Fast Ways You Can Restore Credit

July 3rd, 2010 by Jane Sanderfer No comments »

The typical person who is trying to restore credit is someone who has either built up a history of bad financial habits, or has fallen into circumstances beyond their control, such as losing a job or suffering a medical problem.  Unfortunately, lenders for car loans, mortgages or credit cards will not likely take into account the reasons you have fallen behind.  They look at credit reports simply as numbers, regardless of the people behind the story.

While this makes it harder to repair your credit history, when you as a person are ignored in favor of the hard, cold numbers, it’s important to remember that you are dealing with businesses, who have profit margins they need to meet, and have also suffered major losses in the economic downturn of the past few years.  As a result, their standards have only tightened, to avoid lending to anyone who might be a risk  in any way.  If you need to a fast way to restore your credit, then you will need patience, and knowledge. The first item we can’t give you but we can give you the knowledge of the types of effort that can help you get credit despite bad credit history.

Sometimes it can help to present the lender with information about your individual situation.  If you bank with a local bank, as opposed to a big national corporate bank, you may be able to actually talk to the loan officer to discuss your situation.  for example, wit ha job loss, your credit may reflect late payments, but if you have no been working an are paying down debt, you still  may be able to get a credit consolidation loan. Don’t hesitate to try to talk to the  highest up official you can, and describe your situation an dhow you are fixing it.

Or, if you are in the situation of trying to find housing but your credit report is causing landlords to refuse to rent to you, be completely open about your situation, about how you are taking steps to clean up your credit, about how you now have work where before you did not.  This can help, as they landlord will understand they can trust you to be open with them and that you will make paying rent a priority.

Make sure that as fast as you can, you pay off any past due balances, no matter how large.  Having large delinquent amounts is the biggest red flag to lenders.  Sell things on eBay or Craigslist, pick up a part time job, find a way to make some extra money and get that debt paid down.  It will show immediate results in your credit history, within a month or two as the credit reports update.

Make all of your monthly payments on time as well.  If you can’t afford to do that, ou ened to have some long, frank discussions with your lenders, and work out a plan. If the lender refuses to work with you, let them know that you have no alternative but to let their bill fall to the bottom of the repayment pile.  Pay what you can, and when times get better or income increases, take care of the rest.

Finally, you can restore credit by closing some accounts. Having too many accounts open can cause lenders to be concerned that you could overextend yourself at any time wiht debt on existing cards.  If ou have some that have been dormant for a while, carrying no or small balances, then pay them up and close them.  This can help your credit as well.


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Here’s How To Raise Credit Score

July 2nd, 2010 by Jane Sanderfer No comments »

Looking for ways to raise your credit score?  What you need to do is very basic, but it’s not easy to accomplish. We wind up with credit and debt habits that can be very hard to break, even for people who find themselves in major financial trouble.  If you are sincere when you ask, how to raise my credit score, there are a couple basic, simple steps that you can begin to put in place, to get a handle on bad credit and debt, and start putting some money aside for emergencies.

First, write a budget. Yes really. So many of us claim we hate to do this! But there is no way to know where you money is going, where it needs to be spent versus where it’s just being wasted. Even if you just have big, general categories, like “housing”,  ”clothes” , “food”, “utilities”, and “entertainment”, you can get started.  Make sure you also have a “savings” envelope too, and add some money there each month. To raise credit score, you will have to start understanding where your money is going.

Put an estimate of what you need for each item, and then put your paycheck into envelopes for each of this categories.  Only spend the cash you allocate into each envelope.  If you run out in one, borrow from another, but do not use credit cards!   Once you have this basic budget in place, you can list on the envelope what you’ve spent the money on.  Later, take some time to decide whether your expenditures were on items you needed, or whether you could have skipped them.  The items you didn’t need are “discretionary” as opposed to “necessary”, and that’s the fat in your budget you can cut.

A good next step  is to cut your credit cards up.  This way you won’t be tempted.  To raise your credit score, you will have to reduce you use of credit.  It’s very likely that your bad credit comes from either having balances that are too high or over limit, or late payment sin your credit history.  By cutting them up, you won’t be able to use them.  You may want to actually close those cards that have zero balances on them too.

The last quick step is to figure out how much you owe on each credit card, what interest rate you are paying and whether you are current or past due on each.   If you can’t make the minimum payments, or bring a card current, you will want to call each credit card company and negotiate a payment plan you can afford, or see if they will remove fees and penalty charges, or lower your interest rate.  Each month, pay your bill on time.  If you are past due on any balances, use your discretionary spending savings from your budget, and put that extra cash toward your balances until they are current, or even better, paid off.

