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How Navy Federal Files Its Credit Reports

Once you ask to join Navy Federal, the credit union will request a copy of your credit report from one or more of the main credit bureaus. Navy Federal will then use this information to determine your creditworthiness, which will impact your credit limit. You can also acquaint yourself with how to rebuild credit without a credit card or contact The Phenix Group if you need any help to repair your credit. 

Having a Navy Federal account that is in good standing will help improve your credit; however, if your account is or was delinquent, it can severely damage your credit score, which can be viewed as a risk to potential lenders and put in jeopardy the possibility of getting a loan or credit.  

Even if Navy Federal reports your account activity to the relevant credit bureaus, you are still the one who is ultimately responsible for your score. It falls on you to ensure that your account is in good standing and that all of the information provided is accurate. Learn more about what a tier 1 credit score is and how this will be viewed by potential lenders.

If you have a problem with your credit account and Navy Federal, it is best to reach out to them directly. They have representatives who can clarify any issues you could be having; they can also help you understand your credit report and your score by giving you some guidance on how certain situations may be affecting you, including special circumstances such as whether closing a checking account affects credit score.

Details About How Navy Federal Files Reports With Credit Bureaus

Navy Federal is required to file its reports with credit bureaus every month. One of the reasons for this is that it provides updated credit details and how its members use their credit, regardless if it is being done wisely or unwisely.

Credit companies like Navy Federal report all of your activities to major credit bureaus such as Equifax, Experian, and TransUnion. Despite there being no specific date for filing these reports, it usually takes place at the end of the month of a billing cycle, which is usually twenty-eight to thirty-one days long.

You can request the provider of this information copy you on any correspondence related to your account that they send to bureaus. In most states, if you register a dispute, you are eligible to receive a free credit report directly from the bureau–this is done to allow you to verify or update any incorrect information. You can expect the entire process to take approximately thirty to ninety days. 

It’s important to remember that once you have a Navy Federal Credit Union account and a loan, you must keep up with your payments by paying your bills on time. Doing so will not only help you to maintain an optimal credit score, but it will also provide you with an ideal chance to show lenders that you are indeed a responsible borrower.

A Hard Pull When Applying for a Loan

Navy Federal can make a hard inquiry whenever you submit an application for a loan. In most cases, this can drop your score by five to ten points. However, you can still get things back on track with a couple of on-time monthly payments.

In Summary

Don’t forget that your credit score is one of the most critical factors lenders look at when trying to establish whether or not you qualify for a specific loan amount. This means that the higher the score is, the more likely you will secure approval that comes with a reduced interest rate. This can also help you save a lot of money throughout the term of your loan.

Being able to show that you use credit appropriately is one of the best ways to prove that you are responsible with your money and not just spending it however you want. This will also play a part in determining your creditworthiness if you ever decide to borrow money again.

You may be trying to figure out how to rebuild credit after debt settlement and how closing a checking account will be viewed by creditors. So, what is the truth? 

Each Situation Is Different

Closing a checking account can impact your credit score, though the specific effect will depend on your financial situation.

No Significant Impact

If you have a positive history with the account and maintain a good relationship with the bank, closing it may not significantly impact your score. If you’re in good standing and have no outstanding balances, you may not see a significant dip.

Negative impact

If you have a history of overdrafts or missed payments, closing the account could lead to a drop in your score. When you close a checking account, the bank will report the account as “closed by the consumer” to the credit bureaus. This notation will stay on your credit report for up to seven years and may negatively impact your score.

Also, if you have outstanding checks or unpaid fees when you close the account, this will be reported to the credit bureaus and could lead to a drop in your score. Closing an account you’ve had for a long time could shorten your credit history and lead to a lower score.

The impact of closing a checking account on your credit score will vary depending on your individual situation, so it’s important to weigh the pros and cons before closing your account. 

How to Fix a Debt Settlement Issue

Debt settlement can be a tool to help you get out of debt and improve your financial situation. You can rebuild your credit after debt settlement by following these five steps:

1. Get on a Budget

The first step to rebuilding your credit is getting on a budget. You need to find a way to live within your means and ensure you’re not spending more than you bring in each month. This will help you get a handle on your finances and start to pay down your debt.

2. Pay Your Bills on Time

One of the most important things you can do to rebuild your credit is to start paying all of your bills on time. This includes your mortgage, car payment, credit cards, and any other bills you may have. Late payments can stay on your credit report for up to seven years, so it’s important to pay on time.

3. Pay Down Your Debt

Once you’ve gotten on a budget and are making all of your payments on time, you can start to pay down your balances. Start with the account with the highest interest rate and focus on paying that off first. As you pay down your debt, your credit score will improve.

4. Use Credit Wisely

After you’ve made strides in paying down your debt, it’s important to keep using credit wisely. This means using your credit cards for purchases you can afford to pay off in full each month in order to keep your balances low. Using credit wisely will help you maintain a good credit score and improve your financial situation.

5. Monitor Your Credit Report

Keep an eye on your credit report so you can see the progress you’re making. You’re entitled to one free credit report per year from each of the three major credit bureaus. Check your report regularly to ensure there are no errors or unusual activity, too.

Example of Larger Creditor Reporting

If you’re a member of the Navy Federal Credit Union, you may wonder when does Navy Federal report to credit bureaus. This large, global credit union reports account information to the credit bureaus monthly. 

Your payment history will also be reported monthly if you have a Navy Federal Credit Union loan. Therefore, it’s important to make all your payments on time to avoid negative marks on your credit report.

Auto loans are also typically reported to all three credit bureaus (Experian, Equifax, and TransUnion). If you are curious as to which credit bureau is most used for auto loans, Experian is usually the go-to, because it has a specific score designed for auto lenders called the FICO Auto Score.

Conclusion

Closing your checking account can have an impact on your credit score, depending on your individual situation. If you had debts in the account that are not settled, closing the account could lead to a significant drop in your score. However, if you have a positive history with the account and the bank, you may not see a huge impact on your score.

This information may be helpful if you want to know how to build credit after car repossession.

If the potential lender uses all three services, it will most likely use the middle score from the three credit reports. So, if your Experian score is 690, your TransUnion score is 710, and your Equifax score is 720, the lender will use the 710 score.

Ask the lender which credit bureau they plan to use so you can check your report for accuracy. 

How To Fix a Problem With an Old Car Loan

Car repossession can have a very negative effect on your credit score. If you have had a car repossessed, you may be wondering how you can ever get your credit score back up. Here are a few tips on how to build credit after car repossession.

Monitor Your Credit Reports

The first thing you need to do is get a copy of your credit report. You are entitled to one free credit report from each of the three major credit bureaus every year. Check your report for any mistakes and dispute any inaccuracies.

Make Payments on Time

You need to start paying all of your bills on time, every time. Payment history is one of the largest contributing factors to your credit score. So, ensure you pay on time for every amount that you borrow.

Reduce Your Debt

Another important factor in your credit score is your credit utilization ratio. This is the amount of debt you have compared to your credit limit. If you have a lot of debt, you may need a debt consolidation loan to pay them off–this can help you reduce your interest payments and get your debt under control.

Pay Off Collection Accounts

If you have any accounts with a collection agency, you should try to settle them because they may negatively affect your credit score. If you can’t pay them off, you may be able to negotiate a reduced or extended payment schedule and ultimately have the account removed from your credit report.

Build Up Your Credit Limit

You could ask your credit card company for a higher limit if it is currently low. This can help you bring your credit utilization ratio down and your credit score up.

Get a Secured Credit Card

If you have bad credit, you may not be able to get a traditional credit card, but you may get a secured credit card. A secured credit card can help you build up your credit history and improve your credit score. Ensure you use the card responsibly and make your payments on time.

Other Credit Items That Might Affect an Auto Loan Application

In addition to an auto repossession, you may be wondering if there are other items in your credit history that might impact your ability to get a loan to purchase a car. For example, does closing a checking account affect credit score? Your checking account is not a line of credit, so closing it should not directly impact your credit score; however, if you have a history of bouncing checks or making late payments, closing your account could indirectly impact your score.

Bouncing checks or making late payments can also negatively mark your ChexSystems report. This report tracks your banking history and is used by banks to decide whether to approve you for an account. If you have a negative mark on your ChexSystems report, this could make it difficult to open a new checking account.

Maybe you are wondering if a debit card builds credit–debit cards can build your credit if they report your activity to the credit bureaus. If you use your debit card regularly and make on-time payments, your positive activity can help you build up your credit history and improve your credit score.

Not all debit cards report to the credit bureaus, so you need to check with your card issuer to see if your card activity will be reported.

Final Thoughts

Auto loans are an important part of building credit. If you had a car repossessed, it can be a major setback for your future financial security. You can build your credit back up by monitoring your credit reports, paying your bills on time, reducing your debt, and using a secured credit card.

 Look at some other options on how to rebuild credit without a credit card.

How to Build Your Credit Using Debit Cards

If you’re looking to build your credit but don’t want to take on the risk of using a credit card, you can do so by using a debit card. Here’s how:

Use Your Debit Card Regularly

The more you use your debit card, the more likely your card issuer will report your activity to credit bureaus. This way, you can establish a positive credit history.

Make Sure Your Transactions Are Reported

Some debit card issuers don’t report transaction activity to credit bureaus. If you’re using your debit card to build a credit history, make sure your card issuer reports your activity. This will help ensure your credit file is being updated.

Make Sure Your Payments Are on Time

Like with a credit card, late or missed payments can negatively impact your credit score. Paying your bills on time can help build a positive credit history.

Keep Your Balances Low

Using a high percentage of your available credit can hurt your credit score, so keeping your balances low is essential.

Check Your Credit Report Regularly

If your debit card activity is reported to the credit bureaus, it’s important to check your credit report regularly to ensure everything is being reported accurately.

By following these simple tips, you can use your debit card to help build your credit. Building credit takes time and effort, but it’s worth it in the long run. By using a debit card responsibly, you can improve your credit score and get access to better financial opportunities.

Other Ways to Build Credit

In addition to credit and debit cards, you can use these other methods to help improve your credit score:

Apply for a Credit Builder Loan

Credit builder loans are designed specifically to help people build their credit. The loan is paid back over time, and making on-time payments helps improve your credit score.

Get a Secured Credit Card

A secured credit card is a good option for people with bad credit or no credit history. It requires a security deposit, which acts as your credit limit. Then, as you use the card and make on-time payments, you build your credit.

Become an Authorized User on Someone Else’s Credit Card

If you have a friend or family member with good credit, you can ask them to add you as an authorized user on their credit card. This way, you can piggyback off their good credit and build your own.

Use a Credit Monitoring Service

Credit monitoring services can help you track your credit score and report any changes to the credit bureaus. This can help you catch any errors or fraudulent activity dragging down your score.

Report Alternate Payments

Alternate payments, such as utility bills and rent, can be reported to credit bureaus; this way, you can build your credit history even if you don’t have a credit card. Ask your landlord or utility company if they report payments to credit bureaus.

If You Missed Payments

If you fall behind on debt payments, your account may be turned over to a collection agency. This can happen if you default on a loan or fail to make credit card or utility payments. Once your account is with a collection agency, they’ll try to collect the debt from you.

If you ever defaulted on a payment schedule, you need to know how to find out which collection agency you owe. Here are some things you can do:

Check Your Credit Report

Collection agencies will often report debts to credit bureaus. If you check your credit report, you may see which collection agency is listed as the creditor.

Look for Collection Notices

If a collection agency tries to contact you, they’ll typically send you a notice in the mail. This notice will list the collection agency’s information and the amount you owe.

Contact Your Original Creditor

If you’re unsure which collection agency holds your debt; you can try contacting your original creditor. They may be able to give you the contact information for the collection agency. Once you know which collection agency you owe, you can begin working on a payment plan.

Lenders use different credit bureaus when considering auto loans, so checking all three of your credit reports is important to find out which credit bureau is most used for auto loans. Experian is the most commonly used credit bureau for auto loans, but a potential lender may also consider your TransUnion and Equifax scores.

If you’re unsure which credit bureau a lender will use, you can check all three of your reports. This way, you can have the most accurate information when applying for a loan.

In Summary

Debit cards can be a great way to manage your finances and build your credit. By using a debit card responsibly, you can improve your credit score. Remember to use your debit card wisely, keep track of your spending, and make timely payments. With a little effort, you can use your debit card to help build your credit and improve your financial future.

This post will show you how to find out which collection agency is after you and how to build credit after delinquency.

How to Determine the Collection Agency Owning Your Debt

1. Check Your Credit Report

Most collection agencies will report their account to the credit bureaus, so checking your credit report is a good way to determine which collection agency has your debt. 

If you see an account on your credit report that you don’t recognize, it could be that a collection agency is trying to collect on the debt. The credit report will list the collection agency’s name and contact information.

2. Contact Creditors Directly

You can also try contacting your creditors directly to ask if they have sold your debt to a collection agency. Remember that even if they have, they may not be willing to give you the information. If you’re unsure who to contact, you can find the customer service number for your creditor on your monthly statement, or you can look up the creditor’s information online.

Once you have the collection agency’s contact information, you can reach out and ask them to verify that they own your debt.

3. Wait for Them to Contact You

If you’re unsure who currently owns your debt, you can wait for a collection agency to contact you. They will eventually get in touch if they think you owe a debt—at that point, you can confirm that they own the debt.

Of course, this could take a long time and in the meantime, the collection agency may report the debt to the credit bureaus, damaging your credit score, so this option is rarely ideal.

4. Go Through Your Voicemail

Collection agencies usually leave a voicemail message with their name and contact information when they call you about a debt. Check your voicemail to see if you have missed calls from collection agencies. 

Of course, some agencies may not bother, or they may only leave a general message without giving their contact information, so this option isn’t foolproof.

How to Build Credit After Delinquency

Rebuilding your credit after delinquency can be difficult, but it’s not impossible. Here are a few steps you can take to improve your credit score:

• Pay your bills on time. This is the most important factor in your credit score, so be sure to pay all your bills on time.
• Keep your credit balances low. Another factor in your credit score is your credit utilization ratio, which is the amount of credit you use compared to your credit limit. Keep your balances below 30% of your credit limit to improve your ratio.
• Avoid opening new credit accounts. When you open a new credit account, your credit score takes a small dip, so if you’re trying to rebuild your credit, avoid opening new accounts.
• Pay off your debt. This will help improve your credit utilization ratio and show creditors that you’re serious about rebuilding your credit.
• Consider getting a secured credit card. A secured credit card is one that requires a deposit, which becomes your credit limit. This can be a good option if you’re having trouble getting approved for a traditional credit card.

Does a Debit Card Build Credit?

A debit card is linked to your bank account and can be used to withdraw cash or make purchases, while a credit card is a loan that must be repaid with interest if you don’t pay your balance in full each month. Using a debit card doesn’t help your credit score because it’s not reported to the credit bureaus. 

How Does Your Credit Score Go Down

Your credit score can go down for several reasons, including:

• If you miss a payment or make a late payment, your credit score will go down–one of the most important factors in your credit score is your payment history. 
• Another factor in your credit score is your credit utilization ratio, which is the amount of credit you use compared to your credit limit. If you have high balances on your credit cards, it can hurt your score.
• When you apply for new credit, the lender will do a hard inquiry on your credit report. This can temporarily lower your score by a few points.
• Closing an account can lower your credit score by reducing your overall credit limit.
• If you default on a loan, it will have a major negative impact on your credit score.

In Conclusion

You can find out who owns your debt by contacting your creditors or the collection agencies that are trying to collect your debt. You can also check your credit report to see who is listed as the creditor for your debt. Once you know who owns your debt, you can negotiate with them to try and settle the debt for less than you owe.

A credit dispute letter that works will have the necessary details, plus adequate supplementary information to back your claim. You can do this on your own, but it’s best to seek help from a Chicago credit repair consultant like The Phenix Group to ensure that you’re doing it right.

What Is a Credit Dispute Letter?

A credit dispute letter is a document that points out inaccuracies and outdated information in your credit report, with a request to remove these errors. In the letter, you explain why you believe the items are wrong and attach any supporting documents to back your claim. You send this to the credit bureau that issued the report with the error, which could be one or all three (Experian, Equifax, and TransUnion).

If the dispute is resolved in your favor, the credit report bureau will correct the errors and, if necessary, notify any lenders or employers of the updated information to ensure that the mistake doesn’t negatively impact your credit score any further.

Do Credit Dispute Letters Work?

Credit dispute letters are effective ways to correct mistakes on your credit report as it requires credit bureaus to investigate your issue. That said, it’ll only work in fixing your credit report and improving your credit score if you have strong evidence to back up your disputes.

To understand how to file the right challenges and strengthen your claims, it’s useful to have good credit education and understand factors like how long it takes for debt to become uncollectible in Illinois, what you can fix in your credit report, or the most common violations of the FDCPA. You can learn these basics with the help of a professional credit repair company like The Phenix Group.

What to Include in a Credit Dispute Letter

According to the Consumer Financial Protection Bureau (CFPB), a credit dispute letter should have four main parts:

Identifying Information

The identifying information includes your details:

• Full name
• Date of birth
• Current address
• Contact number
• The account number of the tradeline you’re disputing

You may also have to provide additional I.D. such as your driver’s license and/or Social Security number.

Company Information

The company information gives details on the credit bureau you’re making the dispute with or the data furnisher, including their contact information.

Disputed Items

Disputed items list the account numbers, dates, and errors that you’re disputing and why you want them changed. Here, you want to be specific about the inaccuracies.

Enclosures

The enclosures include physical copies of documents that you’ll want to send to the credit bureaus to make your case. Examples of these are your credit report with the inaccuracies marked or listed, previous billing statements, and payoff statements. Include what you want the credit bureau to do about the errors, as well.

Tips for Writing a Credit Dispute Letter That Works

An effective credit dispute letter needs to have sufficient information and evidence to prove that inaccuracies made by credit bureaus are actual errors. Here are some tips to help you write one that will work in your favor:

Be Meticulous With Your Evidence

Pay attention to the documents you include, making sure that each one backs up the disputes you’ve listed. It’s good practice to keep records of all of your bills and statements so that you have them when you need them.

Dispute One Error at a Time

Don’t bulk dispute errors at once. Dispute them one at a time or, at least, just a couple at once. If you have many errors to challenge, group them and space them out. This gives the credit bureaus enough time to focus on each dispute properly.

Remember to only dispute mistakes that are real–don’t attempt to make credit bureaus remove valid and legitimate negative items.

Send Your Letter by Mail

While there are convenient online channels where you can send your credit dispute letters, you’re still better off sending them off by certified mail with the return receipt requested. This way, you can rest assured that your complaint is being handled.

The Phenix Group Can Help With Credit Disputes

If you have inaccuracies that you want to dispute with your credit bureau but are unsure of how to do it, it’s best to seek help from The Phenix Group. We can help you identify errors in your credit report, write credit dispute letters that work, and be sure that you have all the necessary items you need to win a dispute in your favor and pull your credit score back up!

 In this post, we will discuss some of the things that can cause your credit score to go down; we’ll also provide tips on how to rebuild your credit score.

Reasons Why Your Credit Score May Drop

Your credit score is a number that reflects the risk you pose to lenders. It’s used by financial institutions to determine whether or not to lend you money and, if so, at what interest rate. A low credit score may mean you’ll have to pay a higher interest rate or may not be approved for a loan.

There are many reasons why your credit score may drop. Here are some of the most common:

1. You Have Late or Missing Payments

Your payment history is one of the most important factors in your credit score. If you have late or missed payments, it will negatively impact your score. For example, if you’re thirty days late on a payment, your score could drop by as many as one hundred points. The card issuers may also report your late payment to the credit bureaus, further damaging your score.

2. Increased Credit Utilization Rate

Credit utilization rate refers to the percentage of your credit limit that you’re using. For example, if you have a credit limit of $1,000 and you owe $500, your credit utilization rate is 50%. A high credit utilization rate can hurt your credit score because it signals to lenders that you’re struggling to manage your debt.

If your credit utilization rate is high, you can take steps to improve it. One way is to pay down your balances so you owe less money; another way is to request a credit limit increase from your card issuer. This will lower your credit utilization rate because you’ll have more available credit.

3. Inaccurate Information in Your Credit Reports

Did you know that inaccurate information in your credit reports can affect your credit score? If you have errors on your credit reports, they could be dragging down your score.

If you find inaccuracies, you can dispute them with the credit bureaus, and if they find the information to be incorrect, they’ll remove it from your reports. This can help improve your credit score, but it can be difficult for the average person to undertake. At The Phenix Group, we can help you identify and dispute inaccuracies on your credit reports.

4. You Closed an Account

Closing an account may hurt your credit score by lowering your credit utilization rate and shortening your credit history. Before you close an account, consider the impact it may have on your credit score. You can always ask a credit expert for advice if you’re unsure.

5. Reduced Credit Limit

Credit limit is the maximum amount of credit a lender will extend to you. If your credit limit is reduced, it may hurt your credit score because it can increase your credit utilization rate.

A credit limit reduction may also make it difficult to manage your finances because you’ll have less available credit. If you’re struggling to make ends meet after a credit limit reduction, you can contact your card issuer to ask for a higher limit.

How to Rebuild Your Credit Score

Now that you know why your credit score may drop, let’s talk about how to rebuild your credit score.

1. Get a Copy of Your Credit Report

The first step is to get a copy of your credit report from all three major credit bureaus—Equifax, Experian, and TransUnion. This will help you identify any errors that may be lowering your credit score.

2. Pay Your Bills on Time

Next, you’ll want to start paying your bills on time. This includes credit card bills, utility bills, and any other type of bill you may have.

3. Use Your Cards Responsibly

You should start using a credit card responsibly. This means only charging what you can afford to pay back and making sure you make your payments on time.

4. Pay Off Your Debts

If you have any outstanding debts, start working on paying them off. This will help improve your credit score over time.

5. Check Your Credit Utilization Ratio

Lastly, keep an eye on your credit utilization ratio. This is the amount of debt you have compared to the amount of credit you have available. A lower credit utilization ratio will help improve your credit score.

By following these steps, you can start to rebuild your credit score and improve your financial standing.

How To Find Out Which Collection Agency You Owe

If you have a debt turned over to a collection agency, the agency will likely report the debt to one or more credit reporting agencies. This can damage your credit score and make it harder for you to get approved for loans and credit cards. If you’re unsure which collection agency you owe, you can check your credit report from each of the three major credit reporting agencies. Look for any collection accounts that are listed on your report.

You can also contact your creditors directly to ask who they have turned your debt over to. Once you know the collection agency’s name, you can contact them and set up a payment plan.

Which Credit Bureau Is Most Important

Credit bureaus are companies that collect and maintain financial information about consumers. This information is used to generate the credit scores lenders use to determine whether to approve a loan or credit card.

Of the three major credit bureaus in the United States, Experian is generally considered to be the most important because the majority of lenders use Experian’s credit score.

You should focus on making positive changes to your credit report with all three bureaus to improve your credit score. This will give you the best chance of improving your credit score and getting approved for loans and credit cards.

Conclusion

Some reasons your credit score may drop include late payments, reduced credit limit, and maxed-out credit cards. You can improve your credit score by paying your bills on time, using your credit cards responsibly, and keeping your credit utilization ratio low.

Below, we’ll tackle the murky world of credit reports, credit reporting bureaus, and look at how one agency may differ from another. We’ll also discuss how to rebuild credit scores fast. 

What Exactly Is a Credit Reporting Bureau?

In the United States, just three corporations hold the keys to whether or not you are approved for a loan or line of credit with a financial institution. These three companies are known as Experian, Equifax, and TransUnion. 

Each time you open an account, you’ll typically be asked for your social security number. This isn’t done simply to verify your identity, it’s also done so the bank can obtain a copy of your credit report. Some banks may look at a report from all three bureaus, while some may have a contract with just one bureau that provides their credit reports. Regardless, the report will contain a complete financial picture of your life for the last seven to ten years. 

What Can Be Found on My Credit Report?

Once the bank has your name and social security number and has determined whether or not they will approve your loan or line of credit, the credit reporting process has just begun. 

Now that you have an open loan or line of credit, the banks begin reporting to credit bureaus–check out our article on how often Capital One reports to credit bureaus to learn more. Besides financial institutions reporting on your credit cards, there will be a variety of other items on your report. Here are some common items that are found on a credit report:  

Credit Card Accounts

Which bank is the account with? What is your maximum credit limit? How much do you currently owe on the card and what is your estimated monthly payment? All of these items and whether or not you’ve ever missed a payment by more than thirty days will show up here. 

Loans

Whether it’s a thirty-year mortgage or a loan for your child’s new car, you’ll find similar types of information such as the original loan amount, how much is owed, late payment history, and your monthly payment amount. 

Collections Accounts

If you’ve ever had an account go to collections, that will also appear on your credit report. This is partially done in an attempt to shame the debtor into paying their debts by lowering their credit score and making it harder to obtain loans. If you’ve ever wondered how credit scores go down, collections accounts are one of the leading factors.

Bankruptcies and Other Legal Judgements

If you’ve ever gone through bankruptcy or had a court order against you for a debt, these items will appear on your credit report as well. Typically, a bankruptcy will stay on your report for between seven and ten years. Regarding judgements, once the judgment is paid in full, it will be shown as a paid and completed item on your report for a few more years afterward.

Is One Credit Bureau More Important Than Others?

The short answer is, no. However, if one of the credit bureaus is reporting wildly inaccurate information about your financial status and payment history, it may be time to correct these issues. 

This is where credit repair companies like the Phenix Group can help. They will work with you side-by-side to examine your credit reports from each of the three bureaus in order to identify inaccuracies and dispute them. Once an inaccurate negative item is removed, your credit score could rise significantly.

Today, we’ll be discussing how credit reports work, who reports to them, and how often banks such as Capital One report to them. We’ll also talk about how to rebuild credit after collections and other negative items have appeared on your credit report.

What Is a Credit Report, and How Do They Work?

For most Americans, credit reports are a murky write-up that somehow affects all aspects of our financial lives. In the United States, there are three primary credit reporting bureaus—Experian, Equifax, and Transunion. You may be wondering which credit bureau is the most important, but in reality, they are all equally important. 

Each time you open an account that is related to a loan or credit card, financial institutions begin reporting the status of that account to the credit bureaus. Other items that may appear on a credit report include negative items such as collections accounts and bankruptcies. Furthermore, missing payments by more than thirty days on a loan or a credit card will show up on a credit report.

Based on the items listed on your credit report and the amounts owed, the credit reporting bureaus will assign you a credit score somewhere between 300 and 850. The higher your credit score, the better. 

So long as you pay your bills on time, don’t max out your credit cards, and aren’t frequently opening and closing accounts, your credit score should slowly rise over time. Most lenders look for a credit score in the mid 600s to feel comfortable offering loans or other credit services to a client. Lower scores may be accepted, but they typically come with much higher interest rates. 

On the other side of the coin, having a high credit score all but guarantees approval as long as you have a stable income history. Additionally, having a high credit score can allow you to get some of the lowest interest rates available. 1% lower interest may not sound like much, but having a one percent lower interest rate on a $200,000 thirty-year mortgage will save you over $40,000 by the time the loan is paid off.

How Often Do Banks Report to the Credit Bureaus?

Whether you have a credit card with a major financial institution such as Capital One or your local credit union, the answer is typically the same—once a month. Some banks may report more or less frequently, but most simply report to the credit bureaus each month when they’ve completed your monthly statement and added up the current total balance. 

Now, you’re probably wondering, if I pay my bills on time, why do they report to the credit bureaus? The answer is because the credit bureaus consider how much of your available credit lines you are using as part of their credit score calculation. If the credit bureaus see that you are maxing out your credit cards, they may start to consider you to be in financial trouble and in danger of missing future payments. 

How Can Credit Repair Companies Help?

Credit repair companies can assist you by having inaccurate, negative information removed from your credit report. By removing these items, your credit score will rise. Additionally, credit repair companies can provide advice and counseling on how to improve your credit by utilizing other tactics such as making sure you have an optimal mix of credit types. 

If you want to learn more about managing credit, specifically after bankruptcy, check out our post on how to know when your Chapter 13 is over.

which credit card to pay off first because you don’t have enough money to pay your debts each month while leaving enough for yourself to live. Then, the calls and letters start–at first, just a few, and then a flood, and soon, you’re getting legal notices from creditors that want to take you to court. 

Sound familiar? You aren’t alone. In 2010, more than 400,000 Americans applied for Chapter 13 bankruptcy protection. Below, we’ll explain what a Chapter 13 bankruptcy is, how it is managed, and when it is considered finished. We’ll also look at how bankruptcy affects your credit score as well as how to rebuild your credit after Chapter 13. 

What Is a Chapter 13 Bankruptcy?

Before we dive into what a Chapter 13 bankruptcy is, let’s understand what the overall concept of bankruptcy means. 

Bankruptcy is not just something that happens in monopoly games–bankruptcy is when you approach the courts for protection and relief from unmanageable debt. By declaring bankruptcy, you are legally telling your creditors that you are unable to manage your debt based on your current circumstances. 

A Chapter 7 bankruptcy is a complete write-off. Say that you’re 100% broke and cannot afford to pay any of your creditors. Once you’ve demonstrated to the courts your complete inability to pay, your debts will be discharged. However, Chapter 7 bankruptcies are extremely detrimental to your credit report as it shows a total inability to manage debt. 

Chapter 13 bankruptcy on the other hand is a type of bankruptcy that allows your debt to be consolidated into a more manageable payment plan that both you and your creditors agree upon. Once an agreement is made on the amount of debt and the repayment schedule—typically three to five years—you will begin making payments to a bankruptcy trustee who will distribute the money to your creditors. 

When Is a Chapter 13 Bankruptcy Over?

Just because you’ve made all of your payments according to the provisions of your bankruptcy agreement does not mean that your bankruptcy is finished. You must file with the courts in order to be discharged from bankruptcy. 

It’s important to note that filing for bankruptcy as well as being discharged from bankruptcy involves extensive amounts of complex paperwork and legal filings. For this reason, it’s imperative that you seek qualified legal counsel to assist you in dealing with the courts. This ensures your bankruptcy process starts and ends as smoothly as possible. 

That being said, the discharge process is somewhat straightforward in that so long as you’ve made your payments, attended any state or federally mandated financial classes, and met any additional necessary steps, your bankruptcy judge should approve you for discharge. 

How Do Bankruptcies Affect Credit Scores?

If you know how often Capital One reports to a credit bureau, you understand your bankruptcy must be reported. As mentioned above, the Chapter 13 bankruptcy, while less severe, is still a significant stain on anyone’s credit report. 

A Chapter 7 bankruptcy will remain on your credit report for ten years, and a Chapter 13 bankruptcy will remain for seven years. This isn’t to say your credit is completely ruined for seven to ten years–so long as you continue to make timely payments on any open credit accounts or loans, your credit score will slowly improve over time.

How Can Credit Repair Companies Help?

Credit repair companies can help to repair your credit by working with you to identify inaccuracies on your credit report. They then will assist you in disputing these inaccuracies to make sure they are removed, thereby improving your credit score.

These inaccuracies can frequently happen in bankruptcy cases because a debt may have been included in the bankruptcy proceedings, but due to a clerical error, the debt may appear as active or unpaid on your credit report. Once errors such as this are removed, your score can skyrocket.

In today’s article, we’ll discuss which card to pay off first, how credit cards affect your credit score, and how to rebuild your credit score fast.

How Does Credit Card Debt Work?

In the world of credit reports, credit cards are what is known as “revolving debt.” This means the account is constantly open and available so long as you make monthly payments and don’t max out the card. 

Home and auto loans, on the other hand, are what are known as “installment loans.” This basically means that you know in advance what your monthly payment will be and how long the loan will last. Once your loan is paid, the account is considered closed. 

The way credit cards add interest to your debt can be quite confusing. You may see the term APR on your credit card statement–APR stands for ‘Annual Percentage Rate,’ and is the amount of interest you’ll owe each year. However, credit card companies don’t add interest charges to your account annually, they add interest monthly. This is done by dividing your APR by twelve (twelve months in a year). 

Let’s make this very simple and say that you have an APR of 12%. This means each month the credit card company will add 1% to your outstanding balance. If you owed them $100 at the start of the month, at the start of the next month you’ll owe them $101.

There are typically at least two types of credit card debt—everyday purchases and cash advances. Everyday purchases are charged your normal APR interest rate, and cash advances are often charged at much higher rates, sometimes even double or triple the amount. Each month, these interest rates are calculated separately and added together to make up your current balance and amount due. 

Which to Pay off First

Well, first let’s make it clear that we aren’t talking about making a payment on one card and completely ignoring a payment on another card. That’s a quick path to ruining your credit score.

We’re talking about large payments on your credit card debt–perhaps you got a Christmas bonus and want to make a dent in your debt, or you’re wondering if paying off collections improves credit scores.

The best way to approach this is to attempt to pay off the highest interest rate cards first, along with the cards that have the highest balance from any cash advances you may have. By paying off the high-interest rate cards first, you can save yourself hundreds or even thousands of dollars in interest payments.

How Credit Cards Affect Credit Scores

So long as you make your payments on time and don’t max out your credit limits, having an open credit card on your credit report is typically a good thing. It shows the credit reporting bureaus that you’re managing your debt responsibly. 

However, should you miss a payment or start to reach the top of your credit limit, you may see your score go down. 

