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Credit Repair

Credit Repair Myths Busted

7 Credit Repair Myths Busted

By | Credit Repair

The first step toward repairing your credit is educating yourself on credit repair myths. For most people, the Internet is the easiest way to access that information. But as with any other common financial problem, you’ll find that the Internet abounds with misinformation and services that, unfortunately, might actually cause more harm than good. We’ve rounded up the most popular credit repair myths so you can save yourself from more unnecessary financial angst.

Credit Repair Myths:

Myth #1: If you pay off your debts, those negative items will dissolve from your credit report.

Paying your debts will increase your credit score, but the damage may already be done. Negative credit items remain on your credit report for seven years, which is a very long time to wait. Especially when you’re facing denials for loans or higher interest rates because of your credit history. The only other way to get an item removed is if you believe it to be inaccurate or outdated. In that case, you can hire a service to dispute the information with the credit bureau or undertake the process yourself. Resolving to pay your debts on time will go a long way toward boosting your credit profile, but it won’t rid your score of the effects of the “bad” debts.

Myth #2: Credit repair companies are a scam.

This is the most popular question when it comes to credit repair myths. Not all credit repair companies are created equal, but legitimate and well-respected companies do exist. Successful and reputable credit repair companies will have a trained analyst review your credit report, discuss any questions and concerns you may have, and go to work on your behalf with the credit bureaus to dispute incorrect or outdated information that is hurting your credit rating. Although you could commence the process yourself, you may choose to save considerable time and energy by handing the reins to a trained professional.

Myth #3: Bankruptcy is my only option.

Bankruptcy should be viewed only a last-resort. Bankruptcy might provide an immediate fix to a devastating financial situation, but your credit score will take a while to recover. Before you take this leap, make sure you have investigated all of the possible options available to you — and better yet, speak with a trained credit counselor who can possibly point you in a direction better suited to your financial situation.

Myth #4: You won’t see improvements in your credit score for a very long time.

Change isn’t going to happen overnight, but it may happen faster than you think. Credit bureaus will generally make marks to credit scores every 30 days, and hard inquiries (a credit check done by a lender when you’re trying to open a new account, for instance) are reported soon after they occur. You might see some small changes if you check your credit report once a month, and more significant improvements will be visible within the first year of working to repair your credit situation.

Myth #5: Negative items can be added back to your credit report.

You may have heard that credit bureaus can add negative events back on your credit report after they’ve been removed due to a dispute. The only way that can happen following a dispute is if the credit bureau finds out that a debt may be valid after it has been contacted to remove the item for being incorrect or outdated. But in most cases, items erased from your credit report won’t make a reappearance.

Myth #6: You’re better off repairing your credit on your own.

You can, of course, gather all of the necessary information, write to the credit repair companies, and request removal of any items that you believe to be erroneous. This does, however, require a great deal of patience, as well as legal and financial finesse. That’s why it’s a good idea to hire a professional, who is trained to negotiate with the credit bureaus and secure the best possible outcome for you.

Myth #7: Credit reports are generally accurate.

Errors are more common than you’d think. A 2012 study from the Federal Trade Commission revealed that one in five Americans have been plagued with an error on their credit report. Most people make it a habit to review their credit card statements monthly to ensure they recognize all charges. The same should be true for your credit report — because you never know what incorrect and damaging information could be affecting your credit score.

It can be tough to separate fact from fiction when you’ve resolved to repair your credit. At Ovation Credit, we are standing by to help answer your questions about your credit score and reports. Contact us today to learn more about how we can help you build a stronger financial future.

repair your credit

4 Simple, Effective Ways to Repair Your Credit

By | Credit Repair

Anyone can make mistakes — and some of those mistakes can impact your credit standing. Even if you’ve always taken great care with your credit, unforeseeable crises can easily undo all your good work. Just as a few serious problems can torpedo your credit rating, a few smart strategies can help you bring it back to life. Fortunately, you don’t have to carry that burden indefinitely.  Here are some simple, effective things you can do to repair your credit.

Repair Your Credit Tip 1 – Start Over With Secured Credit

The worst-case scenario in the credit world is bankruptcy. This last-ditch move can indeed give individuals a fresh financial start, but in the process, you can expect to lose your credit. Oddly enough, you may start receiving credit card offers in the mail sooner than you’d expect. But this can prove a dangerous kind of trap. The creditors making the offers know that you won’t be permitted to file for bankruptcy again for at least 7 years, meaning that you’ll be stuck with paying them back even if you get into trouble.

Still, there is one kind of credit card you definitely should look into: a secured credit card. This card is backed up by a cash deposit, with the credit limit typically equalling the deposit amount. Use this card carefully and pay it off in full every month. By doing so, you’ll be rebuilding a positive credit history that can set the stage for your successful credit repair journey.

