Debt Settlement and Credit Repair

When you are trying to repair your credit, one of the first things that you should try is to get your creditors to agree to a debt settlement.  What is a debt settlement?  Basically, you will call your creditor and let them know that you want to pay off the account and ask them what the lowest number they will agree to.  Most of your debt that you have accumulated is in interest fees and late fees, so a lot of them will think about this and agree to a lower payment amount than what shows on your statement.

If you have collection accounts on your credit report, be sure they are willing to remove the collection in return for your negotiated payoff. Otherwise, paying off a collection could hurt your credit even more. A good credit repair company would be a great help with this.

Not all companies will agree to debt settlement, but when you can find one who will, it can go a long way to repair your credit.  Be honest with the company and tell them what you have to offer.  If it is acceptable to them, the settlement of the debt will be finalized and you will be on your way toward credit repair.

There are other companies besides credit card companies who will agree to debt settlements.  One of the biggest reasons that people get into credit problems is due to overly huge medical bills.  These cannot be helped oftentimes and they can stack up very quickly causing huge blemishes on your credit report.

Believe it or not, you can make a debt settlement agreement with the medical companies that can go a long way to repair your credit.  Check with the hospital to see if they have any special programs for people who are having financial difficulties because of an illness that isn’t covered by insurance or for people who don’t have insurance.  Almost all medical providers realize that medical care is expensive, so if you show them your total financial picture and at least try to make some type of settlement on your debt, they will be willing to accept it.  Keep in mind that some won’t, but there’s really no harm in trying.

Using debt settlement agreements as a way to repair your credit is just a smart way to go.  Make the phone calls and be prepared to negotiate.  Many people will work with you if you show a good faith gesture to try.

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.

Consumer Credit Protection Laws

When we refer to consumer credit, we are talking about the use of credit to finance transactions without having to pay the full amount of the merchandise at the time of checkout. The most common form of consumer credit is a credit card issued by a financial institution. Merchants may also provide financing for products which they sell. Banks may directly finance purchases through loans and mortgages. This type of consumer credit is most often used for cars and homes and other large purchases.

The law of consumer credit is primarily embodied in federal and state statutory laws. These laws protect consumers and provide guidelines for the credit industry. There are many different laws that protect both the lender as well as the borrower when it comes to consumers obtaining credit.

States have passed various statutes regulating consumer credit. Congress has passed consumer credit protection acts in part to regulate the consumer credit industry. It requires creditors to disclose credit terms to consumers. It also protects consumers from loan sharks, and generally investigates the consumer finance industry, among other things.

Credit card companies and credit reporting agencies are also regulated by Acts passed by Congress. These Acts also regulate debt collectors and provides for rules as to what they can and cannot do when attempting to collect a debt.

Let's face it, we need to have credit. We may not need it for everyday things like groceries and toiletries, but if we want to own a car or a home, it's necessary as not every consumer can pay cash for such high ticket items making obtaining credit a must.

From credit counseling agencies to credit card companies and credit lenders, consumer credit is a multi-billion dollar industry. Because we do need lines of credit to get some important things in our lives, it's a good thing that legislators realize that having consumer credit laws are needed so that abuse of the system doesn't occur.

The everyday consumer has at least one line of credit open, but the average in the United States shows that we have at least four to five lines of credit in some way, shape, or form. As a consumer, you must use your credit lines wisely and pay your installments on time. If you don't, you will find yourself with a bad credit rating and a bad credit report. Consumer credit can work for you or against you - it's really all up to YOU!

Some of the main Consumer Credit Protection Laws are:

Fair Debt Collection Practices Act (FDCPA) -

Fair Debt Col­lection Practices Act requires that debt collectors treat you fairly and prohibits certain methods of debt collection.

Fair Credit Reporting Act (FCRA) –

The basic purpose is to require the credit reporting agencies to adopt reasonable procedures for providing consumer information in a manner that is fair to the consumer with regard to confidentiality, accuracy, and proper use of such information.

Fair and Accurate Credit Transactions Act of 2003 (FACTA) – This is an amendment to the FCRA to help prevent identity theft, improve resolution of consumer disputes, improve the accuracy of consumer records, and make improvements in the use of, and consumer access to, credit information, and for other purposes.

Fair Credit Billing Act (FCBA) – This law applies to “open ended” credit accounts, such as credit cards, and revolving charge accounts — such as department store accounts, to ensure creditors bill correctly. This act also allows consumers to dispute transactions with the creditor.

