Repairing Credit Problems
Many families are financially strapped and max out credit cards. Could your credit use some fixing?

Repairing Credit Problems Since many families have been in this situation before, we thought we could help those of you who are currently having credit problems. If you're having problems getting credit or paying your monthly bills, you might look to businesses that advertise quick and easy solutions to credit problems. But there are really no instant solutions to repairing your credit. Although some credit counseling companies guarantee to repair your credit or give you your money back, there are usually strings attached or you won't be able to get your money back for one reason or another.

There are certain things you can do to begin repairing your credit, but you must take the time, have some patience, and follow the law. Read on to find out why your credit history is important, how to build your credit history and establish credit, and what you can do to improve a history of bad credit. We also list possible ways to deal with any debts you may have.

It's important to have a good credit history: Most creditors rely mostly on your credit history when deciding whether to give you credit, even though there are other factors involved. Because of this, you must take care of your credit history. To learn how you've handled credit in the past, most creditors obtain a copy of your credit report from a credit bureau. Credit bureaus gather and sell credit information about consumers and are a principal source of information about your own personal credit history. Your credit bureau report is based on information supplied over time by all your creditors. It also provides information on where you live and have lived, where you work, and may note other matters of public record such as judgements or bankruptcies. Your report records payments you have made on credit cards, installment loans, other credit accounts, and helps your creditors predict whether you are likely to be a good credit risk. A history of timely credit payments will help you get approved for additional credit.

You can get in touch with the three largest credit bureaus by contacting them at the addresses below. You are entitled to a FREE credit report from each of the credit reporting agencies once per year.

To read your rights under the Fair Credit Reporting Act and to find contacts for questions or concerns, CLICK HERE.

1. Trans Union: PO Box 403, Springfield, PA 19064; Phone: (800) 888-4213; Website: Trans Union
2. TRW/Experian: PO Box 2106, Allen, TX 75013; Phone: (800) 422-4879; Website: TRW
3. Equifax: PO Box 740241, Atlanta, GA 30374; Phone: (800) 378-2732; Website: Equifax

There are some creditors who are reluctant to grant credit to consumers who have not yet established a good past credit history with other creditors first. It's sort of like a catch-22...you want to get a good credit history, but you can't get one without having one first. There are also many creditors who will not extend credit to consumers with a history of delinquent payments, repossession, judgements, or bankruptcy. If you're in either situation, do not fall for ads that promise you instant credit or a major credit card regardless of past credit history. The fact is, that all legitimate creditors want to know whether you're likely to be a good credit risk. Whether you get credit will depend on whether your qualifications meet the creditor's criteria. No one can guarantee you credit in advance.

Building a credit history & establishing credit: We've already mentioned that a good credit history is important to have. What do you do if you don't have any credit history at all? You should take the time to establish your first credit account. There are young people as well as older people who have never used credit. Also affected are divorced or widowed women who had shared credit accounts that were reported only in their husband's name. You can also check with the above listed bureaus or one of your local bureaus (you can find them in the phone book under "Credit" or "Credit Reporting Agencies"). For a nominal fee, they will send you a copy of your credit report so you can see where you stand.

If you have had credit extended to you before under a different name or in a different location and it is not reported in your file, you should ask the credit bureau to include it. If you shared accounts with a former spouse, you should ask the credit bureau to list these accounts under your name as well. Although credit bureaus are not required to add new accounts to your file, many will do so for a small fee. Finally, if you presently share in the use of a credit account with your spouse, ask the creditor to report it under both names so you can have your own credit history as well.

Creditors are not required to report any account history information to credit bureaus. If a creditor does decide to report on an account, and if both spouses are permitted to use the account or are contractually liable for its repayment, under the Equal Credit Opportunity Act you can require the creditor to report the information under both names. When contacting your creditor or credit bureau, do so in writing and include relevant information, such as account numbers to help speed up the process. Always keep a copy of all information sent and received.

You should begin to build a credit history if you have none. If you have a steady income and have lived in the same area for at least a year, try applying for credit with a local department store. Another thing you might do is to borrow a small amount from your bank where you have a checking and savings account. A local bank or department store might approve you for credit whereas the larger creditors won't, because their standards aren't as tough to meet. A good thing to do before you apply for credit, is to ask whether the creditor reports credit history information to credit bureaus serving your area. Most creditors do, but some don't. If possible, you should try to get credit that will be reported, since this will be what builds your credit history.

