Repairing Bad Credit
How to Begin
Removing errors from your credit report
The FTC Recommends Self-help
There are two reasons for bad credit. The first is that you really do owe bills you haven't paid, have taken bankruptcy, or had a foreclosure.
These problems may have occurred through no fault of your own, as in the case of an illness that prevented you from earning an income; or they could be the result of poor money management. In either case, the only way to repair the damage is to begin building good credit as soon as possible.
The second reason for bad credit comes from errors on your credit report. This can happen when there's been an error in data entry somewhere, or when your identity has been stolen.
How to begin
Take a realistic look at your income and expenses, and create a budget that will allow for repayment of your debts. Many creditors will help you create a repayment plan when they see that you are serious about rebuilding your credit. Be sure to allow room in the budget for an occasional indulgence - otherwise it's doomed to fail!
If you feel overwhelmed and need some help, consider contacting a credit counseling organization. But choose wisely. Many credit counseling organizations are nonprofit and will actually work to help you. Others are not.
Check with your financial institution, a local housing authority, a consumer protection agency, or even friends and family before choosing. Some agencies posing as credit counselors are only in business to take more of your money. Many reputable credit counseling firms are government approved. You can find the list at www.usdoj.gov/ust
Your Mouse House Mortgage Loan Counselor will also be happy to help you find a reputable credit counseling service near you.
Removing errors from your credit report
If you've been turned down for credit, and your income is sufficient to make payments on the purchase, the reason can be found on your credit report. Get a copy and study it to make sure all of the information is accurate - because it could very well contain errors.
With most of the world's business being done through computers, it takes only the slip of a finger to enter an erroneous number and assign someone else's debt to you!
Ignore the ads on television for a free credit report - when you call they'll want you to sign up for a monthly service, which is definitely not free. They don't tell you that each of the nationwide consumer reporting companies — Equifax, Experian, and TransUnion — is required to provide you with a free copy of your credit report, at your request, once every 12 months. If you require additional copies within a 12 month period, you will pay up to $9.50 each. You'll also have to pay a fee to learn your actual credit score.
To order your credit report, go to: annualcreditreport.com (need link please) or call 1-877-322-8228.
If you find errors in your credit report, begin gathering supporting documentation, and then write to each credit reporting agency to file a dispute. You'll find procedures, instructions, and a sample letter provided by the Federal Trade Commission at http://www.ftc.gov/bcp/conline/pubs/credit/repair.htm
The FTC Recommends Self-help
Fraud against consumers trying to rebuild their credit is so widespread that a warning against it is the first thing you'll see when you access the credit repair information on the Federal Trade Commission site.
I'm sure you've seen the ads:
- "We can increase your credit score in 7 days"
- “We can remove bankruptcies, judgments, liens, and bad loans from your credit file forever!”
They aren't true! All these are is an attempt to remove more money from your pocket and leave you even further in debt! Believe me, helping you is the last thing these folks are interested in. Only time, discipline, determination, and a personal debt repayment plan will improve your credit report if the information it contains is true.
Some of their offers and claims can even land you in jail! It is illegal to create a new identity for the purpose of defrauding creditors, but some of these companies will propose you do just that. Don’t do it!
Instead, start today to make good choices, use discipline and restraint in spending, and start getting your debts repaid. Begin with the debt that carries the highest interest, so more of your money will go to debt repayment sooner.
Talk with your Mouse House Mortgage Counselor about where and how to start. You may need a debt consolidation loan in order to reduce your monthly outlay and be in a position to make all of your payments on time. This could be especially beneficial to you if you have outstanding credit card at 14%, 16%, 18%, and even higher.
Discuss the possibility with your Mouse House Mortgage Counselor and then decide.
Mouse House Mortgage is a free service for people who are looking for a
mortgage loan with favorable rates, whether you have excellent credit or bad
credit. A friendly mortgage advisor will help you navigate your options and
access the best mortgage rates for your situation.
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