I found this article to provide information on credit repair, and I'd like to share it with you all.
By LaToya Irby,
It's easy to make mistakes when it comes to your credit. Some mistakes are so detrimental; you'd never want to appear on your credit report. Since future creditors and lenders use your credit report to make decisions about you, there are some things you'd never want to show up on your report.
1. Charge-offs
Missing your payments for 6 months or more could cause your creditors to deem your account as uncollectible. When this happens, the creditor writes off the account and updates your credit report as "charged-off" or "written off and uncollectible." Charged-off accounts remain on your credit report for seven years.
2. Debt collections
Not only will creditors charge-off your account after a period of non-payment, they may also hire a third-party debt collector to attempt to collect payment from you. Your credit report may or may not be updated to reflect a collection status. Sometimes the debt collector places an entry on your credit report or the original creditor places a note on your report indicating the account is in collection status.
3. Bankruptcy
Filing bankruptcy allows you to legally remove liability for some or all of your debts, depending on the type of bankruptcy you file. Your credit report will reflect each of the accounts you included in your bankruptcy. Even though the bankruptcy information will remain on your credit report for seven to 10 years, you can sometimes begin rebuilding your credit soon after your debts have been discharged.
4. Foreclosure
If you default on your mortgage loan, your lender will repossess your home and auction it off to recover the amount of the mortgage. This process is known as foreclosure. When your home is foreclosed it can severely damage your credit, limiting your ability to obtain new credit in the future. A foreclosure will remain on your credit report for seven years.
5. Tax liens
When you don't pay property taxes on your home or another piece of property, the government can seize the property and auction it off for the unpaid taxes. Even if your home is foreclosed because of a tax lien, you are still responsible for the mortgage loan. Non-payment of the mortgage will also hurt your credit. Unpaid tax liens remain on your credit report for 15 years, while paid tax liens remain for 10.
6. Lawsuits or judgments
Some creditors may take you to court and sue you for a debt, if other collections fail. If the lawsuit is accurate and a judgment is entered against you, it will remain on your credit report for 7 years from the date of filing, even after you satisfy the judgment.
Thursday, July 22, 2010
10 Credit Repair Mistakes
Things You Shouldn't Do To Repair Your Credit
By LaToya Irby, About.com Guide
If you’re thinking about repairing your credit, or even if you’re going through the process now, there are some things you shouldn’t do. Here are 10 credit repair mistakes you want to avoid.
1. Not repairing your credit at all.
Perhaps the biggest mistake of all is putting off credit repair indefinitely. Even though most negative information will fall off your credit report after seven years, that’s a long time to live with bad credit.
2. Disputing everything on your credit report.
This is a tactic often used by credit repair companies. There are two problems with trying to repair your credit this way. First, it’s not believable. If you dispute too many items, the credit bureaus could dismiss your dispute as frivolous. Second, you don’t want everything taken off your credit report. Some positive accounts are actually helping your credit rating and disputing them could cause your credit score to drop.
3. Hiring a credit repair company.
Credit repair companies don’t have a reputation for good results. In fact, the Federal Trade Commission has been quoted as saying it’s never seen a legitimate credit repair company. Credit repair companies often make lofty promises that they can’t legally fulfill. In the end, you’re better off saving your money and doing it yourself.
4. Canceling credit card accounts.
A lot of people don’t realize that closing a credit card can be bad for your credit score, especially if it’s a credit card with a balance or one of your older credit cards. You’ll never improve your credit score by closing a credit card, so think twice about canceling one.
5. Playing the balance transfer game.
Transferring credit card balances to avoid making a payment is only postponing the inevitable. This tactic will only take you so far. Considering the balance transfer fees that are added to your balance each time you transfer it, the amount you owe continues to grow rather than shrink.
6. Cutting up your credit cards.
A lot of people who go through a period of bad credit swear off credit cards. But, without them you could have difficulty getting new loans or other types of credit. Not only that, using a credit card the right way will help rebuild your credit as you go through the repair process.
