Credit repair is a process which aims to remove bad information from your credit repair if that is possible and teach you how to manage your personal finances in a way which will naturally increase your credit score over time.
David Bakke writes about credit and debt on Money Crashers Personal Finance, a resource dedicated to helping people get out of debt and live within their means.
Your credit score could affect your credit card interest rates, insurance premiums and even your ability to get a job. Therefore, it is probably well worth your time to do what you can to improve it. Fortunately, small moves on your part could significantly improve your score and you probably wouldn’t have to wait forever to see the effects. And most of these ideas can be put into place without spending a lot of time.
1. Pay Bills on Time
Paying bills in a timely fashion accounts for roughly 35% of (more…)
Your credit report is filled with information that could help or hurt you in debt settlement. You’re not the only one who can access your credit report. Creditors and debt collectors are also allowed to pull your credit report – and they will likely make decisions about your settlement offer based partially on your credit report.
Tool: Creating a Settlement List
As you probably know, your credit report contains a list of most (or possibly all) your credit card and loan accounts. Before you start your debt settlement efforts, you could use your credit report to help complete your list of accounts that you need to settle. For many of your accounts, you’ll probably have recent billing statements or balance due letters from creditors to let you know the account balance and other details. But, you may also have some old accounts that aren’t being actively collected. Your credit report could give (more…)
One of the biggest questions you might have about debt settlement is how it will affect your ability to get credit after you’ve finished settling all your debts. Not only could the answer to this question affect your decision to proceed with debt settlement, it could also impact the steps you take to repair your credit should you decide to go through with settlement.
Whether debt settlement goes on your credit report is entirely up to your creditors. Most of the time, creditors do update your account to show that you settled the debt. The account will probably specifically state that the account was settled or it will have wording that indicates you paid less than the full balance due. These remarks, like most other negative information, could stay on your credit report for up to seven years from the date of the settlement.
When debt settlement is listed on your credit report, it typically impacts your credit score – but likely more so in the first few months and years after the settlement is complete. With time, the debt settlement probably impacts your credit score less especially as you add positive information to your credit report like timely credit card payments. (more…)
Most of the companies you have debt with report your account to at least one of the three major credit bureaus each month. The major three bureaus are Equifax, Experian, and TransUnion. These credit bureaus, or credit reporting agencies, have the task of collecting all your accounts and adding the details to your credit report. Years and years of accounts appear on your credit report, so your credit report could be a good place to go if you want to know about your debts.
What’s On Your Credit Report
Many details are usually listed for each of your accounts. These details generally include: the name of your creditor, a portion of your account number, the current balance, your credit limit or original loan amount, current monthly payment, the account status, and a list of any payments you’ve missed in the last seven years.
When you’re assessing your debt to come up with an attack plan, your credit report is typcially a great place to go because most, if not all, of your accounts and balances will be listed there. Note that creditors also have access to (more…)
People typically add family members, significant others, and sometimes even friends as authorized users on a credit card to help boost the authorized user’s credit score. Sometimes parents add their kids to credit cards to help the kids learn how to use credit responsibly. A spouse may list another spouse as an authorized user on a credit card so that spouse can make purchases with the credit card too. Unfortunately, if you have authorized users on your credit cards, your debt settlement could affect their credit, too.
How Authorized User Accounts Work
Just like your credit card history is listed on your credit report, it’s also likely on the authorized user’s credit report, too. It can be helpful for the authorized user when the credit card balance is low and all the payments are made on time. But, if you settle the debt, that too will generally be added to the authorized user’s credit report, even if they had nothing to do with the settlement.
Authorized users have no legal responsibility for the credit card balance, even if they helped rack up the charges. When you default on payments, the credit card issuer isn’t allowed to go after the authorized user for payment because the user is just someone who (more…)
One concern you may have after debt settlement is how your credit was affected. You should expect to have some type of negative impact to your credit, even if it’s just a recording of the settlement process on your credit report. There are a few ways to check your credit report and credit score for free. Use these methods after debt settlement if you want to see where you stand.
Free Annual Credit Report
The Fair and Accurate Credit Transactions Act was passed in 2003 and gives you the right to view your credit report for free once every twelve months – one from each major credit bureau (Equifax, Experian, and TransUnion). Get this free credit report by visiting AnnualCreditReport.com. The website also contains instructions on how to order your annual credit report by mail and by phone.
