Credit Repair Tips To Improve Credit Scores

Credit Repair Tips To Improve Credit Scores

Credit Repair is something every consumer can do on their own, however; the consumer needs to do it right and take their time and ensure they understand the process.  There are many people who attempt the repair and make their situation worse because they dive in and don’t learn what items should be disputed and what items should be left alone.  Do thorough research.  There is also a new site that I am, anxiously, awaiting it’s launch and sounds like it will be an incredible one stop, step by step learning site on credit repair. You can sign up to be notified of their launch here. This is their blog but the sign up form is listed there and you will be notified when they launch.

Learn the steps and you can improve your credit scores within a very short amount of time.

Don’t Wait To Start To Rebuild Your Credit

No matter how bad your credit is or how many negative items are currently reporting, you need to start getting positive information added to start to Improve and Rebuild Credit. Even if your situation is so bad that you may not raise your score, you will still be minimizing the damage to your score.

Credit cards are a very powerful weapon you can use to start to rebuild.  If your credit score is less than 580 and/or if you have current negative items, you are very unlikely to get any lender to give you an unsecured credit card. This means you will be limited to a secured credit card.  You can read more about a secured credit card on this post and also see 3 options for them that do not have annual fees.

Now you may be tempted to wait until some negative items are older or until things seem a bit better but I encourage you to think about this differently.

1-Whenever you open a new account, it has a negative effect on your credit score. That negative effect will last about 6 months and then you get a decent score improvement and will continue to add positive points to your credit score from that point on.

2-The older the account gets, the more value.

So waiting does absolutely nothing to help you.  By starting now, you are actually helping your score much more in the long run.

Now What Do I Do?

Now that you have moved forward and got a secured credit card, you need to handle it in a certain way to have the most positive impact on your credit score.

Keep your balance under 30% of your credit limit.  If you open a $300 dollar secured card, you should never have more than $90 on it at any given time.

There is a little wiggle room here.  If you ever need to use your entire balance, it is true your credit score will take a hit but the good news is that it isn’t long lasting.  When you pay it down, your  credit score will bounce right back up.  If you have maxed out your cards and are at a point where you need your score to boost up, make sure you pay it down 60 days before you need to see the score increased.  The reason is because not all lenders report every month, some report every other month so you need to allow time for it to reflect the new balance on your credit report.

It will also be hard for you to judge the impact of a maxed out card vrs a low balance but in some cases that can affect your credit score by 150pts!

Maybe you have no intention of actually using the card but you really need to use it periodically. Even if you use it and send off a check the same day.. use it regularly.

How Many Credit Lines?

For the best credit score you should ultimately have:

• 2-3 credit cards
• Car loan
• Mortgage

I realize a car and a mortgage may be way down the line but everyone has to start somewhere.  Get your credit cards, use them wisely, give it some time to show you can handle the debt and get your credit score above 600 and you are more likely to then add a car loan.  Pay on that and your score will go up even more and you can now move on to your mortgage.

Statutes of Limitations Can Change The Entire Ballgame

First read this post which will explain the Statute of Limitation and its importance.

Briefly the Statutes of Limitations (SOL)  limit how long a debt is considered legally collectible. In most cases, all debt is out of SOL long before it is due to fall off your credit report. The time limit varies by your state and the above link will show you the SOL for each state.

If I Pay My Collections Will I Improve My Credit Score?

Not once single ounce.  Once an account goes to collection the damage is done.  It doesn’t matter if you pay it or not. The exception to this is if you are in the market for a mortgage. When you are approved for a mortgage you can not have outstanding debt. There is usually an exception for medical bills. Your mortgage lender will tell you what you need to take care of.

Also note the Statute of Limitations again.  If your type of debt is out of SOL, it is considered legally uncollectible.

Read this for more information on paying off collections.

This post does not cover the dispute process that can improve your credit score. You can read more about disputes here and here..

Credit repair is doable but again, be careful and do your research on all steps to make sure you do it correctly. There is a lot of bad information floating around the internet.

Clean Credit? Improve Credit? Rebuild Credit? How?

Many people ask, “how can I get Clean Credit, Improve Credit or Rebuild Credit?”

Many people believe that they can’t get clean credit or even improve credit on their own.  They feel that going to a credit repair agency is their only option.  This is false.  I won’t ever say that it is ‘easy’ to do-it does require time, it requires you to be active and keep good records and follow through but if you take it one step at a time, it is not overwhelming and you will feel a huge sense of accomplishment when you see things falling off your report and your credit score going up.  To improve your credit score, on your own, is a very powerful feeling. You’ve been in a bad place and now is the time to start the rebuild credit process and start fresh!

For more detailed information see the previous post on pulling your credit report and credit disputes. And this previous post on how to improve credit.

