Credit repair

The Secured and Damaged Credit

Most people end up with a damaged credit when they
experience a financial difficulty. Having a damaged
credit can make it hard for you to obtain a new one.
Those credit mistakes you made in the past can be
nearly impossible to live with, especially when your
new creditors and lenders are reluctant to provide you
with a second chance. And so, in order to reestablish
your credit, but cannot obtain a credit card, you only
need to get a secured credit card.

The Secured Credit Card

The secured credit card is not that different from the
regular credit card. It operates just like the usual
credit card but it requires you, the cardholder, to
make a deposit against the credit limit of the
account. The deposit is utilized by the creditor as a
security in case you default on your payments.

Usually, secured credit cards have a credit limit of
50% to 100% of the deposit you make. For instance, if
you make a $1000 deposit for the secured credit card,
the credit limit will be between $500 and $1000.

More so, these kinds of credit cards normally have
fees that regular credit cards do not have. These fees
will include processing fees, application fees, and
annual fees. However, always be on the lookout for
those cards with high fees since they can
significantly decrease your deposit and eventually
your credit limit.

Taking Advantage of the Secured Credit

Damaged credit is the effect of having poor payment
habits, most of the time. If you cannot obtain credit
through traditional methods, secured credit can
greatly help you demonstrate improved habits in your
payments. Since you cannot prove a renewed capability
to make payments on time until obtaining a new credit
card, having a secured credit card is a big help.

However, before applying for one, you must guarantee
that the creditor reports to all the three major
bureaus for credit. Otherwise, the card would not be
beneficial in the issue of reestablishing your credit
for the reason that future creditors would not have a
process of looking at the history of your payment.
Additionally, it would not be incorporated in your
credit score or in your credit report.

If your application gets approved, always keep in mind
that your sole purpose for the card is to rebuild your
damaged credit and eventually create a positive credit
history. It is important not to use the card to incur
debt and instead, use the card to buy small things
that you can actually pay full in a month. Moreover,
it is important not to charge any item that you cannot
afford to pay on the card.

Managing your secured credit card and developing good
habits in payment can help you move into an unsecured
credit card. There are several credit card companies
that allow a consumer to convert to an unsecured
credit card after the course of one to two years of
timely payments. Even though you cannot change your
secured credit card, you can still submit an
application for an unsecured one with another company.

Remember not to repeatedly apply for credit cards
after you have been denied of an application; this
would only make you look desperate. What you can do
instead is to continue to make your payments on time
on your secured credit card and apply again after the
span of six months.

The Basics of Credit Repair

By having a credit, you are using someone else’s money
as payment for your purchases. In addition, it also
indicates that you are swearing to repay the money to
the agency or person that loaned you the amount.

If you are applying for a loan, credit card or
mortgage, it is normal for the agency to check your
credit worthiness. This is essentially based on the
assessment of your credit history, thus helping them
determine the possible risks of the deal and decide
the terms of the loan. Positive assessment means good
financial background, which increases your chances of
applying a credit.

The Credit Repair

The process wherein consumers with poor credit
histories try to reestablish their worthiness is
called the credit repair. It involves procuring the
credit report from agencies and taking careful and
appropriate steps in addressing apparent issues,
including omissions, misreporting, misinterpretation
or other inaccuracies.

If there are any discrepancies found in the credit
report, the consumer is entitled to dispute the errors
that unjustly harm their financial healthiness and
credit worthiness. There are several laws and
regulations that are designed to guarantee fair and
legal undertaking of the credit report process. These
laws can be used to legally and formally start the
process of credit repair.

Every consumer is entitled to one copy of credit
report each year from each credit reporting agency.
Investigations with regards to the real nature of the
inaccuracies and errors are possible and necessary for
a successful credit repair.

What influences your purchasing power and eligibility
of availing any credit facilities in the future is
your credit record. You should keep in mind that a
good credit score can help in several purposes, such
as: mortgaging a home, buying a car or applying for a
job. On the other hand, a bad credit score can make
you vulnerable to exorbitant interest rates and
unnecessary loan terms from several companies. These
two facts are important in helping you understand why
maintaining a good credit score is vital.

