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.

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.