Credit repair seems like a very tedious process but actually it is not. Credit repair is a booming business now and, unfortunately, a lot of unscrupulous elements are thriving in the market. By law, credit repair organizations must give you a copy of the “Consumer Credit File Rights Under State and Federal Law” before you sign a contract. If you decide to respond to a credit repair offer, look for these tell-tale signs of a scam: companies that want you to pay for credit repair services before they provide any services.

Under the Credit Repair Organizations Act, credit repair companies cannot require you to pay until they have completed the services they have promised. For example, a credit repair company cannot: make false claims about their services, charge you until they have completed the promised services, perform any services until they have your signature on a written contract, and have completed a three-day waiting period. Everything a credit repair clinic can do for you legally, you can do for yourself at little or no cost.

Credit

Credit debt can greatly negatively impact your overall credit status. Credit card companies never let on about how to avoid getting into debt. Creditors set their own credit-granting standards and not all of them look at your credit history the same way. Creditors don’t have to report to all three credit bureaus, so they typically report to the credit bureau to which they also subscribe. Credit bureaus generate your report on information they receive from your creditors; they don’t verify it.

Only time, a conscious effort, and a personal debt repayment plan will improve your credit report. Everyday, companies nationwide appeal to consumers with poor credit histories. They promise, for a fee, to clean up your credit report so you can get a car loan, a home mortgage, insurance, or even a job. After you pay them hundreds or thousands of dollars in fees, these companies do nothing to improve your credit report; most simply vanish with your money. You could be charged and prosecuted for mail or wire fraud if you use the mail or telephone to apply for credit and provide false information. It’s a federal crime to lie on a loan or credit application, to misrepresent your Social Security number, and to obtain an Employer Identification Number from the Internal Revenue Service under false pretenses.

Bad

Bad Credit will cost you thousands of dollars. You can have bad credit erased legally and quickly. Bad credit repair can improve your way of life greatly enabling you to get the mortgage or refinance loan at the best possible low rate. A bad credit report simply means that you have a bit of work ahead after disputing items to the Bureaus Equifax, Experian and Transunion.

Proper management with Bad credit repair software will save tremendous time and energy, rapidly boost fico ratings and boost fico scores. You can certainly fix and improve bad credit on your own, but it helps to have a vast knowledge of the law. You can clean up your reports so that bad debts and bad scores are not an issue. You must take the first steps to clean up bad debts from your credit reports and this must be done with Equifax credit bureau, Trans Union credit bureau and Experian credit bureau.

Information

Under the FCRA, both the consumer reporting company and the information provider (that is, the person, company, or organization that provides information about you to a consumer reporting company) are responsible for correcting inaccurate or incomplete information in your report. To take advantage of all your rights under this law, contact the consumer reporting company and the information provider. Tell the consumer reporting company, in writing, what information you think is inaccurate.

In addition to providing your complete name and address, your letter should clearly identify each item in your report you dispute, state the facts and explain why you dispute the information, and request that it be removed or corrected. They also must forward all the relevant data you provide about the inaccuracy to the organization that provided the information. After the information provider receives notice of a dispute from the consumer reporting company, it must investigate, review the relevant information, and report the results back to the consumer reporting company.

If the information provider finds the disputed information is inaccurate, it must notify all three nationwide consumer reporting companies so they can correct the information in your file. If an item is changed or deleted, the consumer reporting company cannot put the disputed information back in your file unless the information provider verifies that it is accurate and complete. The consumer reportincompany also must send you written notice that includes the name, address, and phone number of the information provider.

Tell the creditor or other information provider, in writing, that you dispute an item. And if you are correct – that is, if the information is found to be inaccurate – the information provider may not report it again. Even if you don’t have a poor credit history, some financial advisors and consumer advocates suggest you review your credit report periodically because the information it contains affects whether you can get a loan or insurance – and how much you will have to pay for it. Do make sure the information is accurate, complete, and up-to-date before you apply for a loan for a major purchase like a house or car, buy insurance, or apply for a job.

Identity thieves may use your information to open a new credit card account in your name. That’s when someone uses your personal information – like your name, your Social Security number, or your credit card number – to commit fraud.

Everything a credit repair clinic can do for you legally, you can do for yourself at little or no cost. Many states have laws regulating credit repair companies. If you’ve had a problem with a credit repair company, don’t be embarrassed to report it. But truly effective credit repair requires an in-depth understanding of the scoring model as well. Bad credit repair can improve your way of life greatly enabling you to get the mortgage or refinance loan at the best possible low rate. And the best thing with credit repair services is that most of these services come free.

FICO – More Than Meets the Eye

Fair Isaac and Company is the developer of the FICO score, the credit score used by most lenders today. The exact formula is not published, but Fair Isaac offers a breakdown of the categories of influence, and the relative importance of each. The breakdown is a helpful starting point for anyone in credit repair mode who wishes to optimize his or her scores, but it is only a starting point…

Credit Repair and the Logic of FICO

If you are in a credit repair program and aspire to optimize your credit scores it is handy to understand the logic behind the scenes. Fair Isaac is in the business of providing lenders with a measure of the risk they will incur in lending you money. Fair Isaac has spent years analyzing the implications of every measurable behavior and developed a formula to communicate risk with a single number. Here is a breakdown of the components of the FICO score along with some powerful tips you can apply to your own credit repair efforts.