How to Repair Your Credit

The process of credit repair can be achieved through
hard work and discipline. Easy methods, which can help
you get out of poor credit history, can be quite
tempting. However, these easy way outs can only lead
to further difficulties in the future especially if
they are done illegally.

In case your poor credit history is caused by
circumstances beyond your control, you can always
request for an upgrade in your credit rating to your
creditor. However, this can only be done if you were
able to make amends to your credit records after the
circumstances.

Creditors do not normally trust consumers who default
on their payments. This can pose a difficulty to you
in obtaining a new credit. However, once you are able
to demonstrate enduring stability in your income and
prompt patterns in your payments, the situation can
improve in the span of two to three years. This way,
even though there is a case of bankruptcy, you are
likely to be eligible for credit cards within two
years if the steady income is maintained.

Keep in mind that there are no quick fixes in
repairing your credit. By contacting credit bureaus,
creating your own corrections, budgeting and
consolidating your debts can improve your own score.

Taking Care of Your Debt Situation

You can determine a financial emergency once you
experience a situation that can render you moneyless,
homeless or without any important property. You should
differentiate this kind of emergency from a
threatening phone call or letter from a bill
collector.

When experiencing such emergency, it is crucial to act
immediately and begin by contacting the creditor.
Doing so enables you to work out a temporary solution,
which can help you keep your properties. However, it
does not always work and if so, getting in touch with
your lawyer to negotiate with the creditor is helpful.

Face the Problem

The common misconception in debt problems is « the less
you know, the less it hurts ». However, you must learn
how to face your debt problems. You must be able to do
this since rebuilding and repairing the credit will
not take place when you do not know exactly where your
money goes or where it must go instead.

Although it is not harmful to overestimate your debt,
it is always beneficial to know how much money you
really owe. You can do this by taking a look on the
bills you have received. In case you have thrown out
your bills without even opening them, you can still
call customer service and inquire about the bills.

There are several creditors that use automated
telephone systems. This can provide a balance and
information regarding the payments automatically.
Additionally, information about your account might
also be available on your creditors’ Web sites. After
acquiring the necessary details, sum it all up,
especially those past due installment bills and your
monthly obligations.

Options Available for Your Debts

There are several options available when dealing with
debts. One is to do nothing. This option is probably
the most popular approach used by those who are deeply
in debt. Most often, these people have very small
income and property and do not normally expect any
change in their lifestyle. If you do not anticipate
any steady income any time soon, you can consider this
option.

However, if doing nothing does not help, you can find
money to pay your debts. You can do this by, first,
selling a major asset, like a car or a house. This can
be a good choice if you can no longer afford your car
or house payments. Instead of waiting for a
repossession or foreclosure to happen, selling a
property is always a better.

The proceeds you gain from the sales can help lessen
your debt and enable you to pay off anything you still
owe. More so, you should remember to pay off the liens
placed by the creditors and use anything that is left
to aid you in paying your other debts. However, before
taking this step, make sure that you already came up
with an alternative for your housing or transportation
needs.

Another way, which can help you pay off your debts, is
to cut your expenses. Not only will this eventually
aid you in the payment but also in negotiating with
your creditors. Try to shrink the cost of your food by
clipping coupons, purchasing generic brands, buying
when there is a sale or shopping at outlets with
discounts.

Yet, if you cannot seem to cut your expenses, you can
always borrow money from a tax-deferred account.
Tax-deferred retirement account, like IRA or 401(k),
can help pay off debts by withdrawing money from them
before retirement. However, since you may need to pay
a penalty or taxes, this should only serve as your
last resort.

How to Safeguard Your Financial Life

Several financial planners would agree that one of the
foremost and important steps that you should take to
protect your financial stability is to set aside funds
as emergency reserve. The concept that you have the
fund for emergency and unexpected events is enough to
help you stay away from using your credit card and
drown yourself in debt.

How to Get Started

Everyone must stash a little extra cash in case of
emergencies. However, how much money should you keep?
Although the topic of exactly how much money is needed
for your emergency fund is open to debate, the minimum
amount should be enough to cover your expenses for
daily living for at least three months. It is also
wiser to save for six months though most financial
planners agree on a full year worth of cash.

