Credit Repair. Increase Your Credit Score!
As a parent, you may choose to provide financially for you children even after they have turned of legal age and accountable for their own finances. However, it is important to realize that while your gestures may be nice, the fallout from the gesture can do your credit score serious damage. You will then need to repair your credit if you wish to continue keeping a solid score for your own financial well-being.
Why Lend Your Credit
Many young adults lack the financial history necessary to get credit. It is a Catch-22 situation and in some cases, parents agree to step in and co-sign for credit cards, car loans, or student loans. Parents typically do not agree to pay the monthly note but as a cosigner on a financial obligation, the parents ultimately become responsible whenever a payment has been missed. By the time a late payment has gone overdue, many parents will find their score has already dropped and their credit history has been affected.
While young adults may lack credit experience, it may not always be a wise idea for parents to Read more…
The PLUS Score may be an unfamiliar term for many consumers but it can be an integral part of repairing your credit and improving your knowledge as to how make your credit work for you. Experian, the consumer credit reporting agency, created the PLUS Score as a way to help consumers better understand how to manage and repair their credit scores.
The PLUS Score is consumer-friendly credit score that was created by Experian to help consumers understand what is having an impact on their present credit score. It PLUS model also provides detailed information about what consumers need to do in order to see their credit scores increase.
How PLUS Score Works
The PLUS Score is calculated from the data on an Experian credit report. The calculation is relative to the methods utilized by lenders when making credit decisions. The PLUS Score ranges from 330 to 830. Much like a traditional credit score, the higher a consumer PLUS Score is, the less of a credit risk they pose to lenders. While most creditors will pull a consumer’s FICO score when making decisions, the PLUS score can be Read more…
Credit report disputes are one of the easiest credit repair strategies. By law, you’re entitled to an accurate report and you have the right to dispute information you believe to be inaccurate, incomplete, or unverifiable. Credit bureaus have to remove this type of information from your credit report after an investigation proves your dispute to be accurate.
Results of Credit Report Study
Are credit report disputes really the best way to spend your credit report efforts? A new report released by the Policy and Economic Research Council (PERC) in May 2011 revealed that less than 1% of credit reports actually have an error that, if corrected, would improve credit scores more than 25 points. The study, called U.S. Consumer Reports: Measuring Accuracy and Dispute Outcomes, also showed that only half a percent of those consumers who disputed report errors saw their scores improve to the next tier. According to this study, it’s very unlikely that a credit report dispute would move your score from Bad to Poor or from Poor to Fair.
Do the Study Results Apply to You?
This information makes it seem that credit report disputes are a waste of time, but they’re still a worthwhile effort, especially if you have significant errors on your report. More than half the people (53%) who participated in the study had VantageScores above 800, that is, scores are in the “A” and “B” categories. It stands to reason this particular segment of the population wouldn’t have serious errors on their report dragging down their scores. On the other hand, only 29% of participants Read more…
The path to credit repair might require you to pay off some (or all) of your past due accounts. You could easily feel overwhelmed by the amount of your past due accounts, but don’t let this discourage you or cause you to delay your credit repair. You can pay off these accounts one at a time.
Figure Out What You Owe
Make a list of all the negative accounts on your credit report that have outstanding balances. Your credit repair agency may not be able to get these removed these from your credit report unless you can pay off the balance. If you put together a list of the accounts you owe, you can better come up with a plan to pay off all the accounts.
Your accounts may have different levels of delinquencies. Some may be late, but not yet charged-off. Others may be charged-off. And you may have some accounts that are with collection agencies. How you pay your accounts depends on how delinquent they are. For example, if you have accounts that are late, but not charged-off, you might pay them to keep them from becoming charged-off, especially if you don’t have any other charge-offs on your report.
Pay for Delete
One of the reasons Americans have struggled so much with big debts and credit repair issues is due to the inexperience and lack of education concerning personal finances. In order for the youth of today to avoid credit nightmares tomorrow, they need to learn the basics from a young age.
Getting Help Early
Financial literacy is rarely taught in schools and for most young teens, financial responsibility lessons start at home. Parents of teens need to start educating their children about money management prior to sending them off to college. Waiting too long may mean it is too late to avoid bad credit and negative credit history marks. As teens graduate and move on to college, it is often the first time they are navigating life without mom and dad and are more prone to making credit mistakes.
What To Teach
Basic personal financial lessons can be incorporated into every day life. Starting with allowances and moving up to money management can give a child the foundation they need for staying ahead of the debt game many adults still struggle with later in life.
Here are a few of the basic credit and financial essentials kids need to learn early:
Save and Save More Often
Most Americans do not put enough cash into savings. They struggle to make ends meet and do not place a priority on savings. Teach kids to set aside a percentage of every dollar they receive or earn on their own.
