Credit Repair Life Skills

Credit repair is never a one time affair. You have to work hard at improving your credit score, firstly to repair any credit issues, and subsequently as well as continuously maintain it at a good level with best practices. In fact, Credit repair is a continuous journey which entails both credit correction, as well as good credit maintenance. It is not surprising that in today’s busy life, in many cases, people actually have low credit scores not because of carelessness or indifference, but because hectic lifestyles lead to oversights and missed credit payments. Key to a better credit score is discipline by classically conditioning your lifestyle habits in your credit management and bills payments. And the beauty of the approaches which I share with you here is that once set, the bills payment strategies work almost automatically every time round.

Clear Them As They Come. Pay Your Bills Whenever You Receive Them.
There is a very high likelihood that if you leave your bills until later, you will forget about paying it and end up with late fees and interested charges which are totally uncalled for. Some credit companies may not report you to credit bureaus right away, while others report even one skipped or late payment, thereby reflecting your credit report and negatively impacting your credit rating. The solution here is simple, pay up your bills the moment you receive them so the issue of forgetfulness will never exist and hence no late fees or interest charges will ever apply on your accounts.

Recondition your Lifestyle Habit. Set A Regular Time And Place To Pay Your Bills.
Make Time For Bills Payment. If you are too busy to pay your bills as they arrive, set a fixed day, one hour per week for paying your bills. Designate a regular quiet place and time on the fixed day to clear your bills until it becomes automatically second nature to you whenever it is time. Equip with quiet place with pens, calendar, stamps, envelopes, and your payment information, all that you need to make payment in comfort and convenience. Making bill paying automatic in this way can reduce the number of non-payments and late payments you make on your bills, and reducing these problems can help improve your credit risk rating.

Have A Constant Reminder. Make a Date on Your Calendar.
One approach to constantly remind you of when your bills are due is to record your financial duties on a calendar, just like all your other appointments. If you mark down when bills are due, when you need to make payments, and what you need to accomplish to boost your credit score in a visible place you check often, you are less likely to overlook important appointments and deadlines.

You Can Be Ill Or May Go On Vacation, But Your Bills Never Should.
Make arrangements to pay your bills when you are on vacation or ill. Whenever you go on vacation, you probably want to get away from it all, but never forget to pay your bills while away, or you will risk getting dings on your credit that can affect your credit risk rating. Pay your bills in advance or to arrange someone to pay your bills while you are away or when you fall ill, as bills should never pile up. It is frustrating to be trying to improve a credit score only to suffer a setback over a small oversight.

It is important to start off this discussion with key answers addressing the issue of buying better credit. As of the date of this writing, buying better credit is indeed legal, but is highly subjective on whether it is ethical or dishonest.

We all understand the repercussions of possessing a low credit score. It could practically wreck havoc in your life, from lifestyle issues to work to money. Having a low credit score will give you problems in getting your mortgage approved, or for that matter, any credit lines. And when you get your loans approved, you are probably required to pay higher interest rates for being a bad credit risk. You might also be denied that coveted job when your potential employer run a check on your bad credit status, denied house rental, or other necessities.

What Is Leeching And Why Is It Undesirable
There is a loophole in the credit reporting system and more people are tapping on it to temporarily manage their bad credit repair activities. The approach is what I would deem as Leeching. If you are an authorized user on the credit account of person B, the account history of person B will actually appear on your credit report. The positive payment history of person B will benefit your credit report and you can actually see an increase in your own credit score simply by being included onto the credit account of person B. You can add several of these other accounts to your credit history, and in so doing, you might actually increase your credit score sufficiently to get approval for loans or better interest rate.

A Highly Unethical And Dishonest Credit Repair Approach Greatly Discouraged
We highly disapprove the use of this approach as this will lead to future issues with the good credit owner. As the bad credit owner, you are misleading lenders to think that you are paying your bills on time, and this will back fire on you very soon when situation comes to light, especially when you do not change your bad repayment habits and continues to default on your repayments. This is surely not a proper approach to managing bad credit repair.

Hence, rather than getting temporary reprieve on your credit report score, and spending hundreds to thousands of dollars for this highly disputed, unethical and dishonest tactic, you should do much better to go the ethical route of repairing your credit the right way. Instead, you should spend that amount of money on paying down your outstanding balances, and over time, you shall benefit truly from real credit repair.

