stay financially organized
Keep all your financial records - including tax records - in one
place. Note the days you paid your bills on the bills
themselves. Note how much you owe and where you owe
money. Keeping your financial information in one place allows
you to refer to it easily. Seeing all your financial life in one
place also makes it easier for you to see where your credit and
your financial life still needs work.
Some of the information you may want to keep in your financial
file includes:
Bills
Tax receipts and forms
Articles and pamphlets about debt
Your credit reports and scores
A list of contacts that affect your financial life (such as your
bank and credit agencies, for example)
Your written emergency plan, detailing what you should do in
case of a sudden loss of job or other problem
Banking information
Financial forms
Investment information
Deeds to your assets (such as your house)
Agreements you have signed for loans and other financial
services
A list of your financial goals
Insurance forms
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You may want to buy a box and keep your separate information
in different labeled folders (tax information together, for
example, and bills in another folder) for easy referencing.
Whatever system you use, you will find it much easier to
manage your finances - and your credit - if you don’t have to
hunt for random pieces of paper.
Tip #63: Set short-term goals and do frequent credit
self-checks in order to track your progress
Credit repair takes time and effort. Some days, it will seem that
you are getting no closer to a better credit score at all. In order
to keep track of your progress and in order to keep going
forward, you need to set goals and keep track of what you are
doing.
For example, setting a goal such as “I will improve my credit
score” is far too broad. Set smaller goals, such as “I will talk to
my bank about budgeting this week” or “I will pay off half my
credit card bill by next month.” These goals work better
because they are manageable and have a built-in deadline.
Writing your goals on a calendar or planner you look at
everyday will motivate you to keep working on your credit
repair and will keep you making the small steps that can lead to
better credit. If you review how far you have come each month
or week, you can really keep track of your progress and see how
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much you still have to do.
Tip #64: Take care of the details when applying for credit or
for a credit report
Little things make a big difference. Misquoting your social
insurance number or using a slightly different name (Jane Doe
Smith instead of Jane Smith) can make a big difference, since
credit bureaus can count the two names as different people.
Making sure that you fill out each financial form accurately and
in the same way can go a long way in ensuring that there are no
mistakes in identity that can affect your credit score.
Tip #65: Don’t make the mistake of thinking that small
differences in credit scores or loan interest rates won’t make
a big impact
A few points on a credit score can mean the difference between
a lender offering you a prime rate reserved for the best credit
risks and the worse interest rate offered to less than prime
customers. This may amount to only a few percentages in
different loan rates, but this can make a huge impact, especially
on a large purchase. For example, a few percentage points on a
long-term fixed-rate loan can mean the difference between tens
of thousands of dollars saved - or tens of thousands of dollars
overspent.
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It is in your best interest to boost your credit score by every
percentage point you can and to fight for the very lowest interest
rate loans you can. After all, if you have larger payments each
month due to a higher interest rate than you deserve, it will be
harder for you to repay your bills. Also, you will qualify for
fewer loans if you have higher-than-needed interest rates, as you
will be able to afford fewer of the larger monthly payments.
Tip#66: If you need to repair your credit, stay organized
with a to-do list that ensures you won’t forget anything
As you can likely tell by now, credit repair is not one magical
solution but rather lots of relatively small things you can do to
help repair your credit. To make sure that you don’t overlook
any one thing, you may want to develop a to-do list that you can
post and check off.
You may list credit accounts you need to close, accounts you
need to pay down, people you need to contact, and things you
need to check out or research. As you tick off each item, you
will get a real sense of accomplishment knowing that you are
taking steps to improve your finances. Keeping a credit repair
checklist posted will also keep you on track and let you know
what you still need to do.
Tip #67: Automate your finances
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Thanks to automatic bank payments, you can have your bills
taken out of your checking account each month or even charged
to your credit card. If you are the sort of person who gets dings
on their credit report because you can never remember to pay
your bills on time, this can be a very useful service.
You can even set up your email service to send you automatic
reminders of bills that are due soon so that you can pay them.
This sort of automation is one of the nicer things about high-tech
living and can help you keep your credit score clean if your
credit score suffers mainly from your own forgetfulness or
disorganization.