Other things that can negatively affect your credit score are accounts that have gone to collections, missed payments on a home or auto loan, and Chapter 7—for more information, read our article on how to know when your Chapter 13 is over.

That being said, credit reports aren’t flawless–there are often inaccuracies that may be negatively affecting your credit score. This is where a credit repair agency like The Phenix Group comes in. We can work to remove these inaccuracies so you can focus on what really matters most.

Let’s take a look at what collections can mean for your credit score and how to rebuild your credit score by utilizing credit repair agencies. 

What Is a Credit Score?

In the United States, there are three credit reporting bureaus that effectively control whether or not you are approved for a loan. They are Equifax, Experian, and Transunion.

When you open an account with a bank for a loan or a credit card, it begins reporting the status of this account to the three credit reporting bureaus. Based on these accounts and a variety of other factors, the credit reporting agencies will assign you a credit score between 300 and 850. The higher the score, the better.

So long as you pay your bills on time and you aren’t maxing out your credit cards, your credit score will improve over time. Typically, creditors want to see a credit score of around 650 before they approve a loan. Others may allow lower scores, but this typically involves paying a much higher interest rate. 

How Do Collections Affect My Credit Score?

Before we go on, we’ll briefly explain what a collections agency is. Asking for money is a difficult job, so much so that many companies will decide to sell debt to a collections agency for pennies on the dollar. Those agencies will attempt to collect on the debt and make a profit. This process is completely legal so it won’t be going away anytime soon.

Having a collections account on your credit report will definitely bring down your credit score. If you choose to pay off the collections account, this demonstrates to the credit reporting bureaus that you are willing to pay your debts and will absolutely improve your credit score.

It’s not just collections that negatively affect a person’s score. Perhaps sometime in the past, you could only afford to pay one of your credit cards and had to decide which credit card to pay off first. Anytime a payment owed on a credit card or loan is more than thirty days past due, a mark will be made on your credit report that shows which month and year you missed the payment. 

What if the Debt Isn’t Mine or I Paid the Bill Years Ago?

There are a thousand and one reasons a person may have a collection item that doesn’t actually belong to them on their credit report. Perhaps they have a common name or lived at the same address as someone who owed a debt, or somewhere, a social security number was mistyped into a computer. 

Whatever the reason, getting inaccurate and negative items removed from your credit report can be a hassle. Typically, it involves spending hours on hold with credit reporting bureaus as well as the people or companies that you allegedly owe money to.

This is where credit repair companies come in. Reputable companies like The Phenix Group have years of experience dealing with creditors and credit reporting bureaus, and have the resources to remove inaccuracies from your credit report with ease. Furthermore, such credit repair companies can offer guidance and tips on other ways to improve your credit score using a variety of proven methods. By improving your credit score, you’ll not only get approved for that loan you need, you’ll also get a much better interest rate that could lead to you saving thousands of dollars in interest payments.

We’ll also explore ways to potentially have a foreclosure removed from a credit report if it is erroneous or the loan was obtained through false pretenses–this can be done by utilizing the help of credit repair companies in Austin, Texas, like The Phenix Group.

What Is a Foreclosure?

Before we fully explain a foreclosure, it’s important to understand why a bank would simply give you $200,000 to buy a house when there’s a chance you might not pay it back.

When a bank grants someone a mortgage, this is not just an agreement to repay the amount borrowed–the mortgage also acts as what is known as a lien on the property. A lien attached to a property means that if the property is sold, the lien holder (in this case the bank) will be paid the amount of the lien before any remaining money is given to the person who sold the property. 

Borrowers who fall behind on their mortgage payments may attempt to sell the property before the bank forecloses, and because of the lien, the bank will be paid its money before the seller receives any proceeds. If the home cannot be sold before foreclosure or the owner neglects to pay their mortgage, the bank will likely foreclose on the property. This means having the home seized and given to the bank so that it can sell it in an attempt to get its money back. 

How Does a Foreclosure Affect My Credit Score?

The short answer is it will affect your credit score quite negatively. However, because there was likely a series of missed payments before foreclosure, each of those missed payments were already lowering your score significantly. By the time the foreclosure happens, gets reported to the credit reporting agencies, and is listed on your credit report, your credit score was probably already low enough that most lenders would not agree to loan you money. 

A foreclosure will remain on your credit report for a period of seven years, but it’s important to note that this does not mean that your credit is completely destroyed for seven years. It is possible to begin repairing your credit score immediately by continuing to make your scheduled payments on any other outstanding loans or credit cards you may have. So long as you make your payments on time each month and you aren’t maxing out your credit cards, your credit score will slowly recover. 

How Can a Foreclosure Be Removed From My Credit Report?

If a foreclosure is legitimate, only the seven-year time limit will remove it from your credit report. However, if you never had a mortgage and the foreclosure listed on your report is an error, there are ways of disputing and correcting this. Furthermore, if the foreclosure is a result of identity fraud or someone falsely using your name and credit profile, you may also be able to have the foreclosure removed. 

The process of disputing fraudulent and erroneous items on a credit report is a daunting one. Typically, it involves many hours waiting on hold to speak with representatives at banks, credit agencies, and even the police in the case of identity theft. Furthermore, there is a large volume of paperwork that must be sent between you and the aforementioned parties. 

This daunting task can be made infinitely easier by hiring a qualified credit repair company like The Phenix to work on your behalf in disputing erroneous items—not only foreclosures, but errors such as incorrect amounts, accounts, or missed payments. Credit repair companies can file the necessary paperwork and work with creditors to correct mistakes and help you get your credit profile back on track. They can also provide financial information, such as how credit card cash advances work, and even if you have legitimately bad credit, they can offer valuable advice on how to raise your credit score over time through a combination of refinancing and on-time payments.

In this article, we’ll provide a general overview of how credit cards work, as well as explain how cash advance credit card debt varies. We’ll explain how credit repair companies in Austin, Texas can be used to correct errors that may be weighing down your credit score or help you understand how to remove student loans from your credit report.

How Do Credit Cards Work?

A credit card is like a loan from a bank in that it has a credit limit. The key difference is if you do not make any purchases, there is no payment to make because you haven’t “borrowed” any money yet. 

When a purchase is made using a credit card, you are responsible for paying that amount back to the credit card company. If you pay the entire amount that you owe before the due date, you will not be charged any interest. However, if you only pay some of the amount due, you will be charged interest on the amount still owed. This is typically done monthly. 

Let’s say that you have an annual interest rate (APR or Annual Percentage Rate) of 12%. This means for every $100 you borrow, at the end of the year, you will pay $112 to the bank. Now that we understand this, let’s say you use your credit card to buy a new laptop for $1,200. When the due date for payment comes, you pay $200–this leaves $1,000 left over. The credit card company will then charge monthly interest on that amount. In this case, a 12% annual interest rate means each month is 1% interest because there are twelve months in a year. Now, if you don’t buy anything else, next month you will owe 1% interest on that $1,000, which is $10. So, when next month’s bill comes, it will show that you owe $1,010. 

The Higher Cost of Cash Advances

Cash advances are slightly different; the average interest rate mentioned above of 12% does not apply here. Typically, cash advances are charged at a higher interest rate, usually something like 18% to 25%, depending on your credit score. The reason for this is because the bank believes that if you take cash, you are using it for essentials like making a car payment or a rent payment and are therefore at higher risk of not repaying the amount borrowed, whereas if you buy something like a new computer, it figures that you can’t afford the cost upfront and will be able to pay it off over time. 

Furthermore, with cash advances, the interest starts accruing immediately, rather than after the grace period of the due date. There is typically a percentage fee that is immediately added to the cash advance balance. Say it’s 3%–if you get a cash advance of $1,000, you are actually being charged $1,030. 

When you make a payment toward your credit card, any amount over the minimum payment will be applied to the highest interest rate items first. This means that by paying more than the minimum, you’ll be paying down that cash advance before the other items at a lower interest rate. This is actually a good thing because you are eliminating high-interest debt faster. Every credit card company has its own rules regarding cash advances—you should read the fine print very carefully and call your credit card company if you have any questions.

How Credit Repair Can Help

If you find that banks are unwilling to loan you money or are charging high interest rates, it may be time to find out why by obtaining a copy of your credit report. If there are any errors on your credit report, you can talk to a credit repair expert, such as those at The Phenix Group, about having these inaccuracies excised or removing foreclosures from your credit report. This can help raise your credit score and allow you to obtain lower interest rates for all your financial needs.

Student loans are subject to specific federal rules and regulations that can impact your overall creditworthiness–here’s a look at how student loans can affect your credit, and when it may be time to get help from companies offering credit repair in Austin, Texas to help you through the process.

Loan Deferment and Forbearance

Contrary to popular belief, student loan deferment and forbearance will not hurt or negatively impact your credit. While it will be noted in your credit report, it will have no bearing on your score unless you miss or make late payments before receiving approval for your deferment request. 

There are certain circumstances where deferment and forbearance can actually improve the likelihood of getting a loan, such as a mortgage, approved. For instance, if you can adequately demonstrate to your bank that your student loan is (or will be) in forbearance, it will likely factor that into its decision-making process when examining if your discretionary income is enough to pay back borrowed funds. 

Installment Loans

When your student loan is reported to credit bureaus, they treat it as an installment loan rather than revolving credit, which means you’re making a fixed number of payments on the outstanding balance. Regarding your credit score, installment loans carry less weight than an item classified as revolving credit, like a credit card. 

By properly managing your student loan payments and credit card balances, reporting agencies like Experian, TransUnion, and Equifax will use that behavior as a strong indication that you are fiscally responsible. Debt management is essential to ensuring your credit score remains in good standing.

Building Credit History

Most individuals who apply for a student loan are just entering college or graduate school and have yet to build a strong credit history. Qualifying for a loan or new credit line can sometimes be difficult when you cannot demonstrate a strong credit history—especially if you’ve just graduated and are not yet employed. 

This is where a student loan can prove beneficial. Federal student loans do not require a long-standing credit history to qualify, so they’re a great starting point for building credit.

Adding Credit Diversity

One of the criteria used to calculate your credit score is the types of credit you have and how diverse those credit sources are. Adding an installment loan, such as a student loan, to your portfolio can help improve your credit standing. As long as you’re making payments on time, the more types of credit you possess, the greater impact it’ll have on boosting your credit score. 

Making a Good Investment

When you’re borrowing funds for a student loan, it’s seen as an investment in your future. In other words, you’re not applying for a loan for a luxury vehicle or something extravagant that isn’t an essential need and could likely be purchased using a credit card. Because student loans are considered smart investments, they can be used in your favor if a bank is determining whether or not to approve a loan you’re requesting. 

Account Delinquency

Your credit score is negatively impacted if you have an account that’s considered delinquent. If this happens when you are awaiting deferment approval, federal student loan lenders usually correct the delinquency reporting automatically by properly backdating your deferment once it’s approved. 

You can encounter this issue for several reasons–for example, maybe you are back in school pursuing your degree and accidentally dropped the ball on mailing your deferment form. Because of this, your account transitioned into past-due territory. This can quickly be resolved by sending in your deferment form and backdating the paperwork date to when you originally qualified for the deferment. Once this is processed, the lender should remove the negative report from your credit history and fix any other issues resulting from the delinquency.    

Past Due Reporting

It’s easy to panic when you realize you missed a student loan payment. The good news is that most federal loan lenders have a policy whereby they do not report past due balances to credit bureaus until after sixty days. If it’s only been a few days or weeks, there’s no need to feel alarmed–there is a strong likelihood that it will not impact your credit score. 

While it’s never good to miss a payment, if you have a clean track record of making payments on time, one slip-up won’t blemish your credit standing. Make sure to remit payment to your lender as soon as you realize the payment was missed. 

Resolving Delinquency

If your account has rightfully moved into delinquency, it will negatively affect your credit standing. However, if you focus your efforts on making your student loan account current by bringing it out of past-due territory, it’ll help raise your credit score and help paint your credit history in a more positive light. 

There are options available for federal student loan borrowers with delinquent accounts and repayment assistance to help bring your account current. Once your account is current, you can see an increase in your credit score in as little as a few weeks. 

Write a Dispute Letter

In most cases, a properly-worded dispute letter does the job of removing student loans from your credit report. You can fix any incorrect information in your credit report with a mere phone call, but it’s best to write a formal letter. By doing that, the request and any correspondence is done professionally and there is an official document that can be used to track your claim, making it much simpler to follow up on in the future.

In your dispute letter, you must include your student loan reference number, a clear explanation of the error with a copy of the credit report. Also, provide any information or evidence, such as proof of payments, that demonstrates that the current report contains misinformation. 

Another important thing you need to do is to request that your student loan servicer contact the major three credit bureaus so they can correct the information on their end. Make sure you send the letter through certified mail with a return receipt requested. Then, follow up if you haven’t gotten a reply within two weeks–the request should be confirmed within thirty days, but make sure to double-check your report.

Gather Information to Support Your Claim

Before you send off your letter, you need to gather some documentation or evidence that supports your claim. This evidence or documentation can be in the form of emails from your servicer or bank statements that prove you made on-time payments and that there is an error on the report. This way, you can remove the student loan from your credit report.

File For an Account Dispute

If your loan servicer doesn’t notify the credit bureau to correct the loan information on your credit report, your best bet is to fix things yourself. To do this, you need to file an account dispute to force the credit bureau to review your file. Only do this as a last resort after contacting your student loan servicer.

Here’s a simplified outline of what you need to do while filing an account dispute:

• Collect all required evidence that supports your claim.
• Write a dispute letter to your student loan servicer to correct your record.
• Follow up on your letter if you haven’t received a confirmation within two weeks.
• After receiving the confirmation, recheck your report to see if it’s fixed. You’ll have to file a separate dispute with each of the three major credit bureaus.

Final Thoughts

Having a good understanding of your credit and how your student loan can impact your standing is extremely important. Maintaining a healthy credit score will play a critical role in things like your ability to procure loans and gain employment. Because of this, you need to take every step possible to take good care of your student loans and delete late payments from your credit report–a professional credit repair expert, such as those at The Phenix Group, can help.

Wondering how credit card cash advances work? We’ve got you covered–check out our recent post.

Of course, you can look for help from companies offering credit repair in Austin, Texas, if you need guidance finding ways to delete late payments and boost your credit score.

There are a variety of factors that go into your credit score, including:

• Payment history
• The amount you owe
• Types of credit (i.e., loans, credit cards, retail accounts, etc.)
• Length of credit history

However, of all of those, payment history is the number one factor that affects your credit score. In this article, we’re going to look at how late payments impact your credit score and how to improve your score.

Late Payments and Credit

It can’t be overstated that late payments are the quickest way to ruin your credit score. According to Equifax, “If you miss a payment on one of your credit accounts, be it a credit card, mortgage, or other loans, you could see your credit score drop.”

Keep in mind that each credit reporting agency is different in how it scores, but all of them penalize a person for late payments. While a late payment will ding your credit score, it’s not all gloom and doom. Credit reporting agencies look at several factors regarding late payments, such as how late they are and if there’s a history of late payments, or if this was a one-time issue.

For example, if your payment is ninety days late, it will be a bigger mark on your credit score than if you’re only thirty days late–the longer your bills go without being paid, the worse your score will get. So, it’s vital that if you do miss a payment, you make it as soon as possible. Missing a payment by one or two days won’t hurt as much, if at all. 

How Much of a Drop Do Late Payments Cause?

It depends on how late the payment is, but according to Credit.com, “a recent late payment can cause as much as a ninety- to one hundred-point drop on a FICO Score of 780 or higher.” This is more than a 10% drop—and could be what pushes you out of the good-credit range and into the fair-credit range. If this happens, it might be more difficult for you to get credit in the future until you get that score back up.

It’s also important to remember that the better your credit is, the more likely you will feel the negative impact of having a late payment on your credit score.

How To Fix Late Payment Credit Scores

Keep track of your credit–this is easy to do if you have access to a smartphone. There are many apps that help you monitor your credit score and alert you when a lender makes an inquiry about your credit or if you have a rise or drop in your score. This way, you will always know where you stand and if you need to make adjustments in your financial situation.

Once you know your credit score, you can take steps to improve it. Become obsessive about making your payments on time, and sign up for auto pay with your accounts if you’re busy or have a tendency to forget about due dates. With autopay, you authorize your lender to deduct funds from your checking or savings account when it’s due without your intervention; this is the best way to ensure your payments are on time.

If you’re concerned about security or don’t feel comfortable giving creditors access to your accounts, you can set up reminders for each bill that tell you when it’s due and that it’s time to pay. Again, if you have access to a smartphone, there are a variety of reminder apps available that will help you keep your bills paid on time.

Another trick is to make your payments every week. Some people find the monthly payment too difficult to manage. Making smaller, weekly payments will keep you up to date and not drain your account so quickly. It’s not uncommon for people to be late with a payment now and again, and while it may negatively affect your credit score, you can fix it by paying as soon as possible and staying on time with future payments.

Ways to Delete a Late Payment History

Late payments on your credit report can be a bit concerning because they may affect your credit score and chances of getting a loan. That said, there are ways to delete them from your credit report.

Write a Goodwill Letter

This is a simple method to remove late payments from your credit report–you only need to write a goodwill adjustment letter and send it to your creditor. This will give you a chance to explain the reasons for not being able to pay on time. A goodwill letter can result in late payments being deleted from your credit report if you have a good reason.

However, removal is not guaranteed because creditors are responsible for giving accurate information to credit bureaus. It can’t hurt to call a creditor and speak to a person; often, you will get an answer much faster than if you wrote a letter or email. This will also let you give a more personal and detailed explanation of what is happening and the reason you were late. If this is your first time making a late payment, you have a much greater chance of success.

Write a Pay for Delete Letter

Sometimes, a creditor offers a service where it will remove the late payment from your record if you pay off the amount owed. To make this happen, you need to write to your creditor and make a Pay for Delete request. 

This is a relatively effective way to wipe a late payment from your record. Keep in mind that although this will delete the late payment from your credit report, it doesn’t remove the missed payment from the primary account.

File For a Credit Dispute

Another way to deal with late payments in your credit report is to file a credit dispute. If there’s any error in your credit report, you can file a dispute with the credit bureau where the credit report was generated.

The first step is sending a dispute letter to the credit bureau where the mistake was reported. In the letter, you need to fully describe the inaccurate information that you’re disputing. Include any documents that can prove the claim is incorrect and request that it be removed from your report.

After sending your dispute letter, creditors usually have thirty to forty-five days to investigate the claim. You will be notified of the results of the investigation when it’s finished. If the credit bureau agrees with your claim, they will remove the late payment from your credit report.

How Do Late Payments Affect Your Credit Score?

Missing a payment will cause your credit score to drop. If you’re late by thirty days or more, you may have up to one hundred points deducted from your credit score. Even a single late payment is enough to ruin your credit rating. Payment history is crucial to your credit score, so be sure to pay your bills on time.

In Summary

Late payments may cause your credit scores to drop and leave a dark mark on your report. Fortunately, there are ways you can remove late payments from your credit report, but if you need further assistance, be sure to solicit the help of a reliable credit repair company, like The Phenix Group.

Wondering how to remove student loans from a credit report or if divorce affects credit scores? Check out our latest posts.

In this post, we’ll go over how divorce can impact credit scores, how you can repair it, and if you should look for the help of credit repair companies in Austin, Texas.

How Divorce Impacts Your Credit Score

The fact that you’re divorced doesn’t directly impact your credit score or credit results, but the financial issues that come afterward can. Here are some factors that can cause your credit score to decline:

Debt Grew Because Your Ex Was an Authorized User on Your Credit Card 

This is a common problem that happens in more hostile divorces. For instance, if your ex is spiteful, they could try to punish you by using your credit card to make large purchases in your name or by accessing your bank accounts.

If your former spouse is an authorized user, they can do this legally. What’s more–they won’t be liable for repayment. To be frank, they can spend as much money as they want without bearing its consequences. 

Your Joint Accounts Are Unpaid

Married couples usually have joint accounts; you and your spouse may share a credit card, mortgage, car loan, or other forms of debt. The debt doesn’t go away after separation because you are both responsible for paying it off. 

Paying For Bills May Be Tougher

It’s no secret that life after divorce is tough. During that time, you may have trouble keeping up with all the bills you have accumulated while paying for living expenses, especially if your ex was the main income earner when you were married.

As a result, this can damage your credit score if there are any late or missed payments. Because your credit history is the most important factor in your credit score, it would be wise to make payments on time, every time. 

You’re Using Your Credit Card to Pay for Costs

If you’re using your credit cards to substitute for income (or lack thereof), you could end up with a lower credit score. You must ensure that your credit utilization ratio is less than 30% at all times to protect your credit rating.

Paying for legal expenses with your credit card could also affect your credit score. Although every divorce comes with fixed costs, like filing fees, other costs vary wildly. Lawyer’s fees depend on your particular situation and the degree to which the issues between you and your ex are contested. For example, if you’re dealing with property or custody disputes, the divorce might cost thousands of dollars—and most people don’t have that kind of cash on hand. 

Your Credit Limit Decreased

Creditors have the right to lower their credit card limits. This could happen after you and your former spouse separate, especially if the creditor discovers that you’re making less money. 

You’re Refinancing Your Home

Refinancing can be one of the worst things you can do to deal with financial issues after a divorce. If both you and your ex-spouse are on the house deed, then you may have to refinance the mortgage to remove one of the names from the loan and the deed. If you decide to refinance the mortgage in your name, then the bank or lender will look at your personal credit score and income to determine if you qualify for the loan on your own.

Mortgage applications also conduct hard inquiries that might cause temporary dips in your credit score. Plus, refinancing the whole home in your name may significantly affect your income-to-debt ratio and your ability to get credit in the future.

You’re Dealing With Undisclosed Debts

Through the divorce process, you’re required to disclose existing debts. If your ex doesn’t disclose a debt, it can negatively affect your credit. There have even been incidents where exes open new accounts in their partner’s name to purposefully damage their credit–it’s usually too late by the time the partner realizes what’s happening.

If you have a joint account, your ex might still use it during the divorce and increase your debt. The best way to deal with this is to close any joint account you have, or at least remove your name from it.

Get Removed as an Authorized User

Getting removed from your partner’s accounts as an authorized user can affect your credit score. Even if you’ve never paid a penny toward the bill, just being an authorized user on the card boosts your credit score. So, getting removed as an authorized user could significantly decrease your credit score.

Nonpayment by One Party

In many cases, exes don’t pay their portion of a joint debt after a divorce. Unpaid bills and untimely payments cause credit scores to nosedive. This situation can create quite a pickle–you’re caught between whether to pay your exes bill or take the credit hit due to the nonpayment.

If you get caught in this situation, look for legal advice. If your divorce decree has a payment plan, you might be able to get your ex to pay the bills to prevent your credit rating from plummeting.

Fortunately, there are several ways for you to protect your credit score after a divorce. 

How to Fix Your Credit Upon Separation

You need to be proactive about your credit score, as it will not necessarily be there during your divorce. This way, you can protect your money and make it easier to start your new, independent life. 

Here’s what you should do to fix your credit score:

• Separate all joint accounts: As soon as you’ve confirmed you’re getting a divorce, either close your joint accounts or switch them to individual accounts immediately.
• Determine which accounts were shared, according to your credit report: Read every line of your credit report for any mishaps and find out which accounts you’re either partially or fully responsible for. It’s quite common for spouses to open accounts in their partners’ names and you need to delete late payments from the credit report.
• If your spouse has access to your account, remove their authorization: If your spouse does indeed have access to a bank account or credit card that is solely in your name, remove them immediately to protect your finances.
• Change your security information: Improve the security of your credit and debit cards by changing their PIN codes and the passwords on sites and apps that link to your bank account. You can also change the security questions, so your spouse can’t easily guess them. If you have moved, change the address so that your credit reports and bank statements are delivered to your new location.
• Change your lifestyle to match your income: Most divorcees, especially those who rely on their spouses’ income, struggle financially to maintain their lifestyles. If this is your situation, cut back on spending. For instance, you should consider moving into an apartment, getting rid of cable, and trading your car for a less expensive model. The best way to know what you can and can’t afford is to make a budget. Give greater priority to your most important expenses and try to stay ahead of payments that could directly affect your credit score, such as credit cards and bank loans.
• Work out an agreement about joint debt payments: Try to work out the specifics of joint debt payments, with or without the help of a divorce decree, and then get the agreement in writing.
• Keep a check on your ex’s payment due dates on joint accounts: If your former spouse doesn’t pay on time, you can make the minimum payment on your joint account and save your credit. Later, you can report the nonpayments to the courts and get your money back.
• Boost your income: You should prioritize earning more and spending less during your divorce. In addition to lowering your expenses, you can earn more money by either working overtime or doing some freelancing on the side. This will also help reduce total loan costs if you need one.
• Freeze Your Credit:One of the best things you can do to save your credit is to freeze your account to restrict access. Neither you nor your partner can access the credit report without unfreezing the account. If you do this, your ex won’t be able to take new loans and drive you into debt until the account is unfrozen. This gives you more control of the situation.

In Conclusion

Going through a divorce is already devastating, but the financial effects and the effects on your credit score can make things a lot worse. The act of getting divorced doesn’t affect your credit score, but the sudden changes in your financial responsibilities and income can result in a drop in your credit score.

Furthermore, there are ways to reduce your upfront costs–let’s look at ways you can reduce the total cost of a loan and how you can improve your credit profile by using credit repair companies in Austin, Texas.

How Interest Rates Affect the Total Loan Cost

Let’s say you’ve borrowed $10,000 from the bank at a 4% annual interest rate. If your loan has a repayment schedule of one year, at the end of the year, you will have paid the bank $10,400. ($400 is 4% of $10,000). Divided into twelve monthly payments, this means each month you will pay $867–this is how interest works at its most basic level. 

The above does not include any closing costs or fees associated with the loan that the bank may add to the total balance. 

Combining Interest Rates and the Repayment Period

We will now use the $10,000 amount above, but we will change the repayment period from one year to five years. Again, we will use the interest rate of 4%. 

4% of $10,000 is $400—multiplied by five years, this is $2,000. Therefore, your total loan amount will be $12,000. Divided by sixty (twelve monthly payments multiplied by five years), each month your monthly payment will be $200. Though taking longer to repay the loan means a lower monthly payment; you can see how when the loan is finished being repaid, you will have paid the bank a far larger amount of money.

Ways to Reduce the Total Amount Paid

First, we need to explain that when you start making payments on your loan, for the first year—or perhaps five, in the case of a thirty-year mortgage—large portions of the money you are paying go directly to the interest owed. The remainder is applied to the principal (the actual amount borrowed). In this way, the bank gets its interest money upfront, so if you pay the loan off early, it still makes money. This is explained through a process known as amortization.

For this example, we’ll be using a five-year loan of $10,000 at a 4% interest rate. Here is how each payment will be applied for the first year:

<img src="https://ibb.co/GCpSN5Y">

Based on the above, you can see how each month you are paying a little less interest, and a little more towards the principal. By the last year of the loan, nearly all the payment will be applied to the principal and almost nothing to the interest. 

We can reduce the total loan amount by making additional payments to the loan. Instead of paying $184.17 as noted above, say you pay $300–the extra money will be applied directly to the principal balance and will shorten the life of the loan, thereby saving money in the long run. Using the exact example above, you will pay off the loan two years early and save yourself over $400 in interest, so, imagine how much you would save on a thirty-year mortgage for $300,000.

What if My Interest Rate Is Too High?

Loans are closely connected with credit scores—a very important aspect of financial life. You may have wondered what credit score you need for an apartment in Austin, Texas or asked yourself if a divorce is negatively affecting your credit. If you’re being offered high interest rates, it may be time to obtain a copy of your credit report and make sure each item listed is accurate so you can know you have the best credit score possible.

Doing this yourself can be very time-consuming and may involve hours on hold with banks and creditors. Entrusting this process to a qualified credit repair company like The Phenix Group can help you get these inaccuracies removed and get your credit back on track so you can get the loans you need to live your best life.

This article will provide a picture of the Austin home market, what kind of credit score you might need to get a place you’ll love, and how you can get help from credit repair in Austin, Texas if you need it.

Current Housing Market in Austin

Since the end of the pandemic, real estate prices have soared everywhere and there is fierce competition for buyers and renters alike. The real estate market in Austin is no exception, and it ranks as one of the most popular in the country. According to Zillow, median home price in Austin in August 2022 was $650,000, with prices rising 16% year over year. Most experts expect that growth to continue, albeit more slowly, over the next year.

Because of a thriving job market, values for homes in Austin continue to grow. While this trend is the same for many major metropolitan areas, Austin is one of the strongest; although there is a slight slowing in the market, homes still sell quickly–after about forty days on the market, on average. Last year, the average time a home spent on the market before selling was thirty-three days.

One of the major driving factors in the Austin housing market is the incredible population growth, as it consistently ranks as one of the best places to live in the United States. Another factor that drives up value in Austin is the supply-to-demand ratio compared to other Texas cities. By all reports, the Austin area still has far greater demand for homes than supply.

How Affordable Are Austin Apartments?

With a growing population and a booming economy, it’s no surprise that homebuyers and apartment hunters are concerned about affordable housing. Although home prices in Austin will likely continue to climb, many experts say Austin is still one of the more affordable places when compared to more saturated markets like San Diego and Seattle.

Still, experts advise that if you’re planning on relocating to Austin, your work will be cut out because there is a high demand and low inventory. The competition for housing is fierce, so it’s advised that you start looking for a house or apartment as soon as possible to give yourself plenty of time to find the right place at the right price. 

Because homes do not sit on the market long in Austin, deciding to wait or think about it may mean losing a property to someone else who’s ready to buy. Lastly, take advantage of low mortgage rates–they have inched up recently, but they are still historically low rates. To get low rates, you’ll need a good credit score.

What Credit Score Do You Need For a Home in Austin?

If you’re looking for a home, you must examine your credit score before you apply for a loan. Your credit score is a significant determinant factor in whether or not you get a loan and what terms you get with interest rates. The higher your score, the more favorable terms you’ll get, and the lower the down payment you’ll need.

While there are a variety of home loans you can apply for, in general, the average credit score for Texas first-time home buyers is 671, according to Credit Karma. However, the credit score you need depends on the type of loan you’re applying for. 

For example, with the Federal Housing Administration, you may be able to get that loan with a score of 580 or above. A Veterans Administration loan can be secured with a score of 620 or more, a U.S. Department of Agriculture rural development loan can be obtained with a score of 640 or above, and a conventional loan can usually be made with a score of 620 or above. 

Having a high credit score will help you reduce total loan costs; FICO and Vantage are the two most popular services used to obtain a credit score. You may wonder which is better when it comes to FICO versus Vantage – the answer is that they do the same thing, just slightly differently.

What Should My Credit Score Be if I’m Renting?

If you’re interested in renting an apartment, your score is still important, but not as much as when you’re getting a loan. Most people or companies renting out apartments will expect you to have a score of 620 or higher. However, because Austin is a hot market with high demand, rental companies and landlords may want to see scores over 700.

While landlords differ in what they look for, they generally want to know about your income and credit history to show that you have the money to pay your rent and are responsible for making your payments on time. Just like a low score may get you denied for a home loan, a low score could also cause you to be turned down for an apartment.

Because your credit score is so important when renting or buying, you must improve your score if it’s not where you want it to be before you go out looking for a place to live. The best way to improve a low score is to make all your payments on time and pay off your debt as quickly as possible. If you need help, contact a reliable credit repair company like The Phenix Group to help you get back on track and into the home of your dreams.

Minimum Credit Score for Renting an Apartment in Austin

The minimum credit score to get an apartment depends on various factors, such as your local rental market and whether or not you want to rent a luxury apartment. None of that matters if you have a splendid credit score–the average credit score you’ll need to approve a rental application is 650, whereas the average credit score that gets rejected is 538 or lower.

To get approved for a high-end building, you’ll need a credit score of around 683; anything less than 560 is sure to be rejected. A rule of thumb is that the more high-end the building and the more competitive the market, the higher score you’ll need, but the best way to know is to ask potential landlords what they are looking for in terms of a credit rating.

Options For Renting Apartment With a Low Credit Score

Not everyone’s going to have an excellent credit score. In case you don’t have a perfect record, there are a few ways you can rent an apartment with a low credit score:

– Rental Payment Proofs

If you’re struggling with your credit score, you can show your landlord proof of your previous rental payments made over the last six months. Make sure those were on-time payments and that the evidence you are showing is in the form of bank statements.

– Recommendation Letter

Another way to get approved is to have a recommendation letter from your previous landlord. It should state what a great tenant you were and that you always paid the rent in time. Although this probably won’t be enough to get you an apartment, it can improve your chances. You can even ask your employer for a reference letter if you have never rented an apartment before.

– Get a Lease Guarantor

If you have a low credit score, find someone to act as your lease guarantor. A lease guarantor is a person who will cosign an apartment lease with a tenant, guaranteeing that he’ll pay if the tenant fails to. Your landlord will ask many questions about your guarantor’s financial details if you go this route.

Ways To Improve Your Credit Score

Building credit scores can be a long and tedious process. You can, however, take some steps to accelerate the process. 

Apply For a Credit Card

Getting a credit card is a great way to improve your credit score. If this is your first credit card, then get an entry-level card that doesn’t have any annual fees. Use it to pay all your bills, but don’t use more than 30% of the available credit. 

