Best Ways To Resolve Credit Problems

Good Credit Will Make An Enormous Difference To Your Financial Health

Good credit makes an enormous difference to our financial health.

Buyers ability to borrow money at reasonable interest rates is determined by their credit rating.

A credit history is your personal record of how well you have handled your financial obligations over a period of time.

To improve your financial situation, you need to:

- know what your current standing is with the credit bureaus and what your fico score is

- understand what are the causes for your credit score to be low, if it is in fact lower than you'd like

- dispute negative credit information or mistakes on your credit report

- add positive credit information

- monitor your credit rating on an ongoing basis

Credit Card Balances

The best way to improve your credit score when you have credit cards with high account balances is to pay off the debt, then keep balances low enough to pay the cards off each month. If a card's limit is $1,500 and you have a balance of $1,200 the account's debt to credit ratio is 80%. A guideline here is to have no more than 40 percent debt to credit ratios on every credit card account. Pay down your credit cards with the highest interest rates first. Always remember: if you only pay the minimum payment each month, you'll never get out of debt.

Liability Management Consultants

If you're suffering from high credit card balances, a new type of financial advisor - a liability management consultant - can help. Just like we're used to using accountants for taxes, investment advisors for investments and insurance consultants for insurance, liability managers are the fourth stool of your financial umbrella. Liability management consultants will review all your outstanding balances and come up with a plan to pay down your debt over a 7 to 12 year period by creating a plan to pay down the highest interest rate debts first, extending certain debt payout periods if necessary. Our site has a listing of liability management consultants if you don't know where to start.

Negative Public Records

Negative public records, collections, bankruptcies, judgements, liens will lower your credit scores. Most bankruptcy information will remain on your credit report for seven to ten years from the date of filing. Unpaid tax liens will stay on indefinitely. All other public record information will generally remain for seven years. Try to do everything you can to resolve serious issues such as these prior to their being recorded on your credit report. Most collections agencies and counter parties are willing to negotiate a settlement that will work for you as they have nothing to gain by putting a black mark on your credit history.

Missed Payments

If a credit report shows a missed mortgage or credit card payment, there can be a stiff penalty. Call the bank and demonstrate to them that you made the payment on time or provide the extenuating circumstances and see if they will be willing to work with you. If your payment is 30 days late, try and do everything you can to prevent it from becoming a 60 day late, which is much more injurious to your credit rating. Contact the credit rating agencies and ask to dispute the late payment. If all else fails, ask to be able to put in your side of the story into the credit report.

Your Rights

Your rights are protected by the Fair Credit Reporting Act. You have the right to dispute discrepancies on your credit report. Nowadays, this can be done very easily online by visiting equifax, transunion or experian. Each have elaborate dispute procedures and online forms you can submit. Only correct one or two accounts at a time. Usually the credit rating agencies will respond back within a few weeks. Persistence and patience are key.

Hire A Credit Counsellor

Be very wary of hiring a credit counsellor to fix your disputes. For every credit counsellor that is legitimate, there are five others that aren't. Ask for referrals and research the background of the credit counsellor. A personal referral from someone that has used their services and can vouch for them is best.

If the disputed amount is not removed and if the response is not received, send a follow up notice stating that your rights have been violated under the FCRA act and that the dispute must be removed from your credit report or you may file a complaint with the Attorney General and the Federal Trade Commission if they do not comply, as well as pursuing legal remedies through an attorney.

Create Positive Credit Events

Take a card with a balance of zero and put some charges - preferably a nice sized charge - on there and pay it off. This demonstrates your willingness and ability to pay off debt. Be fiscally responsive. Pay off balances at the same time each month and regularly. Over time your score will climb.

Avoid This Mistake

Finally, many people think that by cancelling credit cards their score will rise. Not true. If you just cancelled a card you've held for over 5 years be prepared to see your credit score drop. The finance industry does not want to see you reduce the number of cards you hold. No they want to see you hold many cards with low balances.

We hope this information has been useful to you in improving your financial situation.

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