Wealthy Joe Basics: How To Repair Your Credit!

credit repair

Checking your credit nowadays is so much easier than it was 20 to 30 years ago.

Resources like Credit Karma keep you up to date with any changes to your credit score.  They will also let you know if your data has been compromised.

Many credit card and bank apps now have a feature that allows you to check your score for free.

There really is no excuse in this day and age not to be on top of your credit!

When I was a freshman in college, over 25 years ago, the credit card companies would set up tables on campus.  In my opinion, that’s the original form of predatory lending: trying to get a bunch of 19 and 20 year olds to start the journey of credit ruin.

Unfortunately, at one point or another, many people will find themselves in a position of having mismanaged their debt.  Whether it’s due to not paying on time, or to a sudden loss of income, accounts in collection and charge-offs will destroy your credit score.

No matter how damaged your credit is, however, you can rebuild it.

I’m not a fan of credit repair companies, because sometimes they try to implement a quick fix that will boost your score but only last temporarily.

The truth is that rebuilding your credit score is very simple.  Here’s how it’s done:

Accounts in collection: Negotiate with the collection agencies to pay off the debt.  If you owe $2000, and you happen to have $1000 available, you could probably settle the debt with $1000.  Once it’s reported to the credit bureaus that the account has been paid, your credit score will increase.

After a bankruptcy or repossession: These kill your credit score.  Once they’re on your report it will take seven to ten years for them to come off.  The only thing you can do in this case is to continue to pay your other lines of credit on time.  Over time, your score will gradually improve.

Accounts that don’t belong to you: If you find an account on your credit report that you never opened, and are positive it doesn’t belong to you, you should write a dispute letter to each credit bureau (Equifax, Experian, and TransUnion) reporting this information and informing them that the account does not belong to you.

They have 30 days to either a) provide you with proof that the account is in fact yours or b) remove it from your credit report.

Identity theft in the information age is rampant, and something we all have to be on the lookout for.  You should make a habit of checking your credit quarterly.  The sooner you identify false information, the faster you can deal with the problem.  It can take over a year to clear up your credit due to being a victim of identity theft.

My book, The Stock Market is For Everyone, is a short guide for the beginning, inexperienced investor that is easy to understand and can be put into action immediately.

Click the image of the book at left to be taken to its Amazon page.  (Disclosure: As a participant in the Amazon Services LLC Associates Program, I earn a small commission on each sale generated through these links.)

 

 

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Wealthy Joe Basics: How To Build Credit!

i have no credit

Unfortunately, “no credit” equals “bad credit” in our society.

The credit rating agencies have decided that choosing to abstain from credit may be proof that you don’t know how to manage it!  It doesn’t matter if your decision is well thought out and calculated: in the eyes of the credit bureaus, your credit rating will be low.

If you are in this boat, you can easily build up your credit score, if you’re gainfully employed and have financial discipline.

Here’s how:

1. Apply for a secured credit card.

A secured credit card will issue credit based on the amount of a deposit you make.  So if you deposit $250, your credit limit will be $250.

The one drawback is that most of these cards come with an annual fee.  Try to select one with low fees.

Once the account is set up, you simply use it like you would a regular credit card.

The credit card company will report your payment history to the three credit bureaus like they would for any other card.  If you continue to make on-time payments, your score will gradually increase.

Eventually the credit card company will refund your deposit and convert your card to an unsecured one.

2. If you have an outstanding student loan, and you’re paying it on time, you are building credit.

There are a few other, gimmicky ways to build credit.  But I don’t like gimmicks when it comes to personal finance. In my opinion, the secured card route is the best one to take.  I’m speaking from experience!

 

My book, The Stock Market is For Everyone, is a short guide for the beginning, inexperienced investor that is easy to understand and can be put into action immediately.

Click the image of the book at left to be taken to its Amazon page.  (Disclosure: As a participant in the Amazon Services LLC Associates Program, I earn a small commission on each sale generated through these links.)