Repair My Finances.com

Any credit repair consists of two phases: removing the negative listings from your credit report and adding new, positive listings.

Since just a couple of negative listings will earn a rejection from most creditors, repair of your negative credit should be the first priority. After bankruptcy, for example, the credit report will show many negative listings including the bankruptcy filing, discharge and numerous “included in bankruptcy” listings. While removing a bankruptcy from your credit report is no easy proposition, it is possible and definitely worth the effort.

It is important to note that you may be able to obtain much of the credit you need even without repairing your credit report.

Most home loan guidelines (including FHA guidelines) require that you have no negative credit appearing within the last two years. This means that you may have no late pays within the last two years and that any collection, lien or judgment has been paid more than two years ago. Even if you have some bad credit in the last two years, you can often find a mortgage amongst the “sub-prime” or “sub-A” lenders that will finance you even before you repair your credit. These loans will charge a higher interest rate and require more equity or a larger down payment before they will close. If you have good income and a reasonable debt to income ratio, a sub-prime loan may be the key to refinancing or getting a home while you repair your credit. In any case, if you are working on your credit repair, you may be able to refinance within a year at better terms.

Automotive financing will typically allow some negative credit before credit repair, but with less than optimal terms. If you have a few late pays, you may pay a little more in interest (but it adds up fast, to be sure.) If you have truly awful credit, you may still get an auto loan, but at very high rates (but you should definately repair your credit in the meantime.)

Standard rate credit cards seem to be the most difficult when it comes to credit that still needs credit repair. Most standard rate cards will reject you immediately for any negative credit whatsoever. Yet, there are many credit cards that work with bad credit and help you to repair your credit. Some require deposits and others require a significant annual fee. Most have low credit limits.

So, once your credit repair is underway, you can turn attention to adding positive credit. You may have to accept some of these less-than-standard credit options while you repair your credit. But, a word to the wise, there are many credit repair scams out there that prey upon the credit distressed. Even your local auto dealership may take advantage of your vulnerable position and your desire to repair your credit. Many phony credit card offers exist that allow you a card, but one that is only good for the company’s limited line of merchandise. Mortgage brokers often hide exorbitant fees in loans to borrowers who need credit repair. It is not uncommon to charge credit repair customers four to eight “points” on a sub-prime mortgage loan. These points amount to tens of thousands of dollars that you must pay over the life of the loan. Make sure that you read the fine print and compare your mortgage, auto loan or credit card to the typical terms of regular financing if you are applying before your credit repair is complete.

With that said, there are many good options for repairing and rebuilding credit that you can find on the internet or at your local credit union.

Maybe you’ve recently finished repairing your credit or maybe you’re young and haven’t used credit yet. In either case, here are a few tricks to credit repair and building a positive credit history quickly and cheaply. Most times you start building some good credit in just a couple of weeks. But, beware, if you stack too many open accounts, or too many credit inquiries, you will be denied based on debt to income ratio and excessive credit inquiries.

If you know someone (like a good friend or parent) who has good credit, you can “borrow” their good credit listings and begin to repair your credit. This friend must have credit cards, and must trust you enough to allow you to become an “authorized user” on his or her credit cards. Just have your friend call the credit card company and request that you be placed on his card as an authorized user. A copy of the card will be sent and you may simply return it to your friend. Your credit file should soon show an open account with all of the positive history that your friend has created over the years with that credit card. A small footnote will sometimes show that you are an authorized user of that card. Remember, though, when a new credit grantor goes to review your file, he may insist that the balance on the card appear on your debt to income ratio. That shouldn’t disqualify you for credit if your income is sufficient and you don’t have an excess of debt on your file.

There are a number of good secured and unsecured credit cards that advertise on the internet. These cards are designed to help you to repair your credit. Understand, however, that secured credit cards will appear on your credit report as “secured” and will not necessarily repair your credit history as much as an unsecured card.

There are a number of creditors who are traditionally more accepting of those with little credit history or who are in credit repair. For example, many college credit unions will extend low limit credit cards to students without a credit history. Many department stores, such as Sears, will extend a credit line to encourage you to shop at that store, even if your credit repair isn’t yet complete. Electronics stores, furniture stores and cosmetics shops are all usually open to extending credit to credit repair candidates.

As with any line of credit, you must make sure that you handle these new accounts responsibly. It is a temptation to use a department store credit card frivolously. Just remember that you have to pay back every dime, with interest.

What is the truth about credit repair companies? Can they really do what they say they can do?

Many “credit repair” companies claim to remove negative credit with the flick of a wrist. Their advertisements make bold assertions and money’back guarantees; “Bankruptcy, tax liens, judgments, . . . no problem!! One hundred percent guaranteed!! Credit report 100% cleared in 30 days!!” Can they really make such sweeping guarantees?

While some credit repair companies are outright frauds, others are not frauds and they use the dispute process to obtain impressive results. In fact, they delete thousands of negative credit listings every day - regardless of whether or not the listings are technically accurate. In truth, credit repair fraud is less common today then five years ago. Vigorous regulatory sweeps by state and federal regulators have cleared away most of the illegitimate (and some of the legitimate) credit repair companies.

