Avoiding the Scam

In the issue of repairing your credit, it is best to

do it yourself. Most often, you may hear or see

advertisements claiming outstanding credit repair

services offering you “legal” and “guaranteed”

solutions for your credit problems. These services may

use mottos that are quite enticing to those who are in

dire need of credit repair. There are even others who

get easily convinced after reading “authentic”

testimonials from several customers, who might not

actually exist.

When you are really in need of credit repair, the

first thing you want to do is to act immediately. You

should remember that this action should be done by you

and not anyone else. Luckily, there are several

factors that can help you avoid scam credit repair

services.

The Fraudulence

Day after day, several companies appeal to consumers

who have awful credit histories. Often, they promise

to tidy up credit reports, for a price, to help

consumers loan a car, mortgage a home, or even get a

job. The horrible fact is they cannot deliver; you

should keep this in mind especially if you do not want

to worsen your debt. These companies would only take

the cost of the services with them and vanish into

thin air.

The Signs of a Scam

If you had responded to a credit repair service, there

are warning signs that can help you determine an

authentic credit repair offer from a fraud. Firstly,

be aware of companies that wish for you to pay the

cost of the repair before providing any services. In

addition, avoid those companies that do not divulge

any possible legal rights you are entitled to and what

processes you can do yourself without payment.

There are companies that advise consumers to directly

contact a credit reporting agency - you should avoid

such companies. More so, if the company you have

responded to suggests that you to create a new credit

identity and then make a new credit report by applying

for an Employer Identification Number to use rather

than you SSN, you should immediately stop contacting

that company.

Lastly, those that advise you to argue all information

included within your credit report or take actions

that may seem illegal, i.e. generating a new credit

identity, should be avoided.

Remember that you could be prosecuted for wire or mail

fraud if you use the telephone or mail to apply for

credit and give information that are not authentic.

Lying on a credit application, misinterpreting your

SSN and acquiring an Employer Identification Number

from the IRS under false pretenses are all federal

crimes.

Most importantly, you should remember that included

within the Credit Repair Organization Act is the rule

that credit repair companies should not require you to

pay until the services they have promised are

complete.

The best possible way to avoid poor credit history,

and totally keep you safe from fraudulent credit

repair services, is to do a periodic credit report

review. Reviewing your credit report is important

because the information in your report affects your

chances of getting an insurance or loan. Make sure

that the information is correct, complete and

regularly updated before applying for a loan. Lastly,

by doing periodic check-up on your credit report, you

can be safe from identity theft, which can create a

major problem not only in your credit report.

The Secured and Damaged Credit

Most people end up with a
damaged credit when they

experience a financial difficulty.
Having a damaged credit can
make it hard for you to obtain
a new one.

Those credit mistakes you made in the
past can be nearly impossible to live with,
especially when your new creditors and lenders are
reluctant to provide you with a second chance. And so,
in order to reestablish your credit, but cannot obtain a
credit card, you only need to get a secured credit card.

The Secured Credit Card

The secured credit card is not that different from the

regular credit card. It operates just like the usual

credit card but it requires you, the cardholder, to

make a deposit against the credit limit of the

account. The deposit is utilized by the creditor as a

security in case you default on your payments.

Usually, secured credit cards have a credit limit of

50% to 100% of the deposit you make. For instance, if

you make a $1000 deposit for the secured credit card,

the credit limit will be between $500 and $1000.

More so, these kinds of credit cards normally have

fees that regular credit cards do not have. These fees

will include processing fees, application fees, and

annual fees. However, always be on the lookout for

those cards with high fees since they can

significantly decrease your deposit and eventually

your credit limit.

Taking Advantage of the Secured Credit

Damaged credit is the effect of having poor payment

habits, most of the time. If you cannot obtain credit

through traditional methods, secured credit can

greatly help you demonstrate improved habits in your

payments. Since you cannot prove a renewed capability

to make payments on time until obtaining a new credit

card, having a secured credit card is a big help.

However, before applying for one, you must guarantee

that the creditor reports to all the three major

bureaus for credit. Otherwise, the card would not be

beneficial in the issue of reestablishing your credit

for the reason that future creditors would not have a

process of looking at the history of your payment.

Additionally, it would not be incorporated in your

credit score or in your credit report.

If your application gets approved, always keep in mind

that your sole purpose for the card is to rebuild your

damaged credit and eventually create a positive credit

history. It is important not to use the card to incur

debt and instead, use the card to buy small things

that you can actually pay full in a month. Moreover,

it is important not to charge any item that you cannot

afford to pay on the card.

Managing your secured credit card and developing good

habits in payment can help you move into an unsecured

credit card. There are several credit card companies

that allow a consumer to convert to an unsecured

credit card after the course of one to two years of

timely payments. Even though you cannot change your

secured credit card, you can still submit an

application for an unsecured one with another company.

Remember not to repeatedly apply for credit cards

after you have been denied of an application; this

would only make you look desperate. What you can do

instead is to continue to make your payments on time

on your secured credit card and apply again after the

span of six months.