Increase Your Credit Limit

Improving your credit score will depend on your credit card usage. With a higher limit, you can spend more and improve your credit score.

In Conclusion

Good credit scores are crucial for getting a good apartment in Austin. So, regularly monitor your credit score and try to improve it. Having a good credit score also ensures you’ll get a good interest rate if you are in the market to purchase a home.

 Despite VantageScore and other models edging their way into the market, FICO continues to be the forerunner in the credit rating industry since it created the scoring system. FICO stands for the Fair, Isaac, and Company; it was founded in 1956 in San Jose, California and quickly gained traction after pitching several lenders its scoring algorithm to help companies determine a potential borrower’s creditworthiness. In 1986, the company went public and had been offering general purpose and more tailored credit scores.

 In 2006, VantageScore hit the scene due to a collaboration between the three major credit bureaus—Experian, TransUnion, and Equifax—to provide a scoring system to compete against FICO. VantageScore is run by VantageScore Solutions, LLC, and features a similar scoring system to FICO.

Credit repair Austin, Texas can also help you improve your score, regardless of the method.

Similarities Between FICO and VantageScore

VantageScore originally began calculating scores based on a 501 to 990 range, assigning a letter grade to subranges between those two numbers. To be more consistent with what consumers were used to seeing, VantageScore’s system changed to reflect the same range as FICO. Both firms assign scores between 300 and 850. Scores up to 689 translate into a bad credit rating. 630 to 689 equals fair or “average” credit. 690 to 719 means you have good credit, and anything 720 and above is excellent.

Hard Inquiries

FICO and VantageScore penalize consumers for too many hard credit inquiries in a short period. Hard credit inquiries are any checks on your credit score that you’ve initiated, such as when applying for a credit card or personal loan. They ignore soft inquiries, or any inquiries made by potential lenders that borrowers haven’t initiated, but will lower a score if a hard inquiry for the same type of credit is made in a narrow window of time.

 Both companies deduplicate, which means they won’t penalize you for a shotgun blast of credit inquiries by different lenders for a single credit line. This is especially relevant when a car dealership, for example, sends auto loan applications to a large selection of lenders on the car buyers’ behalf.

Debt Forgiveness

More recently, FICO and VantageScore have shown a willingness to ignore bad debt that’s been paid off. The record of the initial bad debt is still on the credit report, but both scoring models no longer include it in their scoring evaluations. This new approach to debt repayment gives consumers big incentives to pay the debt off.

Differences Between FICO And Vantage

One key way these two credit score measuring methods differ is how each pulls your credit history to generate a score.

FICO credit score accumulates all available credit history data about a potential borrower and then uses it to generate a credit score. A Vantage score, on the other hand, focuses on credit history and lets a lender know about credit behavior. 

Although these credit measuring methods use quite a few similar factors to generate a credit score, the biggest difference is what factor each method prioritizes and the impact that factor has on the overall score. Both analyze your credit history, balance, inquiries, payment history, and credit usage, but assign different weights to each that could impact the respective score differently.

Point Value

These credit scoring models analyze your credit report, then award you with points based on the information it finds. You get points based on the factors that contribute to credit utilization, payment history, card inquiries, and credit history.

FICO and Vantage have different weights or values for each factor. Some factors may be very important to FICO while having negligible significance to Vantage. For example, you might get 150 points from FICO for having zero late payments. For the same payment history, Vantage gives you 155 points. (Note: these aren’t actual points, but hypothetical examples.)

Bureau Models

Vantage uses a single tri-bureau model to generate a score, which can be used with a credit report from companies like Equifax, Experian, or TransUnion. FICO, on the other hand, creates bureau-specific scoring models. This means that even though the newest FICO score is a 9, there are three FICO models with slight variations that could each generate a different score for the same person. These three models are part of the three major credit bureaus.

So, there is a possibility that your lender might use any one of those models to approve your loan. This means FICO scores can vary from lender to lender based on the credit report that was used to derive a score.

For example, if your TransUnion-based score is better than your Equifax-based score, one lender might approve your loan while the other will deny it. The Vantage score is more uniform across all three bureaus, so the score tends to be the same rather than vary from lender to lender.

Credit Utilization

Credit utilization can be a crucial factor in creating your score. In most cases, the most recent revolving account balance is required. Credit utilization is basically the total credit card balance divided by credit limits.

A Vantage score looks at your utilization trend to check if you’re making minimum credit payments or paying the full amount. Vantage puts weight on credit utilization, whereas FICO doesn’t.

Debt Weighing

VantageScore is also more strict than FICO in terms of late payments. It considers all forms of late payment with different degrees of importance when calculating a credit score. A late mortgage payment is weighted more heavily than a credit card payment or an outstanding medical balance. FICO weighs all types of outstanding debt over $100 equally. There’s no difference in weight between mortgages, credit card debt, or medical bills.

The advantage for consumers with this schema is the leniency over medical debt. With so many changes in medical insurance terms in the past ten years, increasing medical costs have fallen on consumers’ shoulders, and an uptick in billing mistakes has also resulted in billing disputes and unpaid balances.

Crowded Business

Although VantageScore and FICO are the two primary sources for consumers to obtain a creditworthiness score, they are only two of nearly a thousand different scoring methods on the market.

The problem is that consumers never see the scores generated by all of the other methods–most of these are proprietary in-house scoring algorithms used by major lenders. The good news is that the score that the vast majority of these proprietary methods generate will be similar to the VantageScore or FICO score you see. So, you’ll have ample peace of mind knowing where you stand based on receipt of a FICO or VantageScore rating. 

Although both FICO and VantageScore have unique characteristics that set them apart, you can rely on either scoring model to get an accurate assessment of where you stand in terms of creditworthiness. You can even use these credit scores to buy a car.

In Summary

Although FICO and Vantage share some similarities, there are also many differences between the two of them. They still serve the same purpose, but use different methods. 

Want to know what credit score you need for an apartment in Austin? Take a look at our latest article.

If you’re wondering how to rebuild credit after collections, you might be interested in learning what a collections agency is.

A collections agency or a debt collection agency is a third party that collects unpaid or long-due loans from borrowers. A lender or a creditor may hire such an agency after they’ve made multiple attempts to recover the borrowed amount but failed.

In this post, we’ll share a detailed insight into how these agencies work, what happens if the borrower still refuses to pay, and much more. 

Some Key Terms

Before we dive into the topic, it’s important to be familiar with the following terms:

• Lender/Creditor: This is someone who lends money or property as a loan, and can be an individual or a financial organization like a bank.
• Defaulter/Debtor: This is the person or organization who acquired the loan but failed to repay it on time.

How Does a Collections Agency Work?

Imagine you’re a private lender and you gave a loan of $10,000 to your ex-employee. Because it was a huge amount, you did all the paperwork, and both parties agreed on interest-free $2,000 installments every three months. This means they will return $2,000 of the borrowed amount after every three months.

Now, your ex-employee paid back $4,000 through the first two installments but went off-grid at the time of the third installment. You tried calling, e-mailing, and even writing to them, but couldn’t get in touch with them. 

In this case, you’ll reach out to a collections agency. It will sign an agreement with you and ask for some data about the borrower. Once you have hired it, it will take the following steps to trace the borrower and retrieve your amount: 

• It may consistently call the borrower to remind them of their dues and the possibility of strict legal action in case of non-payment. 
• It will only call between 9:00 AM and 8:00 PM.
• It may mail multiple notices of late payment.
• It may reach out to the defaulter’s current employer.
• It may show up at the defaulter’s residence.

If you’re wondering how they will track the defaulter’s phone number, debt collectors have several ways of doing that. They’ll first refer to the information you provide them; after that, they’ll search for contact information in legal databases. Lastly, the agency will reach out to the defaulter’s family, friends, and colleagues to locate them.

Case A: Success

If the collection agency succeeds in recovering your amount or assets, you will have to pay a percentage of the recovered funds or assets to the agency. You’ll settle this percentage with the collection agency at the time of hiring it.

Case B: Failure

If the collection agency fails to recover the funds, you will still have to pay its service fee. But, of course, the percentage clause in the hiring agreement will be nullified. 

As for the defaulter, they will become ineligible for acquiring any major loans for at least a span of seven years. The collection agency will add the collection status to their credit report, which puts their credit score at the lowest possible.

Limitations of a Collection Agency

The borrower owes you money and is apparently on the wrong side of the frame. Does that mean you or the collections agency can do anything to retrieve the due amount?

Yes and no–the government doesn’t have a lot of say on how the creditor’s in-house debt collection department deals with the debtor but collection agencies have to abide by the Fair Debt Collection Practices Act. According to this act, debt collectors cannot do the following:

• Sue the borrower for the dues
• Seize debtors’ assets without winning a lawsuit against them
• Pursue debt collection if the debtor has filed for bankruptcy
• Physically harm the debtor 
• Harm or threaten to harm the debtor’s family or friends
• Call the debtor’s workplace if the debtor has clarified that the employer doesn’t approve of these calls

With that said, you should know that in-house debt collection departments are also restricted to the measures mentioned in the agreement that the debtor signed when they acquired the loan. 

The in-house debt collection department cannot take a violent or aggressive approach towards debt collection (such as threatening to physically harm the debtor).

FAQs

How Long Does it Take for a Collections Agency to Recover the Money?

Usually, a collections agency takes three to six months to recover the dues. Beyond this, it adds the collection status to the debtor’s credit report

Is There a Way to Remove Collections From the Credit Report Without Paying?

Yes–debtors can remove collections from credit reports by sending a letter of goodwill (asking for forgiveness). Alternatively, the debtor can dispute the collection by writing a debt dispute letter. 

For more information related to debt and collections, check out our posts on whether paying off collections improves your credit score and how to freeze your credit.

Understanding the Risk

Imagine working hard, building a reputation, and suddenly stumbling upon a Facebook page where someone is pretending to be you (and selling the same services as you). Here are the worst possible (and often reported) developments in this scenario:

• They have opened up a bank account in your name.
• They are receiving payments under your name.
• They are acquiring loans under your name.

If you haven’t experienced something similar yet, you might wonder: how on earth is that even possible? It is–all that the scammers need is your social security number or a similar piece of information. They can easily get these via your credit report, ATMs, online stalking and manipulation, data breaches, physical spying, etc.

Before you face such identity theft, a blow to your credit score, or a visit from a collections agency, we highly recommend taking the necessary measures. 

Read on to figure out how you can protect yourself by freezing your credit report. If your credit score has already been damaged as a result of identity theft, you can learn how to rebuild credit fast here.

How Do You Freeze Your Credit?

You can freeze your credit in only two steps. Here’s what you need to do:

1. Send a Mail to the Three Credit Bureaus

Use these contact details to either send a mail or make a phone call to the credit bureaus listed below:

Equifax

• Address: Equifax Information Services LLC, P.O. Box 105788, Atlanta, GA 30348
• Contact Number: 888-298-0045

Experian

• Address: Experian Security Freeze, P.O. Box 9554, Allen, TX 75013
• Contact Number: 888-397-3742

TransUnion

• Address: TransUnion, P.O. Box 160, Woodlyn, PA 19094
• Contact Number: 888-909-8872

Note that these are the only three national credit bureaus in the U.S., and you need to file a request for a credit freeze at each one of them. The process doesn’t cost a penny, and it’s usually quick. You can also learn about the difference between Equifax and TransUnion here.

2. Create an Account and Password

Equifax and Experian will allow you to create an account and attach a password to your credit freeze. We recommend picking a very unique password for this. Do not use passwords that you use for other online accounts or something too obvious, like your pet’s name or your date of birth.

TransUnion will allow you to set up a six-digit PIN. Like your password, make sure you choose a super unique combination of numbers. If it helps, be sure to jot down this information on a piece of paper and keep it in the safest place possible. 

Remember, you should not carry this piece of paper in your backpack, purse, or wallet. You should also not save the details on your phone’s notepad, or send it to your mother on WhatsApp, as all of these places are accessible to thieves and scammers. So, keep a physical copy of it, buried deep in your study room or your closet.

How Do I Unfreeze My Credit?

If you’re shopping for a loan or need a third party to access your financial data, you would need to unfreeze your credit. To do so, simply log in to your online accounts and lift the freeze. 

In case you have lost your PIN or password, you can mail the credit bureaus to assist you with the freeze lift process. You may need to provide documents as evidence of your identity and current address. For example, you may need to share a copy of your social security card (for identity) and a copy of your cell phone bill (for your address).

It will take about one hour for all three credit bureaus to lift your freeze. However, if you wish to permanently remove it, you may have to wait for three business days or so.

The Pros of Freezing Your Credit

The primary benefit of a credit freeze is mental peace. Once you have it in place, no third-party (not even a bank) can access your files or credit checks. You’ll stay protected from any identity theft; plus, it does not impact your credit score!

The Cons of Freezing Your Credit

There’s one major con of freezing your credit that you must know before you trust it completely. At times, thieves can steal data from your current or existing accounts, without needing access to your credit. This is more of a limitation than a con, but it’s something to keep in your mind.

The Similarities

There are only two solid similarities between Equifax and TransUnion. These are: both are nationwide consumer reporting agencies, and both get information from creditors.

These similarities set them apart from Experian, a global information services company that acquires data from public records and direct sources.

The Differences

The following are the differences between Equifax and TransUnion:

Experience and Headquarters

Equifax is about 123 years old in the consumer reporting industry. The company was founded in 1899 and has its headquarters in Atlanta, Georgia. Although the geographical location does little benefit to the agency, the years of its work surely make Equifax’s systems more authentic and reliable.

TransUnion was founded in 1968 and has its headquarters in Chicago. In comparison to Equifax, TransUnion is fairly new to the industry.

Varying Credit Score Module

Equifax gives you a credit score ranging from 101 to 992. The higher the number, the stronger your credit score will be (you can check out our post on how to rebuild credit from 500 here). The credit bureau calculates your score based on the following:

• Payment history
• Number of accounts
• Types of accounts
• Used credit and available credit
• Length of credit history

On the other hand, TransUnion will give you a credit score ranging from 300 to 850. The lowest possible credit score is 300. This doesn’t mean TransUnion gives you an added advantage for the baseline–its 300 is equivalent to Equifax’s 101.

Additionally, a higher number generally means a better credit score in TransUnion. However, the most ideal range is about 661 to 720. TransUnion calculates credit scores based on the following factors:

• Recency of accounts
• Payment history 
• Credit utilization
• Types of credit
• Length of credit history

The factors assessed by these credit bureaus are more or less the same, but the scale used by both differs.

Pricing and Offers

Both Equifax and TransUnion charge a certain amount from their users but offer varying value for money. Here’s a quick comparison of their plans:

TransUnion: $24.95

You can access your credit report and score whenever you want and receive regular tips and recommendations on how to improve it. Under this plan, you can also avail of its Credit Lock product, which allows you to freeze both Equifax and TransUnion credit reports.

Equifax: $19.95

You can monitor your credit report for unusual fluctuations or alarming changes. Plus, Equifax promises $500k in identity theft insurance. You will also have a dedicated ID Restoration Specialist to help you recover from identity theft.

Dispute Resolution 

Both TransUnion and Equifax take about thirty days to resolve a dispute. However, both of them process disputes in a unique way.

As an Equifax user, you’ll have to file a dispute more formally. You can reach out to the organization by whatever means you’d like, be it by mail, call, or online. But to further your complaint, you’ll have to provide as much documentation as possible. You may have to provide the following:

• Birth certificate
• Copy of utility bills
• Driver’s license
• Canceled checks (if applicable)
• Student loan disability letters
• Evidence for a claim of theft of identity
• Recent bank statements
• And any other applicable documents

Equifax is unforgiving and pretty robust with all its procedures, be it concerning a customer or a thief. In comparison, TransUnion asks only for basic details. You can file a dispute simply by calling, mailing, or reporting on its website. It will ask you for the following:

• Name 
• Current address
• Social security number 
• Date of birth
• Name of the company with which you have a dispute
• Reason for dispute
• TransUnion file number

Neither of the companies will request all of the details mentioned above; they’ll request only the necessary ones. However, filing and processing a dispute via TransUnion is generally much easier compared to Equifax.

Which of the Two Is More Accurate?

Technically, neither of the two is more accurate than the other. Whether you’re acquiring a personal loan or a business loan, it’s essential for you to have a good credit score under both credit bureaus.

It is true that some lenders and creditors trust one credit bureau over the other–but that’s just because of the business’ preference, not a technicality. If you would like any help navigating these systems, The Phenix Group is ready to help. 

If you need more help, you can look into credit repair in Austin, Texas.

What Credit Score Do You Need To Lease a Car?

The advantages of leasing a car versus buying one outright are that you generally get lower monthly payments. Some experts say you can get anywhere from 30% to 60% lower payments versus buying a car; another big advantage is that you’ll have warranty protection for the entire time you drive the car. 

However, leasing a vehicle is like buying because you still need a decent credit score. According to Nerdwallet, “the average score for customers starting a new lease was 722. If your score is 680 or above, you’ll likely have attractive offers.”

Credit scores above 740 are considered excellent by lenders, and those with scores of 740 and over get the best rates and deals regardless of whether they purchase or lease–but what if your score isn’t so hot? 

According to LeaseGuide.com, if you score between 620-679, you’re still in the ballpark for getting a lease. However, while you’re more likely to be approved with those numbers, you may get a higher interest rate. If your score is below 619, it’s considered “subprime” or “fair” credit. If you have a score in this range, you may or may not get accepted to lease, and if you do, you’ll likely pay a high-interest rate. 

If you have a subprime score, you’re better off taking a few months to improve that number before you go shopping for a new vehicle. Keep in mind that lease requirements always change and vary among auto manufacturers. It’s important to note that market conditions factor in whether or not you get approved, depending on your score. 

Credit Score For Buying a Car

Buying a car has its advantages over leasing. While you pay higher monthly payments, you have the benefit of owning a vehicle when you’ve paid it off and can sell the vehicle when you choose to get another one. Additionally, you have the advantage of being able to modify the vehicle if you want without the fear of breaking a contract. 

However, buying a car is similar to leasing because you still need a decent credit score to get a loan. Nerdwallet.com notes that “the average credit score to buy a new car is 713; it’s 656 for a used-car loan.”

If your score is in the low 700s or below, expect a difficult time getting a loan. You’ll probably have to answer questions about negative credit report entries and jump through hoops to prove your income and verify your payment history.

While it’s possible to get an auto loan with bad credit, which is defined as a score below 600, it’s unlikely–if you do get approved, you’ll pay very high-interest rates. As with leasing, if your credit score is bad, you’re better off spending six to twelve months building your score back up if you can afford to wait. 

How To Improve Your Credit Score

As you can see, having a good credit score is essential to getting good terms on a lease or car purchase, but if you have less than perfect credit, all hope isn’t lost. You can take steps to beef up your score, and it doesn’t take as long as you think, but you might need some tips on how to build your credit score faster. To know what your credit score means, it’s helpful to know how that number is calculated. Credit scores are three-digit numbers that help lenders know how credit-worthy you are. 

No uniform algorithm is used by everyone, which is why you may have different scores from different reporting agencies. Credit reporting agencies look at various factors to come up with that number, including your payment history, your credit usage, whether your accounts are delinquent, and more.

The number one thing you can do to improve your score right away is to make your payments on time from now on. Even if you’ve been late before, start making every payment on time–even if it’s the minimum. 

The next thing you can do to improve your credit score is to pay off your debts and credit cards. The debt to credit ratio or credit utilization ratio is the second biggest factor that goes into your credit score. Do everything you can to quickly bring down those credit card and loan balances to send your score in the right direction.

Another way to better your score is not to take on any more debt if you can afford it. It seems counterintuitive since you’re trying to take on a car loan, but your score takes a hit when you apply for new credit, which is why it’s best to get your score as high as possible before taking on a car loan or lease payment. 

How Credit Scores Impact the Interest Rates of Loans

Your credit score determines if you’ll get a car loan or not, as well as what the interest rates will be if you are approved. Your credit score is a representation of how likely you are to repay your loan–the higher your credit score is, the more likely you are to repay your loan in time. As a result, you are also more likely to get a favorable interest rate and terms on a loan. 

Here are various interest programs that can happen based on your credit score:

• Super-prime: If your credit score is 781 or higher, you may get an interest rate of 2.34% for a new car loan and 3.66% for a used car loan.
• Prime: Prime borrowers have a credit score between 661 and 780. At this time, they usually can get an interest rate of 3.48% on loans for new cars and 5.49% on used cars.
• Near prime: This category of borrowers has a credit score of 601 to 660. For new cars, they can secure a loan with an interest rate of 6.61%; for used cars, an interest rate of 10.49%.
• Subprime: The credit score for this category is between 501 and 600. These borrowers get loans at 11.03% for new cars and 17.11% for used cars.
• Deep-subprime: Deep-subprime borrowers have a credit score of less than 500. They generally pay 14.59% interest on a new car loan and 20.58% for used cars.

You might think the difference between 3.66% and 20.58% isn’t significant, but it can be the difference between paying a small amount of interest and an amount equal to half the car’s price.

Which Credit Scoring Models Are Used?

Different lenders use different credit scoring methods to decide the interest rate to charge on a car loan. Two of the most widely used services are FICO and Vantage Score. When it comes toFICO versus Vantage, which one is better?

FICO Score

The FICO score is the most commonly used credit scoring method for car loans. Scores range from 300 to 850 and are calculated based on payment history, credit mix, available credit, amount owed, and average credit history. Although your FICO score can differ from lender to lender because lenders prioritize some information over others.

Vantage Score

This is the second most commonly used credit scoring method. It was developed by three major credit bureaus, and the scores range from 300 to 850. The factors that determine the score are depth of credit, balances, payment history, utilization, available credit, and recent credit.

Both of these credit scoring methods help predict how likely a borrower is to repay their loans. Lenders use these services when determining who they should lend money to.

One key difference between the two services is how long each takes to produce a credit score. FICO scores require six months credit history, whereas a Vantage score can create a credit score within a month or two of opening an account.

The bottom line is that your credit score is very important, whether you want to get an auto loan, home loan, or any other type of credit. If you’re in the market for a new vehicle, your best bet is to examine your credit to see where you stand. If you think you need to make improvements, do so before attempting to get a loan. Getting a loan with a high credit score gives you more favorable terms and makes you more likely to be approved. 

How Fast Can You Build Your Credit?

A credit score takes time to build and improve. While you can’t transform your score overnight, you can see dramatic improvement with steady and consistent efforts. If starting from zero, you can expect to build a decent credit score in six months. 

For the major credit scoring companies to compile enough history of your credit use for a score, you need at least one active account open for a minimum of six months. If you’re trying to repair damaged credit, the longer you have to rebuild it, the better, but you can start to see improvements within three months. Of course, you can use services from credit repair companies in Austin, Texas to help you build credit.

What Can You Do to Boost Your Credit?

Consistent, steady improvement will do the most to improve your credit over time. Nothing happens overnight regarding your credit score, but some things contribute more than others. Here are some ways you can more easily increase your credit:

Apply for a Secured Card

If you want an easy instant boost to your credit, apply for a secure credit card. These cards require a cash deposit upfront as collateral against the purchases you’ll make. The benefit of this card is your ability to control the credit limit by paying a higher security deposit. 

One of the factors in your credit score is how much credit you use. It’s best to stay under 30%, so if you apply for a secured card and place $1,000 as your security deposit, keep your credit usage under $300. If you consistently stay under 30% credit utilization each month, you’ll see your credit score improve.

Become an Authorized Credit Card User

This is an effortless way to build your credit, so long as you choose the right person’s credit card. By becoming an authorized user on a friend or relative’s credit card, their credit utilization and history of payment will be reflected in your score. If you have a little credit history, using this tactic works well.

To do this right, you’ll want to make sure you choose someone with a credit card with a consistently low balance, a history of no late payments, and a high credit limit. Do not sign on to another person’s card if they have a history of poor credit utilization. Their credit behavior, good and bad, will be reflected in your score.

Ask for a Raise in Credit Limit

If you constantly struggle to stay under your credit limit, apply to your credit card company for an increase in your credit line. A higher credit limit can help improve your score by lowering your utilization. When your credit line increases, the increase is also reflected favorably on your credit score. An increase in credit demonstrates that you are viewed as a stable cardholder by credit card companies.

Correct Wrong Information on Credit Reports

There are many ways to track your credit score. Popular websites and apps like Experian and Nerd Wallet offer free credit score tracking–but why is monitoring your credit score important? Knowing when incorrect information is entered into your score is vital for getting it fixed. 

Though it may not happen often, there are times when incorrect information may get entered into your credit report. When this happens, your score could be negatively affected. The only way to reverse this is by having the credit scoring companies such as Equifax, Experian, and TransUnion remove this information. 

Removing false information from your credit score usually takes more than a phone call to point out the mistake. There will be checking, referencing, and the potential for documentation needed from you. It will take some time to remove the incorrect information, and your score will be repaired. Getting the process started as soon as you notice an inaccuracy pop-up is the best to get your score back to normal quickly.

Make Payments on Time

Your payment history is one of the most significant factors when improving your credit score. On-time payments will always contribute to improving your score. If you make a habit of missing payments, your score will continue to go up. When it comes to payments, you should always pay at least the minimum, as noted on your credit statement each month. Paying more than the minimum is advisable to reduce interest payments and lower your credit utilization, but if you can only do the minimum, it’s best to at least do that.

It may not seem like a big deal to miss one or two payments, but a late payment can cause a drop in your credit score, ranging anywhere from ninety to 110 points. That’s enough to take you from a “good” rating to a “fair” rating and instantly increase interest rates on loans or even disqualify you from obtaining loan approval. Though the score will rise again as you faithfully make payments, you could feel the effects of late payments for as long as seven years. 

Applying Credit Utilization

Credit utilization depends on how much credit you use compared to your credit limit. Low credit utilization is beneficial; generally, you shouldn’t use more than 30% of your limit. If you have a credit limit of $1,000, you should keep your credit under $300 each month or until you pay it off. Low utilization sends the message that you know how to manage credit well and aren’t at risk of borrowing more than you can pay back.

Improving your credit score takes time. Being financially responsible and practicing the steps outlined in this article will help you boost your credit, and while there are many things you can do on your own, if you’re still at a loss, it could be best to hire a reliable credit repair company, such as The Phenix Group, to help you out.

Pay Off Your Debts as Soon as Possible

Paying off your debts is the biggest contributing factor to building your credit score fast. Because 35% of your credit score directly comes from payment history, paying off debt (such as student loans and other loans) is arguably the best way to build your credit.  A great way to tackle this goal is to make monthly or biweekly payments to hack away at the balances.

Reducing credit card balances is also something you can do to improve your credit score, especially in the short term. You can automate your payments to streamline and quickly pay off debts, as well as to prevent missing a payment because you forgot to make a manual payment.

Don’t Use More Than 30% of Your Available Credit

Try your best to keep your credit balance well below your credit card limit. The ratio between your credit limit and the amount you usually owe significantly influences your credit score. Having your monthly credit score too close to your credit limit can negatively impact your credit score. The best way to speed up your credit building is by cutting your balances to 20% of the credit limit. 

Keep Your Credit Cards Open

While many people may think having fewer cards is more practical, having more than one open account will boost your credit score if you manage them correctly. How long you maintain your credit account is crucial in determining your credit score—the older your credit history is, the more attractive you look to a lender.

Rather than closing an account you don’t use anymore, it might be more beneficial to keep it open. Closing a card will lower your overall credit limit and possibly impact your overall credit utilization ratio. This, in turn, will decrease your credit score.

Report Your Rent To Credit Bureau

A great way to build your credit score is to report your rent or utilities expenses to a credit bureau. Try services that report rents to credit reporting agencies. These services process the rent and utility billing data and send it to the monthly credit reporting bureau.

Experian Boost is one free service you can use to boost your credit score. If you have a thin credit file, it can almost instantly increase your credit score by eight to nineteen points.

Apply For Credit Builder Loan

Credit builder loans are loans designed to help borrowers with zero credit history who are hesitant to open a credit card. First, you’ll have to decide on an amount and term. After that, you get the money upfront and return it every month. The lender then reports the on-time payments to the credit bureaus; by the time you’re done, you have increased your credit score. 

It’s also important to understand the difference between pre-qualified and pre-approved if you are interested in taking out a loan.

Final Thoughts

Building your credit score takes time and patience, but is very important. It’ll help you qualify for major loans in the future, such as home or car loans. If you follow the instructions above, you can significantly speed up the process. 

Now that you know how to have a decent credit score, you might want to know the credit score you need to buy a car.

As most credit repair companies in Austin, Texas will tell you, both of these aspects are crucial in the mortgage application.

Basic Concepts of Pre-Qualified and Pre-Approved

Some people use pre-qualify and pre-approved interchangeably. Even though this may go unnoticed in some circles, anyone familiar with the real estate market knows that they are different in several ways, and it is up to every home buyer to understand exactly how, especially if you want to understand how to build your credit faster.

That said, pre-qualifying can be defined as the first step toward securing a mortgage; it gives you an idea of how big a loan you will most likely qualify for. On the other hand, pre-approval is the second stage and involves additional and verified information in order to ascertain your credit worthiness.

One could also say that the pre-qualification phase is based on consumer-submitted information, whereas the pre-approval depends on consumer data like a credit check. This is also something that you will find when looking at what Transworld Systems is.

The main benefit of completing both these steps, pre-qualifying and pre-approval, before searching for your dream home is that it provides you a rough idea of how large of a loan you can obtain. This means that you won’t waste time looking at properties above your mortgage loan limits. The other positive aspect is that getting pre-approved for a mortgage also helps speed up the purchasing process as it lets the seller know that your offer is a serious one, which is especially important in today’s competitive real estate market.

As a borrower, you will also provide your lender with a copy of the purchase agreement and any other relevant documentation needed for the underwriting process once a home has been picked and an offer made. The lender will also secure the services of licensed or third-party contractors to conduct a home appraisal process to determine its value.

Do I Have to Spend the Amount I’m Pre-Approved For?

Another vital point to note is that in some cases, you may be eligible for more money than you had initially planned to spend. However, you don’t have to use any more money than what’s available in your personal budget. Also, even with such an offer on the table, limiting your home search to those priced at an amount that will not place you under financial strain is still advisable. Therefore, you should explore mortgage amounts that adequately fit into your plans; you can even try out a home affordability calculator to make things easier.

A Closer Look at the Difference between Pre-Qualified and Pre-Approved

Purchasing a home is a big deal. When the time comes, whether it’s your first home or you are moving into a new one, you’re most likely in need of a mortgage. With all of the information available, it can be overwhelming knowing where you’re supposed to start. 

Pre-approval and pre-qualification are two terms that seem to be used interchangeably, depending on your lender. However, the differences are subtle, and figuring out which one you’re supposed to pursue can be challenging. 

Let’s take a closer look at the differences between pre-qualified and pre-approval so you can determine the one that’s right for you.

What Does it Mean to Be Pre-Qualified?

Getting a letter in the mail that you’re “pre-qualified” for a loan or credit card essentially means that the creditor has done a fundamental review of your creditworthiness and you seem like a good candidate for a loan. Typically, a consumer has initiated the process by completing and submitting a pre-qualification application. Requirements for pre-qualification vary by lender and involve sharing basic financial information like your annual income, monthly housing payments, and any savings you may have. 

In some cases, a lender may check your credit by initiating a “soft inquiry” into a credit bureau to get a glimpse of your credit background. Be aware that a soft inquiry has no impact on your credit score, but it can give the lender enough information to decide whether or not you would meet the minimum requirements for lending. 

At this stage, the lender may tell you that you are pre-qualified, and you can choose whether or not you want to make an official application and continue with the review process. This usually requires you to submit official documentation and agree to a hard inquiry on your credit report, which can impact your credit score. It’s important to note that while you may pass the pre-qualified bar, it doesn’t guarantee that you will be approved. 

The benefit of pre-qualification is that if you get denied at this stage, you can move on to another lender or creditor without having a hard inquiry impact your credit score. With pre-qualification, you’re only receiving a ballpark estimate of how much you can borrow. Your lender is only taking into consideration the data that you provide without requiring validation; there is no commitment on the lender’s part to guarantee you will be pre-approved or approved. It’s merely a high-level evaluation of whether or not you’re eligible for a mortgage loan and a rough estimate of how much it could be.

What Does it Mean to Be Pre-Approved?

A pre-approval confirmation is the next step after pre-qualification, and you’ve submitted the proper documentation to complete a ”hard inquiry.” Pre-approval requires you to complete an official mortgage application, including all the necessary documentation for an extensive evaluation of your financial history and situation. A pre-approval application sometimes requires an application fee, depending on the lender, and can cost several hundred dollars. 

Once the lender completes your pre-approval application, it will typically specify a maximum amount of credit it is willing to give you. It will also give you an idea of the interest rate you can expect to pay. Once you are pre-approved, you will receive a conditional commitment from the lender in writing for the exact loan amount you are qualified for–with this document, you’ll know exactly how much you can afford for a home, and you can look for places that are at or below your approved price level. 

With a pre-approval in hand, you’re not only one step closer to getting an actual mortgage, but sellers will know that you’ve secured a loan amount and you’re serious about buying. 

What Are the Important Differences?

