5 Ways to Rebuild Your Personal Credit

Has your credit score taken a hit because of the current recession? Foreclosures, unemployment and other financial struggles have hurt a lot of people's credit history. So how do you go about fixing it? Here are five ways that you can start repairing your credit score:

Organize and prioritize. Your main concern in rebuilding your credit is making sure every bill is paid on time. Sit down with your finances and find places where you can cut corners so that every bill is paid on or before the due date. Set up auto-pay for each credit card so you don't accidentally miss a payment. Your payment history is the largest percentage of your credit score, so it must be perfect going forward if you want to rebuild your credit.

Negotiate down your debt. Many lenders understand that people have financial hardships and will work with you to pay down what you owe, whether it be setting up a payment plan or cutting you a deal if you pay it all at once. Focus on your credit cards, or any other "revolving" debt. Paying off mortgages, auto loans and other "installment" debts don't do as much for your score. Make sure you ask the lender how they will be reporting your new terms to the credit bureaus. They can report them as "Not paying as agreed," which can further hurt your score, or they can report them as "Paying as agreed," which can help your score. Don't agree to any terms that are reported as "not paying as agreed" and make sure to get everything in writing.

Don't close out accounts. It may seem like a good idea to close out your credit card accounts once you pay them off, but doing so can hurt your credit score. One of the main factors of your credit score is your "credit utilization ratio," which measures your credit limit-to-balance ratio on your credit cards. So if you can keep these accounts and manage to maintain a low balance on them, this will help show that you know how to handle your credit.

Get a secured credit card. If your credit score has taken a big hit, it might be impossible for you to be approved for any line of credit. If that's the case, look into getting a secured credit card. With secured cards, you pay an upfront deposit, which in most cases will reflect your credit limit, just in case you have issues paying off your balance. Make sure your secured card reports to all three of the credit bureaus (Experian, Equifax and TransUnion) every month so that you can start building your credit again.

Make sure any mistakes on your credit report are fixed. Check your credit report to make sure there are no mistakes or identity theft-related issues in your credit history. This also includes any negative information on your credit report that can be easily removed. Contest any negative information on your report from any company that no longer exists or has been bought by a larger company. All information on your report must be verified, and if the company isn't there to verify it, it must be removed.

The most important factor in repairing your credit score is time. It takes seven years for most negative information to fall off your report.

Expert Credit Consultants, LLC specializes in establishing business credit and funding using our exclusive Business Credit and Finance Suite as well as consumer credit restoration and optimization. www.ExpertCreditConsultants.com.

6 Personal Credit Mistakes To Avoid That Could Cost You Thousands

The following details some of the most common misconceptions and myths in your personal credit report. Please keep in mind everyone’s credit score and analysis is unique. Credit reports are typically issued from 3 main credit reporting agencies; Equifax, Experian and Transunion. The 3 Credit Reporting Agencies (CRA’s), also known as Credit Bureaus, receive data from thousands of different companies around the world. Companies that transmit data to the CRA’s do so in different intervals. Some will report monthly, others quarterly, bi-annually and some companies actually will only report data when you are delinquent. The credit score that you receive from each of the companies is derived from advanced calculations which are specific to the exact time that you request the report. Your credit score could be significantly different from one day to the next. Banks and lenders will determine a client’s creditworthiness by reviewing the information and the scores found in your credit report. The following will assist in obtaining the best possible credit score.

1. Payment History is the Most Important Element of Your Credit History

Your payment history is the most important element in a credit report. Late payments will affect your credit score based on the frequency and the recentness of the late payment. Typically companies will report that your account was late if your payment is received over 30 days past the due date. A Single late payment on an account can reduce your credit score from as little as 5 to well over 100 points. If you frequently have late payments, your credit score will have been affected the greatest by the most recent lates. The first late payment for someone with exceptional credit could reduce their credit score by up to 100 points in the first month. The longer the period of time passes since the late payment; the less it will affect your credit score.

