Rebuilding Credit

Everything Counts!

Credit repair is not complicated. Your credit scores reflect your historical credit record, both the positive as well as the negative. Many people in Credit repair programs are so focused on the negative that they neglect the positive. No matter how many negative items you remove from your credit report, unless you take the time to build new positive credit your Credit repair effort will drag on and on..

The Logic of Credit Repair

The logic is simple. Your credit scores are intended to reflect the amount of risk a lender will face when they write you a new loan. In the Credit repair process you should think of your credit score as an impartial witness of your life, judging your ability to meet your obligations. The best way to impress this impartial witness is to offer proof of your ability to pay each and every month.

Revolving Credit Rules

The most powerful way you can offer proof of your credit worthiness and influence your Credit repair progress quickly is with the proper use of revolving credit. If you don’t have any open credit cards, now is the time to open them. If your credit is currently too weak to get regular unsecured credit cards, just get secured cards. It’s easy and will do the trick.

Secured Credit Cards

Secured credit cards are every bit as helpful for your Credit repair as regular unsecured cards. It does not matter if the limit on these new cards is low. Your credit scores will get the same benefit from a little secured card as it will from a high limit unsecured card, as long as you manage your debt percentages in the right way.

Manage Your Balances

Credit card management for score optimization is not difficult, but unless you know what to do mistakes are likely, and your Credit repair project may even suffer when it could have easily succeeded. Timely payments are essential of course, but the real trick to Credit repair success is to understand the relationship between your balance and the limit on the card.

Your Scores Are In Your Control

The impact of your credit cards on your Credit repair will depend almost entirely on your balances. This is always the case, but is even more important during the first year after a card is open. There are five ratios that will trigger score changes; 20, 40, 60, 80, and 100 percent usage. 50% usage of a card will have no effect, the two tiers below will increase your scores, and the two tiers above will reduce your scores.

Credit Repair with the Right Credit

There are a few other important factors to consider when rebuilding credit. Not all credit cards are equal. Store cards are of little value for your Credit repair. For undisclosed reasons, the geniuses behind the credit scoring formula have downgraded the benefit that accrues from store cards, and amplified the harm that can result from having them. Likely reasons include the fact that store cards are easier to get, usually have higher interest rates, and consequently may be an indicator of poor judgment on the part of the consumer. Try to stick with MasterCard, Visa, Amex, and Discover.

Your Credit is Alive

When it comes to Credit repair there is no good substitute for new revolving debt. A new auto loan is helpful, but will not have the impact that a credit card will have. Credit cards are emphasized because they are open-ended and alive; each month they report they can reflect your financial life. If you keep your balance low and make your payments on time it will tell the credit scoring model that you are living within your means. If you max out a card it is interpreted as a warning of budgetary strain and potential default.

Help is around the corner

Credit repair is not a difficult process, but it requires a bit of finess, and an understanding of the FCRA. If you take your time to plan the Credit repair process you will succeed beyond your expectations. And always remember that help is available. If you are in doubt pick up the phone and call a Credit repair professional.

Foreclosure or Short Sale?

Thinking about a short sale vs. a foreclosure? If you, like many other Americans right now, are coping with a challenge to meet your mortgage payment. This may be due to one or a combination of these very common struggles:

1. Job loss
2. Increasing rates if you are in an ARM loan
3. Decreasing home values

It is most likely that you are deeply concerned with how either of these ugly terms will affect your credit score and which one may be the better choice of the two burdens. Instead of being intimidated, you are at least getting educated on your choices and the consequences. Though the reality of a short sale or foreclosure is not positive, researching what you will face is a good start to finding the best solution to your individual situation.

With a short sale, lenders typically take a loss on a loan that reflects the difference between what you owe and what the property actually sells for. They must be willing to accept this level of risk, and may execute one of two actions in a short sale:

1. Sue you, the homeowner, for the difference; reflecting on your credit as a deficiency judgment which could profoundly impact your credit score in a negative way, or
2. If they choose not to sue, they very well could absorb the loss, show it as a tax write off, the IRS would see this as a taxable event, and you would receive a 1099. You would then be taxed based on the difference of the lender's loss. This could prove to be extremely costly; however there would be no deficiency judgment showing on your credit. Now, if you're talking about your primary residence, then this should be forgiven up until 2012 (Consult your tax professional).

