Self Help Credit Repair

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Category Archive: Credit Repair

  1. Bad Credit Consolidation: Pros and Cons

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    There are a large number of individuals interested in repairing their credit. However, few people among this number actually know the pros and cons of specific methods for achieving this type of financial repair. There are many available options for repairing credit, but the most often cited method is debt consolidation. This option is a double-edged sword that can be as hurtful as it is helpful if the indebted individual does not enter into the scenario with full knowledge of what they are getting into.
    Debt consolidation is a method of financial repair which allows the borrower to repay their old debts and clear them off of their credit report. Sometimes, with proper negotiation, a lender or creditor might remove the account altogether. Usually, however, the account merely states paid in full and is closed.

    There are many positive and negative benefits to debt consolidation. The most common positive and negative occurrences are:

    Pros:

    • The remaining debt is only for the amount of the loan. The monthly payments on this loan are generally much smaller than the total amount of repayments on the original debts.
    • The indebted individual will be able to repair their credit slowly with old accounts closed or paid up to current dates.
    • The individual will only have a single monthly payment to make, simplifying their financial burdens.

    Cons:

    • The individual’s credit score can actually drop for a short time since all of their older accounts will be closed rapidly.
    • In some instances the individual will have a lot of small debts. If this is the case it might be simpler to just pay those debts off one at a time. Once a debt is ninety days past due and in collection status it really cannot do too much more damage to a credit score.
    • The borrower needs to be savvy in regards to debt consolidation lending practices and interest rates. These types of loans may end up costing the borrower far more in the long run due to the cost of the loan and fees.
  2. Bank Accounts for Bad Credit

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    Second Chance Checking

    Banks have created situations, some say by design, where clearing policies and penalties can create a situation where a single bounced check can cause a modest overdraft to balloon into tens or even hundreds of dollars in fees. If the fees are not covered (bounced check fee, negative balance fee etc.) the bank will likely close your account.

    Many banks use a service called Chexsystems. It is a reporting service that reports on a consumer’s past checking account activity. A negative Chexsystems report usually means that banks who use the service will not open a checking account for you.

    For instructions on how to be removed from Chexsystems, please see: ChexSystems Removal.

    There are also some ways to  maneuver around Chexsystems. Banks do not normally use Chexsystems when a patron is opening a savings account. So, if you open a savings account and then join Paypal, using your savings account, you can pay bills and receive payments that will go directly to or from your savings accounts.

    The other way around a negative Chexsystems report is to find a bank that doesn’t use the reporting system. While 80 percent of U.S.banks do use the system, 20% do not. The following is a partial list of facilities not using Chexsystems as of December, 2010:

    AccountNow Vantage
    Compass Bank
    Currency Connection
    iBankUP
    Peoples Bank
    Woodforest National Bank
    Woodforest Bank

    Branches may not be convenient. But, with Internet banking, direct deposit, and bill pay, branch location should not be an issue.

    To open an account with any bank, you will need a photo ID and a social security number. These documents can be scanned into a computer and attached to the application. The majority of banks offer free checking if you direct deposit your paycheck or retirement check.

    Some of these accounts are not exactly checking accounts. They are free debit card accounts that also provide you a routing and account number for direct deposit. These are the accounts mentioned earlier that you link to Paypal for bill paying.

  3. How to Fix a Credit Score

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    Your credit score affects so many aspects of your life that it is necessary to learn how to create and maintain a great one. Most people do not realize that their credit reports likely contain flaws. It is because of these flaws that you need to know how to fix a credit score. The process does take a little time, usually about 2 months, but is worth the effort.

    Following these simple steps will help you fix your score and maintain a good credit report from that point forward.

    1. Immediately apply for a free credit report from each of the 3 major credit bureaus. As a consumer you are entitled to 1 free report each year. Your report will be different with each of the bureaus so it is necessary to have a copy from each agency.
    2. You will need to review each report carefully. Start with the personal information. Is your name spelled correctly? Is your address listed correctly? Are there addresses associated with your account that are not yours? Are their employers that do not belong on your report? All of this information is very important. Something as simple as having your middle initial incorrect can cause you to be associated with someone else. Birth dates are also a very common place to find a mistake. A miss-key in this area can cause you to have a second identity.
    3. Review each and every entry on the report. Make sure that payment records are right. Verify that the balances on the accounts are correct and that the monthly payment reflects what you actually pay. If it is a bad account verify the last date of activity on the account. This is crucial! If the last date of activity is more than 7 years old for a regular account or 10 for a lawsuit, tax obligation or bankruptcy, you can demand that it is immediately removed.
    4. Once you have found all the errors, dispute them using the forms located on their websites. If you select to dispute by snail mail this needs to be documented through return receipt and will cause the repairs to be delayed. The companies have 30 days to respond to your requests.

