Credit Repair & Debt Relief Issues

What makes ‘Good Credit’?

# 1: Paying your bills on time for at least the minimum payment. That’s the single most important action you can take towards good credit.

# 2: The kinds of credit you have can also impact your score. Too many easy credit financing accounts can actually hurt your score. Don’t get me wrong, they are great stepping stones to better, more beneficial credit. 

# 3: Do not to go out on a furniture, jewelry, electronics, car-accessory financing sprees. Just one or two of these in good standing can make it possible to the next stage for good credit. And this is where we get ‘too many inquiries’. The creditors view too many inquiries as a bad thing, and can really impact struggling credit scores.

# 4: With the exceptions of Homes and Autos; and especially the easy-credit-items, if you cannot afford it, don’t finance it. Save your money and buy it with cash later. This will teach discipline, it’s good for all of us! And keeps us from nickle and diming ourselves into the poor-house! ~for the record, this is the hardest of all, on the whole list, at least for me! ~

# 5: Once you can afford to buy it with cash, and you are intending using this one account as a stepping stone better credit later. Go ahead and finance it, then pay it off over the next few months. Won’t be super difficult, cuz you are learning to save, and once the account is paid…Do not close it.

# 6: Closing old accounts. Don’t close old accounts just because you got a better account. Use them for periodic purchases and pay the full balance off, before any interest accrues (usually before the due date on the first statement showing your balance). It doesn’t hurt to have several accounts, just to have several revolving accounts with balances.

# 7: Charging up the cards is not, I repeat NOT, the same as building credit. It’s just making debt. Be wise with your spending. Keep yourself from being overwhelmed by the nickle and dime phenomenon.

# 8: Fraud Alerts. You’ve heard me say it before, but I say it again. Fraud alerts have their place. If you really have had your identity stolen, your wallet or purse. Then it can be a good thing, only for a temporary basis. Identity Theft is not the same as letting your girlfriend or boyfriend use your card, or drive the car you financed, believing or not that they will pay for it. If they don’t, you will have to anyway. Fraud Alerts should be used sparingly and only for as short a time as crisis requires. Creditors and Banks see fraud alert abuse, as you not taking responsibility for yourself. They can actually hurt your chances of getting granted some the better credit items.

# 9: Stay away from Payday/Car-Title Loans. Pawnshops too. Live lean, and tough it out. These things are a trap, and once you are buried in the 200% interest, it can take an act of Congress to dig you out. Chances are the circumstances which may tempt you to use these guys, will have resolved themselves far faster than the payments you’ll be locked into by these Payday Loans.

# 10: Read the small print! BEFORE YOU SIGN! On all the loan agreements you sign. Read them. If they don’t make sense, don’t accept the credit. Period. Save your money and buy it later. NEVER apply for credit while you are desperate and in the moment. Take a deep breath. It helps.

The path to good credit goes a little like this: One or two easy-credit items, paid off, then move onto Department store cards. Being in good standing with your department store items will give your own bank enough reassurance to give you a MasterCard or Visa. Those in turn make an American Express possible. Most anywhere along in this good credit journey, you can get approved on a car loan, which helps immensely in improving your scores. Make all of your payments on time, if not early, and for at least the minimum due, if not more. Once you have mastered all these kinds of credit, and learned lots of discipline, you may be ready for the heftiest of all debts. Your own home. Be ready, so you can avoid the mess so many people are in right now. (Again, for the record, I am not entirely sure I am ready for a mortgage myself, as it were…)

Each new line of credit you are granted is an opportunity to prove yourself for the next new creditor on the horizon.  Make the most of it. Make all your payments on time, and pay more than what is minimally due. This process can take a couple years, but its so worth the effort, and finanacially beneficial to you too.

I know this doesn’t sound very easy. That’s only because it isn’t. But trust me, it gets easier the further along you get. Then again, maybe you are reading this and thinking it’s too late. Do not waste anytime beating yourself up! Live and Learn. Hit the ‘ReDo’ button! No problem, our credit repair company, can help you get rid of those old bad inaccurate credit items. Afterwards, you can continue on your journey towards Good Credit.

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It seems like a simple enough question. It does stand to reason, that if a person has several or more good solid trade-lines, and little or no negative credit history, they should have high scores, right? The truth is maybe. There are so many variables to the credit score algorithms, and the credit bureaus guard that information strictly.

Credit repair most certainly makes it POSSIBLE to have great credit scores, whereas before, there would be no possibility with so many negatives items on the record. Credit Repair is like an eraser. You can remove the mistakes, but you still have to do your homework. You can’t get past this. You must have good accounts to have good credit. Simple as that.

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Yes, but most of what you see advertised are not free credit reports, they are free credit reports with a catch. The catch with most, is that you will get a 3-in-1 credit report for free, but you are signing up for a $49/mo subscription for a credit monitorinig service. There is only one way to get your credit reports for free, and that is by going directly to annualcreditreport.com. This service has now made it possible for everyone to get a free credit report from each credit bureau, once per year. These credit reports do not include credit scores, you will have to pay extra for those.

Keep in mind that going to annualcreditreport.com does not guarantee you will be able to get your credit reports. About 70% of the time, you will run into security issues that will prevent you from obtaining 1 or more of your credit reports. We do all this work for all of our clients, so we see it every day first-hand. It can take a great deal of skill to navigate through the red tape to getting your credit reports. The credit bureaus view providing credit reports to consumers as a nuisance, and they don’t make it easy.

