The Ultimate Do-it-Yourself Credit Repair Guide

ultimate credit repair do-it-yourself guide

Ready to kick open the doors to financial opportunity?

A better credit score will do it for you…

The following is our ultimate do-it-yourself guide to credit repair, so you can improve your scores,  fix errors in your reports with the three credit bureaus, and know everything to expect along the way.

What does a great credit score get you?  Get lenders begging for you to borrow with better and better offers — PLUS imagine everything being cheaper too, from home loans, insurance to credit cards, you get access to the best, lowest rates and programs.

The following is our ultimate do-it-yourself guide to credit repair, so you can improve your scores.

  1. Best Ways To Learn Your Current Credit Scores
  2. Fix Errors in Your Credit Report
  3. Credit Repair Strategies That Really Work
  4. Reduce, Then Eliminate Your Debt
  5. How to Build a Perfect Credit History
  6. Avoid The Pitfalls Which Cause Bad Credit
  7. How To Protect Your Credit for Life
  8. Enjoy The Benefits Of Good Credit

The following are the very same resources and information we use to clean and correct reporting problems, grow better scores and to set our financial trajectory towards perfect credit. Follow the step-by-step process below, and you will know exactly what to expect and how to do it for yourself.

 

 


step 1

The following step will walk you through the following techniques:

  • How to get your free credit report
  • How to get your report from niche agencies
  • How to get your credit score from the courts
  • How to get your report from the medical bureaus

To begin, the first thing you should do is brush up on the rules of the game.   Take a few minutes and visit the Federal Trade Commission to brush up on my rights as a credit consumer.

Believe it or not, your rights change and the most current accurate information can save you time and money.  For example: Bankruptcy used to fall off your report after 7 years… It was recently changed to 10 years.  Knowing the rules is vital to navigating the credit game successfully.

FICO national average scoreThe FTC is THE crucial resource which sets the rules of consumer credit which we can use in our favor as a consumer to ensure we have the best consumer credit we can.

Additionally, the FTC setup the website www.annualcreditreport.com. It was setup so you can get your credit reports free as pursuant to your rights, the reports are free once per year for all consumers. For a small handling charge, you can get your reports, and you can return to get them again for a small fee if you would like them updated later in the same year.

Free Consumer Rights Tip: You are also entitled by law to receive a free credit score report when you are turned down for credit within 60 days even if you have already been given your free credit report for that year.

If the lender doesn’t provide you your report following being declined, you can simply send in your disapproval letter to the three reporting bureaus and state that you were denied credit, employment or insurance, by whom, and the date — they are obligated to send you a free credit report.

To get your credit report from the Big Three credit reporting bureaus.  You can contact them directly.

In the United States your consumer credit history is maintained by three major reporting agencies:

*The big three bureau reports are all you need unless you have specialized circumstances which we’ll cover shortly.  We’ll detail the niche agencies you may have need of in a moment.

Getting A Credit Report From Specialized Bureaus:

vantagescore national averageHow to get your ChexSystems report:
If you are having trouble opening a checking account, you might be listed with ChexSystems, a reporting bureau which falls under the FCRA and is also obligated to provide your credit score. Their contact info is:

Attention: Customer Relations
12005 Ford Road, Suite 600
Dallas TX 75234
800-428-9623
www.chexhelp.com

How to get your CLUE© report:
You may also want to get your CLUE© report from ChoicePoint. Your ChoicePoint report keeps a record of any car insurance claims and your insurance history. ChoicePoint is also obligated under the FCRA to provide a free report similar to the other consumer credit bureaus as delinquencies can affect your credit.

ChoicePoint’s Consumer Disclosure
P.O. Box 105108
Atlanta, GA 30348-5108
www.choicetrust.com

How to get a judicial judgements report:
The following link is used if I wish to get a reporting of any past judicial judgements and legal obligations:

CourthouseDirect.com
P. O. Box 70558
Houston, Texas 77270
Phone: (713) 683-0314 or (713) 683-0491
Fax: (713) 683-0493

How to get your residential history consumer reports:
You can get a report of any delinquent utilities bills here:

National Consumer Telecom & Utilities Exchange (NCTUE)
www.nctue.com

Did you know your rental history is sometimes tracked?  To see if there you have any negative items in your history holding you down, you can get your report here.

