Thursday, November 13, 2008

Removing Collections from you Credit Report

Getting rid of unpaid collections from your credit report is not a hard task to complete, you basically have three options at your disposal. First you can just pay off the amount in full but this will still leave negative makrs on your credit report even though you paid off the debt. Second you can contact the collection agencies making the claims on your credit report and negotiate the amount owed and the terms in which you will pay it off. This is the smartest and most moral thing to do as you will be able to negotiate not only the amount owed but you might also be able to get the negative file off your credit report completely as if it never existed making a positive effect on your credit report. It’s important to know that some collection agencies will not agree to lower the amount owed or removing the file from your credit report.

The last option would be to dispute the negative file by contacting the credit bureaus through either mail, phone or their online dispute system, and requesting the negative file on your credit report to be removed due to inaccuracies. Credit bureaus generally put the file into investigations requesting the creditor or collection agency to provide proof that the debt is legit. Typically the creditors and collection agencies have thirty days to report back, failure to do so will result in the removal of the negative file from your credit report. This is known as a soft delete as it is still possible for the creditor/collection agency to provide proof to the credit bureaus after the thirty days resulting in the negative file being inserted back into your credit report, this typically does not happen as most creditors and collection agencies do not report anything after the thirty days has past.

Installment Credit vs. Revolving Credit

Installment credit is based on a fix monthly payment such as am auto loan,student loan, or a mortgage loan, the difference is your payments are generally fixed so you must pay the same amount each month based on the amount of the loan and the interest rate. Being late on an installment loan can leave negative marks on your credit for a period of seven to ten years.

Revolving credit is usually in the form of credit cards, department store cards, and gas station cards, this type of credit has a pre-detemined interest rate and payments are basically whatever you want them to be with only a small monthly limit you must pay. Revolving credit accounts that become late pose a negative mark on your credit report on a monthly basis, it is important to pay at least the minimum amount due each month to maintain in good standing with the credit grantor although it is highly recommended that you always pay more than the minimum amount due monthly.

Fix Your Bad Credit, Become Debt Free

Step 1:

Obtain a copy of your credit report from the three major credit bureaus (Experian, Equifax, and Trans Union), goto to receive your free credit reports, you are able to obtain your credit reports for free once each year.

Step 2:

Highlight the negative marks on your credit report and prepare to dispute these files to the credit bureaus and/or the creditors and collection agencies.

Step 3:

You will need to either write a letter to the creditors/collectors explaining that the debt indicated ony our credit report is false and you have no knowledge of the accounts. This step can also be done online using the credit bureaus dispute system.

Step 4:

Now you will need to wait up to thirty days to find out if the negative marks have been removed or updated, do not get frustrated if all or some of your negative marks are not erased from your credit report. The creditors and collection agencies have thirty days to reply to your debt dispute and provide proof that the debt is accurate. If they fail to do so the negative file will be taken off your credit report.

Step 5:

Repeat steps three and four until you get the desired results, please note that there is no guarantee that you will remove all or any of your bad credit.

Rob Peter to Pay Paul and Come out a Winner

This trick is an oldie but goodie, the idea is to create fast positive credit to further boost your credit score. First you need to shop around and find two types of credit cards, one with a low interest rate and another that offers an interest-free period each having the same credit limit although one can have a bigger limit than the other. Once you have obtained both the credit card you will need to max out the interest-free credit card, so go ahead and shop till you drop.

Next you wait until your credit card bill is due and pay of the full balance with the low interest rate credit card, then next month pay off the low interest rate credit card with the interest-free credit card and continue this process for at least six months and you will receive a positive boost to your credit score. This can also be accomplished using small personal loans obtained from local banks or even a mix of one credit card and one personal loan assuming they are both able to cover the full balance of the other each month.

Interest-Free only if You Pay in Full

This is a trick alot of credit card companies play on consumers, they boast about their interest-free period credit cards but what consumers do not know is they must pay off the balance of their credit cards in order to recieve that interest-free period. If you do not pay the full balance of your credit card then you miss out on the interest-free period and are charged interest from the date you purchased your items, this get’s worse because in order to get interest-free period you must pay in full your balance on current and future purchases.

Credit Card Companies Want You in Debt

The interest rates on credit cards have been steadily rising for the past three years with no end in site, this is do to the prime rate going up and the more it goes up the more your credit card interest rate goes up. This does not include those who have a fixed rate and have been paying their credit card bills ontime, but unfortunately on late payment could easily end that.

Making just one late payment can cost you more than $30-$40 in fees it can also cost you to lose your intro, fixed or promised interest rate quicker than you can say “huh”. The 0% can easily turn into 19.8% overnight with just one late payment which can easily happen to any of us at anytime. The credit card companies have basically taken the Murphy’s law as in “What can happen will happen and we will charge you a fee when it does” this is just one of many tricks the credit card companies like to play in order to reel in new customers.

