Credit Problems? What can be done?

Low credit scores and bad credit can cause many problems in today's world with so much emphasis on almost everything you do placed on your credit profile. Whether you are applying for a new credit card, applying for a personal loan, wanting to get financed for a mortgage, trying to find a homeowners or auto insurance carrier, applying for a new job, trying to rent an apartment, or whatever it is you need to do, everyone wants to look at your credit profile and credit scores and use this to help base their decision on. To be honest, this is extremely scary. Many people have credit problems because of bad situations, bad choices made at a young age, life threatening illnesses, family problems, and a wide variety of other reasons that happen to come our way in life. The problem for most people is that once they get into a bad situation and their credit suffers due to this, it becomes a very tough and sometimes never-ending battle to dig yourself out of this situation. Lets face it, bad things happen to very good people.

There are some solutions and assistance available out there though to improve your credit, your credit scores and your financial situations. The first thing that you need to do is to obtain a copy of your credit report and look to see how good or bad your credit actually is, where the deficiencies in your credit report are and whether there are any inaccuracies being reported within your credit report. This will give you an idea of where to go next and as to what you available options are. You can obtain a free copy of your credit report once per year by visiting http://www.annualcreditreport.com/.

Your next step will be to determine how bad your credit actually is and which of the following is going to be your best option. You can choose from trying to repair your credit yourself, hiring a credit repair company to work with you on fixing your credit report, you can hire a credit builder types company to help rebuild your credit almost overnight, or you can find a mortgage broker that would be willing to assist you with improving your credit scores. There are various ways sites online that offer numerous tips on how to repair credit, sample credit dispute letters, credit scoring factors and everything else you can think of. Here are a few links with a lot of good information on self credit repair/maintenance help:

http://fshomeloan.com/index_files/mortgageblogger.htm
http://www.creditinfocenter.com/forms/
http://www.ftc.gov/bcp/conline/pubs/credit/repair.shtm
http://credit.about.com/od/creditrepair/Credit_Repair.htm

Self credit repair can be done for very cheap and can also produce great results. The keys to making self credit repair work are to put forth a genuine effort of many different credit repair tactics and to stay persistent with your credit repair efforts. For self repair you must obtain copies of all of your credit reports from all 3 credit bureaus. Next you will dispute anything that is improperly listed, that contains errors or is listed unfairly. If your first round of disputes are unsuccessful you will send out another round of disputes and repeat this process until your credit has improved and the items are reporting correctly. You must keep good records of everything that you mail out, copies of everything and copies of all correspondence back from the credit bureaus and/or the creditors. Obviously there is more involved to fixing and improving your credit by yourself, however for the sake of time and simplicity I am only going to provide the basics for you here in this article. You can find out much more detailed information from clicking on the links above.

So, if you realize or decide that self credit repair help may be too extensive, time consuming, complicated or just plain difficult you may want to consult the services of a credit repair company. BE ADVISED THAT THESE COMPANIES ARE USUALLY CHEAP! There are literally thousands of companies that offer credit repair. Some of these companies are scams, some are worthless and provide an expensive service that does not follow through on their promises, and yet there are some that are very good at what they do and they provide you with a truly great service. Credit repair companies usually charge on average anywhere from $500 up to $1,500 per person. Usually, this will cover 1 year of credit repair. Other companies charge by the month, offer discounts for multiple customers and offer discounts for extended service agreements. Shop around to find a credit repair company that you can trust. Do your homework before entering into an agreement to work with one of these companies. Search sites such as the Better Business Bureau at http://www.bbb.org/, Rip Off Report at http://www.ripoffreport.com/, the appropriate state attorney generals office at http://www.naag.org/, or any other website that you know of that may be able to provide more of a background on the company you are considering dealing with. I also highly recommend doing a Google search on the name of the company to see what type of information comes up. If people have had bad experiences with a certain company, they will write about it online somewhere and if they do, it will generally come up in a search. Try this search with the company name "in quotes" and not in quotes for best results. Credit repair companies can help out, but again be cautious as to which company you decide to work with. Here are a few companies that I have come across in the past that seem to be good at what they do and seem to be reputable from what I have seen and heard:

http://www.thecrcgroup.com/
http://www.htdifinancial.com/

If you absolutely do not believe bankruptcy is the route that you would like to take and you want to do your best to pay back most or all of what you owe, you can consider a consumer credit counseling or a consumer credit consolidation program to help you gain control of your finances again. Again these types of companies are a "dime a dozen" and there are literally thousands of them available out there. You should do the same type of research on these companies as mentioned above on the credit repair companies as well. Anyhow, the way these companies work is that they have prearranged agreements with many of the large credit card and lending firms throughout the nation that allow them to set up accounts for their clients to pay back their debt while reducing their balances, lowering their interest rates, freezing late and over the limit charges and/or any combination of these items. Therefore, you can save money in fees, interest and or lower your overall balance with some or all of your creditors in order to be in charge of your finances once again. If you do become involved with one of these type of companies please be advised that many lenders will consider these companies similar to filing bankruptcy or barely a step above bankruptcy. Your choices can be hindered or taken away altogether when you are trying to obtain new credit such as buying a house or a car while being in consumer credit counseling. Many mortgage lenders will not lend to a borrower when they are currently in CCC. While this does not make complete sense in regards that the consumer thinks they are doing the right thing by paying off their debt, it is still considered the next closest thing to bankruptcy from a lenders view. Studies have shown that consumers who have enrolled in the services of a consumer credit counseling service are more likely to default on their mortgage loan that consumers who have not. This makes it a higher risk to a bank. However, working with these types of companies can help improve your credit and can often result in less damage to your credit.

