A law that went into effect last year was supposed to curtail the use of credit cards on campus. But did it work?
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There are quite a few credit repair secrets your creditors and the credit reporting agencies do not want you to know about. When you start taking measures to repair your credit, it can cost both the creditors and the reporting agencies a great deal of money.
There are many different credit repair secrets they do not want you to be familiar with, but the one we want to focus on here is the ability to dispute negative items on your credit report.
You can significantly improve your credit by disputing the negative items you find on your credit report. Using a correctly formatted letter is the way to accomplish this, and when you do so it is always a good idea to keep a copy of the letter you send.
You may also want to send along a copy of your credit report so they can see where the problem is. The following are a few simple steps to help you effectively dispute the negative items on your credit report.
Step #1 – Get a Copy of Your Credit Report – Once you have your report, make sure you look it over for any mistakes. For every separate listing on your report, check out the information to make sure it is really yours.
At times you may find a wrong listing will end up on your report, so if you take care of these first, it will probably help to get rid of the other negative items.
Step #2 – List the Items You Want to Dispute – After taking care of wrong listings, then you can start looking at the negative items on your report and make up a list of things you want to dispute. You should put the most harmful items at the top of your list to be taken care of first.
Then it is time for you to start writing. Each separate item should be addressed in a separate letter, and you should be sure to send the letter to each of the credit reporting agencies. Remember, this is one of the many credit repair secrets because agencies do not want to be disputed, but doing so is legal and will help to repair your credit.
Step #3 – Personalize and Use Strong Language – One of the reasons these credit repair secrets are so “hush hush” is because creditors and credit reporting agencies do not want to investigate or get rid of the negative items on your credit reports.
You are going to have to use strong language and a great letter to get through to them. Although they may give you some trouble and tell you that you are not allowed to dispute items, remember what you are doing is legal and they are required to investigate the problem. Let them know with your words that you mean business.
It will take a few weeks for everything to get underway, but after the credit reporting agency investigates, then a new credit report should be issued. Make sure you check out your report to be sure negative items have been taken away. This is one of the best kept credit repair secrets, but once you learn how to use it, you can effectively repair your credit report.
Do you have a low credit score? If so, you’re not alone. Thousands of Americans, buffeted by the recession, are facing lower than average FICO scores. Since most Americans have, on average, a credit history of 14 years and 13 credit obligations, the capacity for error can be great. In fact, since the average American has approximately $19,000 in credit to manage, it helps to know how you can avoid getting lower credit scores, or how to improve your existing one.
In this article, we discuss how bad credit happens and what steps you can take to repair your low credit score.
How Bad Credit Happens
More than 25% of Americans have credit scores below 600, which is commonly referred to as the dividing line between good credit and bad credit. How do they get into this predicament?
There are four steps most consumers take on the road to poor credit:
- Overuse of credit – the higher your balance, especially relative to your credit limit, the lower your credit score will be.
- Late payments – a single late payment (over 30 days late), can dock your credit score by as much as 110 points.
- Debt management tactics – short sales, deeds in lieu of foreclosure, settlements, and other debt reduction practices can decrease your credit score by as much as 85 to 160 points. Bankruptcy can drop your score another 130 to 245 points.
- Actions by the credit card issuer – your credit scores will fall if your lender cuts your credit limit or pursues any collection activity.
Understanding Credit Management
It’s important to know there’s a right way and a wrong way to manage credit. Less than 50% of Americans have ever been 30 days late on a payment, but 30% have been 60 or more days late, and 20% have had an account closed by the creditor. So obviously proper credit management practices should be implemented by at least half of all consumers who are using credit.
Credit utilization in the United States breaks down in this way:
- 40% of credit holders carry less than $1000 balance on their accounts;
- 48% carry approximately $5,000 or less as a balance;
- 37% carry less than $10,000 in non-mortgage related debt;
- 15% carry more than $10,000 in debt.
Repairing Credit – What You Should Know
You can repair your credit score by taking the following actions:
- Pay all your credit card and other bills every month;
- Begin paying down your high credit card balances;
- Exhaust all other avenues before allowing foreclosure to happen or declaring bankruptcy.
Repeatedly requesting your credit report can lower your score. Be sure to challenge any false or incorrect information on your credit history, which you can obtain by getting your free credit report on an annual basis. The total amount of credit you have isn’t really what counts; instead, lenders look at your available credit when calculating your score. If you want to repair your credit, a debit card won’t help your score, but it can help to rein in your spending habits.
You pay your apartment rent on time every month. You never miss a utility bill. Your credit score, then, must be strong, right? Maybe not. The only way to know for sure is to check your annual free credit report.
Your three-digit credit score is one important number. Lenders of all types, whether they’re passing out a mortgage, auto, or personal loans, rely on it to determine if you qualify for their money and at what interest rates. A growing number of employers study your credit score when you apply for a job. Your auto insurer might use your three-digit score to help set your policy rate.
In other words, being stuck with a bad credit score – one under 700 on the popular FICO credit-scoring scale – can make life difficult.
Most troubling of all is that you might pay your bills religiously each month and still have a weak credit score. The problem? You might not be paying the right bills.
Credit reports don’t take into account how well you make such payments as apartment rents and utility bills. That’s because these creditors don’t report their findings to the bureau. This means even if you’ve never missed a rent or electric bill in 10 years, you might still have a low credit score if you don’t have enough other credit. The credit bureaus penalize consumers not only for missing payments and filing for bankruptcy protection but for not having enough credit, too.
That’s why it’s so important for you to view your free annual credit report each year. Your credit report will show you exactly what lenders see when they look at your credit history. It won’t show you your actual three-digit credit score – you’ll have to pay one of the three credit bureaus, Experian, Equifax or TransUnion, for that – but it will give you an idea of what your past financial history looks like.
The good news is you can get your credit report for free. By visiting the Web site AnnualCreditReport.com, you can order one copy each of your three credit reports – one maintained by each national credit bureau – every 12 months.
Just make sure you request these reports only from AnnualCreditReport.com. The other commercial sites promising you free credit reports are not to be trusted. Many of them require you to first sign up for a free trial of their credit-monitoring services. Then, if you don’t cancel this service after the free-trial period ends, you’ll find a monthly fee on your credit card. AnnualCreditReport.com, though, provides you with your credit reports free of charge.
Explore your free annual credit report to get the real truth about your credit history. You might be surprised at what you find.
Debt consolidation is getting more popular as more people are struggling with finances. If you want to get onboard, but you have bad credit, there may be some help available. Finance companies are under pressure to find new ways to get customers. Early in 2011, at least two of them, Wells Fargo and Citibank, announced they would offer bad-credit debt consolidation loans. This is good news for people with less than perfect credit.
Many people with bad credit are already struggling to make their monthly loan payments. The opportunity to consolidate their loans provides a way they can still pay them, but at a lower monthly payment. This can help them avoid further credit blemishes, and even start building a good credit history. Additionally, those with blemishes who are on the road to recovery, and who have made timely payments for a while, will have the ability to consolidate high interest loans into one with more affordable rates.
This is not to say that debt consolidation loans for people with poor credit will have low interest rates. If a person’s credit is on the mend, however, he may qualify for a lower rate than he’s currently paying. These loans go for varying amounts.
Whether you have bad or good credit, debt consolidation is usually a good option. You do not have to be a mathematician to figure out lower interest rates and lower monthly payments are beneficial. However, you should always use caution. You do not want to fall into the trap of consolidating your credit cards only to run them back up to their limits. That is a recipe for financial disaster. Look at a debt consolidation loan as an opportunity for a fresh start, and try to break bad spending habits