Your personal circumstances and what it takes to
provide you with a peace of mind are the elements to
help you determine just how cautious you want to be.
If for instance, you have well-off parents who have
always been supportive and willing to help you in a
financial crisis, an emergency fund for three months
will be sufficient. On the other hand, if you had
reach for you credit card for help and end up paying
15% in interest on the debt, you would be better off
saving enough money for your expenses that would last
for at least six months.

If by any chance you are thinking about where to place
your money, emergency fund, paying off the credit card
debt or funding your 401(k), you can always start with
your credit card debt. Next, you can contribute to
your 401(k). This step is especially useful since you
can later borrow money from your 401(k). However, as
soon as all those are finished, return to your project
of setting up your emergency fund.

If you do not feel like you are required to make your
entire funds this week, you can start like everyone
else. Begin by setting aside a monthly amount, like
for instance, 5% of your paycheck or other amount that
allows you to build one month’s worth of living
expenses over the course of a full year. It is also
advisable and helpful to make this automatic. You can
do this by asking your bank to do an automatic program
for deduction from your checking account to your
savings account.

Additionally, monitor you spending habit each month
and always search for areas that you can develop. If
by any chance you receive a promotion, bonuses, or
other unexpected windfalls, always think about
including them to your emergency fund.

Where to Keep the Cash

Keep your emergency fund somewhere that is both easily
accessible and safe because you might be required to
get the cash in a hurry during emergencies. Remember
not to put your cash in the freezer but do not tie
them up together in stocks whose worth may have
declined by the time you need them.

The best option you have is to open a savings account
or money market account. However, always examine their
offer with regards to the minimum balance, interest
rate and other terms.

By time you think you have saved enough, learn how to
stop. You can now sleep easier and try to start
placing your additional saving into higher-interest
and usually less accessible investments or accounts.

Good Credit Maintenance

Maintaining a good credit is important to your
financial life. There are people who experience poor
credit report due to neglect and improper report
reviewing. There are even others who went through the
process of repairing their credit and somehow managed
to maintain good credit after. If you do not want to
ever need a credit repair, good credit maintenance is
advisable. Luckily, simple steps can help one in
proper maintenance of a good credit.

The Importance of a Good Credit

Credit history plays in important role in determining
whether you are qualified for a loan or not. The
credit is really worth a thousand words and it says so
much about the consumer. Not only can it affect your
finance but other aspects of your life as well.
Several counselors and services agree upon on thing:
maintaining a good credit is important in leading a
fit financial life.

Most people do not realize that landlords, employers
and companies checks credit scores before making a
decision on whether or not they can grant a contract
or a job. The scores and credit report can help
companies decide whether you pay your bills on time or
if you have filed for bankruptcies. By doing so, they
can use the information on your credit report as a
future marker of your credit worthiness.

What You Can Do

Although maintaining a good credit can be quite a
challenge, there is no better way to keep you safe
from debt than by carefully following your spending
and always sticking on a budget. Budgets are important
as they can aid you in controlling your finances,
decreasing your debt and building a strong credit
history.

In the topic of managing your debt, the first thing
you can do is to keep track of your spending habits.
You can do this by creating drafts of what you spend
and track anything that you might owe. Monthly
statements should be reviewed when they arrive and
always check for any possible inconsistencies.
Additionally, always remember to report them
immediately.

To keep your account in good standing, always remember
to pay the creditor on or before the due date normally
printed on the statement. Do not skip on any payments
and strive to pay more than the minimum or, if
possible, pay the whole balance each month.

Another step you can take is not to exceed your credit
limit. The available credit is the amount left on your
credit usually represented by the difference between
your credit limit and your outstanding balance. Always
remember to maintain the balance lower than the limit
of the credit. Additionally, make sure to add any
charges you made after the closing date to your
Outstanding Balance included in the monthly statement;
doing so can help you find out just how much credit
you have left.

Sticking to a budget is also important. Typically, 10%
of your monthly income should be used in paying your
credit lines, bills or personal loans. However, in
case you are paying more, it is time to reconsider
your habits of spending. Keep out of impulsive buying
since they are especially hard to pay off.

Lastly, control your finances. It is advisable to
create a payment plan, which can help you get on the
right track. This kind of scheme should incorporate
those whom you need to pay and the amount of the
payment each month. Normally, other people limit their
credit usage until the finances are under control;
this is an excellent method of controlling your
finances.