Unfortunately, it’s risky to trust anyone to help you repair your credit. It is estimated that credit repair companies have bilked Americans out of more than fifty million dollars. The majority of credit repair companies were started by entrepreneurs with a penchant for marketing. Consumers have flocked to these “credit doctors” only to discover that their advertisements proved far more impressive than their results. Hiring a credit repair company is like playing Russian roulette. Many of them are effective and legitimate, but it is difficult to tell a rip-off from the real article.

Working within the credit bureau maze requires substantial background knowledge; knowledge it takes credit repair companies years to learn. In fact, U.S. District Court Judge J. Wexler entered the following legal opinion in the Federal Supplement. “Since allowing third parties to assist consumers will likely lead to the expedited correction of credit reports, it will further the purposes of the [Fair Credit Reporting] Acts.”

So, can credit repair companies really guarantee results?

Not a chance! No credit repair company is so good that it can guarantee a specific outcome. It would be like a defense lawyer guaranteeing that the jury will find his client innocent. Guarantees are a sure sign of credit repair fraud. A warranty, where the credit repair company promises a refund if certain results don’t occur, is a better, more realistic claim.

Not surprisingly, the credit bureaus have declared war against the credit repair companies and those selling instruction on how to do-it-yourself. The bureaus lambaste credit repair companies in the media and send anti-credit repair literature to anyone whom they suspect of using credit repair services. The bureaus unflinchingly deny that accurate information can be removed from a credit report.

Some time ago, a couple in the Northwestern United States, who were using the services of a legitimate credit repair company, received a scathing letter of reproach from their local credit bureau. The letter chastened them for relying on the “unethical” methods of credit repair, and pointed out how all their efforts had come to nothing. “As you can see,” the letter chastened , “your credit reports remain unchanged.” The couple was bewildered because almost all of their many negative credit listings, including a bankruptcy, had long since been deleted.

The simple truth is that you don’t have to endure bad credit for seven to ten years. It is possible to repair your credit within a much shorter time.

However you decide to address your credit challenges, realize that regardless of what you may hear in the news media, thousands before you have sought help and repaired their credit. They can show you their homes, cars, and credit cards. Despite the newspaper articles, TV reports, and other credit bureau propaganda to the contrary, you can repair your credit.

Whenever you apply for any type of credit or financing, a credit report is pulled from at least one of the three major credit bureaus. While there are hundreds of smaller credit bureaus around the country, virtually every credit bureau is affiliated with Trans Union, Experian, or Equifax. These credit bureaus collect and maintain information on the vast majority of Americans, but they are not affiliated with the government in any way. The credit bureaus are for-profit corporations that sell your personal information for money.

The credit bureaus receive your personal information through the same lenders who grant you credit. They have agreements with each of these credit grantors that require the credit grantor to inform the credit bureaus of everything that occurs in your relationship with the credit grantor. If you make a payment late, the negative credit listing is quickly reported to at least one of the three major credit bureaus and is added to your credit history.

Credit reports are not just a record of how you are currently managing your credit accounts. Credit reports are histories of everything you are doing with your credit now, and everything you have done in the past. The credit bureaus collect this information, list it on your credit report, and then sell it to credit grantors who wish to see your credit history before they decide to lend you money. The credit grantors who review your credit are especially interested in any negative credit. If you have shown any tendency to pay late, or to disregard your financial commitments in the past, then the creditors’ computers will immediately reject your application. Just like when you were in grade school, your credit report is your financial report card to the world.

What Kind of Information Appears on the Credit Report?

Merchant Trade Lines These include all regular credit lines such as department store cards, auto loans, mortgages, and credit cards. If there is any history of late payment, or if the trade line was included in bankruptcy, charged off, or put into repossession, the listing will be considered negative by all credit grantors.

Collection Accounts When an account is referred to collections because of delinquency or because of a bad check, this appears on the credit report as a collection account. Collection accounts can appear as paid or unpaid accounts. Any type of collection account, whether paid or not, is considered very negative by all credit grantors.

Public Records Public records include bankruptcies, judgments, liens, satisfied judgments, and satisfied liens. All court records, including satisfactions, are considered negative by all credit grantors.

Inquiries Every time a potential credit grantor looks at your credit file, a credit inquiry appears on at least one of your credit bureau reports. If the number of inquiries is very few over the last two years, then there may be no negative effect on your credit worthiness. However, if there are many recent inquiries showing on your credit report, credit grantors may become nervous and deny you credit.

How Long Will Negative Information Stay on My Credit Report?

The Fair Credit Reporting Act (FCRA) requires that most negative credit items be deleted from your credit bureau file in no more than seven years, except for a Chapter 7 bankruptcy which can be reported for up to ten years. These are the time limits for reporting negative credit. The creditor or the credit bureau can choose to have the negative credit information deleted whenever they please. Inquiries may remain on the credit report for up to two years.