Repair Your Credit Tip 2 – Reduce Outstanding Credit Balances

You could have an excellent credit payment history, with multiple lines of credit going back many years, and still get turned down for a loan because of a high credit utilization ratio. This term refers to the amount of your credit tied up in outstanding balances. Lenders generally recommend that you keep your credit utilization ratio under 30 percent of your total credit limits. If you need to reduce your outstanding balances, you may want to try either of two popular debt payment techniques:

  • Snowballing – Snowballing involves paying down one credit line at a time, starting with the lowest balance. For instance, you might pay $25 above a $25 minimum payment (or $50 a month total) to accelerate repayment until the balance hits zero. You then take that $50 monthly payment and add it to the monthly minimum payment on the next-lowest balance. Repeat this process, and you’ll see that credit utilization drop at an ever-faster pace.
  • Stacking – Stacking is the same basic technique as snowballing, except that it involves paying the credit lines down in order of interest rate, with the highest interest rate going first. This may be less satisfying than seeing those smaller balances disappear quickly, but in the long run it’ll save you more money.

Repair Your Credit Tip 3 – Go Easy on the Applications

If you’re tempted to obtain a new credit card to make your credit utilization ratio lower, take care. While your utilization will indeed drop as your total available credit rises, that new credit line will require what’s known as a “hard pull,” or credit review. This type of review can temporarily make a bad credit score even worse. Actually using the card will compound your troubles if you don’t make certain to pay it off faithfully each month.

Other types of loan applications can also ding your credit, at least in the short term. Each car loan, home loan, or other kind of bank loan application will result in a hard pull. Too many of these inquiries can seriously disfigure your credit score. The fewer credit lines or shorter credit history you have, the more damage your score will take. If you need to shop around for the lowest rate among multiple lenders, make all those credit applications within the same 30-day credit cycle. Creditors recognize rate shopping when it occurs in this pattern, and they will score those multiple applications as a single hard pull.

Repair Your Credit Tip 4 – Watch Your Credit Report

Consumers who struggle with credit issues are only human — but so are the people who enter information into creditors’ databases and credit reports. It’s always possible that inaccurate data is depressing your credit score unfairly. You may also be suffering the effects of a co-signer or other party who has damaged your credit without your realizing it.

You can catch these issues by requesting and studying copies of your credit report from each of the three major credit reporting agencies (Experian, Equifax, and TransUnion). You’re legally entitled to one free copy of each report per year, and you can also purchase additional copies. If you see something wrong, you can dispute that entry and possibly get it expunged from your record. Once you’ve sent a written dispute letter, ideally via Certified Mail, the reporting agency is required to investigate the possible error within 30 days’ time.

As you can see, there’s no single “magic bullet” to repair your credit. But the right combination of best practices, implemented with patience, intelligence, and consistency, can give you the power to fix those nagging credit issues and prevent them from recurring. Last but not least, you’ll enjoy the tremendous feeling of accomplishment and empowerment that comes from taking control of your own destiny — and that’s surely something worth taking credit for!

Sources:

https://www.bankrate.com/finance/credit-cards/10-questions-before-getting-a-secured-credit-card-1.aspx

www.nerdwallet.com/blog/finance/improve-your-credit-utilization-ratio-fast/

https://www.thebalance.com/debt-snowball-vs-debt-stacking-453633

https://www.moneytalksnews.com/ask-an-expert-will-opening-a-new-credit-card-hurt-my-credit-score/

https://www.myfico.com/credit-education/credit-checks/credit-report-inquiries/

https://www.usatoday.com/story/money/personalfinance/2015/08/22/nerdwallet-check-your-credit-reports/32129411/

https://www.consumer.ftc.gov/articles/0151-disputing-errors-credit-reports

Investment in Credit Repair: Why Should I?

By | Credit Repair

Credit repair may seem pricey but when you step back and look at the return, its a no brainer the investment is worth it! Credit repair service helps you to get inaccurate and dubious entries removed from your credit report. Therein, fixing your report to accurately reflect your credit history, which in return recalculates your FICO score. In turn, you will find yourself saving a lot of money and qualifying for many more financing opportunities.

Investment Credit Repair

Understand the Value of Strong Credit

There is an immense value that comes out of having great credit.

You are suddenly eligible for incentive-rich credit cards, personal loans, mortgages and even small business loans. You have funds available if there’s ever an emergency — plus your debt comes at a lower price, as having good credit means you qualify for better interest rates.

The ability to save on interest costs is the silver lining here. For instance, look at how your credit score impacts your overall mortgage costs. With a FICO score in the 620-639 range, you will pay more than $115,000 above what a borrower with a 760-850 score pays in a 30-year amortization period. So even though an FHA home loan gets you into a new place with a 580 score (and sometimes lower), it still makes sense to repair your credit first.

This example was provided in our post here, which showcases the high cost of a low credit score in a major financing situation. It’s based on a $400,000 purchase price. While the actual savings will vary, it’s true that the interest rate discount is massive for homebuyers with strong credit scores. This factor makes it crucial for soon-to-be home buyers to maximize their credit score right before buying a home.

Credit Strength Provides Incalculable Benefits

The financial benefits that come with a strong credit score are not always foreseeable. Sometimes you only realize what you could have saved once it’s too late, and in hindsight you find yourself wishing you did something about your bad credit sooner.

The home buying scenario is a great example. Imagine if you buy a place with your spouse and they move out. The only way to remove one of you from the financing documents is to refinance. You will be eligible for that new loan if your credit is strong enough to qualify you.

In that scenario, having good credit can save you from being forced into a mortgage default and foreclosure. Suddenly, you prevent your family from going homeless or having to sell your property. This example alone should show you why you want your credit score to always be high.

