Top 10 lists are great because they get a point across quickly and easily. Chances are, you’re reading this because your credit needs help. Here are some of the 10 biggest reasons people put off repairing their credit, and why you shouldn’t let anything on this list stand in your way to repairing your credit.

Unless you live in a cave, you’ve probably heard about President Bush’s proposed $700 Billion (yes, that’s Billion with a capital “B”) buyout. There’s a lot of “gloom-and-doom” news reports about closed-door meetings, hidden agendas, higher interest rates, tougher credit approval guidelines and the like. But what most average Americans want to know is how it’s going to affect them. Here it is in plain English, along with ideas on what you can do to weather the storm.

Basically, the Bush Administration and Congress are suggesting that the US Government buy up $700 billion in distressed mortgages nationwide. This massive debt is the result of the housing market crash and mismanaged funds and credit ratings by senior executives. Although it would be easy to write an entire book on that subject alone, this is the simple answer. And it’s important to note that as a result of this buyout, it will become increasingly more difficult to be approved for credit, at least in the short term.

Who’s responsible to come up with the $700 Billion?

Although it looks like Congress will approve the buyout, they won’t be footing the bill. No, my friend, that’s up to you and me and the rest of the taxpayers. It comes out to roughly $2,500 a piece. To be clear, it won’t likely be a one-time $2,500 hit on your taxes – the proposal allows for it to be spread out a bit, and hopefully prevent it from being a burden to the average taxpayer. Nevertheless, $2,500 is a significant amount of money to most people that I know, so start saving now.

In the interest of being fair, the total amount may be less than $700 Billion – that’s just the cap right now. You see, after the Treasury Department buys the mortgages, it will turn around and sell them to investors (if you’ve got good credit and you’re optimistic about the plan you could be one of them), and it may not end up costing the entire amount approved by Congress. The Government isn’t just writing a check for $700 Billion, the proposal allows it to spend up to that amount. Any way you look at it, it’s still a whole lot of money.

So, as an American who is neither rich nor reckless financially, I’m being asked to bailout people that are?

The simple answer is, “Yes.” What’s in it for you, then, the average American homeowner of average income and spending habits? Well, it could end up saving your retirement or 401k. With the massive collapse of Washington Mutual last week, just about everybody’s financial future is uncertain. If you’ve got good credit, chances are, you’ll be just fine. If your credit is fair to poor, you may have a much tougher time of it. It’s speculated that foreclosures will continue to rise in the short term, so repairing your credit could save you not only money, but ultimately your house as well.

How is it that Congress can suddenly come up with $700 Billion when they haven’t been able to come up with even a fraction of that amount for healthcare, to repair bridges and tunnels, etc.?

It’s a good question, and one that I’m certain will be asked frequently in the months to come. The response from Washington is that although there are many other valid and worthy places to spend money, as a matter of national security and continuing our way of life, the financial system could not be allowed to collapse, no matter the cost.

How do I prepare myself for what’s next?

For the short term, clean up your finances and your credit. Reduce your outstanding debt as much as possible, and carefully evaluate any new applications for credit or major purchases. The goal for the short term is a financially protected and defensive position, while the long term may very well be financially lucrative to those who have the good credit to support them.

Credit scores have long been a mystery – closely guarded secret formulas used to determine your financial fate. However, there’s plenty of information on what your credit score is, how it affects your life, and even the way it’s calculated. The good news is, you can find out all of this and more in just a few minutes. And the bad news? Read on…

There are all kinds of myths about credit repair out there – it’s a scam, it doesn’t work, and so on. We tackle some of the more common myths, and give you the real story on each one in down-and-dirty, plain English. You may be surprised at what the truth really is.  Visit creditrepair.com to read more on this article. 

Question

hi well ihave three credit cards and i pay on time never late and I also have a mortage and i always pay ontime never late but my credit score stays below 600 no matter what i do it never seems to up

Lisa D.

Answer

Lisa

Congrats on paying your bills on time.  This is very important for maintaining and building positive credit.

There are other factors that go into calculating your credit score.  Here a few things to check…

1) Monitor your credit.  Make sure you or no one else is pulling your credit too often.  Inquiries can lower your credit score.

2) Make sure everything on your report is accurate.  If it is not, dispute these items with each of the credit bureaus.

3) Make sure you have available credit showing on your accounts.  Having your accounts “maxed out” with lower your score.

4) Make sure that if you have old accounts on there, they are paid off.  An old collection or judgment could bring down your score.

Check on these 4 things and keep maintaining positive credit.  Your score should continue to go up over time.

Thanks

Candice

Question

I just found out my husband has bad credit and a lot of debt in his past.  The collections bills are now starting to roll in and we just had a debt collector come to our door the other night for 8000.00.  What are my options?

Blake H.

Answer

Blake

Sorry to hear about this but this is a common problem in marriages; spouses bringing in old credit history into the new marriage.  It is very important for you both to sit down, talk about your combined financial picture and work out a plan together.  Above all, keep communicating to each other!