Loans and Your Credit Score
Loans affect your credit score more than almost any other item
on your credit report. The types of loans you have, how long
you have had loans, the amounts you owe and your payment
history on your loans has one of the biggest impacts on your
credit score. If you can control your loans, you can boost your
credit score. There are a few tips that can get you well on your
way to painlessly managing your loans:
Tip #68: Refinance loans
If you got a poor deal on a loan - especially a major loan such as
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a car or home loan - or if your credit rating has improved since
you got your loan, you may want to consider refinancing.
Refinancing means that you take your loan to another lender in
order to enjoy better terms or rates.
You don’t want to do this too often - it prevents you from
developing long-term relationships with lenders and results in
inquiries on your credit report - but if you have good reasons to
refinance, it can actually help you repay your debts. For
example, if you can get more reasonable monthly bills that you
will actually be able to repay, refinancing can help prevent all
those non-payment credit dings that come from not being able to
pay your bills. Making your payments more affordable can
save you money and can save your credit score.
In the short term, refinancing can push your credit score down,
as you will acquire inquiries on your credit report as you look
for a new lender and as you close old accounts and open new
accounts. In the long term, though, refinancing can be a good
way of boosting your credit score. If you are now missing or
delaying payments because you cannot afford monthly bills, for
example, refinancing a loan or two can be a good way to get
back on track and can get you repairing your credit score again.
Tip #69: Look for loans that are offered for bad credit risks
If your credit score is bad but you need a loan, consider services
that cater to people with poor credit scores. These companies
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know that some creditors with poor credit scores will still make
their payments on time and so are willing to speak with debtors
other companies would reject out of hand. You may have to deal
with higher interest rates, but choosing a bad credit lender can
go a long way to ensuring that your credit score won’t disqualify
you for a loan.
In the long run, you can always refinance your loan to take
advantage of a better rate once your credit score improves.
Tip #70: Always know your credit score before speaking to
lenders
Many people assume that having an excellent credit score is
enough when applying for a loan. It is not. Some lenders are
not terribly scrupulous about offering you the best rate -
especially if they can gain by having you pay higher interest.
Some lenders will try to tell you that your credit score is lower
than it is and that disqualifies you from a better rate. Some may
rely on your ignorance (or what they think of your ignorance)
about your credit score to quote you a worse rate.
Never let a lender do this. Always look up your credit score
before shopping for a major loan and if you are quoted a rate
you think is unfair, speak up and tell the credit officer that your
credit score of 700 (or whatever the score is) seems to indicate a
better loan.
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Show the lender your printed copy of your credit score. If the
lender tries to tell you that lenders get more accurate credit
scores than customers who look up their own credit scores or
tries to tell you that your credit score has changed, walk away.
There are many reputable lenders out there. Find one of them
rather than relying on a lender who will try to lie to make a
profit.
Tip #71: Consider speaking to lenders face-to-face if you
have a bad credit score
If you apply for a loan over the telephone or online, your credit
score will count the most, because that is all the lender will
likely look at before getting back to you with a quote. If you
have bad credit but still need a loan, meeting with a lender face
to face is your best bet because an actual meeting allows a
lender to get an impression of you, and allows you to explain the
problems you have had in the past and the things you are doing
now to make yourself a better credit risk.
When you meet worth a lender in person, you force them to stop
looking at you as a credit score number and make them look at
you as an entire person. This can be a huge advantage for you
(especially if you are personable) and can help you get the loan
your credit score does not completely qualify you for.
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Make Credit Repair Easier on Yourself
Credit repair is no picnic. It requires continual work and effort
to get a good credit score and to improve a bad one. In today’s
busy life, you stand a much better chance of getting a better
credit score if you make it as easy on yourself as possible. In
many cases, people actually have low credit scores not because
of carelessness or indifference, but because hectic lifestyles lead
to oversights and missed credit payments. There are several
things you can do to make good credit almost automatic:
Tip #72: Don’t let a bad credit score make you swear off
purchases you must make
You will make life much harder on yourself if you deny yourself
things you need - such as medical treatments - because your
credit is poor. If you have bad credit, but need money for
something urgent, consider a secured loan or a bad credit loan
with generous terms. Do not let bad credit affect your ability to
stay safe and healthy.
