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Understanding Credit Scores and Repairs

Understanding Credit Scores and Repairs

If you are applying for a mortgage, you’re going to have to deal with credit scores. Therefore, understanding credit scores and methods for improving them is a must.

Credit Report

Step one in the process is making sure that you have a current copy of your credit report. Congress recently amended the Fair Credit Reporting Act so that consumers may now receive one free credit report annually. There are three major credit bureaus: Equifax, Experian, and Transunion. Since entries can vary across bureaus, you’ll want to request a free report from each of the three companies. (Go to www.annualcreditreport.com)

Credit Score

It’s also imperative to know just what a good credit score is. Most A-Paper scores typically begin around 680, although this number may differ slightly among lenders. Don’t despair if you come up shy, there is always room for improvement. Increasing your score just 5 points can save a significant amount of money. For example, if your score is 698 and you increase it to 703, then you could save yourself thousands of dollars over time as a result of a slight improvement to your loan’s interest rate.

While credit repair is necessary for some, it is not the panacea to increase your credit score. Even if you have stellar credit, you can enhance your score through these steps:

1. Evenly distribute your credit card debt to change the ratio of debt to available credit. Let’s say you have a credit score of 665. If you have debt on only one card, and four additional credit cards with zero balances, evenly distributing the debt of the first card could move you closer, and possibly into, that ideal bracket.

2. Keep your existing accounts open and active. The average consumer is usually anxious to close credit card accounts that have zero balances, but doing this can cause them to lose the benefits of long-term credit history and increase their ratio of debt-to-available credit. The bottom line is don’t close those old accounts!

3. Keep credit inquiries to a minimum. Each inquiry into your credit history can influence your score anywhere from 2-50 points. When it comes to mortgage and auto loans, even though you’re only looking for one loan, multiple lenders may request your credit report. To compensate for this, the score counts multiple auto or mortgage inquiries in any 14-day period as just one inquiry, so try and stay within that time frame.

Remember, credit scores do not instantly get better. Improving them requires time and diligent effort on your part, so it’s a good idea to start at least three to six months prior to submitting your application for home financing.

If credit repair is what you need, you can either begin the process yourself or seek out a repair service. If you decide to make your own improvements, visit as many websites as possible to get information regarding credit laws and consumer rights. Diligently search through them and educate yourself to ensure that you don’t sustain any self-inflicted wounds. A good place to start would be the Federal Trade Commission’s website, which contains a plethora of helpful literature.

If you’re facing severe or complicated credit issues, then you’ll probably want to enlist the assistance of a professional credit repair company. Before you do, be sure to familiarize yourself with the FTC’s regulations on credit repair. With over 1100 credit repair companies to choose from, it’s important to be certain you are dealing with a reputable firm. Examine the FTC’s information on fraudulent practices to avoid falling victim to credit repair scams.

Albeit, addressing credit issues can be uncomfortable. By taking these steps now, however, you’ll be that much closer to obtaining the home of your dreams.

Three Steps To Fix the Error on Your Credit Report

Three Steps To Fix the Error on Your Credit Report

Have you spent a little more (or a lot more) than you should have with credit? Most American’s have several credit cards with a few thousand dollars in debt racked up, as well as car or personal loans. When you combine these payments with your everyday living expenses, it can be really hard to get yourself out of debt. Here are 3 steps you can take right now to fix the error on your credit report.

1. Thanks to changes in federal laws, every citizen in the United States is now eligible for a free credit report every year. It used to be you had to be denied credit with a company before you could obtain a free report, now you can request one each year to keep on top of what’s being put in your credit report. This allows you to find and fix the error before it costs you your good credit reputation. Order a copy of your credit report to determine how severe your financial situation is. You may think that you have bad credit, but your credit report may show otherwise, and vice versa. If your report shows a lower score than you would like, you can then start taking steps to improve the situation.

2. Investigate the credit report thoroughly and look for errors. You would be amazed at how many people have found accounts on their reports that they have never had in their name. The usual errors are credit card accounts that are showing open when you’ve paid them off and closed the account, and this appears to be money available to you that hurts your overall credit score. You can fix these errors by writing to each of the companies that have reported information in error, and asking them to correct it immediately. Save a copy of all correspondence and seek the advice of the credit reporting agencies if necessary. Once you get the errors corrected, you may be happy with your new credit score!