How Repair Services Boost Your Credit

A credit repair agency will get rid of any inappropriate entries on your report. These instances are typically negative items that hold down your FICO score. By removing them, you could see a shift of anywhere from five to 100 points or more.

The actual adjustment in your credit rating comes down to the type of item that gets taken off. For example, a wrongly reported late payment or defaulted debt could give you a huge boost. The best way to calculate the score difference is by looking at how much your FICO score can drop from each action. Learn more on how to read your credit report to get an idea of how your score might change based on particular negative items.

Another benefit comes from having credit repair specialists work against debt collectors to void your debt. For instance, you might have an older debt in collections that was re-sold a couple times. During this process, if the debt amount was changed, it’s grounds for removal. It is common for debt collectors to add their own fees or report slightly different numbers — so this might be an easy way to get your credit score lifted a bit.

Is the Investment in Credit Repair Worth the Cost?

By law, a credit repair agency is required to provide their service before accepting payment for their work. You receive a written contract to fill out detailing the services they will perform. Unless specified as longer, you are legally entitled to a three-day grace period where you can request a refund.

There are many service providers that claim to offer credit repair help. Some market their services as credit-score boosters. While you can improve your credit score this way, you also have the right to dispute anything on your credit report on your own, but this could be very tedious and time consuming.

The part that makes a professional credit repair service so beneficial is the fact that they have years of experience(s). They know the ins and outs of error reporting and how to deal with everyone from the debt collectors to the credit bureaus. In short, you have a much better chance of getting negative items removed if you do source the work to a professional credit repair firm.

Conclusion

Free yourself of bad credit in every way possible. Sometimes the battle starts with improving your borrowing behavior. Yet, for anyone with removable/inaccurate items, it definitely does not end there. A credit repair service will help you get the hindrances removed from your credit report.

If you are unsure if you have errors on your credit report, why not get a complimentary credit consultation with one of our professional credit analysts to see how we can help you. Call 866-639-3426 and press option 3, they will review your credit report to see if there are any inaccuracies that could be affecting your credit.

The investment is well worth it because in the end, you may be able to achieve a much higher credit rating once these changes to your credit report are recalculated into your FICO score. A better score means a better interest rate which in return can save you thousands especially when you think about a 30 year mortgage!

Sources:

https://www.forbes.com/sites/marcwebertobias/2015/05/06/credit-repair-companies-how-to-avoid-being-scammed

https://www.credit.com/credit-repair/

Why We Love Improving Credit (And Why You Should, Too!)

By | Credit Repair

Improving credit can give people such a great feeling. It comes as a relief because it lets you put money-related setbacks or mistakes in your past. At the same time, it offers an exciting new start for your financial life.

Love Improving Credit

In particular, improving credit can positively affect the following areas.

1. Credit Cards

With a more impressive credit, it’s easier to get credit card applications approved. Plus, your interest rates will be lower.

Also, in some cases, credit card companies will automatically raise your borrowing limits as your credit score goes up. And, if they don’t, you could always apply for higher limits. Even if you don’t spend any more money with your credit cards than you have in the past, a higher credit card limit will help you. That’s because it will lower your credit utilization ratio. That ratio measures how much you spend versus how much you could spend. A lower credit utilization number will mean an even higher credit score.

In addition, there are various credit card bonuses that people with good credit may be eligible for, including programs that provide rewards points or cash-back offers.

2. Loans

Reputable lenders are much more likely to authorize loans to people with solid credit reports. Therefore, you’ll surely be capable of securing larger loans and more favorable terms ― such as lower interest rates ― with a better credit score.

Equipped with that higher score, you could also try to renegotiate and refinance loans that you’ve already taken out, especially a mortgage if you have one. Maybe you’ll be able to eliminate certain fees or extend the length of a loan, which obviously would mean making smaller payments each time.

3. Rental Homes

Nowadays, it can be difficult to find a landlord who’ll let you rent an apartment or other type of housing if your credit is poor. Many landlords feel, rightly or wrongly, that tenants with bad credit are less likely to pay their rent on time.

This fact holds true for rented vacation homes as well. Whether you’re renting such a place for one time only or on a recurring basis, you very well might obtain lower rates and fees if the owner knows that you have good credit.

4. Security Deposits

When your credit report is healthy, you may not have to pay security deposits when you sign up with a new utilities company or buy a new smartphone. And, by not having to pay such deposits, you could save hundreds of dollars over time.

5. Getting a Job

If you’re applying for a new job, your prospective employer might ask to look at your credit report. You’d need to give your consent in writing before anyone could do so. And, if you have an excellent report to show off, it might make you look especially responsible and mature.

At this time, most employers don’t look at credit reports, but that situation could change. Moreover, if you’re applying to a company that does check out these reports, having better credit might give you an extra surge of confidence when you go in for your job interview.

6. Auto Insurance

Car insurance companies often calculate that people with higher credit scores file fewer claims. As a result, they frequently charge higher premiums to those with lower scores. Therefore, improving your credit can be a major advantage when you’re looking for an auto insurance policy.

 



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Repairing or Improving Credit

With all of these benefits in mind, you might be wondering how to begin repairing or improving your credit. Well, a reputable credit repair company is a good place to start. The professionals will work with you to comb through your credit report and find errors that are negatively affecting your credit. For example, perhaps your record states that you forgot or were late with a certain debt payment, but you’re sure that you paid it on time. Your credit repair company will dispute on your behalf to hopefully get that removed. Not to mention, in the process of advocating for you, your credit repair representatives could offer you a wealth of financial advice on how to live a better credit life.

