Wednesday, September 12, 2007

Legal Credit Methods

To better understand what legal credit repair is, it would be helpful to understand a few types of illegal credit repair:


Illegal: Changing your social security number to obtain a clean bill of credit.


If any company should suggest this type of credit repair, report them to the authorities.


Illegal: Disputing every item on your credit report, regardless of nature.

The Fair Credit Reporting Act specifically states that only items that are unverifiable, inaccurate or misleading should be disputed. Items that are clearly yours, and reflect your credit history should not be disputed.


Illegal: Charging for services that have not yet been completed.

This is to protect the consumer from fraudulent companies that charge for services that never get completed (charging to "repair your credit", then hitting the road...)


So, what exactly is Legal Credit Repair?





Legal Credit Repair consists of removing the negative items on a credit report. There are a few different methods of going about this, the most common and effective are:


"Goodwill" Negotiation Negotiating directly with creditors and asking them to "please" remove negative items from your credit reports is a viable method of credit repair for mild late-pay accounts. There are no laws that require that negative items stay on your reports for any amount of time, and creditors have the ability to simply remove these items if they see that it could somehow work to their benefit, even if that simply means a pleased customer.


Credit Disputation The Fair Credit Reporting Act gives you the right to contact credit bureaus directly and dispute items on your credit reports. Just as in a court of law, you have the right to plead "not guilty" to negative information on your credit reports, and leave the burden of proof to the credit bureaus. You can dispute any and all items on your credit reports that you feel classify as inaccurate, unverifiable, or misleading. If the bureaus can not verify that the information on your reports is indeed correct, then those items must be deleted. Learn More.


Learn More.

Thursday, August 30, 2007

Bad Credit Checking Account: ChexSystems Myths and Facts

If you have made financial mistakes in the past, you may find it difficult or even downright impossible to open a checking account. If you find yourself in this position you may be wondering what you can do about it. After all, it can be very hard these days without a checking account to pay bills with.

Before you can start fixing the problem, it is important to understand what the real issue is. Many people think the problem lies with bad credit, but that is not the whole truth. The mistakes you may have made in the past may have resulted in a bad credit score, but the truth is that banks do not, and cannot, use your credit report when making a decision to allow you an account. Instead they have their own sort of agency that maintains a list of people who have written bad checks, and/or have unpaid fines or fees due to a bank. This company is called ChexSystems and if you have gotten on this list for any reason, you will find it very hard to open a checking account at a major financial institution.

If you are reading this article then you probably find yourself in that position. So then the question is; what can you do to acquire a checking account?

When approaching this problem you essentially have two options.

Option #1 - Work With the Bank

This is the more difficult option but is often worth the extra effort. What you need to do, essentially, is convince the bank to give you an account. This is easier than it sounds. You will need to actually visit the bank and speak with them in person. The goal here is to sell yourself and if you have a good stable job, then that will help. If you can provide direct deposit that can often push things over the edge. If that isn't enough, and you really want to deal with that bank, then you will need to provide some security to the bank. None of this is a guarantee but the lower the risk you are to the bank the better. Ask the bank if they will give you an account if you secure it with a deposit that they hold, or perhaps with a 6-month or 1 year CD.

This is the preferred option in my opinion. The advantage to this option, and why I recommend it, is because it can allow you to be more flexible. By this I mean you can quite possibly open an account at a major local bank rather than being forced into a lesser known, or inconvenient bank.

Option #2 - Non ChexSystems Bank

If option one doesn't work for you then your only other choice is to find a bank that doesn't use ChexSystems. There are banks out there, but you will need to do some research. When you are looking for a bank under this option then it is important to protect yourself. Don't be so focused on finding a bank that you get taken advantage of. Here are a few things to watch out for.

Banks Requiring a Direct Deposit

If you want to do a direct deposit, then that is your choice, but be wary of a bank requiring you to do this in order to open an account.

Extra or Unfair Fees

Sure banks charge fees, but watch out for banks that are charging extra fees just because you are in a bind. Do your research and see what sort of fees are generally charged by local banks in your area, and then when shopping a non-ChexSystems bank don't let them charge you differently.