Tenant History Credit Bureaus
www.saferent.com
toll-free for consumers (888) 333-2413

Lastly,  the medical information bureau has information relating to any medical insurance records if I have applied within the last seven years as an individual which can affect your credit scores. If this applies you can get access here:

*Your record usually does not end up in their hands if you were part of a group plan.

www.mib.com/html/request_your_record.html
Toll-free number for disclosure is (866) 692-6901

There you have it, we’ve shown you all the major agencies which are worth checking if your situation demands.  For most people, you need only get your credit report from the big three bureaus and ignore the rest.

(Want to learn more:  New York Fed Household Debt Information)

Final Thoughts:
We start here, because we need facts.  We get your most current consumer credit reports.  Your current score provides a benchmark and the items in your report are opportunities to improve, as you work to grow your scores.

[NOTE:  A NUMBER of services are available which will do all this for you for a small fee if you would like to avoid the hassle.  See what we recommend to help you see your credit score free that can be accessed here.  This resource can help you streamline the process outlined above, so you need only visit one location to monitor your scores.]

In the next step, we’ll share exactly how you can dispute erroneous items on your report.

step 2

You should have your full credit reports from at least the major three reporting agencies, right?  Great!

If it looks ugly, not to worry.  Every negative item dragging your credit scores into the toilet is an opportunity.  Like weights, as you clean up the bad, over time you will get a bounce in the numbers in your favor.

In this stage, details matter, be sure to read carefully the following information can help you get better credit.

Ready to start learning how to correct errors in your credit file?

It is very common for you to find a you have a number of errors in your file the agencies use to keep track of your history.  It’s not uncommon to see incorrect addresses, wrong names, entire debts linked which aren’t yours and other issues.  Fixing the errors is a powerful tool to help improve your credit.

bad credit to great credit score scaleLong story short, don’t expect the data in your files to be entirely accurate, and fixing mistakes which are pulling down your scores is just good sense.

You will have learned the following when you complete this step:

  • How to fix your report fast
  • How to fix your scores online
  • A powerful free way to improve your consumer credit

Now that you have obtained your free report, make a list of report errors you find in each credit history from the bureaus and rank them, giving the most damaging significant errors which are dragging down your good credit, the highest priority.

In the name of efficiency, these will be the errors we will want to fix first, lets get the greatest impact for your efforts quickly.  Additionally,  make a note of how many open accounts you have, the extent of your owed balances, and the number of delinquent accounts you have.  This step is crucial, please do not skip it…  We’ll explain more later.

Don’t Miss:
*Be sure not to forget errors in your personal information, to reflect only one record for employer, legal name, etc. This will further protect you from identity theft and help the bureaus verify your information.

Using disputes to improve your credit rating:
Ok, so you’ve made a list of all errors.  Have alot?  Most people do…  Great, you’ll be able to improve things fast!

The next step is to take this list of errors and dispute them, individually.

We’ve provided a sample dispute letter you can use here.

You may address each of the errors in a single letter (envelope) to each agency, if you like, [IMPORTANT] but you will want to provide separate complete information for each error that you are disputing.

This prevents the bureaus from throwing out your case as irrelevant.  Years ago, this was the number one mistake I made, it led to wasted effort, lost time, and kept me from reaching my credit rating goals as quickly as I would have liked.

How Fixing Errors in Your Report Works: The Rules
The FCRA grants you the right to dispute and fix errors in your credit report.  A good credit history can often be lost simply due to inaccuracies in reporting data.

The credit bureau is obligated when it receives a dispute, to research the record in dispute within a reasonable period of time unless it believes the dispute is frivolous.

If the reporting bureau cannot verify a disputed item it must be deleted.  The credit bureaus are given 30 days with which to resolve a dispute. which can be found here: United States Code, Title 15, Chapter 41, Subchapter III, Section 1681i

credit report error statisticsNow that we have determined what the errors are in your credit report, we will learn how to dispute these errors correctly using the credit bureau report dispute guide.