While pre-approval and pre-qualification are similar, there are slight differences. Pre-qualification is considered the first step in the mortgage process, while pre-approval is the second step. A pre-qualification is simply a high-level overview of your financial history and typically doesn’t require documentation to verify. 

Moving into pre-approval does require hard evidence and documentation of your financial situation, including all your income, assets, and debts, and a deep dive into your credit history resulting in a hard inquiry on your credit report.

Which Is Right For You?

To figure out whether you need to be pre-qualified for a mortgage or gain pre-approval, you need to look at the lender’s definition of each. Because these words are interchangeable in different companies, it can be hard to know which one you should be focusing on. 

Ask your lender how it defines pre-approval and pre-qualification, and which requires a credit check as a hard inquiry. You’ll also want to check-in with your real estate agent, as they’ll have an inside view into which is required and provides more credibility for the market in which you’re looking to buy.

Because the definitions of pre-approval and pre-qualification can vary, you need to ask your lender about its process and the interpretations it uses. While neither pre-approval nor pre-qualification guarantees a loan offer, both can give you an idea of how much you may be able to borrow to purchase your home. 

The home buying process can be confusing, especially when you’re dealing with terms that are often used interchangeably. This is why your best course of action is to talk with your real estate agent and prospective lenders about their processes and what’s needed to meet the minimum requirements for home buying. 

In Conclusion

Getting pre-qualified for a loan or pre-approved for a mortgage means that as a buyer, you will have the necessary information ahead of time, such as the kind of house you can afford. On the flip side, once you are done with both these processes, most sellers will be open to negotiating with you on the property you want. Being pre-approved also means you can close on a home in a shorter time frame.

One great option for fixing your credit is to contact a credit repair service in Austin, Texas.

It’s important to remember that collectors are trained to be persistent and can therefore make your life miserable, and that collection accounts can negatively impact your score. With such issues in mind, you should do your best and take the initiative when dealing with a collection agency; you can even negotiate Pay for Delete to resolve debt issues and maintain a good credit score.

Is Transworld Systems a Legitimate Debt Collection Company?

For some debtors, the first question they ask themselves when receiving a letter or call from Transworld Systems is whether it is a legitimate debt collection company or not. No one can blame you if you have had the same thoughts in your head; after all, there are so many debt collection scammers across the United States. Doing your due diligence is also highly advisable before you begin conversing with such companies or sending them any money.

In the corporate world, Transworld Systems Incorporated, or TSI, is a legitimate debt collection firm that has been operating since the 1970s. It has over 600 employees and, as of 2019, had collected over $725 million on behalf of its clients. The firm also has twenty-nine service locations nationwide.

What Does TSI Do?

As mentioned earlier, TSI is one of the largest debt collection agencies in the United States. In case you have ever looked up the difference between pre-qualified and pre-approved, then you might have come across it during your research. 

That said, creditors seek out their services for different reasons, including debt collection or debt selling if they cannot collect. In situations where an individual’s debt is sent to them, they will initiate contact via call or mail to collect the debt. To find you, they use a technique referred to as skip tracing, which helps to pinpoint the location of debtors who might have moved or are simply not picking up calls or replying to their letters. 

It would be fair to say that throughout the years it has been in operation, TSI has achieved low consumer ratings regarding its fact-checking ability and customer service levels. According to various reports, the company was taking excessively aggressive measures to collect debts, such as making persistent calls for days and forwarding wage garnishment letters to debtors. Regardless, most debtors will tell you that TSI is a challenging firm to deal with, so you should do all you can to resolve your debts or validate that you owe money as soon as possible. 

An In-Depth Look at Transworld Systems Incorporated

Dealing with debt collections can be scary, especially if you’ve never experienced the stress of letting a credit account go delinquent. Debt collectors come with a variety of outlooks on how they should treat consumers in their efforts to collect a debt. Many are polite, professional, and communicate clearly all options available to you, but others are not so polite, unprofessional, and don’t communicate options very well.

All debt collectors, however, are subject to restrictions listed under the Fair Debt Collection Practices Act (FDCPA), which requires them to behave in above board practices when attempting to collect a debt. While many collection agencies adhere to these requirements strictly, there are some debt collectors that seem to walk the line between above and below board.

Transworld Systems is one such company. Besides the countless complaints about Transworld over the past decade, this company has found itself butting heads with the Federal Trade Commission (FTC). The FTC ended up issuing a fine to Transworld Systems parent company, Expert Global Solutions, in the amount of 3.2 million dollars.

The premise behind the fine was that Transworld was giving personal consumer information out to third parties that were not one of the credit bureaus, harassing consumers over the phone, and ignoring consumer account validation requests, all of which are prohibited under the FDCPA. The FDCPA was passed in September of 1977 in an effort to provide more protection for consumers against unfair debt collection practices. Because debtors’ prison was no longer an option by the 20th century, the practice of harassing and threatening consumers in an attempt to collect debt became quite common up to this point.

Since the passing of the FDCPA, those types of practices have subsided to a degree, but violations still occur on a consistent basis, and complaints are still being made against a variety of debt collectors today. While some complaints are expected, especially when dealing with such a stressful personal problem as debt collection, many of these complaints can be substantiated by the language of the FDCPA.

Under the FDCPA, consumers are protected from a variety of predatory practices by collectors. Violations of these practices are prosecutable under the law.

Harassment

Consumers cannot receive robocalls or unsolicited texts on their phones from debt collectors. They cannot be subject to vulgar, offensive, or derogatory language. They cannot be sent mail that is outwardly indicative that the collection agency is attempting to collect a debt, or contain any information on the envelope that would be embarrassing for the consumer. Debt collectors cannot send postcards and may not call repeatedly or continuously.

Threats

Collectors may not threaten a consumer with violence. They may not threaten to take any action they don’t intend to, are not capable of taking, or don’t have the authorization to take. They may not misrepresent themselves as law enforcement, a government agency, or a legal firm if they are not.

Reasonable Correspondence

Consumers cannot be contacted at work once the consumer has indicated to the collection agency that they wish not to be. Debt collectors cannot call consumers after reasonable waking hours (before 8:00 AM or after 9:00 PM) or after hours appropriate to someone working an alternative work schedule.

Ignoring Requests

You have the right to request debt validation. Once you’ve made the request, the debt collector is legally obligated to send a debt validation to you in writing; this document contains all of the details of the debt for which the collection agency is pursuing you. If there are any inaccuracies or misrepresentations on this validation, you have the right to dispute it.

Misrepresentation

Debt collectors cannot agree to do one thing and then do the other. If they make a promise to clear your debt line entry from its report to the credit bureaus in exchange for settlement of the debt, then they must do so. Unless you get it in writing, however, you have no proof that the agreement was ever made.

Dealing with Debt Collectors like Transworld Systems

Despite the protections set forth by the FDCPA, violations still occur. Whether a debt collector is aware of the violations and fully engaged in the unlawful practice, or an honest mistake has occurred, you’ll need to make sure you are protecting your rights.

Put Everything in Writing

Fully record all of your correspondence with the debt collector and require the collector only communicate with you in writing. If you request a Debt Validation report, request it in writing. If you agree upon a payment settlement agreement in exchange for the removal of the debt, make sure that correspondence is in writing. Discuss nothing over the phone, as having all correspondence in writing means you can prove everything you say about your experience with the debt collector.

Credit Report Disputes

Always make a request for validation with any new collector that comes knocking on your door within thirty days of the initial correspondence. If you do find inaccuracies, you’ll need to file a credit report dispute with each of the three credit bureaus–Equifax, TransUnion, and Experian–in an effort to resolve the mistake or remove the credit line completely from your report.

Statute of Limitations

All debt has a certain number of years before it falls off your credit report. Bankruptcies last seven to ten years, while foreclosures last seven years. Some debt collectors will often engage in unscrupulous practices in order to keep your account alive, as the statute of limitations begins with the last contact with the consumer. Be aware of the statute of limitations on your debt, but don’t ignore debt that can be civically litigated against you.

If you are suffering from outstanding debt that’s gone to collections, understand your rights and collector obligations under the FDCPA before negotiating with any debt collector. Many collectors will operate in somewhat of a gray area legally to get you to pay your debt–knowing exactly what they are and are not allowed to do will help you keep them accountable for their actions.

When it comes to credit repair in Austin, Texas, Pay for Delete is one option that has been brought into the limelight over the last couple of years. However, for most individuals, the question that still lingers in their minds is how the option works and whether it is advisable to pursue it.

According to financial experts, Pay for Delete is a good option, but in a limited number of cases. Remember that even though the Fair Credit Reporting Act (FCRA) provides consumers with the right to question or dispute errors on their credit reports but does not offer the same provisions when the negative information is correct. This is something that you will also find when looking at what Midland Funding is. That said, If the collections account information is correct and you actually owe the debt, you will need to resolve the matter, such as by requesting a Pay for Delete as it can help you clear things up and improve your credit score.

How Does Pay for Delete Work?

Collections can significantly weigh down one’s credit score; exactly how much they do will depend on the kind of collection in play, how old it is, and the amount owed. In essence, Pay for Delete is one way to eliminate an active collections account from your report. This is something that you will also discover when evaluating what Transworld Systems is.

We can also define Pay for Delete as a negotiation process initiated by a debtor between them and their creditor or collection agency. In most cases, you can offer to pay off your remaining amount if the creditor agrees to remove the collection entry from your report. Nonetheless, it is still up to the credit agency to accept or decline.

In most cases, especially if an account is particularly old and there was no expectation of payment, credit agencies may agree to pay for deletion if the debtor can make even a partial payment instead of the entire balance. In other situations, they may suggest Pay for Delete as an incentive to inspire you to make payments. However, it would be wrong for us not to tell you that some collection agencies are notorious for making promises they have no intention of keeping in a bid to make you pay. Therefore, it would help to practice caution and due diligence before agreeing to anything. One way to do this is to request an agreement in writing via mail.

Another essential point to remember is that because Pay for Delete entails removing accurate or legitimate negative items from your credit report, it is considered by some lending institutions as something that undermines the integrity or validity of precise credit reporting. Some credit bureaus have even gone the extra mile and taken several steps to discourage Pay for Delete, including emphasizing in their provision guidelines that all reported data must be accurate and complete.

An In-Depth Look at Pay for Delete

Living in a world full of easy money means a constant juggle of offers–some great, some not so good–to take on debt. Racking up debt is incredibly easy to do, and before you know it, the amount of debt you have a responsibility to pay off can become overwhelming.

The idea of erasing that outstanding debt you’ve had lingering on your credit report for years can seem like too good of an opportunity to pass up. If you’ve heard of Pay for Delete options, you may feel tempted. But before you pick up the phone to strike a deal with that debt collector, it’s important to understand the realities of this gray area practice.

While in the past, collectors who actually have been able to delete derogatory debt records in exchange for payment may have come knocking at your door, most debt collectors neither have the interest nor the ability to completely delete your bad credit.

Negotiating Pay for Delete

To fully understand all that is great and not so great about Pay for Delete, it’s important to know exactly what Pay for Delete entails. If you have outstanding debt with a creditor, you can contact them to negotiate a deal. The deal entails you paying either all or part of the total outstanding balance in exchange for the creditor removing the record of outstanding debt from your credit report.

Because most debt collectors buy consumer accounts for small amounts or for a percentage of the recovery amount, negotiating a settlement amount less than the total is no problem. Getting a creditor to agree to a Pay for Delete option may be possible, but you’ll need to make sure to get the deal in writing, just in case you see the derogatory account entry pop back up on your credit record.

Most large lenders won’t even entertain a Pay for Delete option with you. So, if you give them a call expecting some wiggle room, don’t expect much, especially in a Pay for Delete scenario. What you may not know about Pay for Delete is that it is often not possible for creditors or debt collection agencies to wipe that record of that debt entirely off your credit report.

This is because there may be multiple entries of the debt over the course of that debt’s lifetime. Entries are made on your credit report when your original creditor reported your account as past due; entries are made again when that account is sold to collections. Once you’ve settled your account, another entry is made. So, even if a creditor wipes out one entry, previous evidence of your delinquent account may be lingering on your report.

Additionally, the practice in general floats around in the gray area of legality. Creditors are obligated to report the most accurate and up-to-date information to credit reporting agencies. Creditors send information on a regular basis to credit bureaus about any or all of the accounts you hold with them, including outstanding debt.

If creditors are agreeing to wipe out your record, then that doesn’t fall in line with policies regarding accurate reporting to the credit bureaus. You may have a difficult time finding lenders who will agree to Pay for Delete, though smaller debt collection agencies, medical debt collection, or other creditors that agree to circumstances beyond your control may be more inclined to do so. All in all, only about 10% of creditors actually agree to Pay for Delete deals.

The other downside to attempting a Pay for Delete deal is refreshing the statute of limitations on the account. All possibilities for litigation in an effort to collect bad debt live only for a certain amount of time, usually anywhere between three and fifteen years.

Once you’ve made it to the end of the statute, debt collectors can no longer pursue you to collect the debt through legal means–the statute starts from the date of last activity on your account. So, if the last activity was the transfer of the account to collections, your account may be progressing toward the end of the statute. Once you make that call to the debt collection agency to arrange Pay for Delete, the statute of limitation restarts from the beginning.

The conversation about Pay for Delete is becoming increasingly obsolete, as more financial institutions start to adopt newer credit analyzing algorithms. FICO 8 and VantageScore 3 both no longer hold outstanding debt against your credit rating if you have paid the balance off.

Of course, the record is still listed in your credit report, but these new methodologies don’t pay it any mind. So, if your bank or credit card company hasn’t switched over to FICO 8 or VantageScore 3, it will in the future, and the Pay for Delete conversation will be irrelevant.

FICO 8 already ignores debt less than $100 when calculating its scoring, so you may want to consider paying off large debt first, since those bigger numbers have more of an impact on your credit rating. VantageScore gives less priority to medical debt compared to credit card debt or outstanding mortgage payments when calculating its score. So, while it’s important to settle all debt reflected on your credit report, it may be worth your while to start with the more heavily weighted debt first.

In the meantime, even if you choose not to pursue a Pay for Delete option, you should be working to chisel away at outstanding debt, whether the account is held by a creditor, or it’s been sold off to a debt collection. The debt you will have repaid will help improve your credit score, and as more creditors move to the new system, your chances of being approved for a better loan will increase thanks to a combination of the new system and your paid-off debt.

Even though one can go over their credit limit in certain instances, most of the reputable credit repair services in Austin, Texas will tell you that it is not a wise move–especially if you want to build up and preserve your credit score. This is because exceeding your credit limit can negatively impact your credit utilization ratio, which is responsible for measuring how much of your accessible revolving credit you are currently using. This means that your credit utilization should remain as low as possible to keep your credit scores high or in the optimum range.

Understanding How Credit Limits Work

To make things more straightforward, it is essential that we point out that a credit limit refers to the maximum one can charge on a credit card. Knowing this bit of information will also help you when you are trying to understand what hard inquiries are. 

Moving on, if you exceed your limit–for any reason–you will have to deal with inevitable consequences, including a lower credit score and various credit card fees. This is why, if you can, you should avoid going over your credit limit at all costs.

When your new credit card comes in the mail, you’re given a paper listing your credit limit which is the maximum amount you can spend on your credit card. Every so often, if you’re a good borrower, you can increase your credit limit. But have you ever wondered how this credit limit is even decided?

The method used by credit card companies to determine your credit limit is called “underwriting.” Underwriting works via mathematical formulas, but the exact details of this method are kept tightly under wraps by each institution as it’s how these companies make their money.

What Is a Credit Limit?

As mentioned earlier, a credit limit is the maximum amount you can spend on your credit card. While a high limit allows you to purchase more expensive items, offers you more flexibility, and can improve your credit score, it can also get you into trouble quickly if you get buried in credit card debt, and then have contact with a debt collection agency like Ad Astra Recovery Services. 

It’s important to remember:

1. How much of your credit you use determines a portion of your credit score. It’s wise to have more available credit than you use to keep your credit score high.
2. While most Americans have credit cards, few think much about their credit limit, which is one reason so many get into trouble with their credit cards. Fortunately, it’s easy today to get a handle on your credit limit with the many apps that assist you in managing your credit cards.
3. If you don’t have a smartphone or prefer not to use an app to achieve this, you can use the card issuer’s website to get this helpful information. Most of these sites will give you your balance and limit at a glance, so you know exactly where you stand.
4. If you don’t have access to an app or a website, you should be able to find this information on your statement each month.

How Are Credit Limits Determined?

When a company sets a credit limit, it shows how much it trusts the borrower to pay back what they owe. If you’re given a high limit, the bank thinks you’re low risk and will likely pay off your debt and make timely payments, meaning you’re considered a good borrower.

However, if you don’t look like a low-risk borrower to the bank, it’ll give you a low limit to start. If you pay your debts responsibly, the bank or card issuer may raise your limit after a set time. After some time, you can also request to increase your credit limit, if need be.

The Role of Credit History

A major determining factor in your credit limit is your credit history. When you apply for a credit card, the card issuer checks things like your annual income and your credit report to determine what your limit will be.

When it looks at your credit report, it’ll factor in your repayment history, your credit history length, and how many credit accounts you have open. Open credit accounts include other credit cards, mortgages, student loans, auto loans, and personal loans.

Card issuers also look to see if you have any derogatory information on your credit report. Bad marks on your report could be bankruptcies, missed payments, late payments, tax liens, or accounts that have gone into collections.

Is It Possible to Go Over Your Limit?

For most items, your credit card company will deny the transaction that puts you over your limit, but some don’t. Some card issuers allow users to opt into an over-the-limit coverage whereby they pay a fee if they go over and the card issuer honors the transaction.

Still, even with this protection, it’s best not to go down that road. Besides hurting your credit, going over the limit puts you at risk of having your limit decreased or your account closed by the card issuer, and it may also cause your card issuer to increase your interest rate.

It’s essential to understand how credit limits work and how they impact your credit score; equally important is staying on top of your credit score to know where you stand. Many apps available on your smartphone let you access your credit score and show you where you need to improve. 

Should an Individual Go Over Their Credit Limit?

Going over your credit limit is not advisable. Sometimes, it may happen by accident; in other scenarios, you may have needed extra cash in a hurry. Regardless, we cannot overstate that going over your credit limit will ultimately lead to substantial financial issues such as extra charges, debt, and damage to your overall credit score.

As a borrower, your priority at any given time should be to avoid maxing out your card, as this is one of the best ways of practicing proper financial responsibility. Do everything you can to maintain a low credit utilization rate, as this will be a wise move in the long run, regardless of how tempted you may be to exceed your limit. 

According to most financial experts, if your circumstances force you to go over your credit limit, the best you can do is to sit down and ascertain why you did so in the first place. This will help you determine whether or not you need to review your budget. Another thing you should do is to figure out which purchases led to you spending more and whether it will be possible for you to increase your income or make changes to your spending habits.

Other Items That Factor in Your Credit Score

While the underwriting process differs depending on the company, many consider identical variables in determining your limit. Some items they believe are the credit limits on your other accounts and your work history.

Your debt-to-income ratio also plays a role. If you have a lengthy work history and low debt-to-income, you’ll be seen as low risk and most likely be given a higher limit.

If you apply for a card and don’t get the credit limit you were hoping for, it’s most likely something in your credit report holding you back. This is why it’s a good idea to check your report regularly to know where you stand and what you can do to improve your credit score.

How Do Credit Limits Affect Credit Scores?

While credit card limits affect how much purchasing power you have, it also directly impacts your credit score. One of the ways it does this is mentioned above in your credit utilization ratio or debt-to-credit ratio–this ratio is important as it comprises 30% of your FICO credit score.

People with low credit limits get into trouble quickly with credit utilization, which is why it’s best to strive for higher limits. If you have high credit utilization, it reflects poorly on your credit score.

However, it’s important to remember that every credit report is different, and just because you brought your ratio down and it reflects positively on one report, it doesn’t mean it’ll do the same on another. Of course, it’s wise to keep your credit utilization ratio low when possible–many experts say under 30% is a good number to aim for. An excellent way to increase your score and lower your credit utilization ratio is to ask for an increase in your credit limit but keep your card using the same.

In Summary

From the information provided above, it is safe to say that going over your credit limit is never a good idea, regardless of whether it is an available option. As a result, if you wish to avoid going over the limit, it is essential that you first establish how much credit is currently available to you, have a budget, and watch your spending habits. You also need to remember that it may not always be a purchase that takes you over the edge–if you carry an extremely high balance on your card, your interest and fees could be sufficient to push you over the limit, so remember to keep an eye on your limits and fees.

Maybe you’ve looked at your phone and wondered, “what is Midland Funding?” only to discover you’ve been contacted by a debt collector. Perhaps you missed a payment, maybe a bill went to the wrong address and didn’t get paid, or maybe it’s a complete mistake. The fact is that no one likes getting a call from someone that says you failed to make payment and are now in debt collection. 

This article will examine how debt collection works as a business, as well as how and when a debt collector may try and take you to court over your debts. We’ll also look at what can be done to correct erroneous items on your credit report through the use of credit repair services in Austin, Texas.

How Does Debt Collection Work?

When a company is owed money that has not been repaid, and it feels that either the amount is insignificant, and or the person who borrowed the money is difficult to locate, it will often pass the debt to a collection agency, such as Ad Astra Recovery Services. It’s the collection agency’s job to locate the debtor and collect the debt. 

Collection agencies work in two ways–first, they can purchase the debt from the bank. Let’s use an example of the bank being owed $500 the agency does not believe will be repaid. The collection agency offers the bank $25 in exchange for transferring the $500 of debt to the collection agency. Now, if the collection agency can get the entire $500 from the debtor, it’ll make a huge profit. 

The second way collection agencies make money is to locate and convince borrowers to repay the debt to the bank. Through this method, the collection agency charges a fee to the bank in the form of a percentage of the amount recovered. If it recovers $500, it could be paid a fee of 30%, or $150. 

When Would a Debt Collector Take Me to Court?

Fortunately, for smaller amounts owed, it’s rare for a debt collection company to file a lawsuit–court fees are rather expensive and often aren’t worth it for small amounts. However, once a debt is sufficiently large enough, it can absolutely make financial sense for a collection agency to take the debtor to court. 

Receiving notice that a lawsuit has been filed against you is a serious matter. If you do not show up in court to plead your case, you will automatically lose by what is known as a “default judgment.” This is the worst possible scenario–if the court finds you liable for the debt owed, it can also lead to a host of negative outcomes, such as:

Garnished Wages

The court will order that a percentage of your paycheck be held each pay period until the debt is paid. 

A Property Lien

A lien is a mark on the title to your home or car that states if the home or car is sold, the institution you owe money to will be paid before you receive any of the money from the sale. 

Asset Seizure

This is rare and is only used in egregious cases, but if you don’t show up to court or are in contempt of court orders, the court may rule that the debt collector can seize your personal property so it can be sold to repay the debt. This may include any items of value such as a home, automobile, bank accounts, and other property that the court or collection agency is aware of. 

What if the Debt Isn’t Mine?

If you receive a call from a debt collector and you are sure it’s an error, you can dispute the debt. Sadly, this process can take months of back and forth with banks and collection agencies to clear up–this is where the process of credit repair comes in. A seasoned and trusted credit repair company, such as The Phenix Group, can work on your behalf to clear up any errors that may exist on your credit report and can provide advice on how to improve your overall credit profile. This way, you won’t have to spend hours on hold with banks and can focus on what matters most to you.

If need be, you can always consult a credit repair company in Austin, Texas to better understand the concept. 

How Do Hard Inquiries Affect Borrowers?

There are many factors associated with your overall credit score. This includes the new credit accounts that are opened such as new loans or credit cards, the amount you currently owe, and your payment history; another factor that goes into your overall credit score is the number of times your credit score has been pulled in the past year or two. This is why credit checks are put into two categories: hard inquiries and soft inquiries. As a result, knowing how each type of inquiry affects your credit is essential so you can have more control over your credit score as a whole. This is a very important concept to familiarize yourself with in detail, especially if you wish to understand other important credit issues like what happens if you go over your credit limit. 

That said, hard inquiries are a necessary part of obtaining a new loan or credit card, but their impact will differ from one individual to the next. Nonetheless, too many hard inquiries can lead to a decrease in your score–if your credit report shows that you have fifty hard inquiries in the past two years, the credit reporting agencies believe you are desperate for a loan.

Such credit checks can also affect your credit score and take off as much as five points from your FICO score, which may seem small to some, but it can mean the difference between you securing a loan or failing to get one. However, in most cases, it’s not a big deal. 

If you’re trying to shop around for a credit card or a student loan, it’s best not to procrastinate and only apply for credit cards you think you’ll receive. All those inquiries within a fourteen- to forty-five-day period are considered one inquiry on your credit report. So, if you’re looking to shop around, stay smart during your journey–but having excessive hard inquiries might make you seem high-risk to lenders. Don’t let these facts keep you from shopping around for the lowest interest, but don’t go crazy with your application. Also, remember that FICO gives a thirty-day grace before loan inquiries affect your credit score. If you can minimize the number of hard inquiries on your credit report, then it’s a good idea to do just that.

Soft Inquiries

On the other hand, soft inquiries (or soft pulls) don’t affect your credit score at all. They’re utilized for various reasons, often without your permission, including when credit cards pre-approve you for loans. It wouldn’t be in their best interest to waste postage on a person they would probably not accept, so they check their credit. Additionally, when companies do background checks, soft inquiries happen, as well. Companies might check your credit to indicate that you’re a responsible adult with good habits; checking your credit score doesn’t affect it at all. It’s often a common misconception that checking your credit score will lower it, but that’s not the case. Whether getting your free yearly credit report from any credit bureaus or using an on-demand service like Credit Karma, they’re all recorded as soft inquiries. These types of inquiries might be included on your credit report, but that often depends on the specific credit bureau. You can check your credit score as often as you’d like.

Hard or Soft: More Information

Certain situations could involve either a hard inquiry or a soft inquiry. These include leasing a car, opening a utility account, requesting a higher credit limit, and more.

If you’re unsure whether a credit check will be recorded as a soft or a hard inquiry, then it’s essential to contact the lender or financial institution. Being informed when it comes to your financial history is very important. Also, if there’s a hard inquiry on your report that you didn’t authorize, you can contact the lender and ask it to remove it; you can dispute inquiries directly with the credit unions if the lender isn’t budging. It’s vital to keep the information on your credit score as up-to-date as possible to get the most honest report.

How Long Can a Hard Inquiry Last on Your Report?

In most cases, a hard inquiry will remain on your credit report for about two years. During this period, lenders can see all the inquiries made, but this will only impact your credit score for approximately one year maximum. As a result, when you apply for a credit card, you may see a minor drop in your credit score approximately one month after the hard pull. However, with time, the impact will diminish, and if you practice responsible credit behavior, you will recover from the drop quickly.

Another thing to keep in mind is that if you want your credit score to remain strong, you should only apply for credit that you genuinely need. For instance, when you want to secure a mortgage. We also recommend that you avoid applying for new kinds of credit during this stage to help your score remain as high as possible.

How Can You Protect Yourself From Hard Inquiries?

To best protect yourself against hard inquiries, it’s crucial to maintain a solid credit score to minimize the effect a hard inquiry would have on your credit. Ask the lender to make a soft inquiry instead–it might be just as effective for you to pull your credit report, print it out, and show that instead of making a hard inquiry on your own.

Hard and soft inquiries are very different, but they’re both essential to know when it comes to your credit. Hard inquiries happen with your consent and often affect your credit score, whereas soft inquiries often happen without your permission but don’t affect your credit score. Knowing these two separate concepts gives you the best chance of taking control of your credit score and staying as fiscally responsible as possible.

In Summary

Suppose you are feeling nervous or worried about what kind of impact several hard inquiries could have on your credit report. In that case, you could be duped into accepting a particular offer earlier than expected to prevent them from appearing on your credit report. However, the best thing you can do is to consider and evaluate your situation before you settle on one creditor. In most cases, the impact of hard inquiries on your credit score may be less than you believe. As mentioned above, all inquiries taking place within a fourteen to forty-five day window will be counted as a single pull, as credit agencies expect you to shop around a bit, especially for large loans like mortgages and auto loans. So, feel free to check out your options–as long as it’s within that window of time.

The more informed you are about such matters, the better off you will be when it comes to the preparation of sec

For example, for those living in Texas, you will need to know who the best credit repair services in Dallas, Texas are if you want to get fair representation, or when understanding whether or not banks help with credit repair in your state. 

State Laws That Regulate Credit Repair

Many states stipulate that credit repair firms need to have a state-licensed attorney on staff. A credit repair attorney will have the legal authority to practice in your state and make any disputes on your behalf. By checking out such elements, you can ensure that the credit repair company you select is legitimate. If you find that the company does not have a state-licensed attorney on its payroll, think twice about using the service, because it could be a scam.  

Most states also require that a credit repair company be bonded to work for clients residing in that particular state. This is something you need to know, especially if trying to understand if it is bad to have a lot of credit cards. 

A state may outline legally required disclosures and disclaimers, including standards for advertising and claims that can be made when engaging in sale calls. In addition, jurisdictions may establish specific systems for assessing fines and other punishments if a credit repair company breaks the law. 

The Fair Credit Reporting Act

The Fair Credit Reporting Act (FCRA) is a piece of legislation that was introduced in the 1970s and streamlines the credit repair process. Small-sized companies started providing consumer credit histories by issuing summary reports in the 1960s that helped banks make lending decisions. However, people found that these reports were not always accurate and were affecting their ability to qualify for loans. As a result, the federal government stepped in and took measures to regulate credit reporting.

Consumer’s Rights as Stipulated Under the FCRA

FCRA limits who can view an individual’s credit report. According to FCRA, credit institutions and other authorized organizations can view an individual’s report for the following reasons:

• Court cases
• Insurance purposes
• Loan and credit applications
• Bank closures
• Employment

Other Important Elements of the FCRA

In most cases, one must give a company permission in advance before reviewing their credit report. Even when you apply for a loan, you must first give the chosen creditors authority to pull your information. FCRA limits what items or statements creditor review firms can include in your credit report, what kind of information gets listed in your account, and how long it stays there.

The FCRA guarantees consumers the right to accuracy. Credit reporting agencies need to take every step possible to ensure the information in individuals’ reports is accurate.

Within the credit repair process highlighted in FCRA, consumers have the right to submit a dispute or question the accuracy of a reported item. Once this happens, the bureau has thirty days to verify or remove the item.

FCRA guarantees consumers the right to know or be made aware of what is in their report. The legislation also gives individuals the right to obtain a free annual credit report from each credit bureau. Lastly, FCRA includes a fraud alert process so consumers can prevent fraud if their identity is compromised.

In Summary

Credit repair is the process of rebuilding or improving your credit score after it has been damaged by financial setbacks, poor spending habits, credit reporting errors, and identity theft. While there is no denying that credit repair is a favorite tool of con artists, the process is legal. 

It’s best to work with a legitimate repair company such as The Phenix Group, which will know the ins and outs of the industry and how best to repair your credit status.

In this article, we’ll explore the components of a credit repair agreement, as well as what a 609 credit repair entails. 

Components of a Credit Repair Agreement

A credit repair agreement is a contract between a client and a credit repair company. According to the Credit Repair Organizations Act (CROA), credit repair companies must provide a credit repair agreement when offering their services to consumers. 

Although repair inaccuracies and unverifiable information on credit reports are legal, some credit companies are fraudulent–they make false promises and often mislead innocent consumers. Because of this, the CROA was created to keep such shady credit repair companies at bay. When working with legitimate credit repair services in Dallas, Texas, the credit repair agreement should contain:

• Payment terms for the services to be offered, including the total cost of the entire credit repair process made clear at the beginning of the engagement
• A description of the services to be provided by the company to the client
• Any guarantees or refund policies 
• The period within which the company should complete the credit repair process
• The names and physical addresses of the credit repair company and the client 
• A power of attorney 
• A cancellation notice

You’ll then sign a contract for the credit repair company to begin the process of improving your credit rating. There is usually a three-day waiting period after signing the contract, which allows you to cancel the contract if you’re no longer interested in working with the company. Within this waiting period, you can cancel the contract without paying any fees as a penalty.   

The credit repair company would then make two copies of the agreement and give you one while keeping the other. According to the Credit Repair Organizations Act, the company is also obligated to keep the agreement for a minimum of two years.     

How a 609 Letter Can Improve Your Credit Score

A 609 letter is a credit repair letter that requests credit bureaus to remove inaccurate and unverifiable negative information from your credit reports. It is named after section 609 of the Fair Credit Reporting Act (FCRA); the FCRA is a federal law that protects consumers from unfair credit and collection practices. 

Errors in your credit reports may incorrectly lower your credit scores, preventing you from accessing loans or seeking employment. A 609 credit repair letter would remove any negative information from credit reports to boost your credit rating.

How Long Does It Take to Complete Credit Repair Work In Dallas?

Wondering how fast credit repair works in Dallas? It takes at least thirty days to complete credit repair if you only have a few inaccuracies, but could take longer than six months to repair your credit if you have a history of late payments, defaults, and bankruptcy. 

