The Credit Repair Equation
Although credit cards may be what land the most people in credit trouble, they're also the best tool for credit repair. If you find yourself faced with mounting debts and worsening credit, the most important things you can do are always paying your minimum credit card bills, and not exceeding your card's credit limit. If you allow your card to be canceled or "charged off," you will have a very hard time getting credit in the future, which will make it even more difficult to restore your credit rating.
Or, if it's too late and you've already had your cards canceled or charged off, you should apply for a card from a company that specializes in servicing clients with not-so-good credit. Even if the card's interest rate is exorbitant and there's a costly annual fee, it's worth it to have an open, active credit account. Otherwise, how are you ever going to rebuild your credit?
Helpful Resource:
http://yomimedia.ecreditdirectory.com
Rebuilding + Revamping = Repairing
But rebuilding your credit through the timely payment of your new bills is only half of the credit repair equation. There's also the matter of the items that are already listed on your credit reports. If you can get an item deleted from one of your credit reports, then to that credit bureau and all who use it, it's as if it never happened - the instance of not-so-good credit will have been expunged from your record. Surprisingly, it's easier to have this done than you might think.
Obtain and Review Your Credit Reports
First, you need to obtain your credit reports from the three major credit agencies - Equifax, Experian, and TransUnion. This can be accomplished by visiting their web sites (equifax.com, experian.com, and transunion.com), and paying the necessary fee. If you've been denied for credit, insurance, or employment in the past 60 days, you are entitled to free credit reports. Send documentation of your denial along with your credit report requests.
You can also always get a free credit report at our site, regardless of your history:
http://yomimedia.ecreditdirectory.com
Once you have your reports in hand, scan for inaccurate information - negative, of course. If some untrue positive information somehow made its way on to one or more of your reports, you are under no legal obligation to identify it as being false. It's probably best to turn a blind eye. But as for the negative information, photocopy your reports and use a highlighter to indicate what you would like to be changed. Send a letter explaining how the information is false and include any corroborating documents that support your claims.
If you prefer to have a professional handle this matter, we highly recommend the services provided by Lexington Law. They are a professional law firm who can help you rebuild your credit and they will work with all of the appropriate agencies on your behalf. Their site can be reached at:
Lexington Law
Once you've dealt with the inaccurate information, it's time to move on to the things you only wish were inaccurate. It's important to note that any negative information (excluding a bankruptcy) that's older than seven years old should not appear on your credit report. You have every right to request its removal, and the credit agency must comply.
Set Realistic Goals - And Make Them Concrete
But next you need to decide what you would like to have removed, and how realistic your chances are of having it deleted. If you declared bankruptcy last year, or you have an unpaid judgment against you, there's not much of a chance you'll succeed. But if you got divorced four years ago and your husband stopped making the car payments, which ultimately resulted in a repossession on your credit record, you just might get it expunged.
Other, minor debts aren't as difficult to have removed. For example, if you owe a credit card company $1,100 for a canceled card, you may be able to get them to remove the information from your report if you pay them in full. Normally charges like this go unpaid or end up being settled for pennies on the dollar, so if you have the ability to pay your debts in full (or close to it), you may be able to get your creditor to send letters to the credit bureaus saying that it was all a big misunderstanding.
The key is to evaluate your credit report and decide what can realistically be accomplished. Give yourself three achievable goals and go from there. And in the meantime, make sure you don't repeat the mistakes of your past. Keep two or three credit cards open and active and pay the bills in full and on time. It won't happen overnight, but by following these guidelines, your credit will be rebuilt, revamped, and restored. The sooner you get started, the sooner the process will be complete.
Best of luck in your important journey,
Mike "The eCreditCoach"
http://yomimedia.ecreditdirectory.com
P.S. Don't forget, having a solid, ongoing payment history with
a card is your best way forward. Find yours now:
http://yomimedia.ecreditdirectory.com
And if you've already had trouble with your credit, our recommended
service, Lexington Law, can help you out right now:
Lexington Law
Saturday, February 24, 2007
Friday, February 23, 2007
What College Students Must Know About Credit
If you're a college student, chances are you've been offered more than a few credit cards. Maybe you have a friend who has already run up credit card bills on par with her student debt, and so you've steered clear of the credit card offers. Or maybe you're one of the few who have received their first credit cards and used them responsibly - so far, at least. Regardless, you probably don't realize just how important responsible use of your first credit card is to your financial future. It could have a significant impact on whether or not you'll be able to get financing for your first new car or house, and increasingly, it could even determine whether or not you get hired for your first professional job.