Pay History

Your pay history makes up 35% of your score. Clear enough, but let’s take a moment to understand the implications. A late payment is an indication of financial stress. Financial stress translates into risk of default, and FICO communicates this risk to lenders by reducing your credit score. A lower credit score says, “don’t lend to this person.” But there is more involved. FICO weighs recent late payments more heavily than older late payments. A brand new late payment can send your credit score to a level that no lender will consider. On the other hand, anyone in credit repair mode should be happy to hear that the impact of a late payment fades quickly as time goes by.

Balances – Installment

Your account balances make up 30% of your score. Both installment and revolving accounts are considered. Let’s take a quick look at installment debt before discussing the far more important category of revolving debt. When installment debt, such as a car loan, appears on your credit report FICO sees it as an unknown and drops your score to warn lenders of the new risk. After a few months FICO acknowledges your ability to manage the payments and adjusts your score accordingly. Not a big credit repair concern.

Balances – Revolving

Revolving balances are tricky and may hinder or help your credit repair efforts more than you think. You can clean up your credit report, pay your bills on time, and still end up with a miserable credit score. FICO puts a huge emphasis on the relationship between your balance and your high credit limit. The latest FICO model acknowledges six balance-to-limit ratios: 20%, 40%, 60%, 80%, 100%, and the deadly over-100% category. The two lower tiers will increase your scores, the middle tier is neutral, 80% is bad, 100% is awful, and as for the deadly over-100% category – I think you get the message.

Credit Repair and Your Balances

People often get a credit card, and quickly use it to the limit. Sounds like fun! Unfortunately, a new account with a high balance is credit repair suicide. The new account warns FICO about unknown stress on your budget, and the high balance says that you are out of control. This may not be the case, but big brother is watching and he doesn’t like what he sees. But there is some good news too. If you take that same new account and keep the balance below 20% of your high credit limit for 6 months FICO will think you are fantastic and reward you accordingly. This is solid credit repair gold.

The Age of Accounts

This category makes up 15% of your score. There are a few credit repair angles here. There is nothing you can do about the age of installment debt; when it’s paid, it’s done. But revolving accounts are a different story. FICO loves old accounts as much as it worries about new ones. Many people start a credit repair effort and cut up their credit cards; a strategic error. Generally you would be advised to keep your accounts open. There are exceptions. If you have lots of established credit cards you should close the inactive ones. There is a bit of a balancing act; too many cards work against your score.

New Credit & Inquiries

This category weighs in at 10% of your score. If you are planning to apply for a mortgage or a car loan soon, or are in a credit repair program and watching your scores, you should minimize your credit activity. New accounts will reduce your score, and an inquiry is interpreted as the intent to open a new account, so FICO will downgrade you to warn prospective lenders that there may be trouble ahead.

Type and Mix of Credit

This is the final 10% of the calculation, and not much of a credit repair concern. FICO does not publish their idea of the optimal mix of credit, but if you really want to know what the perfect 850 credit score looks like, here you go! One mortgage over 5 years old, two car loans more than halfway through their life span, and five credit cards over five years old with balances under 20% of the high credit limit will take you to the summit!

Copyright © 2007 James W. Kemish. All Content. All Rights Reserved.

Credit Repair and Our Poor Judgment

Credit repair becomes necessary in three instances. First, and maybe foremost, is the case of simple ignorance; we get in over our heads out of pure stupidity. Don’t get me wrong, I’ve been there, and it’s the easiest thing in the world to do. We get a credit card, see something we want and we buy it. Or we decide to purchase a new car, knowing perfectly well what we can afford, and drive away from the dealer in our deluxe new ride, complete with a whopper of a monthly payment. About a month later the payments begin and we realize we are going to have to juggle our budget to make ends meet. This is the beginning of the spiral that wreaks havoc on our credit report and creates the need for credit repair.

Credit Repair and Risk Gone Wrong

The second case that can create the need for credit repair is the case of risk gone wrong. Entrepreneurs are my heroes; nothing ventured nothing gained; from Apple to Microsoft, America was built on the inspiration of those who tried something new. But for every great effort that survives and thrives, many more struggle and fade away, often ruining the credit history of the inspired entrepreneur. These failures may have nothing whatsoever to do with poor judgment on the part of the business person. After all, the best paid plans often meet unforeseen circumstances. There are so many moving parts involved in running a business that even the most experienced veterans may be taken by surprise. Bring on the credit repair.

Environmental Issues and Other Causes

The third case in which credit repair becomes a necessity is when our environment takes us by surprise. Recession strikes, home values fall; we lose our jobs; take pay cuts, or worse. There are many cases where we dodge the worst of the bullets only to find our budgets squeezed by gas prices forcing us into a borderline financial situation. And so the need for credit repair arises even for those who plan, budget, and think ahead. The road of life takes many turns and we can’t always anticipate what things will look like when we get around the next corner. But when our credit has taken a hit, credit repair can help us patch things up again.