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 services. www.ExpertCreditConsultants.com.

What's In Your Credit Report

       - Your name
       - Your address (and previous addresses)
       - Employment (and previous employment)
       - Your current and past loan information
       - Your public record information (court judgments, bankruptcies, liens)
       - A list of other companies who have reviewed your credit.
       - Your 3 digit credit score (optional)

While some of this credit information is self explanatory, some of the other aspects, especially your credit score, are a bit of a mystery to most consumers. Few people know their credit score or understand how it is calculated. Additionally, most people are unclear about how their behavior can affect their scores.

The majority of people understand the basics, like failing to make a payment will make your score go down, but there are a number of complexities that trip up the average consumer. If you pay your debts on time, don’t carry too much debt on any one card, don’t close older accounts unless absolutely necessary and only apply for new credit when you have to, you will generally be in good shape. However, it is important to keep yourself informed so you can maintain a credit score that accurately reflects your consumer status.

Your credit score is determined by an algorithm developed by the Fair Isaac Corporation (hence its other name of FICO score). Since its inception, three corporations, called “credit bureaus” specialize in collecting and reporting on financial history. Those three companies are Equifax, Experian and TransUnion. While the exact formula used to calculate your credit score is a tightly guarded industry secret, these companies provide general guidelines about financial behavior that can affect your credit score. When calculating your score, the basic formula includes:

35 percent: History of on-time or late payments of credit

30 percent: Available credit on your open credit cards

15 percent: The age of your lines of credit (old = good)

10 percent: How often you apply for new credit

10 percent: Variable factors, such as the types of open credit lines you have

Lenders use your credit information from your reports in order to judge your reliability as a loan candidate. Your credit report indicates your ability to handle debt responsibly and will help banks decide if you are a desirable loan customer. A high credit score can help you lock in low APR rates or secure special deals on loans. A bad credit report may prevent you from securing loans and can damage your ability to buy a car, open a credit card or even rent a home. A history of inability to manage your credit successfully will make lenders uncomfortable about trusting you with additional funds in the future.

You are entitled to a free copy of your credit report once a year, an offer you should take advantage of. When you do receive your credit report, check to ensure the figures are accurate and act quickly to correct any mistakes. This may include any clerical errors, identity theft issues or incorrect information. If your credit score is low, you should begin working on a financial rehabilitation plan, either on your own or with a certified debt counselor or credit repair company to begin correcting your bad debt habits.


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 services. www.ExpertCreditConsultants.

8 Ways to Boost Your Score

1.  GET RID OF YOUR COLLECTION ACCOUNTS, CHARGE­OFFS AND LIENS.

Did you know that paying a collection account can actually reduce your score? Here’s why: credit scoring software reviews credit reports for each account's date of last activity to determine the impact it will have on the overall credit score. When payment is made on a collection account, collection agencies update credit bureaus to reflect the account status as "Paid Collection". When this happens, the date of last activity becomes more recent. Since the guideline for credit scoring software is the date of last activity, recent payment on a collection account damages the credit score more severely. This method of credit scoring may seem unfair, but it is something that must be worked around when trying to maximize your score. How is it possible to pay a collection and maximize your score? The best way to handle this credit scoring dilemma is to contact the collection agency and explain that you are willing to pay off the collection account under the condition that all reporting is withdrawn from credit bureaus. Request a letter from the collector that explicitly states their agreement to delete the account upon receipt/clearance of your payment. Although not all collection agencies will delete reporting, removing all references to a collection account completely will increase the credit score and is certainly worth the involved effort.

Charge­offs and liens barely affect your credit score when older than 24 months. Therefore, paying an older charge­off or a lien will neither help nor damage your credit score. Charge­offs and liens within the past 24 months severely damage your credit score. Paying the past due balance, in this case, is very important. In fact, if you have both charged­off accounts and collection accounts, but limited funds available, pay the most current past due balances first, then pay collection agencies that agree to remove all references to credit bureaus second.

  

2. GET RID OF YOUR PAST DUE ACCOUNTS.

Within the delinquent accounts on your credit report, there is a column called "Past Due". Credit score software penalizes you for keeping accounts past due, so Past Dues destroy a credit score. If you see an amount in this column, pay the creditor the past due amount reported in order to be current.

