Fees and billing tactics-A desirable credit repair agency will charge reasonable fees for their services. Beware of any that are extremely cheap; while the most expensive credit repair service is not always the best, you will generally get what you pay for if you go with the cheapest service available. You can find really good services for less than $100 per month, but steer clear of anything under $40.

Per the Credit Repair Organizations Act (CROA), credit repair companies may not charge upfront fees for their services. They can only bill you after service has been performed. However, they can charge an initial set-up/consultation fee before they begin repairing your credit. Typically, credit repair companies will bill you for the set-up fee, then a month later they will begin charging a monthly fee for services rendered the previous month. There are also a few companies that will bill you only for each negative item that is deleted from your credit reports, rather than charging a monthly fee.

What tactics does the company use to repair your credit? There is a legal way to repair credit, and there is also an illegal way. The illegal way to do it is called file segregation, which is a felony. File segregation consists of using a fake or stolen social security number to establish credit. A stolen social security number in this case would usually belong to a deceased person, and a fake SSN would usually be an employer identification number (EIN), which has the same number of digits as a social security number. Needless to say, these tactics can get you into serious trouble, so avoid any services that employ these methods. The only legal method of credit repair is disputing negative items on your credit report–with the credit bureaus, with the data furnishers, or both–in an effort to get them removed. Before committing to a credit repair service, always find out exactly how they will be repairing your credit.

Does the company provide personalized credit repair? You may have to do a little searching to find services that offer this, but it’s VERY important. To elaborate on what I mean by “personalized”, I will describe the credit repair methods commonly used by some credit repair companies, typically the ones that charge very low monthly fees. These tactics are legal, but they are terribly ineffective.

As you may know, legal credit repair consists partly of sending written disputes of derogatory items on your credit report to the credit bureaus. Some credit repair companies will send identical dispute letters to the credit bureaus over and over for every single client they have. This is a problem because per the Fair Credit Reporting Act (FCRA), the credit bureaus can legally ignore any disputes that they deem “frivolous”. So guess what happens when the credit bureaus receive hundreds or thousands of the exact same dispute letter? That’s right, all those cookie-cutter letters get tossed into the “frivolous” pile without a second look. This is why it’s crucial that your credit repair company sends unique, personalized dispute letters on your behalf.

Further, there is more to credit repair than just sending dispute letters to the credit bureaus. In order to effectively repair credit, disputes will also usually need to be initiated with the data furnishers–creditors, collection agencies, and/or courthouses. You (or a credit repair agency) will rarely get very far by disputing solely with the credit bureaus. But some credit repair services don’t take it this essential step further, or if they do, they may charge you extra for it. This is unacceptable; as I said above, disputing with data furnishers is part and parcel of effective credit repair–it should never be optional and it should always be included in the price of the service.

A good credit repair service will not make unrealistic promises or guarantees. By law, credit repair companies cannot guarantee any specific results at all. (But yes, they can still offer a refund policy in case their service doesn’t work for you.) Also, they should be honest and realistic in telling you what to expect from their services. They shouldn’t claim to be able to repair your credit overnight; in reality, it should take at least several months for most people, and they should be truthful with you about that.

Check out prospective credit repair services with the Better Business Bureau. Avoid any agencies that have unfavorable ratings or excessive customer complaints.

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How To Choose a Credit Repair Service

Related posts:

1. Do-It-Yourself Credit Repair vs. Credit Repair Services
2. Credit Repair Myths
3. How To Repair Your Own Credit Report – Part 1

My answer: All delinquent accounts remain on your credit report for 7 years from the date that the account first became delinquent (unless you use a pay for delete agreement or credit repair to get them removed sooner). Paying on the account will not shorten or lengthen this time period. However, paying can actually hurt your credit score, and here is why: A credit score weighs your more recent payment patterns more heavily than your behavior from the distant past. When you make payment on a delinquent account that has had no activity for some time, it then becomes a recent negative item on your credit report, instead of an old one. So the payment actually dings your credit score. By the way, paying a delinquent debt does not turn it into a positive item on your credit report–the item will always be negative because of the fact that it was ever delinquent.

So what can you do? Above I mentioned pay for delete agreements, and/or credit repair. With a pay for delete agreement, you negotiate a deal with the creditor where you pay the debt (usually in a lump sum, and it doesn’t always have to be 100% of the debt–you can try offering less), and in exchange for your payment, the creditor agrees to delete the account from your credit report entirely. That is the only way you can help your credit by paying a delinquent debt! Creditors may or may not agree to do this, but it’s worth a try. If they agree to it, be sure to get the agreement in writing before you make any payment.

