7 Simple Tips To Improve Your Credit Score

photo credit: Lincolnian

Credit history and credit records are of utmost importance in many decisions related to your finances. Most credit lending companies rely heavily on your credit history for evaluating your loan application. Unfortunately, the process of creating your credit history is not flawless. Being complex there are many genuine issues, some loopholes that creditors may exploit and lastly your own ignorance that can damage your credit record. Hence, you need to take the initiative and start to repair your credit records.

There are many ways you can improve your records, given below are some highly effective ones. All may not suit your present state, but you can experiment with those that are applicable to you and see the results for yourself.

1. Balance Ratio Reduction
   The balance due on your credit card payments has a significant contribution in your credit score – as high as 150 points. If you maintain a good balance, you enjoy better ratings. Typically a unpaid balance of 60+% (of the limit) can have negative effect on your score and one below 20% has great impact. Hence, try to get as close to 20% as possible with your unpaid balance. You could either pay the debt to bring your balance down, or your could increase your limit. Observe that the balance is always seen relative to your limit. So increasing your limit helps bring down your balance ratio.
2. Secured Cards
   These are another great tool to improve your credit ratings. If your application for a credit card gets turned down, you must opt for a secured credit card. Secured credit card is one which is secured by some amount that you deposit with the credit card company. Given the security, it is almost always approved and you can build your credit with it. Again, if you stick to a <20% balance ratio on this card, you would do a great job with your credit ratings.
3. Authorized User Accounts
   You can join some other stable credit record of family member and own a credit card jointly. The solid credit record with that credit card can help you gain important credit scores too. Being a joint owner of the credit card, the authorized user accounts can help repair your credit scores.
4. Student Loans Rehabilitation
   If you have a default student loan that you haven’t been able to pay off, look to target that. There are provisions to bring it out of default and you can repay the loan to have it knocked out of your credit history. Get in touch with the Student Loan Ombudsman Office to look at the options that you could pursue and talk with the lender to rehabilitate the loan.
5. Verify Letters from Collectors
   Letters from collectors are great source of credit repair, so don’t just head to pay them or throw them away the next time you get one. Look to verify the claim and if you find something amiss, you can ask the collector to validate the debt. If not validated, they can neither collect anything from you nor can they report it to the credit bureau.
6. Check your Credit Report Yourself
   Annually order a copy of your credit report and look for mistakes and erroneous entries. Even if they are genuine, but you can’t place them, it is better to get them verified than live with them. This is a great credit repair exercise.
7. Check Reported Credit Card Limits
   As stated the balance to credit limit ratio is vital part of your score. Some credit card companies would look to report the limit close to your balance for their petty benefit. Check the reported limits and have them changed with your latest credit card statements as proof.

If you can relate to some or all of these tips, but are unsure how to go about it; hire a professional. Credit repair lawyers are best equipped to examine your credit records and help you repair them.

A Poor Credit Score Can Be Improved

photo credit: aturkus

You probably have had a horrendous financial past that just seems to keep haunting you in all your current credit loan applications. If that’s you, then you will be pleased to know that even a bankruptcy should legally not be reported on your credit report after ten years. If something as grave as bankruptcy can be erased from your account, any bad blot can be wiped clean. But this may not happen automatically. Sometimes because the creditors don’t want that out of your records allowing them to overcharge you and other times due to genuine glitches in the complex solutions that manage the credit history.  Hence you have to carry out due diligence and work on cleaning up your report.

Beware of Credit Repair Advertisements

There are many people with poor credit records who are looking for loans. The advertisements on credit cleanups try to exploit the mental state of mind of such people and lull them into simple ineffective means of cleaning the credit score. Typically, with all the bogus claims, you may end up with software that allows you to file claims. Sometimes you may get useless advice from a self proclaimed professional who takes his fees and leaves you in dark. Or you may also get a bunch of letters and templates that you can use to file your credit repair request.