Some people think that getting credit while trying to repair their
FICO score is bad idea. While it is true that you may not get
the best interest rates on the loans you get in the time before
your credit score is improved, getting loans that you need may
simply be too important to put off.
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Tip #73: Make arrangements to pay your bills when you are
on vacation or ill
When we go on vacation, of course we want to get away from it
all, but when we forget to pay our bills while away, we risk
getting dings on our credit that can affect our credit risk rating.
Make it part of your vacation practice to pay bills in advance or
to arrange someone to pay your bills while you are away.
Similarly, while you are ill, arrange to have bills paid so that
bills don’t pile up and so that you don’t get marked as a
“non-payer.” It is frustrating to be trying to improve a credit
score only to suffer a setback over a small oversight.
Tip #74: Consider online banking or telephone banking to
make bill payment easier
If you have trouble getting your payments in on time, consider
online or telephone banking. This simple system is now
available from virtually every bank and can help you pay your
bills in minutes - at any time of the day or night. If you travel a
lot, on line or telephone banking can be a real life-saver as it will
allow you to pay your bills no matter where you are.
Plus, you get instant confirmation of the paid bill and your
payment is counted instantly. You no longer have to worry
about payments getting lost in the mail or getting lost in a
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bureaucratic shuffle - the record of the payment is right on your
bank account statement.
If you lead a busy lifestyle and have several late payments of
bills simply because you can’t quite keep up with the errand of
paying bills, online or telephone banking can be the solution that
can help your credit rating by effectively putting a stop to late or
unpaid bills. With these two very convenient and quick
payment options, there really is no excuse for unpaid accounts.
Tip #75: Simplify your bills
You can often get great discounts by choosing to get several
services from the same company - for example, a package deal
from your phone company can give you internet access, long
distance phone plans, and cable television - all on one bill and
all in one low price. Pooling your insurance into one package
from one insurance provider can have the same effect. Reducing
the number of bills you get can make it easier for you to pay
your bills and so reduces the chances that your credit rating will
be affected by non-paid or late paid bills.
Tip #76: Pay your bills as soon as you get them
If you leave your bills until later, you may forget and end up
being listed as a late payer. Some companies may not report
you to credit bureaus right away, but others report even one
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skipped or late payment, which can show up on your credit
report and affect your credit rating.
Tip #77: Set aside a regular day, time, and place for paying
bills
If you are too busy to pay your bills as they arrive, set aside one
hour each week for paying your bills and ordering your finances.
Have the same place and time set aside each week, so that
paying incoming bills and taking care of your finances becomes
an automatic good habit.
Make sure that the place you set aside is quiet and contain
everything you need - including pens, a calendar, stamps,
envelopes, and your payment information. Making bill paying
automatic in this way can reduce the number of non-payments
and late payments you make on your bills, and reducing these
problems can help improve your credit risk rating.
Tip #78: Record your financial duties on a calendar - just
like all your other appointments
If you mark down when bills are due, when you need to make
payments, and what you need to accomplish to boost your credit
score in a visible place you check often, you are less likely to
overlook important appointments and deadlines.
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Tip #79: Go online
There are a number of online resources that can help you find
credit information and can help you with your credit repair
project:
The FICO web site - www.myfico.com - contains lots of useful
credit repair information and even allows you to order credit
reports and scores.
The credit bureaus (transunion.com, equifax.com and
experian.com) allow you to order credit scores and credit reports
online.
Through the online sites you can also get information on
reporting errors on your credit report. Your bank likely offers
online banking as well, which can make managing your
accounts easier and simpler for you each month.
Most companies - including utility companies and credit card
companies - will now allow you to get your bills right in your
inbox. This is a very handy feature as it allows you to get your
bill right away, it cuts down on the amount of mail you get, and
allows you to get and pay your bill online through online
banking. Plus, many accounting software packages now allow
you to coordinate all your financial information through one
program, which can make taking care of your finances much
more automatic and timely.