If the debt is now in the hands of a collection agency rather than the original creditor, I recommend a slightly different approach: request validation for the debt. Often collection agencies can’t or won’t comply with this request, and in that case they legally cannot collect payment from you, and they must also cease collection activity, which includes
listing the debt on your credit reports.

If the collection agency does validate properly, then you will be on the hook for paying the debt, and you should try to negotiate a pay for delete at that point.

I do want to point out that if the debt has been charged-off by the original creditor, and the debt is now being listed on your credit report by both the original creditor and the collection agency, the pay for delete
agreement from the collection agency won’t remove the listing that was placed by the original creditor. The listings will have to be dealt with separately. If a debt is charged-off, the original creditor usually will
not accept payment for the debt. If this is the case (or if a creditor/collector will not agree to pay for delete), credit repair is your only other option to get the listing removed. You can find a reputable company to repair your credit for you, or you can try doing it yourself. You can try removing the listing through credit repair whether or not it has been paid, so if you pay a debt that the creditor/collector would not agree to delete, you can try to have it deleted later.

Post from: Credit Repair and Debt Solutions

Reader Question: “If I pay a delinquent account, how long will it appear on my credit report?”

Related posts:

1. Pay For Delete Agreements

Get a checking account if you don’t have one already. I first want to point out that bank accounts do not build credit history (nor do debit cards, even if they have a Mastercard or Visa logo), but you still need one. Loan and credit card applications will usually ask for your checking account information, and it would not look good to a lender if you did not have a checking account. Also, by establishing a checking account and keeping it in good standing, you can prove to your bank that you are financially responsible. They may take that into consideration when deciding whether to extend you credit if your credit report doesn’t provide enough information on which to base a decision. It also can be helpful to open a savings account in addition to your checking account.

Understand the factors that make you a desirable candidate for a loan, aside from your credit report/score. Lenders like to see indications of consistency and stability. Try to avoid bouncing around from job to job, or moving frequently. Creditors see people who keep the same job and residence for years at a time as a better credit risk than those who don’t.

Apply for a department store or gas credit card, if you haven’t already. These types of credit cards are generally easier to obtain than other types of cards. Just make sure that the card is reported to all three major credit bureaus: Equifax, Experian, and Transunion. Also, use these cards carefully since these types of cards tend to have high interest rates. (But do use them regularly, or they won’t help your credit!) The best way to use them is to charge small amounts on them every month or two, and pay off the card in full the same month.

Apply for a collateral loan, or have a loved one cosign a loan for you. A collateral (or secured) loan allows a lender to minimize their risk when extending credit to someone whose ability or willingness to repay a loan is questionable, as is the case for a borrower who has no credit history.

You can also have someone cosign a loan for you. If you obtain a loan with a cosigner, it still builds your credit history just as much as if the loan were in your name only.

If you can’t get a regular credit card, apply for a secured card. If even the department stores and gas stations turn you down, you can apply for a secured credit card. These cards are intended for people with bad or no credit, and they work in much the same way as a collateral loan. In order to obtain a secured card, you will need to make a cash deposit in the amount of the line of credit on the card. If you were to default on the loan, the creditor would use your deposit to cover their loss. Some banks will issue secured cards to their members, and you can also find and apply for secured cards online. These cards often come with high interest rates and fees, but it’s worth it to build a positive credit history!

Use your credit responsibly. Always be responsible with the credit that you do get. Always pay on time, and don’t carry a high balance on your credit cards. To build and maintain the best credit scoreyou possibly can, you should never use more than 30% of the available balance on a credit card at any given time, even if you pay it off in the same month.

Post from: Credit Repair and Debt Solutions

How To Build Credit

Related posts:

1. How To Get Out of Debt
2. Check Your Credit Reports Regularly

Just about everything we do these days hinges on the contents of our credit reports. The days of not giving your credit much thought unless you were planning to apply for a loan, are long gone. Your credit reports can now determine whether or not you qualify for an apartment lease, insurance, or even a job (and yes, that often includes jobs that do not involve handling money). If you don’t know what is on your credit reports, you won’t be able to address any negative items that may be on them, and in turn you could find yourself jobless, uninsured, or without a place to live. (Hopefully it wouldn’t come to that, but at the very least you’d find your options extremely limited.)