Credit Repair the Do-It-Yourself Way

Negative remarks on your credit report can cost
serious money. You do not have to despair though,
since it is never too late to become credit worthy
again. However, always remember that credit repair do
not happen overnight. It requires serious dedication
and perseverance to start in a clean slate once more.

How to Get Started

You should know what the three credit bureaus are and
what they are saying about you. Since creditors do not
have to report to Equifax, TransUnion and Experian all
together, they generally only report to one or some to
which they are subscribed to. This only means that
each report from each bureau is slightly different
from one another.

The first thing you need to do is to order your credit
report. Remember to order it from each bureau because
you would only waste time and money if you only order
a credit report from one bureau. The cost of the
credit report might vary from state to state though it
is estimated that the cost of your credit report is
around $9.

However, you are entitled to a free copy of your
credit report from the agency if you have been denied
of employment or credit due to your credit report. You
can ask the company to provide you with the name of
the credit bureau, telephone number and address.

Once you get a hold of your credit report, examine it
carefully. Since the credit bureaus create your credit
report basing on the information they receive on your
creditors, they are never verified. It is your job to
maintain your credit report a good reflection of you.
Be on the lookout for errors on typing, incomplete
information, and outdated and inaccurate histories of
your account. After examining the report correctly,
list all the errors you want to dispute and the
reasons why.

Since bad reports cost money, remember to be thorough.
You have two choices, which is to either complete the
argument form supplied with your credit report or
write a letter. It is also recommended to send a
photocopy of your report with the errors circled to
the credit bureau who supplied the report.
Additionally, do not forget to include supporting
documents with your report.

After sending the documents and report, do not forget
to keep copies of all the forms and the date you sent
it. Normally, the bureau will investigate the dispute
in the span of thirty days prior to receiving your
letter. More so, any item that is proved to be
inaccurate is removed.

Stability in Your Credit Life

Another way to repair your credit is to show that you
can still work on adding positive information and
stability in your credit life. Even if you have the
credit, there can be a time when you get denied of
credit due to insufficient credit file. There are
several creditors that do not report your credit
history to the credit bureaus. What you can do is to
try asking the grantors to report the information of
your account and the history of your monthly payment
to the credit-reporting agency.

You can also try building a solid credit history
through the use of secured credit cards. These kinds
of credit cards are offered to those with no credit or
in the process of repairing their credit.
Additionally, it is advised to open a savings account
in your bank. Doing so, would show your creditors that
you are trying to save and that you are reserving
money to pay off your debts.

Cleaning the Mess in Your Credit Report

An important factor that plays an important role in
maintaining a clean credit report is actually the
contents of your credit report. The credit report is
pretty much the story of your financial life,
contained in a detailed document.

The credit report carries the credit score, which is a
numeric ranking usually between 300 and 850. Several
lenders use the credit score to help them decided
whether you are worthy of a credit. More so, the score
is also used to determine your capability of paying a
loan. The credit report is important and cleaning or
maintaining a good credit report is vital to your
financial survival.

A Look inside the Credit Report

In a credit report, the first entry is normally your
personal information. It includes your name, listed
telephone number/s, previous and current addresses,
reported differences of your Social Security Number,
past and present employer and the date of birth.

The information regarding your credit accounts follows
your personal information entry. This is also listed
in detail and normally includes loans, the maximum
loan amount, and information of any joint account
holders or co-signers. The credit report also
incorporate a section, called Inquiries, which lists
any person who has recently requested a copy of the
credit report.

There are some states, wherein the credit report
contains public record information. This information
can feature overdue payments, bankruptcies or other
judgments in the court. Normally, these entries can
last for up to ten years and may affect your chances
of obtaining a loan negatively.

How to Start

Firstly, in order to clean your credit report, you
will need to order a copy of the report. You must
determine what is out of date or inaccurate, after
which you can submit a letter to the bureau requesting
fixes to the information. This process may take a long
time and you may be required to do several follow-ups
with each bureau before achieving a clean credit
report. However, to perform this correctly, you must
be aware of the information the credit agencies are
allowed to report and the duration.