Here is a link to complete instructions on getting your free credit reports.

Jon Ochs Credit Repair credit reports, credit scores, free credit reports

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When it comes to debt management programs, what most people are looking for does not exist. I cannot tell you how many times I find myself on the phone with a prospective client drowning in credit card debt, looking for the perfect debt management program. Here is the criteria they are looking for:

• - Payoff all your debts in a short period of time
• - Not affect your credit negatively
• - Make all your payments on time

The problem: There is no such program!

What I have found over years of assisting clients out of debt, is that most are initially looking for a program that does not, and has not ever existed. Let me be perfectly clear, there is no debt management program in existence, aside from just making all your payments on time, that will provide the above benefits.

Now that we have that understood, let’s talk about what options are available and in short summary, provide a basic understanding of each:

• Debt Consolidation Loans

Debt consolidation loans are typically home equity loans or second mortgages. This is where you take the equity out of your home to pay off unsecured debts, then just repay the equity loan with one payment, hopefully lower than the total min payments on all your unsecured debts.

The upside is that you can trade in your high-interest unsecured debts for a lower-interest, single payment that can sometimes have a tax benefit.

The downside is that most people who have a lot of unsecured debt will not qualify for a loan, or have any equity in their home.

• Consumer Credit Counseling

These are the companies that have been getting into a lot of trouble over past years. Typically non-profit, they claim to lower your interest rates and set you up with a low monthly payment to get you out of debt in 5-7 years by splitting your single payment into little chunks to pay each creditor a reduced payment.

The upside is… well there actually is no upside. Because these programs rarely ever do what they claim, and many credit card companies no longer participate in these programs, this has become a serious waste of money and time.

The downside is, in addition to above, that your creditors will each enter a line into your credit reports on every account included that states that the account is handled through credit counseling. This will prevent you from qualifying for pretty much anything.

• Debt Settlement

In the past couple years, this has become the most popular and most effective program for getting out of debt quickly. However, you must truly be in a financial hardship and not able to pay your current minimum payments. The strategy here is to negotiate with your creditors and get them to accept a settlement pay-off of less than the balance owed. All creditors will accept settlements as long as you have successfully shown hardship. In my experience, attorneys have been most effective in negotiations with creditors because they cannot be bullied by savvy collectors.

The upside is that you can completely settle your debt for pennies on the dollar in a very short period of time; usually 3 years or less.

The downside is that your accounts must become very delinquent before creditors will accept settlements. This is not a problem if you are in a financial hardship; after all, you are already not able to make your min payments, so going delinquent was happening anyway.

• Bankruptcy

In past years, anyone could file bankruptcy chapter 7 and easily eliminate any amount of debt quickly. Now, since the Bankruptcy Reform Act, most do not qualify for bankruptcy, and you are forced to try other solutions such as debt settlement first. Bankruptcy is a legal court process where those who are completely insolvent are able to possibly protect their primary residence and eliminate debts.

The upside is that once a chapter 7 bankruptcy is completed, the creditors literally write off the debt and cannot pursue you further.

The downside is that it is a permanent court record, and will also remain on your credit reports as a public record for up to 10 years.

I hope you find this information helpfull, and that it provides you with a foundation that will allow you to choose the best plan given your circumstances.

Jon Ochs Debt Management credit counseling, debt consolidation, Debt Management, debt settlement

I know from talking with hundreds of clients every day, that when it comes to making a decision about which credit repair company to go with, most base their decision purely on cost. If you are serious about repairing your credit in an effective and timely manner, this is the biggest mistake you can make.

What most people don’t know is that all those credit repair companies that charge on a monthly service fee basis are only going to do a very small amount of work each month. If you are like the average person with bad credit, you most likely have an average of 8-15 negative items on each of your 3 credit reports. If you are only paying a $49 – $79 monthly service fee, they are only going to work on 1-2 items at a time. Keep in mind also that with the monthly service fee model, the credit repair company’s motivation is to keep you paying as long as possible. You may easily end up paying far more, with fewer results, than you would have with a company that offers a flat-rate program.

With the flat-rate payment model, the company is motivated to get your credit cleaned up as quickly as possible, and that is what most people are looking for, isn’t it? I have never spoken to a client who wanted to clean up their credit slowly.

With all that said, you need to be very careful when choosing the right credit repair company, as they are not all created equally. The first thing you should do is check out their complaints record. If the company has been in business for more than a few years and has not been proving a good service, you will hear about it on the Internet. Just go to Google and type in “[company name] complaints”. If you get more than just a few complaints about the company, you should beware.

The Federal Trade Commission has made statements that tell consumers to stay away from credit repair companies, and not to work with any who charge a fee up front. The main reason for this is that they are tired of getting complaints about credit repair companies that take client’s money and not perform any work. Since the FTC cannot recommend any particular company, their policy is to simply tell everyone to stay away. Many companies have since adopted the model of charging a monthly service fee instead of charging for the credit repair itself. They have found it to be easy money, as most clients will sign up for this type of service and forget about it; leaving the credit repair company to continue receiving payments for a longer period of time with no obligation of work.

I cannot tell you how many times a week we get calls from people who have been a client of a monthly service fee credit repair program for more than one year, and have only seen a couple of improvements on their credit reports. I personnaly find this appalling, and so should you.

I hope this information has been useful. If you want to check out a credit repair company that has been in business over 10 years, licensed and bonded, with no complaints, here is our plug Best Credit Repair Company.

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