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Student Credit Repair
Students are increasingly worried about credit and credit scores -
and for good reason. Student debts are rising and the numbers
of students who leave school with ruined credit scores is rising
as well. Many experts blame larger credit card debts and rising
tuition costs (that lead to larger student loans).
Despite the pressures of today’s student life, though, it is
possible to leave school with a good credit score and in fact to
develop good financial habits that can lead to a lifetime of good
credit ratings. There are a few tips that can make the college
years a credit-booster instead of a credit disaster:
Tip #80: If you are a student, you have a great secret weapon
for credit repair and credit help - your school’s financial aid
office
If you are a college student, your school’s financial aid office
should be one of your first stops at the campus. Few students
visit this office regularly while they are in school, and this is a
mistake. The financial aid office at most universities and
colleges has more than enough information to help you keep
your credit score in tip-top shape.
The financial aid office offers one-on-one financial counseling,
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information about scholarships, tips on budgeting, books on
money, and many more resources. The officers at your
university or college financial aid office can offer you help on
almost any aspect of financial help - including helping you
figure out credit scoring. Plus, many financial aid offices have
workshops that can teach you about dealing with money and
credit, and even offer free tax filing services, services that are
extremely useful.
In fact, the financial aid offices at most colleges and universities
are so useful that you may want to call the school you attended
in the past to ask whether alumni are eligible for any services at
the financial aid office. The resources that you a get for free
from these offices are simply too good to miss.
Tip #81: If you are a student (and especially a student with
student loans), budget carefully
Student loans need to be paid back and are more and more often
for large amounts. Taking out the smallest loans you can and
sticking to a budget can help establish good credit habits that
can help ensure that you have a good credit score when you
leave university. Plus, since student loans are for a limited
amount, you can easily budget because you will know exactly
how much money you will make each month and how much
money you will be spending on student housing, tuition and
other expenses.
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Tip #82: Try to pay for education through means other than
loans
Student loans are becoming a problem for more and more
students. On the one hand, student and college loans can help
students who could otherwise not afford go to college or
university.
On the other hand, though, huge student loans can be a terrible
financial burden after graduation.
While it is true that most college and student loans do not have
to be repaid until after graduation, the time after graduation
usually carries some large financial responsibilities. Many
college graduates want or need a car, a good job, and possibly a
house or home. Each of these things requires a good credit
standing, but too large student loans not only require larger
monthly repayments but also may affect credit scores by
overextending credit.
As tuition fees rise, larger student loans are becoming the norm,
leading to financial hardship down the road for many students.
To avoid this, you should take out the smallest loan you can,
relying on jobs, savings, scholarships, bursaries, and other forms
of financial aid to make up the rest of your tuition and living
expenses. You should rely on loans as a last - not a first -
alternative.
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Student and college loans are an investment in your future since
they can help you get the education you need in order to get a
great and fulfilling career. However, these loans are a serious
and usually long-term financial responsibility. They should not
be undertaken lightly. If you need a loan to pay for college, you
should get the smallest loan you can and should get the best
terms and rates on it possible.
In general, need-based government-subsidized student loans
generally offer the best terms and rates. After that, college and
student loans from private lenders may offer decent rates.
Personal loans and credit cards should only be used when
absolutely necessary to pay for an education, as these tend to
have higher interest rates and require that you start repaying
them right away.
Tip #83: (Almost) never default on a student loan
Many students think that defaulting on a student loan after
graduation is a smart way to get rid of a debt. After all, they no
longer need the money for school and in fact need the money for
settling into a job and new home.
However, defaulting on a student loan is a terrible mistake in
almost all cases, because it affects your credit rating very
negatively. If you have student loans, it is important that you
start repaying them on schedule and that you repay them on
time. Doing so will actually improve your credit score.
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If you are having trouble repaying your student and college
loans, speak to the lenders rather than ignoring the problem.
Most lenders will actually give you a six month grace period
after graduation so that you can find a job and settle into
post-college life before repaying your loans.
If you have several loans, your lenders may be willing to help
you pool them into one larger loan payment that requires smaller
monthly payments. Some lenders will also give a few months
grace in case of unemployment.
