How to Avoid Bad Credit
There’s a negative stigma attached to bankruptcy, but the truth is that it’s the only way out for many consumers struggling with bad credit. When credit repair isn’t working, how do you know if bankruptcy is the path you should take?
The benefit of bankruptcy is that it temporarily stops collection activity on most of your debts. Once you file bankruptcy, you get what’s called an automatic stay. This action prevents creditors and collectors from calling you, sending letters about your debts, garnishing your wages, or levying your bank account. You may even able to stop foreclosure and eviction after filing bankruptcy. Note that some creditors may get special permission from the court to keep collecting from you. Read more…
Repairing credit often takes an extreme focus on allocating monies earned towards debt payoff. For some people who are already finding it hard to get by each paycheck, it can be easy to end up with nothing to live on several days before the next payday. Having not many options to survive until then, people have turned to payday loans as a means to get by until your next check is available.
Why Payday Loans Hurt
The problem with payday loans is not immediately apparent to those in need. They see a way to get quick cash with the worry of a credit check. Their focus is on the money at the end of the transaction and not necessarily the consequences that present after the deal is done.
When you take a payday loan, it is true you do get cash almost immediately. It is also true that payday lenders do not require a credit check. Essentially all you need to get a payday loan is proof of identification, proof of employment, and a bank account. Show up with your driver’s license, pay stub and a blank check and you’ve got yourself a loan. Read more…
When repairing your credit, you have to take the initiative and see what is being reported to the credit bureaus. You may find after checking your credit report that you owe some old debts from years gone by. It can be tempting to continue ignoring these debts since the creditor has not pursued them but doing so can be bad for your credit score.
Repay for Repair?
Some debtors choose to let debts fall from their credit reports after seven years since the time they stopped making payments on their account. They wait for the time to have past rather than spend the money to repay the original debt. While it is true that old debts will expire from the report and you’ll have saved yourself some money, there is no guarantee it will not hurt your credit. Read more…
When you repair your credit, there are steps you must take to ensure your credit history is correct and always up to date, otherwise it can reflect poorly on your credit score. In order to keep accurate information contained in your report, you may need to file a dispute to the credit reporting bureaus to correct the error. But be cautious – if you try to dispute data by yourself, make sure that is in fact true or your dispute may be dismissed as frivolous.
How Investigations Work
The credit reporting bureaus receive data from creditors on a monthly basis. The information shows how you manage your credit, pay your bills, the amount of credit you are extended and have used, and the type of account you have. The credit bureaus take this information and compile it into a history report. Because the data is managed by humans, there is always a chance some of the information may be reported incorrectly. A consumer has a responsibility to check their information and make sure it is correct. They can do this by order a copy of their credit report and reviewing each detail.
Once a consumer notices errors, they should complete the credit bureaus form for filing a dispute. The information that is incorrect should be reported to the bureau which will then lead to an investigation by the credit reporting agency. The bureau will then contact the creditor with questions about the information being reported. During a 30 day period the creditor must respond with the corrected information, prove the information is being reported as accurate, or they may not respond at all. If corrected information is provided, the credit bureau will change it on the report for the consumer. If the information is accurate, the consumer will be alerted. If the creditor does not reply at all, the information will be eliminated from the consumer’s report. Consumers will receive written correspondence with the results of the investigation that details any action taken. Truth be told, it can be a tedious process.
In the event you were denied credit due to incorrect information being reported, the consumer credit bureau will send a corrected copy of your credit report to anyone that had received a copy of your report within a two year time frame. In order to instigate this action, a consumer must request this be done in writing by the consumer.
Disputing Real Issues
There are some inexperienced agencies that will attempt to file disputes on all of your credit information in the hopes some creditors will not respond and the information will be eliminated, which is discouraged. Only a handful of credit repairing agencies have the expertise and experience to be able to decipher what should be disputed and what should be left alone.
If doing it yourself, remember that the credit reporting agency has the right to refuse an investigation if they feel the dispute is frivolous, so you should be well informed before attempting. If you have several legitimate disputes, you should file them as soon as you have discovered the inaccurate information. However, keep in mind that filing too many disputes in an effort to have information removed can be detrimental to your credit repair success.
Once a dispute is filed, be sure to follow up regularly to ensure the information is correct. Many consumers will make the mistake of doing the initial work and letting the rest fall by the wayside. If inaccurate information remains on your credit report, your score will not improve.
Too Many Disputes Could Be “Frivolous”
If you send too many disputes at one time, the credit bureau can decide these disputes are frivolous and refuse to process the disputes. The law allows them to do this. When this happens, none of your disputes are processed and nothing is removed from your credit report.
The only exception is when you’ve been a victim of identity theft and none of the accounts on your credit report belong to you. Even then, you should have documentation, like an ID theft report or affidavit, showing that the accounts were fraudulently opened. Read more…
Credit is your willingness and ability to pay back money you’ve borrowed. Unfortunately for some, your credit is measured by how you’ve handled credit cards and loans in the past.
If you have good credit, you’ve paid your bills on time and you haven’t taken on more than you can afford. On the other hand, people with bad credit have not paid their bills on time and have, more often than not, overextended themselves with borrowing.
Bad credit is most often defined by a credit score – which is a numerical summary of the information in your credit report. A credit report contains information about all your credit and loan accounts – when the account was open, how much you borrowed, and whether you paid on time. Read more…
Repairing your credit involves taking care of accounts that have become past due. These delinquent accounts hurt your credit score the most because credit history has the biggest impact on your credit score. In fact, payment history is 35% of your credit score. No other factor has as significant impact on your credit score.
Types of Past Due Accounts
There are several different types of delinquencies that affect your credit score. 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…
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…
Some people are consumed with debt and feel the walls quickly caving in. They feel they can not make it on their own and have no where else to turn. Many will make the mistake and totally give up. They will stop making any kind of payments and soon the debt collectors are incessantly calling with threats of legal action. When people get to the point of no return, it can be difficult to know what to do next. They must look outside themselves for financial help which can be a hard first-step to take.
What Are Debt Management and Credit Repair Services?
There are credit repair and debt management agencies that specialize in helping consumers better manage their debts. These services evaluate your debts, come up with a budget based on your income, and plan out the most reasonable way for an individual to become debt-free based on their income and other financial obligations. Read more…