2. Debt to Credit Ratios Will Significantly Impact Your Credit Score

The amount that you owe on credit cards and other revolving accounts have the second greatest impact on your credit report. The ratio of what you owe on a single account versus your total available credit can drastically affect your score. In addition to the single accounts, the amount that you owe overall versus your entire available credit is also considered in the calculation of your score. The ideal situation is to not owe anything on your credit cards however if you do have debt it is better to have it spread across several accounts than to have too much on a single account. The maximum ratio that you can have before it starts to affect your score is 30%. To calculate the ratio, divide the amount that you owe by the available credit. Example:

$5000(Balance)    /   $10,000(Credit Limit)   =  50 % Debt to Credit Limit Ratio

It would be better to owe $2500 on 2 different credit cards that each had a $10,000 limit than to owe $5000 on a single card. Be cautions of balance transfer offers that will cause you to owe more than 30% of your available credit limit. From 30-50% Ratio your credit is not being affected as much as it is when you get above the 50% Ratio when you reach the 70% Ratio your credit can be severely affected. Be sure to spread the debt amongst several cards to keep your credit score at the best possible levels.

3. DO NOT CLOSE OLD ACCOUNTS                                                                  

The length of time since accounts have been established plays another crucial role in the calculation of your credit score. Accounts that have been established for several years should NEVER be closed. The media and bankers previously advised clients to close accounts if they are not in use. As I stated in section 3 the amount that you owe versus the total credit available Ratio plays a significant role in your credit. If you have accounts that are open and have no balance it will reduce the total ratio of available credit. Showing consistency in keeping accounts for many years will consistently increase your credit score. If you feel that you need to spend if you carry a credit card, cut it up and throw it away, but don’t call to cancel it. But one thing to keep in mind is that some creditors will automatically close your account if not used in 6 months to a year. The best scenario is to only use it a couple of times a year, charging a small amount and then paying it off as soon as the bill comes in.

4. You Need To Have Several Accounts to Get A Credit Score                                       

The number of accounts that you currently have open will also affect your score. The Credit Reporting Agencies must have enough data to create a score for you. If you only have one account, the CRA will not have enough information to calculate a score. It could take several years to establish a strong credit profile, however, in a single month you can ruin what took years to build. If you want to have the ideal credit score; a mix of several types of accounts will be necessary to establish. Two to Three credit cards, a car loan, an installment loan, a department store card and a mortgage is a good combination. Again, keeping the balances low or zero will optimize the score. There are several places that you can go to establish additional accounts. E-mail service@ExpertCreditConsultants.com for a list of accounts that you can qualify for with little, bad or no credit.

5. Paying off collections incorrectly can hurt your score

As derogatory accounts get older they affect your score less and less as time passes. Paying off a collection account that hasn’t had activity in several years can actually hurt your credit score. As soon as the account is paid off; the collection company will report to the CRA that the account has been paid that current month. Due to the fact that the account is still considered a derogatory account, the now New/Current Derogatory account can severely affect your score. I always advise individuals to payoff all collection accounts, however, I suggest negotiating with the collection companies for “REMOVAL” of the account as a condition for paying it off.

6. IGNORING LATE NOTICES UNTIL THEY HIT YOUR CREDIT REPORTS

Ignoring collection letters will not make the debt go away. Once it’s reported to your credit reports, it’s more difficult to deal with. Deal with debt before the creditors report to the CRA’s.

Your credit is constantly changing; the above are some of the items that affect your credit score. You can get a FREE credit evaluation by e-mailing service@ExpertCreditConsultants.com. One of our credit specialists will schedule an appointment to do a complete analysis of your current credit situation. The specialist will also consult and advise on the steps to take to increase your score over a period of time. Some suggestions have increased scores as much as 120 points in a single month.

Expert Credit Consultants, LLC specializes in establishing business credit and funding using the exclusive Business Credit and Finance Suite as well as credit restoration and optimization. www.ExpertCreditConsultants.com.

