It’s difficult to navigate today’s society with a bad credit considering the number of companies that use your credit to decide whether to do business with you and to set your rates. Consumers with a troubled credit history often seek credit repair to improve their credit to have an easier time financially. Hiring a credit repair company often seems like the best option, but is typically the least viable choice. As you navigate credit repair and evaluate the best option for your credit, here are the most critical things to know about credit repair.
A bad credit puts you in a disadvantageous position considering the fact of (MNC & SME) companies that use your credit to decide whether to approve or reject your application and decide on the rate of interest. Consumers with a tattered credit history often seek credit repair to improve their financial health in the long term. Engaging a credit repair company seems to be a good option, but not necessarily true in today’s information-sharing digital world. When you undergo credit repair and evaluate on the best cleanup option, here are the most crucial factors to put in your observation list for credit repair.
1. You can fix it personally (DIY).
Under normal circumstances, with little to no experience, you might think that only credit repair companies can fix bad credit, in actuality is that there is nothing a credit repair company can do that you can’t do it yourself. As for how credit works, the internet provides a wealth of information, you can do the needful in repairing your own credit.
Removal of bad objects listed, for instance, is done via credit report disputes, verification of debt, payment for deletion of negative information, or letters of goodwill. All these are of resemblance to that of strategies employed by credit repair companies in retrieval of negative objects and removing bad information from your credit report – obviously doable if you de.
Do-it-yourself: In performing credit fix personally, you’ll avoid cost incurred to the agency, grant authority in managing your own credit history, exercise credit control, adopt financial prudence in handling future disputes. Certainly, doing individual cleanup campaign can help in improving your credit score as well as getting trained in communicating with “fearful” credit reporting bureaus.
2. Credit repair focuses on your personal credit report, not about your credit score.
During the process of fixing your credit, as a money plumber, you’re directly observing the common problems on your credit report. A mistake or error from any party can jeopardize your current financial standing, leading to undue punishments. Such issues are what ultimately determines whether you obtain a good or bad credit, being the foundation of your credit score.
A credit report check is the initial phase of work you ought to observe when you’re prepared to operate on your credit. It’s fine to contact the relevant departments, get a free copy of your annual credit report, up to three times from major credit bureaus – Experian, Equifax, and TransUnion – checking out annualcreditreport.com.
Reporting-and-fixes: If you’re investing time in listing out negative information from your credit report, chances of receiving a shock on expired debt listing, invalid claimant’s name, or removal of tax lien wrongly, are some of the more common insights. There’s more detailed credit checks going on by actual reviewers but never at your personal report card.
3. Your financial status depends on your credit score.
Many consumers misunderstood on the concept of information displayed in their credit report having an impact based on good or bad credit. While it’s true that negative objects listed does influence your credit standing, it is also true that a naked eye cannot detect the actual information your creditor’s reviewer is looking out for. Hence, a credit score is the best indicator of your progression in credit repair.
A low credit score signaled poorly read credit history that needs an immediate fix. As your credit score improves, you should be wary on any outstanding payment – not losing focus in repairing bad credit. Below are five interconnections of personal information:
- Payment history – one of the best indicator to show your creditors that you have credit trustworthiness.
- Amount of debt – another critical indicator that your creditor is looking out for.
- Age of credit history – a lender often worries on the amount of risk being leveraged.
- Types of credit accounts – most reviewers wanted to learn more about you.
- Recent lines of credit – fresh applications might trigger creditor’s review for further examinations on your financial health.
Tools: Using free credit score check services such as Credit Karma or Credit Sesame enable you to closely monitor your progress at a low cost. When you’re in search of a professional credit monitoring service, do not sign up using a credit card. Reason being, there’s an opportunity for the service provider to induce trial packages or “forced” you to join their subscription base – charging you unknowingly and eating into your personal savings that is necessary to perform credit repair.
Upon realizing that you’ve unintentionally subscribed for one of a paid credit monitoring checker, recognized the blunder by canceling the checking service and request for a proof of receipt. This can help you saved up for other prominent service providers offering higher quality credit repair services.
4. Precise removal of negative object list is challenging.
Nobody handles your account better than you do. Credit bureaus, legally appointed by local governments, are obliged to remove inaccurate negative information reported in your credit report. Do not be afraid to liaise with an officer as removal of bad objects is a legal mandate – after verifying that the claimant’s dispute is invalid or made an error.
