Credit Repair

Let’s talk about the all important credit score and I will not for one minute downplay the importance of it in this day and age. At the same time though I would like to ask how years ago people got by when they could only buy a car with let’s say 25 percent down? How about a home when at least 20 to 30 percent down would guarantee you a mortgage with a rate between 8 and 12 percent which was still the lowest around the world? These are obviously rhetorical questions but at the same time should be discussed as many of us today could not fathom having that kind of money to put down and the rates quoted above are reserved for people with below average credit scores also known as the infamous subprime mortgage. Truth is most of the clients that have come to me to file a bankruptcy are not losers who just spend money and take on credit without any regard to consequences. Rather they are people who had top notch credit scores and just got overly confident in a low interest rate environment with the real estate boom. The idea behind this section is to boost your score after you have cleared up collection activity or after you have filed a bankruptcy and to use it wisely, not making the same mistake again.

First I’m going to cover some basics on the FICO score that might be obvious to some or at least you might have heard this from a broker, banker, or finance manager at an auto dealership. One of the biggest things that hurt a credit score is maxing out your credit limits, which is not limited to just credit cards but also home equity loans that are to the limit, auto loans with very little or no equity. So what you want to do is keep them at about thirty percent of the high limit which means if possible to spread out your debt on various cards if those options are available to you.

A real drag on the credit score is tons of little collections that people blow off throughout the years and just forget about them. There are a couple of ways to deal with these and they are both effective. Remember we are talking about removing them off of your report here so if even if they are small enough and they are not covered under the statute of limitations as discussed above Eliminating Debt Without Bankruptcy you might want to contact the creditor and negotiate them removing from your report before you pay it off. Most of them will tell you that it’s not possible but I assure that it is. For example let’s say you owe $350.00 on an old cell phone bill and you are willing to pay it off but do not want it to show up just as a paid collection. You can tell the collection agency you’re willing to pay the amount that you owe only if they remove it from your report. Many will tell you to go ahead and just pay it and they will show it as paid and that’s good enough. But again, it is always better to not have the debt listed on your credit report at all. Some of these agencies are quite saavy and will tell you it won’t be a problem just to get you to pay it, so don’t fall for it! Tell them you want something in writing before you send payment. Many will tell you it’s not possible, but I assure you that it is because I have done it for clients personally!