  • Remember to prepare a letter of dispute for each credit bureau to properly fix your score [Sample Dispute Letter Template]
  • Very Important provide complete information for each item you are seeking to dispute

Making Sure Everything Is Perfect in Your Credit Item Dispute Letter:
When using our Dispute Letter Template provided above, include this information for each of the items you wish to dispute.  Make sure your letter:

  • Details exactly why you are disputing each item — CLEARLY.
    For Example: August mortgage payment not late. or credit card account with Discover is not mine.
  • Be very clear in your error dispute letter to state the item in question is being ‘challenged’ or ‘disputed’ and that you are exercising your rights under the FCRA.
  • Use clarity. Clearly state whether you are requesting the item be corrected or deleted.
  • Be yourself. A personal letter is better than a form, and handwriting is best, (unless illegible).  Avoid over polishing your letter and looking too professional as it can be considered ‘dispute spam’ and thrown out.
  • Always provide any documentation to support your disputed items where possible and list its inclusion at the bottom.

Because this information is inaccurate, it should be resolved either by the bureaus investigation or because they were not able to verify in time. If after investigation the credit bureaus still feel some of these items are accurate, you may be required to repeat this process until the items are successfully removed from your history.

(NOTE: Want someone to do it all for you? See the professional credit repair services we recommend here! Have it done for you here.)

Final Thoughts:
Cleaning up errors from your report is incredibly powerful.  We recommend every consumer monitors their credit reports annually and addresses any inaccuracies which may arise to keep their credit history error free and as perfectly accurate as possible.

(See Also: MyFico Credit Score Fact vs. Fiction)

 


step 3

Challenging items in your credit report successfully, is the single most powerful way of quickly improving your credit.  In the previous step we covered disputing errors in your report.  Now, we are going to dig deeper into the dispute process you can challenge and request updated information for negative items in your report.

This module will provide you with the following skills:

  • What to do if your first dispute is denied
  • How to optimize your dispute process for better results

You should have already sent your initial dispute letters.  If you were successful, and you got all the errors removed — GREAT!

Unfortunately it doesn’t always happen that way, not to fret, persistence is key here.  Now we are going to repeat a similar process to request updated information and challenge any information which isn’t correct on negative items in your report.

 

negative report items maximum time

 

To improve your chances of success when challenging credit report items:
To review, when disputing items with the credit bureaus be sure do the following:

  • Prepare a letter of dispute for each credit bureau to properly dispute credit score items
  • Dispute credit score items with complete information detailed for each item individually
  • Use clear language for the reason you are disputing.
    For Example: October car payment not late. or Loan X is not mine.
  • Clearly state in your letter whether the item is ‘challenged’ or ‘disputed’ and that you are exercising your rights under the FCRA.
  • Declare clearly whether you are requesting the record be corrected or deleted.
  • Be yourself. Try to use a personal letter rather than forms, and handwriting is best. Avoid over polishing your letter and looking too professional.

If your dispute is mishandled:
When you dispute credit report items with the bureaus it is a good chance your dispute claim will either be mishandled, or lost in the shuffle.  As frustrating as this can be, you can almost count on it.

To combat this, be sure to maintain accurate records as your proceed through your dispute letter process, as they will not do so for you.

When you challenge items in your credit history the inability of the credit bureaus investigation to verify the information within the alotted time required works in your favor.  These items are then required by law to be cleaned and removed from your report.

They might be too busy to get to it in time, the lender might refuse to cooperate, any number of things could happen which will result in the negative items you have being deleted from your report.

What to do if your first dispute is denied following investigation:
When you challenge an item in your report many will come back as verified after an investigation is completed.

Not to worry, if you are believe it is in error, you still have recourse.

First, document your results, and then prepare to send another round of dispute letters to the bureaus. This time you need to use a different reason for disputing the accuracy of the item.

You can use the reasons list below, cycle through whichever may apply as needed as you go through the process:

  • Credit Record Not Mine
  • Credit reported is wrong amount
  • Item included is wrong account number
  • Incorrect Charge-Off Date
  • Credit item last Activity Date incorrect
  • Credit reflects incorrect Balance
  • Incorrect status reported
  • Wrong High Credit Number
  • Incorrect reporting of late pay month

The credit bureaus are obligated to investigate and must resolve the issue within 30 days. This obligation is the key behind the many services and companies that teach how to dispute credit score items.  If data is inaccurate and hurting your credit score, dispute it – remove it – improve it.

