Repair Credit: Results in Months Not Years

repair credit now

Full credit repair is no seven-year journey; with the right efforts, you could increase your FICO score by more than 100 points in just six to eight months.

If you’re trying to repair credit problems, don’t turn to bankruptcy. In fact, even if you’re unsure how to repair credit, the best route is debt management.

Take a look below for more details on what actions you should take, which include: using secured credit cards to repair credit, fixing credit report errors to remove penalties, shifting away from heavy revolving debts and taking credit limit increases when possible.

How to Improve My Credit Score

In less than a year, you can go from bad to great credit. It’s just going to take some work. That means building new credit, paying old debts and fixing any delinquent accounts. But if you have bad credit, how exactly will you do this?

The best thing you can do is forget everything you thought about secured credit cards. It’s never a good route if you have other options – but a secured card works wonders when you’re trying to repair credit.

How to Repair Credit with a Secured Card

It’s simple – get a secured credit card in your name and start using it. After 12 to 18 months of responsible paying, the card issuer will upgrade you. Some cards only increase in security funds and others switch to unsecured cards.

Aim for the latter and shoot for the highest credit limit you can get – the bigger the collateral you can provide, the better. The best convertible secured credit cards allow for a $5,000 to $10,000 secured credit limit.

The only other thing is to avoid using the secured card for all your monthly expenses. It’s not good to be that active – after all, the more debt you carry on the card, the worse your credit utilization rate will be. This is an important variable to keep under control; your outstanding debt levels amount for 30 percent of your FICO score calculation.

Building Credit by Fixing Errors

Another way to see a fast increase in points is by fixing errors on your credit file. If there’s an inaccurate entry, it could plague your score by 100 points or more. In fact, a FTC study from 2013 found that 1 in 250 consumers have a 100 point or higher deficit due to reporting errors. Beyond that, another 1 in 20 files contain errors amounting to lower scores by 25 points or more.

You can request a copy of your credit report from each bureau individually, or through the AnnualCreditReport.com website. Take a look at it for any signs of inaccurate or missing information. If anything is spotted, when the bureau acts on it your new FICO score will be higher.

You can report errors on your file through the credit bureau websites. TransUnion also lets you send your report by mail. It’s best to contact all three, but once you notify a single bureau they’re obligated to tell the others. If the issue is due to identity fraud, and not a recording error, then an FTC affidavit and police report might be required.

Consolidating Your Revolving Debts

Revolving debts weigh more on your credit score than installment debts. This means short-term loans can help. If your credit card debts are high, you could use a consolidation loan to lower your debt-to-credit ratio. The installment debt created by your loan won’t drag your score as much, so your score will go up once your file updates with the change.

This is why debt repair services are actually a hidden gem. You can avoid bankruptcy and pay back what you owe on your own schedule. In the end, you might be able to repair your credit score within six months to a year. It’s just a matter of organizing your debts and optimizing your file based on how FICO calculates your score.

Take Any Limit Increase You Can Get

When you are offered a higher credit limit it means you’re given the chance to take on even more debt. This shows that you’re trusted with a higher amount; until you spend it, your debt-to-credit ratio will be improved.

Therefore, taking on credit limit increases as they come is a fantastic idea. It’s just a matter of having the willpower to not blow all the new funds. Long story short, if you can manage this, then the greater credit limits will help boost your credit score.

Conclusion

Credit repair is a scary subject – where the only happy ending seems to come after you go through bankruptcy or if you win the lottery. This doesn’t have to be the case, and there are ways around bankruptcy, but it will take a real commitment.

The journey begins with figuring out what you’re doing wrong as a borrower. In most cases, it’s carrying too large of a debt on credit cards. Deleverage this by getting access to loans and by consolidating your high-interest debts.

Then work on sustaining the best credit utilization rate you can manage. Your FICO score will show real changes after only three to six months of good stats getting reported to the credit bureaus.

Sources:

https://www.ftc.gov/news-events/press-releases/2013/02/ftc-study-five-percent-consumers-had-errors-their-credit-reports

http://www.myfico.com/crediteducation/amounts-owed.aspx

7 Myths About Credit Repair Companies

Credit Repair Myths

If your credit score is not as high as you’d like it to be, thanks to some delinquent accounts on your report, credit repair may be your best bet. If you haven’t considered this route before, it’s probably because you’ve heard a few misconceptions about how credit repair companies work. Fortunately, many of the negative things you’ve likely heard about credit repair can be debunked. Check out the truth behind the most common credit repair myths.

