Repairing Your Credit |

We’ve all seen them. “Send me 99.95 and I’ll fix your credit and you can get a one million dollar credit card tomorrow.” OK so I am being a little dramatic. This article is to give you some insight into repairing your credit. It is not meant in any way to be legal advice. We will discuss several things in this article such as how credit works, paying or settling debts, credit repair companies, and establishing new credit. Before we begin I want to share a few things. I was a collector for almost 10 years until bad health forced me to leave the profession. I have also had my credit messed up by a bankruptcy after my son was hit by a car and had over ½ million dollars in medical bills. Yet within 18 months I had purchased a new car, a home, had credit cards and some other accounts. So you see credit can be damaged but it can be repaired.Before you can fix your credit report you have to know what is on it.http://www.annualcreditreport.comhttp://www.equifax.comhttp://www.transunion.comhttp://www.experian.comSome of the bureaus have an online score calculator that will allow you to see how your credit score will rise if you pay a debt off, or begin making payments. Check it out and become familiar with it. Although there are 3 credit bureaus, and in a perfect world they would all say the same thing, they may each have slightly different info. Review your reports to make sure there are noinaccurate entries.When I was collecting I often had people say to me “My credit is ruined so why should I pay ?” After I explained to them how the credit bureau worked, and showed them that they could fix the damage they where happy to pay. Many people get behind on their bills, figure their credit is ruined and just give up and never pay the bills. So it reports bad to the credit bureaus and they never make any payments on them so it stays bad. Many think that if they get behind that they automatically can’t get credit for 7 years. While it is true that it may report for 7 years so will any payments you make after the time the account went past due. It is similar to a stack of boxes. If the last box says bad then it lowers your score and all your future creditor can see is the bad box. But if you make payments after that it pushes the bad box down the line. The creditor can still see it but it has less importance. So even if you got behind or haven’t paid it for a long time either beginning to pay on it or paying it off or settling it will help your credit score.I have often seen people who thought their credit was ruined and all they had was a few hundred dollars in unpaid medical bills or a small credit card. I advise people that they should just pay off small accounts either in full or by payments. In some case making payments on the debt may be better for your credit than just paying it off in full. The reason is that the credit bureau is really just a record of how consistently you make your payments. If the account isn’t charged off and in collections then you are probably best to just make payments. If they don’t update the bureau until it is paid for then by all means go ahead and pay it off.If you have larger debts you may be able to settle the debt. If the debt is charged off and with a collection agency your chances are better. Why ? Because they get the accounts and they get a percentage of what if recovered. They like it when they don’t have to spend a lot of time and money to recover the money. I have seen them accept anywhere from 80% down to 30%. It depends on the agency and the age of the account. BEWARE BEWARE. If you settle with an agency you still may hear about the debt in the future. Let me explain why. Then original creditor assigns it to the agency. You settle with them. The account is sent back to the creditor. The creditor isn’t aware it was settled, just that the balance is lower. In some cases it gets reassigned to a secondary agency who is also unaware that it was settled. So they attempt to collect on the lower balance. If you settle a debt make sure you get documentation that it was a settlement. Make sure your credit bureau is updated to reflect that. Make sure you KEEP that documentation. If you are ever contacted by another agency in the future you will need that to prove that you settled that debt.That bring us to credit repair companies. There are some that are legit and honest and some that are just a ripoff. Be careful. They will promise you that they will fix your credit, get you new credit, the sun will shine, the grass will grow and the birds will sing and the flowers bloom yada yada yada. They use the dispute process with the credit bureaus to do this and it isn’t always effective. You can also do that for yourself. They may know a little more about it tho. If you use one I would find out how they plan to fix your credit, can they negotiate settlements for you, can they refer you to getting new credit established and most important, will they refund your money(less any actual expenses) if they fail to improve your score.It is possible to establish new credit without going through the steps I mentioned. You can get secured credit cards. These cards do report to the credit bureau but they are secured. Typically they open an account for $250. The fees they charge usually come up to the same amount. So they aren’t really assuming any credit risk. But they will report to the bureau. Make your payments on time or ahead of time. Also pay more than the minimum. There are other variations of the secured card. The best one is one secured by a bank account since you aren’t just giving money away to get a credit card.

