Credit Fixes

j0b0123 asked:


Everyone needs credit – whether you think so or not.  These days you can’t do much without a credit card of some kind.  It is nearly impossible to rent a car, book airfare or a hotel room, without a credit card of some kind.  That is why it’s important to stay on top of your credit rating and do what you can to improve it.  The reason most people do not is the rules that govern that little number are never actually revealed – most people only learn the hard way when they do things to push that number down.  It would be nice if they actually taught you about how credit really works in school, but it just doesn’t work that way.

 

The first thing everyone should be doing, at least every few months, is order a copy of your credit report.  Order it directly from one of the 3 main credit bureaus – do not order it from a third party unless you know and trust that company.  There are tons of scams out there, so you have to be careful.  Once your data is leaked or stolen it’s a real pain in the you know what to undo any damage that might be done.  And on top of this, the worries can go on forever, because the data on the internet lives on and is resold to other criminals.  Once you have your copy, look at every item on it and make sure it is actually accurate.  Meaning all open accounts you recognize and know, the reported balances are correct (mistakes do happen), and there is not stuff on there that should not be.  Usually factual mistakes are easier to clean up (misspellings, wrong balances, closed accounts that are listed open etc).  If you discover any of these, you will need to write a letter outlining the issues and mail it in.  This is stuff you can easily do yourself, and repair your credit problems that are due to clerical issues.

 

A second thing you can do, is to put ALL of your recurring payments (mortgage, credit card, car payment, HOA fees, insurance …) on auto pay.  Most banks now have online banking free of charge.  Most credit cards allow you to setup auto pay for free.  This will 100% insure that you never have a late payment on these.  This is the easiest thing to have happened to your credit report, often just a mistake in forgetting to mail it by the due date (or sometimes the due date shifts from month to month, credit card companies LOVE to do this).  Additional tip – look on your credit card statement.  There should be a billing cycle from date A to date B.  This billing cycle is usually uniform, its the due date that fluctuates.  You want to try to have your auto pay submit the amount due BEFORE THE END OF THE BILLING CYCLE.  This date is also when interest is computed on outstanding balances for the month, and it’s the dollar amount that is reported to the credit bureaus.  This is a good way to get your credit score higher.

 

A third thing to do, is on all credit cards, always pay more than the minimum balance due.  If the payment is 68.00, send in 75.00 or 80.00.  Obviously, it’s in your best interest to just pay off the whole thing as soon as possible.  But – you will get a better score if you don’t pay off your cards in full every month.  Take 3 months to do it – the minor interest you pay is worth it to show you can carry a balance, pay on time AND then pay off the card.  Do this several times and you will start seeing nice increases in your limits.  This seems counter-intuitive, if you charge 1k then pay off 1k you would think that would be idea.  But in the crazy world of credit, your card always shows a 0 balance so it’s like you are not really using the card.  You are actually penalized for being a responsible person.  No worries just vary the cards you use, keep a balance for a few months then pay in full and you are home free.  You will boost your credit score nicely by doing this method.

 

A fourth thing you can do, once you have good credit (720++) is to apply for an unsecured line of credit.  This is not a credit card, its a line of credit that you use checks to access.  You don’t want to use this, you just want it open.  Almost always its free to keep open (no fees).  The reason you want this is almost always these are computed with SIMPLE INTEREST.  Credit cards are always compound interest.  If you don’t know the difference between simple and compound – its rather easy.  Compound interest charges interest on interest.  Meaning if you carry a balance of $10,000.00 and the annual rate is 12% per year, which means its split into 0.12/360 percent interest PER DAY.  So compound interest will accrue today, then this is added to the balance and tomorrow, the interest is computed on this new balance.  Over time it adds up to a huge difference.  Simple interest is just computed once a month on the balance outstanding.  I do not know if there are any simple interest credit cards, but I have not heard of any.  The reason you want the credit line open, is if you get a balance on a higher rate, compounding card, you can transfer the balance to the credit line and pay significantly less interest.  The credit card balance goes to 0, and you pay off the credit line per month.  You just have to be careful with this method not to fall into the trap of paying off the credit card, then while still paying off the balance transferred to the credit line, you start running up a balance on the card again.  This requires discipline, but is a decent method to save money.