Conclusion

A credit repair agreement is a contract given to consumers at the beginning of the credit repair process–it shows how long the credit repair process is likely to take and the costs of the services to be rendered. Credit repair agreements help guide the relationship between you and the credit repair company you hire. If you decide to cancel the contract within the waiting period after signing, you are not required to pay any penalties. The 609 letter was created to protect consumers from unfair credit and collection practices. Reliable credit repair companies, like The Phenix Group, send 609 letters to credit bureaus as a method to remove negative marks from your credit report. These letters dispute inaccurate information and help rectify mistakes on your credit profile.

In this article, we’ll dive into the benefits of 609 credit repair in Dallas, Texas. 

What Is Section 609 of the Fair Credit Reporting Act? 

Section 609 is a section of the Fair Credit Reporting Act, a federal law protecting consumers from unfair credit and collection practices. It states that every consumer agency is obliged by law to provide information in your consumer file upon request. 

Even though section 609 doesn’t say anything about disputing information, it gives you the right to access all the information needed to calculate your credit score. In section 611 of the same statute, you’re allowed to dispute any information available in your consumer file. If the information in your credit reports is inaccurate and unverifiable, the credit bureau would have to remove it upon investigation. 

Credit repair companies can help you identify and correct such errors–you just have to sign a credit repair agreement for them to begin the process of improving your credit score.  

How Effective Is the 609 Credit Repair Letter?

The 609 credit repair letter is assumed to be a credit repair method that requests credit bureaus to delete any unfavorable information in your credit reports. A 609 letter requests that the credit bureaus are legally obligated to verify any negative marks on your credit history, and if they can’t verify such negative information, they’ll have to remove it immediately from your credit report.

However, the 609 credit repair letter may not always work in your favor. If the negative information is verifiable, the credit bureaus are not obliged to delete it because you sent the 609 letters. 

How Credit Repair Software Can Boost Your Credit Score

Are you wondering what credit repair software does? Credit repair software includes programs that identify errors in your credit history and create dispute letters for deleting those errors. They may also provide the best ways to handle your debt, so you can quickly rebuild your credit.

Credit repair software is different from credit repair services. Credit repair services are offered by companies and include one-on-one coaching and guidance by credit repair professionals. The Credit Repair Organizations Act regulates credit repair organizations (CROA). On the other hand, credit repair software may only offer letter templates to help you fix your problems. 

Final Thoughts

A 609 letter requests that credit bureaus rectify any inaccurate information in your credit reports. The credit bureaus would have to delete the disputed information if it is inaccurate upon investigating; however, if the negative information is verifiable, the credit bureaus are not obligated to delete this, as the 609 letter would verify this request.

At The Phenix Group, we care deeply about helping individuals improve their credit scores and reach financial security. We want to help make your life as financially stable as possible so that you can enjoy all the benefits of having a great credit score–we’re ready to help!

Local credit repair companies also use such software to organize their clients’ issues so they can provide the best credit repair in Dallas, Texas. 

Think of credit repair software as the middle option between doing credit repair on your own and hiring the services of a credit repair company. While you can do credit repair independently, it may be confusing and take up much of your time, and when you hire a credit repair company, it may cost you money and save time.

In this article, we’ll look at how credit repair software can boost your credit score. 

How Credit Repair Software Improves Your Credit Rating

Credit repair software provides resources to help you fix your credit. Here’s how it works:

1. Identifying Issues Hurting Your Credit Score

This is the first way credit repair software helps improve your credit score. It goes through your report to spot any inaccuracies that may negatively impact your credit rating. 

Errors related to personal information may include a wrong address or a misspelled or incorrect name. Errors related to debt may be an unrecognized account, payments wrongly reported as late, or unrecognized debt reported to collections. 

2. Fixing the Problems Quickly

Once it has identified the issues affecting your credit score, the credit repair software will now help you fix them. 

Under normal circumstances, you’d send a 609 credit repair letter to the credit bureaus to dispute any information you feel is inaccurate. A credit repair software helps you achieve this by offering letter templates and auto-filled letters that you can send to the credit bureaus. It also assists with filing and tracking disputes to ensure you get the quickest outcome. 

3. Rebuilding Your Credit

Credit repair software also finds the best ways to handle debts that cannot be erased from credit reports. It will give you ideas on how to rebuild your credit effectively and easily. 

How to Choose the Best Credit Repair Software

Look out for these factors when looking for credit repair software: 

Service Type 

Credit repair software is divided into individual and business market types–most companies offer either one of them. Choose the software package that matches your needs. If you’re an individual, opt for the individual software package, and if you’re an enterprise with many employees needing credit repair services, select the business software page. 

Cost and Value 

Cost is an important factor to consider when buying any product. Some products may be expensive but offer the same type of services as other affordable products. Some software packages may also be expensive because of the value they provide–for example, some credit repair software features can support your business from its launch into expansion. 

Ease of Use

Credit repair software, which allows credit report integration, should enable customers to identify inaccuracies and generate dispute letters quickly. 

In Summary

Credit repair software are programs that help people identify issues in their credit reports and fix them quickly. The credit repair software may offer letter templates that you can fill and send to credit bureaus depending on the nature of your problem. Credit repair software is also used by reputable credit repair companies in Dallas, Texas, such as The Phenix Group, to efficiently handle client workload.

The question is, does this concept also apply to credit cards? Most good credit repair companies in Dallas will tell you that this is the case–paying off credit card debt is a good thing that offers a number of benefits.

What It Means To Pay Your Credit Card Early

Paying your credit card on time means making the necessary monthly payment before the due date. There is typically a grace period before a payment is considered late, but this could result in some additional payments each month. Paying on time or early is particularly important for anyone trying to understand if it is bad to have a lot of credit cards, as timely payments play such a big role in your credit status. 

What Are Credit Card Grace Periods?

Most credit card providers offer consumers something known as a grace period–this is the timeframe between the end of one’s billing cycle and the payment due date. It is intended to offer some breathing room between when you purchased an item and when you have to start paying for it.

In most cases, the grace period is usually between twenty-five and fifty-five days. Various factors can affect how the grace period is applied to a particular purchase; for example, whether or not you paid your previous balance in its entirety by the due date can make a difference. You can also check the terms and conditions of your credit card to establish what the term is for your grace period.

Benefits of Paying Off Your Credit Card Fees Early

When it comes to credit cards, everyone’s situation is unique. In most cases, however, making extra payments toward your current balance before the due date could have a significant impact in a number of ways.

Lower Credit Utilization

When you make an extra payment toward your current balance before your billing cycle is over, you can lower your credit utilization ratio (the amount of credit you are using divided by the amount of credit available).

Reduction of Interest Charges

Whenever you carry a balance from one month to the next on your credit card, your card issuer will charge you interest. By paying your balance in its entirety every billing cycle, you will be able to incur much smaller interest costs than if you were to carry it over from month to month. If you can’t pay your balance in full, the Consumer Financial Protection Bureau recommends that you pay off as much of your debt as possible. This is because the higher the balance you have, the more interest you accrue. This is also very important when looking at whether paying off student loans helps your credit score. 

Making early payments also means that you will be able to reduce your interest costs even if you do not pay off your entire balance. Every payment you make to reduce your credit card balance will help chip away what you owe. Because the interest is calculated on the outstanding balance, interest costs will go down as the balance is reduced. You can even use a payoff calculator to help figure out how much you may be able to save.

Avoiding Late Fees

Making a minimum payment during your grace period means you avoid getting hit with a late payment fee. To make things easier, you can schedule your payments in advance, create an automatic payment system, or set reminders on your phone or tablet device so you don’t forget. In certain situations, your credit card provider may offer various tools to help you make early payments.

You should also be aware that if you carry over a balance from the previous month, any payments you make before your due date will be applied to the prior balance. As a result, you will still need to pay at least the minimum amount on the current bill.

Final Thoughts

When it comes to paying off your credit cards early, the bottom line is that there are benefits that can come with taking such steps. You should therefore remember to make minimum payments on time to avoid any additional fees–this will help keep your account in good standing, which is something you always want.

Any good credit repair company in Dallas, Texas will tell you as much. This is because even though maintaining a low credit utilization ratio is good, having too many credit cards can damage your credit score.

If your credit cards also happen to have zero balances for several years due to inactivity, your credit card provider may stop sending account updates to credit bureaus. If this happens, lenders and other financial services companies may have a hard time determining if you are a responsible credit borrower.

Another thing to remember is that closing unused cards may negatively impact your credit score–this is because such a move will shorten the length of your credit history, leading to a lower score. It’s also important to know that credit repair is not illegal in any state. 

You can avoid these types of problems by spending small amounts on the cards you rarely use and then paying those credit card balances in their entirety by their due dates. This way, your credit utilization rate will remain low, and you can show lenders that you are a reliable debtor.

How Many Credit Cards Should One Have?

Many people wonder if they should have more than one credit card. It’s not a good idea to have too many cards, especially if you don’t want to end up with a massive pile of debt you can’t afford. Having multiple credit cards with outstanding balances can make your debt repayments highly unsustainable.

However, there is no definitive number of credit cards a person should have. For instance, according to financial experts, having several credit cards can be a double-edged sword since it can either help or harm your credit score depending on how well you manage them. You should also know whether or not it is bad to pay a credit card early if you plan to have more than one credit card.

Regardless, this has not stopped many Americans from taking advantage of credit cards. Recent reports show that the average American currently holds four credit cards, which is slightly lower than in previous years. One of the reasons is the coronavirus pandemic that created a lot of financial uncertainty among U.S. consumers, some of whom took steps to reduce their credit card debt.

If you have several credit cards, it may help you keep your credit line utilization ratio for each card lower than the advised 30% by spreading balances across the cards. Also, having several cards does have other potential benefits, such as reward points to optimize earnings in spending categories.

The Ideal Number of Credit Cards

Spending habits and the ability to pay bills on time is usually a fine line people walk when using credit cards. As mentioned earlier, the average American has four credit cards. This is because most people build their credit portfolio over time, especially as they age and their credit needs expand.

Nonetheless, it is essential to note that one usually has to be eighteen years or older to apply for a credit card. In some situations, the borrower needs to be twenty-one years old to be considered. As you start with credit cards, it is a good idea that you practice and maintain good financial habits–a reliable income helps a lot, but other factors to consider before applying for credit cards include your:

• Organizational awareness
• Ability to meet deadlines
• Understanding of money management

Considering how and where you intend to spend money is also very important with credit cards. Most cards offer specialized reward points and other benefits that can add perks to your regular spending. If you like stacking up points, you may want to consider cards as a way to maximize on grocery, gas, or travel expenses.

Final Thoughts

The key to being responsible with credit cards is to develop good credit habits, regardless of how many cards you have. Make timely payments and don’t use too much of your credit limit. These simple steps can have a powerful effect on your credit score, and if you’re still looking for guidance, The Phenix Group is here to help.

We’ll also look at how the best credit repair in Dallas, Texas can help you get back on your feet and assist you in getting approved for the loans you need. 

What Is a Credit Report?

If you’ve ever opened an account with a financial institution for a loan such as a car loan, credit card, or mortgage, the financial institution reports the status of that loan to one of America’s three credit reporting agencies—Equifax, Transunion, and Experian. 

The credit reportingagencies look at several items such as:

• How much debt you have
• How much your payments are
• If you’ve ever missed a payment
• If you’ve ever had money owed that is now with a collections company due to non-payment
• If you’ve paid a collections company 
• If you are maxing out credit cards and making minimum payments

Based on these details, the credit reporting agencies will assign you a credit score somewhere between 300 and 850–the higher the score, the better. Most lenders want to see a score in the mid 600s before approving a loan for a reasonable interest rate. 

Some people may wonder if someone with good credit can help someone with bad credit. They can by co-signing on a loan; however, it’s always better if the loan can be obtained by a single person. 

How Does My Credit Report Affect Me?

Your credit report and score not only determine if your loan is approved, they also determine how much you can be approved for and what your interest rate will be. For example, having good credit and getting an interest rate just 1% lower on a $300,000, thirty-year mortgage can save you over $60,000 over the life of the loan.

Because of this, people go to great lengths to improve their credit–check out our recent article on whether paying collections help your credit score to learn more.

How Can Credit Repair Help, and What Are the Costs?

Credit repair comes in when there are inaccuracies on your report. This happens constantly all over America because social security numbers get transposed, data gets mixed up, and sometimes human error leads to mistakes. 

For example, let’s say that according to your bank’s info on your credit report, you missed your last six payments, but you know for sure you made those payments and can prove it. These items need to be disputed to restore your credit report, and they need to be disputed with not only the credit agencies, but the bank itself. Sometimes, there are numerous items and mounds of paperwork that must be obtained in order to clear these errors. 

Credit repair companies take this process out of your hands to make your life easier. They can also provide helpful advice on other ways to improve your credit score. 

Now, what is the cost of these services? Unfortunately, there isn’t a simple answer. It’s kind of like asking, “how much will it cost to fix my car?” Well, what’s wrong with your car (credit report)? How long will it take to get the new parts that I need (file dispute paperwork and wait for responses)? However, when you factor in the 1% interest rate saving you $60,000, you can see how a high cost could be reasonable, given the immense savings. Fortunately, it’s only one call to the credit repair agency to hear some basic numbers based on the complexity of your scenario.

Final Thoughts

Credit repair is an affordable and excellent way to repair your inaccurate credit reports while you focus on the things that matter to you most instead of spending hours pulling your hair out filing piles of paperwork. Let someone else wait for hours on hold with banks and credit reporting agencies so that you can reap the benefits–The Phenix Group is ready to help.

Any good Dallas credit repair company will tell you that lawyer fees for debt settlement and credit repair depend on the nature of your case. There are many factors that can play a role in legal costs when a lawyer negotiates with creditors on your behalf.

In most cases, how much a lawyer will charge depends on:

• The scope or level of work the lawyer will need to undertake
• The amount and sort of debt you have
• How difficult it will be to settle with your creditors

Process Associated With Settling Credit Issues Through a Lawyer

In most cases, a lawyer’s fees are directly related to how much work the lawyer will need to perform. They will negotiate and handle the entire matter until a settlement is reached. In other situations, the lawyer will perform only a specific task related to the proceedings. This is called an unbundled service and can include activities such as preparing a settlement proposal or providing advice about whether a voluntary repo hurts credit.

Understanding Unbundled Services

If you don’t want to hire a lawyer to handle your entire negotiation process, you can ask them about an unbundled service. They can share their estimated fees, which will vary based on the complexity of the task and their willingness to provide unbundled services for the matter at hand–it could be as simple as explaining whether paying off student loans helps credit score.

In debt negotiation, the lawyer will draft a letter to the creditor to kick off the negotiation process. With an unbundled service agreement, it could also involve drafting a settlement proposal to the creditor. Nonetheless, you will still be responsible for negotiating and settling the debt on your own. An unbundled service will cost you less in legal fees compared to hiring a lawyer to handle your whole credit repair case, but you will need to do some of the work yourself.

However, many lawyers will not agree to work on only a portion of a case since it usually doesn’t make sense financially for them. Another reason they may decline is that they will not want to work on a piecemeal basis since they may still be held accountable if something goes wrong in another aspect of your case. Bar associations in some states discourage lawyers from offering unbundled services.

Standard Credit Repair Negotiation Lawyer Fee Structures

There are different ways to structure a fee agreement with a lawyer who is going to negotiate with your creditors. A lawyer may charge:

• A flat fee for each creditor or debt: Based on how many creditors you would like your lawyer to negotiate with, they may charge you a flat fee to handle an entire negotiation until it is settled. The fee amount will usually depend on your case and the number of creditors. In most situations, the average fee can vary from $500 to $5000, depending on the complexity of the negotiations.
• A standard hourly fee: A lawyer may charge an hourly fee to commence negotiations with your creditors that can range from $125 to $350 per hour.
• A fee based on the amount of debt you have: A lawyer may decide to base their fees on your debt level. Typically, such a fee structure will be a specific percentage of the amount of debt the lawyer negotiates on your behalf.
• A fee based on how much the proposed settlement will save you: Just like fees based on the level of your debt, a lawyer may charge a percentage of the money you will save with a settlement. With such an arrangement, the lawyer’s fees rise with the amount you save, giving them more incentive to secure the best possible settlement.

In Conclusion

Lawyers’ fees can vary significantly based on the case they are handling. If you are looking for a credit repair lawyer in your area, you should probably talk to several of them to see what they charge, or get advice from a reputable credit repair specialist first, such as those at The Phenix Group.

You may not be aware, especially if you are unfamiliar with credit repair companies in Austin, Texas or debt collection firms. Still, Midland could have bought an old debt of yours or that of your family member from a cell phone company, credit card firm, or other lending institutions.

Sometimes, you may receive a letter from the company trying to sue you and secure a judgment requiring you to allocate a portion of your paycheck towards your debt. It can also ask the courts to freeze your bank accounts; it’s imperative that you take these matters seriously. 

How Does Midland Funding Go About Its Business?

Whenever an account goes past 180 days without payment, receives less than the required amount, or one fails to successfully negotiate pay for delete, the original creditor may decide to sell it. According to U.S. federal laws, debt or loan accounts can be sold to a new firm without the borrower’s knowledge or consent. In most cases, debt collection agencies opt to take such steps since it would cost more funds to try and collect the debt than to sell to a third-party firm like Midland Funding, LLC. 

In such third-party situations, Midland Funding will now begin to appear as one of the items on your credit report as a debt in collections after it has acquired the debt. On the other hand, the creditor can also report your account as a charge-off, but it will remain on your report for seven years from the initial delinquency date, regardless of when the original lender handed your account over to Midland Funding, LLC.  

It’s also important to understand that Midland Funding operates as a third-party collector in all situations. After the balance is transferred, it will own and service the specified debt and loan accounts; it will also be responsible for contacting the debtor through calls and other correspondence in a bid to collect. This can be confusing for some people, especially when they call the original lending firm to inquire about what happened to the debt or if they want to make a payment on it. In some cases, you may be shocked that the company has no knowledge of your debt and cannot find you on its system. This is because once the debt is sold, it has no obligation to maintain your file. 

An In-Depth Look at Midland Funding LLC

When it comes to debt collection, Midland Funding LLC and Midland Credit Management (MCM) must secure your originally signed contracts and verification documentation of the amount owed. In case they attempt to take you to court without these documents detailing your alleged debt, you have the right to protect yourself against such measures as per the Fair Debt Collection Practices Act (FDCPA).

That said, nobody would like to be in debt. Therefore, finding yourself unable to pay bills on time can have devastating effects both personally and financially. Once some debt goes unpaid and moves into collections, other debt tends to head in that same direction. This seems especially true when a consumer is unable to pay due to personal life events such as the loss of a job or a death in the family.

What can be even more stressful in experiencing financial hardship, is being approached by debt collectors employing every strategy they can in an effort to collect outstanding debt from the consumer. The best tool a consumer can have to work through the circumstances of being placed in collections and contacted by collectors is knowledge–knowledge of their rights under the law and knowledge of strategies they can use when dealing with debt collectors.

As mentioned earlier, one such collector, Midland Credit Management, a collection agency owned by publicly traded Encore Capital Credit Group, will employ a variety of tactics to secure payment for outstanding debt. Understanding what Midland is and what its reputation consists of will help consumers who are forced to deal with it communicate in a way that best protects themselves.

Midland Credit Management, aka Midland Funding, has been in business since 1953, and has been on file with the Better Business Bureau (BBB) since 1992. Like all other debt collectors, it purchases debt accounts from a variety of lenders everywhere and then pursues consumers for collection of those accounts.

Midland has an A+ rating with the BBB, and has been given 3.7 out of five stars for its business practices. Despite that, many negative reviews of Midland Credit Management are currently visible on the BBB website, which is not even taking into consideration the numerous complaints about the company on other consumer advocate websites. 

Complaints Filed Against Midland Funding LLC

The number one complaint against Midland is that it breaks promises made, or acts on debt that is full of error or completely false. According to the BBB, in 2015, a court case was settled between the Consumer Financial Protection Bureau and Encore Capital Group (Midland’s parent company) over the allegations that “the business bought debts that were inaccurate, lacked documentation, and unenforceable and collected payments from consumers using false statements and false court documents. Under terms of the Assurance, the business agreed to refund consumers $42 million, pay a $10 million penalty, and stop collecting over $125 million worth of debts.”

Although settlement of the dispute does not admit guilt, this case, combined with the wealth of consumer complaints made in the last decade, provides a clear indication that Midland may be engaging in practices that violate consumer rights under the FDCPA.

The FDCPA is a federal law passed in September 1977 to help protect consumers from a high prevalence of predatory debt collection practices that were often abusive in nature. The act set out specific requirements that clearly defines the types of practices lenders and debt collectors can and cannot employ in attempts to collect a debt; violation of any of these requirements is prosecutable under the law.

According to the Fair Trade Commission (FTC), the FDCPA restricts lenders and debt collectors from engaging in the following practices:

Harassment such as:

• Threats of violence or harm
• Making public names of those consumers who refuse to pay (exception: giving the information to the credit reporting companies)
• Using inappropriate/obscene language
• Repeatedly using the phone to annoy or harass

False Statements such as:

• Saying they are attorneys or government representatives when they are not
• Telling the consumer he/she has committed a crime
• Lying by saying they operate or work for a credit reporting company
• Misrepresenting the amount of debt owed
• Saying that letters or paperwork they have sent are legal papers
• Saying that papers they’ve sent aren’t legal forms when they are
• Telling a consumer they will be arrested if they don’t pay
• Saying they will seize, garnish, attach, or sell a consumer’s property or wages unless they are permitted by law to take the action and intend to do so
• Saying they will take legal action against a consumer, if doing so would be illegal or if they don’t intend to take the action

Misrepresentation such as:

• Giving false credit information about a consumer to anyone, including a credit reporting company
• Sending a consumer anything that looks like an official document from a court or government agency if it isn’t
• Using a false company name

Unfair Practices such as:

• Trying to collect any interest, fee, or other charge over the amount owed unless the contract that created the debt, or state law, allows the charge
• Depositing a post-dated check early
• Taking or threaten to take property unless it can be done legally
•  Contacting a consumer by postcard

If you find yourself in the position of having to deal with Midland Funding or any other debt collector, there are specific steps you can take to protect yourself while communicating with them. First, let them know you will only be corresponding with them in writing, and that they are not allowed to call you anymore.

Lastly, if you settle for removal (paying an amount less than the total owed in exchange for your record being removed from Midland’s report to the credit bureaus), make sure it is in writing. One of the many complaints against Midland is that it promises to settle for removal, and then does not. If you don’t have it in writing, it is essentially the company’s word against your own.

Dealing with debt collectors can add to the immense amount of stress already felt from falling behind on debt repayment. Knowing your rights and the specific measures you can take when dealing with debt collectors will help give you some breathing room when you can start the process of recovering from bad debt.

Wondering if debt collectors can take you to court? Check out our latest post.

Credit repair can take as little as thirty days or as long as six months, depending on the condition of your credit history. This article will show how fast credit repair can work, especially when you get help from a Dallas credit repair company.   

What Is a Dallas Credit Repair Company?

A Dallas credit repair company helps people in Dallas to improve their credit score by disputing inaccurate and negative information on their credit history. If you have a bad credit rating, a credit repair company would communicate on your behalf with interested parties. These interested parties include credit bureaus that store your credit information, as well as the information furnishers, such as banks and debt collectors. 

At a fee, a Dallas credit repair company would negotiate with these interested parties to either delete inaccurate information damaging your credit profile or file a dispute to fix these inaccuracies. 

How Long Does It Take to Complete a Credit Repair Process?

It takes an average of one to six months to complete a credit repair process, depending on the number of disputes. If you only have a few errors to correct, the process can be done in as little as thirty days. Once the credit bureau investigates your claim and verifies that the information is inaccurate, it will immediately correct it and notify you of the results. 

If you have legitimate negative marks on your credit reports, like defaults and bankruptcy, the credit repair process could take longer than six months, and the law does not allow the credit bureaus to delete them. At this point, your credit repair company can only negotiate with information furnishers, like banks and debt collectors, to help improve your credit rating.   

How to Verify a Dallas Credit Repair Company 

Even though there are many credit repair companies in Dallas, you need to verify that the one you choose is legitimate. Check out the company’s online reviews on the Better Business Bureau website–this site has verified online reviews, so it’s impossible to fake them. Check the complainant database on the Consumer Financial Protection Bureau, as well, which will confirm if a credit repair company is legit if there are complaints on this site. 

What Is a Credit Repair Agreement?

A credit repair agreement is a document that stipulates the services a credit repair company would offer you. It outlines the entire process of improving your credit score from the moment you sign up to work with them, to the point where you’d have a positive credit rating. 

A credit repair agreement also shows the amount of money you’d pay to the credit repair company in exchange for its services. Some companies may charge you for each negative mark they remove from your credit report, while others may charge a flat rate based on how much your credit score has improved after rendering their credit repair services. 

The Phenix Group Helps You With Credit Repair In Dallas

If you’re wondering how to get help with credit repair in Dallas, The Phenix Group is the right team to contact. We have vast experience to help you improve your credit score as quickly as possible–our credit repair specialists will review your credit report to identify any discrepancies and contact credit bureaus on your behalf for correction.

If you are familiar with the credit and lending world, or have dealt with credit repair companies in Austin, Texas, then you have probably heard of Ad Astra Recovery Services. Ad Astra is a certified debt collection agency that has been in operation since 2007, with headquarters in Wichita, Kansas.

In some cases, the agency can appear on one’s credit report under several different names, which include:

• Ad Astra Collections
• Ad Astra Inc.
• Ad Astra Company
• Ad Astra Recovery Serv.
• Ad Astra Recovery

According to information available on its website, the agency offers an easy outsourcing service with quality-oriented employees. Aside from that, AARS doesn’t provide too many specifics regarding the other kinds of services it provides. However, one can conclude that it is an agency that deals with in-house and third-party debt collection via speedy cash and check recovery services. 

Many people often want to know if debt collectors take you to court. When it comes to AARS, the agency is known to make collections for various industries, it most notably does so on cash advance debts and payday loans.

How Does Astra Recovery Services Deal With Outstanding Debt?

It is fair to say that being contacted by a collections agency can be rather frustrating. Having accounts that have gone to collections can also damage your credit score, which can be more detrimental than the agency’s insistent calls and letters. 

The way it works is that the three primary credit reporting bureaus, Equifax, Transunion, and Experian, calculate one’s FICO credit score. It is this score that a majority of loan providers use to assess your reliability. 

Removing Ad Astra Recovery Services from Your Credit Report

When an AARS collection is added to an individual’s credit report, there are a few things you should do and others you shouldn’t if you hope to get it removed. For instance, you should know what happens if you go over your credit limit. 

Some people do not know that the Fair Debt Collection Practices Act (FDCPA) gives individuals thirty days to get their debt validated. According to the law, debt collectors cannot seek repayment without offering evidence that you indeed owe the funds. You can dispute your debt with AARS by sending a validation letter to the mailing address within thirty days. If the agency does not have any documentation linking you to the debt, it will be required to drop it and cease contacting you.

Another way you can remove AARS from your credit report is to prove that the information on the account is fraudulent, incorrect, or has errors and that you cannot fix the problem within the appropriate amount of time. Based on reports and studies done by the U.S. PIRGS, approximately 79% of people’s credit reports contain serious errors or mistakes. In some cases, the situation can be so bad that you will have to seek the services of specialists who can remedy such accounts. A credit repair agency is a great option for these scenarios, as it can be time-consuming and frustrating to do it yourself.

How Debt Collection Works 

As long as there’s been debt, there have been debt collectors; the two go hand in hand. Debt is such an institutionalized part of most ancient and modern societies, that debt slavery–a practice whereby debt was passed from generation to generation–has often been an accepted component of this institution.

Debt collection has historically been an aggressive, coercive business; before the abolition of debtor’s prison in the early 1800’s, consequences for failing to pay a debt were often personally catastrophic.

Reasons for not paying a debt don’t solely fall on negligence. Other circumstances include financial hardship, disputes with the debt, unreasonable expectations in interest and penalties, and failing health.

Consideration of the circumstances by which debt has accrued has contributed to a relaxation of laws against debtors over the past century and affords them protection against negative and aggressive debt collection practices by creditors and third party debt collection agencies. In September of 1977, Congress passed the Fair Debt Collection Practices Act (FDCPA), which protects consumers from abusive debt collection practices. This law was passed in order to give the consumer protection from what was up to this point, aggressive practices by debt collectors.

Since that law was passed, the nature by which debt collection has changed for the benefit of the consumer. However, from time to time, agencies violate the law by forcing consumers to seek litigation against these agencies to protect their rights.

As mentioned earlier, Ad Astra Recovery Services (AARS) may be one of these third-party collection agencies. Ad Astra works as a collection agency, check recovery service, debt repayment planner, and payday loan service provider according to the Better Business Bureau (BBB). 

In the past three years, both the BBB and the Consumer Financial Protection Bureau (CFPB) have received over 420 and 380 complaints, respectively, about suspected below board practices initiated by Ad Astra (AARS). At least thirteen cases of federal civil litigation have been recorded against Ad Astra Recovery Services for violations of the Fair Debt Collection Practices Act.

An example of an alleged violation against Ad Astra can be seen in a 2013 case against it brought by a consumer in Illinois. According to the consumer, Ad Astra verbally abused and practiced intimidation in order to get the consumer to pay an outstanding payday loan that he insisted he never took in the first place. The case was later settled between the consumer and Ad Astra.

Many of those who have complained about Ad Astra, and probably even more who haven’t lodged formal complaints may have qualified to bring litigation against AARS for violation of the Fair Debt Collection Practices Act.

The Fair Debt Collection Practices Act prohibits debt collectors to engage in the following practices:

• Contacting consumers outside of the hours 8:00 AM to 9:00 PM over the phone, and any time inconvenient to consumers due to work schedules, family schedules, etc.
• Failure to cease communication after the consumer has requested in writing that the collector engage in no further communication or has refused to pay the debts (with exception for notification of termination of collection efforts, or intention to file a lawsuit against the debtor)
• Calling the consumer repeatedly or engaging a consumer in a phone conversation repeatedly or continuously with the intention of annoying the consumer, abusing, or harassing them
• Talking to consumers at their place of employment, including telephone conversations, after the employer has requested it to be stopped
• Contacting a consumer who is knowingly being represented by a lawyer
• Communicating with a consumer after they request validation and before the validation has been sent
• Misrepresenting the debt or practicing deception against the consumer
• Publishing the name and address of the consumer
• Pursuing collection amounts that are unjustified
• Threatening the consumer with legal action or arrest
• Using abusive or profane language
• Sharing consumer debt information with third parties
• Using methods to communicate with the consumer that would personally embarrass them, such as displaying embarrassing language on the outside of a mailed envelope
• Sending incorrect, intentionally false information to a credit bureau for the purposes of misrepresentation on the credit report

The FDCPA also requires creditors and debt collectors to adhere to the following requirements:

• Debt collectors must identify themselves as such and notify the consumer that they are attempting to collect a debt in every instance of communication
• The debt collector must provide the name and address of the creditor of origin
• The debt collector must inform the customer that they have the right to dispute the debt
• If the consumer sends in a request for verification or they dispute the debt, the collector must send the consumer the requested information
• If the collector files a lawsuit, it must be done in a proper venue such as the consumer’s residence or place in which the debt was initiated

The above requirements are just that–requirements. Violations of one or more of these requirements can be prosecuted under the law. Debt collectors like Ad Astra may also violate another law, the Telephone Consumer Protection Act of 1991, as well, if the collector sends robocalls to a consumer’s cell phone without prior consent by that individual.

Suspected violations of either or both the Fair Debt Collection Practices Act (FDCPA) or the Telephone Consumer Protection Act (TCPA) is prosecutable. Consumers do have the right to pursue litigation against debt collectors who have engaged in unfair and unlawful practices in order to collect a debt.

If you receive communication from Ad Astra or other debt collection agencies, know your rights. If you feel the company may be engaging in measures that violate your rights, let it know that. If it continues, you have the right to lodge your complaint with the Better Business Bureau, and even pursue litigation. The Better Business Bureau has a publicly viewable website that shares all complaints against a business with the rest of the world.

Complaints on the Better Business Bureau’s website against Ad Astra include not honoring an agreed upon settlement, not honoring a Pay For Delete agreement, inputting incorrect information on a credit report, failure to provide proper debt validation, lying about debt payoff conditions, and submitting a false collection claim, among others.

However, in this situation, you can also consider a voluntary repossession or voluntary surrender meaning you contact your dealership or lender and return the property. Either way, your credit will take a hit, but with an involuntary repossession, you might need credit repair services in Dallas, Texas to recover. You can avoid a major financial hit by choosing voluntary repossession. 

How Does Voluntary Repossession Work?

If you have to choose voluntary repossession, you should first tell the lender about your situation—you can’t pay the debt anymore and want to return the vehicle or property. To return the property, decide a time and place to meet and record the details for your records. However, this doesn’t mean you’re done with your debt.

You may need to pay late payment fines or other additional fees. Then your bank or the creditor will sell the car and you’ll be notified about the sale. You can also participate in the property auction, but the only accepted payments are cash. You’ll get all the sale details of the default property or vehicle in the form of a statement. 

The difference between the amount the car is sold for and what you owe to the creditor is called a deficiency balance. You have to pay this deficiency balance no matter what type of repossession it was. If you can’t pay the deficiency balance, your lender can get help from a collection agency to recover their money. Having a collection amount on your credit reports negatively impacts your credit score more heavily than repossession. 