Do-It-Yourself Credit Repair Yields Better Results Over Time
Key to Bad Credit Repair is to change your attitude towards credit, have a healthy respect whenever you use credit, keep good and timely bills repayment habits and maintain good money management. Patience is paramount in credit repair too and you need to work conscientiously over time. Give your credit bureau time to update your hard work and you will be out of the woods within 6 to 9 months. The beauty of legitimate credit correction is that you could truly sleep well at night, knowing that you have been ethical and honest in your dealings.

Get more good reads at the Bad Credit Repair Tips .

Your credit report score measures your ability to manage credit. And if you belong to the profile category of whom never owned or utilized credit and hence have a low credit score on your report, it is indeed time that you take a new credit card.

There are, however a number of factors you need to consider when in search of the most suitable credit card. Key among these factors is your credit card terms and conditions i.e. literally the fine prints. You need to choose the plan terms that best suit your financial needs. Consider the plan terms like free period or grace period, the annual percentage rate or APR, annual membership or participation fee, transaction fee among others.

Read the Fine Prints
You should spend time to understand each of the credit card plan terms before you accept the card to avoid binding yourself unnecessarily. If for instance your issuing company has a shorter grace period, you may be unable to pay on time, late fees will be imposed on you and you might end up adding to your debt. That said, usually the terms are rather competitive within the credit card industry but there will be some which provide longer grace periods, lower APR etc. And it might be a surprise to you that some card companies are most willing to waive off your annual membership fee in return that you continue to use the card.

Avoid and Minimize Card Theft
Syndicated card theft is rampant nowadays and you should take additional care to safe keep your card to avoid unauthorized use. An alternative way to avoid lost or unauthorized use of your card is to carry only one card and only carry it when you think you will use. Never give away your card information if you do not feel secure to do so. Take for instance when a telemarketer asks for your credit card number and other personal details, never reveal. Call the card issuer immediately and inform them in instances when you lose your card. Keeping separate records of each of your account number, expiration date and issuer contact information is important but a lot of us have yet to keep this good habit.

Reconcile Your Card Accounts
Another good habit is to keep your official receipts of purchases you made with your credit card. This is for you to re conciliate your receipts with your monthly credit card bill as they arrive. When in doubt of certain account entries, with the supporting receipt documents, you will be in a better position to discuss the discrepancies with your card issuer. Note that reconciliation of your monthly statement with your receipts is a critical step in the process. Always ensure that there are no errors or additional entries not incurred by you.

For more credit repair tips, check out Credit Repair Tips.

Increasing your credit report score rating is not a difficult proposition. It simply takes time and patience. You must not expect to see results overnight. And if you are approached by someone in a credit repair company which insists that they are capable of cleaning up your credit report within a couple of months, walk away.

If you have plans to buy a new home, or a new care in the future, now is the time to review your credit report and improve your credit score ratings. We will share some simple legitimate and easy to apply techniques to help you progressively increase your credit report scores over a period of time.

Review your Credit Report & Ensure that Your Credit Report is of Full Factual Accuracy.

First thing you need to do is to get your credit reports, from each of the big three Credit Reporting Bureau. As we cannot stress more, to get better accuracy and clarity, you need to read all 3 credit reports for the big 3, namely Equifax, Experian, and TransUnion. And remove all the inaccuracies by liaising with them if any.

Use Your Credit Cards, Make Repayments, Clear Payments Regularly.

The optimal credit cards you should possess are about 3 to 6. The more credit lines you have the more it will hurt your credit scores, especially when you are accumulating outstanding unpaid balance attracting hefty interest on them. Pay off the outstanding amounts as much as you could but never clear all at once. Do it progressively with a schedule and budget.

Then proceed to repairing your credit cards status and henceforth repairing your credit report scores. The fact that you are making regular payments on your cards and are reducing your debt will show up on your credit report, and you will get credit for this. In the meantime, do not use your cards to make additional purchases. Note that your aim is to pay off your debt.

Well, it may sound unbelievable but there are people who have been paying with cash throughout and hence do not have a good credit score in this respect. No Credit Report would be able to unravel the fact whether you are a good money manager at all if you do not even possess a credit card. In this case, apply for a couple of credit cards. Make a small purchase on each card every month, and pay the card every month. These payments will show on your credit report, and they will begin to increase your credit score. In short, you are creating a legitimate image of a responsible credit user.