Myth 1: Your Credit Score Will Increase Overnight

Credit repair will surely increase your credit score, but not right away. You’re not going to go from 500 to 750 in a month, either. Instead, plan to see incremental score improvements over the next several months. This means it might increase by 25 points one month and 50 the next, and so on. Going into the process with a realistic attitude when it comes to how long it will take to see improvement will ensure that you’re happy with the results. Just know that if you choose the right credit repair company, you will see a marked difference in your credit score this year.

Myth 2: You Can Get the Same Results on Your Own

It’s true that you can call or write to each of your creditors on your own to get inaccurate or negative information removed from your credit report. But the reality is that few people actually do this. And if you do happen to get around to contacting every creditor, you will need to have some patience and great negotiation skills to get the same results credit repair companies do. Otherwise, you’ll only end up fixing some of the problems. This is why hiring a credit repair company is the most effective option, since professionals know exactly how to spot and fix all your credit issues.

Myth 3: Credit Repair Will Decrease Your Score

Some people assume that the fact that they had credit repair will show up on their credit report, thus decreasing their score. While your score may go down at first, it’s not because of the credit repair itself. If this happens to you, it’s because once you remove a few items on your report, your credit has been rebalanced and you no longer have enough credit accounts to qualify for a good score. You can combat this issue by continuing to build up your credit after the repair, which will help you end up with a better score in the long run.

Myth 4: Credit Repair Costs a Lot of Money Up Front

When you’re already in debt, it doesn’t make sense to add to it with extra expenses, which is why it’s good that credit repair is often affordable for anyone who wants credit help. In many cases, you’ll pay a monthly fee that is likely less than most of your other bills. And in return, your score will eventually increase enough to get you the lower interest rates you deserve, so you’ll likely start seeing return on your investment within months. In this way, paying for credit repair is one of the wisest ways to spend your money.

Myth 5: You Can Increase Your Credit Score by Simply Paying Off Delinquent Accounts

It’s a good idea to pay your debts on time. But it’s a little late to start this once a negative item shows up on your credit report. At that point, it’s already affecting your score and you need to get it removed as soon as possible. If you don’t have a credit repair company request to remove it, it can continue to negatively affect your score for about seven years. So while you should get into the habit of paying your debts, it’s best to do this before they get sent to collections and show up on your report. After that point, you need to hire a credit repair expert to request that it be removed.

Myth 6: Certain Negative Items Can Never Be Removed From Your Report

Some people assume that bankruptcies, foreclosures and other types of delinquent accounts can never be removed from their credit report. But in reality, it’s possible to remove any negative item, assuming you hire the right credit repair company. Some accounts might take a little more time and effort to remove, and there are no guarantees regarding the results you’ll get. But most credit repair companies can tackle any type of negative item on your report, so don’t assume you can’t be helped if you have a foreclosure or bankruptcy.

Myth 7: Negative Items Removed by Credit Repair Services Will Come Back

If you’ve been putting off contacting a credit repair company because you’ve heard that the negative items on your report will show up again, you can rest assured that’s a myth. In most cases, once an item is removed from your report by a credit repair company, it’s gone for good. You might have heard this myth because sometimes the credit bureaus remove an item after being contacted by a credit repair company, and then they hear back from the creditor months later and find that the debt may be valid. At that point, they may add the negative item to your credit report again, at which time your credit repair company can once again request that it be removed.

Now that you know the truth about these credit repair misconceptions, it’s time to give this method a chance to increase your credit score. Credit repair won’t decrease your score, so the only way you can expect to go is up!

Sources:

https://www.credit.com/credit-repair/

http://www.moneychoice.org/best-credit-repair-services-fix-bad-credit/

https://www.nerdwallet.com/blog/finance/credit-repair/

https://wallethacks.com/best-credit-repair-companies/

Getting a Mortgage With Bad Credit

Mortgage with Bad Credit

Is it possible to get a mortgage with bad credit? The answer is yes, but attempting to do so can pose unnecessary financial hazards. A far more effective plan would be to improve your credit score first and then seek real estate.

