Credit Repair - Blueprint Part 1 If you are just getting started on the process of repairing your credit, one of the big questions is whether to do it yourself or commit to using a lawyer or credit repair service. If you feel that doing it yourself will get the job done right, I am going to have to agree with you. Many credit repair services will charge you a monthly fee and you will have no idea what you are getting. I have known several people to try repair services and be extremely disappointed. I am not saying they are all bad, but if you were charging a monthly fee, do you think you would be racing to get the job done quickly? So by now you have probably figured out that this series of articles will be about repairing your own credit. In this first series we will get started in finding out how damaged your credit is, and then prepare a game plan to begin the healing process. It would be difficult to prepare a halftime comeback if you didn't even know what the score was. But what if I told you there were three scores and they may all be different? Don't despair it will make sense in a minute. There are three major consumer credit reporting agencies, and each one keeps a file on you called a credit report. This report contains information such as name, address, social security number and other personal information about you. The biggest section of this report keeps a history of all your current and past trade lines. This information will have the name of the lender, account numbers, and payment history information that other lenders will look at to see if you make your payments on time or have ever had late payments. Noted will also be approved limits and the type of credit, installment or revolving, and the status of the loan (open, closed, paid, and inactive or whether it's been sent off to collection). The next section of your report, Public Record, will have the most impact on your scores. This is the section that lists any tax liens, bankruptcies, foreclosures or other judgments against you. If you are lucky this section will be clean. If not there are actions that can be taken to help clean up this section of your report. In a later article I will touch on some of these advanced credit repair techniques. Just know that if done correctly you will not have to wait 7 to 10 years for these items to drop off your report. The last section is Inquiries. Each time you apply for credit, a lender will pull a copy of your credit report to gauge your credit worthiness. Each lenders formula on how to approve you will be slightly different, but will most likely be checking your report, your FICO score and looking at your income statements. Each inquiry into your credit actually counts against you and will knock a few points off your score. However, if you pull the report yourself, this is considered a soft inquiry and will not have any impact. Lenders will begin reporting on you to the bureaus once you have established a loan and begun making payments. Because this is a voluntary system for lenders, you will not know which if any of the reporting agencies a lender is submitting data to. For this reason you will find that your credit report will be different as well as your credit score at each of the 3 big credit bureaus. So to begin with you will need a copy of your report and score from each credit bureau. I recommend looking for a package deal that will contain a combined report from all three bureaus and your FICO scores too, as most lenders will use this score to grade you by.
In Part 2 of this series we will begin learning how to clean up your report and begin building new credit.
Credit Repair and History The Credit Repair Equation Although credit cards may be what land the most people in credit trouble, they're also the best tool for credit repair. If you find yourself faced with mounting debts and worsening credit, the most important things you can do are always paying your minimum credit card bills, and not exceeding your card's credit limit. If you allow your card to be cancelled or "charged off," you will have a very hard time getting credit in the future, which will make it even more difficult to restore your credit rating. Or, if it's too late and you've already had your cards cancelled or charged off, you should apply for a card from a company that specializes in servicing clients with not-so-good credit. Even if the card's interest rate is exorbitant and there's a costly annual fee, it's worth it to have an open, active credit account. Otherwise, how are you ever going to rebuild your credit? Rebuilding + Revamping = Repairing But rebuilding your credit through the timely payment of your new bills is only half of the credit repair equation. There's also the matter of the items that are already listed on your credit reports. If you can get an item deleted from one of your credit reports, then to that credit bureau and all who use it, it's as if it never happened - the instance of not-so-good credit will have been expunged from your record. Surprisingly, it's easier to have this done than you might think. Obtain and Review Your Credit Reports First, you need to obtain your credit reports from the three major credit agencies - Equifax, Experian, and TransUnion. This can be accomplished by visiting their web sites (equifax.com, experian.com, and transunion.com), and paying the necessary fee. If you've been denied for credit, insurance, or employment in the past 60 days, you are entitled to free credit reports. Send documentation of your denial along with your credit report requests. Once you have your reports in hand, scan for inaccurate information - negative, of course. If some untrue positive information somehow made its way on to one or more of your reports, you are under no legal obligation to identify it as being false. It's probably best to turn a blind eye. But as for the negative information, photocopy your reports and use a highlighter to indicate what you would like to be changed. Send a letter explaining how the information is false and include any corroborating documents that support your claims. Once you've dealt with the inaccurate information, it's time to move on to the things you only wish were inaccurate. It's important to note that any negative information (excluding a bankruptcy) that's older than seven years old should not appear on your credit report. You have every right to request its removal, and the credit agency must comply.
Set Realistic Goals - And Make Them Concrete But next you need to decide what you would like to have removed, and how realistic your chances are of having it deleted. If you declared bankruptcy last year, or you have an unpaid judgment against you, there's not much of a chance you'll succeed. But if you got divorced four years ago and your husband stopped making the car payments, which ultimately resulted in a repossession on your credit record, you just might get it expunged. Other, minor debts aren't as difficult to have removed. For example, if you owe a credit card company $1,100 for a canceled card, you may be able to get them to remove the information from your report if you pay them in full. Normally charges like this go unpaid or end up being settled for pennies on the dollar, so if you have the ability to pay your debts in full (or close to it), you may be able to get your creditor to send letters to the credit bureaus saying that it was all a big misunderstanding. The key is to evaluate your credit report and decide what can realistically be accomplished. Give yourself three achievable goals and go from there. And in the meantime, make sure you don't repeat the mistakes of your past. Keep two or three credit cards open and active and pay the bills in full and on time. It won't happen overnight, but by following these guidelines, your credit will be rebuilt, revamped, and restored. The sooner you get started, the sooner the process will be complete.
Credit Repair - Maintain the Correct Debt To Credit Ratio Many people believe that paying off their credit cards every month is a good idea. And if you are trying to stay out of debt, then I would have to agree with you. If you are trying to build credit and look good to your creditors, then paying off your credit cards every month is actually a bad idea. Let me explain. Creditors and lenders don’t make there money from annual fees on credit cards. They make there money on the interest that you pay each month. If you are paying off your balances each month, the creditors and lenders aren’t making any money. Creditors want to see someone that can maintain a balance each month and make payments on time. This goes a long way in showing your credit worthiness and actually is built into the algorithm that calculates your credit score. Your debt to credit ratio is very simple to calculate. Suppose you have a credit card with a $10,000 limit. If your balance on this card is $2500 then your debt to credit ratio would be 25%. A good ratio to maintain to help raise your score would be between 30-35%. Your ratio is based on all your credit card limits and balances and combined. This actually gives you some flexibility. If you had a limit on one card of $5000 and a balance of $3250 then your debt to credit ratio would be around 75%. To fix this you could pay off a big portion of your balance or you could ask the creditor to raise your limit to $10,000. The latter costs you no money but alters your ratio to around 35%. With multiple cards there are many combinations to achieve a good credit ratio by upping the limits on some cards and paying down others. I think you get the idea.
To Get More Help And Info On Repairing Your Credit With The Next 37 Days, Click Here For This TopSelling Product! It may not be necessary to maintain this high ratio on your credit cards all the time. Use this technique to build your credit fast. If you will soon be in the market to get a home loan or auto loan, perhaps begin moving towards this ratio several months before shopping for a loan. Once you get a loan you can let this ratio go down to something more manageable. This is just one little technique that can have huge ramifications on your credit score. I hope it helps. And remember to make all your payments on time. This can’t be stressed enough. Those 30 and 60 day late payments will kill your credit faster than you can repair it. Good luck!