The budget process will help you raise credit, because this is where you will be getting the extra money to pay off your debt. Paying off debt and keeping current is what raises your credit score, so these steps are closely connected.  After you start to see the light at the end of the tunnel, you can find other ways to bring in extra money and get those balances paid off fast.


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Tips For How to Improve Your Credit Score

July 2nd, 2010 by Jane Sanderfer No comments »

With changes to bank policies and fees, many Americans have seen changes in their credit scores.  If you’re asking “how to improve my credit score?”  you are not alone.  Many people saw a downturn in their score.  Here is a really basic tip on how to improve your credit score.

When you’re applying for credit today, getting a store credit card is the kind of card that’s easy to get, but that  you  may not use all the time.  Once you apply, you may forget about even having that card, if you don’t shop at that store frequently.  Yet that open store card account appears on your credit report while it’s still an open account.  When you have lots of these types of unused accounts at various stores, you may damage your credit since it looks like you have too  much available, and could get overextended.  Lenders don’t like to see a lot of available credit you never use. 

It’s also true that having many credit card accounts you don’t use can lead to a risk of forgetting bills, and forgetting to make payments on those accounts.  Having these kinds of lingering debts can also hurt your credit score. You never want to have a bill go unpaid or be late in any way, if you’re trying to raise your credit score to a higher level.  It’s a good policy to only keep open those accounts which you know you will use, and make sure you pay those on time.  Close other accounts that you do not use, or do not intend to use.  When you have a manageable number of accounts, that means you can more easily keep track of what you need to pay each month, not to mention keeping your payments affordable.  You can improve your credit score by closing some of these accounts, and paying the remaining accounts on time.

If you do have one of these accounts that has become delinquent, even if you close the account the history will still appear on your credit report.  That’s why it’s so important to make every payment on time.  You may also see a slight drop in your credit score when you close an account, because your existing balances are a bigger percentage of the remaining accounts you have open.  Don’t worry about this too much, but just keep paying down balances and your score will come into line too.

As an example, if you start out with a total of $4000 in credit, with a balance owed of $1000, but you close two cards and reduce your available by half, owing $1000 on a card limit of $2000 looks worse than owing $1000 on a card limit of $4000.  Just  keep paying down your balances, make your payments on time, and soon your balances will get below $500 and your credit will improve.


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Help – Get Me Out Of Debt!

June 14th, 2010 by Jane Sanderfer No comments »

With so many people now struggling under large debt burdens, along with job insecurity, you can almost hear people pleading: Get me out of debt! Many of us probably wish today we hadn’t accumulated so much debt, and had started paying it down all those times in the past when we swore we were going to pay off balances.

Getting out of debt is simple, but not easy. It takes some patience, and most of all a plan. We aren’t used to financial planning, now, are we? As long as there was cash available on the credit card, we bought stuff! Well that “plan” isn’t going to work any more. Many people have been using credit lines as a substitute for additional income, as incomes for most Americans haven’t gone up since the 1980′s. Now we have to learn to live within our means, meaning, spending less than we make each month.

This brings us to step one. The best thing you can do for your financial future and to get out of debt is to create a budget. Everyone groans when they hear the word “budget”, but it can be something very simple to use as a guideline, before you make it more detailed and specific. All you need to do is write down what you need to spend money on for the month, including necessities like utilities, food, shelter and clothing. In addition, add things you owe, such as mortgages or rent, car loans, credit card bills and the like. Assign every dollar of income to one of your needs or debts. When your next paycheck comes, ONLY spend that money for the items on your budget.

An easy way to help you make your payments is what’s known as the “envelope system”. You create an envelope for each expense, like groceries, gas, lunches, and so on. You then put cash from your pay into each envelope according to the budget, and then only pend that much. If you run out of money, you have to borrow from another envelope, which gives you less for that category, so you have to be careful.

A problem can arise if you don’t make enough money to pay your necessities plus your debts. In this case, you will have to find a way to renegotiate lower payments on your debt, reduce your expenses, such as fast food dinners or grocery store bills, or increase your income. You can get a part time job, start an online business to bring in more money, or sell some household items you don’t need any more. Make sure all of the extra money goes to paying down your debt.

If you follow these basic steps, your neighbors won’t hear you yelling any more, Get me out of debt! In fact, they might even start asking your advice about how they can do it too.


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Can You Give Up Using Credit?