Get an FHA Loan

When your credit report is less than stellar, you could try taking out a Federal Housing Administration (FHA) loan, which the government insures. The FHA, by the way, is a division of the U.S. Department of Housing and Urban Development. The requirements for such a loan are relatively lenient. If you’ve experienced a foreclosure or if you’ve filed for bankruptcy, you still might be eligible.

The down payment of an FHA loan amounts to just 3.5 percent of a new home’s total cost. Private lenders often ask for larger down payments, sometimes at rates of 20 percent or more.

FHA loans do have drawbacks, though. To secure one, you’ll need to take out an insurance policy, and its premiums can be more expensive than conventional loan insurance premiums. For an FHA loan, you’ll have to pay an upfront premium as well. A private lender probably wouldn’t require you to make such a payment.

Also, it’s possible that you could obtain an FHA loan only to realize later that you’re unable to make your payments. In the end, it’s better to get rejected for a loan than to get a loan you can’t repay.

Find a Cosigner

Another option is to locate someone who’d be willing to cosign your mortgage. If this person’s finances are sound, he or she should be able to help you procure a lower rate of interest and other favorable terms.

However, this course of action ought to be your last resort. If someone were to cosign your loan, that person would be assuming a major risk. If you failed to make a payment on time or if you were to default, your cosigner’s credit score would be damaged severely.

For that reason, don’t be surprised or offended if those who are close to you decline to cosign. Likewise, if people ever ask you to cosign for them, you should turn them down no matter how much you’d like to be of assistance.

Use Your Negotiating Skills

If you have bad credit, you might still be capable of persuading a lender to grant you a mortgage. Most likely, you’d have to demonstrate that you currently make a lot of money, have substantial savings and aren’t in debt. Furthermore, it may help if you can prove that you’ve paid your rent punctually for the past 12 months or longer.

All of these factors would indicate that you’re financially responsible, and they might convince lenders to overlook your credit score, especially if it dropped due to circumstances beyond your control or because of a one-time mistake that you vow never to repeat.

On the other hand, you might create a financing plan with the person who’s selling the house. That is, you could make a significant down payment and agree in writing to give him or her a certain amount each month. However, many sellers simply have no interest in such deals.

 



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Whipping That Credit Score Into Shape

Given the serious drawbacks to all of the home financing methods mentioned above, there is only one conclusion to draw here. Before you even start looking for a home to buy, you really should make sure that your credit report is impressive enough.

Different credit reporting agencies have somewhat different credit score ranges. But, roughly speaking, those scores extend from 300 to 850. If you want to take out a conventional home loan, you should have a score of at least 650, and 700 or higher is preferable. Don’t panic if yours is less than 650, however.

Rather, there are a variety of ways in which you could raise that number fairly quickly. For one, you could obtain copies of your credit reports, look for errors that aren’t in your favor and tell the agencies about them. In addition, pay off all of your credit card balances. Likewise, if you haven’t always been doing so, start consistently paying your credit card bills on time and in full.

Moreover, with each of your credit cards, don’t utilize more than 30 percent of your credit line during any given month. In fact, to keep your utilization rate down, you might request higher credit lines if you’re eligible for them.

Finally, an outstanding credit repair service can review your specific financial circumstances and find ingenious and highly efficient techniques for boosting your score.

In the end, the strongest reason to avoid taking out a mortgage with bad credit is that you’d most likely get stuck with an extremely high interest rate. Because of that rate, you’d spend thousands of dollars more over the life of your loan. By contrast, you could invest perhaps a couple hundred dollars in improving your credit score. Consequently, you’ll not only obtain a much more affordable mortgage, but you’ll have the ability to work out many other advantageous financial contracts in the future.

Sources:

https://www.bloomberg.com/news/articles/2016-05-10/how-to-raise-your-credit-score-fast

http://www.forbes.com/sites/trulia/2015/02/04/the-pros-and-cons-of-seller-financing/#4ba516f7e822

http://homeguides.sfgate.com/buy-house-down-payment-bad-credit-7377.html

http://money.usnews.com/money/personal-finance/articles/2015/01/30/how-to-get-a-home-loan-with-less-than-stellar-credit

http://www.nytimes.com/2013/12/08/realestate/the-downside-to-fha-loans.html

http://time.com/money/3086800/qualify-mortgage-bad-credit-low-credit-score/

https://www.yahoo.com/news/4-ways-buy-house-bad-152456987.html