Tuesday, August 14, 2007

Guard your credit from Identity thieves

On raise-your-credit-score.blogspot.com, my goal is to assist you in repairing credit problems. I offer tips and strategies to be successful in repairing various problems. One bit of news that has cropped up as of late is identity theft. This has become a serious problem in our society, such to the point that it needs addressing on this blog.

We as a society have now become dependent on information. Some of the largest and most successful companies in America today are based upon the decimation of information. In fact, your credit report is nothing more than a collection of information about your financial history. This being said, with the growth of our use of information, has brought about the increase in opportunities for that information being compromised.

The US Justice Department website describes identity theft as the following,
Identity theft and identity fraud are terms used to refer to all types of crime in which someone wrongfully obtains and uses another person's personal data in some way that involves fraud or deception, typically for economic gain.

"...wrongfully obtains and uses another person's personal data.." Here is the crux of how identity thieves operate. They wrongfully obtain your credit information and use it for their economic gain".

The sole purpose of identity theft is to misuse the data compromised for personal gain. Plain and simple. Thieves have no good intentions when it comes to your information. This is why it is necessary to take specific actions to guard your credit information. Treat your credit information as if you were protecting national security secrets. It may sound a bit over the top but this advice with save you tons of problems caused at the hands of a mischievous identity thief.

  1. Make sure that you take the proper precautions to dispose of mail that may have your information on it.
  2. Be weary of who you give your personal information to over the telephone.
  3. Always be cautious about what website that you give your credit card or any information to over the Internet.
  4. Immediately report to your creditors lost or stolen credit cards and other credentials that may have compromised your credit information.




Saturday, August 11, 2007

Credit Ability & Buying the Perfect House or Car: Great Links

Here is a site that offers some addition information on getting what you want and raising your credit score.

Credit Ability & Buying the Perfect House or Car: Great Links

Tuesday, August 7, 2007

Can Bad Credit Be Deleted?

Yes, it can. Despite the fervent proclamations of bureaucrats and credit bureaus everywhere, a simple fact remains: negative credit listings are deleted from peoples' credit reports by the thousands each and every day.

A few years ago, an attorney from Lexington Law. visited with a regulatory agency for a casual conversation with two agents. The Agency's office, as a matter of course, believed the credit bureaus' claim that bad credit couldn't be deleted. The visiting Lexington attorney asked, "How many negative listings would you have to see deleted from consumer credit reports before you would believe that bad credit can be deleted: ten? fifty? a hundred? one thousand?" The agents responded with only blank stares.


"How about 50,000 deleted listings, would that convince you?" continued the Lexington attorney. From his briefcase he pulled a stack of papers six inches high.

"In these pages, we have listed the permanent deletion of over 50,000. listings from our clients' files in the last two years alone," he explained. The agents pulled the stack across the conference table and began to pick through the pages, taking in the massive list.


"But have you deleted any bankruptcies?" shot back one of the agents, "we know that bankruptcies can't be deleted." The Lexington attorney leaned across the table and ran his finger down the first page.

"There's one deleted bankruptcy... and, there's another,... and another,... and another. Should I go on?" asked the Lexington attorney.

The agents sat back in their chairs. "You know," began the junior agent, "I have this one listing on my credit report that simply must belong to somebody else..."

How is credit repair possible?

The Fair Credit Reporting Act (FCRA) allows a consumer to challenge the information on his credit report on the basis of "completeness and accuracy." When a consumer files a dispute, the credit bureaus must contact the source of the credit information (the creditor) and confirm that the information is accurate, verifiable, and not obsolete. In some circumstances, the credit bureau is required to go beyond a simple verification of the creditor's own computer record. If, within 30 days, the credit bureau has not received verification from the creditor, then the credit bureau must promptly delete the credit listing. Learn More.





Repair my credit score fast?

Repairing your credit score quickly is always a goal of an individual who has a low credit score. In an effort to improve their credit score individuals have sought out all kinds of dubious methods of raising their credit score. I want to reiterate a point made in one of my previous post. Using credit cards as a means of increasing your credit is not a sound method of improving your credit score.

Raising your credit score is something that takes place over a course of time. The people who are attempting to do so are patient. We have established in previous post that credit scoring occurs over a thirty day time period. So usually what you do today, will not be reflected for at least thirty to sixty days in the future. So hence the need for a long term view of improving your credit score.

