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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 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.

Credit Repair Advice: How To Improve Your Credit Score

Credit Repair Advice: How To Improve Your Credit Score

Our credit scores determine much about how we live our lives. We buy practically everything on credit and therefore, we need a reliable credit repair advice to keep our finances in order. When applying for a loan, our good credit scores help us receive reasonable interest rates. In fact, from landlords to insurance companies, to utilities, everyone looks at our credit scores, as they are a reflection of our financial health. A healthy credit score may determine what various agencies will charge for their services. Today, even employers check personal credit scores before offering a job.

Knowing more about our credit scores and the factors affecting them may help us build a positive credit history. But first, let’s look at how they are maintained by the various credit reporting agencies.

Three major credit bureaus – Equifax, Experian, and TransUnion – calculate credit scores. Though they use the same methods and formula to calculate scores, they sometimes come up with a different rating for various reasons. One agency may have more updated information about an individual. A creditor may have shared information with one agency only, but not with the others. Creditors, while checking on our scores, take the average of the three scores from these three agencies.

Credit scores range between 300 and 850. A score of 680 and above is excellent for obtaining mortgage financing at low-interest rates. A credit score of 621 to 679 is an average score and you would have to pay a slightly higher rate of interest. A credit score of below 600 makes us potentially unreliable and harder to obtain credit. When a credit score falls below 600, credit repair steps should be taken immediately.

The following are factors affecting credit scores and basic steps to take to maintain an accurate credit score rating with the credit bureaus:

1. Routinely check payment history and the current credit debt held.

2. Credit history length is a determining score factor. Naturally, the longer ‘good’ credit history, the better.

3. Do not close old or paid off accounts. These show the credit history length and contribute to higher credit scores.

4. Pay off debts to improve credit scores.

5. On-time payments. Delayed payments appear on credit reports and adversely affect it.

6. An individual’s race, sex, age, level of education, or marital status has no bearing on a credit score, nor does the fact that an application for credit was previously turned down.

Taking care to maintain a high credit rating enables us to receive credit and loans at good rates. Our credit score is a reflection of how we manage our finances and a determining factor for many aspects of our lives. Get practical credit repair advice to help you have a healthy credit history. Doing so is the best way to avoid bad credit and limited loan options in the future.

Credit Repair – How To Deal With A Credit Bureau

Credit Repair – How To Deal With A Credit Bureau

Having good credit is an essential tool in today’s economy – it allows you to have a credit card, to obtain car and house loans, and many other conveniences. While you can live without good credit, a bad credit rating will certainly affect you negatively throughout your life. The key to your credit rating lies with a credit bureau. There are a handful of credit bureaus in North America that handle all reports – positive and negative – from creditors to create a credit report specific to you. If you have a poor credit history, you must take steps to engage in credit repair, and one of the first and most essential tools is to learn how to effectively deal with your credit bureau.

Credit repair begins with determining which credit bureau holds your file. To do this simply look at any rejection letter from a credit application – the letter, in refusing your credit, will indicate which bureau proved the rating. The next step is to obtain your credit history. Keep in mind that legally it is always free to obtain your credit history if you have recently been denied credit, although many organizations will imply that it is not. The only time you should pay money for a credit report is if you want to receive it instantly, in which case credit bureaus will provide an instant online report for a fee.

When dealing with a credit bureau, understand that they are in the business of collecting and selling information. For this reason, it is in your interest to never provide them with any information that is not legally necessary. Legally, you only need to provide a credit bureau with your name, social security number, and legal address in order to obtain your credit report. The bureaus may request a copy of your social security card, and – if the address they have on file is different from your current one – a copy of something proving your address. Although they may ask for a driver’s license to prove your address, send them a copy of a bill showing your address. The reason you want to be cautious when dealing with credit bureaus is that they own many collection agencies and if you have a credit problem you want to give them as little information as possible with which to harass you.

Once you have received the report, examine it closely for any errors. If anything is in question, send a written request for an investigation to the credit bureau. Legally, the onus is on the credit bureau to document anything on your credit report – if they cannot document it within 30 days, it must be removed. This is the basic strategy of many credit repair companies that charge exorbitant fees: challenge everything negative. In many cases, if the negative item is more than a few years old it will be difficult to verify and the item will be removed.

By learning to properly deal with a credit bureau you can engage in effective credit repair that other companies charge high fees for. By educating yourself as to the legal obligations of the credit bureau, you can, in many cases, repair your own credit quickly and effectively.

Additional information to help you build good credit:

Making a Debt Management Plan for Credit Repair

Top 10 Ways to Repair Your Credit Score