It’s all too easy to spiral downwards financially. As you’ve read, when you have bad credit, it’s harder to obtain favorable conditions from lenders, landlords, credit card companies and others, which means it becomes harder to pay back the money you already owe. Then, if you fail to make some of those payments, your credit score will drop even further, which can put extra monetary strains on you. The cycle is vicious.

Fortunately, the opposite is also true. When you boost your credit, you’ll accrue an array of benefits that will make it much simpler to live within your means and save for the future. As time passes, your economic outlook should look brighter and brighter. With an outstanding credit repair service at your side, you can finally break free from harmful spending patterns and take charge of your financial life. That sense of personal empowerment may be the best reward of improving credit.

Sources:

http://www.huffingtonpost.com/nextadvisorcom/6-surprising-ways-having-_b_6000364.html

http://finance.yahoo.com/news/6-biggest-ways-bad-credit-110012930.html

http://money.usnews.com/money/blogs/my-money/2012/02/21/6-benefits-and-rewards-of-having-awesome-credit

http://www.msn.com/en-gb/money/moneymatters/reap-the-benefits-of-an-excellent-credit-score/ar-AAdgJjH

https://www.thebalance.com/having-good-credit-score-960528

Can a Credit Repair Service Really Fix Your Credit?

By | Credit Repair

Are you facing issues from your past that are weighing your credit report down? If so, a repair service might be of some assistance. However, many Americans are still unaware of what these companies actually do. So before you draw any conclusions, it is important to understand how these services can help you fix your credit.

It’s also important to educate yourself on what a credit repair service does not do. That is, they don’t focus on building your credit rating, nor do they help with consolidating debts. It is all about fixing erroneous credit reporting issues. While there may be adverse effects (maybe your score goes up), this is not the main purpose of a credit repair service.

Fix Your Credit

What Do Credit Repair Companies Do?

A credit repair company will try and fix any damage on your credit report. This is done by collecting a copy from each bureau for analysis. The service provider will carefully comb through and try to identify errors. It could be anything, such as HR reporting errors at work or signs of identity fraud.

The FTC reported that one in 20 American consumers have credit report errors. Of that group, one in 20 saw a 25-point or more score increase by fixing the error. A further one in 250 saw a 100-point or higher change afterward.

Fixing any negative items on your credit report can be very profitable. A shift in your score could result in thousands (or more) in interest savings. Just think when it comes time to buy a home, how much could you be losing to negative items?

Fixing Negative Items the Right Way

Credit repair companies are experts at managing credit report errors. This hands-off solution leaves you not having to worry about the outcome. It also means saving endless time on handling the issue. After all, the average amount of time spent to fix an identity theft issue is 30-60 hours.

By hiring a company to do it for you, the entire process becomes painless. Here are the steps that are typically taken to repair your report:

1. Request a copy of your Equifax, Experian and TransUnion file

2. Compare data with you to see if there are any inconsistencies

3. Point out any errors which should be reported and removed

4. Report such errors to the respective credit bureaus

5. Follow up and work with the bureaus till its resolved

What Types of Credit Report Errors?

Every error should be taken care of as it is found. Failing to do so can increase your risk of becoming an identity theft victim. It could also prevent you from qualifying for a credit card or loan — particularly if your score is suffering from the error.

Some items a pro might dispute in order to repair their credit include:

•    Information that is no longer current

•    Inconsistencies between each bureau’s file

•    Reporting errors from your work’s HR department

•    Non-updated information after a divorce

•    Wrongly reported late payments and charge-offs

Credit repair services also help with bankruptcy procedures and post-bankruptcy recovery. There are many things that come into play when making sure your file is clean and up-to-date. For example, sometimes discharged debts are reported incorrectly. They should always have no balance and a reference to why.

Can You Fix Your Credit Errors Yourself?

It is always an option. However, the best credit repair companies have spent many years doing this every single day. It will take you longer and the chance of success is a little or lot lower, depending on the circumstances. You will have to learn how to dispute credit report errors from scratch — which takes even more time.

The easy thing is finding the errors. You can help a credit repair agent with that process. From there, it becomes clear what the path forward will be. Some errors just require an update of your information (i.e., address changes). But others are more serious and require negative item removal.

Furthermore, there are many things you might not be aware of that are actually errors. One such example is if you close an account yourself and the entry says that it was closed by the grantor. This can hurt your credit score as it appears that there was a reason for them to stop doing business with you. Removing the “grantor” label would potentially increase your rating and it makes you look better.

Of course, there are some situations you can handle without help. For those that already know their errors, try contacting the credit-reporting company that caused it in the first place. Sometimes you can mitigate the issue right away. But definitely hire a professional if you have a lot of errors or if the damage goes back years.

Conclusion

Credit repair services offer legitimate solutions. However, too many borrowers are unaware of what these businesses provide. It is something that you should seek out after bankruptcy, credit fraud or identity theft. Sometimes it is even necessary once you go through a divorce — especially if you carried extensive joint debts.

The bottom line is, don’t let errors on your credit report hold you back, fix your credit. Hiring a professional credit repair service will save you time, money and may even improve your credit score along the way.