Pay Your Bills Promptly Via Online Banking.

This is something that mot many people realise. When you apply for a bank account the bank gives you an option to register for their online banking services. Accept it and fully take advantage the ease of online banking to pay your bills on time. That is as and when your bills come in, you must schedule them to be paid online.

In addition, you can pre schedule payment of recurring bills, hence you will no longer be plagued by unpaid bills with the online banking auto payment feature. There had been cases where the speed at which you clear your bills makes 35 percent of your FICO score, so bill payment is important.

Apply To Increase Your Existing Credit Limits On Your Cards

To avoid maxing out your credit cards, or even coming close to it, you may opt to apply for increasing the credit limit on your cards. Remember the objective is to ensure that you have spare available credit, hence you must have the discipline not to use this extra approved credit. And of course apply to raise the credit limit one card at a time, and space out the timing to avoid raising questions.

It is obvious that getting approval for any type of loan depends greatly on your credit rating. With an average credit rating, you will probably find your loan application almost impossible to be approved. Knowing what factors drives your lenders to approve your loan is critical. And it is also not difficult to get good rating and improve you credit score. Here are some key factors that many credit companies use when evaluating your credit scores. Most lenders develop their own evaluation system which allocates or minuses points to your overall eligibility. Some criteria are beyond your control, yet some could be remedied. And most of them are facts that lenders may not want you to know too.

Your Age which you could never change is critical to your credit score. If you are between 24 to 64 years of age you will get one point. Any age bellow or above that will score you probably get zero point.

Your Marital status helps if you are married.

You stand a chance of adding extra points to your score. Otherwise, you are deem as higher risk and allocated a zero point to this criteria. The rationale is simple in that lenders believe that any borrower should have the basic moral obligation to their dependents to pay off their credit and debts and not to skip town instead. Hence, being married and having a family anchors you to your credit realities.

Your Place of Residence

This is another peculiar but critical criteria for lenders to evaluate you. Essentially, the root means that your place of residence, your location, your neighborhood, the length of your stay, the size and term of your loan, your repayment records. Lenders want to know where you live, or rather what kind of neighborhood you put up in as this would imply certain common characteristics of loan repaying, probably more law abiding individual.

Owning the home with a fairly large mortgage or without a mortgage will give you more points. Records on the timeliness of your loan repayments are critical. The length of time you stay in your current or previous residence also adds more points to your score. For instance, If you have stayed in the same residence for 5 years or more, you are allocated points. Alternatively, if you are someone who moves often you probably score zero points in this area.

Your Job

Your Job is one other key criteria which lenders check out very carefully before evaluating to approve your loan. Key criteria are the length of time you held the job and your monthly income. Your capability to stay on at a job tells of your stability and stable income generation implies ability to repay loans.

Although we believe that lenders should never discriminate against different occupations, jobs which render the applicant with stable instead of fluctuating income are somehow better rated. Should your income fluctuates without a trend, you might not get scored for this aspect.

You credit score is usually rate between 350 and 850. The lower your score the more difficult it will be to get loan. Scoring 800 or above should be goal of every consumer. Bellow is list of short tips on how to achieve 800 credit score or above.

The secrets of what lenders look out for to evaluate approval for your loan applicants are essentially very basic and logically lifestyle based. And their eventual basis is to ensure whether you are a good risk to them. The higher the risk the lower chance of credit approval and vice versa.

It is imperative that you understand why your credit score is a very important in any financial transaction that you make or intend making in future. Your Credit Score could mean thousands of dollars saved between the best loans or subprime rates in town. You might think that the rich get richer and the underprivileged get the worst deals. Well, it is all in you to break this myth. Self Discipline is key to improving your credit report score, thereby allowing you much better loan and credit rates. Hence, it is critical that you equip yourself with the knowledge of what the score means, and how to improve it.

What is Your Credit Score?

When you borrow money or utilized credit you are allocated a score reflecting how well you manage the credit. The credit score is determine by the amount of credit you have, how much money you owe and whether you make timely payment.. It is obvious hence that your credit score serves as predictor to the lender of how likely you are to repay credit. Another key reference indicator is whether your credit report records a good credit history. If you have a bad history of credit repayment, late or non-repayment, you will find it difficult to get any institution to trust you again. To repair your bad credit image, you need total self discipline and good money management habits.

