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Credit Repair and Bad Credit Repair with
Credit Repair Solutions
Having trouble
paying your bills? Getting notices from creditors? Are your
accounts being turned over to debt collectors? Are you worried
about losing your home or your car? Do not despair for there
is Credit
Repair!
You're not alone. Many people
face financial crises at some time in their lives. Whether
the credit
repair crisis is caused by personal or family
illness, the loss of a job, or simple overspending, it can
seem overwhelming, but often can be overcome. The fact of
the matter is that your financial situation doesn't have
to go from bad to worse.
If you or someone you know is in financial hot water, consider
these credit
repair solutions: realistic budgeting, credit
counseling from a reputable organization, debt consolidation,
or bankruptcy. How do you know which will work best for
you? It depends on your level of debt, your level of discipline,
and your prospects for the future.
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Rebuilding Damaged Credit or Credit
Repair
Bad credit can
happen to good people
Don't despair. There are ways
you can get your credit back in shape. But you have to start
working on it today -- and keep working hard to show potential
creditors that you're serious about credit
repair. As you do so, your credit
score will improve, resulting in better credit offers
and a substantial savings in money.
Get Started Now
Open new accounts and pay them off. Being able to repay
a variety of new accounts is a key step in rebuilding your
credit. That means that devising a strategy to open and
pay off as many different kinds of accounts as you can is
better than adding more debt to an existing credit
card.
Start small.
Rebuilding
your credit can be similar to starting over from scratch,
and starting small may be the easiest option. Credit cards
from department stores or your local credit union can be
useful.
Consider asking for help.
If you can't qualify on your own, ask a friend or family
member to cosign for a small
loan or credit card. If you can stay current on a major
credit card account or small auto
loan, this will speed up the process of re-establishing
good credit on your own.
Consider a secured
credit card. They are guaranteed by a deposit
that you make with the credit grantor. The cards offer the
purchasing power of a major credit card. Just make sure
the grantor reports payment histories to one of the three
major credit bureaus so you're building your positive
payment history towards repairing
bad credit.
Use your new accounts
in moderation. And make payments that are more
than the minimum. You can keep a small balance so that your
positive payment history will continue to show up on your
credit report.
Keep your balances low.
Avoid carrying a balance that is more than 30% of your credit
limit (creditors may view it as excessive debt that credit
repair may not sustain).
Check Your Progress
You have taken the first step toward rebuilding
your credit. Now it's time to take the next.
Do you know where your credit stands? Find out with Score
Power®, it includes your
Equifax
Credit Report ™ and your 
FICO Credit Score, the score used by
more creditors than any other to judge you as a credit risk.
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Be Patient-the Credit
Repair Payoff Is Worth It
It takes some time for your new credit
history to gain momentum. You're demonstrating that
you are not depending on certain credit cards and loans
for your financial survival.
That's why opening and
paying down accounts for credit repair may make it a little
easier to get more credit. With patience and timely
repayments, you'll likely be able to build a new credit
history that creditors will look upon favorably when making
decisions about your ability to handle even more credit.
Self Help
Developing a Budget: The first step toward repairing
bad credit is to do a realistic assessment of
how much money comes in and how much money you spend. Start
by listing your income from all sources. Then, list your
"fixed" expenses-those that are the same each
month-such as your mortgage payments or your rent, car payments,
or insurance premiums. Next, list the expenses that vary,
such as entertainment, recreation, or clothing. Writing
down all your expenses-even those that seem insignificant-is
a helpful way to track your spending patterns, identify
the expenses that are necessary, and prioritize the rest.
The main goal for credit
repair is to make sure you can make ends meet
on the basics: housing, food, health care, insurance, and
education.
Your public library has information about reparing
credit, budgeting and money management techniques. Low
cost budget counseling services that can help you analyze
your income and expenses and develop budget and spending
plans also are available in most communities. Check your
Yellow Pages or
contact your local bank or consumer protection office for
information about them. In addition, many universities,
military bases, credit unions, and housing authorities operate
nonprofit counseling programs. Smart
Credit Repair Solution.
Contacting Your Creditors: Contact your creditors
immediately if you are having trouble making ends meet with
credit repair.
