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How To Use A Collection Agent To Repair Your Credit

How To Use A Collection Agent To Repair Your Credit

Your credit rating is determined by your credit report. If you obtain a loan from a bank, credit card company or another loan establishment, your ability to make your payments on time is reported to a credit reporting agency. Credit reporting agencies then compile this financial information into a personalized credit report, the key to a positive – or negative – credit rating. Any negative notations within your credit history will haunt you for up to seven years and could prevent you from getting another loan.

If you begin to fall behind with your payments to a creditor, the creditor will attempt to receive payment in a variety of ways. After a long series of “warnings,” your debt will eventually be sold to a collection company. The creditor basically “writes off” the loan, and allows the collection company to buy it at a drastic discount. The creditor has pretty much decided that they won’t recover the loan from you and will sell the debt for sometimes half of its original value just to end up with something. The creditor then informs the credit reporting agency, and you are stuck with a black mark on your credit report which stays there for the next seven years.

One extremely important step to credit repair involves taking steps to ensure that the creditor doesn’t “write off” of your debt. As soon as a collection agent contacts you, it is time to act. Don’t contact the collection agency – contact your creditor and try to make arrangements with them. Many times, if you can offer to repay the amount immediately, they can delete the “collection” flag from your credit history. This is the quickest method of credit repair.

If you can’t pay the debt all at once, or for some reason your creditor won’t accept immediate payment in full, you’ll have to deal directly with the collection agency. At this point, remember that that black mark on your credit score can’t get any blacker since the debt is in collections already, so be sure to consider your options before acting. Collection agents are usually aggressive and demanding, implying that they will end up in court if payment is not immediately received, and it can be tempting to do whatever they say to get them off your back.

But remember this: that collection company probably bought that debt at about half of the original value, so if you pay a higher amount than that, you are providing them with a profit. Offer to pay less than the full immediately. Many times, the collection agent will accept and want to wrap the situation up as quickly as possible so they can move on to the next debt.

You want to achieve successful credit repair quickly, so try to pay your creditor directly and have your “collections” negative mark removed. If your creditor refuses and you must work with the collection agency, try offering them less than the full debt amount. Usually, anything above half constitutes profit to a collection agent, so make a full payment for your last resort.

How To Repair Your Credit With Credit Cards

How To Repair Your Credit With Credit Cards

Very few people live their entire lives without inflicting any damage upon their credit scores. Whether it be high balances on credit cards, bankruptcy, collections issues, or financing troubles, credit problems affect the best of us and are difficult to repair.

Fortunately, there are solutions to repairing bad credit and restoring faith with credit agencies and bureaus. All it takes is a little time and the right strategy, and before you know it, you’ll be receiving “Pre-Approved” credit offers in the mail again. One of the most effective ways to repair your credit is with credit cards, and I’m going to show you how.

“Bad Credit” Credit Cards

Believe it or not, there are actually credit cards out there designed just for people who need to get back on their feet. Most of these cards have middle-of-the-road APRs with annual fees ranging from $40 – $100. Some also require an account set-up fee and other charges, which are expected with customers whose credit reports have black marks.

Credit Reporting

The most important thing to remember when repairing bad credit is that your card will not help unless the financial institution reports it. There are three major credit bureaus: Experian (1-888-397-3742), TransUnion (1-800-888-4213), and Equifax (1-800-685-1111). When you fall into collections or fall short of a loan, the financial center reports the debt to one or more of these credit bureaus, and that is how your credit is damaged. In order to repair that damage, financial institutions must also report accounts in good standing.

The best way to ensure that this happens is to find a credit card that reports monthly (or at least quarterly) to all three major credit bureaus. This way, your credit continues to improve exponentially as you continue to pay off all of your balances.