Ordering a credit report can be easily done and
accessible to everyone, since at least one free report
can be obtained by the consumer each year; this rule
is also included under the FCRA or Fair Credit
Reporting Act. More so, the consumer is also allowed
to obtain a free copy of his or her credit report each
year from each of the three major companies handling
credit reporting, namely the Experian, TransUnion, and
Equifax. However, in case you have already obtained a
copy of your credit report this year, you may be
required to pay an additional fee if you want another
copy.

Once you have obtained your report, review it
carefully. Every detail must be inspected since
bureaus can sometimes confuse names, addresses or
employers. Most often, people who have common names
have credit reports that may contain information on
other variations of their name.

Additionally, it is important to perform a periodic
check on the credit report. It is advisable to order a
copy of the report once a year and dispute any
possible inaccuracies. Always take careful steps in
handling your payments and make sure not to make any
late payments. Time is of the essence and even minimum
payments should not be neglected. Remember that
carefully managing your credit can add as much as
fifty points to your credit score per year.

Building New Credit Habits

Repairing your credit entails getting rid of the
negative credit report information and catching up on
your overdue bills. This could raise your credit score
but might not be enough to make you credit worthy
again. However, to raise your credit score high enough
to entitle you to a loan, you have to rebuild your
credits. Doing so would only prove that you have the
capability to handle credit responsibility.

Although it might be difficult to start, but once you
achieve that momentum you need, you will be sashaying
to a good credit score. You can always begin by
developing the required credit habits.

The Do’s of Using Your Credit Card Wisely

Although many people are born without the skill it
requires to use credit cards, it is important to learn
the rules of the game. All you need to do is to
remember simple do’s and don’ts of credit card usage
and in time, you would welcome healthy spending habits
in your financial life.

The first thing you do want to ever do is to use your
credit card to make your everyday purchases,
especially food, gas and clothing. It is bad enough
not to have cash-on-hand but buying simple everyday
items can develop into a habit wherein you may tend to
substitute a credit card with cash. It is always
advisable not to take your credit card out of your
wallet for everyday purchases but instead use your
cash or a debit card.

The next thing you do not want to do is develop a
habit of making minimum-only payments. If you make
minimum payments each month, you are only increasing
the length of time it will take for you to pay off
your debt. Additionally, it will also increase the
amount of interest you could end up paying.

If you are one of those people who usually buy things
that are way off budget, remember not to use your
credit card to buy things you cannot afford. One way
to get into debt is living off borrowed money. You
might end up waking one day realizing you are so much
indebt that you wish to return your expensive
purchases back to wherever you bought them from.

The Do’s of Using Your Credit Card Wisely

Learn how to make correct decisions when it comes to
buying items you need against those you simply want.
Everybody knows what a « need » is and what a « want » is.
Remember not to substitute need from the want and vice
versa. If you are using your credit card wisely, it
only means that you are being responsible in
recognizing what things you need and which you only
want.

Next, always let your creditor know in advance if you
would not be able to pay your monthly payment on time.
Since most creditors offer assistance with your
payment if you give them a heads up, it is important
not to simply forget about the payment for no reason
at all. You can do this by simply calling your
creditor, explain the situation and ask if they allow
late fees to be waived.

Lastly, do not exceed with your credit limit. The
safest is to stay within at most 30% of your credit
limit. Because the major part of your credit score
reflects on the quantity of debt you actually have, it
is important to keep your balance low in order to
preserve a good credit standing.

Breaking the Habit: How to Stop Using Your Credit Card

You know your debt is rising, but still cannot stop
using your credit card for purchasing items. Several
people get easily dependent on credit cards for
everyday expenses and impulsive buys. The fact that
you are borrowing money from the creditor for your
purchase might be tempting, but the truth is: you must
be able to pay it off on time. Neglecting those bills
can cause headaches in the future. You might get
malicious letters from your creditors, or even receive
threatening telephone calls.

Close, Shred and Leave

If you really want to avoid those from happening all
together or if you are starting to drown in your debt,
you have to stop credit card usage. Fortunately, there
are several ways on how to.

