How to Repair Your Credit Score

How to Repair Your Credit Score

Like many Americans we have all faced some issues that have affected our credit scores. And just like many Americans, we have all wondered how to repair our credit scores. So, I did a little research on this topic and if you indulge me for a few minutes, I would like to share what I found with all of you.

How do I repair your credit score?

The first thing I found was a concept, really. I needed to understand and except the fact that there is no quick fix to repair your credit score. It is going to take some time, not forever but it certainly won’t be fixed say tomorrow. So, I found that there are a variety of ways to repair your credit score. For example, the most obvious method is pay your bills on time, which leads to another strategy, if you’re behind on payments, get current. Then you need to correct any errors on your credit report. And finally, reduce your debt. Now keep in mind this is certainly not an exhaustive list but some of the main ways to repair your credit score.

What are some of the best ways to pay my bills on-time?

The best way, I would think, that most people would suggest as to how to pay your bills on time would be just to pay you bills on-time! Logical, yet not very helpful. In today’s fast paced on the go technological world, it is very easy to forget to do this, honestly. And quite frankly, there are many people who just have not reached that level of responsibility to get this done month in and month out. But the same thing that can hinder us, can help us; technology.

Use technology to help you pay your bills on time. Set up reminder alerts in your calendar, like Google, or email, like Outlook. Use your bank or credit union’s automatic bill pay. Set up automatic payments through the various companies you make recurring payments to, like utilities, internet access, rent.

Just make sure if you do the automatic bill pay, you review your bank statement, online if you wish, to confirm that your bills were paid correctly and on time.

What strategies should I use to get my overdue bills, current?

Being behind on bills can be very daunting and stress inducing. Just remember though, it is not the end of the world, if you take steps to get back on track. So, what do you do to get overdue bills back to a current status? First, take inventory. Collect all your overdue bills and then prioritize them as to in which order you are going to work on getting them current. You should prioritize them in order of importance of the running of your daily life and magnitude of how behind you are, will a service you need say for example water get shut off if you don’t pay today.

Once you have that do the next thing to do is to figure out where the money to pay for these might or have to come from. At this point it is extremely helpful to have a household budget on hand. If you do not have one, this is a great time to make one! You need to be able to see how much money you have coming in and from where each month and how much money you have going out and to where each month. With a budget you can see exactly where you need and are able to tighten the fiscal belt strap and move money around to start getting your overdue accounts back to current and on time.

Now that you have your budget and your overdue bills prioritize, now is the time to reach out to those creditors and discuss a repayment plan to get you back on track. Most companies would rather have you working towards paying off your balance than dealing with the hassle of fighting with you to pay your bills. They will work with you, believe me.

At this point you may have to bite the bullet and accept the fact that you need more money coming in. What does that mean? It means, and don’t hate me for saying this, that you just might have to work more hours, ask for overtime or get a second or third job. Yes, I know that is easier said. And yes, I know that sucks to hear. But it just may be your reality, at least until you are caught up. Unfortunately, part of being an adult is to be responsible and do things that we may not want to do, like working extra jobs.

Finally, although this will not help with your current batch of overdue bills, it will help if you find yourself in a similar position in the future. Start an emergency fund account. Put money away in an account that you can access when funds are thin to keep your payments current. It will require discipline for you not to dip into this account to but a couple of large pizzas for the big game. Remember these funds are for things like paying your rent if you find your funds lacking during the month.

How do I fix errors on my credit history?

Mistakes happen, that is part of life. We all make them. However, mistakes that lower your credit score is a modern-day scourge of humanity. Okay, maybe it is not that serious, but it is still a big deal. It is a fact that credit scores are far easier to lower than raise, so you don’t need mistakes making you fight to repair your credit any harder than it already is. So how do you fix errors in your credit history?

The first thing you need to do is, well, review your credit history. You are allowed one free credit report from each of the three main credit bureaus each year. Get them! You can have them mailed to you but, hey, it’s the technological age; you can view them online at the credit bureaus’ site. Now that you have reviewed your credit report, what do you do? If you find something that is inaccurate, dispute it! Again, you can mail a form to the credit bureau or fill out their online dispute form. This will start the process of you voicing your concern and them contacting the credit agency that reported the ‘error’.

As the credit agency responds, you may be asked to upload or provide additional information to support your claim. Once all the facts are obtained by the credit bureau, they render a decision. If they find in your favor, the errant information must be removed. However, if the find the information is correct, then it stays on your report. Keep in mind, that even if you successfully dispute an errant posting on your credit, having it removed may not improve your score. But you have the peace or mind knowing that you are not getting dinged for something that does not belong to you.

What are some of the best tips to reducing my debt?

Again, this seems like a no-brainer, but it may sound easier than putting into practice. So, what are some tips to reducing your debt? First and foremost, STOP creating new debt! Get your spending under control, here again, is where a monthly budget comes in handy. If you can, increase your monthly payments on your big-ticket debts, car notes, mortgages, student loans for example.

Start building that emergency fund we discussed earlier. The general rule of thumb for that is you want to have at least six months of rent or mortgage payments saved up. I personally try to have around five thousand dollars sitting in that account, a savings account, you know so I can get a little interest as well.

