About Your Credit

How to clean up your credit.

Advice and Tips for Credit Repair and Improving your Credit Score

Here you’ll find resources to aid you with credit repair, counseling, management and other issues involving your credit.

We are constantly updating this site as the laws regarding your credit (and credit card companies too) are changing.

We all want the best possible credit score we can get because so much depends on it in the twenty first century. Where as in the past your credit rating determined whether or not you got an auto loan or a mortgage and that was pretty much it, things have now changed.

Potential employers have begun to ask for a copy of your credit report and even current employers considering you for promotion want to see it too. Now of course some industries have been doing that for years, but they were usually only in highly sensitive fields such as financial services, defense and the chemical or biological industries. Nowadays, it seems that even the most mundane occupations require you to provide proof of your good credit management skills arguing it shows your financial integrity.

That of course is true, if you have integrity and commitment to your financial responsibilities it is reflected in a much better credit score. And of course since the advent of Vantage-Score from the big 3 credit bureau it is even easier to see just how you rank financially.

So how can you manage your credit better?

Well, to start with you should ensure that you get all your payments in on, or before, they fall due. If you’ve ever seen your credit report you will have seen how any late or missed payments are recorded for all to see.

You should try to keep your borrowing well within your means. Now I know how tempting it can be to think “oh it’s only $X per month, I can afford that” but the more credit you stack up the more you show anyone checking you out that you’re a risk taker. You might feel that shows you to be courageous, but unfortunately they see it more as being a gambler.

Avoiding building up high balances on credit or store cards is another great piece of credit management on your part. They always have some of the highest interest rates around which can obviously reflect badly on anyone who has more than 1 case on record.

Just by following simple tips like these you can utilize your credit management skills to get yourself a better credit score with all the benefits that can bring you.

Today, millions of people are struggling with the consequences of racking up large amounts of debts. When you have a large amount of debt and begin to default on payments, your credit score is the first thing to go. If this scenario sounds familiar you must begin at once to correct the situation. It might be tempting to ignore the situation however If you don’t take action right away you will soon discover your credit score is the least of your worries. Fortunately there are several things you can do to stop the downward spiral and get the ball rolling in the right direction.

Before you start, you should know it is going to take a lot of hard work and determination before you will see results. With that being said, the first thing you will need to do is take a long, hard and honest look at your lifestyle and make the necessary cutbacks. Depending on how much debt you have, the necessary cutbacks may be simple things such as eliminating your weekly pedicure, canceling numerous magazine subscriptions, changing cable providers, and reducing your cell phone plan to the bare minimum.

However, your situation may be more severe than that, requiring a more drastic lifestyle change. You may have to sell your vehicle and purchase one that you can pay for in cash. This will not only eliminate a monthly car payment, but will also drop your insurance payments because you can now carry just liability. You may also need to change your living arrangements. If you are having trouble meeting your monthly mortgage or rent and making small changes isn’t offering much relief, then you should find a cheaper place to live. Making a lifestyle change will not be fun or easy, but it is necessary.

Certain situations require a more aggressive approach such as credit counseling, debt negotiation or even bankruptcy. These options each offer pros and cons that should be carefully considered before moving forward. In most cases any method of debt reduction other than paying the debt in full per the terms of the contract will have a negative impact on your credit. Keep in mind, if the situation is severe enough to warrant aggressive methods of debt reduction, protecting your credit score becomes less important than eliminating debt.

Once your debt is eliminated your credit score should begin the recovery process. Do not expect your credit score to improve overnight, sometimes it takes months before you see a significant improvement in your credit score. It is imperative that you continue to pay your bills on time each month to create a new history of good credit. Avoid canceling all of your credit cards which will actually have a negative impact on your credit score. Instead remove temptation from your wallet or purse and make a commitment to not use credit unless you can afford to pay the balance in full at the end of the month.

Some might refer to the good ol’ credit card as the Fantastic Plastic. As recent statistics have shown, credit cards in the western world are proving to be anything but fantastic, especially for those who succumb to its use. Debt quickly emerges and strangles the card owner somewhat like a Boa Constrictor strangling its host.