Read your loan agreements carefully to find out what your
student loans are like and what is forgiven in them. If you need
to, work out a different payment schedule, seek out refinancing,
or find some other way to repay.
Only default on your student loans as a last resort when you
really have no way of repaying your debts. In that finality, be
prepared for the decision to affect your credit score quote badly
for some time.
Once you default on one loan, it really counts against your credit
rating - especially since as a new graduate you do not have a
long credit history yet. After all, lenders who see that you have
defaulted on one financial responsibility will wonder why you
wouldn’t default on their loan, as well. After defaulting on your
student loan, you may be unable to get credit for some time and
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you will have to work much, much harder to re-establish good
credit.
Tip #84: Save money by taking advantage of student
discounts or student life
One of the advantages of student life is that it is inexpensive.
Student housing or rooms rented with roommates create
inexpensive living, on-campus facilities offer great services at
discount rates, and many businesses offer student-only deals.
Try to take advantage of these offers to make your student
money stretch further so that you have take out the smallest
student loans possible. Look around to find the best
student-deal offers, ranging from travel deals to free tax filing
services, available from your campus and from surrounding
businesses.
Make use of the free services on campus - such as renting
movies for free from the film department or working out in the
school gym - rather than paying for these same services outside
the campus.
Tip #85: Follow the “cash for wants, loans for needs” rule
Many students fall in love with their credit cards. Credit card
companies know this, too, and routinely heavily advertise on
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college campuses, even offering students free food or gifts to fill
out a credit application. While the convenience of credit cards
is tempting, it is a good habit to use credit cards only for major
purchases, saving cash for entertainment, food, clothes, and
other like items. This is because studies have repeatedly shown
that those who pay cash for items routinely spend less than those
charging or using debt cards to pay.
Using only cash for entertainment and other small needs ensures
you won’t spend more than you have to and also ensures that
you won’t up paying for months for something that is long gone.
Tip #86: Make learning about money a priority
Whether you attend information sessions at the financial aid
office, read about money in books, or meet with your bank’s
financial officers, learning how to manage your money is an
important part of school life.
For many students, their time away from home is one of the first
times they are responsible for finances - including bills.
Learning to handle this responsibility well early on in life
ensures that you will enjoy a good credit standing your whole
life. Learning about money will also help you prevent costly
credit mistakes.
Tip #87: Start building credit early - and do it well
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Start building credit early - even before college starts, if you
plan on taking out college loans. Ask your parents to sign over
a bill that you pay on time each month. Get a credit card with a
low limit and a bank account that you balance each month.
Avoid opening several charge cards at once - not only will they
be hard to repay, but having several new accounts when you
have a short credit history will actually cause your credit rating
to drop. Get a part-time job.
Each of these things can help you establish good credit, high in
turn can help you get a good student loan rate. More
importantly, establishing credit early will help ensure that you
have a long (and good) credit history by the time you graduate
from college, which will help you with all your important, large
post-graduation expenses.
Dealing with Debt
Debt is a major factor in your credit score. If you have too
much of it (or none at all) or if you have trouble repaying your
debts on time, your credit score will plummet. Keeping your
debts reasonable and paid, on the other hand, will do more than
almost anything else to improve your credit score. Here are a
few tips that can ensure that your debts actually help you boost
your credit score:
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Tip #88: Consolidate your loans to make repaying them
easier
Having lots of loans and debt is one of the biggest reasons
leading to poor credit ratings. The larger your debts, the worse
your credit rating and the more likely that you will find yourself
with large monthly bills that are difficult to repay.
Consolidating your loans means that you take out one large loan
to repay all your creditors so that you only have one large loan
to repay. While the overall amount of the loan does not change
- if you owed $20 000 to five different companies, you will still
owe $20 000 but to only one lender - but the interest rates and
monthly payments are usually quite smaller and this can help
meeting your debt obligations much easier.
Debt consolidation can be an especially good idea if you have
lots of high-interest debt and lots of bills that are hard to keep
track of. One smaller monthly payment will be easier to
remember and will help make bill time less painful.
Tip #89: Pay down your debts by making larger than
minimal payments
If you only pay down the minimum amount on each of your
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loans, it will take you a long, long time to pay down your loans.