Even, or especially, if you are current and have been current with your bills, reach out to those creditors and ask for a lower interest rate. It costs nothing to ask. I hate to sound like a broken record but being responsible and disciplined when it comes to your finances are the absolute best way to reducing debt, managing debt, and making your money go a long way to your enjoyment of life.

What is I need help reducing my debt and improving my credit score?

We all need a little help sometimes but we need to be intelligent and humble enough to recognize this. It also takes courage to ask for help. So if you are in a situation where your debt is out of control and you need help, then you might want to look into working with a debt relief company.

The team over at Debt Reset US may just want you need. They will discuss with you the best options for getting out from under your debt, And don’t forget to ask them about their credit score repair service.

Understanding Debt Validation

Understanding Debt Validation

What is debt validation?

Debt validation is more of a ‘how’ than a ‘what’. Well, that certainly makes things confusing; allow me to explain. According to Debt Reset US, debt validation is a specific method employed in removing debt. However, it is not a true program as such. I say this because it really developed out of the Fair Debt Collections Practices Act, also known as FDCPA.  The FDCA provides individuals from unfair collection practices when it comes to personal debt. One of these protections deals with if said debt is legitimate and valid. This is also why debt validation is known as debt verification; however, they are not the same thing, technically. It puts the onus on the person(s) or company that is attempting to collect the debt, to verify that the debt is, in fact, legitimate. This solitary step is what makes debt validation such a powerful tool in removing debt and protecting the individual or consumer. This is all well and good, but how does this process work? I’m glad you asked; keep reading.

How does debt validation work?

In a nutshell this is how debt validation works; basically you start by sending a letter to your creditor(s) asking them to verify and validate that the debt they are attempting to collect from you is valid. And by valid, I mean that the debt belongs to you, that it is actually yours. Well, let me take a step back. The process actually begins when your debt is sold by the original creditor to a third-party collection company.

The next step is you, the debtor, are then contacted by that third-party collection company requesting that you pay to settle that debt. At this point, you draft a letter outlining your request of proving the validity of the debt and mail it to the collecting agent or agency. By the way, using certified / receipt requested mail for this is best. It will take roughly thirty days, or at least the company has that long to respond, to see if they can validate the debt or must forgive (eliminate) it. Keep in mind that if part or all the debt is discharged, that amount may be considered income and may have tax ramifications for you. At that point, it is best to consult with your tax professional.

What does it mean to validate a debt?

Simply put, to validate a debt means that the owner of that debt, in this case the third-party collection company, must prove that the debt in question does belong to you. Again, if that collection company cannot satisfactorily prove that the debt belongs to you, then, according to the law, that debt must be forgiven or discharged. According to the website, The Balance, it is critically important that you make the third-party collection company validate, or prove, that the alleged debt is not only yours but that it really exists.

So how does a third-party collection company prove a debt belongs to you?

Proving a debt exists and is legally attached to you all comes down to documentation. So, in the letter that you sent, via certified / receipt requested mail, you ask the third-party collection company to provide all the specific and pertinent documents related to the alleged debt. What to ask for in the way of documentation can be a bit daunting, which is why if you decide to go this route, it might be wise to seek the help of a reputable debt relief company. There are important and specific questions you need to have in the letter and working with a debt relief company that has years of experience and a proprietary method in this area may be a wise decision.

How long does the debt validation process last?

The duration of the debt validation process can vary; however, most times it can take up to 36 months depending on the number of delinquent accounts needed to be worked on.

What types of debt qualify for debt validation?

The types of debts that may qualify for the debt validation process are quite simply any debt that has been sold by a creditor to a third-party collection company. Typical debts that are sold are credit card debt, store credit card debt, medical bills, student loans, outstanding rent, and small business invoices that would have gone to small claims court just to name a few.

How will debt validation impact my credit score?

On the plus side, the actual debt validation process does not hurt your credit. What has a negative impact on your credit are the already delinquent accounts that you are putting through the debt validation process. And delinquent accounts are already impacting your credit score negatively. That being said, if you decide to work with a debt relief company, that you check with them to see if they offer any type of credit restoration program in conjunction with their debt validation program.

Summary

Debt validation is a process of getting a third-party collection agency prove that the debt they are alleging you owe truly exists. This process is afforded to people via provisions in the Fair Debt Collections Practices Act (FDCPA). Once a third-party collection agency contacts you about paying an alleged debt, that is the time to send them a debt validation or debt verification letter. This letter puts the onus on the collection company to prove that not only does the debt exist but that you are the one responsible for paying it as well.

Knowing what exactly goes into a debt validation or debt verification letter can be a little overwhelming. Asking the right questions and for the proper documentation can be above the pay grade of most of us. That is why, if you are considering using this route to relieve your debt, you might want to seriously consider working with a reputable, legitimate debt relief company. They would have the knowledge, experience, and frankly the leverage to follow through completely with making the collection company comply to the letter of the law.