Deceptive Plastic

Perhaps it would be better referred to as Deceptive Plastic. Many card holders don’t realize what their balance is, on a day to day basis, or just how much interest they are paying on funds not paid in full by the due date.

Others should consider dubbing their credit cards Drastic Plastic. These are the people who call on their credit cards for emergencies, yet they have no management plan for the newly acquired debt. They resort to using their credit cards when times are lean, or when the temptation of a purchase makes their financial situation even more drastic!

Credit Card Debts

Credit card debt is at record levels, as the cash-strapped struggle to give up a certain standard of living, or forego a lifestyle that is not necessarily essential to their basic daily living requirements. Instead, they continue to over-commit themselves financially, and look to utilize a band-aid solution of putting it on the plastic. They believe they have survived to live and play another day. Another day, that is, until the debt escalates and becomes insurmountable.

Credit Cards Use

There are those who use their plastic to ‘keep up with the Joneses’. Others possess a…‘I would like to have’ mentality. When cash and household budgets are tight, cutting back on frivolous spending, and doing without should be a preferred way of thinking, especially when so much of life’s necessities are already being paid for by credit card. In harsh economic times, think smart, buy smart and save smart.

On average, students in the USA carry in excess of $4,000 on credit cards by the time they graduate. Indeed, education has its price. At the other end of the demographic, pensioners each carry an average of over $10,000 in credit card debt by the time they retire.

Savings or Credit?

There are ironies aplenty when one considers the credit card and how it is used. At the point of sale, the sales person or cashier, after swiping the card, is often heard to ask, Is that savings or credit? Understandably, the consumer is entitled to snicker – Savings? For many, savings is something that has gone the way of the Unicorn and the Dodo into folklore oblivion. Something of fictitious existence in a time no longer known.

The further irony of credit cards is the advice given by the financial sages of our day: Only use your credit card if you have the cash. Why use a credit card if you have the cash? Also, is cash not king? If so, the plastic is just that – plastic, false, and best used for making cheap ornaments, and not to be used as a method of transacting financial interaction between buyer and seller.

The concept of credit cards is seductively cruel. We hear it all the time: Buy now! Pay later. Beware! The promise could end up like financial herpes, as you keep paying, and paying, and paying to levels beyond your wildest dreams and for amounts well above what you originally signed up for.

The message with credit cards is clear. You need to ensure that your fantastic plastic is your servant and not your master. If you can’t clearly determine how this is done, it is best to slip it out of your wallet or purse and leave it at home in the dark corners of your bedside drawer.

A credit card is financial oxymoron because the thing that makes them attractive also makes them dangerous. Of course I am referring to the ‘ease of use’ factor. The main case for plastic is that it takes the hassle out of making purchases both large and small, but this has some not so unexpected side effects. The first is that by eliminating cash we also get rid of our spending boundary.

We are now not limited to the money we have in our wallets but by the size of our credit limit; which unfortunately, more often than not, does not correlate. The second is the fact that the cost of this convenience is actually very high. When you add up the interest on your purchase, assuming you are not paying off your balance in full on or before the due date, the risk of late payment fees, overdrawn fees and even identity theft, you have to ask yourself if they are worth it.

You have probably already made the decision to stop using credit cards but you may have been so seduced by the luxury of plastic availability that you are not sure how you are ever going to live without them. Here’s a list of helpful tips below if you want to stop using credit cards:

1.Destroy the ones you have. You may think that you are strong enough to keep your card on you for ‘emergencies only’ but it is better to be safe than sorry. I have seen even the mighty fall beneath the irresistible pull of plastic, so before you start saying things like ‘buying this pair of shoes is an emergency… it will help boost my spirits and carry me through the work week so I can make money to get out of debt.’ These mind tricks are a sure fire sign that you are not as strong as you think and the best bet would be to take a huge pair of scissors to your credit cards now.

