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Repairing Credit
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Credit Score Secrets
Any credit you have will be part of your credit report. This includes credit cards, car loans, mortgages and student loans, etc. The credit bureaus or any prospective creditor may use this information to generate a credit score. How credit scores are calculated is not a secret at all.
Credit Score Explained
A credit score statistically compares information about you to the c... Read credit counseling article
Consumer Reporting Agencies
Laws were made to help people bring justice to their lives, and it is the violation of these laws what makes a person go through harsh time. The Federal Trade Commission (FTC) designed the laws that assured people's right to obtain, maintain and use credit. But the laws do not promise everyone a credit. It only guarantees that everyone is equal in matters of credit issues.
The FTC is al... Read credit counseling article
Repairing Credit
Having a good credit rating is important in today's world. If you have recently applied for credit and you were denied, you may be surprised to find that you have a poor credit rating. A less than desired credit rating can occur for several different reasons. Here are some common problems that can cause your credit rating to decline, and some things you can do to protect yourself in repairing your credit situation.
A common reason for a bad credit rating is a slow payment history. That is why it is important to pay your bills on time. When you do not your creditors keep track of that information and report your late payment to the credit reporting agencies. When other companies who are considering lending you money see this late payment history they are concerned about their ability to collect their money, too. The easiest way to ensure that your payments are never late is to set up online bill pay through your bank. This way you can have your bills set up to be paid automatically each month. If you choose not to do automatic pay, then you will have to set up a manual system, maybe setting aside a weekly time for bill paying, to ensure all your bills are paid in a timely manner.
Another reason for a poor credit score is carrying too much debt. Sometimes the problem is not that you pay late, but simply that you owe too much money as compared to the amount you make. This is called a high debt-to-income ratio, and it can keep lenders from loaning you money because they question your financial ability to repay it. When reviewing your credit report lenders look not only at the amount you owe, but credit card accounts that you have open. Even if there is not a balance on these cards, it is money that you could borrow, further reducing your ability to pay. If you have too much credit, it is wise to pick a card or two and work hard to get them paid off. You may decide to close some credit cards to reduce your available credit. Just be careful not to close an account that you have had for a long time because having a long history of credit is to your advantage.
Collection accounts are another cause of low credit scores. If you have an account that has been sent to a collection agency it is critical that you take care of the situation immediately. If you dispute the debt then you will need to send a letter to the creditor, and have your credit report note that the account is in dispute. Once you have paid a collection account then be sure to follow up and ensure that the company reports to the credit bureau that you have paid in full. The fact that you had a collection will remain on your credit bureau report for seven years, but a paid collection looks much better than an unpaid one.
You can see why it is important to keep on top of what is on your credit report, so that any mistakes can be addressed immediately. Your ability to borrow money depends on your credit report.
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How to Fix Your Credit In Simple Tips
Have you had problems paying your bills on time lately?
The fact of the matter is that you are not alone. More than 30 Million people in the U.S. have the same problems as you. Poor credit can be the primary cause for a severe inability to obtain credit cards and/or loans.
There is a solution to this problem and it is right at your finger tips.
Here are 7 ways you can fix and improve your credit score and obtain credit cards and/or loans at favorable rates.
1. Reduce your balance to limit ratio.
When a company is reviewing your credit, most of them will look at the amount of balances on your current accounts and compare that figure to the amount of total outstanding credit you have available.
EX. Total Balances = $10,000 and Total Avail. Credit = $20,000.
Now in this example your ratio would be at 50% which in most cases would be frowned upon by lenders. The ideal ration would be anything less than 30%
A good idea would be to pay off those low balance credit cards to get your balance to limit ratio under 30%
2. Cut back your credit card usage.
Even if you are the type of person who typically pays off your credit cards every month, it is a good idea to keep your balances below 30% of the available credit limit.
Even though you are paying off your credit cards monthly your balance is still reported to the credit bureaus.
One of the best ways to keep track is by using financial software like Quicken or Microsoft Money. Using these programs can help you stay below 30% of your available credit limits.
3. Know your limits.
In some cases, your credit card companies may not report your limits to the credit bureaus. This may cause a drop in your FICO score.
What happens is the credit bureaus will use your highest balance as an estimation of your credit limit. So if you spend between $3000 and $3500 on your card monthly then on the credit bureaus you will look like you are using more of your available credit limit than you really are.
In most cases, you can call your credit card companies and have them report your limits to the credit bureaus.
4. Use your older cards.
One of the most important factors in determining your FICO score is the length of time a card has been open. The older the account the better it will make your credit score look.
It is a good idea to use your older cards every few months just to make sure that the credit card companies continue to update your information with the credit bureaus.
5. Help from credit card company.
If for the most part, you have been a good customer, you can call your credit card company and ask them to remove 1 or 2 late payments from your history. Most of the time, this request has to be made in writing but it is definitely worth a shot. Your chances of success using this method increase the better your record with your lender.
If you have had more than just 1 or 2 late payments, then another option would be to request that your lender "re-age" your account. Typically, this is where you and your lender work out an agreement that if you make 12 or more consecutive payments on time, they will delete any previous late payments.
6. Disputing your old negative items.
So you had a disagreement with a company over a bill a few years ago, and it is still hurting your credit today. Disputing that bill as "not mine" is an option you could use to fix or improve your credit score. A lot of times, if the item is relatively small and old, the credit card companies won't bother to respond to the credit bureaus investigation. Most of the time, this will cause the item to be removed from your credit history.
I have seen success disputing negative items when a lender has merged with another company. The merger causes older debts to get "lost in the shuffle."
7. Concentrate on the important stuff.
There are certain aspects of your credit report that really affect your score. It is important to know what they are and to really focus your attention on these items to repair and improve your credit score.
Here is a short list of the item I suggest you focus on:
1. Negative items that are not yours (e.g. Late payments, charge-off, or collections)
2. Incorrectly reported credit limits
3. Anything not listed as "Current" or "Paid as Agreed". (e.g. Settled, paid derogatory, or paid charge-off)
4. Accounts that shouldn't be there due to a bankruptcy.
5. Derogatory items that are older than 7 years that should have dropped off. It would be 10 years if you have a bankruptcy.
You want to be careful with this one because as we discussed earlier. Having aged accounts actually improves your credit score, even if they are negative accounts. It is not possible to know the effect of closing an old negative account. You are kind of "rolling the dice" when you do it.
As you can see, these 7 ways will get you on your way to raising your credit score and lowering your interest rates.
Good credit is obtainable if you just hunker down and put your mind to it. Following the tips above will help you get out of the credit "dog house".
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