Take Them to the Bank
Help a child to open a bank account to place Read more…
When two people get married, a lot of things combine, but credit histories and credit scores aren’t one of them. So, if you’re marrying someone who has bad credit, you don’t have to worry that their bad credit will drag yours down simply because you’ve been joined in holy matrimony. You do have to worry, however, if you’re applying for joint credit together, if your spouse has access to your accounts, or if your spouse has bad spending habits.
Applying for Joint Credit
Now that you’re married, there may be times when you apply for a credit card or loan with your spouse. For example, you may get a joint credit card if your spouse can’t qualify for one alone, to help your spouse repair their credit, or to make household accounting easier. Unfortunately, your spouse’s bad credit may keep you from qualifying for the best credit cards and you could wind up with a high interest rate, high fee credit card.
Applying for mortgages or car loans together will also prove difficult. Lenders have various ways of considering a joint applicant’s credit score. They may take an average of your scores or they may consider only the lowest credit score. Rarely, if ever, do they only count the highest credit score. This means you could qualify for a smaller loan, have a high down payment requirement, or have to pay a higher interest rate on the loan.
Adding a Spouse To Your Accounts
There’s a possibility that your spouse has bad credit because they have bad credit habits. If you add this spouse to your credit card accounts, their bad credit habits will Read more…
It’s becoming common knowledge that employers include credit checks as part of the application process. However, there’s also some misinformation being spread about how employment credit checks affect you. Get the facts on credit checks before you go job hunting so you know what to expect.
Employers don’t check your credit score. One of the biggest myths out there regarding employment credit checks is that employers check your credit score. This simply isn’t true. Employers check your credit report, which is a document that contains your credit history over the last seven to ten years. They’re not looking to see if you have good credit or bad credit. Instead, they’re looking to see if there are specific items on your credit report that could affect your job performance.
Not all employers check credit. Not every employer has a need to check your credit. Employers most often check credit for executive positions and positions where you’ll be dealing directly with money. If an employer needs to check your credit to continue the application process, you’ll know about it ahead of time.
Employers that check credit don’t necessarily check for all applicants. Just because your friend tells you he had a credit check with an employer for a certain position doesn’t mean you’ll have one, too. Remember that employers typically check for specific positions, so if you’re not applying for a position that requires a credit check, there’s a good chance you won’t have to go through credit screening.
You have to give your permission before an employer can check your credit. By law, employers are required to get Read more…
When you work with a credit repair agency, it’s important that you have a contract that spells out what the company will do on your behalf. Read through the contract and ask questions about anything you don’t understand. Here are some things you should expect to be included in a credit repair contract.
Your credit repair contract should include how much you’re expected to pay for credit repair and when your payment is due. Make sure the amount that’s included in the contract matches any oral agreements made. For example, if you were promised a discount on your services, this discount should be reflected in your contract. What you sign up for is what you’re responsible for paying. Handle any discrepancies before you sign.
Services to Be Completed
In your contract, the credit repair company should include a detailed list of all the services they’ll perform on your behalf. This may include preparing and sending letters to the credit bureau, disputing items on your credit report, etc. Just as with the price, make sure all services you discuss are listed in your contract. Credit repair companies are not supposed to misrepresent their services or make promises to do things they can’t legally do.
By law, your credit repair contract must include the Read more…
When it comes to credit, what you don’t know can hurt you. Your financial profile can take a hit based on the information you do not clearly understand. The many myths of credit repair and credit scores can actually leave you in a worse situation than where you started.
The Reality of Medical Debts
One of these myths that is often believed by consumers is that medical bills do not hurt a credit score. Many times people will forgo paying off their medical bills to focus on their other creditor debts thinking that overdue medical bills won’t impact their credit score.
However, medical debts are treated just like any unpaid creditor debt. The money you owe is expected to be paid. The medical provider will not necessarily send the information to the credit reporting bureaus each month but they will pass your accounts to debt collectors. It is then that the unpaid debts will cause your credit score to drop and lenders will see your medical accounts are in bad condition.
Once an account goes into collections, regardless of the account type, you will not only have the drop in credit score, you will also have the Read more…
By now, you probably know that banks, insurance companies, and other businesses check your credit score as part of the process. You’ve probably experienced one of the downsides of having bad credit – having your applications denied. Fortunately, there are ways you can be approved even if you have bad credit.
Make a Bigger Down Payment
When you’re applying for a mortgage, the lender may approve your application if you can make a larger down payment. A larger down payment means you’re accepting some of the loan risk and possibly even lowering the amount of the loan. You may have to increase your down payment by several thousand dollars to qualify for the loan.