Another option to improving your credit scores is by using a credit rebuilding company. You can try to do some of the credit improvement techniques listed above, such as a credit repair company or self help credit repair, in addition to using a credit rebuilding company. A credit building or credit rebuilding company will basically add seasoned and important trade-lines to your credit report for a fee. These can be some of the most costly ways to improve your credit scores and your credit report but these can also provide immediate benefits with some of the best results. The 3 most important factors in determining your credit score are payment history, balance to limit ratios, and length of credit history. By buying tradelines on your credit report you are able to take care of all 3 of these items. You are paying to utilize someone else's credit history as an authorized user (most of the time without any actual access to the account) and in return your credit report will add their excellent payment history on the "said" account, their great balance compared to credit limit will be added to your report, and their long established/seasoned credit history will be added to your report in order to improve your credit scores. While this type of credit building is permitted right now, there is talk from the credit repositories themselves to start preventing or avoiding this type of credit scoring loophole. If you think this option may be good for you, then you may want to look into it sooner than later. You can also use this method at a much lower price by using a friend or family member to add you as an authorized user to their account versus paying a company to do this for you. Here is a link to a company who has built a strong name and reputation for themselves for providing this type of service:

http://instantcreditbuilders.com/

Finally, you can choose to file bankruptcy as a last resort. Filing bankruptcy over the past year or two has been made slightly harder to do than it was in the past as bankruptcy filings had reached all time high levels in past years. When filing a personal bankruptcy you have 2 options. You can file a Chapter 7 Bankruptcy or you can file a Chapter 13 Bankruptcy. A chapter 7 bankruptcy is one in which most of your debts are simply wiped out and you are given a clean slate. Most people who file bankruptcy choose to file this type of bankruptcy over a chapter 13 for many reasons, of which many are quite obvious. Usually a chapter 7 bankruptcy is fully completed within 3-6 months start to finish. A chapter 13 bankruptcy is a repayment plan. The repayment plan can last anywhere up to 5 years to pay back a good portion or possibly all of your outstanding debt. If you are unable to file a Chapter 7 then your only option for bankruptcy will be a Chapter 13. If you can not demonstrate the ability to pay the Chapter 13 bankruptcy then most likely you will not be able to file bankruptcy altogether. A chapter 13 bankruptcy will not be completed, also referred to as discharged until the payment plan has been completely paid off. A bankruptcy can help many people in many different situations and provide a fresh start for them. While the level of bankruptcies in recent years has been record setting the profits of the credit card companies are still reaching record levels as well. Therefore, if you have decided to file bankruptcy you should not be embarrassed by it nor feel like you are doing something terrible. Many consumers simply run into bad situations, whether they or a family member has suffered a life threatening illness, lost a job, or some other unfortunate situation and bankruptcy can help them to get back on their feet again, get a fresh start and help to relieve the stresses caused by money problems. Here are some great links about bankruptcy:

http://www.bankruptcyinformation.com/
http://bankruptcy.lawyers.com/Bankruptcy-FAQ.html
http://wiki.answers.com/Q/FAQ/1784

Here is an article that I wrote in another blog of mine located at:
http://fshomeloan.com/index_files/mortgageblogger.htm.

This information about credit and credit scoring is still up to date and very worthy of reading about credit scoring and credit reports. Please contact me if I can be of any further assistance to you about any of the information contained within this report. Some quick tips for helping to increase your credit score:

* Know and understand your credit and how credit scoring works

* Review your credit report 1-2 times per year

* Request limit increases to provide better balance to limit ratios (do not use extra limits)

* Pay all accounts on time and make sure you do not go past 30 days late

*Avoid allowing any accounts to go into a collection status

*Avoid bankruptcy

*Never max. out your credit cards

* Ask questions if you don't understand something on your credit report

* Dispute inaccuracies and errors as soon as they are discovered

*Keep you balances 40% or lower from your credit limit on revolving credit

*When shopping for a mortgage or auto loan try to do it within 14 days so that it only counts as 1 inquiry

* Do not close revolving accounts after you pay them off

* Don't be afraid to ask friends and family for help or advice if you get into a jam

* Don't go crazy applying for a lot of new credit

* Use some common sense

* Look into some of the alternative rebuilding credit methods mentioned above

* Establish a long history of credit

* Don't think that if you pay for everything in cash and don't have any credit that this is good for you.

* It may help your debt to income ratios, but it will not necessarily help with financing for a mortgage or with having a good credit score.

* Do not live on credit cards and manage your credit wisely

* Be responsible when utilizing credit and don't over extend yourself

* If you get into credit trouble search for a solution early on, communicate with your creditors to find a solution before your credit is destroyed. Most lenders are willing to work with you as long as you communicate with them.

Unfortunately credit and credit scoring has become to important of a part of our lives as it can affect so many different things. Be smart and try to maintain the best credit rating that you can, utilize the advice and the links I have provided for you and don't be afraid to ask for help when you need it. The worst thing you can do is to do nothing at all.