 

A fifth thing you can do is to make sure no card goes above 50% of the outstanding credit limit.  This is something else they never tell you.  They give you a credit line of $10,000.00 but if you use more than $5000.00 of it, your credit score goes down.  It does not matter if you pay more than the minimum, pay on time, never miss a payment etc – your credit score is dinged.  The more cards you have in this situation, the worse off your score is.  The terrible thing that has been happening lately – someone has a $25000.00 limit on a card – they have charged $7000.00 they are paying off each month, well below the 50% threshold.  The card issuer decides to arbitrarily cut everyone’s limit to half of what it was before.  Now you owe 7k on a card that has a 12k limit AND your credit score gets dinged.  This happens regardless of anything you did.  It has nothing to do with you paying it or not, its an accounting measure.  The only remedy here is to pay off the card to get it lower than the threshold, or transfer some of the balance off the card.

 

Following these tips, you can easily build up your credit score and lower the interest rate you pay on everything from a home purchase to a new car.  It is not really that hard, but you have to stay on top of it like anything else.  No one will do this stuff for you – surely not the credit companies that make billions of dollars per year off of charging (and overcharging) people with high interest rates.  It is up to you to take charge.

John Cooper asked:


If you have bad credit there is hope. You do not have to wait seven years for bad credit items to naturally fall off your credit report.

Congress passed the Fair Credit Reporting Act which gives you the right to dispute any item on your credit report. This act also says that if the item is not verified by the lender then the credit bureau must remove it from your report.

For you to dispute an item you must create a dispute letter. You can do this yourself or you can hire a service to do it on your behalf.

Once the bureaus get your letter they will investigate the dispute. They will contact the creator of the item and get them to verify the account, the account balance, and the dates on the account.

If the creator is unable to verify the account then it must be deleted from your report. The easiest items to remove have been learned to be a charge off, repossession and a late payment after they have aged for two years.

This is a result of these lenders having received some form of payment. For example a charged off account has likely been sold to a collection agency. Thus the credit card issuer has no reason to save your account or records of it.

Recent delinquent accounts, tax liens, judgments, and bankruptcies are more difficult to remove. If you have one of these marks then hiring a service is a good idea, because they have advanced dispute tactics.

A service can use more advanced methods to remove an item if it is verified by the lender. A service can use; creditor direct intervention, escalated dispute information requests, and debt validation.

You can also help your credit score by opening a revolving unsecured credit line. This will help your score because you can create a positive payment history and improve your ratio of debt to available credit.

In sum you do not have to wait seven years to repair your credit. You can have a good credit score by removing derogatory items and building a positive payment history.

Tom Tessin asked:


Unsecured techniques of the debt consolidation are all among some most accessible debt consolidation choices out there as they don’t want you to secure debt against something.

As this is in distinction to the secured loans like mortgages that want you to place something as collateral or else security. But, unsecured loans have main qualification in form of good credit rating.

You need to have healthy credit rank prior to you can consider getting credit card with upright interest rate and if credit score is bad than you can’t get good credit card any longer, there is fix offered for your case. The solution also comes, as satirical as it may sound, as bad credit card.

Don’t take term in a wrong way. The bad credit is not very bad as such or harmful to the credit rank. In actual fact, they can be the opposite if used properly. The bad credit cards are called in that way as they are specially targeted for the people who are having bad credit accounts or bad credit scoring. As you can expect, they don’t need much besides the request form.

You can simply acquire bad credit card & lots of banks as well as financial institutions present them. Drawback with the bad credit cards is they have higher APR than usual credit cards have. It means you need to make punctual and habitual payments for credit cards. However besides saving from interest, there is one more important cause to make punctual payments, since you will observe later here.

As they have some requirements, the bad credit cards are easiest (perhaps an only) obtainable choice for you. Getting one can hold key to good credit score.

Get bad credit card for yourself and do light spending on that. Pay utility bills, purchase inexpensive outfit, do something to use up little of credit extensive to you. When the bills arrive, pay them as fast as possible; and do not allow the deadline goes down devoid of paying your dues. Repeat this procedure each month. What it will so is establishing you as debtor who is paying promptly. The credit card company can notice pattern and, soon, will some other creditors.

Using up little of credit line, you will ensure that costs are easily payable at end of each month & that you don’t get hurt by higher average APR. By using this method would not get better your credit rank overnight and this is for certain. You will not get any obvious effects for six months and it can also take a year for paying pattern to look after credit scores back to shape.

If loan or debt linked requirements are not instant or urgent, taking this particular course of act is well the effort for the benefits on the credit rank. This same credit score can be the key in getting the better terms on next credit card or else, indeed, about any other technique of the debt consolidation obtainable.

Stephen Chua asked:


The credit score is a simple three-digit number but it is probably one of the most important number in any American’s financial life. It ranges from 300 to 850 and the higher the number, the better your credit score.

A good credit score can make your financial life a lot easier. It allows you to get approval for almost any type of loans easily. These include mortgage loan, college education loan, credit card, etc. In addition, the interest rate you receive will be one of the lowest available, which means a huge saving to you.