Firstly, many people would agree that closing your
credit card account is the best way possible. One and
simple call to your cardholder is sufficient enough to
inactivate your credit card. Doing so might even quiet
down that nagging feeling and desire to purchase items
using a credit card. Just think that there might be
one situation wherein the clerk says your credit card
has been denied; the embarrassment from that situation
is reason enough for you to inactivate your credit
card.

Shredding is also an excellent way to break the habit
completely. You can use an office shredder since it
works great on plastic as it does on paper. Since your
credit card is shredded into pieces, there is no way
that you can swipe it. However, if you do not have a
shredder, scissors are great too. Just cut the card
into small pieces and make sure that the credit card
number cannot be identified by potential thieves.

Another excellent way to stop using the credit card,
especially when you go out of the house, is to leave
them. If closing or shredding is not your style, try
taking your credit card out of your wallet when you
are about to go shopping. In this way, if you have the
urge to buy something you really do not need, you have
to think twice before buying it since you are about to
use your own money.

The Shock and What Your Can Do About It

You have been using your credit card for your expenses
but have you ever thought about the total amount of
cash you spend in interest alone each year? More so,
the duration of time it will take you to just pay off
your credit cards might shock you. It is all about the
numbers and these will put you into shock and can make
you think twice before using that credit card again.

For instance, if you have a balance of $1,000 and an
interest rate of 14%, it will take you about four and
a half years before you can pay it off; that is, if
you are making $25 in payments every month. By the
time you pay off the balance, you will have paid a
total of $347.55 in interest.

Since you know what credit cards can do, you might
want to stop using it once and for all. Learn how to
say « no » since this kind of discipline can help you
stop impulsive buys, thus stopping the use of credit
cards. Always think twice about swiping that credit
card for your purchases and you would not have to
think about repairing your credit in the future.

Avoiding the Scam

In the issue of repairing your credit, it is best to
do it yourself. Most often, you may hear or see
advertisements claiming outstanding credit repair
services offering you « legal » and « guaranteed »
solutions for your credit problems. These services may
use mottos that are quite enticing to those who are in
dire need of credit repair. There are even others who
get easily convinced after reading « authentic »
testimonials from several customers, who might not
actually exist.

When you are really in need of credit repair, the
first thing you want to do is to act immediately. You
should remember that this action should be done by you
and not anyone else. Luckily, there are several
factors that can help you avoid scam credit repair
services.

The Fraudulence

Day after day, several companies appeal to consumers
who have awful credit histories. Often, they promise
to tidy up credit reports, for a price, to help
consumers loan a car, mortgage a home, or even get a
job. The horrible fact is they cannot deliver; you
should keep this in mind especially if you do not want
to worsen your debt. These companies would only take
the cost of the services with them and vanish into
thin air.

The Signs of a Scam

If you had responded to a credit repair service, there
are warning signs that can help you determine an
authentic credit repair offer from a fraud. Firstly,
be aware of companies that wish for you to pay the
cost of the repair before providing any services. In
addition, avoid those companies that do not divulge
any possible legal rights you are entitled to and what
processes you can do yourself without payment.

There are companies that advise consumers to directly
contact a credit reporting agency – you should avoid
such companies. More so, if the company you have
responded to suggests that you to create a new credit
identity and then make a new credit report by applying
for an Employer Identification Number to use rather
than you SSN, you should immediately stop contacting
that company.

Lastly, those that advise you to argue all information
included within your credit report or take actions
that may seem illegal, i.e. generating a new credit
identity, should be avoided.

Remember that you could be prosecuted for wire or mail
fraud if you use the telephone or mail to apply for
credit and give information that are not authentic.
Lying on a credit application, misinterpreting your
SSN and acquiring an Employer Identification Number
from the IRS under false pretenses are all federal
crimes.

Most importantly, you should remember that included
within the Credit Repair Organization Act is the rule
that credit repair companies should not require you to
pay until the services they have promised are
complete.

The best possible way to avoid poor credit history,
and totally keep you safe from fraudulent credit
repair services, is to do a periodic credit report
review. Reviewing your credit report is important
because the information in your report affects your
chances of getting an insurance or loan. Make sure
that the information is correct, complete and
regularly updated before applying for a loan. Lastly,
by doing periodic check-up on your credit report, you
can be safe from identity theft, which can create a
major problem not only in your credit report.