If your mortgage payments are current, and you foresee issues with your ability to continue, then being pro-active with the short-sale process can significantly help you, reducing your need for credit repair. Partnered with being current, if you have available assets to pay the difference within your short sale, then there should be no need for negative effect to your credit, and no need for credit repair. Since you are in control of the sale, on top of your mortgage payments, and could pay the difference out of pocket, this may not be handled as an actual foreclosure. Hence this would be the perfect solution.

Now, a foreclosure is exactly what it is. You have fallen behind in your mortgage payments; you cannot sell your home due to housing market conditions and have chosen to walk away. A completed foreclosure can stay on your credit for up to 7 years and can literally sink your credit scores. Your credit score could potentially drop anywhere from 100 to250 points; severely impairing your credit. If you are forced into a short sale, behind on your payments, and are unable to pay the difference, this short sale could reflect on your credit just the same as a foreclosure would. Post foreclosure, many people find that the lender continues to report negative information on their credit report. This can be corrected, as it is post foreclosure/short sale. You can attempt to correct yourself, or find a licensed credit repair agency to assist you.

Either situation that confronts you, whether it is after your foreclosure or a deficiency judgment from a short sale, the key to recovering from this successfully, is the determination to repair your credit once the damage is done. With your positive actions, commitment and patience you can fix your credit, and the dream of becoming a homeowner once again could someday become a reality.

Maximizing Your Credit Repair

Successful credit repair involves a wide spectrum to cleaning up your credit report and restructuring your credit. Everything matters. But some aspects of credit repair are more potent than others. Among all of the techniques you can use to boost your scores, the proper management of credit cards is the most powerful. Proper use of your credit cards can easily yield a 100 point improvement in your scores.

How Do I Get Approved?

If you do not have credit cards, you need to sign up for one or two as soon as financially possible. If you want to maximize your credit repair results, establishing new credit can help propel your scores. Most people working through the credit restoration process will be unable to be approved with conventional credit cards. You will need to select a secured credit card to start the process. You can find some very good options here.

What cards do I choose?

Not all credit cards will benefit your credit repair effort equally. In fact, some credit cards can be harmful. Department store credit cards and gas cards, will not help your credit repair and should be avoided. For score building purposes you should stick with mainstream cards like MasterCard and Visa. Initially you will have to start with small limits, it's just important to monitor your balances, and try to keep them below 50%, and continue to use them regularily. When you're ready to re-pull your credit, make sure to pay down the balances completely.

Managing Your Balances

The credit scoring model used by most lenders is called the FICO model. FICO places a significant amount of weight on the relationship between your account balance, as reported to the credit bureaus, and your limit. For credit repair success you must keep your balances low. The credit scoring model recognizes card utilization in 25 percent increments. If you run your balance over 75 of your limit your scores will tumble. But use less than 25 percent of the cards capacity and your scores will be increased.

Timing is EVERYTHING!

Managing your credit card balances for credit repair success is an art. In theory there is no harm in using your cards to their limit as long as you manage to reduce the balance before the date that the creditor reports the card balance to the credit bureaus. This is not as easy as it seems. Many people pay their balances in full when they receive their monthly bill, only to be shocked to see that their credit report shows that their cards are maxed out. It is unlikely that the billing cycle and the creditors schedule for reporting to the credit bureaus will coincide. For credit repair purposes you may want to reduce your balances and keep them low.

Wrapping it all up!

Would you like to give your credit scores a powerful boost? Now is the time. By using these credit repair techniques you will make your credit cards work for you. If you do not have any open credit trade lines, open two new accounts today. Since initially you probably won't be approved for unsecured credit cards, get a couple of secured cards. Stay with MasterCard and Visa, and avoid store cards and gas cards.

Avoiding Credit Card Debt

Credit cards should always be used wisely. You don’t ever want credit card debt because the more you have the harder it is to get out on top. However, it’s even harder to watch credit card spending during times of economic hardship like the current credit crunch we are facing. Here are a few tips on how to avoid increasing your credit card debt during a credit crunch:

1. If anything, you should be aggressively paying down your credit card debt. Things are getting worse and interest rates are going up so if you can, pay them off. Credit card companies will also be attempting to lower your available credit limits if you start to show potential risks. Always Always make your payment on time, even if it's just the minimum payment.

2. Be weary of using credit cards to pay for frivolous things. Ask yourself, do you really need the item? Is it a necessity? Forgo those purchases unless you know you can pay them off once the bill arrives. Not being able to pay off these items will cost you much more in the long run because you will be paying the high interest rates.

3. If you have no choice but to put daily necessities on your credit card such as food and gas, pay off those items as soon as you can. Lenders these days are reducing credit limits while increasing interest rates so if you’re not paying off the bill then those items are costing you double or even triple the price if you were to pay in cash.

