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10 Tips to rebuilding your credit

If your credit is bad, or not as good as you would like, there is no time like the present to get things moving on the right path. With a little effort and taking the right actions you could begin to notice your credit improve very soon.

Know where you stand 
You can't really start fixing your credit unless you know what's wrong. Fortunately, by law, you are entitled to a free copy of your credit report from each of the three major credit bureaus

Tip 1:     Once you have obtained your credit reports, go through them and highlight any negative entries such as collections, judgments, charge-offs, and accounts with late payments. If there is anything you don't recognize, immediately file a dispute with the credit bureau, and they will either verify the information within 30 days or have it removed from your report.

   If a disputed item was caused by illness or job loss or ?? you can write a 200 word explanation letter and have the credit bureaus add it to your report, lenders will see this and take it into consideration when reviewing an application for credit.

Tip 2: Talk to your creditors...you may be surprised:  One strategy that works well is calling your bill collectors and other delinquent account issuers and having a conversation about your account.  Most collectors are willing to negotiate and settle old debts for far less than the balance owed, call and make them a reasonable offer. Explain your situation and that you want to pay the account, but you simply can't afford to pay more than a certain amount. The worst they can say is no.
    Now, more than ever, it pays to settle collection accounts. It used to be that "settled" and even "paid-in-full" collection accounts could seriously hurt your FICO score. Now, under soon-to-be-implemented changes in the FICO formula, collection accounts that are settled will no longer have any effect on your FICO score. If a few collections are the only negative information on your report, this could make an enormous difference.

Tip 3:  Get lenders to waive late fees and charges, If you have missed some payments or made some late payments, lenders will charge you a fee for non-payment. Now you not only have to pay more on your bills plus get a ding on your credit - but also it makes bills more difficult to repay since the balance is now higher. You can phone the lender and get the charge waived in most cases. This is a secret that credit repair companies have long known and is one of the first services they will perform on your behalf. However you can easily accomplish this for yourself, at no cost. Lenders want to get paid, and if they think that you will pay your bill more quickly they will most often gladly remove the fee in exchange for prompt payment.

Tip 4: Credit card debt:  most companies will work with you to pay down your debt; setting up a payment plan, maybe lowering the interest rate, even discounting the amount owed if paid at once. You will need the cards to help rebuild your new payment record so don't close out the account once you have paid off the old balance. 

Tip 5: Secure Credit Card:  It is tough to build up a good credit score without at least one account in good standing. There are credit cards designed for people with bad credit but most come with very excessive fees.
   Your best bet is to get a secured credit card, which works just like a normal credit card, except that it requires a deposit from you (which you get back upon closing the account) equal to your credit line. A $500 deposit will get you a credit card with a $500 limit. The card itself doesn't appear any different,and the status will be reported to the credit bureaus just like any other credit card.  Most major U.S. banks offer secured credit card, so shop around and see which is best for you. Be careful how you use the card, best use it for everyday items that you would normally pay with cash, try not to go over 30% of the credit limit and VERY IMPORTANTLY pay it off every month DO NOT carry a balance into the next month. Just this one tip could boost your FICO score by 100+ points in less than 6 months.

Tip 6:  Make Payments on Time: This is a given but bears repeating, before you start your credit repair effort you must be able to make your payments on time from this point forward.  Credit repair is nearly impossible if you can't pay your minimum monthly payments and you keep adding new late payments to your report.  Cut out your morning latte if it helps you keep current on your payments. 

Tip 7:  Schedule automatic payments. If you have missed payments, start paying regularly and stay current. Use online bill pay through your bank to schedule automatic payments for your monthly credit card, utility, rent, mortgage and other bills. Your payment history has the greatest effect on your credit score—contributing to over one-third
of that important number—and missed or late payments are not easily fixed. But the longer you pay your bills on time the more your score will increase.

Tip 8:  If you are a college student, your school’s financial aid office should be one of your first stops at the campus. The financial aid office can offer one-on-one financial counseling. The officers at your university or college financial aid office can offer you help on almost any aspect of financial help – including helping you figure out credit scoring and dealing with money and credit. The financial aid offices at most colleges and universities are so useful that you may want to call the office at the school you attended in the past to ask whether alumni are eligible for financial aid services. The resources that you a get for free from these offices are simply too good to miss.

Tip 9:  Adding Positive Information to Your Report:  You have received your credit report and have noticed that there are accounts that you were current on that have not been added to you credit file. Since you are trying to build a new positive credit file these are accounts that you really want added to your report.   Contact the credit bureaus listed on your report by letter and request the accounts be added to your file.  Be sure to include copies of current statements of the accounts you are requesting to be added. The credit bureaus will in turn contact the creditors and if the information that you gave is confirmed to be true, the item/s will be added to your credit file.

Tip 10:  Time barred-debts: If you have old debts the statute of limitations  could prevent collectors from being able to sue you to collect on them. After that, your unpaid debts are considered "time-barred." According to the law, a debt collector cannot sue you for not paying a debt that's time-barred.
The statute of limitations varies from state to state and for different kinds of debts but averages around four years.   In some states,if you pay any amount on a time-barred debt the debt is 'revived.' This means the clock resets and a new statute of limitations period begins. It also often means the collector can sue you to collect the full amount of the debt, which may include additional interest and fees.  If you have funds available to pay down your delinquent debts start with the newest and leave the oldest until last, and of course any you are current on keep them current.
   Delete Letter:  A critical factor in negotiating a settlement is a letter to the creditor that requests their agreement to delete the account upon receipt of your payment.  A delete letter will remove this item from your credit report completely as if it never existed and almost immediately your credit score will jump up by 20-30 points.  Ask that the letter be sent directly to you by fax or email then it will be your responsibility to deliver to the Credit Bureaus saving time and ensuring the Bureau processes it to your file.

Final Note:  Whether you are trying to repair/rebuild your credit or maintaining your good credit it is important to monitor your credit report at least every four months, to do this order your free report from the big three credit bureaus one at a time every four months this way you can file disputes or have positive information added quickly.
Don't hide from your creditors they will simply not go away, talk to them and explain your situation, believe me they are very willing to negotiate a settlement if they are guaranteed a smaller payment than none at all.  
























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