Emphasis on accuracy. Since a trained eye performs much better than personal credit repair fix, it’s wise to employ some professional credit repair companies in deploying certain strategic formations – debt validation, pay for delete, goodwill request, or combating identity theft – all at a fraction of a package cost.
Integrity: Before conducting an attempt in removing bad information, you’ve to be honest with your own credit report. There’s certain positive information in rightful claims to your assets. Please don’t dispute them as your creditor’s might take legal actions against your personal claims – to no one’s benefit except cost & time incurrence.
5. Doing nothing is a strategy.
Have you ever heard that “Doing nothing is part of Sun Tze’s art of war strategy”? Indeed, staying put on a strategic location (doing nothing) can do more good than harm. If you patiently wait for a few months to years, the negative credit information cannot last forever within your credit report. Chances are, they’ll be gone after a few years of what, patience of course.
Exceptions under statutory laws are as follows:
- Under Chapter 7 of bankruptcy & unpaid tax liens, information reported can remain up to 10 years legally
- Unpaid judgments may reside on your credit report under the State’s statute of limitations for approximately 7 years or more
When the deadlines are approaching, in a few months for example, doing nothing is a much wiser option due to cost-effectiveness and time-saver. A legal letter of dispute or digging through the entire reporting structure is time consuming – better off doing nothing.
If you’ve drafted a benefit plan for a credit repair, items in the reporting card may not go away even if you implement highly effective clean-up strategies. It’s because the judge has fixated the negative information in your credit report. Removal of bad objects still have to depend on the credit bureaus and subjected to state’s statute of removal.
6. Account closure has no impact on your standing.
Kindly note that closing of accounts, credit or debit alike, don’t have prevailing evidence in a person’s credit report. The answer is a straight no. Inversely, account closures can negatively impact your credit score.
A widespread belief on closing accounts is a myth. If you attempted to close an account, in hope of avoidance of credit risk, your creditor will take immediate action in reviewing the closed accounts and emphasized to industry credit bureaus on reported information. Below is an example of a structured credit repair:
“Closure of an account, a consumer shall be place under a trial mode of, credit score, duration or tenure of account, frequency of transacting, and missed payment – KIG Hall . In one of the major three credit bureaus, “If you’ve exhibited the right kinds of behavior for an established period of time with an account (i.e., paying on time every time), then closing that account may not make sense.”, Nancy Bistritz, Director Public Relations and Communications of Global Consumer Solutions at Equifax.
Assuming that your account is in good standing or can be revived by implementing proper credit control measures, leaving the account dormant can actually help boost your financial credibility among creditors such as a bank, a credit card company, or a potential lender. It’s advisable that you further pursue using of existing accounts, actively pay on time, and create a positive image on payment history to improve credit score. A bad credit score is a turned-off for financial institutions in setting up new accounts for you, however.
7. Are credit repair companies trustworthy?
To learn about the hard truth about credit repair companies, these agencies done an exemplary “job” in introducing financial cleanup services to vulnerable debtors who possessed negative consumer debt reports and not having prior knowledge on understanding how credit works or how much of influence they yield over their personal credit scores.
Good credit repair companies don’t promise lofty speeches – often performing in accordance to contractual agreements – charge after completion of services rendered and not pushing you for advance payments. In fact, other unqualified or cheap credit repair services were prohibited by Federal law in assuming upfront fee payments, failure in service delivery process, and taking advantage of financially distressed consumers.
In an actual case study, by the Federal Trade Commission, government intervention in the major states has chased shady credit repair companies who circumvented the law. Some of these agencies paid hefty penalties while others lost their licenses or franchises in doing business within the credit repair industry. Look out for the following obvious signs of a shady credit repair company:
- Upfront payment – this is the most obvious sign of a credit repair scam. A fraud can be detected as any licensed agent cannot request for an upfront payment in full (yes, not even if consumers agreed to the conditions).
- Local government citation – not even the best credit repair company can boast on having special relationship with credit bureaus (breach of integrity or trust).
- Make a promise – be it improving your credit score, removing of tax liens, or fixing bad information (none could be guaranteed).
- Pay to delete fully – again, there’s absolutely no one who can promise to delete negative information (at all).
- Failure to inform or update you on credit bureau information – no agent must ask you to waive your rights under the Credit Repair Organization Act (criminal breach of offense).