Effects of Involuntary Repossession

1. There’s an Effect on Your Credit

In the case of repossession, two things go on the defaulter’s credit report—repossession and late payments. This information will stay on credit card reports for more than seven years, and the magnitude of its impact on your credit score depends on your credit history.

2. You Still Have to Pay the Loan

Returning any default property voluntarily does not cancel out the loan. After the repossession, the lender resells the property in an auction to recover the loan balance. The borrower is responsible for paying the remaining loan balance after the sale, called the deficiency balance. 

3. It’s Difficult to Get a New Loan

Having a recent repossession on your credit report harms your score, particularly for the loan you already took and were unable to pay on time. For example, if you’re unable to pay a car loan, next time, you may be seen as a high risk for a car loan and could be strapped with a higher interest rate. However, voluntary surrender will be on your reports, and the lender can see you took a proactive approach. 

When Should You Opt for a Voluntary Repossession?

If you’re in a situation where you know you cannot pay your property payments and will lose the property eventually to an involuntary repossession, voluntary repossession can save you to some extent.  

With voluntary repossession, you don’t need to worry about a repo team showing up suddenly to seize your property, and you will avoid some additional fees that come with involuntary repossession.

To Wrap It Up 

After a voluntary surrender, your next step should be to restore your credit. A repossession will not stay on credit reports forever, and you can improve your credit score in different ways. People with good credit can help someone with bad credit, and once you learn if you can afford how much a credit repair lawyer costs, you can opt to go in that direction or seek help from a reliable credit repair service, like The Phenix Group.

Many people are using the recent economic events to try to get their credit score in better shape. This means pulling your credit reports, learning how to read them, then figuring out how to resolve problem accounts.

But what if you have one or more charge offs that have made their way onto your report? How are they going to affect your report and overall credit score, and is there anything you can do about them?

We’re going to take a deep dive into charge-offs, what they are, how bad they really hurt you, and if there really are any techniques that you can use to lessen their impact on your creditworthiness.

WHAT IS A CHARGE OFF?

A charge off occurs when a creditor, after many failed attempts to collect, deems the debt uncollectible and the account is closed. Charge offs are derogatory and are still owed. Creditors typically can choose to charge off an account after the account has gone without any payments from four to six months. The account entry will indicate the outstanding past due balance and late payments in 30 day increments. If, after 120+ days the creditor decides to charge off the account, it will continue to carry an outstanding balance and will be reported as charged off.

THE IMPACT OF A CHARGE OFF ON YOUR CREDIT HISTORY

Charge-offs, as with most derogatory item, are reported to the three main credit bureaus Experian, Equifax and TransUnion. Once reported, the account will be updated on the credit report and listed as a charge off. The impact on your credit history will be considerable.

Your credit score will most likely decrease due to the consecutive late payments, offset balance to limit ratio, and being an uncollectable debt. With the two largest factors that influence your credit score being payment history (35%) and utilization (30%), a charge-off can be destructive.

Not only will your numerical credit score be hurt badly, but you may also jeopardize your relationships with future lenders. When you go to apply for a personal loan, finance a vehicle, or even get a mortgage the lender will pull your credit report and see the charge off. This may cause them to weigh the fact that you have already failed to fulfill your end of the previous lending agreement.

HOW LONG WILL A CHARGE OFF BE ON YOUR CREDIT REPORT?

Your credit report is a record of your payment history and personal management of your accounts. When your accounts are deemed a loss and the creditor reports to the credit bureau, that debt is tacked onto your credit report. Derogatory information including charged-off accounts can stay on your credit report for 7 years from the original date of delinquency.

WILL A CHARGE OFF GO TO COLLECTIONS?

Creditors have the right to sell your debt to another company or transfer your debt to a collection agency. In most cases, if a company places your account in collections, the collection agency can report the new account to all three reporting agencies, again negatively impacting your credit score.

Once transferred to collections the charge-off account will show a zero balance and remain on the credit report as a charged-off/written off account.

WHAT A CHARGE OFF DOES TO YOUR CREDIT SCORE

The charge off will have a major impact and lower your score significantly. This is in part due to the lack of payment and increase in credit/utilization it will report.

With 35% of your total credit score being calculated on payment history, charge-offs have a significant impact due to showing consecutive missed payments. The more positive payment history you have established, the more damage a late payment can do, sometimes it can lower a score between 50-150 points.

Additionally, due to late fees, accruing interest and penalties, this can drive the principal balance over the credit limit or high balance. In turn this will negatively impact your overall utilization which accounts for 30% of your credit score.

OPTIONS FOR RESOLVING A CHARGE OFF

There are few options to properly resolve a charge-off; it will require a strategic plan.

If the charge-off remains with the original creditor, repayment may be the best option. As a customer, you have the right to have the creditor validate the debt is accurately reporting. If they cannot, you may be able to dispute the account and successfully have it removed from your credit file. In some cases, paying the charged-off account will show a positive impact to your credit score by eliminating excessive utilization. Seek the advice of a professional to help determine what your best option will be. In general, settling or paying off a charge-off will not lead to the creditor deleting the account. Again, you must use strategy in addressing the issues.

CONSTANTLY MONITOR YOUR CREDIT REPORT

One of the single most important things you can do to stop an account from going into a charged-off status, is to maintain your on-time payments and closely monitor your credit report. There are countless apps and websites where you can obtain a copy of your credit report from each of the three main bureaus. Watch closely, not just to catch errors, but also make sure you’re getting the proper credit as well. Look for inaccuracies with late payments, new accounts that weren’t given the proper opening date, anything that is inaccurate or incorrect needs to be addressed.

The truth is that student loans can influence your credit, for better or worse depending on the circumstances–the key is knowing how to leverage your student loans to enhance your credit history. Fortunately, paying off your student loans can also work in your favor when it comes to getting help from a Dallas credit repair company.

How Student Loans Could Negatively Impact Your Credit History

Student loans can harm your credit score if you don’t pay them on time. Even a single missed payment can significantly decrease your score, and any missed or late payments can remain on your credit report for up to seven years.

How Student Loans Can Help Your Credit History

Student loans offer young people an opportunity to show that they are responsible and can make regular payments on their debt; this is a primary component of anyone’s credit score. Another way student loans help your credit history is by boosting your average account age and expanding your account mix.

Student Loans Raise Your Average Account Age

When you can show a long history of responsible credit use, such as keeping your student loans current, you are seen as a lower risk to lenders than an individual with a shorter credit history. Paying back student loans over many years increases your average account age, enabling you to demonstrate greater financial accountability.

Why Paying Off Student Loans is Beneficial

Student loans offer a borrower the chance to make timely payments–any payments made against open lines of credit or loans are reported to the three primary credit bureaus and are part of your credit report. Whenever on-time payments land in your credit history, your credit score can go higher. Therefore, when you make regular payments on your student loans, your credit score could significantly improve.

In fact, payment history is one of the most critical and influential components of your credit score. It should go without saying that you should make all your scheduled payments on your student loans–or pay them early, just like you should pay credit card fees early.

Student Loans Broaden Your Credit Mix

If you have several kinds of credit in your name–multiple credit cards, personal loans, home loans, or student loans—you will be seen as someone who can manage different demands for their financial life. Successfully managing mixed credit helps reduce your perceived risk as a borrower and boost your credit score.

Tips for Building Your Credit History with Student Loans

To keep your credit history going in the right direction, consider the following tips for managing your student loans.

Only Take Student Loans as Needed

Limiting what you owe is the best way to ensure that your student loans remain manageable and in good standing. While paying your educational expenses with loans may seem like a good idea, you should consider only using them for tuition, books, and school fees. Avoid using loans to pay for living expenses, such as rent and groceries.

Make Regular Payments

Your payment track record will impact your credit score, no matter what the number currently is. The principle is simple: make regular payments on your loans and credit balances to boost your score; failing to pay what you owe could negatively impact your overall number.

In Summary

If you are struggling to make payments on your student loans, reach out to your lender. It may be possible to defer payments, negotiate a new payment plan based on your income, or consolidate your loans under a single interest rate. Even private lenders usually work with borrowers to ensure they can make payments.

Wondering how much a credit repair lawyer costs? Take a look at our latest article.

If you’re looking for credit repair companies in Dallas, Texas, or trying to understand if locking your credit report helps, you might want to know whether or not paying collections improves your credit score–let’s dive in.

What Is a Collection Account?

A collection account is a debt that has been sent to a collection agency. When you don’t pay your bills, the creditor will eventually stop pursuing you directly and send the debt to a collection agency. The collection agency will then try to collect the debt from you.

Collection accounts can stay on your credit report for up to seven years, even if you pay them off. This is one of the reasons why it’s so important to try to avoid collections in the first place.

Why Are Collections Bad for Your Credit Score? 

When you have unpaid collections, it is a sign to lenders that you are not good at managing your finances. This can make it difficult to get approved for loans or credit cards in the future.

Collections can also cause your credit score to drop significantly because collection accounts are considered to be high-risk by the credit bureaus. If you have multiple collections, they will collectively have a greater negative impact on your credit score than just one. 

Does Paying Collections Help Your Credit Score?

In short: yes. When you pay off a collection account, the collection agency will notify the credit bureaus. The account will then be updated to show that it has been paid, which will help your credit score in two ways.

First, it will remove the “unpaid” stain from your credit report. Second, it will show that you are now managing your debt better, which will help improve your credit score over time. However, keep in mind that paying off a collection account will not remove it from your credit report. It will be marked as “paid,” but it will still show up on your report. 

Can You Get Collections Removed From Your Credit Report?

Although there are no guarantees, there are a few things like “pay for delete” and “goodwill deletion,” which you can use to try and get collections removed from your credit report.

“Pay for delete” is when you agree to pay the collection agency in exchange for them removing the collection from your credit report–this is not always successful, but it’s worth a try. Similarly, “goodwill deletion” is when you write a goodwill letter to the collection agency asking them to remove the collection from your credit report. This is usually only successful if you have a history of good credit and the collection is an isolated incident.

Should You Settle or Pay Your Collections in Full?

If you have the money to pay off the debt in full, that is usually the best option. This is because once you pay your debts in full, your collections will show as “paid in full” on your report, which gives a positive impression to your future lenders. 

However, if you can’t afford to pay off the debt in full, you may want to try settling it for less than what you owe. Keep in mind that doing so will change the status of your “unpaid” collections to “settled.” Although it’s not ideal, it’s still better than leaving your dues unpaid.

Bottom Line

Paying collections will help your credit score in the long run and show future lenders that you are managing your debt. Although it’s not easy, try to pay off your debts in full, and if you can’t, try settling the debt for less than what you owe. 

Whatever you do, don’t ignore your collections. This will only make things worse in the long run. If you’re struggling to pay off your debts, there are many resources available—seek out professional help if you need it, or reach out to a reliable credit repair specialist like The Phenix Group for guidance.

Wondering how much credit repair is a month in Dallas? Take a look at our recent article.

What Is a Credit Lock?

A credit lock is a security feature that allows you to control who has access to your credit report. Only people with your permission can access your credit report when it’s locked–this can help prevent identity theft and protect your personal information.

If you’re looking for credit repair companies in Dallas or how to get help with credit repair, it’s important to first understand that although a credit lock can be useful, it doesn’t impact your credit score in any way. 

How Does a Credit Lock Work?

When you lock your credit report, businesses must get your permission before they can access your report. This means that businesses may need to verify your identity before they can approve you for credit, a loan, or a service.

If you’re wondering how exactly a credit lock protects you from scammers, consider this scenario: you receive a pre-approved credit card offer in the mail. You didn’t apply for the card, but you figure it’s no big deal, so you fill out the paperwork and send it back.

Now, a scammer has your name, address, and other personal information. With this information, the scammer can apply for other credit cards, open new accounts in your name, and rack up debt. If your credit report is locked, however, the scammer won’t be able to access it. This can help prevent identity theft and protect your personal finances.

In order to make sure your credit lock is effective, you’ll have to sign up for the service at each of the three credit bureaus—Experian, Equifax, and TransUnion. This way, you can be sure that no one will be able to access your credit report without your permission.

Is a Credit Lock the Same as a Credit Freeze?

No–a credit freeze is a different security measure that also restricts access to your credit report. A credit freeze is run by the government, not by private companies, and a credit freeze is free for everyone, not just for people who have been victims of identity theft. A credit lock can cost you $0 with TransUnion and Equifax or $9.99 per month with Experian. 

Thus, a credit freeze may be a better option if you’re worried about identity theft, but a credit lock is still a good choice if you want to protect your personal information.

Do Credit Locks Really Work?

Yes–credit locks are an effective way to protect your personal information, but it’s important to remember that they’re not foolproof. Scammers can still get your personal information through other means, and if you give someone your permission to access your credit report, they’ll still be able to see it.

So, while a credit lock can help protect you from identity theft, you should still be careful about who you give your personal information to, and you should regularly check your credit report for any suspicious activity.

In Summary

A credit lock is a good way to protect your personal information, but it’s not a perfect solution. If you’re still looking for guidance around credit locks or other credit-related information, The Phenix Group’s credit repair specialists are ready to help.

Wondering if paying collections helps your credit score? Check out our latest post.

Today, we’ll examine what a credit report is, how a bankruptcy affects your credit report, and how you can repair your credit with a qualified and legitimate credit repair service in Dallas, Texas.

What Is a Credit Report, and How Is It Affected By Bankruptcy?

Each time you take out a loan, credit card, or mortgage, a file is started regarding that account with one of three companies known as Experian, Equifax, and Transunion. Together, these make up America’s credit reporting agencies; they constantly examine how much money you owe, to whom, if you’ve ever missed a payment, and if you’ve maxed out any of your credit cards. They’ll also look at how many loans you’ve applied for in the last thirty days. 

Using all the above information, these companies will use a proprietary formula to determine your creditworthiness in a credit score between 300 and 850–the higher your score, the better. 

A single missed payment on a credit card or mortgage that ends up more than thirty days past due can cause your credit score to drop by up to one-hundred points–or more. Worse still, if it’s a mortgage with multiple missed payments, you may end up as “rolling thirty days late.” Each month, your credit score gets hit, as you are again thirty days late on last month’s payment because you could never come up with the double payment to fully satisfy your outstanding debt. 

Bankruptcy affects a credit report in all kinds of ways that one may or may not expect. Suddenly, you have a gigantic line item that states you went through either Chapter Seven or Chapter Thirteen bankruptcy. A Chapter 7 bankruptcy will show up on your credit report for up to ten years; a Chapter Thirteen will last for up to seven years. 

However, depending on what debts were discharged in your bankruptcy, those items will now be shown as discharged or charged off and no longer due. This is, in some ways, a positive, as it is no longer an open account constantly attacking your credit. 

How Can Credit Repair Help With Bankruptcies?

While the bankruptcy itself cannot be removed, the charged-off accounts may have inaccuracies. Furthermore, maybe some credit reporting agencies didn’t get the memo, or your bankruptcy has been approved and validated by a judge–yet six months later, your credit report still shows an account that should now be charged off. 

The process of disputing these inaccuracies, especially during bankruptcies, can be labyrinthian. Prepare to be stonewalled when you call the bank asking for proof that you no longer owe them money, when at one point you actually did owe that money. Waiting on hold for hours just to be asked to fill out reams of paperwork is enough to make most people give up before they even get started. 

Credit repair can take this process off your hands and expedite the process. Using legal means of dispute, a legitimate credit repair company can set the record straight on what is accurate and inaccurate so that you can begin rebuilding your credit faster. 

A bankruptcy is absolutely not the end of someone’s financial future. For instance, did you know that banks can help with credit repair? If you can maintain a single new account in good standing for just a couple of years, your credit score can be improved immeasurably. 

Red Flags to Watch For

Anyone promising to remove legitimate items from your credit report or provide you with a brand new credit profile is selling snake oil. Working with unscrupulous companies such as these can make your situation worse than it already is, either by disputing legitimate items that cause headaches with banks you may have a good relationship with, or by offering you a predatory loan with exorbitant interest rates and promising to pay off all your debts in one fell swoop. 

Final Thoughts

If you would like your credit repaired as fast and painlessly as possible, a legitimate credit repair company, like The Phenix Group, can easily help. They’ll ensure your credit record is set straight and fix inaccurate late payments on your credit report so you can focus on what matters to you most, instead of dealing with mounds of red tape.

However, there’s another implication you must consider if you’re considering using balance transfers to merge outstanding credit card balances–you should consider how a balance transfer will impact your credit score. As with many questions about credit scores, the impact of balance transfer on your credit will vary. Most times, a balance transfer can boost your credit score, but a bungled balance transfer process can hurt your score. Experts on credit repair in Houston, Texas, like those at The Phenix Group, can help you better understand this process.

When a Balance Transfer Can Improve Your Credit

Balance transfers on their own won’t boost your credit score, but they could cause some changes to the overall makeup of your credit report that might benefit you. Here’s an example of how balance transfers may improve credit scores:

Lower Credit Utilization Ratio

The utilization ratio is the relationship between your credit card balances and limits–it’s a crucial factor in credit scores. If, for instance, you open a new account and move balances from your other credit card accounts, the balance transfer may lower your credit utilization ratio.

Suppose you have two credit card accounts with the following limits and balances:

Account Credit Card Limit Credit Card Balance Credit Card A $10,000 $5,000 Credit Card B $10,000 $5,000

In the example above, your aggregate credit utilization ratio is 50%. This is the percentage of the available card limits you’re using. Here’s how to calculate your credit utilization ratio:

• $10,000 (Total credit card balance) ÷ $20,000 (Total card limit) = 0.5 x 100% = 50% credit card utilization ratio

Suppose you apply for another credit card with a 0% balance transfer offer. You’re eligible for a credit card with a $20,000 credit card limit and a balance transfer of $10,000 worth of existing debt to the new credit card account.

Account Credit Card Limits Balances Credit Card A $10,000 $0 Credit Card B $10,000 $0 Credit Card C $20,000 $10,000

Thanks to your new account and balance transfer, your aggregate credit utilization ratio will drop to 25%. 

• $10,000 (Total balance) ÷ $40,000 (Total card limits) = 0.25 x 100% = 25%

A 25% utilization ratio is often better for your score than 50%. Also, your utilization ratio will drop even further as you pay your balance, as long as you don’t create new debt. In this example, you have an excellent chance of improving your credit score, thanks to bank transfers. 

When Balance Transfers Can Lower Your Credit Score

If you manage balance transfers wisely, they can be beneficial to your credit score. Sometimes, balance transfers may lower your credit score, instead of raising it. Here’s an example:

Hard Inquiries

An application for a new card with a balance transfer offer may negatively affect your credit score. When creditors check your credit file, they perform a hard credit inquiry, which can hurt your credit. However, credit inquiries are less significant than other credit files’ information. Therefore, if you are considering applying for a balance transfer, bear in mind that:

• Credit inquiries affect only 10% of a credit score
• Not every hard credit inquiry lowers a credit score
• After a year, hard credit inquiries no longer affect your score

You should be selective when applying for new credit, and if you don’t overdo it, you have nothing to worry about when applying for financing, such as balance transfers, because the benefits are greater. 

Wondering if credit repair shows up on a credit report or if switching banks can hurt your credit? Take a look at our recent articles.

Final Thoughts

Balance transfers can help you save money; however, opening new credit cards to transfer balances can have either a positive or negative impact on your credit score. Because of this, it’s important to ensure you understand the pros and cons of balance transfers before you apply for one. Determine your current credit score to create a baseline, and be mindful when applying for a new credit card account in order to keep a positive score. Professional credit repair experts at The Phenix Group, right here in Houston, can help you understand all aspects of balance transfers and how they may affect your overall credit.

In today’s article, we’ll look at what credit and credit repair are and how banks can help repair your credit so that you can get back on your feet financially. We’ll also guide you on what to look for when finding the best credit repair companies in Dallas, Texas.

How Do Credit Reports Work?

Each time you open an account with a financial institution and set up terms of repayment for a loan or credit card, a file is opened with one of the three credit reporting agencies with all the details of this loan–these credit reporting agencies are Equifax, Experian, and Transunion.

Each month, the bank will send a report to the reporting agencies, telling them how much you borrowed, how much you owe, what your monthly payment obligations are, if you missed any payments, and if you’ve maxed out any of your credit cards. Additionally, the credit reporting agencies will be watching to see who is examining your credit report in the last thirty days. 

Using these factors as part of a secret formula, these companies will assign you a credit score somewhere between 300 and 850–the higher your score, the better. 

How Can Banks Help Repair My Credit?

Because having a good credit score can lead to a lower interest rate, your credit score is potentially the best money-saving tool you’ll ever have. Consider that on a $300,000 thirty year mortgage loan, if you had just a 1% lower interest rate, you would save over $60,000 over the life of the loan.

Banks come into the picture of credit repair when you’ve had problems with your past credit; some banks may be willing to offer low-limit secured credit cards to help rebuild your credit. If used wisely, these active accounts can slowly raise your credit score over time. Once the bank knows you’re back on your feet and trustworthy, you’ll be able to take out additional loans or credit cards with the bank, further boosting your credit score. 

Alternatively, the lender may offer a consolidation loan if it’s clear to them that the reduced payment would make it much easier for you to pay, thus freeing you from multiple bad accounts. 

While you may think banks have a vested interest in charging you the highest rates and fees possible, they don’t like to take risks, and charging high-interest rates means taking a high risk. They’d much rather see that you’re a responsible individual who will pay bills on time for many years to come. It’s a relationship of mutual trust, and they hope that when you need that big loan for your business expansion, theirs is the first door you’ll knock on. 

What Is Legitimate Credit Repair?

At its simplest, the job of a credit repair company is to take care of the mounds of bureaucratic red tape wrapped around disputing inaccuracies on your credit report. They will file disputes and ensure that any inaccurate information damaging your credit report is removed. Legitimate credit repair companies have seen every imaginable scenario and know exactly which banks and credit reporting agencies need to be dealt with and in what manner. 

While credit repair is legal in all fifty states, you should look out for companies promising you the moon. Nobody can remove bankruptcies from a credit report, and anybody promising to do so is attempting to take your money while causing you a bigger headache than you had before you approached them. Additionally, be on the lookout for predatory loans–a company may promise to wipe all of your debts if you take on one loan at an exorbitant interest rate that’ll be virtually impossible to pay. Lastly, you may hear someone offering to build you a new credit profile, which sometimes involves identity fraud.

In Conclusion

Working with both banks and reputable credit repair companies–like The Phenix Group–simultaneously is an excellent strategy to rebuild your credit so that you can get your life back on track. Once your life is back on track financially, you can focus on what matters most to you.

People with bad credit scores can improve them by using credit repair in Dallas, Texas, but it’s a much smarter and quicker strategy to become an authorized user on the credit card of someone with a good score. However, this process has benefits and risks for both parties, so let’s take a deeper look. 

Authorized Users

To boost your credit score, you can piggyback on someone with a good credit score. In credit card piggybacking, someone obtains the status of an authorized user on someone else’s credit card. The strategy works best if the primary user has a long history of making payments on time and a credit card with a high limit. 

Basically, the authorized user gets the benefit of the good credit history of the primary account holder, and the history of the primary account holder is added to their credit card history. Once you’re an authorized user, the account holder will get a credit card with your name on it, and you can make purchases on the primary cardholder’s account. However, the primary cardholder is responsible for paying charges on the account—the authorized user is not accountable to the credit card company. Authorized users have certain limitations and don’t enjoy certain perks that a primary cardholder is entitled to, including awards, increasing the credit line, and adding or removing other authorized users.  

Piggyback Credit for Bad Credit History

If someone already has a bad credit history, becoming an authorized user will have little effect. The credit of someone who has had to go through repossession of a property, for example, will likely be unaffected by becoming an authorized user.

If you’re in danger of repossession, voluntary repo does hurt credit, but much less than the alternative—check out our recent article to learn how you can reduce damage to your credit score. 

Pros for Primary Account Holders

Piggyback credit comes with risks and benefits for both parties. If you’re a primary account holder, here are the upsides:

• You’re helping an authorized user build a solid credit foundation.
• You’re empowering an authorized user to access a credit card.
• You can keep an inactive account active.
• You can enjoy rewards from the purchasing history of the authorized users.

Cons for Primary Account Holders

Here are some of the risks:

• The primary account holder is responsible for paying the card balance.
• You may have to pay additional annual charges for adding authorized users to your card.
• Bad spending behavior of an authorized user or mismanagement of the account can negatively affect your credit score.

Benefits and Risks for Authorized Users

You don’t need to apply for your own card, and you can build a good credit history. Ensure the card-issuing company reports the authorized user activities to credit bureaus–if they don’t, it won’t add any benefit to your credit score. 

You must use the card carefully and communicate with the primary cardholder to ensure your spending habits allow them to make payments on time. Missed payments or too much debt on a card by either the primary cardholder or authorized users will hurt the credit scores of all parties. 

To turn into an authorized user, ask somebody you trust to add you as an authorized user. Ensure the primary cardholder: 

• Has an old account
• Has an excellent payment record
• Spends less than 30% of the credit limit

In Summary

If piggyback credit is not for you, there is nothing to worry about—people with a bad credit score or no credit score can build solid habits on their own. Paying your bills on time, not applying for multiple credit cards, and spending below 30% of your credit card limit can get you a long way. However, bouncing back from a bad credit score can be difficult. If you’re in Texas and have wondered how much credit repair is per month in Dallas, experts at Phenix Group can help you repair your credit score in no time, and in a way that will suit your budget.

This article will guide you on how to negotiate credit card debt, its effect on your credit score, and determine if it’s the ideal solution for your circumstances. Of course, credit repair companies in Houston, such as The Phenix Group, can help in the process when it may get too overwhelming.

Negotiating With Credit Card Providers

These four steps can help you negotiate with your credit card company:

1. Call your credit card provider at the number on the back of your credit card
2. Ask for the debt settlement or financial hardship department
3. Explain your circumstances to the representative and determine what options you have
4. If you reach an agreement, ensure everything is in writing before you send any money

There are various financial agreements you can discuss with your credit card company, including:

• A lump sum agreement: You pay a specific amount less than your total debt if the credit card company forgives the difference. However, you must have the money ready because credit card providers don’t like waiting after they’ve agreed to a debt settlement. Unfortunately, the credit card company will close your account if you settle a debt for less than what you owe.
• A workout or payoff agreement: You can renegotiate the terms of your payments, so it is easier to pay your debt off over time. As part of your financial plan, the credit card company may waive penalties, lower your interest rates, or reduce your monthly payment due. In exchange, you must comply with the specified payment schedule. With this type of agreement, the creditor could suspend your account, which means you can’t use it until you pay your debt. The creditor can also close your credit card account altogether.
• A hardship agreement: If you’re going through a short-term economic hardship, your credit card company can temporarily lower or pause payments. Often, you must agree to a structured repayment plan. The credit card company may suspend your account until you’ve completed the hardship plan. 

Wondering what exactly you can dispute on your credit card? Check out our recent article.

Does Negotiating With Credit Card Companies Hurt Your Credit Score?

Negotiating with creditors can hurt your credit score, so it’s crucial to consider other options first. If you haven’t made payments, your credit score may likely have taken a hit, and creditors rarely negotiate debt until you’re late on paying your bills.

Furthermore, credit card issuers usually report the debt as settled, instead of being paid in full when you settle a credit card debt. This negatively affects your credit history as it shows you didn’t repay your debt in full. If the creditor cancels your card, it’ll lower your available credit, ultimately increasing your credit utilization ratio. In addition, it can lower your average credit account age–all of these aspects can adversely affect your credit score.

The great news is that after negotiating your debt and fulfilling your agreement, high balances and additional late payments won’t be recorded on your credit card report. You can easily rebuild your credit score with no negative information on your credit history.

Summary

If you’re facing financial hardship and are late on your payments, speaking with your creditor is crucial. Communicating with your credit card company can help avoid additional fines and protect your credit score. In addition, knowing your options for negotiating and working with a reputable credit repair specialist, like those at The Phenix Group, to create a comprehensive plan can help you manage your credit card debt.

Want to know if switching banks can hurt your credit? Take a look at our latest post.

We’ll also talk about how your credit can be repaired by the best credit repair company in Dallas so that you can obtain the loans you need. 

What Is a Credit Report?

Each time you take out a credit card, a loan, or a mortgage, a notice is sent to one or all of the three credit reporting agencies in America–Equifax, Transunion, and Experian. The credit reporting agencies then examine several factors, including how many accounts you have open, how much money you owe, your monthly payment, if you’re maxing out your credit cards, and if you’ve missed any payments. 

Additionally, if you’ve ever been evicted for non-payment or had any other financial misunderstandings, there may be accounts that have gone into collections and are listed on your credit report, as well. Based on all the above factors, they will assign you a score somewhere between 300 and 850–the higher the score, the better. Typically, lenders like to see a minimum credit score in the mid 600s before granting a loan to someone. 

Having a higher credit score can mean some serious savings when asking for a loan. For example, if you can get just a 1% lower interest rate on a $300,000 thirty-year mortgage loan, you will save $60,000 over the life of the loan.

What Is Credit Repair, and How Can I Know It’s Legitimate?

Data breaches happen every single day–account info gets leaked, lost, mishandled, and misplaced. This leads to inaccurate information being reported to the credit agencies, and your credit getting wrecked. 

Credit repair companies come in when there are discrepancies on your credit report. The process is essentially disputing these to have them removed from your credit–this process can be done by oneself, but is intensely time-consuming, as it involves waiting for hours on hold with financial institutions and credit reporting agencies and then filing paperwork to have warehouses searched to verify records.

If you’re wondering whether or not legitimate items, such as a bankruptcy, can be removed from a credit report–the short answer is: no. However, if you maintain good standing on other accounts, your score will rise over time.

Any company that promises they can have any legitimate item altered or removed from your credit report is offering false promises–they may offer things such as a “credit sweep,” during which they dispute every single item on your credit report and create headaches with companies with whom you are already in good standing. 

It’s also advisable to stay away from anyone who promises to set you up with a brand new credit profile–this is typically identity fraud, or it will involve offering you extremely predatory loans while promising to make your problems disappear. 

What Credit Repair Can Do for You?

Legitimate credit repair takes the time-consuming process of disputing items out of your hands; a qualified credit repair company, like The Phenix Group, can offer insights and advice on how to improve your current credit score by altering your own personal financial habits. 

Once your credit has been repaired, you can apply for the loans you need with the confidence of knowing that not only will you be approved, you’ll be saving yourself thousands of dollars in interest rates in the process. 

So if you’re considering hiring a credit repair specialist in Houston, it is imperative that you understand the various aspects involved so you make an informed decision. Credit experts such as those at The Phenix Group can help make the process a breeze.

There are several concerns that one may have when seeking credit repair services, such as: What can credit repair remove? Can a credit repair company raise my credit score? Most importantly, are credit repair companies legal?

In this article, we will help answer these and other questions surrounding the efficacy and legitimacy of credit repair services. 

What Is Credit Repair? 

Credit repair is when a third party, often called a credit repair or credit services company, attempts to get inaccurate negative information removed from a credit report. The Fair Credit Reporting Act (FRCA) gives consumers the right to an accurate credit report, which allows a person to start a formal dispute with credit bureaus about any inaccurate or incomplete information on their record.

Credit repair companies can review your credit report, identify negative or erroneous information, and determine strategies for improving your credit. They do this by sending letters on your behalf to the credit bureaus that dispute inaccurate information or ask for a goodwill review of your account history; they also follow up to ensure any inaccurate information is removed and continue to monitor your credit report to address any new erroneous information. 

Are Credit Repair Companies Legal? 

Yes–whether you do it yourself or hire a service, credit repair is authorized by federal law and in all fifty states. The FCRA and the Credit Repair Organizations Act (CROA) apply to credit repair companies in the United States. Enacted in 1996, CROA clearly articulates what credit repair companies must do and must not do, to remain compliant with federal law. As per the CROA, credit repair organizations need to notify their customers of the following upfront:

• Individuals have the right to dispute their own credit report information
• Consumers can sue the credit repair company if they violate the CROA

In addition to providing all the necessary information, a legitimate credit repair organization must also provide the customer with a contract that includes the following: 

• Payment terms, including total costs
• A detailed description of the services they will provide 
• A deadline to complete the services 
• The ability to cancel the contract within three business days 

Which Credit Repair Practices Are Illegal? 

According to the CROA, the practices that are prohibited by any credit repair organization are:

• Making false claims about the services they offer
• Advising customers to make false statements to credit reporting agencies 
• Charging the customer before completion of the promised services
• Promising to remove any negative, but accurate, information from the customer’s credit report 
• Advising customers to change their identification–an illegal practice known as file segregation–to prevent the credit bureaus from associating them with their real credit information. 
• Encouraging customers to stop making payments to their creditors 
• Advising customers to ignore the IRS, collection letters, or other legal documents 
• Perform any services on behalf of the customer before a contract has been signed and a three-day waiting period has passed, during which a customer can cancel the contract with no fees

Credit repair companies are also not allowed to hide the above notices within the language of their contracts. 

Final Thoughts 

Having a good credit score is extremely important. It only takes a few mistakes to damage it, making it difficult to get approved for credit cards, loans, and other credit-related services. Therefore, you may consider hiring a reputable credit repair company right here in Houston, like The Phenix Group, to do the work for you. While credit repair services are legal under federal law, there are various guidelines that you need to be aware of to make sure you are seeking services from a CROA-compliant credit repair organization. 