2.Stop the influx of new offers. There is simply no point in getting rid of your old cards if new ones keep showing up at your door. One of the easiest ways to kick the credit habit is to put some distance between you and access to credit cards. You can stop receiving unsolicited offers in the mail by sending a letter to the major credit bureaus or calling 1-888-5-OPTOUT. You need to provide your name, mailing address, phone number and social security number to complete the process.

3.Devise a monthly budget. Now that you have cut your ties to credit you are going to have to come up with a spending plan. Many people have no idea how much money they spend each month when they use credit cards. To make a workable budget you should document your income and make allocations for all your major fixed expenses, such as mortgage or rent, childcare, other loans and so on. Your discretionary spending allocations; which would include groceries, transportation, and entertainment, should be realistic. When you have these basic items down you can then estimate an amount to dedicate to savings by subtracting the total of your expenses from your income. If you come up with a negative figure this would most likely represent the amount you were spending on credit to supplement your lifestyle. In other words, you were living beyond your means and you would have to slowly find a way to cut back until you regain control of your spending.

4.Pay bills using an online account. When you quit credit all of a sudden things seem a little inconvenient. You can’t phone in a payment or make recurring charges to your card and you may be tempted to fall back into the trap. You can save yourself by setting up an online account so you can use your own money to pay bills online.

5.Plan before you leave the house. Now that you don’t have credit cards to swipe on a whim, you are going to have to think ahead. This may take some getting used to, but it will definitely help you to schedule your large purchases and put a cap on frivolous spending. Over time this will amount to increased savings and more responsible choices. Not a bad move at all and definitely worth the initial pain of planning in advance.

If you follow this simple five step plan you will be able to kick the credit habit and live within your means. Choosing to do this may mean the difference between building a savings account and watching a mountain of debt pile high. I know which I would prefer… how about you?

The Fair Credit Reporting Act (FCRA)

Below is a summary of the FCRA. The full Act can be obtained directly from the Federal Trade Commission’s web site here.

Fair Credit Reporting Act (Summary)

Public Law 91-508

The Fair Credit Reporting Act (FCRA) allows a consumer to challenge the information on his credit report on the basis of “completeness and accuracy.” If, after a reinvestigation by the credit bureau, the disputed information “is found to be inaccurate or can no longer be verified, the [credit bureau] shall promptly delete such information.”

The credit bureaus are required to complete the investigation within a “reasonable period of time.” This period has been set at thirty days.

The credit bureaus can ignore the consumer dispute if they have reason to believe that the dispute is “frivolous or irrelevant.” The FTC commentary on the FCRA cites, as an example of a frivolous dispute, a dispute wherein the consumer challenges all negative items on his credit report without providing any allegations regarding specific items in the credit file. However, “A [credit bureau] must assume a consumer’s dispute is bona fide, unless there is clear and convincing evidence to the contrary.”

When a consumer challenges a negative credit listing on the basis of extenuating circumstances, such as health problems, divorce, job loss, etc., the credit bureaus are entitled to ignore that dispute.

When a consumer submits a dispute which is neither frivolous nor irrelevant by credit bureau standards, the credit bureau must “at a minimum… check with the original sources or other reliable sources of the disputed information and inform them of the nature of the consumer’s dispute.” In some cases of consumer dispute, “Reinvestigation and verification may require more than asking the original source of the disputed information the same question and receiving the same answer.”

In other words, when a consumer files or re-files a valid dispute, the credit bureaus must contact the source of the credit information (the creditor) and confirm that the information is accurate, verifiable, and not obsolete. In some circumstances, the credit bureau is required to go beyond a simple verification of the creditor’s own computer record. If, within 30 days, the credit bureau has not received verification from the creditor, then the credit bureau must promptly delete the credit listing.

In theory and law, the process is deceptively simple, thus leading many people to think that they can easily handle this themselves “for the price of a few postage stamps.” Most quickly discover that the credit bureaus have made it much more difficult than one would imagine. For help in this, we recommend using Lexington Law a professional credit report repair company.