There are far too many steps to list on one post so I’ll focus on credit disputes. Once you have your credit reports  (see link above for details on where to get them) in hand, it is time to begin.  You really should prepare yourself for the process.  Depending on how much credit repair you need to do, you need to have either one binder with dividers for the three CRA’s (credit reporting agencies) or a binder per CRA.  You will want to copy or print two copies of your credit report so you can make notes on the copy and keep one untouched.  Every single letter you send out should be placed in the binder as well as any notes you make about issues on your credit report.  Every bit of correspondence that is mailed back to you should be placed in the binder.  You will forget steps you have made so you need this information all contained.

The second thing you need is patience.  To clean and improve your credit it takes time and the 30 days the CRA has to give the lenders to respond to your dispute will seem like it is a year.  Just think of all the months that have passed with poor credit and now you are taking the steps to rebuild your credit. While it seems like you aren’t doing anything… things are happening in the background.

Now there are two theories on disputing. Some people believe you should dispute everything-even if you know it is your account/issue.  They believe that they are one side of the equation and the lender can verify the account is reporting accurately and then the tradeline stays on your report  or if they fail to respond within the 30 days, it is their issue-they had their chance and now it comes off your report.   The other theory is if you know it is your debt, then man up and take care of it.  I’ll leave you to which viewpoint you subscribe to.

When you send your letter for the credit dispute, you can make it very simple.

My name is xyz, my address is xyz, my date of birth is xyz.  Credit report # is xyz.  (It is optional to include a copy of your Drivers License but know that you may get a request back asking you to provide it)

I am disputing the following items listed on my credit report as they are not mine:

Item 1: list account information as shown on report.

Item 2:

Now when you get the letter back from the CRA with the list of items they updated or deleted, you can dispute again, for a different reason but it is possible you may get a letter back saying ‘already verified’.  The success of a 2^nd dispute varies but it is always worth a try-especially if you know the item is reporting incorrectly.

More steps to improve and clean your credit will be coming.  There are many steps you can take to rebuild your credit and credit disputes is just the beginning.  Shortly you will have the answer to “Can I Clean Credit, Improve Credit or Rebuild Credit?”  YES YOU CAN!

TaTa

The Lengths We Go To To Rebuild and Improve Credit

By CANDICE CHOI (AP) – Dec 17, 2009

NEW YORK — It’s no mistake. This credit card’s interest rate is 79.9 percent.

The bloated APR is how First Premier Bank, a subprime credit card issuer, is skirting new regulations intended to curb abusive practices in the industry. It’s a strategy other subprime card issuers could start adopting to get around the new rules.

Typically, the First Premier card comes with a minimum of $256 in fees in the first year for a credit line of $250. Starting in February, however, a new law will cap such fees at 25 percent of a card’s credit line.

In a recent mailing for a preapproved card, First Premier lowers fees to just that limit — $75 in the first year for a credit line of $300. But the new law doesn’t set a cap on interest rates. Hence the 79.9 APR, up from the previous 9.9 percent.

“It’s the highest on the market. It’s the highest we’ve ever seen,” said Anuj Shahani, an analyst with Synovate, a research firm that tracks credit card mailings.

The terms are eyebrow raising, but First Premier targets people with bad credit who likely can’t get approved for cards elsewhere. It’s a group that tends to lean heavily on credit too, meaning they’ll likely incur steep financing charges.

So for a $300 balance, a cardholder would pay $20 a month in interest.

First Premier said the 79.9 APR offer is a test and that it’s too early to tell whether it will be continued, according to an e-mailed statement. To comply with the new law, the bank said it will no longer offer the card that has $256 in first-year fees as of Feb. 21, 2010. However, customers will still be able to use their existing cards.

According to First Premier’s Web site, the credit cards are issued by its sister organization Premier Bankcard. The company, based in Sioux Falls, S.D., says Premier Bankcard is the 10th largest issuer of MasterCard and Visa cards in the country, with more than 3.5 million customers.

In a mailing sent to prospective customers in October with the revamped terms, First Premier writes “…you might have less-than-perfect credit and we’re OK with that.” The letter notes that an online application or phone call is still required, but guarantees a 60-second status confirmation.

The letter also states there are no hidden fees that aren’t disclosed in the attached form. That’s where the 79.9 percent interest rate and $75 annual fee are listed. There’s also $29 penalty if you pay late or go over your credit limit. The credit limit is $300.

The bank did not say how many people were offered the 79.9 APR card, but noted that it needed to “price our product based on the risk associated with this market.”

Even if First Premier doesn’t stick with the 79.9 APR, it will likely hike rates considerably from the current 9.9 percent to offset the lower fees, said Shahani of Synovate.

The revamped terms may not be the only changes; First Premier also appears to be moving away from the riskiest borrowers.

The bank typically mails offers to subprime households, meaning those with credit scores below 700. In the third quarter, however, 84 percent of its offers were sent to subprime households, down from 91 percent the same period last year, according to Synovate.

First Premier could be cleaning up its credit card portfolio since the new regulations will limit its ability to raise interest rates. That could mean First Premier won’t issue cards as liberally to those with bad credit.

As harsh as First Premier’s terms seem, that could be a blow to those who rely on the card, said Odysseas Papadimitriou, CEO of CardHub.com.