The credit bureaus will respond with one of the following: ‘verified’, the item was unverifiable (success), or as not being mentioned.

If any of your items were not mentioned in their response, check to be sure you listed the item in your letter of dispute clearly, and that it was clearly stated.

If it was, and they didn’t mention, simply include it in your next round of mailings.

Repeat the process to clean your credit report of negative items bringing down your score with inaccurate data.  Over time you should be able to get most items removed completely.

Some items such as bankruptcy may obstinately remain despite your best efforts, while foreclosures, delinquent accounts and missed payments can often be removed over time to stop weighing down your credit history.

* Important: Don’t Forget:

  • Keep detailed, organized records of your entire credit repairing process.
    Document everything!
  • Be methodical, and don’t get frustrated, the process takes time, having great credit is worth it.
  • Consider leaving positive reflecting items, remove the negative items to boost your scores.
    If they make errors in your favor, that’s their problem.

I recommend repeating this process for 6-10 months or until you have removed everything negatively impacting your reports.  If after 8 months of dispute letters you were unable to get certain items removed, wait a year and then try again with a renewed effort for 3-4 months.

If you feel the remaining items aren’t ruining your credit and aren’t worth the effort, then feel free to ignore them.

Final Thoughts:

With this information you are capable of doing 99% of what a professional credit repair agency would do for you on your own.

Ultimately its up to you whether it is worth the time to do it yourself, just to save yourself the cost of paying for it to be done for you.

If you can spare the $100 a month, you can sit back, stretch your legs, and enjoy results reported month to month as your credit repair company they does all this for you, watching as your credit rating improves from month after month…

Your call–but you now know what’s involved.

Don’t forget to check out our recommended credit repair companies!  Click here to see the recommended offers which can save you all this time.

 

 


step 4

Cleaning your credit history with the reporting bureaus is the first stage of repairing your credit.

However, optimizing your financial accounts and creating an iron-clad financial foundation is the best way to rocket your scores into the stratosphere without risk of falling back into trouble and ruining all your hard work.

In this module we are going to cover how to tackle your debts, what the bureaus want to see financially, and ways you can improve your credit rating by restructuring your accounts.

personal finances money treeCompleting this module will teach you:

  • Why reducing debt to income ratio boosts credit scores
  • How to reduce debts through negotiation
  • Reducing debt with consolidation loans
  • How to eliminate your debt with secret strategies

Familiar with good debt vs. bad debt?  It’s a fact different consumer debts are treated differently by the credit bureaus, impacting your credit score in different ways.

Ultimately, debt is debt, so work to eliminate everything you owe.  Avoid playing games with your debts just to look better for the credit bureaus, it’s not worth it.  An iron-clad financial foundation trumps all such concerns when they are calculating credit score.  Focus on that, as it’s where you’ll get the biggest score gains.

Lesson:  Do what’s best for your personal finances first.  Then worry about what may impact your credit score.

Common sense checklist for creating rock solid personal finances:

  • Assess your debt to income ratio, and set a goal.
  • Reduce debt interest rates and lower payments
  • Services to renegotiate debt owed
  • Reduce debt through debt consolidation
  • Reduce spending to necessary vs. want items
  • Explore ways to increase your income
  • The Debt Devil is in the details! Track them.

Be methodical, attack your debt day by day, and be proud of each little success you make to reduce your expenses or increase your income.

You want to have perfect credit?

Think of it like going to the gym / fitness…

Exercising, eating right, and staying healthy — over time — will give you the results you seek.

Your credit score is a lagging indicator of your financial fitness.  Grow your income, save money, limit your borrowing and your credit rating will invariably improve.

Reduce your debt to income ratio – set a challenging goal you can stick to
Any good debt reduction plan of attack begins with an honest assessment of your financial situation.

Use your free credit reports, and list your available credit lines, how much you have in available credit, how much you currently owe.  Compare it to what your monthly income is.

It can be intimidating at first to take a sober assessment of your finances, but don’t be frightened by the numbers, finance is a game, albeit a serious one, your debt represents a challenge with great rewards offered up when you eliminate it.

Developing a strong personal finance profile IS the secret to guaranteed credit repair over the long term.