Balances

Most people believe that to maintain a good credit score, you must always pay off your credit card balance each month. This isn’t true. When you are attempting to repair damaged credit, it is much better to keep a small balance on each card and pay it off gradually over a period of three-to-four months. When you apply for a loan, mortgage, or line of credit, financial institutions want to see that you are able to effectively manage your finances. Keeping a balance and paying it off shows that you are able to manage your debt in an efficient and systematic manner.

Secure Credit Cards

If your credit rating is too low, then you won’t be able to obtain a Visa or MasterCard. Instead, apply for a secure credit card. This works similarly to a debit card; you deposit money each month, and that amount determines your credit limit. If you choose a secure card that reports monthly to the credit bureaus, then you will be eligible for an unsecured card in a matter of months.

With Secured credit cards, you deposit money into a savings account, and the amount you deposit acts as your credit limit. The amount can be anywhere from $200.00 to $10,000, and it acts as a type of security deposit. It is never removed from your savings account unless you become delinquent on payments, and it accrues interest the same way a normal savings account would.

Repairing your credit with credit cards can dramatically increase your chances of achieving an “A” credit rating, and you’ll be able to effectively manage your finances. Take the time now to research credit cards – both secure and unsecured – and make today the first step toward a better credit score.

How to Repair Your Credit and Buy a Home

How to Repair Your Credit and Buy a Home

There are three major consumer reporting agencies (CRAs), or credit bureaus, that mortgage companies use to assess a buyer’s credit rating: Experian, Equifax, and Trans Union. Credit scores typically range from 300 to 850. When you buy a home, a score of 650 or higher indicates a good credit history and will make it easy for you to secure a mortgage. If your score falls between 620 and 650, your borrowing capacity will be examined more closely. And if you rate below 620, you may have a credit crisis.

When you’re in the market to buy a home and discover that you have bad credit and your score is low, don’t despair. Although it may delay the purchase of your home, there are ways to repair your bad credit rating so that you can still qualify for a home mortgage with a decent interest rate.

To evaluate your credit rating you’ll need to obtain copies of your credit reports from the various agencies. Examine them carefully to see what transactions are lowering your score.

Special note about bankruptcies

Bankruptcy can lower your credit score by 200 points or more. Repairing bad credit following a bankruptcy is beyond the scope of this article.

Charge-Offs

Charge-offs appear on your credit report if a creditor has given up trying to collect from you and ends up writing off the amount you owe as a bad debt. Charge-offs are one of the main reasons why loan applicants are denied credit.

How to Repair It

If you have any charge-offs, contact those creditors immediately and make arrangements to pay off the old debt. After a few months of regular payments, or if you repay a charge-off debt in full, submit a written request to that creditor to change the status on your credit reports.

Late Payments

Late payments are handled slightly differently depending on whether they are isolated incidents or recurring problems.

How to Repair It

If you have a single late payment here or there listed on your credit report, the best thing to do is contact your creditors by phone to discuss the situation. Follow the conversation with a written request to have the isolated late payments removed from your reports. If you’re consistently late with payments, however, repairing the problem is a little more involved. You’ll need to begin by setting a pattern of paying on time over several months. Once this positive pattern is established, call your creditors (and follow-up in writing) and let them know that you’re back on track. With persistence and patience, you may be able to delete these score-lowering marks.

Reporting Mistakes

Sometimes, creditors just make mistakes when reporting to the bureaus. Other mistakes might include charge disputes that resulted in an initial late payment that was eventually reversed. Unfortunately, it’s the individual’s responsibility to spot – and repair – reporting mistakes that lead to bad credit.

How to Repair It

Once again, contact your creditor by phone and follow up with a written request that the mistake is corrected. Because the Fair Credit Reporting Act (FCRA) requires that credit agencies and their information providers investigate reports of inaccuracies, you’ll also want to contact the CRA directly to report the discrepancy.