This is because most lenders only require that you pay down
slightly more than the interest amount on your debt each month.
Even a debt of a few hundred dollars could take several years to
repay this way.
Paying down your debts by putting down more than the
minimum required monthly payment can help you pay down
your debts faster and so can boost your credit score. Paying
down more than you need to also shows lenders that you are in
good financial shape and conscientious about your debts - two
qualities that definitely make you an attractive credit risk to
lenders.
Tip #90: If you are taking out a new loan, consider putting
down a larger down payment to take out a smaller loan
Doing all you can to take out a smaller loan - by putting down a
larger down payment or buying a less expensive car or home (if
that is what the loan is for), for example - can help ensure that
you don’t overextend your credit and can help ensure that your
monthly payments on the debt will be reasonable and affordable
to you.
In fact, for larger purchases, some debtors take out piggyback
loans, most often for a mortgage. They borrow money for a
down payment, so that they can get a better rate deal on the
larger second loan they take out to pay for the purchase.
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Do your math before making a big purchase - you may find that
a larger down payment - even if you have to borrow to get it -
can help your credit by making your payments more affordable
and by ensuring that you don’t overextend your credit.
Tip #91: Use loan calculators to estimate your finances and
keep your credit rating in good shape
Online loan calculators are a useful tool that can help you
determine how much of an interest rate you should pay, how
much in monthly payments you can afford, and how much your
loan will cost you in interest over the long term.
Online loan calculators are free to use and can help you figure
out how to make your debts more affordable. There are online
loan calculators for auto loans, home loans, and personal loans.
If you are going to be getting a new loan, these calculators can
be a powerful resource.
Tip #92: Avoid payday loans
Payday loans are also called “cash advance loans” and they are
small and short-term loans that carry very high interest rate.
Some companies have even begun to advertise them as loans to
help you repair your credit, but this is very misleading. Some
companies suggest that these loans can help you pay off your
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bills and so establish good credit, but if you cannot afford to pay
your payday loans on time, you have to “roll-over” or extend the
loan - often at huge expense and interest. Many people get into
a payday loans cycle, whereby much of their monthly paycheck
goes towards paying off their ever-growing payday loans.
In fact, several states are investigating payday loans for possible
illegal activity stemming from usury laws. If you cannot afford
your bills one month, you are much better off trying to arrange
an alternate schedule of payment with the companies you owe
money to rather than risking your credit rating through payday
loans. Payday loans may be fine in a true emergency, but the
payday loans cycle gets very unaffordable very fast and can ruin
your credit rating.
Tip #93: Do not use one debt to repay another
This results in accumulating interest and so increasingly
unpayable bills. If you use one credit card to pay off another,
for example, you are paying interest on interest, and paying off
the new credit card bill will be more difficult.
This method will also mean that you will always be looking for
new credit and new debt to pay off your increasing debts. It
makes more sense to get a second job or arrange for a new
payment schedule.
Paying off your debts with another debt may help you in the
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short run - you will not have a late payment on your credit
record - but in the long run the larger debt load will make
maintaining good credit more and more difficult. The only
exception to this rule is debt consolidation, in which all your
bills are paid by one lender, who then becomes the only creditor
you owe money to.
Credit Repair and Your Emotions
It is a subject that few people discuss, but more and more
therapists are talking about it - the key link between our
emotions and our money. We may think that money is all about
our rational selves, but in fact our emotions are often very much
invested in our pocket books.
If we want to repair our credit, we have to deal with the
emotional as well as the numerical side of money. There are a
few tips that financial experts now believe can help you harness
your emotions in a way that can actually help you improve your
credit score:
Tip #94: Give Yourself a Break
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There is no point in beating yourself up over your credit score -
whatever it is. Instead, promise yourself that you will do better
in the future and then work to repair your credit rather than
working on berating yourself. Taking action to improve your
credit rating will improve your outlook as well as your credit.
Tip #95: Don’t make excuses
If you have been the object of identity theft or have genuinely
been mistreated by a company, then by all means include an
explanatory note in your credit report. However, most lenders
do not want to hear a lot of excuses. Whatever your problems
have been in the past, you will seem like a much more reliable
lender if you focus on what you are doing to get out of
problems.