The debt to income ratio goal you set is up to you, lower the better, however anything under 30% should see improvements in your credit rating if you were previously much higher than that.

Reduce your debt service on existing debts
Another step to consider is working to reduce your debt service on existing balances by lowering your financing costs via interest rate reductions. We are stealing a little from the strategy book of the debt settlement folks here.

Why does this help your credit rating?  Look at it from the credit bureaus standpoint.  If Experian, for example, sees you paying $2500 a month in bill payments–if your income remains the same but you reduce bill payments to $1800 monthly, you have just reduced your risk in their eyes.

It’s because you’ve become financially stronger

Begin with the highest interest rate loans you have, usually unsecured credit cards or cash advances.  A simple call to each of your creditors can work wonders, simply ask for a rate reduction because of your past history as a customer.

Even with a credit crisis and a shaky credit history, card companies can often reduce your rates to keep your business.  It’s a helluva eye opener when they put you on hold to check, return, and state, “No problem, I’ve been approved to reduce your rate by 5%.”

If you do not get a positive response the first time, hang up, it can be worth it to try again and discuss it with a different representative, be persistent and confident.  Use your best judgment.

With credit cards, consider these strategies to reduce interest rates to help reduce your monthly debt service and improve your risk in the eyes of the credit bureaus.

  • Credit card balance transfers
  • Take advantage of introductory rates and promotional offers to reduce costs
  • Upgrade your credit card to a better program as your credit improves
  • Use lower interest lines of credit or HELOC to restructure credit card debt

Have larger credit lines? Consider these strategies to reduce monthly payments

  • Refinance your mortgage to reduce debt interest
  • Multiple payment strategy to prevent interest accrual
  • Renegotiate debt terms with the lender
  • Debt reduction consolidation loans
  • Consider new loan on different collateral to pay off older high interest loan balances

How to reduce what is owed by negotiating
If you don’t want to negotiate with your lenders, no problem.  There are a number of debt settlement firms who will be be happy to do so on your behalf, for a fee.

If you have large unsecured balances, in excess of $15,000, you may be able to get a large portion of your balance essentially forgiven.

The negative impact to your credit score may be offset by making you financially viable again.  Everything is up for negotiation, even the reporting of a settlement in some cases — so get creative, there is no harm in asking.

How to Reduce Debt With Consolidation
Often receiving a new loan with better terms and rates can dramatically reduce your monthly payments. We recommend any financing alternative that lowers your cost, period…  Simply roll your high interest loan balances into cheaper umbrella loans. Consider these options:

  • Reduce your debt with a second mortgage on your home to consolidate expensive lending
  • Using a HELOC loan to pay off credit cards
  • Reduce your debt through a low interest line of credit
  • Reduce debts with balance transfer credit cards or cards with better terms
  • Reduce your debt using your car or other collateral for a better loan

How to reduce costs by spending less
Stopping the major financial leaks which put you in debt in the first place is just good financial sense.   Everything counts in your credit repair journey, we’ve written extensively on how to reduce your spending, here are a few quick tips.

  • Prepare food at home rather than eating out to reduce debt
  • Cut your own hair to reduce debt
  • Repair rather than replace items to reduce debt
  • Search for discounts online to reduce debt
  • Reassess what is truly necessary in your life
  • Reduce your rent with a move, do you really need all that house?
  • Drive a used car, avoid buying new cars to reduce debt
  • Reduce services / utilities, cut back on newspapers cell phones to reduce debt
  • Reduce driving to save on gas and reduce debt

(Don’t know where to start saving money in your personal finances?  Don’t worry – here’s how to get started with over 100 powerful money saving ideas just for you!)

Ultimately your lifestyle is up to you.  Do what is necessary to right your finances, reduce your costs and increase your income.

Paying the price now for a lifetime of better credit and financial abundance is not asking much, is it?

