Credit Repair is as Important as Getting Out of Debt

Avoiding complications in credit repair is almost important as getting out of debt. When we have bills that were neglected simply because we didn’t have the money to pay the bills, or else we purchased items instead of paying the bills, we are in debt.

If you are considering a Home Equity Loan to get out of your current mortgage, don’t. Why? Simply because most Home Equity Loans get you deeper in debt and once you are obligated you will find the problem is more complicated than when you applied for the loan.

Lenders often target home owners with financial difficulties offering them high interest rates and making them believe it is a solution for debt relief. In most cases, this is where foreclosures come in, or selling homes come into place. The solution is only an option to get you in debt deeper. One solution then is for homeowners to consider the Reverse Mortgage Loans. This type of loan is often as equity against your home, belongings, and so on. The loan offers a ‘cash advance’ solution and requires that the owner does not pay on the mortgage until the end of the mortgage term or when the home is sold.

Most lenders provide a lump sum advance, a line of credit, or else a monthly installment to the home owners. Some lenders even offer a combination to the homeowners. This is certainly a good solution for repairing your credit, and building your credit to a new future. The downside is that Reverse Home Mortgage Loans often are more suitable for the older generation of people that have built equity over the years in their homes. Another disadvantage is that almost all home loans require upfront payments, such as title, insurance, application fees, origination fees, interest and so on. Therefore, it pays to ask questions and shop around before taking out another loan to repair or build your credit. Fannie Mae Home Keeper Mortgage Programs are one of the many that offer a Reverse Home Mortgage Loan.

Another option for paying off your debts and repairing your credit is to borrow the money from family members or friends. If you have someone that trusts you enough to loan you the money to get out of debt, it is often better than getting a loan. There are several options or questions you must consider before asking family members or friends to loan you the money to build or repair your credit. One of those questions should be the obvious. Can these people afford to lend me the money to get out of debt? Are these people kind enough to loan you money without putting high demands on you. Of course there may be interest involved, but remember they are loaning you money they could be spending on their own bills. Is it possible that you can repay the loan without complicating your situation further? Can I repay these people that loan me the money to free myself of one debt? How long do I have to repay the loan? Make sure there are no extra complications before asking friends or family for money to help get you out of debt.

One of the best solutions for finding a way to repair your credit is searching the options to make the money yourself. If you have a mortgage payment and struggling each month to make ends meet, you might want to sell your home. Many homeowners go for this option simply because they make more money in the long run. Once they sell their home they are often able to repay their mortgage loan and then take out a loan for another mortgage more affordable. If you decide to sell your home to repair your credit and get out of debt, be sure that you look around for the best possible solutions in order to prevent further complications.

Make sure you know how much is owed on your home before you set a price for resell. If there are any repairs that are minor or major, try to repair them first before selling. If you can’t afford to repair the home, try to do minimal repair so that you can up the price of the home you are selling.

Common Credit Repair Questions Answered!

What is the quickest way to improve your score? Do mortgage inquiries count against your credit score? Credit repair expert Jim Kemish answers these questions and more.

The Importance of Your Credit

Your credit score will determine the interest rate that you are charged on everything from your credit cards to your mortgage. No other single bit of data has such a dramatic impact on the quality of your life. Nothing is as important, and yet credit scoring is widely misunderstood. Here are answers to some of the most common questions that we are asked.

When Did Credit Scoring Start?

In the 1950s two Stanford University researchers, engineer Bill Fair, and mathematician Earl Isaac invented the first version of what has become known as the FICO score. Fair, Isaac & Company’s FICO score is now the most widely used credit bureau score in the world. Automated FICO scores were first made available in 1989 and initially used primarily by credit card issuers. In 1995 Fannie Mae and Freddie Mac, the two secondary mortgage market giants, first recommended that lenders pull credit scores for all borrowers. And the rest is history.

Why Are the Three Scores Different?

There are three primary credit bureaus. They are Experian, Equifax, and TransUnion. Each of the three bureaus uses the same FICO scoring model although each of the bureaus has re-branded the score name for their own marketing. There are differences in your scores for three reasons. First, creditors do not all report to all three bureaus – if you look at your three reports you will most likely see that there are content differences. Second, the timing of the inclusion of information by each bureau is different – if you used a credit card recently the new balance is likely to be reported by each bureau at different times. And third, Fair, Isaac & Company modifies the software from time to time, but the bureaus do not all adopt the new release simultaneously.

The Fastest Way to Increase Your Score

There are two things that can produce very rapid results. The first is the reduction of outstanding balances. Should you decide to pursue this option you should be aware that there is a strategy which will produce the optimal result. You should pay down your revolving balances before any other type of account. And in paying down your revolving balances you should try to reduce each balance to 50 percent of your high credit limit. As a credit repair professional I counsel people on this approach daily and can vouch for the dramatic and rapid results that are produced.