The Basics of Credit Repair

By having a credit, you are using someone
else’s money as payment for your purchases.
In addition, it also indicates that you are
swearing to repay the money to the agency
or person that loaned you the amount.

If you are applying for a loan, credit card or

mortgage, it is normal for the agency to check your

credit worthiness. This is essentially based on the

assessment of your credit history, thus helping them

determine the possible risks of the deal and decide

the terms of the loan. Positive assessment means good

financial background, which increases your chances of

applying a credit.

The Credit Repair

The process wherein consumers with poor credit

histories try to reestablish their worthiness is

called the credit repair. It involves procuring the

credit report from agencies and taking careful and

appropriate steps in addressing apparent issues,

including omissions, misreporting, misinterpretation

or other inaccuracies.

If there are any discrepancies found in the credit

report, the consumer is entitled to dispute the errors

that unjustly harm their financial healthiness and

credit worthiness. There are several laws and

regulations that are designed to guarantee fair and

legal undertaking of the credit report process. These

laws can be used to legally and formally start the

process of credit repair.

Every consumer is entitled to one copy of credit

report each year from each credit reporting agency.

Investigations with regards to the real nature of the

inaccuracies and errors are possible and necessary for

a successful credit repair.

What influences your purchasing power and eligibility

of availing any credit facilities in the future is

your credit record. You should keep in mind that a

good credit score can help in several purposes, such

as: mortgaging a home, buying a car or applying for a

job. On the other hand, a bad credit score can make

you vulnerable to exorbitant interest rates and

unnecessary loan terms from several companies. These

two facts are important in helping you understand why

maintaining a good credit score is vital.

How to Repair Your Credit

The process of credit repair can be achieved through

hard work and discipline. Easy methods, which can help

you get out of poor credit history, can be quite

tempting. However, these easy way outs can only lead

to further difficulties in the future especially if

they are done illegally.

In case your poor credit history is caused by

circumstances beyond your control, you can always

request for an upgrade in your credit rating to your

creditor. However, this can only be done if you were

able to make amends to your credit records after the

circumstances.

Creditors do not normally trust consumers who default

on their payments. This can pose a difficulty to you

in obtaining a new credit. However, once you are able

to demonstrate enduring stability in your income and

prompt patterns in your payments, the situation can

improve in the span of two to three years. This way,

even though there is a case of bankruptcy, you are

likely to be eligible for credit cards within two

years if the steady income is maintained.

Keep in mind that there are no quick fixes in

repairing your credit. By contacting credit bureaus,

creating your own corrections, budgeting and

consolidating your debts can improve your own score.

Financial Emergency

You can determine a financial emergency once you
experience a situation that can render you moneyless,
homeless or without any important property. You should
differentiate this kind of emergency from a
threatening phone call or letter from a bill
collector.

When experiencing such emergency, it is crucial to act
immediately and begin by contacting the creditor.
Doing so enables you to work out a temporary solution,
which can help you keep your properties. However, it
does not always work and if so, getting in touch with
your lawyer to negotiate with the creditor is helpful.

Face the Problem

The common misconception in debt problems is “the less
you know, the less it hurts”. However, you must learn
how to face your debt problems. You must be able to do
this since rebuilding and repairing the credit will
not take place when you do not know exactly where your
money goes or where it must go instead.

Although it is not harmful to overestimate your debt,
it is always beneficial to know how much money you
really owe. You can do this by taking a look on the
bills you have received. In case you have thrown out
your bills without even opening them, you can still
call customer service and inquire about the bills.

There are several creditors that use automated
telephone systems. This can provide a balance and
information regarding the payments automatically.
Additionally, information about your account might
also be available on your creditors’ Web sites. After
acquiring the necessary details, sum it all up,
especially those past due installment bills and your
monthly obligations.

Options Available for Your Debts

There are several options available when dealing with
debts. One is to do nothing. This option is probably
the most popular approach used by those who are deeply
in debt. Most often, these people have very small
income and property and do not normally expect any
change in their lifestyle. If you do not anticipate
any steady income any time soon, you can consider this
option.

However, if doing nothing does not help, you can find
money to pay your debts. You can do this by, first,
selling a major asset, like a car or a house. This can
be a good choice if you can no longer afford your car
or house payments. Instead of waiting for a
repossession or foreclosure to happen, selling a
property is always a better.

The proceeds you gain from the sales can help lessen
your debt and enable you to pay off anything you still
owe. More so, you should remember to pay off the liens
placed by the creditors and use anything that is left
to aid you in paying your other debts. However, before
taking this step, make sure that you already came up
with an alternative for your housing or transportation
needs.

Another way, which can help you pay off your debts, is
to cut your expenses. Not only will this eventually
aid you in the payment but also in negotiating with
your creditors. Try to shrink the cost of your food by
clipping coupons, purchasing generic brands, buying
when there is a sale or shopping at outlets with
discounts.

Yet, if you cannot seem to cut your expenses, you can
always borrow money from a tax-deferred account.
Tax-deferred retirement account, like IRA or 401(k),
can help pay off debts by withdrawing money from them
before retirement. However, since you may need to pay
a penalty or taxes, this should only serve as your
last resort.