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The DebtClear Roadmap

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Credit Repair

Credit Repair and the Consequences of Bad Credit

If you decide not to take action either by hiring a credit repair service or fixing it yourself there are consequences of bad credit that can adversely affect your finances and quality of life.

The consequences of having bad credit can set you back even further financially. If you fall behind in your payments, there are increased late fees and penalties assessed on your accounts. Credit card companies also will significantly raise interest rates on both your current debt and any future credit you apply for.

Worse than that, not conducting some type of credit repair service could mean lost employment opportunities. Even if your job prospects are not in the financial field, many employers believe your financial management reflects on your ability to manage other aspects of your life, including work responsibilities.

Bad credit also determines the rate at which you can borrow money and for a large purchase like a home, this can translate to the difference of tens of thousands of dollars. Additionally, failure to repair your credit can hinder your ability to buy a car, qualify for insurance, or even qualify for insurance.

It can't be stressed enough just how important it is to be proactive about your bad credit. Hire a credit repair service or follow DebtClear's free credit repair program and do it yourself. Either way, your investment is likely to pay off in lower interest rates down the road.

Credit Repair Counseling

Knowledge is power and when it comes to credit repair counseling—this couldn't be truer. Credit repair is more than just simply removing negative entries from your credit report. A credit repair program counselor can teach you how to build your credit and the overall factors that contribute to your credit score.

Aside from your payment history, your credit score takes into account the number of high balances you carry, the ratio of debt to total credit limit (what you owe measured against your total credit limit), types of credit (revolving versus secured), length of your credit history, new credit, and the number of credit inquiries.

The benefit of hiring a credit repair counseling company is that they will work to get your negatives removed, while helping you build credit by using various credit repair tricks and techniques.

Top Credit Repair Techniques

There are a number of credit repair techniques to help you improve your credit score that involve:

  • Removing negative information to your credit report.
  • Adding positive information to your credit report.
  • Managing the information that is reporting in ways to maximize your score.

The first step to credit repair is to get a copy of your credit report from all three bureaus . Be sure to highlight any negative information and compare these records across all three reports. Any errors, omissions, or outdated records (most negative entries can only be reported for seven years) serve as the basis for a dispute. Then dispute each negative record as many ways and times as possible.

Credit repair strategies should also include tactics for adding positive information to your credit report and for building credit. Some positive accounts that you have or have had in the past may not be reporting on all your reports. Contact those creditors and try to have these positive accounts added, even if it means paying a small fee to do so.

Other credit repair techniques to consider are making payments on time, staying current on all debt obligations, paying down high balances, opening new accounts only on an as-needed basis, building credit by consolidating student loans and having the right mix between open-ended and revolving accounts, to name just a few.

Understanding Credit Repair Laws

There are two important credit repair laws to understand when it comes to credit repair techniques: The Fair Credit Reporting Act (FCRA) and the Fair and Accurate Transaction Act (FACTA).

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The F" title="Fair and Accurate Transaction Act">Fair and Accurate Transaction Act (FACTA).

(FACTA).

The FCRA consists of a group of federal laws that oversee and regulate how consumer credit information is collected, shared, and used to ensure that information about consumers is treated fairly and accurately. The FCRA is also responsible for overseeing consumer reporting agencies, furnishers of credit information, and others who use credit information for business or informational purposes. Most importantly, the FCRA defines the processes for you to dispute any inaccurate or outdated information on your credit report.

The FACTA enhances consumer protection through the introduction of new credit-reporting standards that expand your rights and privacy. These credit repair laws ensure that you can get free copies of your credit report, require that others get your consent before accessing your credit information, and protect you if you are a victim of identity theft.

Taken together, the FCRA and the FACTA are the basis from which most credit repair techniques are developed. If you understand the rule book, you can understand the playbook. Credit repair programs can repair your credit for you, or you can learn more about credit repair tricks and techniques in our free tutorial on Credit Repair.

Credit Repair Tricks

The Fair Credit Reporting Act (FCRA) gives credit bureaus 30 days to conduct an investigation of your dispute and another 7 days to notify you in writing of the results. If the credit bureaus are not able to respond to your dispute in a timely or appropriate manner, you may just have the leverage you need to have the negative removed from your report. Therefore, one of the best credit repair tricks to make their default likely is to avoid the credit bureaus' automated dispute systems.

Since each credit bureau receives about 10,000 disputes per day, they tend to handle most of these with an automated system. Email and phone disputes are handled by the automated system, so the only way to avoid the automated system is to send in a letter. However, even most of these letters are read by a computer that pulls out the relevant information it needs to query a database. The result of the automated system is that there is no actual investigation, but simply a reconfirmation of the information already being reported on your credit report.

To avoid the automated system, one of DebtClear's credit repair tricks is to dispute negative entries with letters specifically crafted to both avoid the automated dispute system and make it more likely that the bureaus will not be able to complete the investigation in time. If the bureaus don't respond within 37 days, they must remove the negative entry regardless of whether it is valid in fact.

Finally, don't dwell just on the negative. Be sure to follow-up and request that any missing positive accounts be added to your credit file. After all, credit repair is about the good and the bad.