Personal Financial Resources - Credit Repair and Debt Consolidation

By Winn Griffin

Misconceptions about credit scores and credit repair abound. Some consumers who use credit cards don’t believe they have a credit score or that their credit scores don’t matter so they would never think about credit repair. However, without a good credit score or without credit repair when you score is blown to bits, a consumer may hurt themselves in day-to-day living.

If you have a bank account and bills to pay then you have a credit score and you may be a candidate for credit repair. Credit scores were developed by FICO (FICO is a registered trademark of Fair Isaac Corporation) as a measure of credit risk and are the most used credit scores in the world. A FICO credit score is a three-digit number that gives lenders a clue about how likely you are to repay your bills. If your FICO credit score is bad. You may be a candidate for credit repair.

Your credit score is accessible to anyone with a legitimate business need. Here are two examples. An apartment manager my use your score to decide if you can be trusted to pay your rent on time. Employers may use your credit score to decide if you can be trusted in a high-responsibility job that requires you to handle money. Not knowing about credit scores leaves one vulnerable and you possible need for credit repair.

As with most potential problems there is often a lot of misinformation circulated about the solution to the problem. This is surely true about credit scores and credit repair. When trying to gain accurate information, consumers often come away with the idea that one can boost their credit score by paying more money to a company or hiring a “credit repair” expert.

Here are some areas you need to consider doing. You may need to define a credit score, a credit report, and other key financial terms to help in credit repair. You may need to develop a personalized credit repair plan that addresses your unique financial situation. You may need to find the resources and people who can help you repair your credit score. You may need to repair your credit effectively using the very techniques used by credit repair experts.

Remember, your credit repair does not happen in a vacuum. You may need some outside help.

Dr. Winn Griffin writes several blogs. One on Credit Repair. You can review a list of them at Library of Blogress and here is a credit repair resource that might be helpful for you.

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When just starting out, many young people face that age old question; “How to get credit when you don’t have credit already” or when you’re in need of credit repair. While this can indeed be a challenge, there are some things you can do that will make this process a little more workable.

Most creditors want to look at your past credit history to see how reliably you have handled credit in the past but there are some that rely on your salary, your job and other financial information that you put on your credit application.

If you do not have any credit history or you are in need of credit repair, here are five things that you can do to start building to your first credit card.

1)      Open up a checking account and a savings account, preferably at a credit union if you are eligible to join one.

2)      You might be able to receive a small loan from the bank or credit union where you have your checking and savings account. Try this about six months after you’ve opened your checking and savings accounts. Hint: Credit unions are often a bit more lenient with loans to their members than traditional banks are. That’s why it’s preferable to open your checking and savings accounts with them.

3)      Apply for a department store credit card. Department stores are anxious to have your business and so are often more lenient in granting credit cards and they can be an excellent way to start building your credit history. Make sure to ask the credit department whether or not they report to the credit bureaus. If they do not, they will no be much good at achieving a better credit history.

4)      If you were turned down for the loan in step #2, ask if they could give you a loan which is secured by funds that you deposit with them as collateral. The bank can then issue a credit card with a limit no higher than the funds you deposit.

5)      If all else fails, try and find a relative or friend with a good, established credit history who will co-sign for you on a credit card. You would be granted credit based on the strength of your co-signer’s credit history. Once you have used the card and paid the bill on time for about six months, then try and apply for another card at another lending institution in your name alone.

Remember that paying each and every bill on time contributes to your good credit history so make it a priority to do so.

By Drikus Botha

If you start missing payments on a credit card or loan, or — worse — your creditor sends one of your outstanding debts to a collection agent, a negative mark will go on your credit rating, which will often prevent you from getting credit in the future.

If you find yourself in this situation, it is imperative that you take steps to repair your credit rating as soon as possible.

Although it seems like a daunting task, if you do nothing your credit rating will remain the same for up to seven years, causing you all sorts of hassles, and preventing you from obtaining any type of loan.

An important step in credit repair is the acquisition of a secured credit card. Generally, if you have bad credit, you will be turned down for any credit card application.

This puts you in a bind, because without a credit card you have no way of improving your situation by proving to creditors that you can pay your bills on time and responsibly.

To engage in credit repair, you should look into what is called a “secured credit card.” This is a credit card marketed specifically to people with bad credit.

Generally, these cards work by requiring an initial deposit that is equal to your credit limit. In other words, if you make an initial deposit of $500, you will have a credit limit of $500.

The issuer will then reserve the right to use your deposit against any outstanding balance on the card if payments are not met after a certain amount of time.

As you can see, this type of card carries no risk for the issuer (because they can always use your deposit against the balance - you’ll never end up “owing” them anything), and therefore can be freely issued to people with bad credit.

Unfortunately, most of these cards will have yearly annual fees that regular credit cards are often free of.

Once you have a secured credit card, you can engage in credit repair by using it sparingly but regularly, and making sure you make all payments on time.

By doing this you will slowly repair your credit. What you will be doing is demonstrating to creditors that you are responsible and can be trusted with credit.

If you don’t take steps towards credit repair by doing things like getting a secured credit card, your credit rating will effectively remain in a static state for years.

Credit reporting agencies will keep any marks on your credit report for 7 years, so unless you are willing to wait that along, it is imperative that you take the necessary credit repair steps.

By obtaining a secured credit card and using it responsibly, you will be able to reduce the 7 year wait period before being offered credit again.

Drikus Botha is wellknown for his articles and e-courses. You can subscribe to one of his free credit repair e-courses right here!

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