Sources:

https://www.ftc.gov/news-events/press-releases/2013/02/ftc-study-five-percent-consumers-had-errors-their-credit-reports

http://www.experian.com/blogs/ask-experian/debt-discharged-in-bankruptcy-continues-to-show-in-credit-report/

https://www.ftc.gov/sites/default/files/documents/reports/federal-trade-commission-identity-theft-program/synovatereport.pdf

Repair Credit: Results in Months Not Years

By | Credit Repair, Credit Reports

repair credit now

Full credit repair is no seven-year journey; with the right efforts, you could increase your FICO score by more than 100 points in just six to eight months.

If you’re trying to repair credit problems, don’t turn to bankruptcy. In fact, even if you’re unsure how to repair credit, the best route is debt management.

Take a look below for more details on what actions you should take, which include: using secured credit cards to repair credit, fixing credit report errors to remove penalties, shifting away from heavy revolving debts and taking credit limit increases when possible.

How to Improve My Credit Score

In less than a year, you can go from bad to great credit. It’s just going to take some work. That means building new credit, paying old debts and fixing any delinquent accounts. But if you have bad credit, how exactly will you do this?

The best thing you can do is forget everything you thought about secured credit cards. It’s never a good route if you have other options – but a secured card works wonders when you’re trying to repair credit.

How to Repair Credit with a Secured Card

It’s simple – get a secured credit card in your name and start using it. After 12 to 18 months of responsible paying, the card issuer will upgrade you. Some cards only increase in security funds and others switch to unsecured cards.

Aim for the latter and shoot for the highest credit limit you can get – the bigger the collateral you can provide, the better. The best convertible secured credit cards allow for a $5,000 to $10,000 secured credit limit.

The only other thing is to avoid using the secured card for all your monthly expenses. It’s not good to be that active – after all, the more debt you carry on the card, the worse your credit utilization rate will be. This is an important variable to keep under control; your outstanding debt levels amount for 30 percent of your FICO score calculation.

Building Credit by Fixing Errors

Another way to see a fast increase in points is by fixing errors on your credit file. If there’s an inaccurate entry, it could plague your score by 100 points or more. In fact, a FTC study from 2013 found that 1 in 250 consumers have a 100 point or higher deficit due to reporting errors. Beyond that, another 1 in 20 files contain errors amounting to lower scores by 25 points or more.

You can request a copy of your credit report from each bureau individually, or through the AnnualCreditReport.com website. Take a look at it for any signs of inaccurate or missing information. If anything is spotted, when the bureau acts on it your new FICO score will be higher.

You can report errors on your file through the credit bureau websites. TransUnion also lets you send your report by mail. It’s best to contact all three, but once you notify a single bureau they’re obligated to tell the others. If the issue is due to identity fraud, and not a recording error, then an FTC affidavit and police report might be required.

Consolidating Your Revolving Debts

Revolving debts weigh more on your credit score than installment debts. This means short-term loans can help. If your credit card debts are high, you could use a consolidation loan to lower your debt-to-credit ratio. The installment debt created by your loan won’t drag your score as much, so your score will go up once your file updates with the change.

This is why debt repair services are actually a hidden gem. You can avoid bankruptcy and pay back what you owe on your own schedule. In the end, you might be able to repair your credit score within six months to a year. It’s just a matter of organizing your debts and optimizing your file based on how FICO calculates your score.

Take Any Limit Increase You Can Get

When you are offered a higher credit limit it means you’re given the chance to take on even more debt. This shows that you’re trusted with a higher amount; until you spend it, your debt-to-credit ratio will be improved.

Therefore, taking on credit limit increases as they come is a fantastic idea. It’s just a matter of having the willpower to not blow all the new funds. Long story short, if you can manage this, then the greater credit limits will help boost your credit score.

Conclusion

Credit repair is a scary subject – where the only happy ending seems to come after you go through bankruptcy or if you win the lottery. This doesn’t have to be the case, and there are ways around bankruptcy, but it will take a real commitment.

The journey begins with figuring out what you’re doing wrong as a borrower. In most cases, it’s carrying too large of a debt on credit cards. Deleverage this by getting access to loans and by consolidating your high-interest debts.

Then work on sustaining the best credit utilization rate you can manage. Your FICO score will show real changes after only three to six months of good stats getting reported to the credit bureaus.

Sources:

https://www.ftc.gov/news-events/press-releases/2013/02/ftc-study-five-percent-consumers-had-errors-their-credit-reports

http://www.myfico.com/crediteducation/amounts-owed.aspx

7 Myths About Credit Repair Companies

By | Credit Repair

Credit Repair Myths

If your credit score is not as high as you’d like it to be, thanks to some delinquent accounts on your report, credit repair may be your best bet. If you haven’t considered this route before, it’s probably because you’ve heard a few misconceptions about how credit repair companies work. Fortunately, many of the negative things you’ve likely heard about credit repair can be debunked. Check out the truth behind the most common credit repair myths.

Myth 1: Your Credit Score Will Increase Overnight

Credit repair will surely increase your credit score, but not right away. You’re not going to go from 500 to 750 in a month, either. Instead, plan to see incremental score improvements over the next several months. This means it might increase by 25 points one month and 50 the next, and so on. Going into the process with a realistic attitude when it comes to how long it will take to see improvement will ensure that you’re happy with the results. Just know that if you choose the right credit repair company, you will see a marked difference in your credit score this year.