Thus it is important to understand what factors can affect your credit score and what you can do about it:

1. Your record of paying bills

You ability to pay bills is important to lenders and one way to see if you got that ability is to look at your payment history. If you pay your bills on time, this is a good indication that you can handle your money well. Lenders will likely view you as low risk to them.

One or two late payments may not hurt your credit score much but a dozen of them will put a huge dent in your score.

2. The amount of money you owe

The total combined debt from credit card, mortgage, auto loan and other loans are being considered here. But revolving debts (from credit card and line of credit) deserved a closer look.

Revolving accounts have upper limit and the closer your debts are to the limit, the more your credit score will suffer. It is advisable to use no more than two-third of the available credit limit.

3. How long do you have credit?

In general, the longer you have credit, the better it is for you. There are exception cases where you can get good score even with a short history. But most of the time, longer history has a more favorable impact on your score.

4. When was the last time your apply for credit?

Opening a new account can bring your credit score down, especially if you apply for a lot of credit within a short span of time. Applying for ten credit cards in a month will be more detrimental to your score than if you do it over a period of a year.

Applying for credit also give lenders a chance to inquire about your credit report. When there are too many inquiries into your credit history over a short span of time, your credit score will take a dip fast.

5. What type of credit do you have?

To get a good score, having a good mix of credit is beneficial. Besides credit cards, you may have other loans like auto insurance, mortgage or personal loan, which can have a positive impact on your score as long as you have managed them well.

Although it is advisable to start building a good credit score as early as possible, it is never too late to get your credit fixed even if you have a poor score now. If you are having bad credit now, focus on making payment on time and control your expenditure while you learn the ropes of repairing your credit.

Alan Largo asked:


Do you wish you had better credit? There certainly are ways to improve your credit, and it does not have to take years or even several months to do it.

People who improve their credit enjoy many advantages over those whose credit has suffered. But many are those who tend to do nothing about it, either because they remain irresponsible or they do not know that their credit can be improved in the first place!

People who take the initiative to improve their credit can get larger loans, more credit lines, more in-store credit cards, and enjoy lower interest rates on their loans.

Also, it is very important to remember that these days, more prospective employers are checking into applicants credit ratings, and if it comes down to a choice between you and a similar person with better credit, they just may not hire you.

How might you improve your credit? And, how might you do so as quickly as possible? You want to have a score of at least 720.

This is the lending industry gold standard for essentially asking no questions and giving you nearly any loan you want at any time (just depending on your income). How might you attain this?

The way to dramatically improve your credit is very simply to get your debts paid off as much as possible without declaring bankruptcy.

Whatever debts you cannot pay off, you simply get caught up on and maintain in good standing so that you do not have 60-day lates or even 30-day lates on your credit report. In fact, there really is no other way to improve your credit score.

Now, the good news is: while it may be painful at first, this stuff really is not difficult. All it requires is discipline and a desire to have a high credit score. So, first things first: stop incurring debts!

And it all starts right with not applying for any more credit, not even checking out lenders for a while. Why? Your credit score is lowered every single time you even apply for a loan. Not by much, but by a couple of points.

So if you sit on the Internet one day and all you do is apply for loans that you never take, you have just cut your credit rating down to size for nothing. And stop using your credit cards!

Also at this point, if it needs financing you do not need it. Not even a new TV on your Target in-store card.

There may, however, be just one or two exceptions to this rule if you; a) own a home, b) own credit cards with high balances, c) are behind in your mortgage payments but are not yet in danger of foreclosure.

If you are behind in your home payments, you must take care of them immediately. You do this by contacting your lender and asking to get a refinance. It does not matter at this point whether or not you will need to take a higher interest rate.

Once your credit is up to par again you can refinance into a lower rate again. What matters right now is getting paid up so you can jack up your credit rating.

Now here is one other thing: if you are behind in credit cards or swamped by them, roll them into your refinance, if possible. Roll in other debts like car payments, too.

At the closing table all of these debts are vanished. And, you will still have your credit cards, vehicles and your house. And now (hopefully) you have just one monthly payment.

You can also accept a new credit card offer in the mail if it will allow you to transfer your balance from more than one other card and give you the low intro rate. But if you own a home, try the refinance first.

If all else fails, look into debt settlement programs that allow you to pay off your creditors for only a fraction of each dollar. Debt management companies may also be able to help you too, although they will just charge you one monthly payment (to them) to help you stay disciplined.

The bottom line to improving your credit score is to take control, and you will soon be able to do that with a little time and the right guidance.