7. Missing some credit card payments in lieu of others.
Prioritizing payments is smart. Skipping some payments for others is not. If you want your credit to improve, you should not miss payments. Your credit will continue to get worse instead of better. The only exceptions are accounts that have already been charged off or have gone to collections. If you have to choose between paying a collection account or paying an account that’s current, pick the account that’s current.
8. Sending letters without certified mail.
When you send letters to credit bureaus, collection agencies, lenders, and creditors, you should always send via certified mail with return receipt requested. That gives you proof that your letter has been sent and whether it’s been received.
9. Not checking your credit report.
Before you ever begin repairing your credit, you should check your credit report. Your credit report will help you figure out what items you need to focus on to improve your credit. Without a copy of your credit report, you’ll have a hard time figuring out where to start repairing your credit.
10. Filing bankruptcy.
You should not use bankruptcy as a credit repair tactic. Bankruptcy will not improve your credit and in some cases, your credit can get worse after filing bankruptcy. Since bankruptcy remains on your credit report for 7 - 10 years, you’ll continue having trouble getting credit cards and loans. Most lenders ask if you’ve ever filed bankruptcy, so even after bankruptcy falls off your credit report, it can still keep you from getting a loan.
By LaToya Irby, About.com Guide
If you’re thinking about repairing your credit, or even if you’re going through the process now, there are some things you shouldn’t do. Here are 10 credit repair mistakes you want to avoid.
1. Not repairing your credit at all.
Perhaps the biggest mistake of all is putting off credit repair indefinitely. Even though most negative information will fall off your credit report after seven years, that’s a long time to live with bad credit.
2. Disputing everything on your credit report.
This is a tactic often used by credit repair companies. There are two problems with trying to repair your credit this way. First, it’s not believable. If you dispute too many items, the credit bureaus could dismiss your dispute as frivolous. Second, you don’t want everything taken off your credit report. Some positive accounts are actually helping your credit rating and disputing them could cause your credit score to drop.
3. Hiring a credit repair company.
Credit repair companies don’t have a reputation for good results. In fact, the Federal Trade Commission has been quoted as saying it’s never seen a legitimate credit repair company. Credit repair companies often make lofty promises that they can’t legally fulfill. In the end, you’re better off saving your money and doing it yourself.
4. Canceling credit card accounts.
A lot of people don’t realize that closing a credit card can be bad for your credit score, especially if it’s a credit card with a balance or one of your older credit cards. You’ll never improve your credit score by closing a credit card, so think twice about canceling one.
5. Playing the balance transfer game.
Transferring credit card balances to avoid making a payment is only postponing the inevitable. This tactic will only take you so far. Considering the balance transfer fees that are added to your balance each time you transfer it, the amount you owe continues to grow rather than shrink.
6. Cutting up your credit cards.
A lot of people who go through a period of bad credit swear off credit cards. But, without them you could have difficulty getting new loans or other types of credit. Not only that, using a credit card the right way will help rebuild your credit as you go through the repair process.
7. Missing some credit card payments in lieu of others.
Prioritizing payments is smart. Skipping some payments for others is not. If you want your credit to improve, you should not miss payments. Your credit will continue to get worse instead of better. The only exceptions are accounts that have already been charged off or have gone to collections. If you have to choose between paying a collection account or paying an account that’s current, pick the account that’s current.
8. Sending letters without certified mail.
When you send letters to credit bureaus, collection agencies, lenders, and creditors, you should always send via certified mail with return receipt requested. That gives you proof that your letter has been sent and whether it’s been received.
9. Not checking your credit report.
Before you ever begin repairing your credit, you should check your credit report. Your credit report will help you figure out what items you need to focus on to improve your credit. Without a copy of your credit report, you’ll have a hard time figuring out where to start repairing your credit.
10. Filing bankruptcy.
You should not use bankruptcy as a credit repair tactic. Bankruptcy will not improve your credit and in some cases, your credit can get worse after filing bankruptcy. Since bankruptcy remains on your credit report for 7 - 10 years, you’ll continue having trouble getting credit cards and loans. Most lenders ask if you’ve ever filed bankruptcy, so even after bankruptcy falls off your credit report, it can still keep you from getting a loan.
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