The main thing to keep in mind is that you should be spending wisely and saving aggressively so you can pay down any credit card debt you may have. It’s not worth ruining your credit over.

If it's too late, and you've already started missing payments, and you can't seem to catch up, contacting a debt settlement company, that works closely with a credit repair firm will help you to move past your troubles in about 12-24 months. If you want to attempt to repair the problems yourself, check out http://www.free-credit-repair.info/ for more information. If you want some assistance, then check out Minnesota Credit Services.

3 Myths About Your Credit Score

With debt a big part of modern life, many people know they have a credit score and it determines whether they can obtain a loan at a decent interest rate. But after that, confusion reigns.

The most important thing people need to understand about credit scores is what goes into the calculation. Payment and Credit History history accounts for 50% of your score. The amount that you owe accounts for 30%. Applications for new credit and types of credit in your record each account for 10% of your score. This means that 60% of your score can be corrected with the use of credit repair.

Credit scores range from about 350 (lowest) to 850 (highest). Generally the best interest rates go to people with a score above 740. In today's tight credit environment you will have difficulty getting credit with scores under 660 and will likely be forced to pay much higher interest rates.

Credit Myth # 1:

You Have One Credit Score

There isn't just one type of credit score. In fact, there are at least six primary ones that are given to consumers and many more assigned to businesses. The primary driving force behind most of them is the Fair Isaac Corporation, known by most as FICO.

Each of the three credit reporting agencies has a slightly different formula for calculating scores, but all are developed by FICO. Equifax's is called BEACON, TransUnion's is called FICO Risk Score and Experian's is called FICO II. You'll find your credit score is not exactly the same at each agency. The major reasons for the variation in your 3 scores, is because every account that reports to the bureaus, may not report to all 3 bureaus.
Credit Myth # 2:

You Should Close Cards to Improve Your Credit Score

Sometimes when you apply for a loan for a major purchase, such as a mortgage, you're told you can improve your credit score if you close some of your credit cards. Don't believe it. In fact, sometimes when you close an older card you can actually cause your credit score to go down.

That happens for two reasons. First, the best scores go to people who use credit moderately over a long period of time, so the older the cards, the better. If you need to close some accounts, close the newest ones first so you retain the cards with the longest history of prompt payment. If you don't have a credit history you'll find it very hard to get a major loan when you need one.

Second, credit scoring agencies put a lot of emphasis on what is called your 'utilization ratio.' It is essentially your total debt as a percentage of all your available credit. If you lower your available credit by closing cards, your utilization rate can actually look higher, hurting your credit score.

Credit Myth # 3:

You Must Pay Off Your Cards in Full Each Month to Get a Good Score

You may think you have to pay down all your credit cards to zero to get a good credit score. That's not true. In fact, to show you know how to use credit wisely, it doesn't hurt to occasionally pay a card over time. Showing you know how to use credit wisely can actually help you get a better credit score.

If you don't buy on credit and pay everything with cash, you'll likely have a lower credit score because you have no credit history for the credit scoring agencies to use. Not having a score can prevent you from acquiring new credit, if you're having problems acquiring new credit, companies like Minnesota Credit Services can help you establish new accounts with secured credit cards, and credit builder loans. This not only hurts your credit score, but it can also impact your insurance costs because insurance companies do use your credit score when determining rates. They believe people with a higher credit score file less claims and therefore are lower risk, so they get the best insurance rates as well as the best interest rate offers.

The ideal way to use credit is to use 10% to 20% of your available credit and pay all bills on time. The only problem is that everyone runs into a little trouble now and then, and reputable credit repair companies can help you to get back to where you below.

Take Charge with Credit Repair

The FTC's views on Credit Repair

The FTC did not set out to do you wrong. Credit Repair is a service that many people can do themselves, just as many people service their own cars, and paint their own homes. The FTC also will tell you that many of the Credit Repair companies out there are "bad apples", and are only out to scam you out of your money. While there are some out there, many of which are not licensed, bonded, or members of the BBB. There are also many that are good companies. It's best to check with your department of commerce to verify if a company is licensed to do Credit Repair.

Credit Repair Good Guys

It is true that there are bad guys in the Credit Repair business. The last time I looked this was true of every industry without exception. As of lately there are only 10 active licensed Credit Repair companies in the state of MN. Feel free to check it out on the MN Dept of Commerce's website.

How Many Errors?

