Passive Credit Repair

Since I’m a relatively new blogger, I’d like to take the time to honor the sites that I’ve drawn on for inspiration over the past months while writing about credit repair. These blogs all incorporate very unique voices to offer clever and passionate musings concerning personal finance, and life in general. Scattered throughout this list are the top sites for general personal finance advice, as well as a sample of those devoted to specific money management topics and targeting particular demographics. I don’t know how much the number order matters…the last blog on the list is certainly as helpful as number 1!

The 50 Best Financial Advice Blogs: Read more…

One of the major reasons why people found themselves heaped with credit card debt is because they thought they were doing the right thing by paying the minimum amounts on their credit card bills each month because they couldn’t afford anything else. But this won’t repair your credit.

The minimum amount due is calculated by the credit card company and is the amount consumer must pay to stay in good standing. While many cardholders figured at least they were paying something, few realized the magnitude of their mistake. By only paying $15 a month on a $1000 debt, it will take years to pay off what is realistically a small amount. Plus, with the interest added the total amount of the debt turns outrageous. What was once a $1000 debt over time will turn into several thousands of dollars. It will become near impossible for cardholders to catch up to their debts. Consumers will begin to suffer from poor credit scores and have fewer options for consolidating their debts. Read more…

While it is never advisable to close out all of your credit card accounts simultaneously, it can be good practice to downsize the amount of credit you have in order to repair your credit score.  The key to closing accounts is to do it correctly. Otherwise, it can end up harming your credit in the long run.

Here are 7 steps to take when you want to close out your credit card accounts for good:

1. Decide Your Route

If you are interested in closing accounts because you have too many cards, you may want to consider which cards you truly no longer need. Never close the accounts you have had for the longest period of time. Doing so can decrease your credit score and make repairing your credit  harder, since the length of time you have had the account is a factor in determining your credit score. Close only the accounts you do not use that have been opened recently. Read more…

It is not uncommon for people to be living from one paycheck to the next. As many families are still facing the after-effects of the recession, it is still a struggle to make it from one week to the next. However, if you have come to a point n life where you find you are buying regular, everyday items using your credit card, it may be time to get help.

Credit is Not an Extension of Your Pay

If you have $100 in your bank account and a $1500 credit limit on your credit card, the reality is you do not have $1600 to spend. People have often made the mistake of using credit limits as an extension of their income. If there is room to spend on the credit cards, they feel they are not broke. Read more…

When the credit card chaos erupted in the last few years and people finally began to realize the damage they were doing to their credit scores by overextending their credit, many made the mistake of shutting down credit card accounts completely. It was thought that closing the accounts would end the temptations of spending more.

However, as people paid more attention to their credit histories and worked hard to repair their credit scores, they realized that closing their card accounts was a mistake. They had actually hurt their scores by taking away part of their credit histories and made credit repair harder. Read more…

While everyone hears about the importance of a credit report, not all consumers will place a priority on regularly checking their own credit histories. By disregarding the information contained in a credit report until the time comes when you actually need a loan or what to apply for a line of credit, you may be facing rejection in your immediate future.

Why Bother Checking?

There several reasons consumers should be checking their credit report on at least a yearly basis. Read more…

As so many people have been through the wringer since the recession hit and unemployment rates skyrocketed, it is not unusual for people to feel hopeless over their poor credit situation. There are many who have lost their homes and have fallen deeper into debt so if you are still facing a financial crisis, don’t give up just yet. Credit repair can still bring your credit back up to par and get you on track towards a better financial future.

Here are some credit repair tips to recover your good credit standing and manage debt successfully:

Time and Effort Required

The first point to consider is whether or not you are ready to invest in the time, effort and patience that is required to repairing credit gone wrong. Read more…

It is human to make a mistake but if your mistake was not paying your credit card bills on time or defaulting on a loan, the mistake can follow you around for another decade or longer. Having poor credit scores is limiting to your financial abilities. You will not be approved for new lines of credit and you may even find you are paying higher premiums for your car insurance.

