Fixing Your Credit Report

Sometimes, negative things appear on your credit report.  Usually, they do a good job of maintaining

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Credit card

” width=”300″ height=”169″ /> Credit card (Photo credit: Wikipedia)

accuracy, but mistakes do happen. The creditor or the reporting agency may screw up, or you may have your identity stolen.  If either of these situations are true, you’ll want to correct your credit report, making yourself eligible for lower rates on future credit and, occasionally, lowering the cost of things like auto insurance.

If you throw “credit repair” into Google, you get 18 million hits.   Most of those are either outright scams or hopelessly optimistic about what they can accomplish. As I said once before:

Credit Repair is almost always a scam. There are ways to get correct bad information removed from your credit report.  If the information is correct, those methods are illegal.   There are two legal methods to repair your credit.  First, stop generating bad credit.  Make your payments on time and eventually, the bad items will fall off.   Second, write letters disputing the actual incorrect items on your credit report.  There are no quick fixes, and anybody telling you different is flirting with a jail sentence, possibly yours.

There are ways to avoid the scammers.

  • Avoid advance-fee credit repair. If they are any good, you will pay for results, not intentions.  If they charge beforehand, they are already breaking the law.
  • If they insist they can erase the accurate, but negative information, run away.
  • If they tell you to dispute everything negative, even the accurate information, run away.
  • If they tell you to create a new credit identity, don’t just run, report them.  It’s a felony.

Legally, you cannot get valid information removed from your credit report.  Anyone who tells you differently is advocating a crime. However, according to the Fair Credit Reporting Act (FCRA), you are entitled dispute incorrect records.

To verify the accuracy of your credit report, you need to see it.  You can get a free report if your credit is used to deny you for something.  This is known as an “adverse action” .  You have 60 days from the denial to request the report.  You can also get one free report from each of the major credit bureaus each year. I space out these requests so I see my credit report every 4 months.

If there is inaccurate information on your report, dispute it in writing.  Send a letter to the credit bureau that is reporting the error.  Explain the problem and politely demand an investigation.   They will contact the creditor, who usually has 30 days to respond.   In the meantime, send a dispute letter to the creditor, along with proof of the inaccuracy.  If the investigation does not go your way, the creditor will have to report the dispute status to the credit bureaus in the future.

If the negative items are accurate, there is only one way to get it off of your report legally:  Wait.    Most negative information can only be reported for 7 years, while a bankruptcy will be reported for 10.

Another way to build your credit in the face of negative credit is to start building good credit to overshadow the bad. Get a credit card.  Your first credit card from the bottom of the debt-barrel will probably be a gas card or a store-branded credit card.    That’s fine.  The main consideration is are low or nonexistent fees.   Don’t accept application fees, activation fees, fees for carrying a balance or fees for not carrying a balance.    Annual fees are becoming a fact of life, so look for low fees.   The interest rate does not matter.   You will be paying this card off immediately, meaning no less often that every two weeks.  Make sure every penny is paid during the grace period, and make sure your card comes with a grace period.   Some don’t.  Those are bad cards to get.

There are no quick fixes for bad credit, just good new habits and time.

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Is That The Best You Can Do?

If you are a typical, hard-working American, you probably feel that there are not enough hours in the day and not enough money in your pocket!

It seems life is busier and more expensive than ever before. In the midst of a global economic recession, the price of daily living is increasing, with higher utility bills and food prices.

It is difficult in these hectic times to be alert to other available options and yet with so much competition between rival companies, you may find a better deal elsewhere.

From mortgages to loans to gas suppliers and everything in between there are numerous options out there that could be highly beneficial for you.

So how do you go about finding the best deal for you? After all, your circumstances are totally unique and what works for you will not be the same as for someone else.

This is why taking advice from family or friends is not always the wisest move. Naturally their intentions are good, but the information they have maybe outdated or incompatible with your circumstances.

Comparison shopping can provide you with the details necessary to make an informed decision, whatever your circumstances. By researching the options available, you can find the perfect product or supplier.

Perhaps you are a young professional looking for your first mortgage, an older couple thinking about retirement funds or maybe you simply want to reduce your mobile phone bill.

Investigating the options available will help you clarify when you are being offered a great deal and what conditions or benefits may be attached to an agreement.

Mobile phone providers, for example, often try to tie you into a long-term contract by tempting you with the latest phone. Many consumers will find this offer irresistible and sign up without thinking the implication through.

It is financially more astute to calculate the cost of the contract against the cost of buying the phone outright and finding a lower priced tariff from another provider.

Credit card companies will offer 0% or lower interest rates on balance transfers, so spend a little time comparing providers to see how much you could shave off this debt.

Even if you have a low credit score it is worth comparing credit cards for bad credit to get the best deal for your circumstances.

Often, credit cards companies offer additional benefits when taking out one of their cards, such as discounts at certain stores or money-off vouchers, travel or car insurance and fraud protection.

If you are planning a family vacation with Disney for example, taking out a Disney credit card can provide additional benefits. Credit card holders benefit from 10% discount at their shops and $50 credit on cruises.

There may be other factors that influence your decision, such as the charitable ethos of a company. Many firms favor certain causes and will donate a percentage of profits to charity.

So invest some time in researching better deals to suit your circumstances or use a reputable price comparison site to do the research for you. Then all you have to do is to enjoy your savings!