If you're not a college student, be sure to forward this message to anyone you know who is -- it's that important.
The Importance of Building Credit History
For many people, credit is a Catch-22: They can't get approved for credit because they don't have a credit history, but they can't build a credit history without first being approved for credit. Luckily for them, college students don't tend to have this problem. Credit card companies view them as low risk, at least compared to other young people with no credit, and so they're willing to give them a first chance. As a new cardholder, it's vitally important that you make good use of this first chance.
When you have a credit card, the issuing company reports information to each of the three major credit bureaus - Experian, Equifax, and Transunion. This information includes the amount of credit you've been approved for, how much of that credit you are currently using, and most importantly, your payment history. All payments - both late and timely - show up on your credit report, and even one late payment can hurt you rather badly when you lack a solid credit history. This is why you should always, no matter what, pay at least the minimum due on each of your credit card bills.
Always Try To Pay More Than The Minimum Due
While it's important to always pay at least the minimum due, you should never only pay this amount unless you are completely unable to pay more. In fact, it may not be a bad idea to pay the minimum immediately upon receiving your bill and then pay more later in the month when you have more money.
If you pay less than the total amount due, you will be charged interest on your next bill. Even though the credit card company holds you in higher esteem than one of your high school peers who didn't go on to college, they still regard you as a rather risky proposition - which means you'll probably be paying a very high interest rate. If you only pay the minimum due on a card with a high interest rate, it could take you several years to pay off even a modest amount of debt.
Take Advantage of Your Opportunities - But Use Your Credit Wisely
Believe it or not, it may be easier to get approved for credit while you're in college then after you get out - particularly if you don't start a professional job right away (or at all). The high interest rates you're asked to pay are just part of being a newcomer to the world of adult finance. But then again, if you always pay your credit card bills in full, interest rates will be irrelevant.
Regardless of all the cautionary tales, you should definitely open up at least one credit card account while in college to begin building a solid credit history. If you can show the credit card companies that you're responsible, you'll soon be paying much lower interest rates, and you'll be able to get that new car or house when the time is right. If you ignore or abuse your credit opportunities in college, it could be one of the worst mistakes of your life. You're an adult now - it's time to stand up, take responsibility, and enjoy your share of the American Dream. And it all begins with responsible use of credit!
To see our full listing of Student cards, simply visit:
http://yomimedia.ecreditdirectory.com
Not a student? Forward this article to that special student in your life.
Also be sure to browse our complete catalog of cards at:
http://yomimedia.ecreditdirectory.com
If you're not a college student, be sure to forward this message to anyone you know who is -- it's that important.
The Importance of Building Credit History
For many people, credit is a Catch-22: They can't get approved for credit because they don't have a credit history, but they can't build a credit history without first being approved for credit. Luckily for them, college students don't tend to have this problem. Credit card companies view them as low risk, at least compared to other young people with no credit, and so they're willing to give them a first chance. As a new cardholder, it's vitally important that you make good use of this first chance.
When you have a credit card, the issuing company reports information to each of the three major credit bureaus - Experian, Equifax, and Transunion. This information includes the amount of credit you've been approved for, how much of that credit you are currently using, and most importantly, your payment history. All payments - both late and timely - show up on your credit report, and even one late payment can hurt you rather badly when you lack a solid credit history. This is why you should always, no matter what, pay at least the minimum due on each of your credit card bills.
Always Try To Pay More Than The Minimum Due
While it's important to always pay at least the minimum due, you should never only pay this amount unless you are completely unable to pay more. In fact, it may not be a bad idea to pay the minimum immediately upon receiving your bill and then pay more later in the month when you have more money.
If you pay less than the total amount due, you will be charged interest on your next bill. Even though the credit card company holds you in higher esteem than one of your high school peers who didn't go on to college, they still regard you as a rather risky proposition - which means you'll probably be paying a very high interest rate. If you only pay the minimum due on a card with a high interest rate, it could take you several years to pay off even a modest amount of debt.
Take Advantage of Your Opportunities - But Use Your Credit Wisely
Believe it or not, it may be easier to get approved for credit while you're in college then after you get out - particularly if you don't start a professional job right away (or at all). The high interest rates you're asked to pay are just part of being a newcomer to the world of adult finance. But then again, if you always pay your credit card bills in full, interest rates will be irrelevant.
Regardless of all the cautionary tales, you should definitely open up at least one credit card account while in college to begin building a solid credit history. If you can show the credit card companies that you're responsible, you'll soon be paying much lower interest rates, and you'll be able to get that new car or house when the time is right. If you ignore or abuse your credit opportunities in college, it could be one of the worst mistakes of your life. You're an adult now - it's time to stand up, take responsibility, and enjoy your share of the American Dream. And it all begins with responsible use of credit!