June 6th, 2010 by Jane Sanderfer No comments »

If you are having financial trouble, and think you need credit help to deal with creditors, repair your credit score and raise your credit score to be able to get more credit, maybe it’s time to think about things differently. For example, many people trying to improve their credit are desperately trying to get more credit.  But clearly, there is a problem, because you can’t be in credit trouble if you know how to handle credit.  The way out of this hole is not to get more credit but to re-think your relationship with credit generally. Maybe instead of getting more credit, or repairing credit just to get more, you need to think about just using less credit, or even no credit at all.

It may seem impossible to live without credit.  With the price of cars and houses alone, how would it ever be possible to pay cash for such large amounts? Well there are ways to get both of those things and live within your means.  This doesn’t necessarily mean paying cash, but it also may mean buying what you can afford, or renting a house instead of buying.

Today for example, it’s very unlikely that in the majority of areas of the country, home values are not going to go up much beyond the rate of inflation for the next few years. Considering that most people stay in a home for three to five years before selling, why buy a home now unless you want to stay there much longer?  The costs and fees and interest in getting a home mortgage will wind up leaving you without much appreciation in value by the time you sell. Renting a home might make more sense that buying in this kind of market.

As for cars, we really think of cars as extensions of our personalities.  But some people are coming to their sense and realizing that this is just a tool to get to work and the store and school.  When you consider it’s just meant to be useful, and that other things in your life have more importance, you may not be so concerned about pending a year’s salary on a vehicle.  Buying something that does the job means you can put the extra $30,000 you saved into retirement account or college fund.  Which means more – retiring in style or driving in style right now?  That’s a choice you will have to make.

Trying to live without credit is hard at first. but once you realize you need to budget, and keep cash aside for emergencies, you begin to build up a little cushion.  You start to think twice about the things you thought you needed, and see how frequently you indulge in impulse purchases.  Sometimes it’s hard to believe you would have just snapped up that aisle-ender item without thinking.  This is where the money goes when we wonder, “where did all the money go?”

When you give up using credit, there is some adjustment period, but when you hear everyone complain about their holiday bills, the high interest rates, and what amounts to near slavery to the credit card companies, you will feel a satisfaction and relief that is worth more than credit can buy.


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Foreclosure Tactics of Banks – Don’t Be Intimidated

May 5th, 2010 by Jane Sanderfer 1 comment »

I try to publish accurate, helpful advice here on this blog.  If you have a question or a problem or don't agree, then post a comment or contact us with the Contact Us page. I'm not trying to scam anyone or do anything that would make you lose even more money than you already have. 

And specifically, with personal experience, it's not always going to match what your experience is, so it is helpful to get others' comments and ideas about their own situations.  Today for example, plenty of people are going through foreclosure. I also lost my home right after filing for bankruptcy. I posted already about my bankruptcy, which I should not have filed.  Then I lost my job, and my efforts to keep my home were fruitless. The banks refused to work with me (this was 4 years ago before they faced so many delinquencies).  I tried to get them to agree to a short sale, but they refused – the second lien holder absolutely refused, despite the fact that they would get nothing when the house got foreclosed.  It was spite and nothing more – PNC Bank was not going to help me get out of this with a short sale instead of a full blown foreclosure. They got nothing in the deal.

My home was in a nice area, with two mortgages that totalled more than 100% of the value – and the banks knew it when they lent it to me. I also knew they were over inflating the price when they told me what it was "worth" so they could lend me 80% of that number. But I wanted to money.  But once I lost my job, there was no way to cover the high payments.

So what would I have done differently? The bank kept pushing my sheriff's sale date back. This hurt me because it was another year before the home got sold – and that meant another year before I could qualify for another mortgage.  They kept changing the date so they could keep adding the carrying costs onto the sale that added up when they changed the date!  It wasn't until I threatened legal action that they sold my house (can you imagine – I had to threaten to sue so that they WOULD sell my house!?)  The banks play any number of games to get more money into their own pockets. Consumers just don't know the ropes, can't afford high-priced lawyers to help them, and the banks know it.

So while it took a year to sell from the original sale date, I didn't know they'd push the date back repeatedly, and I moved – and incurred rent right away.  I could have lived in the home for free all that time – and today with what I know, that's what I'd do if it ever happened again.  For anyone trying to deal with a bank in a foreclosure, stand up and fight – you still have rights even though you owe them money. Bankruptcy can help, because it will stop a sale, and possible help you work out a payment plan if you have regular income.  Try to get your loan modified, and if the bank won't talk to you, call your Congressional representative your state representatives, anyone you can.  Be a squeaky wheel, and don't get taken advantage of in this process.


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Why I Should Have Avoided Bankruptcy

May 5th, 2010 by Jane Sanderfer No comments »

I am writing here about bad credit, because I have been through the process and through the system, including bankruptcy, and I have bad credit now, but my credit was worse.  I've done everything I can to bring up credit scores, and for me, this happened before the bulk of Americans today fell short on their mortgages or lost their jobs. So, I figure I'm about three years ahead of the curve and I hope people can learn something here.