Credit bureaus and creditors make mistakes when reporting/entering information on credit reports. You may think you know your own credit history and therefore don’t need to check your credit reports, but what you might not realize is that errors on consumer credit reports are very common. Information reported and entered by credit bureaus and creditors is subject to human error, and unfortunately the credit bureaus do not automatically verify the accuracy of the items contained within your report–they leave that up to you. So double-check the listings on your report to make sure they’re correct, because no one else is going to do it for you!

If you are the victim of identity theft, you can find out early (and thus minimize the damage) by checking your credit reports. If someone steals your identity and opens credit accounts in your name, you may not find out about it until months later, when bill collectors start coming out of the woodwork and demanding payment for debts you never knew existed. By that point, your credit will have been utterly destroyed and will probably be a nightmare to recover. But if you check your credit reports regularly, you will promptly discover any accounts you did not open yourself, and you’ll have the chance to prevent an already bad situation from becoming much, much worse.

So now you know why you shouldn’t wait until you are shopping for a loan, or worse, denied credit or a job before you take a look at your credit reports. Although you should probably check them more than once a year to be safe, you are entitled to one free credit report each year from each of the three major credit bureaus, Equifax, Experian, and Transunion. The only authorized website from which to obtain them is www.annualcreditreport.com.**

**Please be aware that if you obtain a free credit report and then dispute any of the items on it, the Fair Credit Reporting Act allows the credit bureaus 45 days to investigate your dispute (if you purchase your credit report, they are only allowed 30 days to investigate). Fifteen days may not sound like much, but sometimes it could mean the difference between getting a negative item deleted, or not.

Post from: Credit Repair and Debt Solutions

Check Your Credit Reports Regularly

Related posts:

1. How To Build Credit

Figure out exactly how much you owe. Gather all the credit card bills and other loan bills you receive each month. Don’t forget to include any credit cards or loans that use “paperless” billing or automatic drafts. Add up all the balances.

Stop using your credit cards inappropriately. Credit cards should never be used to buy unnecessary items that you can’t afford. The right way to use a credit card is to charge only small amounts on it and pay it off each month. That way, you build a positive credit history (yes, you have to actually use your cards in order for them to benefit your credit history), but you don’t pay interest and you don’t get into debt. Please note that while you should stop using your credit cards unnecessarily, you generally should not close the accounts; that will hurt your credit scores.

Get organized and develop a payment plan, and stick to it. Determine which card or loan has the highest interest rate. You’re going to pay that one off first while making the minimum payments each month on the others. When the first one is paid off, you’ll move to the one with the next highest interest rate, and so on. You should pay as much as you can possibly afford on your highest interest rate card/loan each month. If you only pay the minimum payment every month, it can take literally decades to get out of debt, plus it can cost thousands and thousands of dollars in interest.

If you’re having trouble coming up with much beyond the minimum payment, you may want to take a closer look on exactly where all your money is going. Start keeping track of what you spend every day for at least a week. If you’re like most people, you’ll find that you are spending a lot of money on unnecessary things like coffee shop coffee, takeout food, bottled water, etc. Those are all examples of things that are much cheaper when you make or get them at home!

If that doesn’t help, evaluate your household expenses. Do you really need 500 cable channels, or could you drop some of them and save some money on your bill? Many of us are also wasteful–we leave every light and TV in the house on at once, we buy food at the grocery store and then let it go bad and have to throw it away, etc. Energy and food are too expensive nowadays to waste, especially when you’re trying to get out of debt!

If you have a savings account, you should use that money to pay off debt. Money in savings accounts generally earns much less interest than you’re paying on credit cards/loans, so it doesn’t make sense to contribute to a savings account when you’re in debt!

Last but not least, get your bills organized so that you don’t lose them and/or forget to pay them! (This is a common pitfall for a lot of people with bad credit.) Late payments are very costly: you get hit with late fees; possibly raised interest rates; damaged credit, which of course leads to higher interest rates; and worst of all, this all translates to more debt! It’s a vicious cycle that you must break if you want to get out of debt and/or restore your credit rating. You must pick one spot and one spot only where you will keep your bills. It should be in plain sight so that you can’t forget about them. You can get a letter tray for this purpose, and there are also mail organizers that hang on your wall. Also, get yourself a calendar and mark off the due dates for your bills. Again, it’s best to store your calendar where you will see it often.

Get professional help if you need it. If you’ve tried all the strategies above and you still can’t seem to keep your head above the water, it’s time to seek professional help. Some options for you might be debt settlement, debt consolidation, or as a last resort, bankruptcy.

