Understanding The Game
There is a wealth of knowledge on this subject but understanding a few basic concepts will insure you are on the correct path of building your credit. Most of your bills that you pay monthly only report to the Credit Bureaus if you do not pay them, which means they only report negative information. If you are unsure if they report positive information all you have to do call the customer service and ask but if you are a smart consumer you may already know which accounts report what. If you pull your free annual credit report this information is also located on this report. There are many innaccuracies in credit reports signing up in a credit monitoring program is very wise but choosing the best one requires extensive research. I prefer CreditCheckTotal, most sites only pull the report from one bureau, initially you can pull a free report from all three bureaus but after you are a paying customer you can pull a new report from all three bureaus everyday which is very unique and usefull.
CREDIT CARDS = 30% of your Credit Score
Usually revolving (credit cards) accounts report both positive and negative information and it is VERY important to always keep your balances below 30% of your limit on each credit card. Something also important to note on credit cards, they usually report (send a snapshot of your balances to the bureaus) before your payment is even due, so it is important to pay that balance before they report especially if you are compromising the 30% rule. To find out when they report all you have to do is call the customer service and ask when they report to the bureaus and write that date on the back of your card with a sharpie and ALWAYS pay before that date. This is the easiest and fastest way to change your credit in a short amount of time bar-none. If you are short in time and you have the hard cash get those balances down and pull your new report after the creditor reports the new balance. It can be the difference of paying for a house for an extra 10 years or more in some cases.
Interest rates are at an all time low but the lenders and investors have disappeared like an epidemic. People that once could get a loan can no longer get those loans, and so much for zero down and no closing cost on mortgages.
Disputing Negative Information
There are a number of ways dispute these items that are causing your score to plummet. Everyone’s credit is different so first thing you should do when going over your report is if you do not know the account that is reporting against you then there is a good chance it is not yours. You can easily dispute this information either by writing a letter to the credit bureau or if you use a credit monitoring service they usually have easy online disputes that are successful in resolving these in a timely manner. Note, never dispute something dishonestly because ultimately this will probably hurt you down the road and is considered fraud. Plus there are many ways to take care of these items if you understand the system and it the negative information is older than 2 years they may not have much of an impact anyways, so dont worry about it.
Establishing Positive Credit
The more credit you are successful juggling and showing lenders that you pay on time everytime, the better your credit will be short term and long term. Never have more than 3 credit cards, but one is enough for most people. Usually 1 mortgage, 1 auto, 1 installment, and 1-2 credit cards is a normal amount of accounts and it is also well rounded and easily manageble if the income level exceeds the product by double. The installment loans can be small bank loans or possible CD’s which are normally secured. Secured means that if you wanted 500 dollars worth of credit you would securing it with 500 dollars so the money is the same amount but the account is reporting to the credit bureaus. This is more important than the measley 500 dollars when comparing how important your credit is when applying for auto or mortgage loans. A good practice is to always know ahead of time a couple months before any large purchases so that you can strengthen your rating to insure the greatest savings.
Collection Accounts and Understanding How to Avoid them
What a job these people have and how depressing it must be. Just like when you get pulled over by a police officer or a collection agency is calling you, it is both equally important to know your rights. Do your research, check out credit repair company website’s for the precise laws. Or even shop them to further understand the process you are not obligated to use their services but sometimes they will give you good information that may help you in your The collection world is a ruthless one and just like any other industry the continue to push the limits and scare tactics are so often used. Check your state laws on collections but most are debtors state, which means if you owe a collection there is nothing they can do in order to collect this debt except hassle you about it. Yet hassle is more like harrassalle and if you tell them that you do not want them to call you on the number they have called and to put it in writing and send it in the mail, but do not verify any information to them because they should already have the information. If you are ever returning a phone call to debt collectors, only call them from pay phones because they update their records religiously and sometimes will call your neighbors and ask them to give you a message. If you have a recording device it can come in handy when speaking with the collectors in case you may need if they cross legal boundaries which they do quite often.
Negotiating Collections
This is something that may or may not be helpful in your case. If this account is less than 12 months and you want it gone ASAP, you can speak with the collection agancy/creditor and ask what thier process is for negotiating these debts. DO NOT be overly generous, only ask like you are entertaining the thought of paying this. If you tell them that this is what is holding you back from getting your house, you will pay the entire amount, and maybe more for additional fees for convenience of them letting you pay it. Ha. When paying these debts use your negotiation skills and try and pay less than half of the amount that you owe, this is common. More importantly always ask for a letter BEFORE you pay, stating that once this amount is met it will be removed or the steps will be in process to remove it from all 3 credit bureaus. This is very important and if you pay the bill first, which is your leverage, and then ask for a letter you will probably unsuccessful with this. This letter also is a receipt because sometimes several collection agency’s may be reporting the same debt you owe which is also very common.