Reduce debt by increasing my income
Your credit rating, ultimately is a factor of your bills, payment history, and your inferred income.  The single most powerful piece of advice I can give, which I’ve discussed at length elsewhere,  is to grow bigger than your money problems.   Focus on growing your income to where your current debts don’t seem so big anymore — then crush them.  Here are a few tips:

  • Pursue a promotion
  • Change jobs for higher pay to reduce debt
  • Attain a certificate or degree for higher income
  • Start a business to reduce debt
  • Consider a part-time second job to reduce your debt
  • Teach what you know for extra income
  • Recycle cans and bottles
  • Sell your extra stuff on Ebay

The Debt Devil is in the details!
Consumer credit success is about paying attention to the details. Good credit is in the details. A quarter saved here, an extra % of interest lower there, can make all the difference when you are reducing your debt service costs. Little by little, step by step, if you chip away at it you will be surprised with how much you accomplish! Successful credit repair is about leaving no detail unoptimized.

Final Thoughts

Reducing your debts to within a healthy range for your income will invariably result in a rise of your credit score.  More than that though, you’ll have more discretionary spending, less bill pressure, and healthier personal finances…

A better credit rating is just gravy on top of all those benefits… Well worth it wouldn’t you say?

We recently covered three easy to implement “smart rules” you can use to improve your credit for you on our blog…

 

smart credit rules to improve your rating

 

 


step 5

You have made it this far, congratulations!

So far you have obtained your credit score, fixed errors in your credit report and have addressed negative items in your history, and have taken steps to restructure your debts and increase your income.

Now, I’d like to discuss types of credit which can help improve your credit score.

average credit card debts in U.S.This module of the good credit guide will teach you:

  • Which new loans can help your credit rating
  • What credit card strategies the credit bureaus reward
  • Growing your credit the healthy way
  • What your credit utilization rate is and how to make it work for you

Ever heard of your credit utilization ratio?  It’s important, and used to determine your credit score by the big three.

Here’s a walk through on how it works.  How many loans, credit lines, and or credit cards do you currently have outstanding?

Next, add up what your outstanding balances vs. what could borrow.  For example:  If you have a credit card which you currently owe $3400, and have a credit limit of $5000, then you have a credit utilization rate of 68%.    $5000 (credit limit) / $3400 (balance owed) = .68  (*100 for %)

Generally speaking, the bureaus would like to see a low credit utilization rate, but not solely caused by your having access to tons of unused credit.  The availability can translate into risk when factoring their ratings too.

Confused what to do?   Don’t worry, again, use your common sense and focus on choices which will make your personal finances strong.  All the same it’s an important factor to be aware of.

When considering how lending affects your credit scores, consider the following recommendations:

  • Credit Cards: No more than three, try to keep balances below 40% of credit limit
  • Home Loans: Primarily keep in mind debt to income rate when considering a mortgage
  • Auto Loans: Consider debt to income factoring everything you owe, can help your credit rating if you have a limited borrowing history
  • Credit Lines: If revolving, keep in mind your credit utilization rate
  • Student Loans: Debt to income is a factor, the extended repayment periods if in good standing can help establish credit history

These lending types can often go unreported and may not help build your payment history:

  • Short term loans 10 months or less
  • Private loans from friends or family
  • Car loans from small dealerships that offer private financing
  • Rent or utility bills
  • Recurring service bills, such as cell phones, or newspapers

Recommended credit card usage for credit rating
Credit cards are an excellent way of building good credit if they are managed correctly, and used responsibly.  Be careful to not over spend but use them as a tool to attain your goals. Try to use your cards with moderate frequency and maintain a balance in the 30-40% range of your available limit.  Have three or less open accounts at a time, any more and it can decrease your credit score. Maintain on time payments at all times and do not let your credit balance creep above the 50% mark of your available credit limit.

Recommended mortgage suggestions for a better credit rating
A good rule of thumb when considering a new home loan?  If your mortgage payment causes you minimum stress, it will cause the credit bureaus little stress when factoring your score. Your debt to income ratio is the primary consideration for this type of lending.  If you can maintain a long history of on-time payments, you will see your credit rating benefit as a result.

Recommended auto loan considerations
A history of on time car payments, with financing terms that do not strain your budget can help you build better credit.  Your overall debt to income level should be your main consideration. If you are looking to establish credit as a borrower, consider financing against your car, it’s often a low cost means of establishing data as a borrower the bureaus can use to watch your payment patterns.