Free Report and Score When You’re Denied
For years, it’s been the law that you can get a free credit report within 60 days after you’re turned down for a credit card or loan because of (more…)
Soon after your last settlement has been paid, you’ll want to start repairing your credit. Credit repair is likely necessary if you want to save money on interest, insurance or security deposit. It will take some time to get your credit score back to where it was before you settled your debts, so starting soon is best. Here are some things you should and should not do while you’re repairing your credit.
Start by checking your credit report.
You need to make sure the details of your settlements are reported correctly. For each settled account, the balance due should be $0 and the payment status should say “Paid” or “Settled” or something to that effect. You can check your credit report by visiting AnnualCreditReport.com or any of the three credit bureau websites.
Don’t let errors go uncorrected.
If your settlements aren’t reported as described above, contact the creditor to make sure everything was processed correctly. You can also dispute the error with the credit bureau and it helps if you have a zero balance letter showing your account has been settled in full. Otherwise, you can send a copy of your settlement offer and proof of payment along with your dispute.
Get new credit to help rebuild your credit score.
To improve your credit score, you likely need to (more…)
After debt settlement, you should quickly get started repairing your credit. Before you jump right into credit repair, make sure you get some essential information on improving your credit.
Your credit report contains the details about what you need to do to improve your credit score. The negative information on your credit report is what brings your credit score down. The first thing you should do to repair your credit is check your credit report. Make a list of the things that are hurting your credit score and figure out what you can do to improve that information.
One of the easiest steps in credit repair is to dispute inaccurate information. Errors could hurt your credit score, especially errors in how your debt settlement is reported. Check every item on your credit report to make sure everything is correct. If you find anything that’s wrong, dispute it with the credit bureau.
Your credit score is based on five different factors: payment history is 35%, amount of debt is 30%, age of credit history is (more…)
You can rebound faster from debt settlement if you get right into rebuilding your credit. The good thing about debt settlement over bankruptcy is that you can typically get new credit sooner after you’ve settled your debts. If you’ve kept a credit card out of your settlement – something you usually can’t do with bankruptcy – then you’re likely a step ahead in terms of improving your credit score.
Check your credit report
Review your credit report to make sure debt settlement looks right. Your settled accounts should report a $0 balance and should have a status of “Paid,” “Settled,” or “Closed.” Dispute inaccuracies with the credit bureau or with the creditor who reported the account. Use your debt settlement offer letter and proof of payment to support your dispute if necessary.
Get new credit.
You probably want to add new positive entries to your credit report to overshadow the negative items added by debt settlement. So, new credit would be necessary. If you don’t have a credit card already and can’t get approved for a regular credit card, save up a deposit for a secured credit card. Prepaid debit cards are a good option for spending money, but they don’t help you rebuild your credit. Opening a few credit cards will likely let you add more payment history than if you just had one card only.
Use your credit cards.
Just getting credit isn’t enough. You have to likely keep your accounts active so they’ll continue to reflect in your credit score. Make small charges on your accounts each month and pay the balance in full. Or, rotate using (more…)
Debt settlement can hurt your credit score, but thankfully, you don’t have to live with damaged credit forever. Debt settlement will only stay on your credit report for seven years, which is much better than the ten years that bankruptcy typically remains on your credit report. The other usual upside to debt settlement is that it’s a remark in the payment history section of your credit report, not the public records section where bankruptcy is listed. Any public record likely severely hurts your credit score and looks bad to future lenders. You don’t experience this with debt settlement.
Plan for the future
You can count on having a fairly hard time getting new credit after debt settlement is finished. But, you’ll typically need new credit if you want to rebuild your credit score. If you haven’t started the debt settlement process yet, you may decide to keep one credit card out of the settlements. That’s only if you can afford to pay off the balance without settling the account. Keep making timely payments on this account and it could give you something to benefit from once your settlement is over.
If you elect to do the foregoing, then make sure you let your settlement firm know you’re keeping an account out of the settlement. Creditors and debt collectors that you are settling with can access your credit report and could see that you have a credit card with a positive payment history. They could use this fact as an argument against settling your accounts. As long as the settlement firm knows about the account you’re keeping out of the process, they should be able to explain to your creditors why you’ve kept this one account.
Negotiate items off your credit report
It’s rare for this to happen, but it’s a possibility. Some creditors are willing to remove (more…)