Four Credit Repair Tips To Remember

If you are thinking of doing credit repair keep these tips in mind:

1. Get a copy of your credit report from each of the three credit bureaus and dispute any negative accounts on each of them. The three major credit bureaus are Trans Union, Experian, and Equifax.

2. When disputing negative accounts (collections, late payments, repossessions, etc.) remember that the credit bureaus must investigate and verify each account within 30 days or delete the item in dispute.

3. When challenging errors on your credit reports by mail always use use certified and return receipt mail. This will let you know if and when your letters were delivered to the credit bureaus.

4. Do not get discouraged when doing credit repair. If the credit bureaus are able to verify that the accounts you are disputing with them are in fact yours continue disputing them every 30 days. People have found that a prolonged amount of credit repair efforts have given them the best results.

Why A Damaged Credit Score Can Kill You Financially

Do you know your credit score? Knowing your credit score can help you know where you stand as a borrower. Having a good score can save you hundreds or even thousands of dollars over the course of a single year.

A good score is anywhere from 640 to 750. Any score above 750 could be considered excellent. A score between 600 and 640 is fair and below 600 could be considered poor.

OK, so you have your credit score but it's terrible, can you fix it? Yes, there is hope for you.

Here is a quick overview of ways to raise your credit score:

1. Repair your credit report. Your credit score is derived from your credit report. You will need to get a copy online, through the mail, or call for it. Find the negative items (late payments, collections, bankruptcies, etc.) and dispute them.

2. Pay down your credit cards to below 50% of their limits. Example: You have a credit card with a limit of $1000 you need to get your balance you owe to below $500.

3. Consolidate your debt. This can help you with getting your credit card balances below 50%. You can get a loan to pay off all your high interest credit cards. This will more than likely improve your score.

4. Do you have too many credit cards? Having too many credit cards may hurt your credit score. Try to have no more than 5 or 6 credit cards, but do not rush to cancel any accounts yet. If you have a choice cancel the newer credit card accounts before the old ones. You do this because credit cards with a long history of payments has a very positive affect on your credit score.

5. Pay your bills on time! This needs no explanation.

Inquiries Can Have A Negative Impact On Your Credit Score

Inquiries are when you apply for credit and a creditor "inquires" into your credit report to see if your credit score is good enough to qualify you for a loan, credit card, home mortgage, or any other type of credit. The inquiry itself is then reported on your credit report.

There are inquiries made by creditors from time to time that are not a result of you applying for credit. These are usually creditors that have extended you credit in the past and that you have given permission to view your credit report. I like to call these inquiries "soft inquiries" because they will usually not hurt your credit score that is derived from your credit report.

Inquiries that can damage a credit score are the ones that are a result of you applying for credit. These "hard inquiries" as I like to call them, may only lower your credit score a couple of points a piece, but a couple of points lost on your credit score may mean a point or two gained on your interest rates.

It should be noted that when applying for a home mortgage multiple inquires within a months time frame may not effect your credit score. This is because the credit scoring model takes into account that many people shop for home loans to find the best rates. They have determined that this is a sign of a responsible consumer thus the risk is not increased for creditors.


So what do you do to keep the amounts of inquiries to a minimum on your credit report?

Choose wisely when shopping for credit. Do not open a new department store account simply to get 15% off your purchase. Weigh the consequences and keep inquiries in mind.