Many individuals with poor credit tend to last the discipline necessary to properly manage their finances. Placing a credit card with very high interest rates and fees in the hand of such a person is not in that persons' best interest. Usually what tends to occur is that individual begins to use the credit card for other means. Only incurring more debt. Placing themselves in a greater hole.

Also, lenders tend to realize that credit card companies will begin to issue cards to individuals who are not necessarily in the best financial shape. Credit cards issued also are likely to have very small balances of less than $1000. With this in mind, lenders like to see credit established along the lines of an automobile, mortgage or personal loans.

What is needed is a better way of raising the credit score. Hopefully, I have made the case, that credit cards are not the way. In future posts, I will show you ways to improve your credit score without using methods that are suspect at best.


Sunday, August 5, 2007

Credit Cards: Leverage or lepor?

When discussing good or bad credit, invariably the conversation will turn to the role of credit cards. Overall, credit cards are a necessity in today's society. If you wish to do most types of transactions, credit cards are vital to completing the process. You would need a credit card for every purpose from securing a hotel room to renting an automobile. So credit cards are not all bad.

The problem for individuals with bad credit is in how they use credit cards. First, many of the credit cards that target those with bad credit tend to have some of the highest interest rates in the credit card industry. Companies such as Capital One, Orchard Bank (which is a card issued by HSBC) and First Premier are make have huge market share in the bad credit area. They each also have some of the highest interest rates and fees of any card issuer.

Also keep in mind that the fees are also front loaded with many of these cards. Some of the fees in which they charge are a "processing fee, account set up fee, program fee, annual fee and monthly servicing fee". Cardholders of these cards are shocked to find out when they get their first monthly statement that their balance is usually about $125-200 even before they use the card! Talk about robbery!

If your credit has some bumps and bruises, you might not want to acquire one of these cards at this very moment. Allow a few more months of rebuilding your credit (following the strategies provided on this site) in order to shop for a better credit card issuer. Time is always on your side.

In the end, a credit card is only as good as the individual using it. If you are wise in the use of your credit card to secure certain transactions as mentioned earlier, I do not see any problem. The trouble for most people with poor credit usually stems from using a credit card as a substitute when you are out of cash, e.g. dining out, movies, luxuries and pleasure items. If you are that type person; that is not the proper use of a card.

Having Good Credit in America Pt 2

Raising your credit score to a high limit is a task that requires that the individual makes certain commitments. In my previous post, I discussed how you are going to raise your credit. Well, in this post I have an example that comes close to heart. My sister and brother in law desire to purchase a home in the next few years. Here credit was decent and fair worst. The main problem was high credit balances which were hampering them from doing the things that were necessary to be successful.

For those of you who do no understand credit; it is like your Grade Point Average in school. Something which is easy to drop and very difficult to raise. Fixing your credit will require you to make certain sacrifices that will ultimately result in a better overall credit report
. Many individuals who succumb to the challenge, simply lack the resolve necessary to put into action a plan which will give a boost to a low credit score or strengthen an already good score.

What will it take to be successful? First, you must obtain a copy of your credit report from one of the credit bureaus. It is not necessary to get all three at once. Remember from our Part 1, we said that you the plan is to order one credit report from one of the credit bureaus every four months so you will have a snapshot of your finances over the course of the entire year. All of this is what my sister put into action.

Secondly, the plan to raise her credit included gathering all of her credit cards and transferring them to a lower balance credit card. You can usually find a zero to low interest rate credit card when doing a balance transfer. As my sister Sylvia did, you are going to now hunker down and pay off that credit card before the honeymoon period expires! In essence, you will find a credit card company that will give you the lowest possible interest rate in order to nullify the interest rate in your quest to pay off the plastic.

Meanwhile, you will not apply for any new credit of any type. No gift cards, charge cards, reward cards,etc. Your lifestyle for a time period may be disrupted. As your plan develops, your automobile is the next item to take a look at knocking out. If you are financing as opposed to leasing your vehicle, continue to drive that vehicle. My sister and brother in law always drove late model vehicles. This time, she kept the goal of building her credit in front of her and kept her current vehicle which is now paid off.

Rebuilding your credit takes time and effort. It requires dedication to a plan for a period of time between six months and two years depending on the severity of your poor credit. For those of you who do not understand, high credit balances is also considered poor credit. It demonstrates to a lender that you are may be either just treading water or all together over your financial head.