Credit Bureaus – The Database

The credit bureaus maintain the database for our credit history. They are the ones that record your credit transactions and generate the ratings accordingly. These companies typically sell your credit scores to the requesting companies and make money from it. However, maintaining information from various lenders based on your personal identification details can be a tough task leading to some glitches in the report.  The credit bureaus are companies with the best interests of the market in mind.
You must basically understand how the credit bureaus work and that can help you clean up your credit history of the negative entries.

Here are some simple steps that you can follow:

• Request for a copy of your credit report from the bureau. Avoid using any legal or technical jargon, lest the credit bureau gets an inkling that you want to drag them to court. This could delay your progress. Ask them in simple language and you should have the report.
• Typically you are entitled for one free copy of your report annually. Some credit rating companies may charge you for the same. Nonetheless you should have a credit report for a minimum amount or even free.
• With the credit report you start to find the flaws in your report. Common problems could be lingering debt records that have already been repaid, incorrect debt records due to identity thefts or incorrect entries, debts that have gone past the stipulated seven year period, etc.
• Make a list of these, get proofs to support your claim and send them to the credit bureaus for correction. In most cases the genuine errors will be rectified.
• With a correct credit record, you must work to improve the record and get a higher score. Start small, by making small purchases with credit card and the pay the bills on time. Such small steps can help you build credit ratings which are invaluable in getting your future loans at good rates.

Get your credit history cleaned and then work on improving your rating. Soon you should be one of those that credit lending companies would flock to give loans at affordable rates.

Cleaning your Credit Record After Foreclosure

photo credit: respres

The general belief is that any foreclosure of your bad debt would remain on your credit record for a minimum of seven years. This is not true, in fact unless it leads to collections, the derogatory information on your debt would remain there for a maximum of seven years. You can actually get it knocked off the record earlier than that too.

First and foremost, you must understand that putting a missed payment on the credit history is completely left to the lender. Hence, if you have had a good track record or share good relations with the lender, your missed payment may not even feature in your record. Since the lenders have the right to foreclose your bad debt, they also have the right to get rid of it.

While looking to clean up your credit record, it is always good to try and strike a deal with the lender. Try and negotiate a deal with the creditor where you pay up the remaining amount under some mutual understanding and in turn the lender knocks off the record from your credit history. This would get you in the good books of the lender as you repay the loan and it also boosts your credit ratings. Even if you avoid this lender in future you can get other loans easily and on better terms, hence this is always worth a try.

You can also try to dispute the foreclosure with the credit bureau. Some of the common causes of disputes are:

• A fully repaid debt still shows in your
• Debt was not raised by you in the first place (identity theft)
• Information in the record is incorrect, etc.

These are valid reasons if you have the documentation to support your claim. With the proofs you must send the dispute letter. Typically, your first request would be rejected as invalid or due to insufficient documentation. Don’t get disappointed, these are typically tricks played by the credit bureau to get you off their back. Investigating these records is time and money consuming and the companies don’t want to be doing that. But you need to be persistent and keep following up. Most times you should be successful and they would carry out an investigation. If your claim is right your credit record would be rectified. Sometimes, if you are lucky, with the large number of defaulters due to the housing loan crisis, even a faulty claim may get accepted and you benefit from the exercise. But never bank on that to save you always.

If despite your best efforts it does not work, you need to look at credit repair alternatives. If you spend sufficient time on understanding the various concepts of credit ratings, you can repair your record yourself. A simpler alternative is to approach an expert – a credit repair lawyer. They are trained professionals that know the rules and laws of credit reporting very well. If there any chance of cleaning your report, they should be able to do it. Being well versed with the changing rules and credit laws, these lawyers can help you in many ways. If your case is genuine they can even go to the court to help you get the foreclosure off your credit record.

So you see, your bad debt foreclosures need not be on your credit records forever. With initiative from your side you can clean your records.

