Dealing With and Repairing Bad Credit

John Mussi

Bad credit can be a burden for otherwise good credit. It may not seem fair at times that financial mistakes in the past can haunt you in the present, but with a little bit of work and some time bad credit can be turned around and repaired.

The important thing to remember is that options exist even for people with bad credit… and that just because it's bad now doesn't mean that it always will be.

What is credit, anyway?

Credit, also known as a credit rating, is an indication to potential lenders and service providers as to how likely a person is to repay the loan or credit line that they're offered, or how likely they are to pay their bills on time.

If you have good credit then you have a high credit rating, and have paid your bills on time most of the time in the past.

If you have bad credit then you have a low credit rating, and have had problems paying your bills on time or haven't paid some of them at all.

People with bad credit are considered a risk for new credit lines because of their past performance, and are usually either denied credit or services with new providers or have to pay security deposits and higher interest rates than those people with good credit.

What options exist for people who have less-than-perfect credit?

If you have bad credit then it might seem like you can't get anyone to take the risk to extend you a loan or credit line, at least at first glance.

In reality, though, there is an entire industry of bad credit lenders, from credit card companies to cheque advance lenders… even automotive financing and car title loans.

Many of these lenders do require security deposits or higher interest rates, but in exchange they offer services that you might otherwise be unable to get.

Some of these lenders don't even check your credit… though it's very likely that their patrons either have bad or no credit, they offer the same terms and rates to everyone without checking.

How can you repair your credit rating?

Every day it seems like there are more companies offering amazing credit repair services, but many of them either don't work like they claim that they do, cost you more than they're worth, or are of questionable legality.

The desperation to get rid of bad credit can open you up to some scams that are mixed in with the legitimate services, so take care when dealing with any of these companies.

A far better option is to take care managing your finances and repair your credit on your own… it may take longer, but it usually ends up being cheaper in the long run.

Take care to pay your bills on time, and make payment arrangements to clear old debts. At the same time, you should establish one or two lines of credit with low credit limits (to keep them from getting out of control). Make regular on-time payments to these credit lines, letting the providers report the payments on your credit report.

As time goes by and you pay off old debts, these positive reports will overshadow the old negative ones, and the older ones will eventually be removed from your report altogether.

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About The Author

John Mussi is the founder of Direct Online Loans who help homeowners find the best available loans via the www.directonlineloans.co.uk website.

Credit Repair Scam - How To Avoid Being A Statistic?

Bill Smith

Credit repair scam - How to avoid being a statistic?

A good credit history is critically important for the consumer. A bad credit will prevent you from getting a business loan, owning a home, or even a job. Promises to "fix" your credit are always made by credit consolidation companies, but they are seldom true. Here are some of the important tips to avoid scams:

First things first. Negative information cannot be erased if the information is correct. Only inaccurate information can be corrected in your credit file. Credit file information remains on your record for seven good years from the time it is reported to the bureau. For bankruptcy, the information remains on your record for ten years. All the consolidated information about your credit bills you fell behind on, but are now paid, will remain on your report for the time period mentioned above.

Do not pay the credit repair company unless their promises are kept. Remember, the law is on your side. Federal law requires credit repair companies to give you a complete detailed explanation of your legal rights, a completely documented written contract, and above all, 3 days to cancel. This applies to all credit repair services including for-profit services, non-profit services, creditors and credit unions.

Be wary about emails you receive. When you hover your mouse over the link in the email, you will know for sure if it is a trusted website or a fraudelent one. If fraudelent, report it to your bank promptly.

You don't need a counselor to correct your mistakes in the credit report. Take charge of it yourself. If you were recently denied credit, you can request a free credit report. Otherwise there is a small charge for it. Some states will allow you a free copy of your credit report once a year. It doesn't cost you anything to dispute or question items in your credit report. Get online or follow instructions from your credit bureau. The three major credit bureaus are Equifax (800- 685-1111), Experian (800-682-7654) and Transunion (800-916-8800). In most cases you will need to contact all the three credit bureaus as the information they have about you may vary.

Remember that you can't create a second credit file. Some of the fraudelent companies will offer to provide the consumers with a different social security number (tax identification number if ssn does not exist) in order to create a new credit file for the consumer. Such a practice is called as "file segregation". File segregation is illegal and does not work.

Whereever possible, add explanation to your credit report to prove your point. If you have legitimate reasons for not paying certain bills on time (switching jobs, illness), or if you refused to pay because of a dispute, send the bureau a statement to be tagged with your credit report. Each lender who pulls your report will be aware why you fell behind on those bills.

Counseling might be a good option. Find a good non profit consumer credit counseling service in your neighbourhood. Get online or open your yellow pages to find one. Seek the guidance of friends and family members. Select a counselor, meet them in person to make sure they are right for you. Ask them on tips and advice on how to build a good credit history. If you are still lagging behind on your payments, credit consolidation firms will be able to set up a payment plan with your creditors. If money is an issue, select a non profit credit counseling service. They will offer their service for free or for a very low cost.

About the Author

"@Copyrights 2005" - Bill A Smith is a credit counselor for Ameri credit counseling services. Bill has over 10 years of experience in providing credit consolidation, credit counseling and credit management services to clients. Visit us at http://www.americreditservices.com for free credit consolidation articles, free credit counseling tips and non profit credit management services.

Credit Repair Increases Your Chances Of Getting A Loan

Anytime you apply for a loan with any type of lending institution your credit report comes into the picture. This report is an overview of your credit history that contains past and current accounts, payment history, and balances. The credit report is a primary tool used by lenders to determine the level of risk they take when extending you credit.

For many people, the credit report is just a formality. But for over 65% of the population, it can mean the decline of their loan application. Why? Because their report shows negative, misleading or inaccurate entries.

Viewing Your Credit Report

Practically no one reviews their credit report as often as they should. If you have not read yours within the last year, it is strongly advised that you do so now.

Simply contact your local credit bureau, and request that a copy of your credit report be mailed to you. You can find agencies in the yellow pages of your local phonebook listed under "credit bureau." There is normally a small charge for generating and mailing you the report.

Once you receive the document, review it carefully. Look for negative, misleading, or inaccurate information. If you find entries like these, you have the full right to dispute them and have them corrected or removed.

Repairing Your Credit

The process of changing your credit history is often referred to as "credit repair." To start, write a letter to the credit bureau stating one discrepancy in your report. (Your credit-reporting agency will correct only ONE item at a time.) Request that they investigate the entry and provide you with proof of its accuracy. Do the same with each additional incorrect or negative item.

Should the bureau not be able to prove that the entry is accurate, it will be removed from your report. Likewise, if the agency is unable to prove the entry within a "reasonable" amount of time, it will be removed.

Because these agencies are extremely busy, it is always wise to correspond with credit bureaus via registered mail, return receipt requested. This service is available from your local post office.

In addition to repairing actual entries to your report, you can also improve it by:

* maintaining your employment and residence status for at least TWO years.

* not carrying your credit card balances near, at, or over the credit limit.

* paying your minimum payments on time and in full, as required by your monthly statement.

Each of these actions proves stability - something lenders specifically look for on all applications.

Often times, your credit report can be greatly improved simply by disputing items that are misrepresented or misleading. With a little attention and legwork, you might be able to significantly increase your chances of getting a loan.

Blane Russell is President of Russell and Associates, a full-service mortgage broker specializing in debt consolidation, second mortgages, refinances, and no income verification loans. To get the credit you need NOW, visit http://www.refinanceu.com today for same day approval on most loans.

Blane Russell