So your credit is already a mess? You're not alone: Nearly one third of Americans have a sub-prime credit score and are in need of credit repair help. Let's face it. Your credit report is important. It determines whether you can get a credit card, a home loan, a car lease, a mobile phone plan. Some employers even use your credit report as a criteria in determining whether to hire you or not.
Don't worry, there is a lot you can do yourself to fix things up.
1) Cut up your credit cards so that you won't succumb to the temptation to use them. Damage control. Yes, it may sound harsh to you, but for now, don't buy anything you can't pay for with cash or a debit card.
2) Assess. Sit down and make a spreadsheet of what you owe and to whom. Include past due amounts and time frames.
3) Create a payment plan. Figure out what you can afford to pay each month towards all of your bills. Your rent or mortgage payment should account for no more than one third of your monthly salary. Break down from this figure how much you can reasonably send each month to each creditor.
Breathe! Next comes the fun part!
4) Chat time. Start calling your creditors. This is the fun part, because creditors are used to having to make the calls. If instead you call them, you are in a very good position in this game. (If you do view this as a game, it can actually be enjoyable. Give yourself goals, make it a little competition, and remember that collections agents are opponents to be sweet-talked or outwitted)
You really have a lot of power here, because you are taking the initiative and they will NOT want to lose this opportunity. Because of this, you can request reduced fees and better terms. Explain that you want to pay them but need to renegotiate the terms of your account in order to do so. If the account is already closed or very past due, (in which case they would have NEVER expected you to make this call), you may even be able to reduce the actual amount due. A friend of mine succeeded in getting one bill down to 17 cents on the dollar!
Be conversational; these people are used to being told off, lied to, or just plain avoided all day long. Treating them with courtesy can put them in a better mood, and thus put you in a better position to get what you want. Be polite but firm, and get the agreement from them in writing, including a promise to clear the bad mark on your credit report. File the written agreement away with your credit report and enter everything on your spreadsheet so you can follow up. (You DO have a folder for all of this, don't you?). Put a check mark next to that creditor and move on to the next. And, once you've reached agreement with your creditors, keep your word and honor the agreement.
5) Automate. Set up online bill pay with your bank. Virtually every bank in the world now has online banking, and you can set up electronic bill payment for free. Set up monthly payments for all of your creditors, and while you're at it, set up a monthly transfer of 10 percent of your income to a savings account that you don't touch.
6) Wait. Maintain. Once you've set the whole process in motion, you simply have to wait. Meanwhile, you can get your finances in order by keeping track of what you spend each month. (This will be another spreadsheet). Make columns for entertainment, eating out, clothing, gas, groceries, etc. This will help you see where your money is going. Use cash or a debit card to make all purchases, and don't forget to record even the small ones, such as Starbucks runs, as the little things add up and are sometimes the worst offenders of all.
7) Reassess. Gauge your progress. After a couple of months have passed, order a copy of your credit report. Check to see that paid off items show as such, and that everything shows as current. If you see anything erroneous on your report, you have every right to dispute it by contacting the credit bureau directly, either by mail, phone or online.
8) Rebuild. After six months or so, your credit rating should be improving. At this point, you can either get a secured credit card or an American Express (the green one which requires you to pay it off each month) in case you need to make a purchase online. This will train you to only spend what you can afford. Continue to pay yourself ten percent of every paycheck, as improving your credit alone will not help you if you have no financial cushion. Remember, your credit is only as good as your ability to pay, and fixing up your credit report should be just part of an overall plan to improve your financial situation (Next step will be investing!). And, don't forget to applaud yourself for taking charge of your finances!
For a free six-part report on credit repair, rebuilding and debt settlement, visit repair-my-credit.org.
Wednesday, February 3, 2010
Sunday, January 17, 2010
Bad Credit Repair: What They Don't Want You to Know
Despite what they will tell you, you absolutely can do it yourself, and you'll most likely do a better job of improving your credit rating than they do. It really is a good idea to take charge when it comes to repairing your credit, since frequently credit repair companies do more harm than good, and cost you not just your hard earned money, but also precious time.
The truth is, your credit report matters. It dictates whether you get a credit card, a home loan, a new car, a mobile phone plan, sometimes even a job. Cards are heavily promoted in malls, at baseball matches, and on university campuses, and just about anything imaginable the home can be had on installments: bedroom sets, plasma TVs, computers, you name it. Which makes it far too easy to get in over your head with payments you can't afford.
If your credit report is a mess... You're far from alone!