To see our full listing of Student cards, simply visit:
http://yomimedia.ecreditdirectory.com
Not a student? Forward this article to that special student in your life.
Also be sure to browse our complete catalog of cards at:
http://yomimedia.ecreditdirectory.com
The Larry Rule - Is Applying for Store Credit Cards Bad for Your Credit?
Larry Lindsey is probably not a name that you know, but he is an important figure in the history of personal finance. Currently, Mr. Lindsey is President Bush's chief domestic economic advisor. Prior to that, he was a Federal Reserve Board Governor. But neither of these distinctions are what make Larry Lindsey significant. Instead, it was a little incident at Toys 'R Us that gave birth to "The Larry Rule."
The Larry Rule - What No Retail Clerk Will Ever Tell You
In 1996, Larry Lindsey was a Federal Reserve Board Governor. While it isn't known for sure, it's probably safe to assume that Mr. Lindsey was then, and is now, a millionaire. An even safer assumption is that he always paid his bills on time and should have had a top-notch credit score. After all, he was a member of the most prestigious financial committee in the world, and his personal credit history was undoubtedly vetted by politicians and regulators before he could be appointed to the Fed.
Despite all of this, Mr. Lindsey was denied a store credit card - at Toys 'R Us of all places. The reason? He lacked a sufficient credit score due to too many recent inquiries. You see, Larry Lindsey had been trying to prove a point. Whenever a retail clerk offered him an opportunity to apply for credit, he did so. He filled out the application correctly, even stating that he was a Fed Board Governor under "employment." He listed his six-figure income and all other pertinent data, and until Toys 'R Us came along, he had always been approved.
It wasn't that Mr. Lindsey actually wanted or needed all of these retail credit cards. His objective was to point out this flaw in the credit scoring system - applying for too many retail charge accounts can hurt your credit and prevent you from qualifying for real credit cards. Ask yourself, which is more important - the charge card at JCPenny that can only be used at JC Penny, or a real Visa or Mastercard that can be used at JCPenny and everywhere else, too?
To Apply or Not to Apply - That is the Question
On one level, the Larry Rule makes at least a little sense. After all, someone who is out there applying for credit all over town would seem to be in some form of financial distress. When the credit bureaus created their scoring criteria years ago, they didn't factor in pushy retail clerks who get bonuses for getting people to apply for cards they don't need. You do need a real credit card. Having two or three isn't a bad idea. But department store cards count as lines of credit on your credit report, and having too many of them can make you look like an unworthy applicant in the eyes of real credit card companies.
Armed with the knowledge that applying for and receiving retail store credit can be harmful to your credit, you should think twice before applying. First, ask yourself if you really want the store credit card, or are you just filling out the application so that the clerk will stop bugging you? If the store offers you a discount for applying, ask yourself if the money you'll save is worth the negative impact that the inquiry (or even being accepted) could have on your credit score.
If you actually do want the card or the discount is a real money-saver, then ask yourself this question: Will I need to apply for credit for something important, like a real credit card, a car, or a home loan, in the near future? If the answer is yes, then it is probably best to "just say no" to the retail application. You wouldn't want an inquiry from Toys 'R Us to inhibit your financial future.
We highly recommend that you research your credit card options before applying for a card. Then, choose the best one that is best for you, not one placed in front of you by a store clerk. In fact, you can search hundreds of cards right now at:
http://yomimedia.ecreditdirectory.com
We recommend you browse this directory and pick our one or two solid cards that you plan on keeping for the long term. With this sound financial advice, you will be on track for a great credit future.
Sincerely,
Mike "The eCreditCoach"
P.S. Don't wait, now's the time to get the card you need for the future:
http://yomimedia.ecreditdirectory.com
The Larry Rule - What No Retail Clerk Will Ever Tell You
In 1996, Larry Lindsey was a Federal Reserve Board Governor. While it isn't known for sure, it's probably safe to assume that Mr. Lindsey was then, and is now, a millionaire. An even safer assumption is that he always paid his bills on time and should have had a top-notch credit score. After all, he was a member of the most prestigious financial committee in the world, and his personal credit history was undoubtedly vetted by politicians and regulators before he could be appointed to the Fed.
Despite all of this, Mr. Lindsey was denied a store credit card - at Toys 'R Us of all places. The reason? He lacked a sufficient credit score due to too many recent inquiries. You see, Larry Lindsey had been trying to prove a point. Whenever a retail clerk offered him an opportunity to apply for credit, he did so. He filled out the application correctly, even stating that he was a Fed Board Governor under "employment." He listed his six-figure income and all other pertinent data, and until Toys 'R Us came along, he had always been approved.