Tell them why it's difficult for you, and try to work out
a modified payment plan that reduces your payments to a
more manageable level. Don't wait until your accounts have
been turned over to a debt collector. At that point, the
creditors have given up on you.
Dealing with Debt Collectors: The Fair
Debt Collection Practices Act is the federal law that
dictates how and when a debt collector may contact you.
A debt collector may not call you before 8 a.m., after 9
p.m., or at work if the collector knows that your employer
doesn't approve of the calls. Collectors may not harass
you, make false statements, or use unfair practices when
they try to collect a debt. Debt collectors must honor a
written request from you to cease further contact.
Credit Counseling for to Repair
Credit
If you aren't disciplined enough to create a workable budget
and stick to it, can't work out a repayment plan with your
creditors, or can't keep track of mounting bills, consider
contacting a credit counseling service. Your creditors may
be willing to accept reduced payments if you enter a debt
repayment plan with a reputable organization. In these plans,
you deposit money each month with the credit counseling
service. Your deposits are used to pay your creditors according
to a payment schedule developed by the counselor. As part
of the credit repair repayment plan, you may have to agree
not to apply for-or use-any additional credit while you're
participating in the program.
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A successful repayment plan requires you to make regular,
timely payments, and could take 48 months or longer to complete.
Ask the credit counseling service for an estimate of the time
it will take to complete the plan. Some credit counseling
services charge little or nothing for managing the plan; others
charge a monthly fee that could add up to a significant charge
over time. Some credit
repair counseling services are funded, in part, by contributions
from creditors.
While a debt repayment plan can eliminate much of the credit
repair stress that comes from dealing with
creditors and overdue bills, it does not mean you can forget
about your debts. You still are responsible for paying
any creditors whose debts are not included in the plan. You
are responsible for reviewing monthly statements from your
creditors to make sure your payments have been received. If
your repayment plan depends on your creditors agreeing to
lower or eliminate interest and finance charges, or waive
late fees, you are responsible for making sure these concessions
are reflected on your statements.
A debt repayment plan does not erase your credit history.
Under the Fair Credit Reporting Act, accurate information
about your accounts can stay on your credit
report for up to seven years. In addition, your creditors
will continue to report information about accounts that are
handled through a debt repayment plan. For example, creditors
may report that an account is in financial counseling or credit
repair, that payments may have been late or missed
altogether, or that there are write-offs or other concessions.
A demonstrated pattern of timely payments will help you obtain
credit in the future.
Auto Loans
and Home
Loans: Debt repayment plans usually cover unsecured debt.
Your auto and home loan, which are considered secured debt,
may not be included. You must continue to make payments to
these creditors directly.
Most automobile financing agreements allow a creditor to
repossess your car any time you're in default. No notice
is required. If your car is repossessed, you may have to pay
the full balance due on the loan, as well as towing and storage
costs, to get it back. If you can't do this, the creditor
may sell the car. If you see default approaching, you may
be better off selling the car yourself and paying off the
debt: You would avoid the added costs of repossession and
a negative entry on your credit report. Car
loans for people with bad credit
If you fall behind on your mortgage, contact
your lender immediately to avoid foreclosure. Most lenders
are willing to work with you if they believe you're acting
in good faith and the situation is temporary. Some lenders
may reduce or suspend your payments for a short time. When
you resume regular payments, though, you may have to pay an
additional amount toward the past due total. Other lenders
may agree to change the terms of the mortgage by extending
the repayment period to reduce the monthly debt. Ask whether
additional fees would be assessed for these changes, and calculate
how much they total in the long term.
If you and your lender cannot work out a plan, contact
a housing counseling agency. Some agencies limit their
counseling services to homeowners with FHA mortgages, but
many offer free help to any homeowner who's having trouble
making mortgage payments. Call the local office of the Department
of Housing and Urban Development or the housing authority
in your state, city, or county for help in finding a housing
counseling agency near you.  Credit
Repair Secrets Revealed
Debt Consolidation
You may be able to lower your cost of credit by consolidating
your debt through a second mortgage or a home equity line
of credit. Think carefully before taking this on. These loans
require your home as collateral. If you can't make the payments-or
if the payments are late-you could lose your home. 
