August 2009

Your Credit History

As part of the loan application process, virtually all lenders will want tosee a copy of your credit report. The report will list all your long-termdebts (credit cards, mortgage payments, automobile and student loans, etc),as well as your payment history. If you don’t have a copy of your creditreport, most lenders will generally require you to pay for a copy when theyprocess your loan application.However, most real estate experts agree that it is a good idea to obtain acopy of your credit report several months before you apply for a loan.

This is so you have a chance to resolve any problems with your credit before yourbank sees it. U.S. Federal law ensures that you have access to your creditreport, which may be obtained from your local credit bureau or any ofseveral national firms that specialize in credit reports.

Late payments
For most people, problems with their credit report are likely related tolate payments on a debt.
If you were late one month in paying off yourcredit card, but otherwise have a good payment history, chances are mostlenders won’t be too concerned. But if you have a history of late paymentsyou’ll need to document the reasons why. A slow payment history won’tnecessarily get you turned down for a loan, but you may have to pay a higherrate of interest or otherwise prove to the lender that you can repay yourloan in a timely fashion.

Errors on your credit report
Many people are surprised to learn that credit reports can often containserrors or inaccurate information. If this is the case with your creditreport, you’ll need to contact the reporting agency or creditor to have theproblem resolved. This can sometimes be a slow process, so make sure to giveyourself time to clear up the mistake.

Bankruptcies and foreclosures
There’s no getting around it, a bankruptcy on your credit report is not agood thing. But that doesn’t mean you still can’t obtain a loan. Even thougha bankruptcy may stay on your credit report for seven to ten years, lenderswill often consider the circumstances surrounding a bankruptcy (familyillness, injury, etc.). Moreover, if you have reestablished good creditsince the bankruptcy, a lender will be more inclined to approve your application.

Places to fix your credit for free

Still having problems? There are free credit counseling services that may help you. Just because you have a poor credit report doesn’t mean you won’t be able to get credit. Creditors set their own credit-granting standards and not all of them look at your credit history the same way. Some may look only at recent years to evaluate you for credit and may grant credit if your bill-paying history has improved.

It may be worthwhile to contact creditors informally to discuss their credit standards. If you can’t resolve your credit problems yourself or you need additional help, you may want to contact a credit counseling service. There are non-profit organizations in every state that counsel consumers in debt. Counselors try to arrange repayment plans that are acceptable to you and your creditors. They also can help you set up a realistic budget. These counseling services are offered at little or no cost to consumers.

You can find the office nearest you by checking the White Pages of your telephone directory. In addition, non-profit counseling programs are sometimes operated by universities, military bases, credit unions, and housing authorities.

They’re also likely to charge little or nothing for their services. You can also check with your local bank or consumer protection office to see if it has a list of reputable, low-cost financial counseling services available.

Here are some more suggestions: Neighborhood Housing Services offers financial counseling at no fee. It does not offer debt consolidation loans, and has offices in every city in the country. Refer to their website at: http://www.nw.org/. http://www.hud.gov/ lists approved counseling agencies that help homeowners in financial trouble.

Do You Need Bad Credit Help?

by Jeff Schumann

Bad credit is a term used to describe a poor credit rating. Common practices that can damage a credit rating include making late payments, skipping payments, exceeding card limits or declaring bankruptcy. Bad Credit can result in being denied credit.

Bad credit can result in a negative rating from the credit reporting agencies. Many factors can contribute to someone getting a “bad credit” rating, among these are non-payment of an account or late payments over an extended length of time. Whether non-payment of an account is willful or due to financial hardship, the result can be the same, a negative rating which will result in a low credit score. However, lenders are more willing to work with individuals if the person contacts the lender to let them know they are having problems meeting their commitment to pay.

A credit score is defined as a statistical method of assessing an applicant’s credit worthiness. An applicant’s credit card history; amount of outstanding debt; the type of credit used; negative information such as bankruptcies or late payments; collection accounts and judgments; too little credit history, and too many credit lines with the maximum amount borrowed are all included in credit-scoring models to determine the credit score.

Raising your credit score is possible. It’s a well known fact that lenders will give people with higher credit scores lower interest rates on mortgages, car loans and credit cards. If your credit score falls under 620 just getting loans and credit cards with reasonable terms is difficult.

Here are five things that you can use to raise credit score.

1. Correct obvious mistakes.

Your credit score is what shows up in your credit report. Review your reports from all three credit bureaus for accuracy once a year as well as several months before applying for a loan. Changing a mistake on your report can take 30 days to three months, or more. Get Your credit report from the three major bureaus: Experian, Trans Union and Equifax.

2. Pay Your Bills On Time

Your payment history makes up 35% of your total credit score. Your recent payment history will carry much more weight than what happened five years ago.

Missing just one payment on anything can knock 50 to 100 points off of your credit score.

Paying your bills on time is the best way to get started rebuilding your credit rating and raising your credit score.

3. Reduce your credit card balances.

A heavily weighted factor in your FICO score is how much money you owe on your credit cards relative to your total credit limit. Generally, it’s good to keep your balances at or below 25 percent of your credit card limit, said Jeanne Kelly, founder of The Kelly Group in Brookfield, Conn., which helps clients improve their credit scores.

4. Don’t Close Old Accounts

In the past people were told to close old accounts they weren’t using. But with today’s current scoring methods that could actually hurt your credit score.

Closing old or paid off credit accounts lowers the total credit available to you and makes any balances you have appear larger in credit score calculations. Closing your oldest accounts can actually shorten the length of your credit history and to a lender it makes you less credit worthy.

If you are trying to minimize identity theft and it’s worth the peace of mind for you to close your old or paid off accounts, the good news is it will only lower you score a minimal amount. But just by keeping those old accounts open you can raise credit score for you.

5. Avoid Bankruptcy

Bankruptcy is the single worst thing you can do to your credit score. Bankruptcy will lower your credit score by 200 points or more and is very difficult to come back from.

Once your credit score falls below 620, any loan you get will be far more expensive. A bankruptcy on your credit record is reported for up to 10 years.

The reality of a bankruptcy is it will limit you to high-interest lenders that will squeeze out high interest rate payments from you for years.

It is better to get credit counseling to help you with your bills and avoid bankruptcy at all costs. By getting credit counseling instead of declaring bankruptcy you can raise credit score over a much shorter period of time.

For hundreds of articles on this and other subjects, go to: http://blueascend.com/credit-repair/

About the Author
The author lives and works in UK

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