Also, I'm a lawyer. I'm not a bankruptcy lawyer or credit lawyer, but I understand the law, and still I made mistakes I can't believe I mad.  I can swim through rules and regulations and legalese, but still I messed up – so I can't help but assume there are many many people out there who are completely confused about what they should do, and don't know where to go for help. If a lawyer can't figure it all out perfectly, probably no one can.

It started when I declared bankruptcy; this was a mistake.  I had a lot of debt,but student loans I couldn't discharge, and I wanted to keep my house. (which in the end was unsuccessful).  I filed for bankruptcy before the laws changed so I could discharge everything – but I'm sorry I did.  A year later I lost my job and my house; I could have tried to be on a payment plan, or something besides having the bankruptcy on my credit report.  

My feeling about it is, even if I had been seriously delinquent, I did have some alternatives to  bankruptcy.  I could have made some kind of small payments until I got another job (which too my 9 months). But having that bankruptcy is a HUGE red flag – even though my credit score is creeping back up, slowly, lenders see that bankruptcy and today they just say no.

Right now, I could have gotten my past due debts paid up, and had a shot at borrowing for big things like a car or house. Today, I can't, not for a few more years.  And paying cash is tough, but I did learn my lesson. I keep no credit cards now, am paying off my existing car loan and student loans, and swearing I will from now on deal in cash, even if it means driving a crappy car or not taking the vacations I dream of.  At least I owe no one, and can even save a little today.

The point is, before I declared personal bankruptcy, I didn't really understand what it would mean afterward. My bankruptcy lawyer did not explain enough about the ramifications of having this on my credit report; he did say that about half my debt I'd still have afterward, but I didn't listen. So, if you are thinking about bankruptcy, think twice.  Figure out if there is any real reason to file, because you can just be late on payments and catch up when you can, you don't have to ruin your credit for ten years, and it will be easier to get back on track if you avoid bankruptcy altogether.


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Tips To Get Debt Help Online

May 2nd, 2010 by Jane Sanderfer No comments »

One way to improve your credit score and work toward consolidating debt, and that means getting a debt consolidation loan.  Searching the Internet can give you several options. If you've been considering the steps of getting a debt consolidation loan, versus choosing a debt management or debt settlement service, you sholud know the main differences, pros and cons of each so that the option you select is the right one for your needs.  It's understandable that many people get confused about these three different options, but they eahc have specific differences and ways to help individuals pay down debt. Here's a look at each.

Debt Consolidation Loan

A debt consolidation loan will transfer your credit card or other revolving debt to a single, lower interest rate loan. You can find lenders by searching online; start with your own bank, then check services like Lending Tree.  Usually, this type of loan is similar to ahome equity loan, in that the equity  you have in your home will be the collateral for this type of debt. Today, it's more difficult to get a loan based on home equty, due to the instability of home prices, however it's still possible if you have equity in your home. For people with good credit, it might even be possible to get an unsecured loan, if you also close the credit cards.  If your credit is not so good, the lender may ask you to close your cards as a condition of the loan.  when you get a consolidation loan that has a lower interest rate, theoretically your payments will go down and you can afford them better each month.  Be sure though that the length of the loan doesn't mean you are stil paying a ton of money in interest over the life of the loan, and be sure to pay the loan off you will actually be able to afford to pay on the principle and that will help you to eventually get yourself out of debt.

Debt Management

A debt management company is a little different from a lender. They work with debtors to build a plan to get control over their debt and other finances. These types of companies show borrower the way to set up a budget and keep to it each month.  Often, the borrower will create a weekly schedule to show when to pay each of their debts, until they are paid off.  Usually, debt management companies are set up as non profit companies, and their purpose is to work with consumers to get them on the right financial track. you wont' find these companies offering any loan products, and they usually don't work with creditors either to reduce debt. But they will work with individuals to give them the right tools to build a secure financial future.

Debt Settlement

Unlike lenders or debt management companies, debt settlement companies will directly contact your creditors about your credit accounts. There are agencies like Consumer Credit dounseling Service which you can find online at locations near you.  These copmanies will work to negotiate with your current credit card companies and attempt to reduce the balances you currently owe. They are able too work out arrangements that can lower your interest rates, or get a reduction of the penalties and late payment fees that are piling up on your accounts.  They may also be able to reduce the balances you owe the credit card companies. Many times their arrangement with you will require that you send them a single payment, and they disribute the payments to the companies you are paying. this makes it easy to budget.  beware however that this service may have consequences on your credit report, as it will be reported to the credit reporting agencies that you are working with a debt settelment company.

