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Eliminating Bad Credit
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How to Fix Credit
Are you overwhelmed with debt, have bad credit, and have been told that you now have You Fix It Credit? That is, credit so bad that the only one who can fix it is you?
In order to fix it you have to know what is in your report. Don't make any assumptions. Always check and positively know what is in your credit report.
Your credit report may contain information that is hamperi... Read credit counseling article
3 steps to find the right credit counselor
If you might be in a position to file bankruptcy after Oct. 17, or you're interested in credit counseling as an alternative to bankruptcy, you'll want to take the following steps:
Get clear about what you're looking for. If bankruptcy is your best option, you'll want to avoid being routed into a debt-repayment plan you can't afford. If you're trying to avoid bankruptcy, though, a debt-... Read credit counseling article
Eliminating Bad Credit
Bad credit also known as subprime credit in the mortgage industry, will affect your pocket book in more ways than making it more difficult for you to get a home loan. Not only will you have a higher interest rate on your mortgage but it will also translate into higher interest rates on car loans, store credit cards and the well-known bank issued credit cards. In addition, poor good credit can even prevent you from getting some jobs. As a result, it is clearly important to improve your credit if it's fallen into such a condition.
You're probably thinking, sounds good, "but how do I do it?" Remember, developing bad credit didn't happen overnight and you can't improve overnight either. However, it's not as difficult as you might think if you follow a few simple rules.
First and foremost, you must stop spending more than you can afford. Surely a common sense principal but not followed by millions of Americans.
Next, stop making your payments late. Late payments show up on your credit report as 30, 60, 90 and 120 plus days late and each time this happens it goes into the formula for calculating your credit score and results in a lower score.
If your debt has gotten out of control you need to seek credit counseling or even bankruptcy. Neither is a bed or roses but if you're to that point your need to bite the bullet, humble yourself and take the plunge. If you can't make the payments and the interest rates on your credit cards has already been raised to 20 or 25 percent these may be your only options.
Setup a budget or your monthly expenses and keep track of everything. If you don't know how much it costs to live each month compared to your income you'll never get your financial house in order. Once this is done take a look at where you can cut back. Hey, nobody said this would be easy but once you make a few changes, exercise a bit of financial restraint you'll be amazed at how much additional cash you can free up each month to pay down your bills.
Another key ingredient to remember is that regardless of how bad your credit has gotten it doesn't take the 5, 7 or even 10 years like you always hear about to fix it. Follow this simple advice and within 2 years you can have your credit back to good or even very good. Of course, a prerequisite is that you get your current bills under control.
Ok, all you need is two credit cards. Use one to buy groceries, the other to buy gas and then pay them off at the end of each month. Simply switch between the two for "emergency" purchases but always try to pay them off at the end of each month or keep a very low balance. Use cash to buy everything else. You only need two credit cards or what the credit industry calls "trade lines" paid on time and preferably paid in full each month to really raise your credit score. So follow the two credit card rule above and even if you just had a bankruptcy or you've gone through credit counseling, within a few short years you can have your credit score back to where it no longer hurts.
Last but not least, get a copy of your credit report from the 3 major credit reporting agencies: Experian, TransUnion and Equifax and then take a close look at them to make sure they are correct. Many people who have gone through credit problems have credit reports that haven't been updated correctly to reflect their current status with creditors, even after they've paid off bills or made special arrangements with their creditors. The bad information can be on their reports for years hurting their credit score, so make sure you get a copy of credit report after you've done your part in putting your financial house in order. You can simply type in the name of the above credit reporting companies in any of the major search engines to find their home pages.
Better yet, go down to your local bank or mortgage company and apply for a loan (even if you're not interested at this time in getting a loan) and ask them for a copy or your credit report (after your initial meeting and they've called you back). However, make sure it's a tri-merge credit report, which includes information from all 3 credit reporting agencies or your credit report won't be accurate.
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Credit and Your College Student
Your child made it through high school and will be starting college in the fall. You're so proud and can't wait to see how the future unfolds. You've packed his bags and loaded the truck, and start driving 400 miles to the college of his choice. Did you forget anything?
Don't send your child off to college without a credit card.
We all hear the stories about the child who wouldn't leave home. You know the one who comes back home and leaves like you have a revolving door? Why not do something to benefit both your child and yourself?
Teach your child the benefits of credit by letting him apply for a credit card. It doesn't need to be a high balance card either, $500 will do to start. Today you can get a credit card for just about anything - gas, food, traveling, flying, student - they even have designer credit cards.
Lessons of Owning a Credit Card:
1. Responsibility
Having a credit card is a responsibility that one should take on with great forethought. Credit means that a bank has faith in your ability to repay a loan. It also means that you trust your child's ability to make his own financial decisions in a responsible adult way.
2. Finance Management
Learning to use credit wisely is something not taught in our current education system. Looking at the current bankruptcy rate you wonder why not? Managing a credit card is just like managing your study schedule. It is said that for each hour of class you should study 2 hours. Same principle should apply to credit. For each dollar you place on your credit card you should put two dollars in your savings. Managing finances via a credit card gives your child a hard copy record future businesses can look at to see what kind of credit risk your child is. Can he manage a $500 balance? Does he tend to max out his credit line and then pay the minimum balance? Does he spend frivolously or wisely?
3. Problem Solving
Learning to deal with problems that naturally come with living is one of the most important lessons your child can ever learn. Let' say he meets a girl he really likes and decides to impress her by taking her out to an expensive restaurant. Does he charge it to the card hoping that mom or dad will pay the balance? Does he decide to use what cash he has on hand to take her out? This may seem petty but the decision made on this small problem can foretell the future of his spending habits. Turning to credit every time one is faced with a problem is not wise however learning to live with the income you currently have is.
4. Investment
Most people see credit as a way to obtain 'things'. You can now buy that blouse, jacket, ring, car, or whatever you desire at the moment. Credit was never meant to be used as it is now in America. Many people are purchasing fast food, gas, and groceries with their credit card. This is fine if you have the money coming into your savings for repayment of the loan but what if you don't? It could take you ten years to pay off that trip taco bell if you continue in this manner paying only the minimum balance. Teach your child that it is okay to use the credit card for certain purchases especially if he is trying to build up a history of repayment. He must already make enough to purchase the item before he places it on credit. This way he is investing in his future as well as enjoying his present.
5. Safety
It's midnight and your son gets a flat tire on the way back to his dorm. He didn't work much last week because he took the time off to study for finals. What is he to do? He knows he will increase his work hours and start making a regular income next which would more than pay for the tire. He remembers his credit card and calls the auto club associated with the card company which he invested in for only $5/month. He buys a tire from a preferred vendor which saves him an additional 15% and puts away $4 dollars for each dollar he spent on the tire for future emergencies. The credit card and his ability manage his finances responsibly enabled him to use his problem solving skills to invest in future predicaments.
Your child is now a Senior in College and you are about to go to his graduation. You are positive about his future because you know for the last four years he managed his finances responsibly and wisely. His future is bright and can only get better. Congratulations you made it through parenthood. Now, can you make it through grandparenting?
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Eliminating Bad Credit
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