Rule Number 1 - To Pay Your Utilities And Card Bills On Time.

Failure to do so will escalate an already negative score which could trigger further dips on your credit score. You should always ensure that you pay at least the minimum monthly payment on your card although it is best that you pay up the balances of your credit card each month. It is critical that in order not to incur late payment charges, ensure that you pay your bills before the end of grace period. For credit cards, you have about 30 days to make payments before due date. Understand that late payment will affect your credit score adversely.

Rule Number 2 - To Make Sure That You Never Exceed Your Monthly Limit.

One factor that reporting agency consider in scoring you is outstanding balance on your credit account. If you are the type of consumer that often exceeds their limit you are risking your credit score. So make sure you do not exceed 30 to 35 percent of your available credit and even in dire straits, you should Never exceed 50 percent of your limit in any case. Note that for credit cards, you should always keep your debt to credit limit ratio below 30 percent at the maximum.

Rule Number 3 - To Limit The Number Of Credit Card You Sign Up Or Use At A Time.

It is obvious that the more cards you have in your credit portfolio, the more debt you will have to live with. Even if you need more than 1 card, ensure that you do not sign up for more that three cards. It is an issue of managing your cards and your attitude of credit spending. A tip is to ensure that you do not go shopping with more than 1 card with you and never exceed that 30 percent credit limit target you set for yourself.

And finally, ensure that you remove all accounts that you do not use, especially accounts with high annual fees and high interest rates. Note though that your credit score will temporarily dip as your debt to credit ratio would be momentarily higher when you get rid of cards you do not use. Should you continue to pay conscientiously pay your bills on time, the credit score will correct itself over time.

So you have received your Credit Report, totally frustrated with your credit status and you are determined to improve it. Drastic situations require drastic measures, within legal means. But there are legalities you need to be in the know if you wish to repair your credit status.

The critical activities you need to do upon receipt of your credit report is to review and dispute any errors or mistakes in the report. The process of reviewing your Credit Report is tedious, to say the least. But all is worth its while if the end result is successfully repairing your credit situation.

Meticulously go through each and every item in your Credit report. And if you have read my other posts and articles, I always suggest that you request for 3 credit reports from the Big 3 Credit Reporting Bureaus, namely the Equifax, TransUnion and Experian. You must review each of the reports carefully to ensure that all information captured are accurate.

Initiating Credit Report Dispute - Key Tips Credit Repairing First Steps

Once you discover errors or mistakes in your Credit Reports, you should do the following:

• Send a very brief letter by certified mail with photocopies of your supporting documents to the Credit Reporting Bureau.
• Hand write your letter, and include the phrasing as such I am disputing this item, or these items, on my credit report. Please verify and validate it, or them. It is important to note that verify has a very strong legal connotation to it a highlighted in the Law Dictionary. So always use the word in any dispute letter to reinforce your tone.
• Never be lazy and dispute more than 3 items in your credit report any one time within 60 days. Otherwise, you might be perceived as overtly anxious to erase all negative information from your file. The law could be on the side of the credit reporting bureau should you do otherwise.
• With any Credit Reporting issues as with any legal issues at all, you Must deal with them via writing in the mail without fail. And as far as possible, use certified mail which requires the correct recipients to sign off, so that you know that the document has been delivered to and received by the correct person.
• Set up a specific file for safekeeping of all supporting documents and correspondents for future references. Keep this good habit for all financial activities going forward, regardless of your disputes.
• You must always request for a revised copy of the verified credit reports after removal of the errors. These too go into your specific file.

Key Tips in Dealing With Credit Report Bureaus on Disputes Follow Through

• With the vast number of verification requests daily, the credit bureaus probably do not have the time to verify all requests. The usual routine is to check the item, or items, and give a brief reply and have 30 days from receipt of your original certified mail.
• Wait until 10 days are left before deadline and send another certified mail letter stating that Your alleged validation is not sufficient to show that I am a debtor to that creditor. Should they not have sufficient time to validate it, and they must remove it from your file. But should they do, you must ensure that the validation is 100 percent accurate, else remove that information from your file. Note that the above is supported by a case law involving the The Fair Debt Collections Practices Act. In fact there is a Federal Law mandating that they verify your disputes, with a penalty of $5,000 for mishandled disputes.