7 Things You Didn’t Know About Credit Cards

7 Things You Didn’t Know About Credit Cards

They are small and are taken for granted. We all do it. They are just there. Little pieces of plastic tucked away in millions of wallets and purses. That’s right, the credit card; considered by many to be the greatest invention and by others, the scourge of humanity. The credit card, an unusual and mysterious item. What do we really know about them, though? Here are seven little known facts, at least by most of us, about our little plastic banks hanging out in our back pockets.

When was the credit card invented?

According to historian Jonathan Kenoyer, the use of credit has been around for a very long time, dating back 5000 years. According to Mr. Kenover, a renowned historian, the ancient Mesopotamians used clay tablets to keep record of transactions with the Harappan civilization. He further goes on to explain that this system of ‘credit’ was vital to business transactions because it was not practical or safe to be travelling with the large amounts of money needed to conduct many of these business deals.

When what the first credit card issued?

The first modern iteration of the credit card was issued in 1950 by Diner’s Club. The brainchild of Frank McNamara, this cardboard based card became wildly popular to stave off paying immediately for bills associated with travel and entertainment. Story has it that the idea for the card came about because Mr. McNamara, one night while out for dinner, had forgotten his wallet! It was so popular, that by 1951 Diner’s Club had 20,000 people that carried the little gem.

When did credit cards start being produced in plastic form?

The use of plastic to make credit cards started in 1959 issued by American Express. Within five years, American Express had 1 million issued cards used by 85,000 merchants domestic and abroad. However, American Express has had a long history in the credit experiment, starting as far back as the 1800s. In 1882 American Express introduced the money order and then in 1891, the traveler’s check was born. 

When did the magnetic stripe appear on credit cards?

In 1969 the first magnetic stripe on the back of the credit card made its appearance. It was introduced by IBM and had been the verification of choice for nearly 40 years. According to the IBM website, engineer Forrest Parry is credited with developing the idea of affixing a piece of magnetic media to a plastic card. However, he was stumped by how exactly to get the tape to stick to the plastic. That is until one day while telling his wife of the problem, she suggested to melt the tape to the card like ironing it. Which he did!

When did travel rewards begin their association with credit cards?

In the 1980s, airlines started offering frequent flier programs to their customers. In 1986 the first ‘cash back’ programs were introduced by Discover Financial Services. Then in 1987,  credit card issuers began their own reward programs that include frequent flier miles as well as a wide array of other perks.

When did the use of the EMV chip happen?

The use of EMV chips began in 2015 in the United States. However, the earliest version of  the EMV system began in Europe in 1994. The driving force behind the movement to have EMV technology embedded in credit cards was incorrectly attested to being legal issues. That was not the case. It was the credit card companies themselves pushing for this change due to transaction security reasons. You see, when EMV is used at the point of purchase, a unique code for that transaction is created and that code cannot be used again.

How many credit cards are there?

Reports show that in 2018, there were 639 million credit cards issued. Surprisingly, that is a slight decrease since 2017, which saw credit cards in circulation totaling at 1.06 billion. However, an increase is projected for 2020 with approximately 1.2 billion credit cards to be in circulation. The number of actual card holders in 2017 totaled at 180 million; whereas, it is projected to increase to 191 million by 2022.

Is debt consolidation right for me?

Is debt consolidation right for me?

What is debt consolidation?

Debt consolidation is an option where an individual gets a loan for the purpose of paying off their unsecured (ie. credit card) debt at one time. This can be beneficial for the individual because most times the loan will be at a considerably lower interest rate. It also allows the individual to only have to make one monthly payment instead of possibly several payments to their various credit cards or other unsecured debt creditors. The most glaring downside to debt consolidation is that the debt really isn’t being paid off but rather it is moved to a different vehicle. It still has to be paid off there.

What type of loans are used for debt consolidation?

Generally speaking, there are four basic types of loans used for debt consolidation purposes. They are: 1) a home equity loan, 2) personal loans, 3) credit card balance transfers, and 4) a bank debt consolidation loan.  

How long do debt consolidation programs last?

The length of time that your debt consolidation program will last depends on which loan option you choose and are approved for as well as the terms of that particular loan’s contract. For example, a credit card balance transfer may take you 5 years to payoff whereas a home equity loan may take you 15 years to payoff.

How does debt consolidation work?

No matter which loan option you choose, they all basically work the same way. You are trying to trade in several high-interest payments for one low-interest payment. Before starting a debt consolidation program, you would gather the information (balances, interest rates, etc) of the debt you are wanting to payoff, get a total, then apply for the loan that best suits you. If approved for the loan, you would make full final payments to all the creditors you had selected.

How much can I save by going the debt consolidation route?

This maybe the most important question to answer before starting any debt consolidation program. You really must crunch the numbers and decide if this is the best option for you. Because honestly, this option may not save you any money and, in fact, may end up costing you more money over the long run. Even at a lower interest rate, making payments for 20 or 30 years (ie. through your home equity loan) may end up costing you more than if you had stayed with making regular payments for 5 or 10 years on your original higher interest credit card.

If you are considering debt consolidation, please go and visit the guys over at Debt Reset US. They are experienced and are truly invested in your financial well-being.