While looking for bad credit repair, many desperately want there to be a band-aid that will fix their broken lives. "There must be some quick and easy insider way of fixing things," some think. After all, there are so many advertisements online, on TV and in newspapers offering 100% guarantees and removal of the worst kind of blemishes, including bankruptcies, liens, judgments and bad loans. But are they legit?
According to the FTC, there are many credit repair scams out there. Many of these companies request as much as $3,000 upfront to settle your accounts, negotiate better debt repayment deals and erase all blemishes on your credit report. Credit repair companies have become a $7 billion/year industry, but not all parties can be trusted. You should never have to pay before you receive any services, as the Credit Repair Organizations Act mandates that bad credit repair services only charge when they have completed the services promised. As well, you should not trust someone who will not give you practical advice on what you can do on your own to repair your credit. If the company recommends that you not contact the credit bureaus directly, suggests you can get a new credit identity through an "Employer Identification Number" or advises you to fraudulently dispute even the legitimate information on your credit report, you should steer clear of their operation.
Here are some DIY tips for fixing bad credit. If you do not want to use a credit repair attorney and feel up to the challenge yourself, then you can use your sales and negotiating skills to get items deleted or at least changed in your favor on your credit report. First thing is, never make arrangements over the phone. It's always best to do yourself a well-written letter instead and be sure you write this letter before you give the creditor any money or you'll have lost your power to negotiate! If you have a "charge-off" listed on your credit file, then you can sometimes offer to adhere to a monthly payment plan and get creditors to replace them with "paid as agreed and on time." If you can't get that, then try for "account closed, account paid or account settled," all of which are more desirable than a charge-off. The best case scenario you could ever hope to achieve is a creditor to completely remove their account from your credit report, although it's certainly a rare best case scenario. Often with medical bills, the creditor will remove the bad credit debt if you agree to pay immediately, in full, with an additional fee or two, which will improve credit scores straight away and if you can afford it, is well worth the additional fee.
Here are a few last bad credit repair tips. First of all, get a copy of your credit report before contacting a debt collector to see how much you actually owe, and furthermore, never negotiate over the phone. Always negotiate with a certified mail paper trail for the best legal protection. Always try to negotiate for negative records to be completely removed from your credit report, but be prepared to pay the full amount in that case. Dispute the inaccurate information on your credit report. Try to have at least three lines of credit in good standing for a minimum of two years; this may include two credit cards and one installment loan. There are credit cards for people with bad credit available from Visa and Mastercard, but be mindful of the terms. Pay down student loans 70% and all other credit cards to 20/80 debt-to-credit ratio. Do not close credit card accounts and be patient; you can repair your credit soon enough.
It is really nice to get a brand new credit card that has a high limit. At first you promise yourself that it is just for emergencies but before long you notice that you are using that credit card for day-to-day living expenses. To make matters worse, the problem usually does not stop with just one credit card. Slowly bad credit begins to accumulate and before long you find yourself in a world of trouble. There is not enough money to pay off the bills and interest keeps piling up. Stop living this way! There are ways to rid yourself of that baggage and find a better way to live.
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