When you are up your neck with debt and realized that there is no way that you could eventually repay the debt amount, the thought of declaring bankrupt would surely have crossed your mind. Yes, Bankruptcy should always only be used as a final option. Paying off your debts will always be a better alternative as much as you could.

You should note that filing for bankruptcy does not simply affect you individually. If you are married, your spouse and children will both be financially and emotionally affected to say the least. The cascading effect from your bankruptcy could ripple across your family members. You spouse might be further burdened with greater debt to maintain your household, your children could be emotionally harassed at school, your relatives would shun away from you and the worst scenario could be the collapse of the family unit. After all, with all the benevolence we have evolved into, society still frowns upon bankruptcy as taboo.

Consider The Following Credit Repair Alternatives Before You Decide To File For Bankruptcy

Settle With Your Creditors.

Open up communications with your lenders. Show them your sincerity in repairing your credit. Most rational lenders prefer to work with you for a settlement plan instead of waiting years for your discharge from bankruptcy. This process is made easier if you are simply in a situation of being late in a few payments. Since you are still not a total bad risk to the lender for the moment, the lender would most willingly work out a plan with you to help tied you over this trying period.

Credit Counseling Services to the Rescue.

Should you feel uncomfortable to negotiate with creditors or have been unsuccessful in the negotiation process, you might wish to seek the assistance of a consumer credit counseling agency. Credit counseling services generally offer you priceless credit report repair by advising you on matters related to money management, offer solutions to current credit or debt problems, and develop an individualized plan to help you prevent future credit problems.

Essentially, Credit counseling services provide you with an overview perspective of your current financial standing and advices you on how to solve your financial woes from a wide aspects of credit and money management. Credit counseling services can also often help negotiate lower interest rates, hence resulting in lower money payments. They can also help set up a debt reduction plan to allow you to pay off your bills in lesser number of years.

Scrupulous Credit Repair Companies Far and Few.

When people suffer from credit problems from some inaccuracies in their credit report resulting into a low credit score, the first thought is to seek help commercially, namely from credit repair companies. Amidst the maze credit report repair companies, in light of the increasing fraud credit report repair cases within the credit industry, it is admittedly not easy to weed the authentic from the fraudulent. Even when some credit repair companies achieve results for clients, research shows that 60 percent of the cases are simply temporary stop gap measures. Their approaches are not long term and neither are they comprehensive. The tactics resorted are focused correcting the most glaring issues from a short term perspective. That said, there are indeed authentic credit repair companies out that which work hand in hand with their clients to provide more overview perspectives and use legitimate strategies which benefits clients over time. And sometimes, Bad credit repair requires drastic but legitimate measures.

It is critical hence, to check the credibility and the reliability of the credit report repair companies you are seeking to take the help of. Check out the profile of the company, whether it is a member of the Better Business Bureau, get testimonials from friends who have used their services, visit them to preview their premises and gauge their set up.

Simply A Breather Or Reprieve From Debt?

Filing for bankruptcy may not be the best option, but could be the correct option at times. For instance, if you are laden with medical bills, you might consider filing for bankruptcy, as you would have a choice of discharging them totally or spread out the repayment over a 3 to 5 year period during bankruptcy.

Make an appointment with an attorney, discuss your issues with him or her and then seek advice on whether bankruptcy is the right option for you. An attorney can review all of the facts in your particular situation and then help you decide if bankruptcy is the right choice.

You would think that with many lines of credit or several huge debts, you are sending a positive indication to your creditors and the credit reporting bureaus that you are a good credit risk. Well, think again. Unless you have abundance of cash to pay off the monthly outstanding loan installments or payment as they come due, with the extensive number of credit lines and large debts, you are obviously maxing yourself out.

Never Over Leverage on Your Credit Worthiness

Essentially, you are over extending your credit and fast becoming a very bad credit risk. Even if you continually pay your loan installments or clear your monthly credit on a timely and regular fashion, lenders would categorize you are having a harder time managing your existing bills. And to top it off, if you should default on your payments at any point in time, your credit worthiness will plummet as well. It is not difficult to understand that the more debt you have in your personal balance sheet the more monthly debt installments you are obliged to repay and therefore you pose as a greater credit risk of defaulting on your loan or credit repayments.