Open Your Mind to the Possibility

Credit repair offers a solution to many of the credit issues that can arise in difficult times. But it must be properly understood. Credit repair is not about removing legitimate derogatory information from our credit reports. Credit repair is about making sure that every conceivable remedy for the issues that challenge your credit scores and financial wellbeing is considered. If you have credit problems you owe it to yourself to open your mind to the possibilities. Time can be your friend or your enemy. If you give up and do nothing to meet the challenges time is not your friend. But if you consult a credit repair professional and explore all of your credit repair options you will be on your feet again before you know it.

Credit Repair and Your Life

There are very real issues with the credit reporting system that that create the necessity for credit repair. You may be aware of the derogatory information on your credit report that reflects an unfortunate event in your life, but did you know that that derogatory data is likely to spawn a cascade of erroneous reporting issues that will magnify and exaggerate your credit troubles. These reporting issues must be identified and addressed. And given the importance of credit in your life, the presence of legitimate credit trouble makes it all the more important to examine every single opportunity to improve your credit scores. You work hard for every dollar you earn. Take the time to insure that your credit is an asset in your life. Explore the possibilities of credit repair.

Copyright © 2008 James W. Kemish. All Content. All Rights Reserved.

The Need for Credit Repair

In 2003 congress passed an important amendment to the Fair Credit Reporting Act. The amendment, known as FACTA, required Equifax, Experian, and TransUnion to provide consumers with a free credit report, upon request, once every 12 months. This was meant to encourage consumers to examine their credit reports for errors. FACTA put a significant burden on the credit bureaus, and for good reason; 50% of all credit reports contain errors severe enough to cause consumers to pay premium interest rates on loans or even to be denied outright. This is a serious problem.

Getting Your Credit Reports

The website set up for the purpose of dispensing free credit reports to consumers is annualcreditreport.com, and is actually a hub that requires you to maneuver through three different sites. At each step you will face security questions which can bring your efforts to a standstill. It’s not easy, but it’s free! If you don’t have the patience I suggest you visit any of the bureau websites and purchase a tri-merged report. It will include all the information you need and should cost about fifteen dollars; easy as pie. Just make sure you don’t accidently signup for monthly monitoring or any of the many add-on services they peddle – unless you want to!

Should You Get Your Credit Scores?

In the long run credit repair is about credit scores. If you know your scores at the outset of your credit repair effort you will have a benchmark to monitor your progress. And so goes the logic, but it is easier said than done. The credit scores sold by the credit bureaus are not the same scores used by lenders when underwriting loan requests. Lenders use a score model known as FICO (an acronym for Fair Isaac & Company, the developer of the score). The credit bureaus sell FICO scores to lenders, but not to consumers. The scores sold on the bureau websites are “estimated scores” and can differ by up to 100 points from your FICO scores. Ouch. If you want to monitor your FICO scores you can purchase them at myfico.com. It will cost you about $50 for all three. You can decide if it’s worth it.

Organizing Your Credit Repair Effort is No Joke

If you are going to manage your own credit repair effort you want to get organized, really organized. Each credit bureau maintains unique information about you. The errors you find on one bureau may not be on the other two. In addition, the same account will often report with a different name and account number on each bureau. If you want to maximize the probability of success you must address each error individually with the offending bureau. I suggest you get three file folders to organize your efforts and plan on treating each credit bureau dispute effort as a separate project.

A Complete Examination

Once you are organized it’s time to get to work. Remember to deal with each bureau individually. If you got your credit reports for free you already have three separate reports. If you purchased a tri-merged report at one of the bureau sites you need to make copies so you have one for each of your three file folders. Start at the top of the first report and don’t skip a line even if you don’t spot an obvious problem. Truly effective credit repair is not just about finding the obvious derogatory issues (although they count too). There are lots of tricky little things to look for. Every point on your credit score matters. Let’s put in the effort!

The Credit Repair Hunt is On

Think of your credit repair effort as a treasure hunt. I bet you can find some credit repair gold, if you look carefully. Here are some of the little items that can add up to serious points on your credit score: underreported high credit limits on your revolving accounts, misreported start dates, balances on closed accounts, and duplicate accounts. Want more? If you have authorized user accounts with derogatory information or excessive balances they are hurting your score; make a call and get removed from the account. Oh, and a note on collections. If a collector no longer owns the debt they are not allowed to report the collection. Collectors sell accounts frequently, but the system does not provide any incentive for them to cease reporting. It’s up to you.

Consider a Credit Repair Professional

Your credit score will determine the cost of your mortgage, your auto loan, your credit cards, and more. Your credit score can even affect your employment and the cost of your property insurance. If you don’t have the time to take care of your own credit repair efforts, hire a pro! A credit repair professional will make sure that everything possible is done to clean up your reports and optimize your credit scores. Time is money, and if you already have a full schedule, don’t put off the task. Find a reputable credit repair service and put them to work for you!

Copyright © 2007 James W. Kemish. All Content. All Rights Reserved.