As you work on repairing your credit rating, there are other things you can do to improve your score:

• Make sure that you pay all of your monthly bills on time

• Avoid opening new credit card accounts, including department store cards

• Work toward paying down your unsecured debt, but keep accounts open even if you pay them off

• Pay cash for the things you need instead of charging them

If, after all your work, you still score below the 620 marks, it doesn’t mean that you won’t qualify for a home loan. It may mean, however, that your mortgage will take longer to process and the terms and interest rate may not be as good as you were hoping for. Talk to your real estate agent about referrals to high-risk lenders.

Repairing bad credit can take many months to a year or more. But when you’re ready to buy a home, you’ll be glad you took the time to improve your score – and your mortgage payment will be lower because of your efforts.

See how our home buying assistance can help you acquire that dream home!

How to Repair your Credit: Consolidating Credit Card Loans

How to Repair your Credit: Consolidating Credit Card Loans

If the bills seem to be getting bigger every month, budgeting can help you begin to save money, but it can’t help you make your previous debt disappear. However, you can save yourself from financial ruin, even if you’re trying to pay off 20 different credit cards—consolidate your credit card loans. This step is easier than you may think and can truly help you repair your credit.

First, make a list of all of the credit cards you own, along with the debt on each and the APR for each. If you must have a credit card, choose the own with the lowest interest rate and set it aside. This will be the credit card that you still use, and it should only be used for emergencies and when you absolutely have no other way to pay a bill. Keep in mind that you’ll have to pay the minimum on this card every month and that you’ll want to try to pay the complete balance when possible.

Next, contact a debt consolidation company. Talk to a representative about your financial needs and about the debt you’ve already incurred. This company will work with you by paying off all of your credit card debt. You will then make one larger payment per month for this company. When this happens, cut your cards and close your accounts! This will save you from incurring more debt and repeating the situation!

You can also consolidate your credit card loans in other ways. If you have a credit card with an extremely low-interest rate, consider transferring all of your debt to this one card, keeping in mind that there may be transfer fees. You can also take out a second mortgage to pay off your cards if you have a low-interest rate in this part of your financial portfolio. The key is to work hard at paying as much as possible every month to avoid interest. Doing this will help you to repair your credit and stay out of debt in the future!

How To Repair A Bad Credit History

How To Repair A Bad Credit History

We all get into financially tight situations from time to time. Short term financial demands can catch anyone by surprise. It could be around the birth of a new child, medical expenses, or just Christmas or birthdays. Whatever the reason, without care, financially tight situations can result in a bad credit history.

It’s possible to get a bad credit history very easily. The credit reference agencies, Experian, Equifax, and Transunion maintain details on almost every adult in the country and they have a level of detail that for many are frightening.

As a matter of course the credit reference agencies have your personal details, your name, address, and previous addresses, as well as credit information. If you have a mortgage they know about it. If you have any loans, credit cards, or store cards they know about them and they know what payments you make.

If you rent your home the odds are they know. In fact, they usually know the details of virtually all financial arrangements where there is any risk of a debt arising.

If you’ve applied for loans, credit cards, or any other purchases or financial arrangements they know you applied, even if the application was unsuccessful. They also know how much you borrow, your monthly repayments and if you are ever late with a payment – even if it’s by one day and caused by things outside your control!

How do they know? All the banks and financial institutions routinely tell them. The reason they tell them is that it is in their interest to do so. They know that by telling the credit reference agencies all the details an accurate picture of your financial position is created. A picture they can use the next time you apply for credit.

If you do miss a payment it will be recorded and that information stays on their records for 12 months! If you default that stays on for at least 3 years! Just missing a couple of payments can very easily mess up your credit score.

Once you have a bad credit history it can be a real nightmare. With a really bad credit history, you are pretty much financially disabled from everything except transactions that can be covered with cash.

Finding an apartment to rent, trying to buy a car, putting a down payment on a house, or applying for a credit card or a loan from a bank are all activities you are barred from with a bad credit history.

Banks, businesses, and decent landlords can see a bad credit history a mile away and will avoid you like the plague. As a result, all the steps that are supposed to build a good credit rating are no longer available. How can you break out of this credit catch-22 once you get stuck in it?