There are several reasons Credit Repair is an essential service in today’s world. Lately, everything is dependent on your credit score, your Job, your credit cards, your home, you name it! You might not think of credit reports as products, but that is exactly what they are, no different really from automobiles or computers. They are assembled, passed through a quality control process, and sold. Unfortunately, like many other products there are flaws.

The Obscene cost of Errors

The flaws in the credit reporting system can be as dangerous as a manufacturing flaw in an automobile. About seventy five percent of all credit reports contain at least one error. Credit report errors can lead to higher interest rates, loan denial, job denial, higher insurance rates.

Credit Repair Reality

Legislation they hammered out is called the Fair Credit Reporting Act (FCRA). In a way this is a consumer protection law, but it is equally intended to protect the three national credit reporting agencies we refer to as the credit bureaus. It is true that congress was heavily lobbied by the credit reporting industry during the creation of the FCRA. There are economic realities involved with running any big business and these must be respected.

Look Out For Yourself

Congress had little choice but to attempt to balance the need for credit-reporting accuracy with the economic restrains of quality control. The end result is simple. Credit reports are as accurate as they are going to get, and consumers’ better look out for themselves. The creation of AnnualCreditReport.com, the site where you can get your credit reports once a year for free, is a stipulation of the FCRA and an attempt by congress to provide us with an opportunity to manage our own Credit Repair efforts.

On the Other Hand

This is not to say that it is the best site to get your reports for free. On the contrary, in spite of my approval of the creation of the site, it’s really pretty difficult to maneuver. Personally, I’d spend a few bucks and get a simple tri-merged report..

Hire a Professional Credit Repair Company

Many people find the prospect of digging into the Credit Repair project just too much to handle. If you are busy and have enough going on in your life without taking the time to figure all of this out, just get on line and find one of the credit repair good guys, there are only 10 in the state of MN. There is plenty of Credit Repair help available if you need it. Either way, it’s your credit, so stand up for yourself!

Use Credit Repair, and Use a Local Minnesota Company!

Credit Repair Makes a Difference

Never before has your credit score been so important. And never has Credit Repair offered such dramatic financial benefits. There was a time, not long ago, when it was enough to pay your bills on time. Lenders would glance at your credit report, and if it looked okay you would be approved. The interest rate you would receive would be the same as all everyone else that was approved. Fannie Mae and Freddie Mac now have pricing adjustments for every credit score. The difference can be as much as .5% for an 60 point score difference. On a $200,000 30 year mortgage, you will pay an additional $22,294.85 in interest!

The Times They Are a Changing

Credit Repair may have made your report look good, but unless there were dramatic problems with your reports you may have gotten little, if any financial benefit. This is no longer the case. Even a small Credit Repair service will pay noticeable financial dividends. The credit markets have changed dramatically, largely as a result of the stress of the post-2006 real estate and mortgage market failures. A 700 score was once considered perfect, now, that has moved to a 780, which only

Make The Most Of Your Scores

To make a Credit Repair service all the more important, the credit scoring model is trickier and less logical that you might think. Once upon a time you would have great credit simply by making your payments on time. This is now far from the truth. You can make all of your payments right on time and still have low credit scores. A Credit Repair service will insure that all of the components of your credit report are in proper balance.

Bad Credit is Cumulative

Your Credit Repair service will include a thorough examination of all three credit bureau reports. Given the importance of each and every point on your credit score not a single item can be ignored. There are a number of reporting issues that many people miss when they proofread their reports. All of these subtle little items must be spotted and removed. Included in this category are revolving accounts with incorrect account limits, paid accounts reporting an outstanding balance, closed accounts reporting as open, and duplicate accounts.

Successful Disputing

The next step in your Credit Repair service is the dispute process. In addition to the tricky compliance issues already mentioned, all questionable issues should be examined. If they cannot be made sense of, they should be disputed. It is important to keep in mind as you continue the project that the credit reporting system is error prone. And it is not self-correcting. Errors can easily linger on your report for years pulling your valuable scores down. The credit bureaus do an important job, but given the volume of data, and the number of participants in the process, errors are a common occurance. If you do not take action, no one else will. Credit Repair is about looking out for you.

Keep At It!

The final and essential ingredient in a successful Credit Repair service is persistence. The credit bureaus are large cumbersome bureaucracies. You may not get the response you want the first time you send a dispute letter. This does not means that you should give up. Credit Repair requires a can-do attitude. If you believe there is a mistake on your report do not take no for an answer. Be organized, remain focused, and you will succeed.