Myth 2: You Can Get the Same Results on Your Own

It’s true that you can call or write to each of your creditors on your own to get inaccurate or negative information removed from your credit report. But the reality is that few people actually do this. And if you do happen to get around to contacting every creditor, you will need to have some patience and great negotiation skills to get the same results credit repair companies do. Otherwise, you’ll only end up fixing some of the problems. This is why hiring a credit repair company is the most effective option, since professionals know exactly how to spot and fix all your credit issues.

Myth 3: Credit Repair Will Decrease Your Score

Some people assume that the fact that they had credit repair will show up on their credit report, thus decreasing their score. While your score may go down at first, it’s not because of the credit repair itself. If this happens to you, it’s because once you remove a few items on your report, your credit has been rebalanced and you no longer have enough credit accounts to qualify for a good score. You can combat this issue by continuing to build up your credit after the repair, which will help you end up with a better score in the long run.

Myth 4: Credit Repair Costs a Lot of Money Up Front

When you’re already in debt, it doesn’t make sense to add to it with extra expenses, which is why it’s good that credit repair is often affordable for anyone who wants credit help. In many cases, you’ll pay a monthly fee that is likely less than most of your other bills. And in return, your score will eventually increase enough to get you the lower interest rates you deserve, so you’ll likely start seeing return on your investment within months. In this way, paying for credit repair is one of the wisest ways to spend your money.

Myth 5: You Can Increase Your Credit Score by Simply Paying Off Delinquent Accounts

It’s a good idea to pay your debts on time. But it’s a little late to start this once a negative item shows up on your credit report. At that point, it’s already affecting your score and you need to get it removed as soon as possible. If you don’t have a credit repair company request to remove it, it can continue to negatively affect your score for about seven years. So while you should get into the habit of paying your debts, it’s best to do this before they get sent to collections and show up on your report. After that point, you need to hire a credit repair expert to request that it be removed.

Myth 6: Certain Negative Items Can Never Be Removed From Your Report

Some people assume that bankruptcies, foreclosures and other types of delinquent accounts can never be removed from their credit report. But in reality, it’s possible to remove any negative item, assuming you hire the right credit repair company. Some accounts might take a little more time and effort to remove, and there are no guarantees regarding the results you’ll get. But most credit repair companies can tackle any type of negative item on your report, so don’t assume you can’t be helped if you have a foreclosure or bankruptcy.

Myth 7: Negative Items Removed by Credit Repair Services Will Come Back

If you’ve been putting off contacting a credit repair company because you’ve heard that the negative items on your report will show up again, you can rest assured that’s a myth. In most cases, once an item is removed from your report by a credit repair company, it’s gone for good. You might have heard this myth because sometimes the credit bureaus remove an item after being contacted by a credit repair company, and then they hear back from the creditor months later and find that the debt may be valid. At that point, they may add the negative item to your credit report again, at which time your credit repair company can once again request that it be removed.

Now that you know the truth about these credit repair misconceptions, it’s time to give this method a chance to increase your credit score. Credit repair won’t decrease your score, so the only way you can expect to go is up!

Sources:

https://www.credit.com/credit-repair/

http://www.moneychoice.org/best-credit-repair-services-fix-bad-credit/

https://www.nerdwallet.com/blog/finance/credit-repair/

https://wallethacks.com/best-credit-repair-companies/

Repair Your Credit – “Waiting It Out” Doesn’t Work

By | Credit Repair

Repair Your Credit Now

You ran into a few problems with credit and now you have negative accounts listed on your report. Derogatory information no longer appears after seven years, so you may be tempted to wait it out as a way to repair your credit. However, you run into several major issues when you take this approach.

1. Creditors Reselling Debt

Once you miss a few payments on an account, a creditor typically claims a loss on the debt through a process called a charge-off. They may sell the account to a collection agency. This company attempts to get payment for the delinquencies. If they’re unsuccessful, the debt may pass to other debt collectors. These accounts may linger on your credit report, particularly if you make a payment to one of the businesses. You may get stuck waiting several additional years past the seven-year limit due to this activity and debt reselling.

You also get into a position where it’s difficult to keep track of the agency holding your debt. Some scam companies may act as though they are the responsible party, but they’re simply trying to get your personal information. With identity theft on the rise, you put yourself at risk.

2. Delayed Drop-offs

Why repair your credit when the negatives will just go away in seven years? Well actually, your bad debt doesn’t disappear from a credit report when the account reaches seven years in total. It’s calculated based on the date of the first delinquency, which is when you began missing payments. If you skipped several months then attempted a payment plan with the company before the charge-off, you may end up adding months or years to the predicted drop-off rate.

3. Multiple Listings

Another issue with waiting out seven years instead of repairing your credit, is the number of negative account listings you end up with on your credit report. You may only have one charge-off, but you can have the original listing, plus another one for every collection agency that purchased the debt. Waiting it out actually causes you to accumulate even more bad debt. Time is of the essence when you need to repair your credit. These entries bring down your credit report and can make your credit-worthiness look worse than it is.