A good place to start is to contact a credit counseling service. Depending upon where you live there may be a free service you can use otherwise you may be forced to use a paid service. Paid or unpaid all these services do the same thing. They will conduct a complete financial assessment of your situation. It is imperative that you tell them everything, so don’t hold back any debts, they need to know.

If possible they will help you set a budget and find a way for you to repay the overdue payments, past debts, or forgotten bills. This will involve you paying extra to cover the arrears. Even if this is possible it will not, on its own, immediately repair your credit rating as the details of the missed payments and bad debts will stay on the record for at least 12 months.

If you are unable to clear any overdue bills or payments the counseling service will then approach your creditors. They will seek to come to some arrangement which allows you to pay smaller amounts over a longer period. They will initially seek an informal arrangement with each creditor but they can also seek formal arrangements where you pay an affordable amount, usually over 5 years.

So long as you keep up these reduced payments, and depending on the type of arrangement and where you live, after 5 years the debt may be cleared and your credit score will improve. Any arrangements with creditors will be notified to the credit reference agencies and are normally help on file for 3 or 6 years.

A third option, and the quickest, is to take out a consolidation loan to pay off all your debts leaving just one lower payment to make each month. If you own your own home – either outright or on a mortgage – this loan can be secured on the property either as a mortgage/re-mortgage or a separate secured loan.

With a property as collateral, it is relatively easy to get additional funds as the lender will have the security of your home and if you fail to pay, sometimes only one or two missed monthly payments, they will go for repossession to get their money back.

Without collateral obtaining a debt consolidation loan is more difficult but not impossible. Without the security of a property however, you will normally pay a significantly higher interest rate.

If you clear all of your debts using a debt consolidation loan cut up any credit cards and close the accounts. Make sure you don’t fall into the same trap again.

So long as you make all the due payments and you are in control of the situation, many of the pressures will ease and, with hard work and self-control, your bad credit history will become a thing of the past.

How To Contact a Creditor To Help With Credit Repair

How To Contact a Creditor To Help With Credit Repair

Good credit has become nearly a necessity these days. Credit has become almost essential to buying a car or a home (unless you have large amounts of cash lying around) and with the advent of online buying, it’s generally difficult to operate without some kind of credit card. Unfortunately, credit does cause problems for some people. Minimum payments on credit cards can be missed, or a loan could go into default and your credit rating will begin to slide. When you have negative activity, the creditor reports it a credit reporting agency, who then records it on your credit history. A tarnished credit report can be tough to clean up, as most negative items will remain to stay on your report for seven years before they expire and are removed.

If you have a bad credit history, you’ll end up dealing with previously unknown problems. You can’t rent a car or buy things online, renting a property will be difficult, and getting a mortgage may be impossible. It’s important to repair your credit as soon as you notice a problem because you’d be surprised at what kind of credit repair you can accomplish by being proactive.

The first thing you should do if you fall behind in your loan payments is to contact your creditor. This can be scary and many people take the opposite approach, avoiding “collection calls” out of embarrassment or even fear. Unfortunately, it’s best to deal with the problem immediately and to avoid long-term credit difficulties. Contact your creditor right away – as soon as you find you are having trouble with debt.

Remember the solution to your credit repair process starts with your credit report, and what is on your report is what your creditor reports about you. By contacting your creditor, you may be able to discuss possible payment plans or alternative solutions. It is in the creditor’s best interests to work with you, as if you go into default, they might never get paid.

There are many reasons that you should contact your creditor immediately, but most of all, it helps to speed up the credit repair process. Once you’ve contacted your creditor, suggest a payment system that works for both for you. Be sure to propose a payment plan that is realistic for you, and stick to it. Defaulting on these payments will look to the creditor as if you were just trying to stall and avoid further payment.

