Credit Repair Ė background and solutions.
The Credit Repair Organizations Act (CROA) outlines how credit repair companies may legally operate. This Federal regulation is proof that the industry as a whole is legal and not a scam.
So is Credit Repair and its practitionerís legal, the answer is yes!
To erase bad credit, the most important thing that you need to do is to repay your bad debts. And if you repay these debts, no more negative reports would be filed in your credit history! Thatís straightforward enough isnít it?
And another thing to do in order to erase bad credit is to add some positive reports to your credit history. There are a number of ways to do this.
Open a new savings account, applying for a credit card and keep the balance low. You can also refinance with a home equity loan so you can repay all the old debts.
SO what is bad credit? Itís a bad score. Most A-Paper scores Ė good credit scores - typically begin around 680.
The usual method used is known as the FICO score. Itís the 'grade' which financial institutions use to judge the risk they take when extending you credit. The higher the FICO score, the better. The FICO scores are based on 22 pieces of data collected by the three major credit bureaus. The lowest possible score is 300, while the highest is 850. Trouble is that none of the credit bureaus will apply exactly the same criteria and may not have the same data so your scores could be different from each one. Once your credit score falls below 620, any loan you get will be far more expensive.
Itís usually made up of - payment history - 35% of the score, amounts owed - 30%, length of credit history - 15%, new credit - 10%, and type of credit in use 10%.
The problem is that you don't generally get a credit score with your credit report, but if you have been turned down by a creditor, or been given an unfair rate, you can request the score they used to determine your rate.
When and if you do get the report here is what you can do
∑ Correct obvious mistakes
Besides the obvious name, security number, DOB and address, make sure that old negatives and paid-off debts are deleted
∑ Pay Your Bills On Time
Missing just one payment on anything can knock 50 to 100 points off of your credit score
∑ Reduce your credit card balances
Generally, it's good to keep your balances at or below 25 percent of your credit card limit
∑ Donít Close Old Accounts
Closing old accounts lowers the total credit available to you and makes any balances you have appear larger in credit score calculations. Also be aware that actually closing your oldest accounts can actually have the effect of shortening the length of your credit history and that, to a lender, makes you less credit worthy!!
∑ Donít Open too many In-Store Credit Cards either
Each subsequent credit application can reduce your score as they reduce the age of your credit history, and a department store credit card isnít good evidence of credit worthiness.
∑ Avoid Bankruptcy
Bankruptcy is the worst thing you can do to your credit score as it will lower your credit score by a whopping 200 points or more. Itís much better to get credit counselling to help you with your bills and avoid bankruptcy at all costs.
You can also repair your own credit by going to Bad-CreditRepairer.com. Yes Ė thatís repair your own credit instead of paying heaps for someone else to do it.
About the Author: John Matkowsky has two websites - Bad-CreditRepairer.com and Affiliateprogram-websitebuilder.com which are dedicated to
helping people on the web by providing information on credit repair,
affiliate programs and website building
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