In my next installment, I will conclude this series with how my sister repair and rebuilt her credit.

Saturday, August 4, 2007

Get a dramatic boost to your credit

Your credit report is a snapshot of your entire financial and credit history. It will tell everything from where you live to who is your employer. Your credit report will show how you have handled your finances. Companies, known as credit bureaus, compile every bit of data regarding your credit life and sell it to businesses worldwide. So you now see how important it is to maintain good credit.

Because your information is distributed so widely to those seeking to make a business decisions based upon you credit, in accordance with the Fair Credit Reporting Act (FCRA). Consumers are advised to take every effort to protect their credit as much as possible. It is critical to your overall financial health.

Getting Your Clean Credit Report

In the event that you are denied credit, insurance or employment due to what was provided by a CRA, the FCRA states that you must be supplied with a copy of the information used against you. As long as that request is made within sixty days.

Since the law states that each individual has a right to a copy of their credit report once a year, you simply need to contact the credit bureaus to request a copy.

The three major national credit bureaus are:

Equifax, P.O. Box 740241, Atlanta, GA 30374-0241; (800) 685-1111.

Experian (formerly TRW), P.O. Box 2002, Allen, TX 75013; (888) EXPERIAN (397-3742).

Trans Union, P.O. Box 1000, Chester, PA 19022; (800) 916-8800.

The first step in raising your credit score, is to write the bureaus and outline what you believe to be inaccurate in your credit report. Provide the bureaus any information that is pertinent to your case. Remembering to keep originals and make copies of the letters disputing the information.

The credit bureaus must re-investigate each incident within thirty days. The only time they do not have to investigate your claims if they believe that the dispute that you are making is without merit. During the time of the investigation, all disputed items must be removed from the individuals' credit report. If this information is not investigated and responded to within the given time frame, the item disputed must be removed. Whether it is accurate or not.

With these items removed or corrected, your credit in a matter of months will shoot up! I have seen situations in which an individuals' credit has soared as much as 100 points in a short period of time.







Having Good Credit in America

Having a high credit score in America is one of the most important benefits of living in a consumer economy that you could possess. I make this statement after having numerous conversations with individuals that do not have stellar credit scores.

The United States and its economy system is fueled by commerce. This is as plain a statement that I could make in describing our system. Many Americans tend to take this for granted. Products of any and every type are constantly being blasted across every type of media outlet to coax you into purchasing that "must have" item. I want to put commerce and personal credit into a different light. How does having bad credit affect the way you live in a market based economy?
Its easy to see the benefits of good credit, but what about poor credit? Maybe, you will see how it affects you and take measures to fix credit problems that hamper your life. The many tips and strategies that I suggest are sound and time tested means to improve your credit score over a course of time. Repairing bad credit takes both time and effort. When I am done, hopefully, you will have a much better understanding of the need to rebuild your credit. I will include the efforts of my oldest sister who gave me a real life example of boosting her credit to a limit that allowed her and my brother in law to do some remarkable things.

Simply put, the 3 credit bureaus (Equifax, Trans Union and Experian) can be your best friend or worst enemy in your efforts to fix your credit. The first step in becoming a gold plated citizen is to contact the three bureaus for a copy of your credit report. The law now allows you to obtain a free copy of your credit report one time per year. Since each credit bureau usually have the same information reporting, I want you to stagger your request over a four month period in order to get the greatest benefit from their service. This will allow you to see the progress that you are making in repairing your credit.

After reviewing the symptoms its time to make the diagnosis. Usually a person with poor credit will possess certain problems which include: late payments and high balances. Something that can be cured, but will require diligence on the part of the individual. You will than select one or all the items that you can pay off in the next couple of months. I find that many individuals with bad credit have nagging problems such as judgments and liens for small amounts that total less than $1,500 that can be resolved. Once these "small thorns" are addressed, you will begin to see some success in your credit efforts.

In Part 2, I will discuss some of the benefits that you reap from having a good credit score in a market based economy.