3. Fix your long term credit situation. Once the errors have been corrected from your credit report, chances are you still have quite a bit of debt you need to get rid of in order to fully improve your credit rating and get yourself out of debt. The first thing you absolutely must do on the journey to repairing your credit is “STOP USING CREDIT CARDS”. If you have them, get rid of them! You must work at paying off the existing debt, and it will only be worth your time and effort if you stop adding to that debt by continuing to spend using your credit cards.

Consider a Loan to Consolidate Credit

If you are still able to, you might consider obtaining a loan to pay off each of your individual credit cards. Doing this will help you because it changes your monthly expenses from several, individual credit card payments, each with their own interest rates and finance charges, to a single monthly loan payment, with just one interest rate. You should also accept a loan with high interest in this case if it’s all you are able to get if it means paying off ALL of your existing credit card debt. Why? For the simple fact that having a single monthly payment with high interest is still going to save you money over the long term than having four or five credit cards with their own interest rates and finance charges that are added, month after month. Your payment will go further on a single loan payment than when it is sent to individual credit cards, regardless of the interest rate on the loan.

Why is It Necessary to Do Credit Report Repair?

Why is It Necessary to Do Credit Report Repair?

Is it necessary to do credit report repair?

Credit report repair will surely help you to improve your credit report and thereby increase your credit score. It is a process that eliminates the negative remarks and gives you a good credit report. There are many people who are unaware of repairing their credit reports and thereby create an obstacle to getting credit extension. You can even repair your credit report timely or by checking it periodically.

With the help of a good credit report, you can have credit flexibility through which you can get credit at a low-interest rate. One should not get tired of bad credit report but seek suitable measures to improve it. A self-credit repair can be a difficult task but with the help of many online services, one can easily repair it by oneself. Below are a few tips, which can help you to repair your credit report.

• Order Credit Report

This is your first step in which you must order the credit report from all the credit bureaus. Don’t be surprised to see different credit report ratings as different credit bureau have different ways to maintain a credit report.

• Check Credit Report

In this step, you must check your report carefully and slowly. It is quite general to find at least one error in one of the three reports.

• Document and Dispute Strategy

Any mistake in your credit report must be informed to the credit bureau. Finding the reason behind any error is equally important, as you understand your credit report. Maintain up to date copy of each and every document that can be used as future reference.

• Dissolve the Debts

Clear your debt payments if you are liable for it. This step is of vital importance, which can help you to improve your credit report rating.

Other Information

If you have unnecessary accounts then close it instantly. Remember Zero balance account is also taken into consideration. Verify each and every account that exists.

Top 10 Ways To Repair Your Credit Score

Top 10 Ways To Repair Your Credit Score

You must never underestimate the value of having good credit. You will definitely need to repair your credit score so you are prepared if you want to use it in the future. For example, if you are a student, you’ll need to borrow a certain amount using a student loan in order to attend school. At this point, your credit history will definitely matter and will have a big impact on getting you the funds that you need.

If you are applying for a student loan, your creditor or the lending institution will probably request a copy of your credit report and the credit score, which comes from an authorized credit-reporting agency. This will help identify your credit criteria and will determine if you are qualified for a loan. And if you are, your credit score will influence what interest rate you will be paying for the funds.

You must be able to demonstrate good credit to be approved by most of the private student loans. This also applies to the loans you might need such as auto loans, business loans, and mortgages.

Here’s what you can do to keep your credit score high and your credit good.

1. Make your payments prompt and timely. Make sure that you don’t miss any deadline.

2. Pay the minimum monthly payments. This will repair your credit score remarkably.

3. Limit the number of credit card accounts you have open at any one time.

4. Maintain available credit on your open accounts.

5. Request a copy of your credit report at least once a year from each of the three national credit-reporting agencies.

6. Check your reports for errors. You must clear up any errors that do appear in your report right away, time is critical in this.

7. Don’t open multiple accounts all at one time, especially if your credit history is not good. This tends to look a bit risky to lenders because you are taking on a good deal of possible debt, all at once.

8. Remember that you must know how to prioritize your needs. Leave those credit cards that are not needed aside for a while. Then after you have recovered from all the other debts, you can add these cards back into your wallet. The new accounts will lower the average age of your account and this is something that counts toward your FICO score.

9. Don’t open accounts that are not necessary. They will just be a burden. Even if you have a very high income, you can still encounter some difficulties.

10. Make sure that you don’t close accounts with the thought that the account will be removed from your record. That will not help at all. Closing accounts can sometimes even hurt your score.