Post from: Credit Repair and Debt Solutions

How To Get Out of Debt

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1. How To Build Credit
2. Benefits of Debt Consolidation Services

“Hard” vs. “Soft” Inquiries

There are two types of credit inquiries: “hard” and “soft”. Only hard inquiries hurt your credit score. Hard inquiries result from potential lenders pulling your credit report when you apply for credit with them. The following are all examples of soft inquiries: you pulling your own credit report; a potential employer checking your credit; and credit card companies inquiring on your report to see if you are eligible for promotional offers (if you want to prevent them from doing that, call 1-888-8-OPTOUT). Creditors that you have a current relationship with may also monitor your credit by pulling your report from time to time; this would also be a soft inquiry.

How Hard Inquiries Affect Your Credit Score

It has been estimated that each hard inquiry lowers your credit score by 5 points. Most inquiries will stay on your credit report for 1 to 2 years.

The exception is if you’re shopping around for a mortgage or auto loan. In that case, any hard inquiries for the same type of credit occurring within 14 days of each other will only count as one inquiry as far as your credit score is concerned. But remember, this only applies to home and auto loans, not to credit card or any other type of inquiries!

Unauthorized Inquiries

The Fair Credit Reporting Act (FCRA) requires that whoever pulls your credit report does so only with permissible purpose. So if you see any inquiries on your report that you don’t recall authorizing, you should dispute them.

The best way to dispute an inquiry is to send a letter to the creditor in question stating that you do not recall authorizing them to pull your credit report. Ask them to either provide you with proof that they had permissible purpose to inquire on your report, or delete the inquiry. Send the letter certified mail with return receipt requested, and keep copies for your records.

In the event that the creditor doesn’t respond to your dispute or fails to delete the inquiry without providing proof of permissible purpose, you will need to dispute the listing with the credit bureau and send them a copy of the letter you sent to the creditor.

If you have any questions about inquiries on your credit report, please feel free to comment.

Post from: Credit Repair and Debt Solutions

Inquiries On Your Credit Report

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1. Medical Debts Listed on Your Credit Report
2. How To Repair Your Own Credit Report – Part 2
3. Understanding Your Credit Score

Any time you request validation from a collection agency/junk debt buyer and they respond with adequate validation, you’ll need to pay them, but you should always attempt to negotiate a pay for delete agreement with them first. This is because a fully paid collection on your credit report is not much better for your credit score than an unpaid collection–and sometimes it’s even worse, because your payment will update the account to reflect recent activity. A derogatory account with recent activity is worse in terms of credit scoring than one that has not had any activity for quite some time. A collection account will always be considered a negative item even once it’s fully paid; the fact that it was ever in collections status is what makes it derogatory!

And you can of course work out pay for delete agreements with original creditors as well.

You should always make pay for delete offers in writing, and keep in mind that you don’t have to offer to pay the full amount of the debt, especially if the debt is in the hands of a junk debt buyer (JDB). JDB’s purchase debts for literally pennies on the dollar, so they still make a huge profit even if you only pay a portion of the debt. You can also offer to pay in monthly installments rather than making a lump sum offer.

If the creditor/collector accepts your offer, make sure you have a signed agreement from them stating that they will delete the debt from your credit reports in exchange for payment. Keep a copy in case the creditor/collector fails to remove the account from your reports (in that case you’ll need to send a copy to the credit bureaus to get the item deleted).

And remember, NEVER pay a collection agency or junk debt buyer with any payment method other than a money order or cashier’s check!! They have proven time and again that they cannot be trusted with checking account or credit or debit card numbers!

I hope you found this article helpful! If you have any questions about pay for delete agreements, or other questions regarding removing collections from your credit reports, please feel free to leave a comment.

Post from: Credit Repair and Debt Solutions

Pay For Delete Agreements

Related posts:

1. Reader Question: “If I pay a delinquent account, how long will it appear on my credit report?”

This letter was originally created by the member Psychdoc of the CreditNet forums. The aim of the nutcase letter is to pester the creditor/collector into submission. You will be demanding that they either validate a debt that has already been paid, or delete it from your credit reports. As you can imagine, once the creditor/collector has been paid, there is nothing in this for them except wasted time and money. So they will often find it much easier just to delete the debt from your credit reports and wash their hands of you, rather than to waste their resources digging up the required documentation (which they very well may not have anyway).

The letter also implies that you are a sue-happy nutcase who may be planning to take legal action against the creditor/collector if they don’t cooperate with you. Again, it would make much more sense for them to just delete the offending item rather than risk being dragged into court over a paid debt.