Can I See My Credit Report?

Most credit grantors are not allowed by the credit bureaus to show you your own credit report. But you can purchase your credit report from the credit bureau for a fee. Once you receive your credit report, you may find that you cannot read it because the information is listed in an unfamiliar code. Trans Union and Equifax credit reports are particularly difficult to interpret and understand. Experian credit reports, however, are relatively easy for most people to read. Your best bet would be to order a 3-in-1 combined bureau report since they are the easiest to read.

How Much Bad Credit Does it Take for Me to be Denied Credit?

As you may have already experienced, even one small late pay listing may result in credit denials. It is a myth that a large amount of positive credit can outweigh some negative credit. Any negative credit whatsoever can become a substantial credit obstacle. Learn More.

Who Looks at My Credit Report?

With the passing of each year, your credit report is used more and more often as a yardstick to measure your character. Prospective creditors will always review at least one of your credit reports before granting you credit. Today it is increasingly common for insurance companies to review your credit before extending auto or health insurance. Many employers now check credit before they consider you for a position. If you rent, you may have already been through a credit check to determine your worthiness as a renter.

The government passed a law that allows every citizen to get a free annual credit report a few years ago. This law states that they can get their credit history because of the recent increase in identity theft.  This free credit report is easily available online and will give you reports from all three of the credit reporting agencies.  A credit score is not going to be provided in this instance for you to view.

This is a very popular new law and there are many con artists and identity thieves that have come about and starting their own credit report web sites to scam you.  They are making money off of this new law that is supposed to protect you.  There are over 100 free credit report web sites that will help you online right now.   There is one good web site that will help you get a real free credit report online and that is www.annualcreditreport.com

The free credit report scam is usually going to charge a “small fee” to get what is a free credit report.  There are also fake free credit report web sites that will take down your information and ask for your social security number or they will ask for your credit card information. With this, anyone can steal your identity and spend money on your accounts that will ruin your credit.

You can find these scamming web sites in different ways. Most of the scam sites have a similar name as the official free credit report web site but you can figure out the difference because these sites often have misspelled works or typos in them.  This means that there may be a period of out place.  Also most of the web sites will charge you a fee to get the report and remember that you are able to receive one FREE credit report a year.  This is true even if they ask you for your credit card information and state and they will not charge you this is something to take note of and be very cautious of.  If you get an email of some kind of sales be sure to read the fine print very carefully before you respond.  Some have found that certain web sites or sales do offer a free credit report but you have to enter your credit card information and if you do this, you will authorize them to charge your card for credit monitoring services.

 You need to remember to get your free credit report either online or at the above mentioned site or phone or mail.  You can also make contact of the three national credit report agencies such as Experian, Equifax, and Trans Union and they can also point you in the right direction to keep a your credit on track. 

When you’re dealing with credit cards, you’re playing with fire. Unfortunately, there are plenty of people out there who don’t realise that, and make all sorts of dangerous mistakes with their credit cards every day.

1)  Paying Late

If you don’t set up any kind of automatic payment, then it can be tempting to just put your credit card bill on a pile and get to it when you have time. Before you know it, a few weeks have gone by and you’re late. If you leave it to the deadline, you might find that the payment won’t get there quickly enough – it’s not a deadline for sending the money, it’s a deadline for them receiving it.

Paying late is a big mistake for an awful lot of reasons. You will almost certainly be charged a late payment fee, and your late payment will go on your credit report for everyone to see. You may also find that you lose any good rate you had, and your debt is automatically thrown onto the very worst rate the company offers.

To avoid late payment, you should always post your payment a long time before the due date (at least a week). If you’ve left it to the last minute, phone up and try to pay that way.

2)  Being Taken in By Rewards

It is never, ever worth getting a higher-interest card simply because it offers some kind of loyalty points, flight miles or whatever. Even if it offers a cash reward, it is unlikely to be more than you would pay in extra interest – after all, why would they give you free money? All ‘rewards’ do is pay you off with your own money to make you feel like you’re getting something for nothing. You’re not.

3)  Collecting Cards

Seeing some people opening their wallet or bag is a scary experience. It looks like they have about a hundred credit cards in there, some of which they haven’t used in years. They have trouble keeping track of all the different cards, balances and interest rates. Don’t be one of these people. You should limit yourself to a maximum of three cards at a time – any more starts to make you look over-committed in your credit report, and could get you turned down for a bigger loan.

4) Maxing Them Out

Your limit is just that: a limit, not a minimum! Whatever you do, don’t get a card and immediately spend your whole limit. This looks very bad. It is better to spend about halfway regularly and pay it back. Wait for the company to increase your limit (which they quickly will), and then you’ll get that extra money without the stigma of having a maxed-out card.

5)  Not Reading the Terms and Conditions

Finally, as ever, don’t sign anything you haven’t read! I know it’s hard going and you’re busy and all, but if you can’t manage to read the terms and conditions then you shouldn’t get the card. Pay special attention to any future increases in rates, and what kind of fees you can be charged.