Credit Repair
Credit Repair
Wednesdays 9 pm EST Chat
-Collections/Credit
Thursdays 9 pm EST Chat
Taxes
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.
THESE ARE
THE CREDIT BUREAU'S
www.annualcreditreport.com
www.equifax.com
www.transunion.com
www.experian.com
Some 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.
www.cardreport.com 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.
If you would like to be notified when we add new items to
the site submit your email