Recommended credit line considerations
The first step is to determine what type of credit line you are considering.  Whether it is revolving, (allowing you repeated payoffs and borrowing, example: home equity line of credit) or if it’s fixed will determine how it is viewed by the credit bureaus.  If it behaves like a credit card, then you must consider your credit utilization rate to better understand how it may impact your credit scores.

Recommended student loan considerations
A student loan can be an excellent tool to build a better credit rating because the financing terms are long term and often include excellent rates and conditions that keep the monthly payments very low. If you are looking to build your credit reputation, and have few credit lines open or have a limited credit history, consider enrolling in a class at your local community college, and get a student loan.  Use debt to income to determine how it may impact your credit rating.

Think your bad credit has you in a corner with no options?  We have a number of bad credit lending resources for you in our lender resources section… For example, see our recommended debt evaluation, analysis and consolidation loan options for bad credit here.

Final Thoughts

There is an old saying, “The best time to borrow, is when you don’t need it.”  It’s a good rule of thumb if you are considering borrowing options to build your credit history.  Another saying to consider, “No credit is worse than bad credit.”  The bureaus need data in order to assess your risk as a borrower.  Borrowing responsibly as a means of achieving your credit goals… Powerful.

 

 


step 6

Ok, so you’ve repaired your credit.  Now a brief discussion on how not to ruin it.

You’ve worked very hard to get a 800+ credit score, and a report free of negative items, so let’s discuss how to avoid common credit mistakes that cause others to ruin their credit.

student loan debt average dataIt is fruitless to try and predict what unexpected challenges the future will bring, but we can prepare, and knowing bad credit which can ruin your progress overnight will help you avoid them.

1. Paying your bills late or after due dates.
Common sense right? Then why do so many fall into this very consumer credit trap. Not only does paying your bills late negatively impact your credit score it also increases your debt with incurred late fees and charges.

Not fun.

Avoid mistakes of inattention.

Consider carefully before agreeing to take on a new loan.  Make sure your financing decisions work to empower you, not drag you down into a debt cycle of despair.

2. Spending more than you earn.
Maintain spending discipline–at all costs. Everyone usually knows bad credit is caused by spending beyond their means, but few take action to solve it.

Maintaining good credit is as much about avoiding excessive spending as it is about maintaing a clean history, develop the discipline to avoid credit mistakes now and it will pay off later.

3. Accumulating too many credit lines.
Having too many credit lines, even if handled responsibly can reflect negatively on your credit score.

If you are addicted to borrowing, try to wean yourself off of it.  A little is good, too much will hurt is more risk than reward.

4. Avoid Financial Blindness: Ignoring your financial warning signs.
Rarely does financial woe happen overnight, even if it almost always feels that way.

Address the leaks in your budget now, not tomorrow. Avoid credit mistakes caused by ignoring the warnings right in front of you.

If you are spending too much in interest on one of your credit cards, or your mortgage is higher than it needs to be, fix it!

Don’t wait until its too late and your good credit is ruined.

5. Carrying balances too high.
Maxing out your credit cards, using the whole credit line, both reflect negatively in your credit reports.  Try to never exceed 40% of your credit limit.

6. Letting someone else use your credit.
Sharing your finances is a mistake.  Any bill attached to your name is your responsibility, do yourself a favor, don’t give anyone access.  A video card bill lent or a cosigned car lease can lead to a destroyed credit score, costs and ruined relationships.  Just don’t.

7. Forgetting to update your contact information with lenders.
When you move, be sure you update your mailing address to avoid misplaced bills and unintended late payments.  Having bad credit because of a mailing mistake is just silly.  Keep your contact information up-to-date, don’t miss bills, don’t leave room for excuses.

8. Letting emotions make your financial decisions.
Remove the emotion from your budget, and your finances.

Stop trying to keep up appearances with your neighbors or feel any shame about your financial situation.

Avoid credit mistakes of emotion. Remove the emotion. Period.

If you are not making enough to support your current lifestyle, reduce it, until you do.

If your debts are out of hand, stop the cycle of anxiety and confront the problem with a plan.

Consider your options, layout a plan, and proceed onward to better credit and financial abundance.

9. Waiting to take action.
Action is required!

Credit repair takes time, start today to see the benefits in the future! Start building a better credit history now and you will truly thank yourself later.