You will feel better and get better responses from lenders if your
focus on current action rather than past mistakes. Instead of
wallowing in pity and explaining in great detail the personal and
financial problems that led to a bad credit rating, give yourself
and lenders the condensed version and then move on to a
detailed review of what you are doing to repair your credit.
Tip #96: Give Yourself a Treat - without affecting your
credit rating
Reestablishing good credit is hard work and daunting as well.
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Once in a while, as you reach a milestone, you need to reward
yourself. You should do this through some means that do not
involve debt or money. If you repay your credit card bill, there
is no sense in running up that bill again on a shopping trip.
Instead, you should list some inexpensive and fun treats you
could give yourself. Keep this list wherever you keep your
financial file. As you reach a big milestone, take out your list
and immediately reward yourself with one of the items on the
list. This will not only keep you motivated, but it will
inexpensively keep you from feeling too deprived while you
work on your credit score.
Tip #97: Work on your emotional response to debt and
money
Most of us carry a lot of emotional baggage with us when it
comes to money. We see money as a marker of success, or we
see money as a way of making ourselves feel better, and these
attitudes lead us to much of our financial and credit problems.
If we rely on money to make us feel successful, then we are apt
to overspend. If we fear money - or the lack of it - we are
unlikely to save it or make investments with it.
We need to be aware of the ways we respond to money and the
ways that those responses shape the ways we deal with money.
Some financial experts recommend that clients keep money
journals, in which they record their money hopes, their money
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fears, and their responses to spending and money. A money
journal can help you by showing you how feel about spending
and about money. If you can isolate the emotions that influence
how you spend money and how you make your money
decisions, you will be well on your way towards fixing your
financial problems.
Tip #98: Don’t mix debt with emotion and stay aware of
your emotions
It pays to separate your feelings of worth and your emotions
from your finances, especially when you are trying to repair
your credit. Feeling self-pity, shame, fear, or sadness as you try
to repair your credit score won’t help you. Staying calm and
professional as you deal with credit bureaus and financial
professionals will help you. If you need to, keep telling yourself
that your credit score is just an important number. Keep it
separate from yourself and your emotional state as far as
possible.
Bad credit can be emotionally trying, and boosting your credit
can be daunting and difficult as well. It is important that you
keep track of your emotions during the process. If you find
yourself dwelling on your credit too much or if you find yourself
severely depressed, seek help at once. A credit problem is a
fixable solution - do not let it become an emotional disaster for
you.
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Tip #99: Get help if you need it
Do not be afraid to ask for help - financial or emotional - if you
need it. There are a number of wonderful organizations that
can help you if a problem is causing your credit problems. If
you have credit problems due to compulsive overspending, for
example, Overspenders Anonymous can be a great help.
If you suffer from a gambling problem, there are a number of
charitable organizations that can help you overcome the
addiction. If you have accumulated debt as a result of these
sorts of specific problems, you will not really be able to fix your
credit rating unless you deal with the problems behind the bad
credit. Many good groups and therapists out there can help
you.
Find a recommendation for a good one from your family doctor
or a trusted friend or family member. You will be glad that you
did.
Parting Credit Tips
Before you head off to enjoy your new and improved credit
score or to work on boosting your credit score, consider two
more tips that may well come in handy as your try to repair your
credit score:
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Tip #100: Learn to deal with collection agencies
If you have bad credit, you will have to deal with collection
agencies sooner or later, and these companies often present the
most persistent and unpleasant problem for those with bad
credit. Collection agencies are basically companies that work on
behalf of companies to try to recoup money that is owed.
If you owe your credit card company a payment that has not
been made in some time, your credit card company will
eventually ask a collection agency to speak with you. In many
cases, collection agencies try to get money for their clients
through phone calls. Some collection agencies are quite
reasonable and will try to work with you. However, some will
use threatening or harassing techniques - including verbal threats
and daily phone calls - to try to get you to pay. To prevent the
stress that collection agencies can cause, learn to deal with
collection agencies.