Thursday, August 2, 2007

The Subprime woes

The recent problems with the Stock Market remind me of the importance of having good credit. During the mortgage refinance boom of a few years ago, lenders sought various ways to increase their market share. One such method was to attract the individual who up until than, had been ignored, the subprime borrower. Subprime borrower generally could be identified as having certain financial characteristics. These credit qualifications included:

  • Late Mortgage Payments. How has the borrower repaid their current mortgage. Usually a subprime borrower has multiple mortgage payments that have been made beyond the thirty day period with a certain period of time. Typically, within the last twenty-four months.
  • High debt to income ratios. This would be the relationship between the amount of debt that is being reported on their credit report to the amount of income that that individual produces. Usually, anything over fifty-five percent is considered above industry standards.
  • High credit balances. Borrowers who typically have credit problems are unable to properly manage their finances. The balances on the loans that they do possess usually are at a higher limit, signaling to the creditor that they may be having trouble making payments.
While just a few of the many factors that made up a typical subprime borrower, you get the general idea of the makeup of that particular market. This was a disaster waiting to happen. Mortgage lenders take the loans that they make, package them up and securitize them through selling the loans on the bond market to investors. In the past, only the best loans were used as collateral. During the heyday of the mortgage refinance boom, this practice was ignored. Lenders began to package riskier loans made to riskier borrowers. Adjustable Rate Mortgages or ARMs, as they are popularly known as in the industry were sold on a wide scale. These loans were fixed at a low interest rate for a short period of 24-60 months on average, and afterwards would adjust upwards at an alarming rate for the remainder of the loan! These loans had the potential of raising the borrowers mortgage payment by hundreds of dollars from its original amount.

It did not take much to see how this was paying with fire. Providing mortgage loans to individuals who had previously demonstrated that they were risky for a reason. This house of cards did not take long to begin to crumble. New Century, a mortgage lender who specialized in loans to subprime borrowers, was the first to feel the heat. Its earning reports showed a high number of its borrowers had defaulted on their loans. Other lenders began to experience the same problem as interest rates began to climb. Finally, Countrywide Mortgage, a leader in the industry had finally announced that many of its none subprime borrowers were defaulting! This was a final nail in the coffin of the industry. One of the top lenders in the industry was having problems with its less riskier borrowers! This has resulted in the current state of the stock market.

I wonder how many of these lenders could have avoided this problem had they kept to their own lending practices. Credit scores and qualifications are set to a certain standard for a reason. These lenders would have been wise to stick to their own best practices.

Wednesday, August 1, 2007

Reasons to maintain a high credit score

Here is the importance of having good credit. There is not a company in today's
economy that will not review your credit before they approve an application for
credit. Many of these creditors have a minimum credit score to even start the
process of opening an account. Usually you must meet a certain credit score
along with various other
criteria in order to proceed with the process. This should
underscore maintaining a high credit score.
That being said, what is the need for a high credit score? There are some
advantages to having a high score. You usually can receive an instant credit
approval based upon your credit score alone. In the past, the lender would have to
manually review every line of your credit file in order to make a determination as
whether to extend credit or not. Second, the consumer has the benefit of system
that is fair to everyone. Being less likely to take into consideration either race or gender. Overall, everyone wins when there is a system that is set in place to
facilitate a rapid and complete credit approval process.

Having good credit thus means that the borrower must also take careful measures
to insure that their personal information is not compromised. In the hands of an
identity thief, good credit can be scary. The thief, in a very short period of time
would assume the identity of the victim and amass a large amount of debt before
anyone ever discovered that there was a problem. Now, that superior credit has
just become your worst nightmare. The only way to maintain that high credit is to
guard every aspect of your credit in the most diligent manner.

Though good credit can be a two edged sword, the benefits of having such, far
outweigh any risk. As a participant of in today's society, you should make every
effort to raise your credit score to its highest possible limit. This score will make it
easier for you to obtain credit when it is
necessary.

Save Time, Money, and Frustration and Get the Right Credit Score

You go into a lender's office prepared to apply for and receive a loan. After all, you've done your homework, you've pulled your credit reports and you know what your credit scores are--you even got one score from each of the three major credit bureaus: Equifax. Experian, and TransUnion. You are shocked when your loan is denied, or maybe you were approved, but the interest rate is much higher than you anticipated. How can that be you say? My credit score is good, I know I checked. Maybe it's not as good as you think. It all depends on there you got it and what kind of credit score it is.