Not to worry, there are many things you can do to fix things up.
By law, you have the right to a request verification of any incorrect items on your credit report. All you need do is file a dispute directly with the credit bureau that is providing the incorrect information. They in turn are required to contact the creditor for verification. If your creditor does not respond within the permitted time (30 days), the law states that the item must be removed from your report.
The three major credit bureaus are:
Equifax http://equifax.com
Experian http://experian.com
TransUnion http://transunion.com
For free information on how to repair your credit yourself, visit repair-my-credit.org.
What if pretty much all of those bad are correct? Then you must get very meticulous and find inaccuracies. Items such as a paid off (collection) account showing delinquent, or an account that is 30 days late reported as 90 days late. Still, if the credit bureau cannot verify the accuracy the item within the 30 days, it must be removed.
Debt relief or consolidation is another important aspect of a credit repair program. Despite the glossy sales pitch, bankruptcy is almost never a good choice. Delinquent accounts on your credit report can be handled (after verification by the credit bureau) by contacting creditor directly and coming to agreement on a (greatly reduced) payoff amount. Just be sure to get a promise from them, in writing, to clear the item with the credit bureaus. The older the account is, the more willing they will be to negotiate with you, since the law states that negative credit items can only remain on your for report seven years. (Except in the case of bankruptcy, which again, the worst choice, remains on your report for a solid ten years).
Meanwhile, you can begin to rebuild your credit to get some positive items, which will help to improve your rating and assist your credit repair work. Seemingly small things do count: If you have any current accounts with balances, keep them up to date. It is essential to foster good relationships that will help your credit report.
Pay more than the minimum payment. Even if all you can afford is an extra five or ten dollars, this will reflect positively, as well as lower the balance much more quickly. If you use credit cards, pay off your balance each month. If you can't afford to do so, cut up the credit cards, and use a check card instead. Rebuilding your credit and accrue good items to your report is every bit as necessary as removing the bad items in your credit repair program. To find out more visit: credit information and repair solutions at repair-my-credit.org/freereport.
The truth is, your credit report matters. It dictates whether you get a credit card, a home loan, a new car, a mobile phone plan, sometimes even a job. Cards are heavily promoted in malls, at baseball matches, and on university campuses, and just about anything imaginable the home can be had on installments: bedroom sets, plasma TVs, computers, you name it. Which makes it far too easy to get in over your head with payments you can't afford.
If your credit report is a mess... You're far from alone!
Not to worry, there are many things you can do to fix things up.
By law, you have the right to a request verification of any incorrect items on your credit report. All you need do is file a dispute directly with the credit bureau that is providing the incorrect information. They in turn are required to contact the creditor for verification. If your creditor does not respond within the permitted time (30 days), the law states that the item must be removed from your report.
The three major credit bureaus are:
Equifax http://equifax.com
Experian http://experian.com
TransUnion http://transunion.com
For free information on how to repair your credit yourself, visit repair-my-credit.org.
What if pretty much all of those bad are correct? Then you must get very meticulous and find inaccuracies. Items such as a paid off (collection) account showing delinquent, or an account that is 30 days late reported as 90 days late. Still, if the credit bureau cannot verify the accuracy the item within the 30 days, it must be removed.
Debt relief or consolidation is another important aspect of a credit repair program. Despite the glossy sales pitch, bankruptcy is almost never a good choice. Delinquent accounts on your credit report can be handled (after verification by the credit bureau) by contacting creditor directly and coming to agreement on a (greatly reduced) payoff amount. Just be sure to get a promise from them, in writing, to clear the item with the credit bureaus. The older the account is, the more willing they will be to negotiate with you, since the law states that negative credit items can only remain on your for report seven years. (Except in the case of bankruptcy, which again, the worst choice, remains on your report for a solid ten years).
Meanwhile, you can begin to rebuild your credit to get some positive items, which will help to improve your rating and assist your credit repair work. Seemingly small things do count: If you have any current accounts with balances, keep them up to date. It is essential to foster good relationships that will help your credit report.
Pay more than the minimum payment. Even if all you can afford is an extra five or ten dollars, this will reflect positively, as well as lower the balance much more quickly. If you use credit cards, pay off your balance each month. If you can't afford to do so, cut up the credit cards, and use a check card instead. Rebuilding your credit and accrue good items to your report is every bit as necessary as removing the bad items in your credit repair program. To find out more visit: credit information and repair solutions at repair-my-credit.org/freereport.
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