Poor credit scores are not the end of the world. You can take action to improve your credit scores on your own. It will not happen overnight but with time and effort you can get results. Here are five tips to help you improve your credit scores and open the door for a better financial future:

Pay On-Time, Every Time

While no one is completely sure of the mathematical equation used to calculate credit scores, it is certain that the way you pay your bills has a big impact on your credit score. If you are 30, 60, 90 days or more late with payments on bills that report back to the credit bureaus, you will see a drop in your credit scores. If you are consistently late, you risk having accounts closed and the negative information being reported on your credit reports for years to come. It is never too late to start getting on track. Automate your payments to make it less likely you will be late or miss making payments. Over a six month time period of perfect bill-paying, you can see an increase in your credit score.

Stop Spending

If you want to improve your credit score and history, stop overspending on credit. If you max out your credit cards or take them over the credit limit, it will drop your score. By rights, you should never charge something you can’t afford to pay in cash but obviously this is not always the case. To help improve your credit, use your cards for purchases you are sure you can pay off in full each month. Paying the full balance will boost your score and keep your credit positive. Don’t spend more than you have on credit and keep a personal budget to make it easier to pay cash for things you need.

Order and Review Your Credit Report

You may have idea what your credit report contains but ideas in this case do not count for much. You need to order copies of all three of your credit histories from the major reporting bureaus Equifax, Experian, and TransUnion. Every individual has the right to receive one free copy of each annually. You can also get a free report for up to 60 days if you have been denied credit. These reports do not include your credit score (you must pay an extra fee to include the score) but they probably contain a handful of mistakes and incorrect information that negatively affects your credit score.

When you receive each report, go over every single line of information and check for accuracy. Any information that is not correct should be reported back to the credit bureau using the online or printed forms provided. The bureaus are required to investigate all reported inaccuracies and if the creditor does not cooperate, the information may be dropped from your report. Since you can get an annual report for free, consumers should make a habit of checking their reports at least once a year. You might be surprised to learn how a small mistake can cost you big time credit score points.

Negotiate With Creditors

If you are working on settling outstanding debts, know that you can do it on your own with the assistance of a high-priced credit repair agency. Contact your creditors directly to negotiate the debt owed and how the results will be reported to the credit bureau. In most cases, creditors want to get their money so they are willing to work with you. If you ignore creditors, you likely will not get much cooperation. When you negotiate your repayment schedule or a total payoff of the debt, also request that the creditor report back to the credit reporting bureaus that the account is in good standing and paid in full. Not everyone will be willing but you will never know if you don’t ask.

Don’t Repeat History

Again, repairing your credit will not happen overnight. It is an on-going process that takes time and patience. The most important lesson is that all consumers learn from their past mistakes and avoid repeating history time and again. Once you begin to notice an increase in your credit scores, keep doing what you are doing in handling your personal financial matters. By staying on task to getting out of debt and improving your credit score, you will reduce the risk of having to rebuild bad credit down the road. Having good credit will afford you the best deals, the best interest rates, and financial stability now and in your future.

When I got my first credit card I thought that building a good credit history is about using your card as much as possible and paying on time. How could I’ve been so wrong? Months passed and I was spending about 80-90% of my credit limit and paying it once I receive each statement. Spending a lot should have made the bank some money because they get paid when you use a credit card and paying my full statement on time must have left the impression that I am financially stable. But is this how the credit card companies feel about it?

I didn’t have any reason to be interested in my credit score so I had no idea what it was. Soon I decided to get my first cell phone plan. I got rejected immediately because of low credit score. How could this be? I was such a good customer – spending money and paying on time… I decided to ask people who have had credit cards for years and enjoy excellent credit scores. I received a lot of advice including… “Do not pay your entire statement every month. Let them take some money from the interest so they can be happy too.” And this is what I did. Wrong again! It took a lot of research, digging into hundreds of websites and even paying for some credit advice services to learn all that I have learned so far.

My biggest mistake was my initial idea that spending money on the credit card will shoot some money to the credit card company and make them happy. Well it won’t! In reality, you need to spend less than 15% of your credit limit to get a good credit score, at least in the first few years. The credit score calculation is complex. It takes many factors and a resource like Credit Repair.org is exactly what people need. We will keep posting vital credit repair advice and hopefully you will start seeing results as we go!