It has been researched and proven that when a person is faced with a high personal debt to asset ratio, any major personal crisis like divorce, retrenchment or illness will have a negative and cascading effect on his or her credit status due to having higher risk in defaulting on loan repayments and to clear credit.

So only borrow the amount you need and repay your debts on time. Lenders and credit reporting bureaus know that while this may not be true for some, it is true for most, that the more debt you have the greater problems you will have in case you do run into a life crisis.

Key Tips To Avoiding Excessive Credit

So the most intelligent thing to do in order to maintain a good credit score is to avoid excessive credit. Keep about 2 credit cards that you find functionally most useful and slowly clear the balances on the rest. Remember that you should not clear all other outstanding balances even if you are able to pay up totally. Paying up over time will help you display to your credit reporting bureaus the ability to manage credit.

For all credit cards or outstanding personal loans, pay your bills regularly and better still, use online banking to schedule repayment on fixed days of the month In addition to the 2 credit cards, maintain at least 1 to 2 key debt instruments like an auto loan or a home mortgage but ensure that you regularly repay your installments.

This should be sufficient for a good credit rating. Never apply for a credit line or a credit card just for that rainy day because when it comes to personal credit risk management in an economic downturn, it never rains, it pours.

If you are serious about repairing your credit, you need to review your credit status from a broad perspective, i.e. from the big picture. It is futile to expect that you could correct your credit report simply by paying up one credit card account when you have payment arrears in your home loans, and 4 other outstanding and ballooning credit card accounts. If you need to repair your credit, you need to spend effort and stay organized with a to do list that ensures you will not forget anything.

As you can likely tell by now, credit repair is not one magical solution but rather lots of relatively small things you can do to help repair your credit. To make sure that you don’t overlook any one aspect, you may want to develop an activity list which you can post and check off.

Understanding Your Net Worth

From a financial personal planning perspective, keeping the picture simple, the key component you should review are your assets, liabilities, income and expenses. Assets include your home, other investment properties, cars, liquid cash, and other smaller personal items like coin or stamp collections etc. Key liabilities include your home loans, car loans, outstanding credit card balances, personal credit lines etc. Income is defined as revenues generated from business, or salary, or rental income from leasing out your home or other assets you might own as well as interest earned from your fixed income investments if any. Finally your household expenses, personal expenses, interest incurred, both ad hoc or on going.

The Net Worth Approach to Comprehensive Credit Repair

It is a misconception of many people that for Credit repair to be executed successfully, you need to focus only on the credit aspect of your net worth. It is most critical that you review what your total net worth is, where you could optimally leverage the financial income or revenue and channel them back to your coffers for credit repair purposes.

First Step to comprehensive Credit repair to start understanding where your credit gaps are i.e. your liabilities and expenses. In addition, you need to review your lifestyle, spending and living needs. Then proceed to review in your portfolio of assets and income. This approach gives you a very clear picture where your credit gaps need to be rectified and where you can generate and channel the income to clear those credit gaps.

Channeling Asset Income To Clear Credit Debt

You need to clear 2 of your outstanding credit card accounts which you worked out to be USD500 per month for about 9 months. And by reviewing your lifestyle and living needs, you realized that you have a large basement not utilized at all. By clearing out the mess in your basement and renting it out, you generate a monthly rental income of about USD500 per month which would then be channeled back to paying off the outstanding credit card accounts. The same approach could be used for channeling your monthly rental income to paying off your home loan or car loan.

Cut Unnecessary Big Ticketed Expenses

If you own an MPV, a Four by Four, both of which you are still paying off car loans, a hybrid car as well as a vintage Mustang which are both fully paid up. All of which are under utilized, kept in your garage to gather dust, while you are laboring hard to find ways and means to pay off your credit debts. It would obviously make more sense to get rid of a few of your cars. Keep the hybrid for fuel savings as well as the Mustang for vintage value and sell the MPV and Four by Four.

Elevate your focus to a broad perspective, Review your overall Net Worth in terms of your outstanding credit gaps. The Comprehensive Credit Repair Net Worth Approach is a proven more effective approach over time in improving your credit report score.

Get more good reads on Credit Repair at Credit Repair Life Skills.