Collectors Bothering You – Repair Your Credit

photo credit: TheTruthAbout…

Many of us know the importance of a good credit. That’s the reason why we would look at ensuring that every outstanding debt is paid off immediately. There are many collectors that try to exploit this aspect of the individual and make money out of it. While ignorance is bliss in most other aspects, with regards to collectors, your ignorance is their bliss. There are some facts about the credit records that you must know. If you don’t understand them, you would be paying the collectors your hard earned money for the rest of your life… unnecessarily.

There are some important concepts in credit reporting that you need to become aware of, with these you can look to repair your credit history and avoid the collectors hot in pursuit.

Statutes of Limitation (SOL)

This is the time limit for which your debt can be dragged to the court to elicit a repayment. In other words, it is the time duration during which the collector can force you legally to pay the debt. Beyond the SOL , it cannot be done so. SOL durations vary depending on many conditions like the kind of loan that you applied for, the state in which you applied for, and others. Although after the SOL it is not legally binding on you to repay the debt, it does not mean that you are safe. Not paying up the debt would continue to reflect in your credit report for sometime beyond the SOL.

Reporting Period Limit

This is the time duration for which your debt would be reflected in your credit record. Typically this is longer than SOL. In other words, while you could escape scout- free by not paying the debt in part or in full, the record would not leave you till the Reporting Period Limit expires.

You must understand this difference in the two terms and the corresponding legal and credit information. Once you know that the SOL on your debt has expired, you need not heed to the whims of the collector. The Fair Debt Collection Practices Act allows you to send the bothering collector a Cease Communication Letter, which officially requests them to stop bothering you. As tempting as it might be to send that letter before your SOL expires, it can attract legal proceedings to do that.

Credit Repair

Besides, you must also track whether the collector claiming the debt still owns the debt or has he sold it to someone else. Typically, the collectors must strike out the debts from your record, which they don’t do. This can affect your credit record. Hence a quick repair in this regard can save you loads of financial and mental hassles.

Credit Reporting Period

Any derogatory information on your debt is typically reported in your history for just seven years. In case of a missed payment which leads to a collection, the credit reporting period is actually seven years and 180 days from the day of the first default.

Remember these aspects while analyzing your credit history. Keep a regular check on all the items reported in your credit history and get rid of those annoying calls from the collectors.

What Your Credit Report Says About You

photo credit: me and the sysop

Today you can achieve your dreams much earlier with the help of lines of credit, credit cards and loans. You like an item that is on sale, but you just don’t have the cash to buy it. Swipe your credit card and it’s yours. You want to own your own house get a loan and its your. The monthly installments that you pay could be comparable to monthly rent in a similar house. Eventually once you repay the loan the house is your. Be it a car, or any other expensive item, credit lines allow you make those purchases and achieve your dreams. But all this revolves around a primary factor – your credit score and credit history. While it is always great to know that there is someone who can fund your spending, it is important that you repay them on time to get help from them in future. The credit rating or credit score is a very good indication of who you are and what has been you repayment record in the past.

What does a credit report card contain?

1. Personally Identifiable Information: This is basically information about you, your personal details that ascertain that this report is actually yours. You could also have you SSN, past and present addresses, driver’s license , date of birth, telephone numbers, employers’ names, spouse details etc.
2. Credit History: This section contains all your past and present credit transactions. You would have the name of the creditor, the reference account number, details of the account, the loan amount, repayment information, etc. It will also have credit card details like credit card number, credit limit, minimum payable balance, total unpaid balance, and other information.
3. Records of Inquiries: This is the list of all the institutions that had requested your credit report for verification.

Based on your transaction history, you are allocated a credit score. This is reflective of your proven ability to repay loans on time. Most creditors would look at this score before deciding on lending you the money. For them, your credit score is a good measure of the risk that they take in giving you the loan.

Thus it is clear that having a good credit history and a high credit score are two important aspects for you. You can also request your credit report for free and look at what is your status in the loan market. Typically, these are very complex operations and hence may have some errors. Other times, you could also have issues with stolen credit cards and identity thefts leading to some discrepancies in your records. It is always good to get these clarified so that they don’t affect your credit ratings adversely.