Get a Credit Card even with Bad Credit

So you have bad credit and you are looking to either improve your credit score or just purchase more stuff on plastic, well the truth is there are plenty of companies who will approve people with bad credit for a credit card. One of the most trusted and friendly bad credit credit card companies is Orchard Bank, they have a variety of credit cards that will most certainly crave your needs.

If your plan is to slowly improve your credit score and you have been turned down by even the bad credit credit cards then a good way to go would be getting a prepaid credit card. Prepaid credit cards allow you to have a credit card with the only difference being you add money to the card before you can use it and then you make monthly payments like a regular credit card slowly improving your credit score.

One thing to look out for and be aware of is that most companies will charge high interest rates, setup fees, annual fees, and other fees some of which are hidden. So before you get all excited about obtaining a bad credit credit card you need to do the research and read the credit card companies fees section carefully. Most bad credit cards will start out with a balance of $300 which quickly turns into anywhere from $0-150 after they take out the initial fees so keep that in mind. Although it is alot of fees to take on in the end once you pay off those fees you now have a fully functional credit card which will help you improve your credit score.

5 Credit Myths

MYTH #1 “Credit Repair Services are fake”.

Although it is true that there are a great many untrustworthy credit repair agencies and services, there are also some bad apples in ever aspect of the business world. We just don’t label all members of these professions as “bad apples.”

If you are looking for services to help repair your bad credit you do need to be watchful and do some research when looking for the right credit repair service. The truth is there are only a hand full of trustworthy credit repair companies that are not “bad apples.”!

As mentioned, it is not always possible to fix your bad credit history to perfect status, so beware of any credit repair services claiming they can. Some credit repair services will be able to improve your overall credit score, just makes sure that they offer a money back guarantee if they fail to fix your credit.

MYTH #2 “Fixing your Credit Report yourself is too Complicated”.

The act of repairing your credit report is not as difficult as most might think, although as in every aspect of life it is always easier to pay someone else to do it for you such as a credit repair service. The idea is simple, write a letter to the credit bureaus or use their online dispute system.

Simple yet true, like everything else once you obtain the knowledge you are able to do things yourself with confidence. You will need to obtain a copy of your credit reports from all three major credit bureaus in order to examine and decide what needs to be done. As stated above your actions will involve disputing negative information on your credit report either through mail or the credit bureaus online dispute system.

Myth #3 - “Once I pay off a debt it will no longer be a negative mark on my credit report“.

This is one of the most common misconception about credit repair, once you pay off a negative debt on your credit report the credit bureaus will label you negative accounts as “Paid” or Paid to collections. This paid debt still has a negative affect on your credit score, the only real upsides to paying the debt off is one you feel better about yourself for paying your debts like a responsible member of society and two even though it is a negative mark on your credit report it is not as negative as it would be if you did not pay off the debt.

The thing to know is if your debt is 5-6 years old you should either dispute the negative information on your credit report or just simple leave it. Most debt such as credit card debt will be removed from your credit reports after a period of seven years so in turn it would be wiser for you to let it drop off if the debt is older than five to six years old.

Myth #4 - “Bankruptcy is my best option to repair my credit”.

Bankruptcy is not a good option when considering credit repair, once you go through the beankrupty process it will be a negative mark on your credit report for around ten years. So if you have outstanding debts on your credit report with the most recent one being four years old, after going through bankruptcy now you have added six years to your of negative points to your credit report.

Bankruptcy should only be used as a last resort for those who absolutely can not pay off their debts within a two to three year period. Other options would be applying for a cloan to consalidate your debt into one easy monthly payment, or you could simply negotiate with the credit grantor’s and collection agencies to lower your amount owed making it easier for you to make payments.

Myth #5 - “Inquiries and request on my credit report do not affect my credit score”.

This is a simple myth to answer, if you fill out an application to apply for a credit card, loan or any other credit the creditors will make an inquiry or in some cases such as auto dealerships they will make several inquiries to your credit report and this have a negative affect on your credit report. If on the other hand a company requests your information from your credit report on their own to say send out a pre-approval offer for a credit card then this has no affect on your credit report at all.

Understand that although credit inquires that you initiate do have negative impact on your credit report, it will be a minor one unless of course you go crazy and apply for every credit card you can find.

Totally free credit reports

It seems like everywhere you turn these days your being offered free credit reports but unfortunately the majority of these free credit report offers come with a hitch. Well forget all about those companies and their greedy ways because now you are able to obtain your personal credit report online free through the three major credit bureaus.

Simply goto and you will be able to receive a free credit report from each credit bureau, it is fat free and simple. This offer is limited to one free credit report each year but you are also able to receive another credit report if you recently requested credit and were denied within 60 days. So what are you waiting for go grab your free person credit report and keep track of your debt.