Any of these types of copmanies can be found online with a simple search, be sure to include your location in your search to find companies near you. It's best to find a company online, but visit them in person – don't work with agencies online only, as this is a potential way to get taken advantage of. You want to meet these companies face to face, and get references for the work they do.  Once you find a good company, these services can certainly provide the debt help you need.


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Myths about Bankruptcy

April 30th, 2010 by Jane Sanderfer No comments »

Sometimes individuals land in debt that it is impossible to get out of debt using conventional means. After you’ve tried to eliminate debt using credit repair efforts, you may want to consider bankruptcy. This is a big step, as it will follow you for years, as opposed to bad or late credit, which you can clean up fairly quickly. If you decide on bankruptcy however, bankruptcy can allow an individual to start his or her life over, and live a life not plagued by constant harassment from creditors. However, a lot of stigmas are attached to the concept of bankruptcy. In this article, the truth regarding some common myths will be explored.

Myth: Being Declared Bankrupt Might Cost You Your Job!

It is not legal for your boss to fire you because you filed for bankruptcy. If it happens you will be able to sue. The only way going through a bankruptcy process will cost you your job, is if you get so distracted that you will not be able to properly take care of it. To avoid this you might want to hire the assistance of a bankruptcy attorney, this will let the process run easier and let you focus on other aspects of your life, such as your job.

Myth: You Can Not File for Bankruptcy Yourself!

This is not actually true. To keep the cost of bankruptcy low, it is in fact possible to file for bankruptcy by yourself. However, it is extremely paperwork intese, and can be a very tricky process.  If you are not detail oriented, before you take on the job, you should make certain you know what you are doing. Hiring help to file for bankruptcy will leave less room for error and make the process less stressful for you. What’s more, it is possible to search for experts online, so you should be able to hire reliable help at an appropriate rate.

Myth: After Bankruptcy You Will Lose Your Credit Cards!

If you have a negative balance on your credit card and you discharge this debt during a bankruptcy, your card will get cancelled. If you do not have a negative balance, whether you can keep the card is up to the credit card company. If you wish to keep the card, is it a good idea to contact the company and explain your situation. If you can’t bring the debt current, then they will likely close your account, unless you pay up past due amounts.

If you lose your credit cards, you will often be able to get new ones, if you apply for secured cards. This entails opening an account and placing a modest amount on it, which will act as security. The limit on your credit card will correspond to the amount offered as security. This limit can, usually, slowly be raised, if you show the bank that you are reliable with the payments. However to costs and fees associated with these secured cards can be very, very high. You should try to avoid them if you can.

Find the Facts Online

With so many rumors floating around, it is important to discover the truth about bankruptcy. When researching the topic, keep an eye out for dodgy information and make sure you are getting the information from reliable, trusted sources.


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How You Can Raise Credit

April 29th, 2010 by Jane Sanderfer No comments »

It’s important for everyone to raise credit because the savings from lower interest rates is significant especially for large purchases like a home or a car. Generally more credit is made available to people with higher credit scores, which is only common sense. If you want to figure out how to raise your credit score you will need a lot of discipline, some hard work, and a committment to chaging your habits.

The Discipline

If you haven’t been real consistent with paying your bills on time then it’s time to find the inner disciplined self. Before you should even bother with the other steps you must be certain you will be making all of your bill payments on time. This will drop your credit score faster than any of the other improvements can make it up. If you are truly struggling for money, then you need to focus on your income crisis and not how to raise credit score levels.

The Hard Work

The next step to raise credit is to reduce your debt load. You want to focus on your revolving credit like credit cards or retail cards. These will give you the biggest credit score bang for the buck. Do whatever it takes to reduce these balances to 25% of their total available credit. Selling stuff tends to be faster than working more, but it’s your choice.

Changing Habits

This is everyone’s least favorite step, and probably the hardest to do. You need to make it a habit not to spend more than you earn. It’s a good idea to also get on track so that you don’t forget to make payments or accidently spend money on other things. You can do this by creating a budget, no matter how basic, that outlines where your money goes every month. Having a a strict budget will help you pay your bills on time. You can have fun things on the list, but understand that it’s the habit of spending on fun things and not paying down debt or paying cash that has gotten you into credit trouble in the past. This is the time to change that habit, for yourself, your future and your family.

It can’t hurt to recognize that overusing credit, and an inability to pay for it, has caused the problem. By working on changing the way you handle money, you are rewriting your financial future, from one of debt to one of wealth.


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