The fact is there are several different credit scoring methods. Credit scores calculated from the same credit reports can differ substantially from credit scoring method to credit scoring method. So how can you ever know what your credit score really is? Well, luckily, 75% percent of lenders use FICO scores exclusively and you can purchase FICO scores yourself--you just have to know where to go. (www.myfico.com)

FICO credit scoring is a numeric method of scoring your credit worthiness developed by Fair Isaac and Company. Your credit score is a number between 300 and 850 that tells creditors how likely you are to pay your bills. The higher the number, the better it looks to potential lenders and creditors.

The three major credit bureaus each have their own version of the FICO score: Equifax uses the Beacon system, TransUnion uses the Empirica system, and Experian uses the Experian/Fair Isaac system. Despite each credit bureaus' use of their own versions, all systems are based the original Fair Isaac FICO scoring method, so each credit score calculated with these systems are generally called FICO scores. However, although most lenders do use FICO scoring, some lenders may have their own scoring methods.

There is only one place where you can get your FICO score from all three bureaus and that is at www.myfico.com. If you order your credit score from anywhere else, again be aware that these scores are "FAKOs" (or "fake") and can differ considerably from your FICO credit scores.

Adding to the confusion is the credit bureaus themselves. Recently, Experian revealed that the national average credit score of its consumers is 678. This is very misleading to the average consumer. When you buy your credit report and score directly from Experians website, you are getting what they call the "PLUS Score," which is NOT a FICO score, and is NOT used by lenders anywhere. (Equifax is the exception--you can buy your FICO score directly from them at their website; however, the only place to get all three scores together is at www.myfico.com.) The 678 PLUS Score reported by Experian is actually the average of consumers' PLUS Scores, not their FICO Scores.

Clearly, the PLUS Score (and all Non-FICO scores) are useless. Not only that, but such hype misleads consumers into purchasing their PLUS Score thinking that they are getting the same credit score that their lender will use. Non-FICO scores are worthless not matter what the credit bureaus or any website selling non-FICO scores claim. Even a few points difference in your credit score can mean confronting the reality of the loss of thousands of dollars out of your pocket--a loss that you probably didn't plan for. The next time you want the most accurate credit score available, do yourself a favor and get the industry standard: the FICO credit score.

Friday, July 27, 2007

Credit Repair and Debt Consolidation

Unfortunately, many people will overlook this option, feeling that going
with debt consolidation means they are giving in to the enemy. Credit
repair, debt consolidation is simply another weapon at your disposal for
getting and staying on track.

Professionally trained and independently certified counselors evaluate your
financial situation, assist you in creating a budget, and work with
creditors to negotiate a possible reduction in these key areas:

. Finance charges. Late fees and / or over-limit charges.

. Monthly payment pay-off time. The credit repair debt consolidation
program will help you simplify your financial monthly commitments.

. Interest payments.

. Length of time that you have bad credit.

. Time taken to become debt-free.

. Overall stress in managing your finances and therefore your life also.

Credit Repair

For those souls brave enough to attempt credit repair themselves, this
should be your mantra: "I will not tip off the credit bureaus to what I am
doing". Make sure you do not disclose your intentions to creditors or you
will not be able to repair your credit as easily as if you follow some
simple rules. Most credit repair law relates to the Credit Reporting Act,
sometimes referred to as the FCRA. In order to legally repair credit scores
or improve them, credit reports should be reviewed for inaccurate information.


Denied credit? Legally repair your credit report.


Credit Score

Perhaps you have been cutting corners, tightening the budget, and working
with the credit bureaus but find your credit score is still too low to buy
a house or car. Credit repair clinics, law firms and counselors offer
services to those who are interested in improving or protecting their
credit scores.

Credit Cards

Credit cards can be the worst culprits for landing you with debt. Card
credit debt reduction strategy is your most valuable possession. Credit card debt help can be achieved through various means, but I would like to mention Lexington Law Firm as a credible resource. Credit card debt consolidation will improve the way you
live and help you rise above the rest by eliminating credit card debt.

Bureaus

If for some reason, you cannot access your credit reports on line, the
credit bureaus provide toll free numbers and mailing addresses to use
instead. Some of the credit bureaus allow you to dispute information on
line. Many government agencies and the credit bureaus themselves advise
that only time and patience will improve credit scores. Some companies that
offer prepaid and secured credit cards charge a fee to report account
activity to the credit bureaus. You will be involved throughout the
process, because the credit bureaus will only communicate directly with
you.