If you get rejected for credit, you should find out why. There may be reasons other than lack of credit history. Your income may not meet the creditor's minimum requirement or you may not have worked at your current job long enough. A problem such as this might need only time to resolve it. You could wait for a salary increase and then reapply, or you could simply apply to a different creditor. Whatever you decide to do, it's best to wait at least six months before making each new application. Credit bureaus record each inquiry into your credit history. Some creditors may deny your application if they think you're trying to open too many new accounts too quickly. They might also think you might have too much credit available to you.

There is another way to get credit if you yourself cannot be approved. You could ask someone with an established credit history to act as your co-signer. Co-signers promise to pay a debt if you don't...this might improve your chances of getting credit. Once you've repaid the debt this way, you should try and get approved for credit on your own.

What can you do to repair a bad credit report: You are entitled by law to be able to correct any inaccurate information that appears in your credit report. If a creditor rejects your application because of negative information in your credit report, it must identify the credit bureau that it got its information from. At your request, the credit bureau must disclose the contents of your credit file. If you act within thirty days of being turned down, you will not be charged for this service.

Whenever you receive a copy of your credit report, you should check to make sure all the information is accurate and complete. Don't fail to skip over your social security number, since a mistake in just one number can have you confused with a totally different person, and situation. You have the right (under the Fair Credit Reporting Act) to dispute the completeness or accuracy of any information in your report. If you find an error, it helps to tell the credit bureau in writing, why you think the information is not correct. Unless your dispute is frivolous or irrelevant, the credit bureau then must do an investigation. If they find any information that is not correct, they must correct it. Any information that cannot be verified must be deleted. If you disagree with the results of the credit bureau's findings, you may file a brief dispute in future credit bureau reports.

If there is any true negative information in your credit report, there is only one thing that will ensure its removal...the passage of time. Credit bureaus are permitted by law to report bankruptcies for ten years and other negative information for seven years. There is nothing that you or anyone else can do to require a credit bureau to remove accurate information from your credit report until the reporting period has expired. Don't be misled by ads aimed at people with bad credit histories, judgements, or bankruptcies. Promises to repair or "clean up" a bad credit history can almost never be kept.

If you discover that you've been a victim of credit card fraud or identity theft, you should take immediate steps to resolve the situation. The following sites are very informative and are a good place to start:
1. Identity Theft Prevention and Survival: Learn how to protect your identity, credit, and good name; and if you're a victim, take steps to resolve the problem!
2. Privacy Rights Clearinghouse: Learn how to protect your personal privacy.

What can you do about debts: A sudden illness or the loss of your job may make it impossible for you to pay your bills on time. Whatever your situation is, if you find that you cannot make your payments, you should contact your creditors immediately. Try to work out a modified payment plan with your creditors that reduces your payments to a more manageable level. If you've made payments on time in the past, they may be willing to work with you. Do not wait until your account is turned over to a debt collector, because once it gets to that point, your creditor has already given up on you and there will probably be no compromises made.

If you have an automobile loan, they present their own problems. Most automobile financing agreements permit your creditor to repossess your car at any time that you are in default of your payments. They don't need to give you any advance notice. If your car is repossessed, you may have to pay the full balance due on the loan, as well as towing and storage costs to get it back. Do not wait until you're in default...try and solve any problems with your creditor when you realize that you cannot make your payments. If may be better in the long run to sell your car yourself and pay off your debt, rather than incur the added costs of repossession.

Evaluating credit repair companies:: People who are having trouble paying their bills might be tempted to turn to a company that claims to offer assistance in solving debt problems. Such companies may offer debt consolidation loans, debt counseling, or debt reorganization plans that are guaranteed to stop creditors from contacting collection agencies. Before you sign up with one of these companies, do thoroughly investigate it. Be sure you understand exactly what services are being offered, and exactly what they will cost you. Do not rely on oral promises that do not appear in your contract. You should also check with the Better Business Bureau and your local consumer protection office first. They may be able to inform you if others have registered complaints against that particular business. People who have used such companies for help sometimes encounter additional problems. There might be hidden costs, as well as possibly requiring your home as collateral. An unscrupulous company may misrepresent the terms of such loan agreements. If they do, you could unfortunately end up losing your home.