When you contact your creditor about your outstanding debt, be sure to remember that it is in your best interest to convince your creditor not to report your non-payment to the credit report agency. By facing up to your payment problems, contact your creditor right away, and creating a payment system that will work for both of you, you are taking a very effective step credit repairing your credit.

Help With Building Credit

Help With Building Credit

There are some tried and true ways of building credit if you are just starting out. It is often in the early days of using credit that many younger people fall into trouble. The last thing any young man or woman or just married couple needs to do is ruin their credit rating before they even get started. Here are some tips that can help you build your credit and help you stay out of trouble.

All consumers, regardless of age, must know that living without credit these days can be hard. Homes, cars, college education all require the use of credit for most people. Without sources of credit, many people simply would not be able to afford these things. Credit ratings are also used for other purposes as well, such as employment and security clearances. All in all, having a good credit record is a very valuable thing to have in this day and age.

There are actually many ways of building credit. Here are some tips that can help get you started:

You need to put your apartment and your utilities in your own name. If someone else, like mom or dad, has their names on these items they will get the credit boost, not you.

If you are working and can afford it, apply for some credit at a local store. The credit does not have to be large, and, in fact, it should be small enough that you can easily make the payments.

You can apply for credit with an oil or gasoline company as they often have lower criteria for giving credit. This can be a good way to get your foot in the door towards getting better credit cards later on.

Again, if you are working steadily and can afford it, apply for a small loan from your bank. If you get the loan, make sure that you pay each payment on time and in full. This will be a huge boost to your credit history.

You may want to apply for a secured credit card from your bank. These are credit cards that require you to put a certain amount of money into an account. Your credit limit on the card is equal to the amount of money you have in the account.

It is important that all of those creditors that you are working with report your payment history to the credit reporting agencies. This is normally done as a matter of course, but it is good to check on this every now and then just to be sure.

Once you have some accounts, it is vital that you make your payments on time and in full. This cannot be said enough as this is the leading cause of bad credit reports.

If you find that you simply cannot make a payment, contact the creditor as soon as possible and explain to them what the problem is. They will often work something out with you and if you can get the payment in quickly, they may not report the late payment to the reporting agencies.

Five Tips For Building A Good Credit Score

Five Tips For Building A Good Credit Score

Improving yourself is always a good thing. If you thrive hard to become a better public speaker, you can might yourself a promotion. Exercising and going to the gym can help you lose weight and have the figure you have always wanted. But the best thing of all is improving and building your credit score. This can help you save hundreds and thousands of dollars on your biggest purchases.

For some, it may be hard to keep up a good credit score but actually, improving credit is not that hard to achieve. You just need to be patient and learn a little bit about the credit scoring system and how it works.

A person who is patient and willing to improve their credit profile can do it easily. There are five things that they can follow in order to boost their credit scores.

1. Check your own credit report from time to time. It is necessary to regularly check your credit and take the steps to remove any inaccuracies in your credit report. Sometimes bad credit is caused by simple inaccuracies in the report. If you see something, contact your creditor immediately, and work to correct the error as soon as you can. Leaving an inaccuracy on your report counts against you.

2. Be on time with payments. Literally, it means that you have to pay all your bills on time. If you are always late with your payments, it will affect your credit report and score. Also, collections and bankruptcies have the most negative effect on your credit report. All reports including the late payments are noted and written in your credit report.

3. Learn how to manage your debt. You must maintain the balance of your credit report to 35% of your available credit limit. Make sure that you always watch your accounts and estimate if you can still handle the using more credit.

4. Avoid unnecessary inquiries. Every time you make an inquiry, it is written in your credit report. Even if you have no plan to open a credit account, your inquiry records will show how often someone has looked at your report and will cast doubt on your ability to pay. So as much as possible, do not make an inquiry into your credit report unless it is important.

5. Give yourself time. Time is considered one of the most significant aspects that can help improve your credit score. Time management is important to get yourself on the right track and show that you can handle your credit responsibly. You can also keep even the oldest account open in order to help make your credit use look longer.