Post by Moneysupermarket.

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Credit Cards: My Failed Experiment

Cash

Image by BlatantWorld.com via Flickr

Back in April, we went off the cash plan.

In the two years prior to that, we paid down about $40,ooo in debt by completely forgoing credit cards.    We went on a strict budget and all of our daily expenses–other than gas for the cars–was paid in cash.   The only other exception was anything bought on the internet.  Amazingly enough, Amazon doesn’t take cash.   When that happened, the amount we spent online was taken out of the cash supply and set in a box until we could get it back in the bank.

No other exceptions.

In April, we decided that we had changed our relationship with money and could–judiciously–move back to credit card use, to take advantage of the rewards.    We’d still use the same amount we had budgeted for groceries,  clothes, and everything else.   I set up an automatic payment for the budgeted amount, so we could use the card for our daily spending and the bank would automatically pay it off every month.   What could go wrong?

Ugh.

We are not predisposed to be able to use credit cards well.   It’s just not good for us.   Credit cards  just don’t feel like real money going out.    When we were using cash for everything, we could see when money was running low, and we’d adjust our spending to stretch it out as needed.   With plastic, it just became too easy to keep spending.

For the first couple of months, it was easy to overlook the problem.   We paid my son’s vision therapy on the credit card, to get a discount on the therapy and cash in on the rewards program.    That was around $4,000.  Combined with the regular spending, it took us a couple of months to get it all paid off and current.

This month, we’ve managed to overshoot our monthly budget by $500.    We’re only halfway through the month.

This weekend, we had a fairly unpleasant conversation about money.   In the end, we decided to go back to cash-only.   It works for us, in a way that credit cards don’t.   Credit cards were a failed experiment.  We’re going back to what works.

Have you ever had to switch from cash to credit cards and back?  How did that work out?

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Credit Cards: How to Pick a Winner

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Image via Wikipedia

We live in a decidedly credit-centric culture.   Whip out cash to pay for $200 in groceries and watch the funny looks from the other customers and the disgust from the clerk.    It’s almost like they are upset they have to know how to count to run a cash register.

If someone doesn’t have a credit card, everyone wonders what’s wrong, and assumes they have terrible credit.  That’s a lousy assumption to make, but it happens.   For most of the last two years, I shunned credit cards as much as possible, preferring cash for my daily spending.   Spending two years changing my spending habits has made me comfortable enough to use my cards again, both for the convenience and the rewards.

Having a decent card brings some advantages.

Credit cards legally provide fraud protection to consumers.  Under U.S. federal law, you are not responsible for more than $50 of fraudulent charges.  many card issuers have extended this to $0 liability, meaning you don’t pay a cent if your card is stolen.  Trying getting that protection with a wallet full of cash.

The fraud protection makes it easier to shop online, which more people are doing every day.   At this point, there is no product you can buy in person that you can’t get online, often cheaper.   How would you order something without a credit card?  Even the prepaid cards you can buy and fill at a store will often fail during an online transaction because there is no actual person or account associated with the card.  The “name as it appears on the card” is a protective feature for the credit card processors and they dislike accepting cards without it.

If you’re going to use a credit card, you need to make a good choice on which credit card to get.  There are a few things to check before you apply for a card.

Annual fee. Generally, I am opposed to getting any card with an annual fee, but sometimes, it’s worth it.    If, for example, a card provides travel discounts and roadside assistance with its $65 annual fee, you can cancel AAA and save $75 per year.     A good rewards plan can balance out the fee, too.   I’m using a travel rewards card that has a 2% rewards plan.  That’s 2% on every dollar spent, plus discounts on some travel purchases.    In a few months, I’ve accumulated $500 of travel rewards for the $65 fee that was waived for the first year.  The math works.  A card that charges an annual fee without providing services worth several times that fee isn’t worth getting.

Interest rate. This should be a non-issue.   You should be paying off you card completely every month.  In a perfect world.   In the real world, sometimes things come up.   In my case, I was surprised with a medical bill for my son that was 4 times larger than my emergency fund.   It went on the card.  So far, I’ve only had to pay one month’s interest, and I don’t see the balance surviving another month, but it’s nice that I’m not paying a 20% interest rate.  Unfortunately, as a response the CARD Act, the days of fixed rate 9.9% cards seems to be over.

Grace period. This is the amount of time you have when the credit card company isn’t charging you interest.  Most cards offer a 20-25 day grace period, but still bill monthly.  That means that you’ll be paying interest, even if you pay your bill on time.  To be safe, you’ll need to either find a card that has a 30 day grace period, or pay your balance off every 15-20 days.  Some of the horrible cards don’t offer a grace period of any length.  Avoid those.

Activation fees. Avoid these.  Always.  There’s no card that charges an activation fee that’s worth getting.  An activation fee is an early warning sign that you’ll be paying a $200 annual fee and 30% interest in addition to the $150 activation fee.

Other fees. What else does the card charge for?  International transactions?  ATM fees?  Know what you’ll be paying.

Service. Some cards provide some stellar services, include concierge service, roadside assistance, and free travel services.   Some of that can more than balance out the fees they charge.   My card adds a year to the warranty of any electronics I buy with it, which is great.

Credit cards aren’t always evil, if you use them responsibly.   Just be sure you know what you’re paying and what you’re getting.

What’s in your wallet?

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