So without further ado, here it is:

Date

Your Name Address City, STATE ZIP

Post from: Credit Repair and Debt Solutions

Sample Nutcase Letter

Related posts:

1. Debt Validation Sample Letter
2. Sample Statute of Limitations Dispute Letter
3. Medical Debts Listed on Your Credit Report

Here are some sample letters you might find useful:

debt validation sample letter-for listings placed on your report by third-party debt collectors
nutcase letter-for fully paid derogatory accounts
HIPAA dispute letter series-for fully paid medical collections
pay for delete agreements-for valid, outstanding derogatory debt listings

6. Get organized. Create a file to keep copies of all correspondence between you and the credit bureaus, creditors, collection agencies, etc. Keep all your certified mail return receipts paper-clipped to their corresponding documents. I don’t recommend you communicate over the phone during the course of your credit repair efforts, but if you must, at least keep documentation of all your telephone conversations in your file.

7. Wait for the results of your disputes and follow up as needed. Unfortunately, not every dispute will be successful the first time around. But persistence often pays off!

Whenever a disputed item comes back from a credit bureau as “verified”, you should write them and ask for the contact information of whoever verified the item. Once you receive it, write to the creditor/collector/courthouse and ask them how they verified the listing with the credit bureau. What documentation do they have that proves the accuracy of the disputed item? Frequently, they won’t be able to comply with your request and will be forced to delete the item from your credit reports.

Sometimes the credit bureaus will not be able to verify a disputed listing within the 30-day timeframe required by the FCRA, and they will temporarily delete the item from your report and reinsert the item once it is verified later. This is legal assuming the item was verified properly and provided the credit bureau notifies you in writing that the item is being reinserted.

Also keep in mind that you can dispute the same accounts again at a later time, as long as your disputes are not exactly the same as the ones you’ve submitted previously. Remember, there are many possible disputes; you can dispute an account in its entirety, or you can dispute one or more of the details of the account listing, such as the date of last activity, the credit limit, the high balance, etc. I recommend waiting at least 2 or 3 months in between disputes for the same account, otherwise the credit bureau may choose to treat your dispute as frivolous (meaning they will ignore it).

Just continue repeating this step until you’re satisfied with your credit reports.

I hope you found this series of articles on how to repair your own credit report helpful; if you have any questions please feel free to leave a comment!

Post from: Credit Repair and Debt Solutions

How To Repair Your Own Credit Report – Part 3

Related posts:

1. How To Repair Your Own Credit Report – Part 1
2. How To Remove Public Records From Your Credit Report
3. How to Dispute a Listing on Your Credit Report

Here are the items you’re looking for:

-late payments
-charge-offs
-collections
-bankruptcy
-judgments
-repossessions
-foreclosures
-tax liens
-inquiries that you don’t recognize as belonging on your report

4. Stop! It’s time to do some homework! I bet that’s not what many of you wanted to hear. I’m sure you’re anxious to dive right in and start attacking the negative items on your credit reports, and I don’t blame you a bit. But the task you’re about to undertake is not cut-and-dry; credit repair is complex and there is often not a one-size-fits-all solution for every individual and every credit report. The approaches you’ll take to challenge the derogatory listings on your reports may vary depending upon your specific circumstances. You need to know what you’re doing beforehand to keep from making mistakes during the credit repair process. You also need to understand the laws that you’re going to use to your advantage in order to clean up your credit. Remember, if you don’t feel you have the time or patience to tackle this yourself, you can always seek the assistance of a credit repair organization (YES, there are good ones out there!).

Here is your pre-credit repair reading homework. It will help you understand the credit laws, and also to understand which approaches are appropriate for which types of listings:

Fair Credit Reporting Act (FCRA)
Fair Debt Collection Practices Act (FDCPA)
debt validation (Pay special attention to the second-to-last paragraph!)
how to dispute a listing on your credit report
HIPAA and credit repair (You can skip this one if you don’t have any medical items listed on your reports)
disputing a judgment, tax lien, or bankruptcy (Again, skip if it doesn’t apply to you)
disputing unauthorized/questionable inquiries

Next==> How To Repair Your Own Credit Report – Part 3

Post from: Credit Repair and Debt Solutions

How To Repair Your Own Credit Report – Part 2

Related posts:

1. Inquiries On Your Credit Report
2. How To Repair Your Own Credit Report – Part 1
3. How To Repair Your Own Credit Report – Part 3