4. Legal Consequences

You are legally liable for the debt you incur, even after the original creditor charges the amount off. The company has a certain statute of limitations in which they can take legal action against you for the account. This period varies from state to state but lasts for several years. You can get served with a lawsuit for the full amount, plus legal costs. Not only do you need to go to court, but you get a judgment against you that also ends up on your credit report.

5. Financial Consequences Costing You Thousands

Bad credit does more than stop you from getting credit cards. You end up with higher interest rates on mortgages, personal loans and car loans, if you can even qualify for them at all. Insurance companies use credit scores as part of their risk profiling, so you get a higher premium when you pick up vehicle or home insurance. Some creditors may place a wage garnishment or bank account lien on you after winning a judgment. You get money taken out of your paycheck or directly from your checking account, which can have disastrous consequences if it happens at the wrong time.

If your delinquent accounts come from the same company that holds your checking or savings account, it may end up pulling money from your accounts to cover these costs.



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6. Career Consequences

Government contracting often requires a security clearance for employees. If you have significant debt, you may not qualify for the right level to get the job. Many companies, particularly those in the financial industry, also look at your report as part of the hiring process. They may feel that many collection accounts show a lack of responsibility. To think you could be fully qualified but not get the job because you didn’t repair your credit.

7. Personal Consequences

Finding a place to live becomes difficult with bad credit. Landlords look through credit reports to determine whether you can afford to live in the apartment and whether you would be a good tenant. If they see a lot of charged-off accounts, you could get passed over for other applicants. Most professionally managed properties look at this information, so you would have to search out a private landlord instead.

The stress associated with bad credit is also significant. You have to worry about constant application rejections, wage garnishments, lack of access to credit products and an inability to get good rates on anything. In an emergency, you can’t turn to a credit card, which leaves you at the mercy of predatory lenders.

Since you can’t get credit cards, you don’t have access to incentives such as cash back, rewards points, roadside assistance and travel insurance. If you do qualify, you may have to pay an annual fee to keep the card open or secure the credit limit with your own money.

Sitting back and waiting for everything to blow over works well in a natural disaster, but it’s not a great tactic when you need to repair your credit. You face legal action, personal consequences and financial instability when you aren’t proactive about your credit health. Start looking into credit repair assistance, so you don’t have to put your life on hold for seven, 10 or even 15 years.

Sources:

http://www.myfico.com/crediteducation/creditscores.aspx

http://www.experian.com/blogs/ask-experian/when-negative-information-will-be-removed-from-your-credit-report/

http://www.rd.com/advice/saving-money/5-smart-ways-to-reduce-stress-around-personal-debt/

http://www.forbes.com/pictures/eegk45gidm/credit-scores-dont-stop-with-credit/#54e166fd44c6

How Credit Scores Impact Mortgage Loans

By | Credit Repair, Credit Scores, Home Buying, Loan, Mortgage, Your Credit

Credit Scores Impact Mortgage Loans

Are you working towards financing a home? You probably know how your credit rating will impact your loan qualification. You pretty much need the minimum credit rating for FHA home loans, which is a 580 FICO score. If you cannot qualify for FHA insurance, you will be hard-pressed to find any lender until you fix your credit.

There are many implications that your credit rating can have on your prospective home loan, such as whether you actually qualify for the mortgage, how low of an interest rate you will get and what type of lender will work with you.
Now, there’s also an unspoken factor: how much your mortgage will cost in total.

How Your Mortgage Could Cost More

When you apply for home financing with a bad credit score, it is unlikely that a major bank will approve you. Since it is the major banks that get the best borrowing rates in the first place, your alternatives will be more costly. In the worst case scenario, only a private lender would consider you.

You might be somewhere in the middle and can get a home loan through a financial institution that accommodates bad credit borrowers. There are many reputable lenders in this area, but you still face the issue of a higher interest rate. This is because the banks know you are a higher risk.

Tip: Get your mortgage through a highly legitimate financial institute that works with bad credit borrowers while also offering traditional home loans. That way, you can repair your credit while holding the costlier loan and refinance under the same lender after your credit score improves.

Your credit score does not have to hold you back from a mortgage. You just need to make sure it’s not unexpectedly costing you extra.

What Will Your Credit Score Cost You?

When applying for a home loan, your decided interest rate is mainly calculated based on your credit score. So if you were to apply for a mortgage right now, what would this mean to you?

It all depends on where you live …

Let’s use Manhattan, New York as an example, seeing as how even a one-bedroom will easily set you back $400,000 or more.

Say you are buying an apartment for $400,000 and you give the minimum of 10 percent down. This leaves you with a $360,000 principal to finance through a mortgage provider. Let’s say the mortgage will run for 30 years and it’s a fixed-rate loan.

Below shows your total interest cost for the lifetime of the mortgage. These calculations come from MyFICO.com’s Loan Savings Calculator, which estimates your interest rate based on your FICO score range.

  • 620 to 639 FICO score: $319,418 total interest (4.793% APR)
  • 640 to 659 FICO score: $277,706 total interest (4.252% APR)
  • 660 to 679 FICO score: $245,727 total interest (3.825% APR)
  • 680 to 699 FICO score: $230,167 total interest (3.613% APR)
  • 700 to 759 FICO score: $217,414 total interest (3.437% APR)
  • 760 to 850 FICO score: $201,683 total interest (3.217% APR)

To put it into context, you are looking at saving $117,735 over 30 years by financing with perfect credit instead of below-average credit. From another perspective: your monthly payment will be about $327 less!