Skilled personal finance experts know fundamental principles drive success in financial matters.  See the personal finance success principles you should consider here.

Final Thoughts

Please… Please, take these warnings seriously.

Stupid credit mistakes can keep you from your goals as much as any unexpected financial disaster.

 

 


step 7

 

In the last section, we discussed what you need to know not to ruin your own credit rating. Unfortunately…  You aren’t the only threat to your credit history.  Identity theft, is a growing and very real problem.  People fraudulently opening accounts in your name, stealing your identity, and leaving you to clean up the mess.  So let’s discuss some strategies to prevent this from happening to you.

You will learn the following:

  • Identity theft protection strategies
  • How to protect your credit on the internet
  • Recommended document theft prevention

How to Protect Your Credit From Identity Thieves and Fraud
It is a sad state of affairs that both credit fraud and identity theft are more common than ever in our society, the number of reported incidents is growing annually.

Have you been a victim yet?  If not,  odds are you will be soon.

An ounce of prevention can help protect your credit rating.

Protecting Your Credit by Being Alert
Make sure you do not leave your documents or any sensitive information anywhere someone else can get to it. Don’t leave your mail in the box for long stretches of time. If you are traveling, consider informing the post office so that you can pick up your mail on your return.

Avoid keeping sensitive documents in the glove compartment of your car, or in your school pack.  Want to protect your identity from identity thieves? Make it difficult for them.

The less your information is floating about the more you protect your good credit.

I’ve included some of the top credit monitoring services for you to consider here.

 

Identity Guard 30-day free trial $14.99/month
LifeLock 30-day free trial $19.99/month
Identity Force No free trial $23.95/month
Experian 7-day free trial $19.95/month
TransUnion 7-day free trial $16.95/month

 

Protect Information with a Paper Shredder
Shredders are a cheap investment to help protect your consumer credit information. Shred any documents that contain any personal information at all.

It protects your information, plus its fun.

Shred your junk mail containing your address, credit card applications, pay stubs, insurance documents, and any other document you feel might contain sensitive personal information, shielding your identity.

Actively Monitor Your Accounts
Religiously check your credit card statements and bank statements for any line items that you do not remember and verify them.

When considering how to protect your credit in your day to day activities, be aware and vigilant.

The goal is to learn as soon as possible that fraudulent activity is taking place so you can move to address any irregularities quickly.

If you find yourself a victim of identity theft – DO NOT DELAY – call to inform your lenders immediately to close accounts and protect against further fraudulent spending. Then contact your local authorities immediately. Visit the Federal Trade Commission for further information regarding how to protect your credit from identity theft. www.ftc.gov/idtheft/

Consider a credit monitoring service which alerts you of any new activity.  Rebuilding after your identity has been stolen is a nightmare, catching it quickly can save you decades of hassle.

step 8

So what are the benefits of repairing your credit?

Access & Cost.

What do I mean by that?   Great credit kicks open the doors of the financial world which would otherwise be closed to you.  Simply put, you get access to more money, if and when you need it, and at much lower costs.

 

start credit repair steps now

 

As your credit rating climbs, your costs go down.  The lower you are on the good to bad credit scale, the higher the premium you are forced to pay for the financing tools available as a consumer.  Credit cards, personal loans, car loans, mortgages, all cost more, if you can qualify at all.  Transunion, Equifax, and Experian are the gatekeepers of the financial world.

You don’t just benefit with borrowing.  You can expect to pay less on your insurance rates, can more easily qualify for rentals, and reduce the costs of leasing.

Other Excellent Credit Rewards
Various other good credit benefits that make the process worthwhile.

  • Reflects better for home rentals & leases to increase approval rates
  • Approvals for specialty consumer cards
  • Less documentation required for approval (can qualify for no-doc loans)
  • Can shop around to have lenders compete
  • Approvals for store credit – ie. Dell, Apple, BestBuy, etc.
  • Business Credit seeding

Final Thoughts

So what are you waiting for?

We’ve given you more than enough to get started and execute your own do-it-yourself credit repair plan.

No matter how bad your credit rating is now—when it comes to your credit history, time heals all.  Action, plus time and you will be able to monitor the gains in your credit score and regain access to all the benefits better credit provide.