Use Non-Traditional Tradelines
One of the unfortunate things about your credit reports with the major credit bureaus is that they only contain major accounts like credit cards and loans. They don’t include payment history from all the other accounts you faithfully pay on time each month, like your rent or your cell phone bill. Some lenders may be willing to Read more…
Every consumer in the US that has established a credit history has a credit report listed with three of the credit reporting agencies: Experian, Equifax, and TransUnion. The credit report lists all of the activity and accounts a consumer has with creditors including mortgages, personal loans, credit card accounts, and other lines of credit and obtaining it is the first step of credit repair. Activity is reported by the creditors for each consumer whether it is positive (ie: pays on time) or negative (ie: missed payments). That information is then used by other banks and lenders to determine the creditworthiness of a consumer. A lot of good reported information will reflect responsibility with credit. Too much bad information on a credit report shows lenders a consumer may be a risky proposition. Bad credit histories will lead to higher interest rates and even rejections on credit applications.
There are a lot of advertisements that mislead consumers into thinking they can easily get a copy of the credit reports for free by signing up with select companies. The problem is that many of these ads aren’t entirely true. While you can get a free copy of your report, you also have to sign up for costly credit monitoring or other service that requires monthly payments for membership.
Obtaining Your Report Without Obligation
All consumers are entitled to a free credit report each year from the three credit bureaus. You do not need to register for membership with any company to receive the free report. If you want to request copies of your credit history, use the following contact information: Read more…
If you have credit card or loan application denied, don’t assume it’s because you have bad credit. Even people with excellent credit scores get denied for credit from time to time. That’s because banks consider more than just your credit score when they’re deciding to approve you for a credit card or loan. Here are some other reasons your application could be denied.
You’re not old enough to have credit. Generally, you have to be at least 18 years old to be approved for a credit card or a loan. New changes to the credit card law require that credit card applicants under age 21 have their own source of income or have a co-signer to be approved for a credit card.
You don’t have enough income. Credit card companies are now prohibited from giving a credit card to anyone who doesn’t have sufficient income to pay back the credit card balance. On top of that, they have to ask only for your individual income, not your household income as they’ve done in the past. Credit card applications don’t state the monthly income requirements to qualify for a credit card. So when you write in your income, you don’t know whether it’s enough to get the credit card or not.
You have too much debt. The amount of debt you have is another factor that banks take into account for your credit card or loan application. Even if the amount of debt you have isn’t taking a toll on your credit score, it could still keep you from being approved. If the bank thinks Read more…
One of the essential components of credit repair is your ability to remain consistent in your efforts to keep your credit report accurate and your credit score as high as possible. Lenders today are looking for scores of 730 and above when making lending decisions at the best rates. It is in every consumer’s best interest to work on keeping their credit reports accurate and up to date.
Why Consistency Matters
There is a heavy emphasis for consumers to monitor their credit history reports and every consumer has a right to check in with their reports annually at no charge. There is also opportunity to request free credit reports when you are denied credit. Your credit score does not come free with your reports but it is your history that is what really needs special attention.
Most consumers will look at their credit history at least once a year or when they need financing but that may not be enough to generate the highest credit score possible. In the interest of time management, it may be wise for consumers to Read more…
In the years before the mortgage industry meltdown when it was relatively easy to get credit, a credit score of 700 was considered to be good to excellent. Many lenders would be happy to approve loan or credit applications for consumers with a 700 score without so much as a blink of an eye. However, because of the latest recession and the enormous amount of defaults occurring among consumers, the rules changed pretty fast. It’s important to understand how these changes affect your credit score and your credit repair work.
Is It Enough to Be ‘Good Enough’?
While a 700 credit score is certainly not at the bottom of the barrel, it is no longer considered the get-to score by those working to improve their credit. In years past, creditors were happy with a 700 or higher but because of the increase in defaults and the overall loss of profits in the mortgage and banking industries, lenders are very wary of taking risks. Borrowers now need to come to the table with provable credit worthiness.
A score these days of 720 or higher is the new standard and many lenders are very strict with their requirements. Mortgage lenders especially are looking closely at income levels and credit scores before making a loan commitment at the best interest rates and terms.
How Flexible Are Lender Requirements?
With 720 being the new credit score target, some lenders will not be Read more…
When you are finally beginning to dig out from the pile of debt you have been living under recently, it can be tempting to go ‘cold turkey’ and rely on only the cash resources you have available. While it certainly is a good thing to want to better control your spending, living a credit-free existence may not be the most financially savvy decision you can make for yourself.
Why Credit Matters
After getting close to being debt free, you may have established new rules for yourself in order to move forward and continue living a debt-free life. However, you have to take into consideration many other aspects of an overall financially healthy and stable life.
For instance, did you know that your credit score is important regardless of whether or not you need a loan? You may never need another drop of help from creditor or a bank but if you maintain a low credit score, you can expect to pay more for insurance, you may find it difficult to get a job offer, and you may even be refused a place to live if you rent. There are more industries than just financial ones that use credit scores to make decisions. Even regular service providers will often perform a credit check before agreeing to an account. Low credit scores may require a hefty deposit to ensure you can be responsible in paying your bill since your credit score does not reflect this.
Why Cash Can Hurt
When you switch to an all-cash existence, you are essentially taking away Read more…