How to Repair Your Credit

You credit is one of the most important aspects of your life and can help you or hurt you during the course of your life. Credit affects many aspects of your life such as applying for a job, applying for a home or apartment, or applying for a personal loan or credit. Some people have been fired from jobs or have not been considered for job vacancies because of their bad credit. If you have bad credit it is never too late to fix it and improve your financial situation. Here are 10 tips to help repair your credit.

1. Order your credit report. Get current on late bills and dispute errors. Dispute errors online or by mail. Provide supporting documentation.
2. Get current. Pay late accounts such as judgments, tax liens, foreclosures, repossessions and collection accounts first. Then pay all other late accounts.
3. Pay down debt. Keep balances at 20% or less of the credit limit. Having credit cards with balances of 50% or more of the limit decreases your credit score.
4. Pay on time. Pay bills at least 7-10 days before the due date to avoid late fees and penalties.
5. New accounts. Opening more than one new account per year will lower your credit score.
6. Avoid closing accounts. Closing accounts that have been open for 2 years or more can decrease your credit score.
7. Negotiate. Setup payment plans to pay down debt if you cannot pay the full amount owed. Stick to the agreement until the account is paid in full.
8. Establish Credit. Open a department store credit card. They usually have the highest interest rates but provide easier approval than bank credit cards. Buy something small and pay the balance in full each month. You can also open a secured credit card account. Ensure the account is reported on your credit report. Get a card with low fees and a low interest rate.
9. Avoid risky solutions. Avoid filing for bankruptcy. Use bankruptcy, debt consolidation, credit repair counseling or debt settlement as a last resort. These are reported on your credit report and lower your credit score.
10. Financial Crisis. If you are currently unable to pay your debts due to unemployment or financial problems request a financial hardship. You can request a reduced monthly payment and reduced interest rate for a period of one year but you must provide supporting documentation.

9 Ways to Protect Your Credit and Increase Your Credit Score

If you do a search on the internet you will find thousands of websites that provide tips or tricks on how to increase your credit score or repair your credit. This means that there is something about having good credit. Good credit opens the doors to various benefits and perks.

Good credit increases your chances of being hired for a job, provides you with cash back rewards, good interest rate and terms, skip a payment options, notices about sales or discounts, automatic credit limit increases without a credit check, and more. This year make a promise to yourself to repair your credit and increase your credit score. Here are 9 ways to protect your credit and increase your credit score.

1. Create a spending plan. Create a budget or spending plan to keep track of your spending so you can readily see where you money is going and make adjustments.

2. Reduce spending. Live below your means. Use coupons; buy items in bulk or on sale to reduce the amount of money you spend each month. Buy more needs vs. wants.

3. Pay down debt. Keep balances at 30% or below the limit. Having credit cards maxed out or close to the limit decreases your credit score.

4. Pay on time. Pay your bills at least 7-10 days before the due date to avoid late fees and penalties. You made an agreement with your creditors to pay your bills on time so try your best to keep that promise.

5. Don't open too many accounts. Don't open more than one account per year. You may be surprised to know that opening more than one new account per year will lower your credit score.

6. Don't close accounts. Don't close accounts that have been open for 2 years or more and don't close accounts that are in good standing. Closing accounts can decrease your credit score.

7. Be honest. Explain to your creditor the reason why you didn't pay your bills and that you are ready to pay back the debt. You may have to convince them several times because you have a bad track record. Notify them in writing of your willingness to pay.

8. Don't Hide. You can run but you can't hide. Call your creditors to setup a payment plan but don't avoid them. They will find you.

9. Don't Believe the Hype. Many times creditors use threats, insults and dishonesty to get you to pay your bills. Know your rights and don't agree to anything over the phone. Ask them to state their terms in writing. Review the Fair Credit Reporting Act on the Federal Trade Commission website for information about your credit rights.

Credit Repair Secret Gem - Account Reaging

Account re-aging can help you get back in good standing with your creditors and increase your credit score. Account re-aging means the creditor will no longer consider an account late and will no longer be reported on your credit report.

Creditors will re-age your account once you have established a history of making payments on time. A creditor may re-age a past-due account if you agree to enter a debt management plan. The revised payment plan can be negotiated between you and your creditor or with the help of a credit counseling service or a debt management company. If you use a debt management or debt consolidation program make sure they are a reputable company and get the agreement in writing.

An account is legally considered delinquent if a payment has not been received 30 days after the due date. Banks have 2 methods for reestablishing delinquent accounts: re-aging and a financial hardship program. In the financial hardship program, you are given a fixed payment amount, and reduced interest rate for a year. This helps reestablish trust with the bank. Re-aging helps you because:

It stops late fees and over limit fees and allows more of your monthly payment to go towards the principal. This shortens the time it takes to pay off your debt.
The creditor reports your account as current with the credit bureaus.
Although you still owe the debt you are no longer delinquent on the account.
For mortgage accounts that were previously late, if you have been current for the last 12 months, ask the lender to re-age your account. By doing this all the late payments over 12 months old will be removed from your credit report.

Federal regulations and creditor policies limit the number of times an account can be re-aged, so once you have re-aged an account continue making your payments on time. A creditor may only re-age an account once in a 12 month period and twice in a five year period for credit card accounts, and once in a five year period for other types of accounts. In June 2000, the Federal Financial Institutions Examination Council established new guidelines for issuers to follow when re-aging credit card accounts. To be considered for re-aging:
1. The borrower should demonstrate a willingness and ability to pay.
2. The credit card account should be at least 9 months old.
3. The borrower should make at least 3 consecutive minimum monthly payments or the equivalent amount.

If a creditor agrees to re-age an account, ask them to confirm the details in writing. If the company refuses put the details of your re-aging program in writing. Send a copy to your creditor by certified mail with a return receipt.
By re-aging an account, the company will remove all late payments and added interest, reduce the interest rate paid on the account, and bring your payments current. They will also report the payment arrangement to the 3 credit bureaus, Equifax, Experian and TransUnion and this will increase your credit score.