    It is estimated that over 80% of all credit reports contain mistakes. It is the consumers responsibility to make sure that their reports are correct.

  4. How to Increase Credit Score

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    Credit Card Repair: How To Increase Credit Score

    In order to improve credit scores, it’s important to know where one currently stands. More than 30 million people in the United States have credit scores under 620, and it is imperative for any consumer to know the basics of how to increase their credit score.
    This is not an impossible task, but credit repair is definitely more difficult than getting into credit card debt in the first place. Anything below 720 lessens one’s borrowing power. However, with diligence and perseverance, one’s credit can be repaired. The following are a few points on how to increase credit score.

    I. Know/monitor credit scores. The first step and it is absolutely required. Four major credit reporting bureaus can give consumers their current credit score: Experian, Transunion, Equifax and Annual Credit Report. Periodically, you need to check to see if any errors have occurred. It is unfortunate, but the burden is on the consumer to follow through.

    II. Be careful with credit card repair companies making unsubstantiated claims often for an upfront fee. Some/many are scams and will still leave consumers with damaged credit, according to the FTC.

    III. Go slowly, pay on time and keep low balances on credit cards. One needs patience in re-establishing credit.

    IV. Using current or new credit
    Get only a “secured” credit card making sure it reports to a credit bureau.

    Bonus Tips:
    Don’t get new cards or max out existing ones. Rotate cards frequently, keeping low balances. Following these steps will facilitate re-establishing good credit.

  5. What Is A Good Credit Score?

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    What constitutes a good credit score is determined by a FICO rating. A FICO score is a method by which your overall credit status is rated. Credit scores are used by most lending institutions in order to decide if you are credit worthy.

    The factors that are considered in rating a FICO score are:

    1) Repayment history: 35%
    2) Money owed: 30% (don’t over extend)
    3) How long you have had credit: 15% (the longer the better)
    4) Recent credit: 10% (too many is not good)
    5) The kind of credit: 10% (credit cards, mortgages loans and others)

    The above factors are then averaged into one credit score giving you a 3 number credit rating. Credit scores range from 300-850. The lower the credit score, the lower your chances of obtaining a good rate of interest on loans. In fact, a low credit rating can mean you will not be approved.

    A rating of 700 is considered a good credit score. A credit score that is over 700 is excellent, and will allow you to obtain credit at a decent interest rate, and as everyone know, obtaining a lower interest rate will save you a lot of money on a loan.

    Many people average around 650-700, but if your score is below that average below that average, there are ways to increase your score. Simply paying a little more each month on your outstanding loans will make a huge difference in your balance due and can quickly lead to a better overall score. Also, you must pay on time if you aren’t doing so already. If you are consistently late in paying your bills, your credit score will suffer greatly.

  6. How to Repair your Credit

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    Are you wondering how to repair your credit? Tackling the task is not as daunting as it sounds. This is definitely something can do yourself and it is something that is may be in your best interest to do without the help of any company offering to assist you.

    Under the Fair and Accurate Credit Transaction Act 2003, you are entitled to a free copy of your credit report from Equifax, Experian, and Trans Union once per year. This can be done online, by phone or by mail. Since all information is not always the same, it is very important to obtain a report from each of these three entities.

    The most time consuming part of credit repair is carefully and meticulously checking each one, line-by-line, for errors and payment-date data, ensuring that all recorded information agrees with your personal payment records. It is very important to note any entries which may have been passed to a debt collections company.

    When you find errors, it is very important to carefully follow ‘report dispute’ instructions. It is also advisable to include a copy of the report with ‘errors’ clearly marked or highlighted along with a cover-letter.

    Once you have a clear picture of your credit situation, begin paying some of the past due amounts while maintaining current payment status on all other bills. Pay off one or more entries, or make payment arrangements, making sure to get any arrangements in writing before making a payment.

    Begin establishing positive credit history by opening at least one new account. Major credit card companies may not accept your request; therefore, it is prudent to apply to only one company. If turned down, apply for a department-store card or a secured credit card which requires a deposit of 10-30% of the account limit.

    If you cant follow these instructions, and anyone can, you will be well on your way to restoring your credit.