Learn What Collection Agencies Cannot Do When Calling Your Home |

Debt collectors are required to act within the guidelines of the Fair Debt Collection Practices Act (FDCPA) which states that debt collection agencies cannot use abusive tactics and harassment in order to persuade you to make payments on money owed.This is actually a good law because you are probably stressed to the limit with your financial obligations and your credit problems, so having strangers call your house and your work-place trying to collect on a debt can be intensely aggravating. Most times your debts are not 100% your fault. Life tends throws us circumstances that are beyond our control. It happens to almost everybody at one point or another.When it comes to credit repair and debt collectors, knowledge is indeed power. Please take notes on the following rules that show exactly what debt collectors cannot do:No Threats Are AllowedObscene language and abusive verbal threats are prohibited by law. Debt collectors and collection agencies are not allowed to use any threatening language, whether by phone or in writing. They are required to communicate in a business-like manner, professional and courteous.If a collection agency is calling your house and threatening you with any type of illegal action, such as taking you to court without going through the legal procedures, then the organization is breaking the rules. They cannot threaten you in any such manner.They Cannot Call Your House More Than NecessaryRegular phone calls are of course allowed by collection agencies but if they become excessive and repetitive to the point that you are receiving several calls each day from the same collector, they are breaking the rules and can be reported.No Deceiving TacticsIn many instances, debt collectors have used deception by way of calling individuals and pretending to be someone else on the telephone in order to get more information. Such deceptive practices include posing as an old school friend, someone from work, or pretending to be taking surveys, etc.They Cannot Lie To YouBelieve it or not, some collection agencies will actually make threats that the person who owes money is breaking the law or is facing jail time. Sometimes they will use threats of being arrested if a payment is not made. This is flat out harassment and is not allowed by law.Remember, the key to handling harassing debt collectors and understanding your financial position is all about knowledge. Knowledge is truly power when it comes to taking back control of your money and credit.

10 Common Credit Repair Mistakes and How to Avoid Them |

1. Closing old accounts
The age of your accounts, types of accounts, and amount of debt used make up a total of 55% of your credit score. When you close an account you remove that account from the equation. That’s usually not a good thing. Instead it’s much wiser to use your old cards once every 6 months to keep them active. Just be sure to pay off the balance within 2 -3 months.2. Using template forms
The credit bureaus aren’t stupid. They keep records of every dispute you make. In fact, they keep records of all disputes. When they see a dispute often enough (like a template dispute you may find on the internet along with thousands of other net surfers) they are much more likely to mark that dispute as frivolous; since the odds are the person using it is either a fly-by-night credit repair company or an amateur. Once your account has been flagged it will be much more difficult to make any further progress on your credit report. Use the template to give you an idea of what you need to say, and then put it in your own words.3. Reviving the statute of limitations
The statute of limitations is the period of time a creditor can sue for a balance owed. The time varies state by state, but begins on the date of your last payment. Making ANY payment, even 20 years later, will cause the debt to reactivate and become legally enforceable. Before making any payments be sure to research whether or not the debt is within the statute of limitations.4. Not using certified mail
Believe it or not, credit repair is a legal process. Any lawyer will tell you it’s not what you know, but what you can prove that counts. According to the Fair Credit Reporting Act (FCRA) the credit bureaus, creditors, and collection agencies have 30 days to investigate and respond to your disputes. This is a major weapon in your arsenal because lenders maintain millions of records. It can be very difficult for them to produce the requested documents.5. Not disputing in the proper order
When disputing you are requesting the bureaus and your creditors to prove they are following the law to the letter. If they are not your ultimate recourse is a law suit. Your case won’t hold water if you don’t follow the proper procedures. If you’re going to ask for leniency from a creditor, do that before disputing with the bureaus. If you plan to fight a remark on your report, you must dispute with the bureaus first.6. Giving up too soon
While you may get immediate results if you have evidence of wrong doing, you can still get good results if you’re persistent enough. For instance, most collection agencies will reply to a request for validation with a template letter. This letter violates the Fair Debt collections Practices Act (FDCPA). By following up you can leverage their violation into a deletion or a law suit.7. Not validating with the creditor or collection agent
Many consumers are too quick to pay off creditors and collection agents just to stop the harassing calls or in an effort to clean up their credit history. Before paying any past due debt, you have the right to request validation that the debt is yours. You’d be surprised how often they fail to comply.8. Not keeping copies of all correspondence
Every letter you send and receive from a creditor or collection agent can be used to build your case. Never negotiate or accept offers unless they’re in writing. Document EVERYTHING.9. Validating negative information
Another common rookie mistake is to validate negative information while trying to dispute the information being reported. The rule of thumb is the less you say the better. Make them prove themselves to you. The law is on your side.10. Not hiring a professional
Credit repair may seem simple. As you can plainly see, it’s not. To get fast results far above anything you could ever do on your own without years of experience, trial and error, and maybe an ulcer, you’d do well to invest a few hundred dollars hiring a reputable credit repair service.