Passive Credit Repair

Many young people get bad credit right out the gate because they haven’t learned the fundamentals of credit repair before when they get their first credit card. Unfortunately, it can be harder for someone under age 21 to repair their credit because of recent changes in the credit card law.

Trouble Getting New Credit Under Age 21

One of the keys to credit repair is rebuilding your credit score by making timely payments on a credit card account that’s in good standing. For young adults under age 21, this can be difficult.

Recent chances to the credit card law requires credit card issuers to verify income of young adults before giving them a credit card. If you don’t have any income, or at least enough income, to qualify for the credit card, then you’d have to get a co-signer to open a new credit card account. It may be hard to convince someone to cosign your credit card application, especially if you have a history of not making your credit card payments and you don’t have a job.

What Can Young Adults Do to Improve Bad Credit?

There are still some things you can do to improve your credit even if Read more…

You have two choices when it comes to credit repair. You can either hire a credit repair company. Or you can do-it-yourself. (Doing nothing is a third option, but, for your credit score’s sake, let’s assume you won’t take that route.) Many people choose to hire a credit repair company because they don’t know where to start, but there are many benefits of repairing your own credit.

You Avoid Scams

Even though there is a Federal law dictating what credit repair companies can and can’t do, there are still many companies who scam consumers. These unscrupulous companies mislead consumers about what can and can’t be done for their credit scores. They charge upfront fees, something they aren’t supposed to do. And some even make promises they never intend to keep.

When you choose to hire a credit repair company, you have to take the time to find a reputable company who will follow the law, not lie to you, and will charge you fairly. There are reputable companies out there, but when you do your own credit repair, you don’t have to take the time to find one.

You’ll Save Money

Credit repair companies charge hundreds and even thousands of dollars for their services. Even if you have the money to pay for the service, Read more…

If you have already begun the credit repair process, you may have noticed that different credit reporting bureaus provide you with a credit score that is rarely equal to the other agencies. Credit scores from Equifax, TransUnion, and Experian will all be reflective of your credit management abilities but it is unlikely they will ever be exactly the same at the same time.

Why Does This Happen?

Each credit reporting agency has a different method and different factor list for determining your three-digit credit score and there are several reasons why your individual scores from the three agencies will differ.

First, it is important to note that not all creditors will report your credit activity to all three of the reporting agencies. Some may choose to report to only one or two of the agencies so the third report would not have this particular creditor data considered as part of their scoring model.

Secondly, the inconsistencies in the credit score may be due to the changes occurring on any given day. Depending on how you use your credit, when you authorize a credit check and various other scenarios, your credit score may change from day to day if only slightly. Credit bureaus also do their credit file updates at different times so the addition of data can be reflected in credit scores. The small differences in your credit report may not seem significant but Read more…

During the process for repairing your credit, debt reduction with the goal of debt elimination is the typical starting place for most consumers. Credit card debt is often the biggest problem in the credit repair equation since missed and late payments or too much credit card debt is the reason your credit needs to be repaired in the first place.

Immediately when learning credit cards are maxed out and bills are too high to pay, many consumers will instinctively want to cancel their credit cards to help them resist the spending temptations which got them in trouble in the first place. But canceling credit cards is one of the biggest credit repair mistakes people can make and doing so, especially to multiple accounts, can be devastating to your credit score.

Here are some things you need to consider about credit cards and credit repair:

Oldest and Dearest Cards Mean Most

The credit card account you opened first means the most to your credit score. Part of the calculation for determining your three digit credit score is the amount of time for which you have established credit. By closing the oldest credit card account, you are essentially erasing part of your credit history which can drop your credit score. Read more…

Credit and debt are very closely related. How you handle your debt can either help or hurt your credit score. On your credit repair journey, it’s important to be aware of what you’re doing with your debt.

Too Much Debt Hurts

A large part of your credit score – 30% – is based on how much debt you’re carrying on your credit cards. If you have a lot of debt compared to your credit limit, then your credit score will be hurt. However, carrying low balances will help improve your credit score and make you a more desirable borrower. Make paying off debt part of your credit repair plan.

Paying Late is Deadly

One of the reasons to keep your debt low is that it keeps your payments at a manageable level. Once your payments get too high, you’ll have trouble keeping up and you may have to miss a month. Late payments will kill your credit score.

It’s not ok to make a late payment just because your credit score is already bad. Doing that will just lengthen the amount of time it takes your credit to recover. Those old late payments will hurt your credit score less as time goes on, but any recent late payments will have to age before the damage lessens. Read more…

You may be familiar with the information that matters to your credit repair tasks and credit score including on-time payments, amount of credit you maintain, the length of time since you established your credit account, and other financial factors. You may also know that your credit score is what lenders rely on to help them making big money decisions and allow them to approve (or deny) your credit application.