Next time you decide to purchase a car, apply for a home loan or even an education loan, you probably figured out a way to make your future payments, but forgot to clean up your past credit record. You would either be denied a loan or granted one on steep terms and conditions. You really don’t want to be caught off guard with that. Hence, be vigilant and protect your credit history with a lot of care.

Good Debt Management Can Get You Out of Debt

Many people have been shocked by the economic slowdown. Some may have been affected by the job loss and are now working at much lower salaries. In effect, your planned lifestyle goes for a toss. You had expected that your present job should get you through the loans, debts and other credits. Unfortunately, it didn’t work out that way and the fines and higher interests on missed payments is wrecking havoc in your life. You are now being cornered by regular phone calls, mails and messages from collectors and wondering, “What exactly went wrong?”. If you find yourself in such a situation or something close, cheer up. This is not the end. There is light at the end of the tunnel, but unless you walk through the tunnel you cannot get to it. So get up as start walking.

photo credit: Andres Rueda

The best way to walk through your finances during such credit crisis is to follow good debt management practices.

Budgeting
Budgeting is the powerful tool that you can help you take control of your finances very quickly. Now taking control doesn’t mean getting out of debt, it just means that with budgeting you ca start to work towards coming out of debt. As a part o budgeting, get all your income and expenses together and record them in two separate columns. Try to be as extensive in your records as possible. This would give you a good idea of how your money comes in and goes out. Now start working on cutting costs and increasing income.
Cutting costs need not necessarily mean depriving you of certain requirements; that would mean change in lifestyle and it is not something that you can do overnight. So start by getting rid of the additional frills like special services on your phone, television,etc. You could also look to cut down on movie trips, rentals, etc. and the weekly parties with friends in pubs. It doesn’t amount to saying that you should not have a life, but you can surely scale down on such expenses. And in future budget them in advance.

Housing
If you are unmarried and are ready to share the accommodation with someone else, do so. You could either someone to stay with you or you could go and move in with someone. Either way, you’ll a significant dip in your monthly expenses which is great. If you already have a family, look to move to a cheaper house. This may be a bit further than your present house, in a different locality, etc. but it is still savings. But before making this move look at other aspects too, like the increase and decrease in your associated expenses like travel charges, groceries, etc. Typically a house shift can get you more than rent savings.

Sell Unnecessary Stuffs
If you were to look around your house, you should see plenty of items collected over the years that you really don’t use. It is great time to sell them off and make some extra buck. Initially, you may not want to sell many of those things. Look at extra TV sets, old players, DVDs, etc. They may be fit to sell as you can do without them. With the success of your over all debt management plans and your sales, chances are that more and more items start to qualify for the sale. You not only clean up your house, but if you decide to move out, you have lesser things to carry with you.

Remember that debt management is just a phase when your sole aim should be to get out of debt and repair your credit score. Once you do that, you are free to regain your original lifestyle. In fact the second time around, with your debt management experience, you would be better placed than the first time.

Taking Care of Your Credit Repair

Lines of credit have become an important part of the modern life. With the growing need for credit, comes greater chance of defaults. To protect against this the credit rating bureaus come out with a credit score for every person ever involved in a credit transaction. These scores form the basis for the verification of application by the credit lenders. To build good credit ratings, you need to have a good history of past debt payments.

photo credit: TheTruthAbout…

The mortgage and loan companies rely on your credit scores to evaluate their risks of giving you their money. If you have a good track record, you should get favorable terms and conditions, if not you may be denied the loan or sanctioned at steep interest rates. In conclusion, it is mandatory that you maintain a good credit score if you want access to affordable loans and mortgages.

If you have been negligent in the past, you probably have a poor credit rating. If your loan and credit card applications are getting rejected on a regular basis, this might be the reason; so you have to start working on credit repairs. You can either take professional help or do it yourself. Professional help is great as you have experts working for you, but it also comes at a cost. With the current credit crunch, you may not be inclined to increase your expenses more. So working on it yourself is a good option. But where to start? How to go about cleaning the credit report?