It wasn't that Mr. Lindsey actually wanted or needed all of these retail credit cards. His objective was to point out this flaw in the credit scoring system - applying for too many retail charge accounts can hurt your credit and prevent you from qualifying for real credit cards. Ask yourself, which is more important - the charge card at JCPenny that can only be used at JC Penny, or a real Visa or Mastercard that can be used at JCPenny and everywhere else, too?
To Apply or Not to Apply - That is the Question
On one level, the Larry Rule makes at least a little sense. After all, someone who is out there applying for credit all over town would seem to be in some form of financial distress. When the credit bureaus created their scoring criteria years ago, they didn't factor in pushy retail clerks who get bonuses for getting people to apply for cards they don't need. You do need a real credit card. Having two or three isn't a bad idea. But department store cards count as lines of credit on your credit report, and having too many of them can make you look like an unworthy applicant in the eyes of real credit card companies.
Armed with the knowledge that applying for and receiving retail store credit can be harmful to your credit, you should think twice before applying. First, ask yourself if you really want the store credit card, or are you just filling out the application so that the clerk will stop bugging you? If the store offers you a discount for applying, ask yourself if the money you'll save is worth the negative impact that the inquiry (or even being accepted) could have on your credit score.
If you actually do want the card or the discount is a real money-saver, then ask yourself this question: Will I need to apply for credit for something important, like a real credit card, a car, or a home loan, in the near future? If the answer is yes, then it is probably best to "just say no" to the retail application. You wouldn't want an inquiry from Toys 'R Us to inhibit your financial future.
We highly recommend that you research your credit card options before applying for a card. Then, choose the best one that is best for you, not one placed in front of you by a store clerk. In fact, you can search hundreds of cards right now at:
http://yomimedia.ecreditdirectory.com
We recommend you browse this directory and pick our one or two solid cards that you plan on keeping for the long term. With this sound financial advice, you will be on track for a great credit future.
Sincerely,
Mike "The eCreditCoach"
P.S. Don't wait, now's the time to get the card you need for the future:
http://yomimedia.ecreditdirectory.com
Thursday, February 22, 2007
Bad Credit? Lose The Shame, Take Responsibility, and Begin Rebuilding
According to the research firm Sherbrooke and Associates, 43 percent of American households are "credit constrained." This means that they lack access to adequate credit, probably because they carry too much current debt, or they were forced into making poor choices with their credit in the past. With interest rates rising and the housing market cooling, the number of credit constrained households is likely to increase. If you find yourself in a such a situation, know that you're not alone.
Having excess debt and bad credit is a source of shame for many, and it has even been known to break up otherwise loving marriages. Many people who are credit-constrained feel there is no way out - particularly now that bankruptcy laws have been changed to make filing for bankruptcy more difficult for people with even average incomes. The truth, contrary to what most bankruptcy lawyers will tell you, is that bankruptcy is rarely the answer. You can dig yourself out of debt and repair your credit - all that it takes is commitment, discipline, and most of all, a new attitude.
Step #1 - Let Go Of Your Shame
Unless you fraudulently charged items that you had no intention of paying for, you need to let go of all shame related to your bad credit and debt. After all, the credit system is set up with the understanding that some people will be unable to pay their debts - that's why lenders are paid interest, to compensate them for risk. If you buy a corporate bond and the company goes under, nobody feels sorry for you, so don't let your creditors make you feel sorry for yourself. Just like buying a bond, your creditors took a financial risk by lending to you, and they didn't do it out of the kindness of their hearts, they did it to make money. So long as you had every intention to pay, you have nothing to feel guilty about.
Letting go of your guilt and shame is not the same as abdicating all responsibility. To one degree or another, you are responsible for your situation. To another degree, externalities - things in the outside world - are responsible. Take responsibility for your actions, but do not let anyone make you feel guilty or they will wield that guilt as a weapon.
Step #2 - Contact Your Creditors
Once you've let go of your shame and have committed to take responsibility, it will be much easier to face your creditors. Explain to them that you're over your head in debt, and while you want to honor your commitments, you would appreciate it if they would work with you to make doing so easier. Most of the time, your creditors will be more receptive than you would imagine - after all, they're used to people in your position ducking under a rock and ultimately sticking them with the bill.