Did you know there are factors that are not included into your credit score calculation? While FICO, the company who created the three-digit number credit scoring system most often used by lenders to gauge credit worthiness, will not divulge exactly how their scoring system works mathematically, there are some things that are not factored into your score.

Here are ten personal financial pieces of information that is not a part of your credit score:

1. Your age – the only way your age is a factor in credit is potentially the amount of time you have had to establish credit accounts.
2. Your vitals – includes gender, race, nationality, marital status, or religion – It is against the laws in American to factor any of this data into a credit scoring system.
3. Your employment – includes where you work, your occupation, job title, employer, work histories, or salary.
4. Your location – includes your current address/location as well as your past information.
5. Your interest rates – includes your interest rates on credit cards and any other loans. Read more…

It’s often hard to get started with credit repair, not because you don’t want to have better credit but because you’re not motivated to do the work involved with repairing your credit. Motivation is often psychological, so if you can convince yourself that credit repair is a worthwhile goal, you’re more like to start working in that direction.

Realize that Credit Repair is Beneficial

You can live with bad credit, but you can live better with good credit. When you think about credit repair, think about all the benefits you’ll get from improving your credit score. You won’t have to be nervous about putting in new credit card and loan applications. You’ll have the good credit that’s needed to establish utilities in your name without paying a deposit. You can pay lower your car insurance rate since bad credit is linked to higher insurance rates. Read more…

There comes a time in every credit repair saga, that you have to ask the question, “Am I ready for a new credit card?” Disputing negative information will only take you so far. If you want to take your credit score to the next level, you’ll need to add some positive information to your credit report. One of the ways to do this is by getting a new credit card and using it responsibly.

Before you go fill out a new credit card application, you have to make sure you’re actually ready for a new credit card. If you get one prematurely, you could undo all the credit repair progress you’ve made so far.

Do you qualify for a decent credit card?

There are some credit cards out there that will approve you no matter what your credit score looks like. However, these aren’t the type of credit cards you need. These “subprime” credit cards target people with bad credit and make cardholders pay dearly with high annual fees and interest rates.

Is your credit score good enough to qualify for a credit card that doesn’t have high annual fees and has decent interest rates? An interest rate between 14% and 20% is expected for someone who’s trying to rebuild their credit score. Read more…

You may be working really hard to get back on track with your credit and have made every effort to repair your credit score but you need to pay close attention around the holidays or your hard work can be in jeopardy.

Why The Risk?

So many people with poor credit scores got into their situation because they had a hard time controlling their spending in the first place. This is especially true during the holiday shopping season when people feel as though they have to give the best to everyone whether they can afford it or not. This results in overspending, mostly on credit, for items and purchases they can never dream of paying back in a reasonable amount of time. The overextension of credit ends in reduced credit scores and the inability to keep up with payments.

How To Stay On Track

You need to really pay attention to your finances during the holidays. Before you hit the mall, you should know how much money you have after the bills are paid and your other financial obligations have been taken care of for the month. You are wise to start a Christmas Club savings account so you’ll have extra cash to devote to your holiday shopping needs. If you did not enroll in such a savings program, it is crucial to sit down and figure out where you stand. Read more…

If you thought you could ignore the rest of your finances and build a good credit score anyway, you were wrong. Credit is an integral piece of your financial picture. If you’re doing bad in one area, chances are you’re doing bad in another area. So, there are some parts of your finances you must fix before you can start credit repair.

1. Create a budget. The lack of a budget is quite possibly one of the things that led to your credit demise. Without some type of budget, you’re more likely to overspend, leading to higher credit card balances and less money to pay your credit card bills. If you don’t already have a budget, create one now.

2. Start an emergency fund. An emergency fund is a financial safety net that catches you when you fall. It’s savings that you can use to pay for unexpected expenses. This keeps you from having to put the expense on a credit card.

3. Have a checking account in good standing.  A sign of financial responsibility is having a checking account that you can use. A checking account makes it easier to pay your bills, an essential step in credit repair.

4. Avoid overdrafts and bounced checks. Overdrafts and bounced checks happen when you spend more money than you have in your checking account. Both events result in a fee. If it’s a regular occurrence, it’s a sign that your spending is off. Overspending is one of the things that leads to bad credit and if you’re overspending your checking account, the same might happen soon with your recovering. Read more…