As far as the debts go, you have a few options…

1)      Debt Acceleration.  If you get on a spending plan together, you may see you have extra money coming in each month.  If you do, start applying this extra monthly month to one of these bills.  Once you have paid off one, apply all the money that was going to the now paid off account and apply it to the next bill.  You can continue to do this until all your bills are paid off.

2)      Family and Friends.  It is getting more common now to borrow from family and friends.  If this option is available, make it official.  Sign a note with them that clearly spells out the repayment terms and the interest rate and by all means pay them back on time!

3)      Credit Counseling.  There are non-profit companies out there that can renegotiate the payment terms with your creditors.  They will draft your account once a month and handle all of the re-payment process.

4)      Debt Settlement.  There are agencies out there that can negotiate a settlement for less than full balance of what you owe.  This could be a good way to save money on some old debts.

5)      Bankruptcy.  If all else does not work, bankruptcy may be an alternative.  You would have to meet with an attorney in your state and discuss whether a Chapter 7 or a Chapter 13 would help in your situation.

Blake, if you would like to have a free referral to a debt specialist, give us a call @ 800-445-8540 and we can match you to a reputable partner.

Good luck.

Candice

Question

Upon paying off a collections account, will my credit score suffer if I settle in full versus paying in full? Also, upon paying off collections accounts, will the reporting collections agency remove the derogatory information or negative rating by not responding to a personal letter from me saying “this account has been paid and should not reflect a negative status, as it is affecting my ability to obtain credit”? What advice can you offer to have derogatory accounts be removed from my credit report?

Joseph D

Answer

Joseph

Great questions. 

We recommend that you always satisfy your debts in some way.  This is a great way to increase your financial health.  In the long run, this should also improve your credit score.  According to myfico.com, 30% of your credit score is made up by the amounts you owe on your debts.  So the less you owe, the greater you will score in this area.  Outstanding collections, judgments, tax liens should be satisfied in one way or another. 

Unfortunately, in the short term, paying off these accounts either in full or by a settlement, may lower your credit score.  The payment you make on these accounts will be more recent than your previous payments and will update the activity date.  Your credit score weighs new activity, usually over the last two years, more than old activity.

Unless you negotiate for a deletion with your settlement, the creditors will not remove these collections accounts from your records.  In fact, they could stay on your reports up to 7 years from the last date of activity.

As a part of your settlement negotiation, you could stipulate that the creditor delete the item in full from the bureau reports.  Often times, the creditors will ask for a higher settlement amount to accommodate this request.  If they do agree to this, it is recommended that you get the agreement in writing BEFORE you make your payment.  Monitor your credit reports in about 90 days from your settlement to make sure these items have been removed from your reports.  If they are not, mail a copy of your settlement agreement to each of the bureaus by certified mail asking them to comply with the deletion request.  If this does not work, follow up with the collection agency to have them contact the bureaus again.

Good luck.

Thanks

Candice

Question

looking for a way past due credit card consolidation company. Know any?

Taylor S.

Answer

Taylor

Creditrepair.com will match you with the most reputable debt consolidation company in the country based on your individual need.  Call us @ 800-445-8540.

Choosing a debt company will depend on the type of debts you have, the amount of debts your have, if your debts are current, behind or in charge off status and your ability to repay these debts in the future.

Let us give you a free evaluation so we can help you determine these answers and we will recommend the right company to help you become debt free!

Thanks

Question

I have a question i have collections on my credit that are not mine I don’t know how to clear them up and get them off

Thomas D.

Answer

Thomas

You are not alone!  As reported in USA TODAY June 5th, 2007 “A 2005 survey by the U.S. Public Interest Research Group found 79% of credit reports contained errors, and 25% contained enough mistakes to prevent the individual from obtaining credit.”

Here are ways you can go about deleting this incorrect record:

1) You can write the dispute letters yourself. Here are a couple of articles with more advice on how to do that. http://www.creditrepair.com/credit/repairing-credit-yourself.html, 

 http://www.creditrepair.com/credit/credit-report-dispute-letter.html  

2) You can get a free phone consultation from a credit repair professional. They will actually write the dispute letters on your behalf. Call us at 1-800-445-8540 and we can match you to the best partner in the country based on your situation.

Thank you and good luck.

Question

My name is James H., and my wife and I Filed chapter 7 two years ago. For some reason there is still a charge off for a 2003 Monte carlo in open status on my credit report. is there any thing we can do to fix this, It is putting a big hurt on us for buying a house.
Thanks,

James H.

Answer

James

Sometimes the credit bureau report will not be updated correctly to show all of the accounts included in bankruptcy.

You can do one of three things…

1) Contact the creditor of the Monte Carlo and ask them to update the bureau report to make this item as “Included In Bankruptcy”

2) You may dispute this item to all three credit bureaus and have them update the credit report.

Lastly, your mortgage lender could do what is called a “rapid Re-Score” and take your bankruptcy papers and work with their credit report provider to get this updated.  This would be the fastest way and could be updated within 72 hours.

Thanks and Good Luck.

Candice