Beware of Credit Repair!

We've all seen them. "Send me 99.95 and I'll fix your credit and
you can get a one million dollar credit card tomorrow." Ok so I
am being a little dramatic. This article is to give you some
insight into repairing your credit. It is not meant in any way
to be legal advice. We will discuss several things in this
article such as how credit works, paying or settling debts,
credit repair companies, and establishing new credit. Before we
begin I want to share a few things. I was a collector for almost
10 years until bad health forced me to leave the profession. I
have also had my credit messed up by a bankruptcy after my son
was hit by a car and had over ½ million dollars in medical
bills. Yet within 18 months I had purchased a new car, a home,
had credit cards and some other accounts. So you see credit can
be damaged but it can be repaired. 

 Before you can fix your credit report you have to know what is
on it.

 www.annualcreditreport.com

 www.equifax.com

 www.transunion.com

 www.experian.com

 Some of the bureaus have an online score calculator that will
allow you to see how your credit score will rise if you pay a
debt off, or begin making payments. Check it out and become
familiar with it. Although there are 3 credit bureaus, and in a
perfect world they would all say the same thing, they may each
have slightly different info. Review your reports to make sure
there are noinaccurate entries.

 When I was collecting I often had people say to me "My credit
is ruined so why should I pay ?" After I explained to them how
the credit bureau worked, and showed them that they could fix
the damage they where happy to pay. Many people get behind on
their bills, figure their credit is ruined and just give up and
never pay the bills. So it reports bad to the credit bureaus and
they never make any payments on them so it stays bad. Many think
that if they get behind that they automatically can't get credit
for 7 years. While it is true that it may report for 7 years so
will any payments you make after the time the account went past
due. It is similar to a stack of boxes. If the last box says bad
then it lowers your score and all your future creditor can see
is the bad box. But if you make payments after that it pushes
the bad box down the line. The creditor can still see it but it
has less importance. So even if you got behind or haven't paid
it for a long time either beginning to pay on it or paying it
off or settling it will help your credit score.

 I have often seen people who thought their credit was ruined
and all they had was a few hundred dollars in unpaid medical
bills or a small credit card. I advise people that they should
just pay off small accounts either in full or by payments. In
some case making payments on the debt may be better for your
credit than just paying it off in full. The reason is that the
credit bureau is really just a record of how consistently you
make your payments. If the account isn't charged off and in
collections then you are probably best to just make payments. If
they don't update the bureau until it is paid for then by all
means go ahead and pay it off. 

 If you have larger debts you may be able to settle the debt. If
the debt is charged off and with a collection agency your
chances are better. Why ? Because they get the accounts and they
get a percentage of what if recovered. They like it when they
don't have to spend a lot of time and money to recover the
money. I have seen them accept anywhere from 80% down to 30%. It
depends on the agency and the age of the account. BEWARE BEWARE.
If you settle with an agency you still may hear about the debt
in the future. Let me explain why. Then original creditor
assigns it to the agency. You settle with them. The account is
sent back to the creditor. The creditor isn't aware it was
settled, just that the balance is lower. In some cases it gets
reassigned to a secondary agency who is also unaware that it was
settled. So they attempt to collect on the lower balance. If you
settle a debt make sure you get documentation that it was a
settlement. Make sure your credit bureau is updated to reflect
that. Make sure you KEEP that documentation. If you are ever
contacted by another agency in the future you will need that to
prove that you settled that debt.

 That bring us to credit repair companies. There are some that
are legit and honest and some that are just a ripoff. Be
careful. They will promise you that they will fix your credit,
get you new credit, the sun will shine, the grass will grow and
the birds will sing and the flowers bloom yada yada yada. They
use the dispute process with the credit bureaus to do this and
it isn't always effective. You can also do that for yourself.
They may know a little more about it tho. If you use one I would
find out how they plan to fix your credit, can they negotiate
settlements for you, can they refer you to getting new credit
established and most important, will they refund your money(less
any actual expenses) if they fail to improve your score.

 It is possible to establish new credit without going through
the steps I mentioned. You can get secured credit cards.
www.cardreport.com These cards do report to the credit bureau
but they are secured. Typically they open an account for $250.
The fees they charge usually come up to the same amount. So they
aren't really assuming any credit risk. But they will report to
the bureau. Make your payments on time or ahead of time. Also
pay more than the minimum. There are other variations of the
secured card. The best one is one secured by a bank account
since you aren't just giving money away to get a credit card. 

 If you have any questions please email me:
webmaster@jaxconnect.com or post a message in our forum:
http://xsorbit29.com/users5/jaxconnectsmessageboard/index.php. I
am also available for personal consultation.