How to Make Your Mortgage Cost Less

There are some tricks that can help you qualify for a more affordable mortgage. Four simple ways to do this include:

1. Refinance Your Mortgage After You Buy

Your mortgage payments go through on time for half a decade, and suddenly the huge debt does not keep your credit score suppressed. The result could be seeing your credit rating go up by a considerable amount since when you first qualified for the mortgage. If this is the case, you could refinance the mortgage to lower your interest rate and ultimately make the rest of the mortgage term cheaper for you.

2. Rent-to-Own the Place First

If you are repairing your credit, but you want your new home now, you could try to buy through a rent-to-own agreement. You will be able to guarantee the seller gets the asking price as long as you follow through with financing at the end of the term. While the rent-to-own contract will set you back a little in equity, the much lower interest rate will create much more savings.

3. Wait a Little Before Buying

While this is not the most exciting solution, sometimes it makes a lot of sense. Say you have a bad debt in collections from six years ago. If that’s the case, waiting roughly a year will cause the negative item to leave your credit report and thus it will not hold back your FICO score. The end result could be a huge boost in your credit rating, or at least enough to score you a better interest rate.

4. Purchase Under Owner Financing

If you want your new home now, but rent-to-own will not work, you might be able to purchase via owner financing. This means the seller holds the mortgage for you for so long (usually 1 to 3 years), and then you can get your mortgage and make a balloon payment to buy it out. You can use the in-between time to repair your credit and this will help you secure a good interest rate. In the meantime, you will be paying on the home under the current mortgage conditions and your bad credit status will not cost you more.

Owner financing is really the only cost-effective and sound way to approach buying a home with bad credit. Otherwise, you could be throwing well over $100,000 out the window. That’s a lot of extra money to pay, especially if you are actually eyeing a one-bedroom apartment.

To conclude, get your credit repaired before applying for a mortgage because the cost of doing so is minuscule in comparison to what you will save on interest payments.

Sources:

  • http://www.fha.com/fha_credit_requirements
  • http://www.myfico.com/crediteducation/calculators/loanrates.aspx
  • http://www.investopedia.com/articles/mortgages-real-estate/10/should-you-use-seller-financing.asp

Choosing the Right Credit Card for You

By | Ask a Credit Expert, Credit Cards, Credit Repair, Credit Reports, Credit Scores, Personal Finance, Your Credit

Choose credit cards

There are dozens of credit cards on the market, so choosing the right one may be difficult. Do you want a card that gives you airline miles, or would you prefer cash back when you shop for groceries or buy gas? The options are almost limitless, so be sure to get a card that suits your needs. Credit comparison sites such as CardRatings can help you choose a card that’s right for you.

Cards and Your Credit Score

One of the most important things to keep in mind before you get a credit card is how it will affect your credit score. Also, depending on your credit score, you may not qualify for every card out there. Always keep in mind that credit cards report to the credit bureaus, so if you don’t pay your bills on time, it will negatively impact your credit score.

Types of Credit Cards

According to the American Bankers Association, 83 percent of people with a credit card have at least one rewards card. Why are they so popular? People like getting rewards for purchases they’re making anyway. You can earn free hotel stays and airline miles just for using the right card.

Here are a few types of credit cards that you may want to consider:

  • Cash-Back Rewards – As the name suggests, you earn cash back each time you make a purchase. These are growing in popularity, and there are a lot of options out there. Some flat-rate cards will give you 1.5 percent cash back on all purchases, while others offer accelerated cash back earnings in certain categories. If you like cash back, look for a card that offers generous rewards and bonuses in categories that you spend more on, such as gas or restaurant purchases.
  • Co-Branded Cards – These are often called partner cards and give you extra rewards at a retailer that you frequent while giving you rewards on all other purchases. These are great if you frequent a particular retailer.
  • Secured Cards – Secured cards are a bit different and are generally used to help people establish or fix their credit score. The idea is simple: You deposit money in a savings account at a bank, and the bank gives you a credit line up to that amount. Secured cards offer a couple of advantages. First, the money that you put in your savings account stays there. Secured cards aren’t debit cards. Second, secured cards report to the credit bureaus, which can help improve your credit score if you pay your bills on time. A credit repair service may recommend that you get a secured credit card to reestablish your credit.

Words to the Wise

A few years ago, a survey found that as much as $16 billion in rewards go unredeemed every year. Make sure that you take advantage of the rewards you earn. You should also review your monthly statements and take advantage of bonuses that card issuers sometimes offer. Also remember that miles and points may expire. Don’t let your hard-earned miles go to waste.

Read the fine print. Some credit cards require that you register for revolving rewards every quarter, while other cards place restrictions on the miles that you can use. Before applying for a credit card, make sure that you’ve read the fine print and get a card that matches your spending habits and lifestyle.

Lastly, watch out for fees. Check the benefits and rewards that a card offers and determine whether they’re worth the amount of the annual fee. Also look out for other fees, such as foreign transaction fees if you travel overseas.

Credit cards can be a great way to improve your credit score while being rewarded for purchases. The best advice is to read the fine print on the card that you’re looking at and use the card wisely to maintain a good credit score.

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