A Controversial Method

There is a second way to improve your scores quickly. If you have a friend or relative with great credit ask them if they will add you to one of their accounts as an additional card member. It is important that they have good credit and that the account in question has been opened for a significant period of time. Within a short period of time your credit score will have inherited the value of your benefactor’s credit card.

A Personal Note

On a personal note, I should say that I have mixed feelings on this. Clearly, the inheritance of a benefactor’s credit rating is not an indication of your own credit worthiness. On the other hand I believe that everyone should be given all of the opportunities available to build their own credit. Because I can not find any logic in the way that the FICO model treats additional card member status, I believe that this is a loophole or bug in the system that cannot last.

Do Mortgage and Auto Inquiries Count Against Me?

This question seems to come up a lot in the credit repair business; and for good reason. If you are shopping for a mortgage or a new automobile you should have the freedom to compare different auto dealers, or mortgage lenders. In most cases they will need to run your credit to determine your interest rate. Multiple inquiries should not count against you. The FICO scoring method does take this into consideration.

Comparison Shopping Allowance

To allow for comparison shopping the FICO model simply ignores all mortgage and auto inquiries made in the prior 30 days. In other words, you can have as many inquiries as you wish during any 30 period and all of the inquiries will be entirely ignored, at least until the 30 day period has past. Once the 30 day period has past, FICO counts all the inquiries that fell in the previous 45 days as a single inquiry when determining your score. I can’t explain why FICO switches from ignoring 30 days of shopping to treating the previous 45 days as a reasonable shopping period, but there you are! As an aside, I should mention that this rule is very recent. Instead of a 45 day allowance for a shopping period the prior FICO model used 14 days.

Contacting Creditors To Help With Credit Repair

Having good credit is almost a necessity on today’s world. In most cases, credit it essential to owning a car or home, and with the proliferation of online shopping it’s hard to be without a credit card. Unfortunately, some people get into trouble with their credit. They miss some minimum payments on their credit card, or let a loan go into default. When this happens the creditor will report it a credit reporting agency, who will add it to your credit history. Once your credit history is blemished, it can be difficult to repair: most things will stay on your credit history for 7 years before they are removed.

Once you’re in a situation where you have a bad credit history, you’ll find yourself dealing with many previously unknown problems: you won’t be able to rent cars or purchase things online; landlords will hesitate to rent property to you; a mortgage may be difficult or impossible to get. This is why it’s important to engage in credit repair as soon as possible: you can do wonders for your credit repair by taking proactive an early action.

One of the best things you can do if you’ve fallen behind on payments is to contact your creditor. Many people, alas, take the opposite approach: they feel a sense of embarrassment or shame and avoid calls and contact with their creditors. This type of behavior is shortsighted and will result in long term credit difficulty.

The best thing you can do in terms of credit repair is to contact your creditor as soon as you run into trouble with a debt. Remember that the key to credit repair lies in your credit history report, and the report depends on whether or not your creditor reports you to the credit reporting agency. In most cases your creditor will be open to discussing alternate payment plans and solutions. Keep in mind that it is not in the creditor’s interest to push you away, as that could mean they get no payment at all. Instead, the creditor is likely to be open to discussing terms.

For these reasons you should always contact your creditor to ensure faster credit repair. Once you contact them, propose a payment system that is realistic both for you and the creditor. It is absolutely essential that you propose a payment plan you can stick to, and that you stick to it. The absolute worst thing you can do is default on these payments – if you do so it will seem like you were simply stalling to avoid payment from the creditor’s points of view.

In general, when contacting your creditors in regards to outstanding debts, remember that their decision as to whether to report your non-payment to the credit report agency will affect you greatly, and it is in your interest to do everything in your power to convince the creditor not to do this. By contacting your creditor early and proposing a realistic payment system, you take one of the most effective steps possible towards credit repair.

Credit Repair: How Credit Scores Really Work

Not all Scores are Equal

There are many credit scores available, but the only one that matters is your FICO score. FICO, by the way, is an acronym for Fair Isaac and Company, the developer of the score. This is the score that virtually all lenders use. Other scores attempt to approximate the FICO score, but frequently vary by a significant margin.

One Score with Three Names

The FICO score may be referred to by three different names. This is because the three bureaus have branded it for their own marketing. Equifax calls it a BEACON score, TransUnion calls it an EMPIRICA score, and Experian calls it the EXPERIAN/Fair Isaac Risk Model. Because of this you will hear of three different scores, although they are all a product of the same formula.

Why Are Your Three Scores Different?