Although the idea of outsourcing your credit repair activities to a third party might be enticing, there are a few things that you need to understand first. For instance, when you search for the best credit repair in Houston, there are a number of companies that show up. So, how do you make the decision about which one to go with? What should you expect when you go to a credit repair company? 

Let’s examine credit repair and if using a credit repair company can raise your credit score.

Understanding Credit Repair 

Consumer credit scores are determined by a number of factors. More specifically, they are calculated based on the information in the consumers’ credit reports, including whether bills are paid on time. However, sometimes this information is not correct. This can happen if creditors give the wrong information to the credit bureau or if an identity has been stolen and the thief takes out credit in the consumer’s name. 

Credit repair is the process of fixing these errors. The practice is covered by the Fair Credit Reporting Act (FRCA) and gives every person the right to dispute any inaccurate information on their credit report. 

What Is a Credit Repair Company? 

A credit repair company communicates with credit bureaus and disputes inaccurate information on an individual’s behalf. They fight to remove the negative information from a credit report. If they are successful, the removal of this information will ultimately improve the consumer’s credit score. 

Consumers often want to know if credit repair companies are legal–the answer is: yes.  It doesn’t matter if you do it yourself or hire a service, credit repair is permitted under federal law and in all fifty states. In addition to the FRCA, the Credit Repair Organizations Act (CROA) governs and regulates the services provided by credit repair companies. 

Credit repair can take as little as thirty days or up to one year to complete, depending on the number of errors on a credit report. It is most definitely a process that requires a lot of patience and perseverance, which is why credit repair experts such as those at The Phenix Group can help make the process a breeze and let you know how long your credit repair will last.

How Does a Credit Repair Company Work?

A credit repair company will start by asking the consumer for their credit reports from the three major consumer credit bureaus: Equifax, Experian, and TransUnion. The company will then review the credit report for: 

• Charge offs 
• Tax liens 
• Bankruptcies 

After a thorough review of the credit report, they will then suggest a plan for disputing errors and negotiating with creditors to remove any inaccurate information that negatively impacts your score. The plan often includes the following elements:

• Requests to validate information 
• Letters to dispute erroneous negative marks 
• Cease-and-desist letters to debt collectors on your behalf 

Once the issues are resolved, credit repair service providers may offer continual credit monitoring services to help you keep a check on any new erroneous information that may arise in the future. 

How Do Credit Repair Companies Help Raise Your Credit Score? 

By following the process outlined above, credit repair companies examine and attempt to rectify any erroneous or misleading information in the consumer’s credit report. They have experience dealing with credit bureaus and know how to get negative items removed from a report. 

One of the most important things that credit repair companies do is help you build a good credit history–this includes helping you establish a solid payment history, which consequently increases your credit score. Further, they can also help you learn how to use credit wisely so you don’t damage your credit score again in the future. Professional credit repair experts at The Phenix Group are ready to help you navigate the world of credit repair and get your credit health back on track today.

In this article, we’re going to examine how credit reports work, what negative items may appear on a credit report, and how to get some of these items removed through a process called credit repair. We’ll also look at if you can undertake this process yourself or if it’s better to get the best credit repair companies in Houston to take care of it for you. 

How Do Credit Reports Work?

Every time you borrow money from a financial institution, whether it’s a mortgage, a car loan, or a credit card, the bank starts reporting the status of this account to the three credit reporting agencies in America—Experian, Equifax, and TransUnion. 

The reporting agencies constantly evaluate your accounts, if you’ve missed payments, and what accounts are open or closed. Taking all these details into consideration, these agencies calculate your credit score—a number between 300 and 850.

What Negative Items Might Appear on a Credit Report?

While you may have missed one car payment last year then got yourself back on track, the credit reporting agency definitely noticed—a single missed payment that’s more than thirty days late can drop your score by fifty points or more. These late payments will be listed on your report for years, and any financial institution you approach for a loan will be able to see these late payments and may have reservations about lending you money. 

Besides missed payments, other negative items that may appear on a credit report are:

• Bankruptcy
• Foreclosures
• Accounts closed due to non-payment
• Accounts that have been sent to collections

Even if you pay off your creditors and close the accounts, the negative marks on closed accounts will still show for a few years.

How Can We Fix This?

Let’s not mince words here–if there is a legitimate foreclosure or credit account that went bad due to non-payment, there isn’t much to be done except to try to keep your future accounts in good standing while your credit slowly recovers. However, people may sometimes have a poor credit score not because they did something wrong, but because of a mistake in the records. For example, let’s say that you paid off your car loan last year, but due to an error, the bank has not marked the account as closed—even worse, they’ve been reporting you as missing payments for the last fifteen months!

These inaccuracies can be fixed through a process called credit repair. This is done by disputing these inaccuracies with the credit reporting agencies and the banks. Unfortunately, the process is time-consuming and involves enough paperwork to fill a filing cabinet. Credit repair companies like The Phenix Group will take this process off of your hands—they’ll make the calls, handle the paperwork, and advise you on the steps that need to be taken. They’ll also examine every aspect of your credit report and give you suggestions on small things you can do to help yourself or how a credit card can improve your credit score.

Do Your Homework

Unfortunately, many unscrupulous companies and individuals out there are looking to take advantage of people. Beware of any company making outlandish claims, such as performing full illegal credit sweeps or offering you a loan that no one else can.

In Summary

When it comes to negative items on a credit report, it’s possible to have inaccurate items removed, especially if you have a qualified credit repair company, such as The Phenix Group, at your side. Then, if you keep your accounts in good standing, your credit will slowly heal and your score will improve.

Read more about is credit sweep legal.

This is where credit repair comes in handy–solid credit repair from the best credit repair companies in Houston, Texas can help you fix poor credit standing that might have declined for many reasons. Credit repair involves correcting or restoring a poor credit score, and includes hiring a reputable credit repair company, like The Phenix Group, to contact credit bureaus, point out anything incorrect on your credit report, and request it be removed. Of course, you can repair your credit yourself; however, it can be time-consuming and labor-intensive. 

How Does Credit Repair Work?

You must request your credit report and review it for accuracy to repair your credit. By federal law, you’re eligible for a free annual report from the three major credit bureaus in the country–Experian, Equifax, and TransUnion. However, the information in your reports can vary from one bureau to another because some lenders might report to one bureau, not the other two.

After you get your reports, check them for any inaccuracies. If you find any, the Federal Trade Commission (FTC) lays out a credit dispute process you should follow. First, the FTC recommends you write to the bureau in question. Next, elaborate on which items you’re challenging, and attach copies of any evidence. You can also contact individual lenders directly to dispute the information they provided to the bureaus. 

By law, credit bureaus must investigate your dispute within a month, unless they consider it unnecessary. The credit reporting bureau must also hand your letter and evidence to the lender who provided the disputed item or service. Then, the lender must investigate your claims and report back to the bureau. 

Once the inquiry is complete, the bureau must provide you with the results in writing. If the credit bureau agrees with you, the original lender must alert all bureaus with the inaccurate data to rectify your credit report. If the credit bureau disagrees, you can still provide a written explanation that’ll be included in your credit report. 

Do Credit Repairs Appear on a Credit Report?

The federal law requires credit bureaus to respond to every disputed information within a month, and if there’s no response, the disputed item must be removed from your credit report. However, suppose the disputed information was accurate and was removed from your credit report solely because the credit bureau missed a deadline. In that case, it’ll show up on your credit report within two to three months. This is because, by law, creditors can re-verify accurate information at any time and put it back on your credit report. 

How to Hire a Legitimate Credit Repair Company

Although legitimate credit repair service providers can deliver on their promises, the industry is full of con artists. The Consumer Financial Protection Bureau outlines some warnings to look out for:

• Claims to clean up all negative marks from your report: In regards to what credit repair can remove, no one can legally remove accurate information from your report. If a credit repair service provider promises to do that, that is a huge red flag. 
• Recommendations that you challenge accurate information: Challenging accurate information is equivalent to fraud.
• Coercion to pay in advance: A legitimate company won’t ask for payment before doing anything.

Remember, a reputable credit repair company, such as The Phenix Group, can only help you remove inaccurate information from your credit report so that it doesn’t hurt your credit score and guide you toward methods of building better credit. 

Want to know if balance transfers are good for your credit? We’ve got you covered–check out our latest post.

Plus, opening a new bank account doesn’t trigger a hard inquiry on your credit. In addition, savings and checking account information is never reported to the credit bureaus, so your credit will remain unaffected.

However, sometimes banking activity may indirectly affect your credit. Let’s dive into what happens when you switch bank accounts. Of course, experts on credit repair in Houston, Texas, such as those at The Phenix Group, can always help you navigate the process.

Will Switching Banks Appear on Your Credit File?

Does switching bank accounts influence credit score ratings? Perhaps not, because your savings and checking history won’t appear on your credit report. According to myFico, what is visible in your credit report includes:

• Personal details, including your date of birth, name, and social security number
• Credit accounts, including account numbers, creditor names, payment history and balances
• Collection accounts and public records
• Credit inquiries

Information about your credit inquiries, credit accounts, collections, or public records affects the FICO credit score calculations. A FICO score is a three-digit number that helps creditors gauge how likely you are to repay a loan. 

Does Switching Bank Accounts Influence a Credit Score?

Opening a new account rarely influences your credit ratings, as long as the account you’ve closed is in good standing. However, it could negatively affect your credit score if you’re closing an account with a negative balance, you’re closing a credit card with your bank simultaneously, or there’s an unpaid loan, which is why it’s important to know whether or not credit card companies are willing to negotiate. Here’s the information shared with the major credit reporting agencies:

• Negative balances can occur due to overdrafts. An overdraft occurs when your bank processes a transaction that exceeds your available balance. Additionally, the bank could charge you one or more overdraft fees to cover those transactions. If you switch bank accounts with overdrafts, your bank will transfer your account to a collection agency. The collection agency may report the delinquent debt to credit bureaus or sue you for the balance due. Collection accounts, delinquencies, and judgments could all appear on your credit file and hurt your credit score.
• If you close your credit card while switching bank accounts, it can negatively affect your score, as it can affect your credit utilization ratio. This ratio determines how much credit you use at any given time. A lower credit utilization ratio is usually better for your credit score. Unfortunately, closing a bank account can lower your credit limit, increase your credit utilization ratio, and negatively affect your credit score.

Does Changing Banks Affect Your Odds of Securing a Loan?

Switching banks may influence your odds of securing a loan if your credit score drops when transferring your account. Again, this may happen if you’re closing a bank account with an existing overdraft, shutting down credit cards, or have a past due loan, so be sure to learn whether or not balance transfers are good for your credit.

Your chances of getting a loan might also be affected if your new bank conducts a thorough inquiry as a condition of opening a new bank account. Detailed inquiries are requests for your credit history, and won’t happen unless the bank has concerns about your application. Usually, when you open an account, banks perform soft inquiries that don’t affect your credit score.

If you’re looking to get a personal loan, debt consolidation loan, or any other type of loan, wait until you’re approved to switch banks, especially if you’re worried about credit score effects. This way, you won’t risk having hard inquiries showing up on your credit and potentially lowering your score.

Final Thoughts

Opening a new bank account might be a brilliant move, especially if your current bank doesn’t meet your financial needs. However, before doing so, you must understand how this shift can affect your credit rating and score. Understanding this can help you maintain a good credit score even after switching banks–and credit experts at The Phenix Group, right here in Houston, can help.

Luckily, reliable Dallas credit repair companies, such as The Phenix Group, are ready to help you do just that–let’s dive into how they go about helping you improve your credit.

What Is Credit Repair?   

Credit repair is when a company helps remove inaccurate and unverifiable information from your credit reports in exchange for a fee. Your credit score will likely improve when such information is removed from your credit history, allowing you to access services previously unavailable, such as loans or even employment. 

How Do Credit Repair Companies Work?

Credit repair companies work with credit bureaus and the companies that provide data to the bureaus–these companies can be lending institutions like banks, credit card issuers, and debt collectors. 

Credit repair companies intend to have your negative credit information either completely deleted from the bureaus or altered to make it favorable to you. However, legitimate companies know they can only remove inaccurate information working against you on your credit report; less reputable companies may claim they can remove anything, even accurate items from your report. This is a scam, and should be avoided.

How Long Does a Credit Repair Process Take?

If you’re wondering how fast credit repair works in Dallas, you’re not alone. Many people would want to get their credit fixed in the shortest time possible so they can buy homes, seek employment, or get loans. The credit repair process will take at least thirty days, but it can take six months or longer, depending on the condition of your credit history. Inaccurate information lowering your credit score gets deleted much faster than a history of defaults or late payments.  

Credit bureaus and data furnishers (people who provide information about your credit history to credit bureaus) usually have up to thirty days to fix inaccuracies that your credit repair company identifies. If your credit reports contain issues such as defaults, bankruptcy, and late payments, it may take longer to improve your credit rating. 

Does Credit Lock Improve Your Credit Score?

Are you wondering if locking your credit report can help in credit repair? Credit locking simply limits people from viewing your credit information without your permission. Many people have been victims of identity theft, whereby someone who has access to your personal information may take a loan on your behalf and hurt your credit score–this is where credit locking can come in handy.

When you have a credit lock, you must first remove the lock to access your credit file. For example, if you were applying for a loan at a bank, you’d temporarily unlock your credit file for the bankers to access, after which you’d close it again. 

Credit repair companies in Dallas, like the Phenix Group, offer credit lock services to their customers. You’ll get real-time alerts when someone tries to apply for credit in your name, and your credit can be locked or unlocked by a simple click. 

In Conclusion

Credit repair companies help dispute inaccuracies and unverifiable information on your credit report to improve your credit rating. Keep in mind that credit repair can take anywhere from thirty days to six months or longer, depending on the condition of your credit history. If you’re concerned about identity theft, credit locking is a service that can prevent people from viewing your credit information without your permission, and can be done with a simple click.

At The Phenix Group, we are deeply passionate about helping individuals fix their credit and achieve financial security. We want to help make your life financially more manageable so that you can enjoy the benefits of a great credit score!

If your score is high enough and you aren’t in over your head with your current payments, the bank should, in theory, approve your loan. 

But what if the bank denies you because you have a bad credit history, or worse, because you have no credit history? In this article, we’ll explain what makes up your credit score as well as how you can improve your credit score with a credit card. We’ll even take a small look at how credit repair specialists in Houston can help by clearing up inaccuracies on your credit report.

What Is a Credit Report and Credit Score?

Anytime you take out a loan or get a credit card, the bank will begin reporting the status of these accounts to the three credit reporting agencies in America—Experian, Equifax, and TransUnion. These credit reporting agencies are constantly looking at all of your accounts, both open and closed, to see if you are missing any payments, or if you’re in danger of taking on too much debt. They use this data to formulate your credit score—a number between 300 and 850. The higher the score, the more creditworthy the reporting agency thinks you are. 

How Can a Credit Card Help?

Initially, you may find it a challenge to obtain your first credit card. Look around for introductory credit card offers with low limits. Your first credit card will probably have a credit limit of no more than $1,000—after all, the bank doesn’t know you well, so they want to limit their risk. 

Obtaining your first card will begin your credit reporting history with the three reporting agencies. Simply put, if you don’t max out your credit limit and make your payments on time, your score will rise. Reporting agencies look at credit utilization–this means that if you have a bunch of maxed-out credit cards on which you are making minimum payments, reporting agencies assume you are managing your money poorly and could be in danger of defaulting on your debts in the future. It’s best to try and keep the amount you owe under 50% of the limit of the card or to pay off the card entirely each month. 

Another factor that goes into a credit score is the age of your accounts. If you’ve been a customer of a bank for twenty years and you’ve never missed a payment, this looks fantastic; it looks significantly worse to open and close accounts quickly. This isn’t to say you should never close out your accounts, but it’s good to have a few accounts active at any given time. If you ever have any issues with charges that aren’t yours, protect your credit by learning what can be disputed on your credit card.

Can a Credit Card Help Bad Credit?

The road to getting your credit score back on track is a long one, but getting a credit card can be a great start. Even if you can’t get a regular credit card, it may be possible to apply for a secured credit card from your bank. A secured credit card is one on which you may have to make a deposit and the bank will offer you a low credit limit. They’ll start reporting this account to the credit agencies, and over time, your credit score will rise. 

In Summary

Whether you have bad credit or no credit, obtaining a credit card can be an effective tool for improving your credit score. So long as you make your payments on time, you don’t max out your credit limits, and you keep an account open for the long term, your credit score will improve. Lastly, if your credit report contains any inaccuracies, it’s possible to get these removed with methods that can help clear a bad credit history—a process made much easier by working with a qualified credit repair company like The Phenix Group.

Before you move on to filtering the results of your search for credit repair companies in Houston, there are a few credit repair basics that you need to be acquainted with. Consumers looking for credit repair services often have a number of questions such as, can a credit repair company raise my credit score, and how much does credit cleaning cost? 

What Is Credit Repair? 

Consumer credit scores depend on a number of factors, including whether the person pays their bills on time. Credit scores are calculated based on the information in the consumer credit report, and sometimes this information is inaccurate. This can happen if the creditor’s report provides erroneous information to the credit bureau or if an identity thief takes out credit in the consumer’s name. 

Credit repair is the process of correcting any such inaccurate information in your credit report with the intent of raising your credit score. The Fair Credit Reporting Act (FRCA) gives every individual the right to dispute any inaccurate information on their credit report. 

How Long Does Credit Repair Take? 

Unfortunately, there is no specific timeline that the credit repair process follows. It could take anywhere from thirty days to one year or more, depending on how serious the credit issues are and how the credit history was affected. The length of time for credit repair also depends on how long the negative items have been on the credit report.

How Long Does Negative Credit Information Last? 

Negative payment information can remain on your credit report for seven years, although bankruptcies can stay on a credit report for ten years, depending on the type of bankruptcy filed. The FRCA explains the limits on reporting the different kinds of damaging marks, though some of these limits also vary according to state laws. Here’s how long incidents of negative credit history remain on consumer reports from the date they are filed, as mandated by the FRCA:

• Late payments: seven years 
• Charge offs: seven years 
• Foreclosures and short sales: seven years 
• Hard enquiries: two years 
• Collection accounts: seven and a half years 
• Chapter 7 bankruptcies: ten years  
• Chapter 13 bankruptcies: seven years

Negative information tends to affect your credit score less as time goes on, but serious delinquencies, such as charge-offs or collections, are harder to recover from than one or two missed payments. However, there are ways to begin the process of credit repair sooner rather than later. 

How Can You Start Repairing Your Credit? 

If you want to start rehabilitating your credit, you need to start by getting your credit report from each of the three major credit bureaus—Experian, TransUnion and Equifax. While reviewing your credit reports, keep the following in mind: 

• Pay attention to your payment history–your payment history is the single most important factor that determines your creditworthiness. 
• Keep track of your credit utilization rate–the utilization rate is calculated by adding up the total of your credit card balances and dividing them by the total of all your credit card limits. 

While you can take actions to keep your credit score trajectory moving upwards, credit repair usually involves a detailed review of your credit report to identify inaccuracies in the information it contains. These inaccuracies are then addressed by disputing them and requesting their removal from your credit report. 

How Can Credit Repair Companies Help? 

Although you can go with the do-it-yourself approach for credit repair, there are legitimate credit repair companies–such as The Phenix Group, right here in Houston–that will do all the heavy lifting for you. These companies can check your credit reports for information that shouldn’t be there and dispute it on your behalf. Credit repair companies dispute the inaccurate negative items in your credit report with the intent of removing them from the report altogether. In addition, they also offer services such as credit monitoring to make sure your credit score keeps improving as you go. –

Typically, this is the end of the journey before it even begins, as most banks will deny a loan on the grounds of poor credit. 

However, there are ways to repair one’s credit. One avenue is hiring a reputable credit repair company, like The Phenix Group, to help clear up your credit report. In today’s article, we’ll examine what credit repair is, how it works, and why you’ll want to hang up on anyone promising to perform a credit sweep.

What Is Credit Repair?

First, we need to understand how the system works. Anytime you obtain a loan or credit card, the bank starts reporting the status of this account to the three credit agencies in America—Equifax, Experian, and TransUnion. These credit reporting agencies examine how many accounts you have, how much you owe vs how much you borrowed, if you’ve missed a payment or had an account closed, as well as a few other factors. Taking all of these details into account, they use a formula to calculate your credit score—a number ranging from 300 to 850.

Whether you’re looking for a credit repair company in Houston, Texas or elsewhere, credit repair is the process of disputing inaccuracies to get them removed from your credit report. For example, a car loan that was paid off three years ago but appears as an active account with missed payments could be tanking your credit score. 

While you can dispute and clear these issues yourself, it’s a time-consuming endeavor that often involves a significant amount of paperwork and a lot of time on the phone with banks and credit agencies. Credit repair companies are experts at navigating this process and have the tools and contacts needed to resolve issues as quickly as possible. 

The cost of credit repair can vary based on how many items need to be disputed and the overall complexity of the case, but when you consider that clearing your bad credit history and raising your credit score means lower interest rates, the cost can pay for itself in savings on your loans. If raising your credit score gets you just a 1% lower interest rate on a $300,000 thirty year mortgage, that tiny 1% difference will save you $90,000 over the life of the loan.

What’s Wrong With a Credit Sweep?

Sadly, in the world of credit and loans, there are many companies and individuals that seek to take as much money from you as they can, regardless of the consequences. There are some companies out there that pose as credit repair companies promising things such as wiping your credit clean with credit sweep services or providing you with a new credit profile. These promises are lies. 

A credit sweep is a process by which someone attempts to dispute accurate information. Companies will promise to get something like a foreclosure removed from your credit report—in reality, they will either take your money and do nothing at all, or they may be filing forged police reports stating identity fraud in an attempt to get these accounts removed. In the end, once these false police reports are uncovered, the “credit repair company” is long gone and you’re left answering questions about why your signature is on fraudulent financial documents. 

In Summary

If it sounds too good to be true, it probably is–this is a wise rule to follow when seeking credit repair services. Do your homework and avoid anyone making outlandish claims. With a proper credit repair company like The Phenix Group at your side, you’ll have your credit score rising in no time and lower interest rates saving you money.

Mortgage, automobile, and personal lenders have long relied on your three-digit credit scores to determine if you are credit worthy enough to qualify for a loan. In addition, lenders also rely on your credit scores to determine the interest rate you’ll pay on these loans. Today, it’s not just the lenders that rely on your credit scores–a number of employers tap into the credit information of job applicants when making hiring decisions. 

As a result, many people search for credit repair in Houston, Texas to find services from professionals who can improve their credit scores. However, when seeking such services, there are numerous questions in a consumer’s mind, such as how long does credit repair last, and what does “restoring credit” mean? Is it different from credit repair?

No need to worry–we’ve got you covered with all the information you need to understand credit repair (also known as credit cleaning) to help you make informed decisions.

What Is Credit Cleaning? 

Cleaning up your credit is just another way of describing credit repair. Credit repair involves the analysis of your credit report to identify any inaccurate negative items, and then removing these inaccuracies from your credit report with the goal of increasing your credit score. 

Steps Involved in Credit Cleaning 

The first step is to obtain your credit reports from each one of the three major credit bureaus—Equifax, Experian, and TransUnion. Each of these credit bureaus issues a credit report every twelve months. The next step is to review your credit reports carefully for the inclusion of any incorrect information. Credit repair essentially involves the removal of the following errors:

• Accounts that don’t actually belong to you (which may be a result of identity theft)
• Duplicate accounts, such as debts that are sold multiple times by the lenders, which may appear as separate accounts on your credit file
• Payments reported as late that weren’t actually late
• Incorrect inquiries, including hard inquiries that you didn’t approve
• Inaccurate data or personal information, such as misspellings or old addresses 
• Missing accounts that could positively impact your credit report 
• Incorrect balances that could lead to incorrect credit utilization amounts 

Once these inaccuracies are identified, a consumer has the right to file a dispute to rectify the situation so that they no longer affect their credit scores. 

How Can Credit Repair Companies Help?

Although credit repair or credit clean up is something every individual can do on their own, people often consider using professional credit repair service providers to help them with the task. Credit repair companies, like The Phenix Group, can use their knowledge and expertise of the credit repair process to help guide you through the journey toward your desired credit score. 

How Much Does Credit Cleaning Cost? 

Credit cleaning can be done for free if you do it yourself, or you can hire a credit repair company for their help and guidance. Each company has its own pricing structure–in general, companies bundle their services into packages and charge monthly fees. Prices range from $19 to $149 per month, depending on the services you sign up for. There may also be set-up or enrollment fees, as well as cancellation penalties. 

Summary

Cleaning your credit on your own won’t cost much, but the process can be overwhelming and complicated. If you don’t feel comfortable with the process or don’t want to devote the time needed to follow it through to the end, you can retain the services of a professional credit repair company in Houston, such as The Phenix Group, to do the work for you.

Fortunately, legally removing negative information from your credit report can help rebuild your credit score. 

Can Credit Repair Companies Remove Items From Your Credit Report?

Unfortunately, accurate negative items can’t be removed and will remain in your credit files for about seven years. Creditors use your credit report to review your previous debt repayment behavior and make educated decisions about whether to extend your loan and under what conditions. So, it’s just as crucial for them to check your negative credit behavior as it is to check your positive credit history.

However, if you realize that a negative item is still on your credit files after seven years and you’ve paid the debt as agreed, you should challenge it immediately–you can opt to file a dispute on your own or hire thebest credit repair company in Houston to help you out. 

If a negative item appears on your credit files multiple times, you should challenge it right away. You can also dispute the negative information caused by identity theft or fraud; you must report identity theft or fraud as soon as possible to the three major credit bureaus–Experian, TransUnion, and Equifax, as they can keep your financial history on the right track.

If your creditor turns your debt to a collection agency, try negotiating. For instance, you can ask the collection agency if it can accept less than what you owe them. If the collection agency agrees to a new balance, your debt won’t be removed from your credit history, but you can ask the agency to report the debt as “paid in full” once you make the last payment. Although your credit reports might show you were delinquent on the debt payments, they’ll also show you’ve paid the debt in full, making you appear less risky to creditors. If the agency agrees to your requests, ask for a written confirmation of the new conditions.

Some credit repair companies promise they can help you remove negative but accurate information from your credit report at a fee. It’s important to know that no one can legally remove any accurate items from credit reports, and anyone promising to do so is likely trying to scam you.

Is Credit Repair Effective?

Reputable credit repair companies, such as The Phenix Group, can do a fantastic job working with the three major credit bureaus to remove false information from your credit report and raise your credit score. Many credit reports have false information that can lower your score. Among the incorrect information that often appears on credit files are accounts that are late in payments that don’t belong to you, bankruptcies of people with similar names, misspellings of your name that lead to another person’s items appearing on your credit report, negative items over seven years old, and debts that can’t be verified and validated. 

Although credit repair companies usually work with credit bureaus, they can also work directly with lenders to change the information they give to the credit bureaus. For example, credit repair companies can work closely with lenders to convince them to correct the false information they gave to credit reporting bureaus or negotiate a settlement with the lender by which the lender reports to the credit bureaus that you paid specific debts satisfactorily. 

Final Thoughts

Many people wonder if credit repair companies are legal. The answer is: yes–credit repair is a legitimate process that can help remove false information from your credit report, raising your credit score. Negative information on your credit report can include erroneous late payments or non-payments, charge-offs, other people’s bankruptcies, foreclosures, and repossessions. Fortunately, legitimate credit companies like The Phenix Group can work with credit bureaus and creditors to remove errors from your credit report and can help you understand if credit repair shows up on a credit report.

This article will explore various types of credit card charges you can challenge, and if it comes to it, how to find the best credit repair in Houston. 

Types of Credit Card Disputes

You can dispute fraudulent credit card charges on your bill by calling your credit card issuer. This is often a swift process, during which the credit card provider cancels the card in question and issues you another one.

Are credit card companies willing to negotiate purchases you are unhappy with? Yes–you can challenge credit card charges for something you willingly bought if you’re dissatisfied with the services offered or not provided. For instance, if you buy an item online that arrives broken, your card provider can help you recover your money. However, there’s a formal process you must follow for non-fraudulent disputes, and you only have two months from the day you get your credit card statement to act. 

Unauthorized or Fraudulent Credit Card Charges

If someone uses your credit card to make a payment you didn’t authorize, that’s fraud. Per the FCBA, the maximum amount a credit cardholder is responsible for after unauthorized credit card use is $50, but most credit cards have zero liability policies, which state that card holders don’t have to pay after unauthorized use of credit cards.

According to the Federal Deposit Insurance Corporation, you must file a police report. Even though this is unnecessary, a single unauthorized purchase on your bank account might be part of a bigger issue, and a report helps police and other government agencies track such crimes. 

Billing Errors

A billing error is any credit card charge you made by mistake–this includes payments for subscription services you’ve canceled or multiple payments for one purchase. Furthermore, the Federal Trade Commission stipulates that consumers can dispute credit card charges based on:

• Mathematical errors
• Credit card payments listing the wrong amount or date
• Charges for products or services that didn’t arrive as agreed or those that you didn’t accept
• Failure to send the credit card bill to your current address

If a merchant refuses to refund a billing error, you can challenge it.

Quality of Services or Products

Although the condition of items or services isn’t under the Fair Credit Billing Act dispute process, the regulation still offers some protection for issues with the quality of items or services you’ve purchased using your credit card. If you encounter an issue with an item or service you financed with your credit card and wish to stop or withhold payment, you need to make a reasonable effort to solve the problem with the merchant first. If you can’t resolve the issue with the merchant, you can withhold the payment while your credit card issuer investigates if the claim meets these requirements, with a few exceptions:

• The purchase must exceed $50
• The purchase must have happened within a hundred miles of your billing address or in your home state

If your purchase meets the requirements above, you can let your credit card issuer know you wish to withhold or stop the payment on an item or service you purchased because you’re unhappy with it while the investigation process continues. 

Final Thoughts

Federal laws protect credit card consumers when challenging billing errors and charges for unauthorized purchases. However, challenging a credit card charge doesn’t mean you won’t have to pay–whether you’re responsible for paying the disputed amount depends largely on the outcome of your credit card issuer’s investigation. Of course, if you’re unable to get a dispute approved and need help with credit repair, the experts at The Phenix Group are ready to help.

Wondering how a credit card can help improve your credit score? Take a look at our recent article.

When you search for any information about credit repair, including credit repairs Houston Texas, a number of options show up. It can be quite daunting to sift through all that information, and you’ll probably wonder, how much does credit cleaning cost, and what does it entail? If you haven’t noticed already, there is a lot of different terminology in the industry such as “credit repair,” credit cleaning,” “credit restoration,” and “credit building” that may confuse you even further. 

What Is Credit Restoration? 

Credit restoration and credit repair are essentially the same thing. Credit restoration tends to be a term that most companies offering credit repair services use to describe their services. Credit repair or credit restoration is the process of disputing inaccurate negative items on a consumer’s credit report with the intent of removing these items altogether and boosting credit scores. 

What Is Credit Building? 

It is important to note that credit restoration is not the same as credit building. Credit building is not about disputing and removing items from the consumer’s credit report, but is the process by which a person improves their credit by taking proactive steps to improve their financial situation, such as: 

• Paying down debt 
• Making past-due payments 
• Improving their credit utilization rate 
• Making current and future payments on time

Put simply, the credit repair or credit restoration process involves fixing mistakes made in the past, whereas the credit building process focuses on current and future financial decisions that help your credit score grow. Credit repair experts, such as those at The Phenix Group, can help you determine which processes are best for your unique credit health.

What Is Credit Counseling? 

Credit counseling is usually offered by nonprofit organizations. While credit repair or restoration companies charge a fee in exchange for the services they provide to consumers, services from credit counseling organizations are usually free. Their purpose is to help consumers improve their financial situations with strategies such as debt management and credit education. So, if you’re working with a credit counselor, you’ll receive consultations without having to pay a fee for their assistance. 

Is There a Difference Between Credit Repair and Credit Restoration? 

No–the terms “credit repair” and “credit restoration” refer to the same process. They both involve removing negative items from a credit report to improve a credit score. The term “credit restoration” most often refers to the services offered by a company in exchange for payment. “Credit repair” can be used in the same context, but credit repair doesn’t have to cost money if you do it yourself.

In fact, according to the Credit Repair Organization Act (CROA), a credit restoration company needs to notify its consumers that they may, on their own, notify a credit bureau in writing to dispute the accuracy of items on their credit report. 

Are Credit Restoration Companies Legitimate? 

The Fair Credit Reporting Act (FCRA) gives every individual the right to dispute the accuracy of items contained in their credit report. Credit repair or credit restoration is covered by federal law and is legal in all fifty states within the U.S. The CROA was enacted in 1996, and it governs and regulates the companies that provide credit restoration services. As long as the companies comply with CROA regulations, they are legitimate. 

In Summary

Credit restoration and credit repair are the same process that involves the removal of negative items from a credit report to improve a credit score. “Credit restoration” is a term that was introduced by companies offering credit repair services, and is available through reputable, professional credit repair companies, like The Phenix Group, right here in Houston.

In the world of loans and finance, there will always be unethical people that seek to scam people with false promises–a credit sweep is on that list of false promises. 