Any signs of the above mentioned must be reported to the State immediately. Failing to inform your credit bureau or reporting agency is an offense. You’re to rectify the problems by calling your creditor’s hotline or simply by lodging a police report, bringing your case to light in an amicable manner.
8. Credit repair is a long-term ongoing process.
Do not be dazzled by lightning credit repair company’s unique selling points. Your credit score takes time to accumulate damages, in a similar fashion shall your credit report recovers from such negative information reported. A good credit history is being reviewed by a wide spectrum of corporations; a credit bureau, a financial institution lender, a bank, a creditor, a claimant, and other relevant government bodies.
You’ve to keep your credit report clean. It’s time to remove that negative information listed by creditors, keep a minimal amount of negative entries, tons of positive credit information, clear for identity fraud thefts, and timely payment to improve financial reputation score. A few timely payments such as paying credit card bills on time, utilities expenses and servicing mortgage repayments can steer you into the right direction. However, your credit score report will not take immediate effect or being rectified by any local government body.
An organic way of repairing your credit portfolio is the best way to succeed. As time goes on, with continuous debt repayments & lowering the amount of debts, you’ll start to see improvements on your credit. Performing a credit cleanup takes a great deal of efforts. You have to exercise patience to oversee the entire process. Time taken for credit repair varies from an individual to another individual, whereby more negative reported information takes a longer time to fix as opposed to a minimally negative portfolio. However, an urgent delete of bad object may lead to faster credit fixes.
Over a period of 3-6 months, you’ll see your credit boost slightly to 609 score or above. It’s not recommended to break your bank by investing in personal assets: Good or Bad credit – for the temporary fluctuations of credit score in the report is not permanent, subjected to change near future. Do not get alarmed by the changes made in the credit report as the agencies are liaising with the relevant departments in removal of tax liens as well as other bad information. Focus on continually improving your financial credibility!
9. Never engage in financially unhealthy habits.
Consumers from all walks of life (bankrupts, debtors, borrowers etc.) undergone credit repair – be it do-it-yourself method or outsourcing to third-party agency – only to repeat the vicious debt cycle of ensnarement; increase in credit card consumption, down pay a new mortgage, apply for mortgage re-finance, upgrade personal lifestyle, adopt a new auto loan, everything except investing in a college debt or equity involvement. While there’s nothing wrong in utilizing credit, people don’t have the financial capacity in repaying the loaned sum, finally getting into financial distress – calamitous ending to come.
Nancy Bistritz says, “When it comes to trusting creditworthiness, a great rule of thumb to remember is to pay your bills on time, every time. Both creditors and lenders demand to know that you’ve been able to satisfy your financial commitments on time, every time. Hence, exercise prudence in footing the bills on time is an important, fundamental behavior to establish early on.” – Equifax reporting.
One missed payment kills the entire good or positive credit rating. If you’ve the habit of forgetting to pay your bills, it might be better off not to borrow money and apply for an automated transaction payment scheme. The bad habits of not paying on time or lending beyond the implied credit utility ratio often bring consumers to justice, permanently removing benefits on interest rate negotiations as well as other incentives.
Good to know tips & tricks for credit repair 2018
No one has a “perfect” credit report. Ideally, you’ve to be at least educated in doing a quick credit cleanup campaign before entrusting your report scorecard to the agencies. Employing of certain strategies can be done by you, not requiring any credit repair company to do the necessary obligations. Below are some of the useful tips & tricks for a quick fix:
- Avoid identity theft fraud
- Pay up on time by lending from friends first
- Adopt a balance-transfer scheme at zero percent interest
- Re-finance your mortgage at better interest rate
- Never sell your personal information or personal identity out
- Invest in credit insurance & protection
- Guard against shady credit repair firms
- Don’t ever reveal your information in full to anyone
- Dispute the right objects & avoid positive information
- Plan your time in managing credit repair
In summary, many consumers don’t have the ability to finance loans on time. You’ll not be one of them but to form proper financial control habits such as reducing debt consumption and learn how to invest in credit repair. The way toward financial freedom (if not freedom) is a challenging one in which unpaid debts, long-term liabilities, or low income-generating assets will definitely not help in attaining strategic pragmatism in credit repair.
Quote of the Day: “What you know starts from where to know – KIG Hall [2013-2018]”
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This article was originally published on February 12, 2014. It has since been updated.