Debt Consolidation and Debt Repair
The costs of these consolidation loans can add up. In addition
to interest on the loan, you pay "points." Typically,
one point is equal to one percent of the amount you borrow.
Still, these loans may provide certain tax advantages that
are not available with other kinds of credit.
Bankruptcy
Personal bankruptcy generally is considered the debt management
option of last resort because the results are long-lasting
and far-reaching. A bankruptcy stays on your credit report
for 10 years, making it difficult to acquire credit, buy a
home, get life insurance, or sometimes get a job. However,
it is a legal procedure that offers a fresh start for people
who can't satisfy their debts. Individuals who follow the
bankruptcy rules receive a discharge-a court order that says
they do not have to repay certain debts.
There are two primary types of personal bankruptcy: Chapter
13 and Chapter 7. Each must be filed in federal bankruptcy
court. The current fees for seeking bankruptcy relief are
$160: a filing fee of $130 and an administrative fee of $30.
Attorney fees are additional.
Chapter 13 allows persons with a steady income to keep property,
like a mortgaged house or a car, that they otherwise might
lose. In Chapter 13, the court approves a repayment plan that
allows you to use your future income to pay off a default
during a three-to-five-year period, rather than surrender
any property. After you have made all payments under the plan,
you receive a discharge of your debts.
Known as straight bankruptcy, Chapter 7 involves liquidation
of all assets that are not exempt. Exempt property may include
automobiles, work-related tools and basic household furnishings.
Some of your property may be sold by a court-appointed official-a
trustee-or turned over to your creditors. You can receive
a discharge of your debts through Chapter 7 only once every
six years.
Both types of bankruptcy may get rid of unsecured debts and
stop foreclosures, repossessions, garnishments, utility shut-offs,
and debt collection activities. Both also provide exemptions
that allow people to keep certain assets, although exemption
amounts vary. Note that personal bankruptcy usually does not
erase child support, alimony, fines, taxes, and some student
loan obligations. And unless you have an acceptable plan to
catch up on your debt under Chapter 13, bankruptcy usually
does not allow you to keep property when your creditor has
an unpaid mortgage or lien on it. More Credit
Repair Tips. |
Damage Control
Turning to a business that offers help in solving debt problems
may seem like a reasonable solution when your bills become
unmanageable. Be cautious. Before you do business with any
company, check it out with your local consumer protection
agency or the Better Business Bureau in the company's location.
Some businesses that offer debt counseling and reorganization
plans may charge high fees and fail to follow through on
the services they sell. Others may misrepresent the
terms of a debt consolidation loan, failing either to explain
certain costs or to mention that you're signing over your
home as collateral. Businesses advertising voluntary debt
reorganization plans may not explain that the plan is a
Chapter 13 bankruptcy, tell you everything that's involved,
or help you through what can be a complex and lengthy legal
process.
In addition, some companies guarantee you a loan if you
pay a fee in advance. The fee may range from $100 to several
hundred dollars. Resist the temptation to follow up on advance-fee
loan guarantees. They may be illegal. Many legitimate creditors
offer extensions of credit through telemarketing and require
an application or appraisal fee in advance. But legitimate
creditors never guarantee that the consumer will get the
loan-or even represent that it is likely. Under the federal
Telemarketing Sales
Rule, a seller or telemarketer who guarantees or represents
a high likelihood of your getting a loan or some other extension
of credit may not ask for or receive payment until you've
received the loan.
You should also avoid credit
repair clinics. Companies coast to
coast appeal to consumers with poor credit histories, promising
to clean up credit reports for a fee. They don't deliver.
What's more, they can't deliver: They can't do anything
for you that you can't do for yourself. After you pay them
hundreds-or even thousands-of dollars in up-front fees,
they can do nothing to improve your credit report. Indeed,
many simply vanish with your money. Only time and a conscientious
effort to repay your debts will improve your credit
report.
If you're thinking about getting help to stabilize your
financial situation, be cautious.
- Find out
what services the business provides and what it costs.
- Don't rely on oral promises.
Get everything in writing.
- Check out any company with
your local consumer protection office and the Better Business
Bureau in the company's location. They may be able to
tell you whether other consumers have registered complaints
about the business.
- Click
here to find out more about legal online credit repair.
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