The Truth on Credit Repair Companies

Contrary to what the credit bureaus would like you to believe, credit repair does work. This is, of course, provided you are getting the best credit information and advice and have an experienced professional working on your case.

Anyone with a credit score below 720 can benefit long-term from the advice and credit information provided through credit repair companies; however, there are times when your own limitations make adhering to this advice impossible. The two limiting factors are: (1) your financial situation and (2) the time frame within you need to reach your results. It is possible to remove anything from a credit report, even accurate items, if the creditor does not adhere to the law that outlines what needs to be done and by when. Just because you have a certain type of account removed at one time does not mean other, similar items are going to be able to be removed, even with the same circumstances. A hit-or-miss aspect exists in credit repair, because credit repair relies not only on the strategies of the person attempting to repair the credit, but also on the effectiveness or ineffectiveness of the creditors and credit bureaus in adhering to the laws.

The reason credit repair has received such a bad name is due to the abundance of scam artists who flock to the easy money made available by people desperate for this type of service. This unfortunate reality leads the credit bureaus and the FTC to make blanket, untrue statements such as, "Credit repair does not work ever and there is nothing credit repair companies can do for you that you can't do for yourself." Given that approximately 80% of credit repair companies are scam artists, promising the world and then disappearing when you pay, the credit bureaus and the FTC are forced to make such bold statements. It would be impossible for them to explain the truth to consumers without causing them to make a bad choice that would result in them getting scammed. As a result, the credit bureaus and the FTC must adhere to the "credit repair does not work" position.

As I have stated, credit repair does work, but...don't let anyone tell you that credit repair is effective every time. Its success varies with the number of players in the game, some of whom never perform consistently. Even if you have a true master of credit repair on your side, you have to take into account that sometimes the other players perform in a way that throws your master off his game. Even if you follow the same approach with every situation that arises when doing credit repair, your results will still vary due to the other players involved. So if credit repair companies tell you they can get everything repaired on your credit, run the other way, because, at best, the pendulum will swing widely both ways for the same situation.

Credit repair limitations do occur under the following situations. These situations make it nearly impossible for credit repair to help someone needing results within six months or so. Please keep in mind even when you can't be helped in the short term, the credit information that can be given now, if coming from a professional, can prevent you from making a mistake in the near future that may worsen your situation. Here are examples of situations where not much can be done within a six to twelve month period.

1. If more than 50% of the negative accounts showing on the credit report appear as unpaid collections, charge-offs, repossessions, or foreclosures and you do not have the money to either pay the accounts in full or settle them.

The only way to prevent this is to bring the account current by paying the past due amount, or, in the case of a collection, charge-off, repossession, or foreclosure, pay the balance in full or settle it for pennies on the dollar. Unpaid accounts that do not have collection, charge-off, repossession or foreclosure status require only that the past due balance be paid to be considered current. Unless the negative account is a public record, the only way to keep it from being re-reported is to make sure the status is "current, paid, settled, transferred or sold."

Public records are the only negative items that do not need to be paid to prevent re-reporting. Because they are only reported once, public records, such as unpaid judgments and tax liens, can remain unpaid and yet will not reappear once they are removed. In fact, the only time they reappear is when the initial reason for removal was the public record agency failing to respond the credit bureaus' verification request with-in the 30 day period outlined by the Fair Credit Reporting Act, in which case the credit bureau would reinsert the public record if and when the public record agency responds to the credit bureaus after that 30 day period.

2. Credit repair is nearly impossible if you can't pay your minimum monthly payments and you keep adding new late payments to your report. This is a "spinning wheels" scenario that rarely yields much improvement to your credit score.

In conclusion, you can repair your credit if you hire a pro and listen to his or her professional advice. The effectiveness of the credit repair depends not only on the skill of the professional you hire, but also your ability to cooperate with his or her advice.

Expert Credit Consultants, LLC specializes in establishing business credit and funding using the exclusive Business Credit and Finance Suite as well as credit restoration and optimization. www.ExpertCreditConsultants.com.