Tag Archives: Bad Credit

Credit Repair Advice: DIY Vs Agencies

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If you’ve been considering repairing credit on your own, that’s likely a good idea before you spend money with an agency or credit counseling service.  Here are some things to consider:

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A piece of credit repair advice: before your hire a credit repair agency consider the pros and cons.

If you opt to repair your own credit, you’ll save the monthly fee you would be paying an agency. You’ll send letters and make calls and know exactly where you are in the process at all times. Also, if you make all your own contacts, you’ll provide the personal touch to make it all more believable.

Repairing credit yourself gives you more flexibility. If you need to wait for some life event to pass, you can. If you’re ready to get it done, you can. For example, if you see a 6 year old delinquent account, it might make sense to leave it alone rather than dispute it. It will fall off anyway after 7 years of inactivity. An agency might figure that out or they might go ahead and challenge everything.

You should consider hiring an agency if you’re short on time, have the extra money and don’t want to be bothered to manage your finances. Also, if you struggle with low self esteem and couldn’t bring yourself to call your credit card company on the phone, then an agency is right for you. Chances are though that no one fits that description. Like maintaining your personal health and raising your own children, your finances are something you should attend to yourself.

If you’re not sure what to do, there is more credit repair advice online than you could ever need. The challenge is figuring it all out and putting it in order. My advice is to find a reputable book or course that puts all the pieces together for you. Learn from another person’s experience and save yourself the time.

What about using an agency?

A credit agency will do the same thing you can do. They’ll send the same letters without your personalization. They might give you additional credit repair advice on how to negotiate your rates. They might tell you to close or open different lines of credit. The is a secure feeling knowing someone is working on your behalf.

The experience many consumers have had is that credit repair agencies take your money and then simply send out a form letter for you. It’s possible the reporting agencies see the letter and reject it based on vague information. Nobody likes being spammed with generic letters.

You’d end up wondering what’s happening as the credit repair agency continues to collect a fee month after month. And while you were waiting there will have probably been other things you could have been doing to improve your credit. If only you would have known.

My recommendation is to do your own credit repair. Spend a little bit of the money you’d give an agency and get yourself a good book or course. Your financial future is up to you.

Fix bad credit! Do your own credit history repair without an agency. Visit www.creditrepairsecrets.org for free help.

What is a FICO Score

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Your FICO score is a vital component of managing your finances. This is the number used by the credit bureaus to determine how good your credit is. The FICO scoring system can appear to be pretty complicated if you do not know how it works. On the other hand, if you know how your FICO score is calculated, you can easily find ways to keep a good score or repair a bad one. Understanding your FICO credit score is key to maintaining good credit and keeping yourself afloat.

The first part of knowing how the FICO scoring system works is to know what qualifies as a good credit score. The highest score you can receive is 850. The best range is between 720 and 850, with scores from 675 up to 719 still representing good credit. Scores below 675 may have trouble getting good terms on money borrowed, and below 620, it may be hard to get credit at all. A score of 300 is the bottom of the FICO score ladder.

A FICO score is comprised of many different parts. To determine your FICO score a bureau looks 35% at your paymnet history, meaning how many payments are delinquent or late. If a payment is past thirty days late, it is reported to a bureau and they will then lower you FICO score. Another 30% of you FICO score depends on you credit/debt ratio. Not know what this means? That’s ok too. Let’s say you have a credit card with 10,000 dollar limits. If you have used 4,000 of that, your debt-credit ratio is 40/60. This is ideal.

Another fifteen percent of your credit score is based on the length of your credit history from the time you first borrowed money to the present. Ten percent is based on the kinds of credit you use. Some kinds are weighted more heavily. The final ten percent of your FICO score is determined by how much credit you have used recently.

Some special factors that can influence your FICO credit score include money you owe due to a court judgment or tax lien. These can carry a very large credit score penalty. If you have more than a particular number of consumer finance credit accounts, you will also find that your score is impacted negatively. The number of credit checks made recently can also lower your score, although the credit bureaus do allow for a certain number of checks in a particular window of time, such as might occur when you are shopping for the best rate on a loan.

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Consumer Credit Repair: 5 C’s Of Good Credit

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If you’ve been trying to figure out how to do consumer credit repair, there are five major C words to lenders. Those major areas are character, capacity, capital, collateral and conditions.

Character

Character refers to how well lenders can trust you. If they know you personally, that’s great. Oftentimes, this is determined by how well you’ve made payments on time.

Credit cards especially report 30, 60 and 90 day delinquencies to the credit reporting agencies. Each negative entry counts against your credit score. If it’s not already there, you’ll want your report to show all accounts in good standing to repair your consumer credit.

Capacity

Capacity is your cash flow. You have to have enough money to handle the debt you’re asking for. They look at your income and expenses for each month. Lenders rightfully want to make sure you have enough money to make the payments.

Capital

Capital is your net worth. Even if you’re making plenty of money each month, if you have way more debt than you have assets, you’re a bigger lending risk. Having more assets shows you’re worthy of more credit.

Collateral

Collateral is something to secure the debt. Typically, loans are secured by property such as real estate or vehicles. If there’s something to get back should you default on the loan, there’s less risk to the lender.

Conditions

The state of the the market and economy are the conditions. The rise and fall of interest rates and inflation are in this category. As the Federal Reserve tightens up credit to banks, consumers find it harder to qualify as well.

Smaller concerns such as your local banker’s mood that day also fall into this group. While we’d like to think your banker is always going to be professional, he’s human too.

Character, capacity, capital, collateral and conditions are the five areas to focus on when you’re looking to repair consumer credit.

Find out how to do your own credit history repair without an agency. Visit www.creditrepairsecrets.org for free credit repair secrets.

FICO Scoring Meaning

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FICO scoring is a system that lenders and underwriters use to determine what your interest rate on a loan is going to be. If you buy a house or car, the mortgage or the loan is determined by you credit report and your FICO score.

The score is based on the system developed by Fair Isaac Company (FICO) and the interest you pay, as well as monthly payments that are based on your personal credit history and score as well.

The same is true when you get a car loan, as well as the premium on your car insurance or homeowners insurance. Your personal credit score can even affect your chances of getting new employment.

There are a lot of things that go into FICO scoring and we will group that into about five categories.

So that you will understand the basics of how FICO score is determined, the percentages below reflect how important each of the categories are in determining your personal credit score.

History of Payment (35%)

Your payment of history is the biggest indicator for a lender whether or not they should lend you money. Thus , it is also the biggest factor in creating your FICO score. This means that how many of your bills are unpaid or late has a the biggest affect on your credit. The more recent the late payment is, the worse the score. Bankruptcies will take it down even farther and stay with you for over seven years.

Debt (30%)

How much of the total credit line is being used on credit cards and other revolving charges? High balances or more precisely, balances that are close to your credit limit can negatively affect your credit score. Most lenders think 40%-60% of maximum is ideal.

Credit History (15%)

This one surprised me. Just length of history. How long have you had an open credit line. If you have a large credit limit and it has been paid as agreed over a long period of time, this will work the best. Close your old accounts if they are having a negative affect on you.

Inquiries (10%)

Every time you apply for any kind of credit you create an inquiry on your credit report. A lot of inquiries negatively affect your credit score. However, ordering a copy and checking your own credit report or personal credit score counts as a soft inquiry and does not go against your score.

Types of credit in use (10%).

Is your credit from a car loan or a mortgage? If it is a mortgage, how much do you currently owe compared to the original amount loaned. How many accounts are open. It is not always beneficial to open a new account to receive more available cred

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