Repairing your credit scores yourself can be a very tedious effort requiring lot of hardwork, dedication and focus from you; but it is also one of the most rewarding exercises. You can make a plan to get your credit ratings straight and work on it. As you execute your plans, you get the satisfaction of making something work and at the end you will have control over your finances and a great credit score allowing you to get those favorable loans for your dreams.

Here are some steps that you can follow:

1. Know Your Credit Rating
   Order a copy of your credit score from the credit bureau and analyze it. Find out what is your score and look for discrepancies in your report. Due to various reasons, your credit report may have some erroneous entries that you can clean up to boost your ratings.
2. Phase Your Applications
   All your loan applications could potentially land in your report and a string of rejects in a short space of time would damage your ratings. So apply for these loans in phases. Also focus on your monthly utilities like mobile bills, utilities, television, even loan repayment installations, etc. If you make regular and prompt payments, they will add to your ratings.
3. Don’t go Overboard
   Never take more credits and loans than you can handle. Handling doesn’t mean just monetarily, but personally too. If you have to juggle with payment of multiple credit card bills, utilities, etc you are bound to miss some and that impacts your ratings. If you have unused credit cards, or any other service that you don’t use regularly, get rid of them.
4. Don’t Get Bogged Down
   You need not be extravagant, but you need to be vigilant while repairing your credit. If you are employed, it boosts your chances of getting your loans and credit cards approved, so apply while you are still employed, especially if you expect a layoff in near future. Also, if you miss payments call up your lender and discuss ways of sorting it out rather than defaulting.

Lastly, never try to hide any information however bad it may be while applying for your loan. Chances are that the lender may look at that information and give you an alternate deal. If you hide something and get a good loan, you will struggle to pay it and that would damage your ratings. Besides, by hiding information you are liable for legal charges too.

Working on Repairing Your Credit

Are you looking for a new credit card, or a new loan and are finding it tough to get one? Well, you probably have your credit score to blame for. Are you someone who looks to pay the minimum payment on your credit card bills, misses the deadlines for paying your utility bills and/ or staring at huge debt. All these are impacting your credit score which why you are getting a raw deal in every line of credit. This is a cause of concern,but not a terminal problem. You can start working on your problems and turn your credit score around.

photo credit: karindalziel

If you retrospect, you may realize that the present day financial problem and credit crunch that you are facing would have started with insignificant mistakes like missing the bill pay deadline by a few days, paying just the minimum monthly requirement, etc. As they say “Little Drops of Water Make the Mighty Ocean”. You minor mistakes have now come back to haunt you. So it is intuitive that repair the credit too can follow the same trend. Correct the same insignificant mistakes and with time you could see the picture turnaround.

Budgeting

Learn to budget your monthly finances. Given that we tend to earn from limited sources and spend on unlimited ones, we know about our income and are pretty ignorant about the expenditure. This is the primary problem for the cash crunch that many face when it comes to paying bills and this affects the credit score. Take control of your finances, follow good budgeting plans and be disciplined in spending. You can save lots of money in this fashion.

Organize your Financial documentation

Working on your credit score requires meticulous planning and diligent execution. These can be best done if you have a record of all your transactions. So make it a point to collect all your bills, payment receipts, loan documentations, investment records, insurance papers, bank statements, etc and have them in a single place. Get a filing cabinet if you have to. Another alternative is to scan all these documents and maintain their softcopy on your hard drive. To be on the safer side, you could also have another copy on a jump drive that is more portable. But make sure that you don’t lose the jump drive as it contains your sensitive financial information.

Start Small

Start with simple goals like paying 40-50% of your credit card balance the in the next payment. Budgeting your banking solutions, paying your utility bills on time, etc. If you have trouble remembering the deadlines, use the auto debit/ credit services from your financial institution to ensure that your bills are paid on time. You may not see any difference for sometime with these steps, but neither did you see the present financial mess when you first paid the minimum balance on your credit card bill or missed your bill payment. These small things will add  up slowly and get you out of the credit crunch.