“Even when the cost of credit is astronomical, for people in true emergencies, it’s much better than not having access to credit,” said Papadimitriou.

Until Feb. 21, First Premier is still offering its even-higher-fee card online. So the price for credit the bank charges is at least $256 in first-year fees.

Copyright © 2009 The Associated Press. All rights reserved.

How To Improve Your Credit Score

How To Improve Your Credit Score?

It isn’t always easy getting those bills paid and now you know there is damage but wonder what steps you can take to improve your credit score. Even if your credit score is ok, you can only benefit from taking a few steps to raise your credit score. The higher your score, the lower interest you will pay on your loans. If buying a home is in your horizon, you especially want a score as high as you can get it. The very first thing you need to realize is you can improve credit. You should understand you are not alone. In the US, there are over 30 million people with credit problems severe enough that obtaining a loan or a credit card would be very difficult, if not, impossible. You can, however, take some steps to change your score.

What Is Your Credit Score?

The first step you need to take in fixing your credit score is to know what your scores are today. See pull credit report for details on how to pull your credit report and where to pull your credit report from. Now, your score will range from 350-850.  Remember that with some simple steps, you will start to see your credit score rise.

1) Pay down your credit card balances. Your goal here is to reduce your credit card balances so you have are using less than 30% of your available credit.

2) Lightly use your credit cards. It is important to use your cards but use them lightly. Also remember that credit card companies report balances are different times each month and it is rarely right at the due date. So if you rack up a big balance and plan on paying it off, you need to realize that the account may be reported while the balance is high, therefore reducing your credit score.

3) Verify your credit card limits. If your credit card lender is a limit that is lower than you actually have, this may have a negative effect on your score.  If it is incorrect, make a quick call to your lender and they should be able to update your credit limit with their next update to the CRA’s.

4) Get out that old card. The older your credit history is, the better it is for your credit score. So it is very important to not stop using your oldest cards. If you stop using the cards, the card issuer may stop reporting updated information to the credit bureaus. So use the card every few months and then pay it off when the statement arrives.

5) Get some goodwill love. Some people believe this is easily achieved and others have had no success but it is still worth a try. If it works for you-great. If not, you have only wasted a short amount of time. If you have a  good history with the lender, they might agree to delete a late payment from your credit report.  Your goodwill request should be made in writing.  Another solution for accounts that have a serious history of late payments etc is to ask that they be “re-aged.”  If you have an account that is open, your lender may agree to delete any prior delinquencies as long as you make several payments on time.  Be sure to get any agreements in writing.

6) Credit Disputes. When you get your credit report, you should go through it carefully and dispute items that you don’t agree with. I always suggest you mail your dispute certified return receipt. ALWAYS. You can simply dispute using the reason ‘Not Mine’. The older the negative item, the easier it is to get removed. Also a small amount is one that some lenders do not bother taking the time to investigate, therefore they do not respond to the credit bureau within the 30 day time limit and the item must then be removed from your credit report.  If you have credit with a lender that has joined another company, you may have more success as oftentimes the merge creates a mess of their records and they can’t verify the loan.  Credit Disputes can rapidly improve credit.

7) Blast significant errors. Credit scores are calculated off of the information from your credit report so it is important to really check carefully. You should realize that there are many items in your credit history that do not impact your credit score.

Things that do improve your credit score and are worth disputing or correcting:

• Charge-offs,  late payments, collections or items you find on your credit report that are not yours.
• A lower credit limit than you actually have.
• Accounts that show “paid charge off”, “settled,” “paid derogatory,”  or other labels other than “paid as agreed” or “current” if they were paid in full and on time.
• Accounts you listed in a  previous bankruptcy but are still showing as unpaid.
• Items older than 7 years and are showing negative status.

Things you really don’t need to worry about includes:

• Your name is not spelled right. (unless there is a concern for identity theft)
• An old address or an incorrect address.
• Incorrect employer information.
• Account that is closed but is listed as open. (don’t fix this, leave it showing as open as this is better for your score.)

Other actions to beware when you’re trying to improve credit scores:

• Don’t ask a lender to reduce your credit limit.  Lowering your credit limit,  will reduce the available credit that is so important. Remember you need to keep your balances under 30% of your total available credit. This value is worth 30% of your score so it is important to follow this.
• Don’t make a late payment. If you have a bad credit history with a lot of late payments, adding another one isn’t going to hurt your score much but since the goal here is to improve your credit score, you need to avoid any late payments at all. When your score gets in the 700 range, one late payment can lower your score by 100 points!
• Consolidating your accounts. You need to be careful when doing this. Remember you need to keep your total utilization of credit down under 30% so whether you have one card maxed out but all others are open or small balances on several cards, keep that number under 30%.
• Don’t apply for new credit, if you have plenty.  If you do not, you should get an installment loan if you do not have any. Remember to have a variety of loan types.

Improving your credit is easier the lower your score and the older your negative items. Once your score reaches the 700 range, you are in a good zone and probably won’t benefit much but you should always pull your credit reports at least once a year and review it for any errors. Paying attention to the above items can help you Improve Credit right away.