Your three scores are different because each bureau gathers information from a slightly different mix of creditors. If you were to look carefully at your three reports you will notice that some accounts are missing on each bureau. Timing also plays a roll. A recent change in your credit may be picked up sooner at one bureau than another.

What is Included in Your Score?

Are you working on credit repair? Be proactive. But in order to influence your score it is essential to understand how it works. Here is an overview of the contributing factors.

Pay History

Your pay history is the big ingredient. This category includes installment and revolving accounts, as well as public records and collections. The age of a derogatory item diminishes its impact on your score. The first step in the credit repair process is to examine your report for obvious errors in this category which makes up 35% of your score.


Your account balances make up the next category. The relationship between the balance and the credit limit on your revolving accounts is a major factor. Anyone involved in a credit repair effort should minimize their revolving balances as much as possible. The relationship between the current balance and the original balance on installment loans is also taken into consideration. This category makes up 30% of your score.

The Age of Accounts

New credit will have a negative impact on your score, and those accounts that you have kept alive and healthy for years have a good impact. Closing old accounts is a common credit repair error to be avoided. This category makes up 15% of your score.

New Credit & Inquiries

New credit and recent inquiries are a factor. Many credit repair candidates open new secured credit cards for the long term benefit. But generally, anyone involved in credit repair should limit new credit activity. Either way you will lose a few points on this one. Fair Isaac weighs this at 10% of your score.

Type of Credit

The type of your credit is the final 10% of the calculation. Fair Isaac won’t define the perfect mix of mortgage, installment, revolving, and consumer debt, but in our experience the key to a long term successful credit repair effort is to be a moderate user of credit, make your payments on time, and try to keep those revolving balances down.

False Credit

As you begin your credit repair effort it is important to have reliable information. Amazingly, the same three credit bureaus that sell authentic FICO scores to lenders also sell unreliable estimated scores to consumers. Every day untold numbers of consumers go to TransUnion’s “True Credit” website and pay for what they believe to be their credit scores. What they get are deceptively named “TrueCredit” scores which vary significantly from the FICO scores used by lenders. Here is the (almost impossible to find) small print from the TransUnion website. “TrueCredit is not connected in any way with Fair, Isaac and Company; the credit score provided here is not a so-called FICO score. The credit scores of TransUnion may not be identical in every respect to any consumer credit scores produced by any other company.”

Real Credit Scores

Are you starting the process of credit repair? Do you want to see your real FICO scores? is the only place that consumers can purchase their authentic FICO scores. Want to save some money? It is handy to know that mortgage brokers typically look at all three FICO scores when pre-qualifying you for a mortgage. If you ask, they just might give you a copy of your report along with all three scores. It can’t hurt to save a few dollars!

Credit Repair: Repair Bad Credit Card Debt Yourself

Credit repair and eliminating your credit card debt does not mean that you have to hire an expensive credit repair service. In fact, if you want to fix your credit you can do it yourself for free. I cannot promise that it will be easy but despite the glib promises made by professional services those are not easy either.

Do not sign a contract committing yourself to an expensive credit repair service. Do not buy any books or software to help you fix your credit. Instead focus on three simple and free steps to rid yourself of bad credit.

First, go the root of the matter. Run your credit reports, every consumer gets a free credit report from the three major reporting agencies every year. Plus if you have had a credit application denied recently you can ask for a report at that time. You do not need to pay for your credit report or join a program to get access to it. This will give you a good picture of your credit situation but you should also collect the recent statements from each of your creditors. Not only will these give you valuable contact information for the next two steps but it usually offers the most up-to-date information regarding your payments, balance, and interest rates.

Once you have summarized your situation it is time to move on to step two which is simple — empty your wallet of credit cards. Cut them up and throw them out, but then you need to take another important step. Close those accounts and do not sign up for any more cards until your credit is once more good. If you continue to add to your debt then you will not solve your problems.

The final step to repair your bad credit and eliminate your credit card debt will take the longest and involve the most hard work and stress. Now you will need to make a plan of action. The first step is to stop making any payments on your credit cards. Now, set aside the money you would use to make those payments for a few months. When the credit card companies start calling about your delinquent payments be polite but be clear that you cannot pay the bill at this time although you are working on a plan to clear your debts. Tell them not to call again until next month. Minimum payments will never clear your debt and it is best to consolidate the money until it matches a sum that will be able to do you the most good. Once you have enough money to pay about one-third of one of your bills (assuming a few months have passed) then call the company and offer your one-third payment. Some companies might jump at that settlement and others may negotiate for a while. It is very likely that through standing firm, consolidating your payments, and waiting them out that most of your creditors will settle for half or less (on average).

You can do your own credit repair and eliminate your credit card debt without outside help with these three simple steps. Simply summarize your situation, empty your wallet, and work the phones. You can do it.