Five Credit Building Tactics

Five Credit Building Tactics

If you are looking to apply for a credit card then you’ll need to ensure that you have sufficient creditworthiness. In reality, this is no easy task – so if you are having problems with this, the following 5 credit building tactics should help.

1. Open a current account

All credit card companies like to see that their potential borrowers are responsible when given the opportunity to borrow money. However, if you only have a deposit account then there is no real chance that you could ever do overdrawn. A way to correct this is to open a current account with a high street bank and use it responsibly, i.e. don’t go overdrawn! In any event, in any application, you make to a credit card issuer they are going to ask you for details of your current account so you may as well take the opportunity of using the past history of your current account to help in establishing your credit rating.

2. Have all your utility bills in your name

A second way you can start to build up credit brownie points is to put all your utility bills, e.g. your water, gas, and telephone bills, in your name and make sure that you pay them all on time! Again, it is very likely that the credit card issuer will ask you to provide them with at least one utility bill when you apply for the card, so you may as well make use of this now as a tactic to start building up your credit history.

3. Apply for a charge card or store card

As most charge cards require you to pay off the balance in full each month, using this as a tactic to enhance your credit history is sound. Not only are you not really afforded the chance to default on a payment, but as the details are provided to several different rating agencies you can use this to building up your credit history.

4. Get a car loan

Applying for, and repaying in a timely manner, any type of loan is one of the fastest credit building tactics you can use. If you drive and know you can afford to repay a car loan, you should give serious thought to taking out a car loan – even if it is just to refinance repairs on your existing car!

5. Do a credit rating check

Once you have completed the 4 credit-building tactics above, apply for a credit report to perform a credit check. Provided you have been sensible with repaying all of your debts and bills in a timely manner, you should now have sufficient creditworthiness to apply for a credit card. In the event that you find an error on your credit report, make sure you take steps to fix this as soon as you can. Furthermore, it is good practice to get into the habit of ordering credit check on an annual basis even after your credit card has been approved to that you can keep a track of your credit rating history as this will have the biggest effect on your credit building tactics!

Credit Cards And Credit Reports

Credit Cards And Credit Reports

Over the years, credit cards have become very popular. When they were first introduced, they were popular, although these days millions of people use them. There are many types of credit cards available, including those that help people who have bad credit. You should always keep in mind that even though credit cards are great to have, they will also have quite an impact on your credit report.

The credit report is extremely important, especially when it comes to credit cards. Banks and lenders use your credit report to determine if you meet their criteria for a credit card or a loan. Your credit report is the determining factor for your credit, which is why you should never let your credit cards do any type of damage to your report. To avoid this, simply pay your bill on time.

Most people will use their credit cards responsibly and won’t damage their credit reports. Doing this will show lenders that you are responsible and that they can trust you with loans and credit – which in turn will raise your credit score. Keep in mind, however; if you have a lot of open accounts, it may tell lenders that you have a lot open and that you won’t be able to pay them back. Although this may count as good credit, lenders look at several open accounts as being potentially damaging to your credit report.

Although you may be tempted to have more than one credit card, it can actually be a downfall in the eyes of the lender. Most lenders will see this as you have a way to spend all of your limits and will fear that you may do so. Even though you may not have this intention, credit card lenders will almost always fear the worst-case scenario, and it eventually leads to you damaging your credit score – simply because a lender will turn you down for a future offer you apply for.

Something else you need to keep in mind is the fact that it can be really easy to miss a payment on your credit cards. Although this doesn’t sound bad, it can have a very negative look at your credit report. If you start missing payments or paying them late, the lender will eventually enter it in your credit report. This can have a negative impact, lowering your beacon score and eventually bringing down your overall credit rating.

If you play it safe and only get one or two credit cards and keep a track of how you use them, you won’t need to worry. Your credit report should always be a primary concern, and you should always do your best to ensure that it stays free of negative ratings. If you keep up things to date – you’ll enjoy the benefit of a positive credit report.