Conclusion

The bottom line is this: Whatever you do, do not miss the chance to repair
your credit through credit repair debt consolidation. Some companies
suggest that debt consolidation may improve your overall credit score, but
as a strategy for credit repair, debt consolidation may not be the best
choice.

Counselors will provide you with a free budget analysis to help you
determine if the credit repair debt consolidation is right for you. Credit
repair debt consolidation is just what you need to get out of debt and
repair your low credit score right away.

It is recommended that you use professionally trained and independently
certified counselors to give you qualified advice, and any information in
this article should first be checked with these qualified professionals
before applying any advice.

It Takes Credit to Make Credit

Using a credit card wisely is an important step in building a good credit
rating. If you're trying to re-build your credit or if you're young and
just starting out, pay close attention the next time you receive a new card
offer in the mail. When you're trying to build a positive credit history
for yourself, using the right credit card makes sense. Making small
purchases and then making your payments on time each month is a simple,
reliable way to build an outstanding credit report.



What to Look For On a Credit Card Application

If you receive a credit card application that appears to offer a low monthly
interest rate, don't make a decision until you turn it over and closely
examine the Disclosure Box. In it you'll find a more important measure
of credit terms - the Annual Percentage Rate, or APR. By federal law,
the Disclosure Box will also tell you whether or not the card has what is
called a grace period - a number of days, usually 25, until your purchase
starts to accrue finance charges. If a card has a reasonable grace period
and you pay off your balance at the end of each billing cycle, you won't
have to pay finance charges. It isn't difficult to find credit cards that offer
these grace periods, so if the Disclosure Box doesn't declare one then throw
the application in the trash and look for a better offer.


If you don't have any credit history at all, a credit card company
won't want to give you a very high credit limit, but that's probably best
when you're just starting out. You don't want to be tempted to go into
serious debt with your very first credit card.



Calculate Your Monthly Finance Charges

Ideally you want to pay off your balance each month to avoid paying any finance
charges, but when that isn't possible it's important to know the actual cost of the
items you purchase. The annual percentage rate, divided by 12 months, gives
you the periodic rate that will be applied to your outstanding balance each month.
You can estimate what your monthly finance charge will be by multiplying the
periodic rate times the outstanding balance. It may sound complicated at first, but
taking the time to learn this simple equation can make a big difference in how you
use your credit card.


When you're able to see how much you actually spend on an item that
you don't pay off at the end of the month, it might help you to resist the
temptation to over-use your card. An item that you want to buy might be on
sale at the time you purchase it, but if you don't pay off your balance at
the end of the month then those finance charges can dramatically increase
the actual amount you'll end up paying.


Use Your Credit
Card as a Tool

Credit cards are only one of the tools available to help you build a positive
credit history. Making on-time payments for other forms of credit, such as rent
and utilities, are also important. Depending on your situation, within 1-2 years
your credit rating will be improved enough that you no longer need to use your
card for new purchases to maintain your good credit. Use these tools wisely, and
they'll help build your financial future!

Three Ways to Raise Your Credit Score

It used to be that "people" made decisions about your credit worthiness.
You knew your banker and your handshake was all the collateral you needed.
Those days are long gone, and now a single number - your FICO score -
determines your credit worthiness.

Although there are several credit models, the most commonly used is FICO,
based on a model created by Fair, Isaac Company. Their consumer website is
myfico.com, and you can find information about the FICO credit scores
there.

Your FICO credit score can be used to determine your interest rate and how
much credit a lender will give you. So taking care of your score, and
keeping your credit clean will save you money.

Preserving your FICO score, and improving it, is not difficult, but it may
take time. Here are some tips to maintain and improve your score, based on
three credit situations.

Strategy One: Obtain a Credit History

There are many reasons you may have no credit history. Maybe you're just
starting out, maybe you pay cash for everything and have never needed a
loan. In any case, if you have no credit history, your FICO score is
likely to be low.

The easiest way to raise your score is acquire a loan, and pay it off on
time. In general, installment loans are weighted more heavily than credit
cards. In other words, you will improve your credit score faster if you
buy goods with an installment loan, rather than acquiring a credit card.