Companies that offer debt counseling or reorganization may charge substantial fees or a percentage of your debts, but fail to follow through on the services they sell. Some may do little more than refer indebted consumers to a bankruptcy lawyer, who charges an additional fee. Companies who advertise voluntary debt reorganization plans or Chapter 13 relief may fail to explain that Chapter 13 debt adjustment actually is a form of bankruptcy. To qualify for it, you must have a source of regular income and a plan for repaying your creditors that meets the approval of the backruptcy court. Companies that sell bankruptc-related services may not inform you all that is involved or assist you through what can be a complex and lengthy legal process. Debt problems can be distressing, but be careful when selecting a solution...which may only add to your problems.

Where can you find help without getting deeper into debt: If you need help in dealing iwth your debts, you might want to contact a Consumer Credit Counseling Service (CCCS). This non-profit organization has more than 1450 non-profit agencies that provide money management education, confidential budget, credit, and debt counseling, and debt repayment plans for both individuals and families. CCCS counselors will try to arrange a repayment plan that is acceptable to you and your creditors. They will also help you set up a realistic budget and plan future expenses. These services are offered at little or no charge to you. You can find a CCCS office nearest you by checking the Business Pages of your telephone directory, or by calling their 24 automated phone line for information and to leave messages: (800) 388-2227 (1-800-682-9832 for assistance in Spanish). If you have further questions you can contact:
National Foundation for Consumer Credit, Inc., 8611 Second Avenue, Suite 100, Silver Spring, MD 20910; Website: NFCC

There are also non-profit counseling programs operated by universities, military bases, credit unions, and housing authorities. They are likely to charge little or nothing for their assistance. You can also check with your local bank or consumer protection office to see if there is a listing of reputable, low-cost financial counseling services.

For more information: The Federal Trade Commission enforces a number of federal laws involving consumer credit, including the Equal Opportunity Act, the Fair Credit Reporting Act, the Truth in Lending Act, the Fair Credit Billing Act, and the Fair Debt Collection Practices Act. It also provides free brochures explaining these laws in detail. For these or related publications, such as Building a Better Credit Record, Women and Credit Histories, and Credit Billing Blues, CLICK HERE or write to the following address:
Public Reference, Federal Trade Commission, Washington, D.C. 20580; Website: FTC

Even though the FTC cannot solve individual problems, it can act when it sees a pattern of possible law violations developing. If you have a complaint that may involve a violation of consumer protection law, write to the following address:
Correspondence Branch, Federal Trade Commission, Washington, D.C., 20580; Website: FTC

Summary: Here's a brief overview & some important facts about credit history:

1. Your credit report records your payments on credit cards, installing loans, and other credit accounts. It helps creditors predict whether you are likely to be a good credit risk.
2. Be leary of ads that promise you instant credit or a major credit card regardless of your lack of credit history or past credit record.
3. If you're rejected for credit, find out why. You can get a free copy of your report if you request it from the credit bureau that provided it, within 30 days of being turned down.
4. Check to see whether the information in your credit report is accurate and complete. You are entitled by law to correct inaccurate information that appears in your credit bureau file.
5. Bureau of Consumer Protection, Office of Consumer & Business Education: (202) 326-3650; Website: Bureau of Consumer Protection

Below are 3 very informative books to read related to the above topic. Use Amazon.com's secure server to order NOW:

The Privacy Rights Handbook: How to Take Control of Your Personal Information.: - Privacy Rights Clearinghouse. Buy it NOW through Amazon.com's secure server! Click HERE or on the image of the books to give this gift to yourself or someone else!

Debt No More: How to Get Totally Out of Debt Including Your Mortgage: - Carolyn J. White. Buy it now through Amazon.com's secure server! Click HERE or on the image of the books to give this gift to yourself or someone else!

Credit Card and Debt Management: A Step-By-Step How-To Guide for Organizing Debt & Saving Money on Interest Payments: - Scott Bilker. Buy it now through Amazon.com's secure server! Click HERE or on the image of the books to give this gift to yourself or someone else!


Getting out of debt is no easy task (unless you have a rich family member who's really nice!)...but if you make a plan and stick to it, it can be accomplished!

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