Review Your Credit Performance

You can order a copy of your credit report annually and analyze your performance. If you find some old lingering entries, some  unclear entries or some incorrect ones, take the initiative and write to the credit bureau requesting them to make the changes accordingly. You obviously would have to supply them with proofs for your claims. If validated the incorrect records can be removed from your history. This would help boost your score.

With these simple steps you can repair your credit and claim loans and credit cards at the best terms and conditions.

Credit Card Debt Consolidation

A credit card consolidation may be the most useful tool since the hammer! Owing money on credit cards is definitely a major stress in people’s lives, especially when those cards carry large balances and the interest being charged is too high. In general it is an an unsecured loan i.e. doesn’t require you to pledge any security.

photo credit: SqueakyMarmot

However, if you have a really bad credit history and you want go for credit card debt settlement using credit card debt consolidation loan, the credit card debt consolidation loan will take the form of a secured credit card debt consolidation loan. This type of credit card debt consolidation loan requires you to pledge a security e.g. the home owned by you or something else that has a value which is comparable to your credit card debt consolidation loan amount.

Debt can happen to anyone. Don’t let outstanding loans or credit card debt control your life. Debt consolidation normally works best when converting a number of unsecured loans in to just one secured loan, which generally means possessing some collateral (such as property) that can be put up.

The general rule in debt consolidation is that the more you are concerned about your credit, the longer it will take and the more it will cost to consolidate. However, you can get out of debt much more quickly through consolidation than through other means.

People fallen with huge debts will face horrific experience. Every individual their own dreams and desires to live a life filled with colorful outline. To gratify their needs and expectations, people hire for loans at most times in their life. But when they fail to settle and pay back the loans they turn into massive debts and they greatly become a huge burden.

Being down in credit card debt can be a nasty experience with debtors always calling up to inquire about pending payments and making cold offers for balance transfer. It can become humiliating and a lot of hassles.

Things To Be Aware Of

While a debt consolidation loan can make your monthly payments more manageable, it can also be the most costly type of loan. This is because you end up paying higher interest… or paying over a longer term. Either will increase the total amount it costs you to borrow. So you need to shop wisely for a debt consolidation loan. You’re also still vulnerable to another danger. Many people, after they’ve consolidated their debts to a comfortable level just go on borrowing. Before they know it, they’re back where they started. Unless you’re ready to put a curb on your spending, a debt consolidation loan will not solve your financial troubles.

One Quick Way To Get Out Of Debt

Quickest ways to get rid of debt is to acquire a consolidation loan. This loan usually will be at a lower interest rate than your debt, therefore saving you hundreds of dollars in interest. Debt consolidation loans can pay off high interest credit card debt, student loans, and more. Try calling the credit card company and ask if they will offer a discounted interest rate for a limited period of time. This type of credit card debt consolidation company will help you to budget your debt as well as negotiate settlement terms or lower interest rates.

Debt Relief in 3 Steps

The word Debt can be associated with the words stress and bondage. That seems to be the case these days as many people are straddled with debt and don’t know what to do. There are 3 things you want to consider before making any decisions about the various options available.

photo credit: Daniele Butera

1. Emotions
   On top of the debt stress you have emotions which can add physical and mental stress to your situation. Be aware that there are solutions and I know it’s easier said than done, try to relax.
2. Information
   The best way to reduce anxiety is to get knowledge. Debt wants to keep you ignorant and the best way to combat debt is to know how to cure it. In this situation the unknown causes stress, knowing your alternatives reverses that.
3. Control
   Having control especially when it comes to your finances generates relief. Even if your finances are temporally out of control knowing what to do gives you a feeling of control and that’s a positive attribute.

As you can see debt isn’t always about paying debt it back it’s about control. We don’t advocate not paying back your debt if you can, but debt can cause a feeling of panic and a feeling that your life is spinning out of control. Just remember debt is a part of your life it is not your “Whole” life.

Don’t ignore the fact that you may have to give to receive. You might have to give up some material things so you can gain control of your finances. It’s a price to pay and a lesson learned.