Another way to acquire a better credit history is to take $1000 and open a
6 month CD account at a financial institution. Now, get an installment
loan for $1000, using that CD as collateral. Now, here's the trick. Take
the $1000 loan, and open another 6 month CD account at another institution.
Take another loan for the $1000 at the second institution. Do this one
more time.

Now what you have is 3 loans. Pay the minimum payment for 6 months. In
the last month, cash out your CDs and pay the loans off. You now have a
credit history, and did not go into long term debt to get it.

Strategy Two: Maintain Your Good Credit History

Good job - you have paid your bills on time, and do not have high credit
card debt. Here's some ideas to keep your FICO score as high as possible.


First, don't close your old accounts. One part of your credit score is
based on the amount of credit available verses amount of credit used.
Closing old accounts can lower this part of your score.

Second, paying off your credit cards every month is good money management,
but you may be able to improve in this area. Here's the scenario: you
have a $2000 credit card. Every month, you charge about $1800 to that
card. And, every month you pay it off. But here's what happens - your
credit card company reports your credit information monthly to FICO. If
they report it before you pay off your card, it looks like you carry a
balance on your credit card every month. You may find your FICO score
improves if you pay off your credit card at a different time of the month.


Strategy Three: Repair Your Poor Credit History

For whatever reason, if you have a poor credit history, there are things
you can do to improve your score. Some of them take time, and you will
probably be best served by talking to a credit counselor to be sure that
you not only repair your credit history, but also eliminate what caused
that poor credit history in the first place.

The most heavily weighted part of your score is based on your payment
history. The first thing to do to start repairing your credit history is
to pay your bills on time. The mortgage is the most important, followed by
installment loans, and finally credit cards.

The next largest portion of your FICO score is based on how you use credit.
The fastest way to improve this is to pay down your credit cards.

One final thing to look for is errors in your credit report. Get a copy of
your credit report from all three primary agencies, and look at all the
entries. You can find the agencies here: experian.com, equifax.com, and
transunion.com. If there are any errors, start the process to have them
removed. Call your creditors - sometimes they will remove negative
information.

Your FICO score is an important part of your financial life, and using
these strategies may help improve your FICO score. Before making any
drastic changes to your finances, consult with a financial advisor.

Wednesday, July 25, 2007

Raising your credit score

Raising your credit score

If you ever plan on buying a house or purchasing a new auto, raising your credit score is the most important step. Credit in America is the most importance factor in the buying process. Whether you successfully complete that major purchase or not is determined mainly by the strength of your credit score.

The amount of money that you will pay in interest will be determined purely on what your credit score reports to the lender. Plan and simple.

Lenders tend to have set parameters as to what constitutes the best rate that a borrower will receive for a loan. Usually, the best rates are for individuals who have credit scores of 720 and above. If your credit score is just six points below a cut off, you do not qualify for that particular rate. This can result in you paying thousands of dollars more over the course of a loan.

The difference in what you pay on a loan between the two scores on a mortgage of say, $350,000 is astounding. Based upon the example of the two scores above, the first borrower if he was able to get a rate of 6.25 percent, his base mortgage payments would be $2,155 per month. For the borrower who misses the tiered cutoff, may drop to a bracket that is one half to three quarter points higher in rate. This is a base monthly payment of $2,270-2,328 per month. That is nearly $175 per month between the two interest rates! The difference between these two rates over an eight year period is over $16,000! Do you now see the importance of having a high credit score?

This places great emphasis on raising your credit score as high as you can get it; along with shopping carefully for the best deal when purchasing a home. Making a determined effort to do everything that is required to eek out the lowest eighth of a point possible.

But first we must increase your credit score to the highest limit as soon as possible. This calls for a short period of making some adjustments in your financial life. The hallmark of any advice on raising your credit score begins with paying your debts on time, lowering the balances on the credit that you do have and not taking out any additional credit. I cannot emphasize this stronger. Having worked as an automobile salesman fresh out of college, I remember numerous customers coming in to buy a car and mentioning somewhere in the process that they were also buying a home. Do this and your credit score will drop like a rock from several factors. First, you will have your credit report reviewed by several lenders (auto dealerships like to submit your credit report to several lenders at once to get a quick approval). Second, you will be adding additional debt on to your credit. One factor in determining your credit score is how wisely you use credit. A new purchase appears on your credit report as zero amount paid off! Keep this in mind as you consider raising your credit.