Your creditors may offer to let you skip a payment or two in order to help you get back on your feet, or they might offer to lower your interest rates. If you still have your accounts open, they might offer to suspend your credit while you pay off the balance in principal only at regular monthly intervals. Finally, they may offer to settle your accounts at less than the full amount due if you pay in one lump sum.
Step #3 - Begin Rebuilding Your Credit
While restructuring your payment terms, by all means, stop using credit. You need to work out a budget that will prevent you from finding yourself in this situation again.
Many of these negotiated payment plans will adversely affect your credit - particularly settling for less than the total amount due, which will be a black mark on your credit report for up to seven years. The fact is that negotiated settlements may still may be superior to falling deeper and deeper into debt, which could ultimately destroy your credit and lead to legal action being taken against you.
Once you're back on your feet, be sure not to repeat the same mistakes you made in the past, but don't swear off credit altogether, either. Just because you're in bad shape now doesn't mean that you always have to be. Open up a small credit account and pay your bills in full and on time, and in a matter of just a few short years, your credit can be just as good as anyone else's. The sooner you start rebuilding after a near credit meltdown, the sooner you'll be able to experience the security and peace of mind that the other 57 percent of Americans enjoy.
Sincerely,
Mike, "The eCreditCoach"
P.S.
For a comprehensive listing of some of the cards that can help you get back on your feet, visit:
http://yomimedia.ecreditdirectory.com
And view our complete listing of all cards at:
http://yomimedia.ecreditdirectory.com
Having excess debt and bad credit is a source of shame for many, and it has even been known to break up otherwise loving marriages. Many people who are credit-constrained feel there is no way out - particularly now that bankruptcy laws have been changed to make filing for bankruptcy more difficult for people with even average incomes. The truth, contrary to what most bankruptcy lawyers will tell you, is that bankruptcy is rarely the answer. You can dig yourself out of debt and repair your credit - all that it takes is commitment, discipline, and most of all, a new attitude.
Step #1 - Let Go Of Your Shame
Unless you fraudulently charged items that you had no intention of paying for, you need to let go of all shame related to your bad credit and debt. After all, the credit system is set up with the understanding that some people will be unable to pay their debts - that's why lenders are paid interest, to compensate them for risk. If you buy a corporate bond and the company goes under, nobody feels sorry for you, so don't let your creditors make you feel sorry for yourself. Just like buying a bond, your creditors took a financial risk by lending to you, and they didn't do it out of the kindness of their hearts, they did it to make money. So long as you had every intention to pay, you have nothing to feel guilty about.
Letting go of your guilt and shame is not the same as abdicating all responsibility. To one degree or another, you are responsible for your situation. To another degree, externalities - things in the outside world - are responsible. Take responsibility for your actions, but do not let anyone make you feel guilty or they will wield that guilt as a weapon.
Step #2 - Contact Your Creditors
Once you've let go of your shame and have committed to take responsibility, it will be much easier to face your creditors. Explain to them that you're over your head in debt, and while you want to honor your commitments, you would appreciate it if they would work with you to make doing so easier. Most of the time, your creditors will be more receptive than you would imagine - after all, they're used to people in your position ducking under a rock and ultimately sticking them with the bill.
Your creditors may offer to let you skip a payment or two in order to help you get back on your feet, or they might offer to lower your interest rates. If you still have your accounts open, they might offer to suspend your credit while you pay off the balance in principal only at regular monthly intervals. Finally, they may offer to settle your accounts at less than the full amount due if you pay in one lump sum.
Step #3 - Begin Rebuilding Your Credit
While restructuring your payment terms, by all means, stop using credit. You need to work out a budget that will prevent you from finding yourself in this situation again.
Many of these negotiated payment plans will adversely affect your credit - particularly settling for less than the total amount due, which will be a black mark on your credit report for up to seven years. The fact is that negotiated settlements may still may be superior to falling deeper and deeper into debt, which could ultimately destroy your credit and lead to legal action being taken against you.
Once you're back on your feet, be sure not to repeat the same mistakes you made in the past, but don't swear off credit altogether, either. Just because you're in bad shape now doesn't mean that you always have to be. Open up a small credit account and pay your bills in full and on time, and in a matter of just a few short years, your credit can be just as good as anyone else's. The sooner you start rebuilding after a near credit meltdown, the sooner you'll be able to experience the security and peace of mind that the other 57 percent of Americans enjoy.
Sincerely,
Mike, "The eCreditCoach"
P.S.
For a comprehensive listing of some of the cards that can help you get back on your feet, visit:
http://yomimedia.ecreditdirectory.com
And view our complete listing of all cards at:
http://yomimedia.ecreditdirectory.com
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