You should always get the full name of whomever you speak
with at a collection agency. You should try to be honest about
your ability to repay and try to work out a payment schedule or
payment options. If at any point you feel threatened or
harassed, say so. Hang up the phone if the collection agent
persists and contact the company who is trying to recoup money
from you directly.
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Note that the collection agency the company uses has been using
is using abusive or upsetting language and ask to resolve the
issue with someone at the company directly. Get the name of
the collection agency and report them - and the agent you spoke
with - to the Better Business Bureau. Refuse further calls from
the collection agency and continue your communication with the
creditor directly, noting each time the collection company
contacts you with harassing or abusive calls.
Unfortunately, some collection agencies feel that intimidation
yields the best results and since most collection agencies work
through telephoning, they feel that they can say whatever they
like (including making personal and false accusations) in order
to try to recoup money for their clients. There is no paper trail
and few people harassed by the agencies take these companies to
court.
Some debtors feel so ashamed of their bad credit rating that they
almost feel that they deserve the abuse. Both views are
completely wrong. A bad credit rating does not make you
deserving of abuse. Report collection agencies that offer
harassment as a technique and make it clear to lenders that you
will not work with a company that uses abuse as a technique of
recouping money.
Some collection agencies will try to use your credit score against
you, telling you that they can ruin your credit score at a glance
or file a claim on your credit score. Don’t fall for this. Your
credit score is instantly affected when you fail to make a
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payment or are reported to a collection agency, but there is
nothing that the collection agency employee can do to make
your credit score worse beyond those two things.
You will still be eligible for credit in many cases. Do not let
false claims about your credit score intimidate you into
accepting the abuse of a collection agency.
Tip #101: Keep at it
Credit repair is not something that you simply do once in a while
when your credit rating slips below 620. Credit repair and
credit check-ups need to be part of your overall long-term
financial plan. You need to follow a regular maintenance
schedule of checking your credit reports regularly (you can get
one free credit report from each of the major credit bureaus
every four months, which lets you check your credit for free
three times a year).
Regular check-ups will ensure that you have not been the
victim of identity theft and will help you make sure that your
credit has not begun to slip. Catching errors and problems early
can be an excellent long-term way to ensure that you never need
intensive credit repair again.
Your credit should be part of your financial goals because your
credit can help you meet your goals. Good credit can help
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make loans affordable, and so can help make education, homes,
and cars possible.
Your credit score will not stay steady - it may drop due to
oversight or if you suddenly open some new loan accounts.
However, overall you should continue to follow the strategies in
this ebook in order to develop good habits that will keep your
financial life stable and will help keep your credit score overall
in good repair.
Conclusion
If you follow all - or even some - of these tips, you will notice
an improvement in your credit rating with time. The main thing
is to keep showing lenders that you are a good credit risk and
keeping your credit report safe from identity thieves and
hackers. If you already suffer from bad credit, developing your
own method of credit repair using the tips in this ebook can help
you reestablish the credit risk rating that can get you the best
interest rates possible.
In general, you will want to follow at least four steps to better
credit scores:
1) Check your credit report and credit scores. Assess your
current situation and make sure to correct any errors on your
report by writing to the credit bureaus and to the creditors
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involved. Immediately report any charges you don’t recognize -
these may indicate an error but they might also indicate that you
have been the victim of fraud or identity theft.
2) Pay down your debts and pay your bills on time. Close
down the shorter-term loans if you need to.
3) Do all you can to make good financial habits automatic in
order to keep your credit rating good.
4) Address particular issues - such as too much debt or a
student lifestyle - that you think may be contributing to your
low credit rating.
Developing your own plan for credit repair is the most
cost-effective and often the most effective way of dealing with
bad credit. It also gives you the tools, knowledge and
self-confidence to take control of your finances and ensure that
you get the best credit score you can.
By being persistent and following the tips in this ebook, you can
turn your credit situation around. With your new, good credit
score, you can become qualified for that great new job, that
apartment, or the fabulous interest rate on that loan you need.
With a great credit rating, your financial life will be much
easier.
You have all the tools and resources in this ebook to start
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repairing your credit right now. You can use the tools
presented here to follow your financial dreams and achieve the
success you deserve. So start reestablishing your credit so that
you can live the life you want right now!
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