Bad Credit? Want To Repair It?
by Julie Fletcher
Then you will need to spend time working to pay off debts and make payments on new items or bills on time. Across the internet, Credit Repair sites abound. According to the United States Federal Trade Commission (FTC), these schemes are just that, schemes.
There is no legal way to remove items from your credit record if they are accurate and timely. You can and should check your credit report each year to make sure there are no mistakes. If there are mistakes, you do not need a credit repair scam, ahem, company, to remove them for you. Keep good records of your payments and send them as proof to the company collecting the reports with a request to have the item removed or contact the reporting entity and send proof of payments with a request to change their report to the credit report companies.
Do not fall for schemes that sell information on how to substitute a fake Social Security number for your own, making a new credit identity. This is a felony!
How can you identify a credit repair scam? Any company that claims it can repair all of your credit, give you a perfect score, or give you information on how to create a new credit identity is bogus. All the information you need to learn how to repair your credit can be found in the following tips.
Begin to pay off your debts, even a tiny amount at a time. Request that payments be reported to the credit reporting agencies.
Some pre-paid credit cards will issue you a ‘real’ line of credit after you have used their service for a year. Accept the offer and keep current with the bill.
Do not spend more than you earn.
If a debt collection company offers you a ‘deal’, which is becoming popular, take it. Some offer a much lower payment than you actually owe. You can wipe out a debt in small payments as well.
Buy used items and work on paying off your previous debt. Do not buy anything brand new until an item is paid off, then treat yourself. Only one treat per debt closed. The treat should not be more valuable than the bill paid and should be PAID IN FULL.
More tips will be posted soon, as one of my ‘secret’ New Year’s Resolutions was to repair my own credit!
This entry was posted on Thursday, January 17th, 2008 at 12:15 pm and is filed under Credit and Debt. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
January 18th, 2008 at 6:50 am
Hi Julie. I would like to state that one point in this article may be counter-productive for some of your readers. You mention that is a creditor offers a payment deal, for the consumer to take it. In a small percentage of cases, this is a good idea. In the vast majority of cases, this is a terrible idea, when it comes to someone’s credit score. When “lesser” payments are made over time, the creditors will report these payments increasingly late. For example, if they need to be paying $100 a month, but are only paying $30 a month, the credit will show these folks down 30 days, then 60 days, then 90 days, etc. I have seen it many, many times. So, I thought you might want to know this, because making payments over time is almost always a very bad idea. What makes more sense is to negotiate a payoff for much less than full balance, and be done with it. Some people can not do this, but if at all possible, and one time payment is far preferable to payments over time. Also, payments over time will cost the consumer a boatload of money.
Anyway, hope this has some value for you. Be well, Mark Enderle
January 18th, 2008 at 10:15 pm
Hi Mark. Thanks for your comment. The deal I was referring to is one you will sometimes receive from bill collectors offering you a much lower payoff from the original. It is on a contract and you have several ‘coupons’ to choose from. I have seen several of these that friends have shown me. I advised them to take it, becausee according to the ‘coupon’, the debt would be wiped clean and there would be a written record of that in case they ever needed to show proof of payment.
Thank you for your advice, it will help clarify what I wrote, sorry for the confusion.
January 19th, 2008 at 9:00 pm
Also, if you carry multiple credit cards with debt, keep your eyes open for “low-rate balance transfers.”
I once wiped out almost $9,000 worth of debt on one card by doing a balance transfer with 2 percent interest (v. the existing 17 percent). Then I did the same thing again and I’m working on paying down another card.
The warning there is do not charge up the card you just emptied, of course. Put it in the freezer, tear the thing up if you have to, but do not use it.
Great column, Julie, and very worthwhile for many people!
March 12th, 2008 at 6:14 pm
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March 14th, 2009 at 11:09 pm
I dont usually comment, but after reading through so much info I had to say thanks