Should You Use A Credit Repair Agency?

You see their ads on TV: credit repair companies claiming the ability to expunge your credit report. No wonder people pay big bucks for a do over of their credit because your credit score really matters-it's a numbers game and the higher the credit score, the better. Why wouldn't you respond to an ad touting a money-back guarantee to remove your dirty little credit secrets, such as bankruptcy, judgments and tax liens?

First, there are no loopholes in the federal law allowing for a negative credit history to disappear. You can, however, challenge anything in your report, and if the credit bureaus don't completetheir investigation within 30 days, the disputed item(s) must be removed. So, how does a credit repair agency work its magic?

Basically, it bombards the credit bureaus with letters, arguing that none of your negative account history is valid. But after the credit bureaus validate the accounts and debts, the items will reappear on your report and your score will plummet again.

There are legitimate companies that can assist you in disputes. But there's nothing they can do that you can't do yourself for much less money. Companies can charge you hundreds or even thousands of dollars, or you can order a consolidated credit report for 30 dollars and get to work.

If you choose to delegate to the professionals, watch out for red flags. Be wary of companies that guarantee results, as the Credit Repair Organizations Act specifically forbids such claims. Removal of any items ultimately depends on the credit bureaus and the creditor who reported them. Watch out for companies that try to charge you before performing any services.

According to the Credit Repair Organizations Act, credit repair companies can only charge you fees upon completion of agreed upon services. Some may charge you up front with a money back guarantee, but you will be out of luck if they go out of business before completing the work. Stay away from a company that offers to help you create a new credit identity.This practice, known as file segregation, is a federal and state felony.

Do your homework. Contact the Better Business Bureau to see if the firm has had any consumer complaints.

Ask questions. By law, your bankruptcy stays on your report for 10 years. So exactly what black magic would the agency have to practice to make it disappear? If by some miracle they accomplish this, do you go around pretending and claiming that you never filed a bankruptcy because it no longer shows in your report?

Remember that credit repair companies cannot remove accurate records of bankruptcies, judgments, liens or bad loans from your file unless the credit bureaus fail to respond to your dispute within 30 days. You can also dispute entries online through annualcreditreport.com, but be aware that bureaus have up to 45 days (instead of 30 days) to investigate your dispute.

The bottom line is no company can perform miracles, and there are no quick fixes. You know your credit report best. If you have the time and tenacity to regularly comb through your report and contact the credit bureaus with disputes, then you can maintain an accurate credit rating.

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Repairing Your Bad Credit Is More Important Than Ever

Due to rough financial times, many consumers have faced financial hardships that show when they pull their credit scores. However, now that the financial hardships are over for some consumers, they are ready to start building their credit scores. But, what are the best ways to build FICO scores?

The first thing that Americans should do when they start building their FICO ratings is get a copy of their credit report. It is impossible to fix something if you don't know what is wrong with it. All people are entitled to 1 credit report from each of the reporting agencies per year for free! This report can be obtained at www.AnnualCreditReport.com. Once people get a copy of their credit report, it's time to start working on paying of the outstanding debts. This may be a time consuming process but is a very important process in repairing bad credit ratings.

Once all the bad debts have been paid off, people will start now with a clean slate. It's time now to start the actual credit building process. The next thing that Americans will need to do is open a secured charge card account. A secured charge card is just like a regular credit card. The only difference is that when people open secured credit cards, they must place a security deposit with the banks before actually being able to use their charge card. So, in a sense the Americans are borrowing their own money and the bank is alleviated of the risks associated to loaning to Americans with bad credit.

Once people open a new secured credit card account, it is important to remember to use this charge card properly. Using charge cards improperly can lead to even worse financial hardships and FICO ratings. Here are a few best practice tips for building credit with secured charge cards:

Always send payments at least 2 weeks early: Credit card companies are looking at how Americans make payments. The more loyal people that make consistent payments are less of a risk to the banks and increases consumer credit scores. By making payments consistently 2 weeks early, people show lenders that they are responsible borrowers.

Never spend more than 50% of your credit line: The credit line on a charge card is the amount of money a consumer will be able to borrow using that credit card. However, the credit line is like a trap. It is always there able to be spent at any time. However, more responsible borrowers maintain an open credit line for emergencies. Once over 50% of a credit line is spent, it can show banks early signs of financial hardship which can actually harm consumer credit scores.

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Making Finding The Right Credit Card Easy

Credit cards have become a major part of the average people lifestyle. Because credit cards have become such a staple in the average Americans lifestyle, a lot of consumers are looking to apply for their first charge card accounts. But, what are the important factors to remember when filling out your first application? Unfortunately, this stuff is not tough in school so, here are a few tips that will help:

 The first thing that consumers should do when attempting to get approved for their first charge card accounts is get a copy of their credit reports. A consumer credit report is a list of all the loans that the consumer has taken out. This report allows banks to gauge the risk involved in loaning money to Americans. It also allows consumers to make an educated decision as to which credit card accounts it would be best to apply for first.

Once consumers have obtained a copy of their credit report, it is now time to start looking at credit card accounts options. The Americans that have deemed they have limited/no or bad credit would now be ready to look for credit cards designed for Americans with their credit score. The same goes for the people who find they have excellent credit and everything in between. At this point, comparison is the key. Here are a few points to look for when comparing charge cards:

Interest Rates: The first thing that people should look at when comparing charge cards is the annual percentage rates. And yes that is plural. Credit cards generally come with multiple interest rates. These annual percentage rates include the standard interest rates (the APRs consumers will need to pay for standard purchases), balance transfer APRs (the annual percentage rates Americans will need to pay for balances accumulated by balance transfers), cash advance annual percentage rates (the APRs people will need to pay for balances accumulated by taking out cash advances), introductory interest rates (the annual percentage rates that is used to get people interested in applying for the account. This APRs only lasts for a short period of time from opening the account) and finally the default APRs (the default APRs is the rate of interest that consumers will have to pay if they default on the credit card account. Examples of defaults would be late payments or exceeding the credit line).

Annual Fee: Many charge card accounts offers come with annual fees. Before applying for a new charge cards, people need to be aware of the annual fee associated with the account. Generally, annual fees are under $150.00 anything more than this is not a good charge cards.

Rewards: Many charge card accounts come with great reward programs. This is a result of the overwhelming competition in the credit cards industry. Because the cost of credit card accounts is calculated using the rewards, it is important to apply for a credit cards with a reward program you will use. Consumers who are afraid of flying should not apply for a sky miles credit card accounts!

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