  

3. AUTHORIZED USER.

If you have a spouse or parent with a credit card in good standing, you can ask them to add you as an authorized user. They don't have to actually give you a card. But by being an authorized user, their payment history on this card will also report on your credit.

  

4. GET RID OF YOUR LATE PAYMENTS.

Contact all creditors that report late payments on your credit and request a good faith adjustment that removes the late payments reported on your account. Be persistent if they refuse to remove the late payments at first, and remind them that you have been a good customer and that you would deeply appreciate their help. Since most creditors receive calls within a call center, if the representative refuses to make a courtesy adjustment on your account, call back and try again with someone else. Persistence and politeness pays off in this scenario. If you are frustrated, rude, and unclear with your request, you are making it very difficult for them to help you.

  

5. CHECK YOUR CREDIT LIMIT(S) AND EVENLY DISTRIBUTE THE BALANCES YOU ARE CARRYING.

Make sure creditors report your credit limits to bureaus. When no limit is reported, credit scoring software scores the account as though your current balance is "maxed out". For example, if you know that you have a $10,000 limit on your credit card, make sure that the limit appears on the credit report. Otherwise, your score will be damaged as severely as if you were carrying a balance of the entire available credit. Credit scoring software likes to see you carry credit card balances as close to zero as possible. If it is difficult for you to pay down your balances, read the following guidelines to maximize your score as much as possible under the circumstances:

• There are different degrees that scoring software can impact your score when carrying credit card balances.
• Balances over 70% of your total credit limit on any card damages your score the most. The next level is 50% of your balance, then 30% of your balance.
• In order to maximize your score without having to pay down your balances, evenly distribute your credit card balances among all of your credit cards, rather than carry a large balance on one credit card. For example, if you are carrying a $9000 balance on a credit card with a $10000 limit, and you have two other credit cards with a $3000 and $5000 limit, transfer your balances so that you have a $1500 balance on the $3000 limit card, a $2500 balance on the $5000 limit card and a $5000 balance on the $10000 limit card. Evenly distributing your balances will increase your score. Another option is to ask the company if they will increase credit limit on a card. Just don't max out this card. Keep the ratios low.

  

6. DO NOT CLOSE YOUR CREDIT CARDS.

Closing a credit card can hurt your credit score, since doing so effects your debt to available credit ratio. For example, if you owe a total credit card debt of $10,000 and your total credit available is $20,000, you are using 50% of your total credit. If you close a credit card with a $5,000 credit limit, you will reduce your credit available to $15,000 and change your ratio to using 66% of your credit. There are caveats to this rule: if the account was opened within the past two years or if you have over six credit cards. The magic number of credit card accounts to have in order to maximize your score is between 3 and 5 (although having more will not significantly damage your score). For example, if a card was opened within the past two years and you have over six credit cards, you may close that account. If you have more than six department store cards, close the newest accounts. Otherwise, do not close any at all.

  

7. OPEN BUSINESS CREDIT CARDS.

If you own a business, you should not be using your personal credit on your business expenses. Obtaining a business credit card should be one of the first steps in starting a business. Business credit cards do not report to the personal credit bureaus unless the person pays the card late. Given that fact, any debt carried on these cards does not hurt the credit score if it is not reported. You can carry credit card debt on these cards without hurting your credit score. Just apply for business credit cards now to start building this segment of your credit. The best credit card in this case is one that will help you build your business credit.

  

8. KEEP YOUR OLD CREDIT CARDS ACTIVE.

15% of your credit score is determined by the age of the credit file. Fair Isaac's credit scoring software assumes people who have had credit for a longer time are at less risk of defaulting on payments. Therefore, even if your old credit cards have horrible interest rates, closing those cards will decrease the average length of time you’ve had credit. Use the old card at least once every six months to avoid the account rating to change to "Inactive". Keeping the card active is as simple as pumping gas or purchasing groceries every few months, then paying the balance off. An inactive account is ignored by Fair Isaac's credit scoring software, so you won’t get the benefit of the positive payment history and low balance that card may have. The one thing all credit reports with scores over 800 have in common is a credit card that is twenty years old or older. Hold onto those old cards, trust me! Preparing credit is a slow and time consuming process. Full knowledge of your credit profile and how it represents you to creditors and credit bureaus is pivotal to full credit restoration success. Credit bureaus always advise individuals that they have a right to dispute their own credit files, but when the rights of the Credit Bureaus slow you down, you know where to ask for help.

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 services. 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.