In today’s article, we’ll examine if a credit sweep is legal, some facts about credit repair, and how the process works so that you can begin getting your credit back on track. Whether you’re seeking credit repair in Houston or anywhere else in Texas, the process is mostly the same.

How Does Legitimate Credit Repair Work?

First, let’s explain why a person may need credit repair. Whenever you take out a loan or obtain a credit card, a report is sent to the American credit reporting agencies—Equifax, Transunion, and Experian. These credit reporting agencies will list each account that you have as well as your payment history for those accounts. Your payment history and credit profile go into a formula that creates a credit score ranging from 300 to 850.

Where credit repair comes in is when you have information on your credit report that is incorrect.Say Equifax shows that your car loan is still active when you actually paid it off two years ago, or there’s a credit card account that someone with a similar name opened and it was accidentally added to your profile. Credit repair is the process of disputing these inaccuracies and getting them removed. While a person can dispute inaccuracies themselves, it is a time-consuming process–you need to speak with banks, creditors, and credit reporting agencies, then file documents and provide proof of finances. This arduous process can be made much simpler by hiring a reputable credit repair company, such as The Phenix Group.

The cost of credit repair varies on a case-by-case basis, depending on how many inaccuracies there are and how many items need to be examined. However, after the inaccuracies are removed, your credit score should rise, and this typically translates into lower interest rates on home and auto loans, as well as much better interest rates on credit cards. On a $200,000, thirty-year home loan, getting the interest rate lowered by 1% can save you $60,000 over the life of the loan—a fact that often makes the cost of credit repair seem reasonable.

What Is a Credit Sweep, and Why Should I Avoid It?

Legitimate credit repair companies can only assist in removing inaccurate information from your credit repair—they cannot remove accurate items. Unscrupulous credit repair companies will make claims that they can wipe your credit clean and give you a brand new profile. This typically involves attempting a credit sweep or some kind of identity fraud. 

A credit sweep is when the false credit repair company files a dispute for every single item on your credit report. Not only is this a huge waste of time, but it can also be illegal, as the only way to get certain types of accounts removed is by filing police reports stating that the account is not yours. Some credit repair companies may falsify a police report in your name in an attempt to get accurate accounts removed from your credit history. In the best case scenario, this is a giant waste of time; in the worst case scenario, you may find yourself in trouble with the law. 

What to Look Out for When Choosing a Credit Repair Company

Avoid companies that make outlandish claims—anyone who says they can wave a magic wand and make accurate, negative items disappear is lying. Furthermore, some bad actors will promise to offer you a loan that everyone else has denied you—they’ll often attach this loan to a predatorily high interest rate that will be nearly impossible to pay off. As the old adage says, if it’s too good to be true, it probably is.

Of course, professional, legal, and reliable credit repair experts at The Phenix Group are ready to help you with your credit repair needs today–we’ll take care of every step of the process involved in getting your credit score back on track.

With interest rates rising every month, many Americans are rushing to get approved for home and auto loans before they become even more expensive. Anyone who has gone through the process of obtaining a loan can tell you that the first step in the process is getting your credit report examined to determine your ability to repay the loan. 

Having your credit report examined is about as much fun as having a root canal—every single detail of every financial account you’ve had in the last ten or fifteen years is likely to be there. Many people who apply for loans are turned down due to a poor credit history, which includes things like missed payments or accounts in collections. Some may not be aware that the reason they have a low credit score is that there are inaccuracies on their report.

These inaccuracies can be devastating, but fortunately for those looking for credit repair companies in Houston or elsewhere, credit repair companies like The Phenix Group can help. Today, let’s take a look at what a credit report and credit score are, and discuss how a credit repair company can help improve your credit. 

What Is a Credit Report and Score?

The keys to your credit report are held by credit reporting agencies—Experian, Equifax, and TransUnion. Each of these agencies maintains a list of your open and closed credit accounts as well as the payment history of those accounts. Based on this and other factors, the credit reporting agency will assign you an overall score between 300 and 850. Most lending institutions are looking for credit scores above 600 or 650 to grant a loan to a borrower; anything below this is typically subprime territory and interest rates will rise sharply. 

My Payment History Is Perfect—Why Is My Score Low?

If you believe you have a strong payment history, but your credit score is low, there could be inaccuracies in your credit report. Perhaps someone with the same or similar name opened an account and it was wrongly listed on your credit report. Maybe someone provided a social security number to a bank and got one number wrong that happens to match your social security number. There are a million reasons for inaccuracy on a credit report, and this inaccuracy may exist with only one agency or its effects could be multiplied if it’s reported by all three. 

What Can I Do About It, and How Can Credit Repair Help?

Dealing with these inaccuracies is simple in principle but lengthy in reality. You have to file dispute paperwork for each inaccuracy, and you’ll be asked for proof of accounts and other information. You can expect to spend hours on hold with credit reporting agencies and wait weeks while snail mail letters are sent to the necessary parties.

It’s often much easier for individuals to hire a credit repair company to help them through the process. A credit repair company will work with you to examine your credit report from each agency. If inaccuracies are found, the credit repair company will assist in filing disputes on your behalf to get the inaccurate information removed. The process typically takes a few weeks from start to finish but can take longer for complicated cases, and during that time, you’ll have someone in your corner doing the heavy lifting.

What Red Flags Should I Look For?

While credit repair is a legitimate service that can help improve your credit, there are many unscrupulous companies and individuals who are seeking to prey on people who may not be financially savvy. Here are some red flags to be on the lookout for when choosing a credit repair company to work with: 

• Companies promising to remove accurate negative items on your credit report
• Promises to build you an entirely new credit profile or offers of credit sweep services
• Telling you that no matter how bad your credit may be, they can get you approved for a loan—this typically involves pushing you to sign up for predatory loans
• Companies that aren’t registered or licensed where they are based—when it comes to Texas credit repair laws, you should always do your homework
• Companies that guarantee they can repair your credit in twenty-four hours or less

What Is the Cost of Credit Repair?

The cost for credit repair varies based on the number of inaccuracies and the overall complexity of the situation. However, the cost is often reasonable when you consider that getting just a 1% lower interest rate on a $200,000 thirty-year mortgage will save you $60,000 over the life of the loan.

With many people rushing to make large purchases on homes and autos before interest rates rise any further, credit repair requests are rising, as well. The reason for this is that in order to obtain a home or auto loan, one must first undergo a credit check. For many people, obtaining a home or auto loan may be the first time they’ve ever had someone examine their credit closely.

After a lender examines the credit report, they may determine that in the past, the borrower did not repay their debts in a timely manner or that their credit score is below a minimum threshold. However, maybe you do pay your debts in a timely manner, so why were you rejected? The answer might be inaccurate information on your credit report—this is where credit repair companies come to the rescue. Today, we’ll take a look at some facts about credit repair, and examine what laws the state of Texas has in regards to credit repair.

What Is Credit Repair, and How Does It Work?

Credit repair is the process of disputing and erasing inaccuracies on a person’s credit report. If you’re having difficulty obtaining a loan, the goal may be to improve your overall credit profile and credit score. If you already have decent credit, the goal of credit repair is to improve your credit score so that you can obtain more favorable interest rates on your loans. 

While a person can dispute inaccuracies themselves, it is an extremely time-consuming process that involves waiting for hours on hold with the credit agencies, submitting documentation, and filling out piles of paperwork. 

Credit repair companies make this complicated process simple for the consumer. They will examine your credit report item by item to make sure everything is correct, and when an inaccuracy is found, they will dispute it with the proper agencies. Fees charged for these services are on a case-by-case basis depending how many items need to be disputed and the overall complexity of the case. However, the fees are often reasonable when you consider that on a $200,000 mortgage loan, having a credit score that enables you to lower your mortgage interest rate by even 1% will save you over $60,000 over the life of the loan.

Credit Repair in the State of Texas

Whether you’re seeking credit repair in Houston, Dallas, San Antonio, or Austin, the Lone Star State mostly adheres to the same laws as the Federal Government when it comes to credit reporting and repair laws. In the State of Texas, credit repair agencies are registered under what is known as Credit Service Organizations (CSOs) which can encompass companies offering all types of credit services. The basics are that all CSOs must register with the Secretary of State before providing services to Texas citizens. 

What Should I Look For in a Reputable Credit Repair Company?

When choosing a credit repair company, it’s important to do your homework. While credit repair is absolutely a legitimate service, unfortunately, there are many unscrupulous companies and individuals that attempt to scam people out of money for services they cannot provide. Here are some common red flags to be aware of when searching for a credit repair company:

• Companies promising to remove accurate negative items on your credit report
• Promises to build you an entirely new credit profile
• Companies telling you that no matter how bad your credit may be, they can get you approved for a loan—this typically involves pushing you to sign up for predatory loans 
• Companies that guarantee they can repair your credit in twenty-four hours or less 

Basically, the rule of thumb is the same with any business deal—if it sounds too good to be true, it probably is. As mentioned above, a reputable credit repair company will examine your credit report with you to identify inaccuracies and help you to dispute those inaccuracies. They may also provide additional services such as credit counseling and tips to help improve your credit score overall. 

In Summary

Credit repair in Texas is much the same as it is in the rest of the country–just be on the lookout for companies that are making exaggerated promises. Do some research before choosing a credit repair company that can help you get your credit score back on track. Of course, The Phenix Group is here to help make your credit repair process a breeze.

This is where the process of credit repair comes in. In today’s article, we’ll examine what a credit report is and who tracks your reports. We’ll also talk about how your credit can be repaired by the best credit repair company in Dallas so that you can obtain the loans you need. 

What Is a Credit Report?

Each time you take out a credit card, a loan, or a mortgage, a notice is sent to one or all of the three credit reporting agencies in America–Equifax, Transunion, and Experian. The credit reporting agencies then examine several factors, including how many accounts you have open, how much money you owe, your monthly payment, if you’re maxing out your credit cards, and if you’ve missed any payments. 

Additionally, if you’ve ever been evicted for non-payment or had any other financial misunderstandings, there may be accounts that have gone into collections and are listed on your credit report, as well. Based on all the above factors, they will assign you a score somewhere between 300 and 850–the higher the score, the better. Typically, lenders like to see a minimum credit score in the mid 600s before granting a loan to someone. 

Having a higher credit score can mean some serious savings when asking for a loan. For example, if you can get just a 1% lower interest rate on a $300,000 thirty-year mortgage loan, you will save $60,000 over the life of the loan.

What Is Credit Repair, and How Can I Know It’s Legitimate?

Data breaches happen every single day–account info gets leaked, lost, mishandled, and misplaced. This leads to inaccurate information being reported to the credit agencies, and your credit getting wrecked. 

Credit repair companies come in when there are discrepancies on your credit report. The process is essentially disputing these to have them removed from your credit–this process can be done by oneself, but is intensely time-consuming, as it involves waiting for hours on hold with financial institutions and credit reporting agencies and then filing paperwork to have warehouses searched to verify records.

If you’re wondering whether or not legitimate items, such as a bankruptcy, can be removed from a credit report–the short answer is: no. However, if you maintain good standing on other accounts, your score will rise over time.

Any company that promises they can have any legitimate item altered or removed from your credit report is offering false promises–they may offer things such as a “credit sweep,” during which they dispute every single item on your credit report and create headaches with companies with whom you are already in good standing. 

It’s also advisable to stay away from anyone who promises to set you up with a brand new credit profile–this is typically identity fraud, or it will involve offering you extremely predatory loans while promising to make your problems disappear. 

What Credit Repair Can Do for You?

Legitimate credit repair takes the time-consuming process of disputing items out of your hands; a qualified credit repair company, like The Phenix Group, can offer insights and advice on how to improve your current credit score by altering your own personal financial habits. 

Once your credit has been repaired, you can apply for the loans you need with the confidence of knowing that not only will you be approved, you’ll be saving yourself thousands of dollars in interest rates in the process. 

Also read more about credit repair is legal in all fifty states.

A legitimate credit counselor is someone who will work with you to examine your personal credit and financial situation, make recommendations for how to save money, and advise you on paying down debt faster. 

A fraudulent credit counselor will make outlandish claims and can be dangerous to your financial future. Today, let’s examine some things to look for in a quality credit counselor; we’ll also examine some red flags to watch out for when it comes to shady businesses masquerading as credit counselors or credit specialists. 

Credit Counseling Versus Credit Repair

Credit repair is a process of examining consumer credit reports for inaccuracies and disputing those inaccuracies with financial institutions, credit reporting agencies, and debt collectors. This is a process that involves heavy amounts of legal documentation and lengthy loan disclosures that must be inspected and disputed correctly through the proper channels. A top credit repair company will work to help you file complex paperwork with banks and credit agencies that most people couldn’t possibly begin to understand. 

Credit counseling, on the other hand, is just what it sounds like—counseling and advice. A high-quality credit counselor will work with you closely to examine your financial situation as well as your current credit accounts, and will make suggestions on ways you can reduce your monthly spending so that you can free yourself of debt faster.

These specialists can also make suggestions on ways you can consolidate your loans and refinance into a single loan with a lower interest rate and a faster repayment schedule. They may also show you options that exist with your current financial institution or recommend government programs that can offer you payment assistance or assist you in lowering your payments and interest rates.

In short, a quality credit counselor will help you get your financial life back on track and stay headed towards being debt-free.

Credit Repair and Credit Counseling Red Flags

A lot of people ask, can a credit repair company hurt my credit? With a legitimate company, absolutely not—they are there only to assist in raising your score by disputing inaccuracies and making suggestions. 

However, there are many shady companies that would love nothing more than to get you on the phone so they can make false promises to scam you out of as much money as possible. Fraudulent companies will often make outlandish claims such as “Bad credit? No problem!” or “We will erase your bad credit history!” or even “We will approve your loan today, no matter your credit situation”. 

That last one is a quick ticket to a loan that will take ten years to pay off–some companies will go even further and attempt to steal your identity.

In Summary

Both credit repair and credit counseling are legitimate avenues toward improving your overall credit picture and financial situation. They’ll work with you to make sure your credit reports are accurate and help you make smart financial decisions–just make sure you research any company you choose to work with and avoid companies that make absurd claims or promise to do things no one else can. 

Of course, reputable credit repair specialists like those at The Phenix Group are credible, honest, and always ready to help take care of your credit repair needs.

Credit repair companies will work on your behalf to ensure that only accurate items appear on your credit report; they’ll also provide assistance in recommending ways to boost your credit score and help you find a good credit counselor. 

However, in order for this to be true, you must be working with a legitimate credit repair agency. There are legitimate fast credit repair services, but there are many unscrupulous companies out there who prey on people who are less financially savvy. These sorts of people can absolutely negatively impact you by having you sign up for predatory loans and make other damaging financial decisions. 

What Is My Credit Score, and How Can I Help It? 

Long story short, everyone has a credit score of somewhere between 350 to 850. According to every financial institution in America, this score plays a huge factor in whether or not your loan, credit card, or line of credit is approved. 

There are three credit reporting agencies—Experian, Equifax, and TransUnion. Each company maintains records regarding any past loans or credit cards you may have had; they will also have records of any unpaid debts that have been sent to collection agencies. 

Helping your credit score is rather simple—make your payments on time every month as agreed and try to never max out your credit cards. Maxing out credit cards shows poor financial management and is a red flag to financial institutions. Responsible use of credit cards and timely payments on your car loan are excellent ways to boost your credit score. Account history also helps your score–if you’ve had a credit card with a bank for more than ten years and you’ve never missed a payment, financial institutions are more likely to trust you with lower interest rates and higher loan amounts. 

How Can I Hurt My Credit Score?

Sadly, hurting your credit is much easier than maintaining a good score. A single payment that’s more than thirty days late on an actively open loan or credit card can absolutely tank your credit score. Even if you manage to get caught up on your payments, it can take months or years to erase that single black mark. 

Another way to hurt your credit is by having it littered with inaccurate information. Remember that car loan you cosigned for your brother that was paid off years ago when he sold the car? Well, according to one or more credit bureaus, that account is still open with your name attached to it. Worse still, it shows that the final payment was late.

This example shows an area in which credit repair specialists really shine–they can dig through documentation and file the relevant paperwork with reporting agencies. They can also contact debt collectors and issue cease and desist letters on your behalf if an account is erroneously in collections. After the incorrect information has been removed from your credit report, your credit score should begin to rise.

In Summary

No legitimate credit repair specialist would ever hurt your credit, but beware of companies making outlandish claims. Anyone who says they can build a brand new credit profile for you or promises to remove legitimate negative accounts is lying and are most likely attempting to gain access to your identity or offer you predatory loans that could leave you in debt for years. 

As long as you do your homework on the company you choose to work with, reputable credit repair specialists, like those at The Phenix Group, are there to help.

Let’s calm your fears right away–yes, real credit repair specialists are legit! However, when shopping for someone to help guide you through the process, it is definitely important to select the right company, as fraudulent companies do exist, just as with any profession. Once you find a legitimatecredit repair service, you can reap the benefits.

Credit repair, in theory, is something you can do yourself; however, you can also represent yourself in a court of law, a practice advised against by professionals. Much like a lawyer, a credit repair specialist is there to work on your behalf to navigate the labyrinth of bureaucracy.

What Is a Credit Score?

There are three major credit reporting bureaus—Equifax, Experian, and TransUnion. These three companies control whether or not you get approved for a credit card, a home loan, or a loan on a new car. They also help determine insurance rates and, potentially, whether or not you get approved for a job. How can three companies have this much power? Your credit score.

Your credit score is rated between 300 and 850. Each agency arrives at their score slightly differently and uses a slightly different formula. Theoretically, as long as you make your payments on time every month, you should have an excellent credit score after a few years–but that’s not all there is to the equation. Say, for example, you make all your monthly credit card payments on time, but all of your credit cards are maxed out and you are only making the minimum payments. The credit reporting agencies may give you a lower score because by maxing out your limits, you aren’t considered to be using your credit wisely.

In a nutshell, if you have a high credit score, banks will typically be more willing to loan you money at lower interest rates. With a low score, banks may be unwilling to loan money to you at all, or they may charge exorbitantly high interest rates. 

What Credit Score Do I Need?

Typically, you want a score of at least 650 to start shopping for home and auto loans. Scores beneath this number are considered high-risk, coming with higher interest rates and causing banks to ask for co-signers or additional income in order to grant a loan. 

How Can Credit Repair Help Me?

Credit repair specialists like those at The Phenix Group can help by examining your credit report with you and verifying each account. When an inaccuracy is found, the credit repair specialist will draft all the necessary forms and fill out any paperwork for you to dispute the inaccurate items. 

Once items are successfully disputed, they will be removed from the credit report. This should help to raise the customer’s credit score by eliminating negative factors. Credit repair specialists may also provide additional assistance in recommending ways to help boost your credit score. The cost for credit repair varies based on a few factors, including how many items need to be examined or disputed. 

What Should I Look Out For?

You might be wondering, can a credit repair company hurt my credit? The answer is a simple no, as long as they are a legitimate company. When selecting a credit repair specialist, it’s important to make sure the company isn’t making exaggerated claims. No one can guarantee a higher credit score in twenty-four hours, nor can they promise to build a brand new credit identity. Furthermore, companies who promise to remove accurate information from a credit report are trying to trick you out of your money–if there is a legitimate foreclosure or bankruptcy on someone’s credit report, it cannot be changed. 

If there is inaccurate information, such as an account that was closed years ago, an account that was paid on time but that shows late payments, or accounts that you never opened, then a legitimate credit repair service like The Phenix Group can assist in getting these matters resolved efficiently.

When it comes to certain kinds of loans, the difference between good credit and bad credit can be as much as 10%.

The cost of credit repair varies based on the difficulty of disputing your negative credit items–of course, if you’re looking for credit repair in Fort Worth, it’s best to research the credit repair company and ensure they’re reputable enough to take on your credit issues.

What Is Credit Repair? 

Credit repair refers to the process of removing bad and inaccurate information from your credit report in order to improve your credit score. The best way to examine your credit report is to request it from one of the three credit bureaus; the next step usually involves studying the credit reports to identify any inaccurate or missing information. Moreover, it would be a good idea to look out for unauthorized accounts that may be in your name. This can be a sign of identity fraud.

If you’re satisfied with the credit report, there’s no need for a credit repair. You can, however, constantly improve your credit score by paying your bills on time and reducing your credit utilization ratio. You can also file a dispute with the respective credit bureau if you notice any inaccurate or missing information. They’ll investigate, and if your claims are valid, the missing information is included in the report or the inaccurate information is corrected.

You can file the dispute yourself, but the paperwork hurdles involved can be challenging. If you feel you’re not confident about filing a dispute successfully or are worried about how long credit repair takes, or you simply don’t have the time, you should consider hiring a credit repair company such as The Phenix Group, who will make sure you know your credit repair specialist is legit.

How Do Credit Repair Companies Handle Disputes?

Some credit repair companies go as far as providing credit monitoring services; companies often differ in the prices they charge, but most of them offer a bundle with monthly fees. Generally, the cost for credit repair is very reasonable. When you factor in how much is saved on loans, credit repair pays for itself.

Still, credit repair doesn’t happen instantly and can take anywhere from weeks to months, depending on the number and type of disputes filed. Sometimes, you may need to file a dispute more than once when the credit bureaus repeat a previous error.

How to Identify a Fake Credit Repair Company

Most people turn to the internet when searching for a credit repair company. There are many reputable companies, but you can also encounter scam companies who promise the world and fail to deliver. Here are a few ways you can tell an honest credit repair company from a fake:

• They ask for the fees upfront and then disappear
• They promise to get rid of accurate information on your credit report (the three credit bureaus can only do this after investigation)
• They tell you not to contact the credit bureaus to launch a dispute
• They promise to give you a loan no matter how bad your credit is or offer you other financial services at exorbitant interest rates

If you choose the credit repair company route, keep an eye out for fake companies whose only interest is financial gain. Of course, experienced and reputable credit repair specialists at The Phenix Group are credible and ready to help.

As such, most people would want to repair their credit as soon as yesterday. You may have already taken the necessary steps to repair your credit, but you haven’t seen any changes, which prompts the question, how long does credit repair take?

What’s the Duration of a Credit Repair?

How long a credit repair lasts is determined by several factors, including the number of errors and your goals. The first step in repairing your credit should ideally be requesting credit reports–you should then review them thoroughly to identify whether there are any errors, and it’s usually best to download credit reports from the three main credit bureaus to help you compare and contrast.

Next, draft and document the disputes and submit them to the respective credit bureaus. The time you spend at this stage can vary based on the number of mistakes at hand and whether you have all the required financial documents. It can also be daunting if you’re doing the credit repair yourself, especially if you haven’t done it before. Because of this, it’s helpful to let legitimate credit repair companies, such as The Phenix Group, help you take a step in the right direction more quickly. The cost for credit repair varies based on how much work there is to be done, however, compared to the time and hassle of being put on hold and mailing back and forth with credit bureaus, it’s definitely worth it.

The three credit bureaus will start working on the disputes as soon as they receive them, and they will have up to thirty days to verify information from creditors. It’s best to send your documents via registered mail, which is handy when verifying the delivery date.

What Happens From Response to Resolution?

The credit bureaus always have up to thirty days to respond, but it can take longer if they request additional documents. Moreover, it can take longer for the dispute to be resolved if you file more than one dispute letter, as they may be responded to at different times.

Generally, it takes between a few weeks to a few months for disputes to be resolved, depending on the number of mistakes you’re disputing–it will probably take longer if it’s your first time disputing and you have a backlog of mistakes.

Rebuilding and Repairing

The best approach would be to repair your credit as you take the necessary steps to improve your credit score, and make sure that you pay all outstanding debts on time. Moreover, it can also help to reduce your credit card debt to lower your credit utilization ratio, which refers to how much you owe on your credit cards versus how much your credit line is.

Final Thoughts

It’s not all gloom and doom if you find out you have a bad credit history–you just need to understand the dispute process. However, the amount of bureaucracy and paperwork to deal with can be daunting, which is why it’s always best to hire a reputable credit repair company like The Phenix Group to file the paperwork on your behalf and help get your credit score back on the right track.

Curious about how to check your credit score without hurting it? Take a look at our recent article.

Most lenders prefer borrowers with a credit score of 670 and above, and you can check your credit score in a matter of minutes. Most credit card companies allow you to check your credit score for free.

Are There Instances When Checking Your Credit Score Hurts It?

Personal inquiry, which refers to you personally checking your credit score, doesn’t hurt it, and a third party can check your credit score and not hurt it as long as they aren’t doing it to determine your creditworthiness but for informational purposes. On the other hand, a credit score check done after applying for a loan can affect your credit score by a few points. Other things such as collections or unpaid bills can also affect your credit score–thankfully, if there are any errors on your credit report, a credit repair company can help. 

How to Check Your Credit Score

There are several ways to check your credit score without leaving the comfort of your home, such as requesting to receive your credit score yearly from one or all of the three credit bureaus. You can do so by visiting annualcreditreport.com or by sending a request to the Annual Credit Report Request Form. You can also:

• Use the service’s free credit scoring website–many websites allow you to register and view your credit score. Some also offer credit monitoring for a small fee. Most require a subscription to view a total credit score, but you should be ready to pay a higher fee for more detailed features.
• Check your credit score via your credit card company–enquire from your credit card provider on whether they offer free credit score checking. Based on the card issuer, some offer advanced features such as forecasting the future of your credit score based on, among other factors, your spending habits.
• Receive a credit score report within sixty days of receiving an adverse action notice–other instances can warrant a free credit report, including when receiving a fraud alert on your file.

Hard and Soft Inquiries

A soft inquiry is where the lender only requests basic information and aims to know your credit worthiness; on the other hand, a hard inquiry is comprehensive and is conducted by a lender to determine a borrower’s ability to pay. A hard inquiry involves examining individual accounts and how many loans you have. When hard inquiries are done several times in a one or two month window, this may subtract points from your credit score. 

Does a Credit Score Change Regularly?

Yes–a credit score lasts an individual’s entire life and can change daily based on your financial transactions, and taking on new credit reduces your credit score. On the other hand, paying your debts on time improves it.

What’s a Good Credit Score?

Three main credit bureaus report credit scores in the US, and they have different scoring methods. FICO is popular by a considerable margin and categorizes an average score to be between 670 to 739, a good score to be between 740 to 799, and anything above 800 as excellent.

A credit score helps you determine your financial health. By getting a copy of your credit report, you can then use the information you obtain to make changes to improve it further and keep yourself protected from fraud. If you have a bad score or there are fraudulent items on your report and you want help, reach out to an experienced credit repair specialist, such as those at The Phenix Group.

Wondering how long credit repair takes? Take a look at our latest article.

Many factors determine the credit score, including credit history and the number of accounts one has. The Fair Isaac Corporation (FICO) established the credit score model; other scoring models are available, but FICO is the most commonly used.

How Are Credit Scores Used?

Whenever you apply for a loan at a financial institution, including a bank, the lender refers to your credit score to determine whether to lend to you or not. If your credit score is low, the likelihood of you getting a loan is slim–and vice versa. It’s therefore essential to ensure you have a healthy credit score.

Contrary to popular belief, financial institutions aren’t the only ones checking credit scores. You’ll be surprised to learn that your phone company, water company, insurance company, and even your landlord can refer to your credit score to determine your creditworthiness–a low credit score results in you incurring high-interest rates and having more trouble getting loans.

How Do Credit Scores Work?

People with a credit score of 640 and below are considered high-risk borrowers. As such, financial institutions charge them high-interest rates; they may also request that the borrower repay their loan in a shorter period of time.

On the other hand, a score of 700 and above is considered good, which can mean paying a lower interest rate for your loan and getting flexible repayment plans, while a score of 800 is considered excellent. Here’s a simple breakdown of the FICO credit score:

• 800 to 850: Excellent
• 740 to 799: Very good
• 670 to 739: Good
• 580 to 669: Fair
• 300 to 579: Poor

Your credit score affects how high your interest rates are determined, the amount you may borrow, and the initial deposit amount you pay when paying for a high-price item such as a home or a car. To find your credit score, you can typically get free copies of your credit report without hurting your score.

What Affects Your Credit Score?

A person’s credit history is collected, reported, and updated by the three main credit bureaus in the United States: Equifax, Experian, and Transunion. While the three credit bureaus used different methods to make their determinations, five main factors affect an individual’s credit score:

Payment history: A borrower will most likely look at the likelihood of you paying your bills by researching whether you’ve paid your bills in the past. Late payments affect your credit score negatively.

Amounts owed: Credit utilization is one of the most common terms when speaking about amounts owed–it refers to the total debt you owe vis-à-vis your credit limit. It’s recommended to keep your credit card balance at 30% or less to improve your credit score. Maxing out your cards will negatively affect your score.

New Credit: If you’ve recently taken out several new loans from different financial institutions at once, it may indicate to the lender that you’re in economic turmoil and you’re more likely to be considered high-risk.

Credit mix: Financial gurus recommend having different types of accounts, indicating to lenders that you can manage other lines of credit such as credit cards, installment loans like auto or personal loans, or even mortgages.

If you find any inaccuracies in your credit report, it is in your best interest to clean up your credit report. This can be done by filing disputes with the credit bureaus and proving paperwork to prove the inaccuracies. However, this process is lengthy and time consuming with lots of complex financial documentation–fortunately, the best credit repair companies, like The Phenix Group, can help by removing the burden of waiting on hold with the credit bureau and filing mounds of paperwork.

Final Thoughts

A credit score is essential because it indicates to lenders your creditworthiness. If you’re having difficulty borrowing or are being offered loans with high-interest rates, there’s no time like the present to turn your fortunes around. You can improve your credit score by paying your bills on time, increasing your credit card limit, putting a pause on a credit card you’re not using, and, of course, working with a reputable credit repair company.

Reviewing it and cleaning it up can improve your chances of approval and uncover practical ways to save money and improve your credit score. If you are wondering how banks determine your credit score, well, it’s a complicated process.

Credit lenders examine your credit history when applying for loans, credit cards, and mortgages. The data on your credit report helps them evaluate your ability to pay off debts; however, any incorrect data on your records can endanger your approval rate and affect the terms you’re offered. In fact, approximately 25% of Americans have errors on their credit reports, which shows there’s a lot of cleaning up to be done. 

One of the easiest ways to get your credit report clean is simply to hire the best credit repair specialist in Dallas, such as those at The Phenix Group, who can help you navigate the tricky process of cleaning your credit–they may even be able to assist you with clearing a repossession from your credit.

How Can You Clean Your Credit Report?

1. Obtain Your Credit Report

Knowing where you stand is the first step toward getting your credit report in order, so the first step is to request your credit reports from the three credit bureaus–Equifax, Experian, and TransUnion. On AnnualCreditReport.com, you can get free weekly credit reports from these bureaus.

2. Evaluate Your Credit Report

After requesting your credit report from the major credit bureaus, check if the details listed on each one are accurate. Evaluate the following information:

• Personal details, such as the address and name listed on your accounts
• Account details, including credit limit, balances, current status, and payment history
• Collection and bankruptcy information, including whether any of your accounts were listed overdue for over a month and sent to a debt collector or collection agency

3. Dispute Any Inaccuracies

Start the dispute process immediately if you encounter any discrepancies in your credit reports with the bureau that has the incorrect information; you can do this via email or online. If the dispute settles in your favor, the bureau must report the matter to the other two credit bureaus. Nonetheless, you should also notify the other credit bureaus to be on the safe side.

However, if your dispute is denied, you can take further action with CFPB or the FTC or file a written statement that can be added to your credit reports. 

4. Pay Off Your Debts

If you have credit card debt, try to pay it off, because the percentage of your total debt or the credit utilization rate you have in comparison to your total credit limit is a vital factor in your credit score. There are several ways you can repay your debt–here are three practical options:

• Apply for a balance transfer–by transferring your balance to a credit card with an interest-free period, you can settle your credit card debt more quickly than you would by keeping your debt on a high-interest card.
• Fund your debt with a personal loan–balance transfer credit cards require excellent credit, so you should consider applying for a collateral loan to repay your debt. Personal loans are typically helpful for larger credit card debts, and they have more accepting credit requirements. In addition, personal loans can help you keep your credit utilization rate low because they are installment accounts, while a credit card is a revolving account that affects utilization.
• Redeem rewards–if you have accumulated points, cash back, or miles, redeem them to pay off your debts. Unfortunately, any credit you get will only cover part of your debt. 

Final Thoughts

Cleaning up your credit reports removes errors from your credit file, strengthening your credit score. To clean up your credit report, you’ll need to request your credit reports, evaluate those reports, dispute any errors, and pay off any debts. Paying off your debt, whether it’s via a personal loan or balance transfer, can also help you save money on interest rates. 

It’s important to note, however, that while the above sounds straightforward, waiting on hold with credit bureaus can take hours, and filling out lengthy forms while answering complex financial questions about your loans can be a real hassle. That’s why hiring a qualified credit repair specialist at The Phenix Group can take this load off your shoulders so that you can focus on your life while your credit gets back on track.

Let’s examine three strategies for removing this scar on your credit history so you can get back on track financially.

1. Negotiate New Payments

Your first step is to negotiate with your original lender. This could be an online lender, a bank, or an in-house finance company at the dealership. You may wonder how you can negotiate a deal after your lender has already repossessed your asset–the fact you owe money means you have leverage. If you can speak to a person with authority to make policy decisions, you can negotiate a deal, including paying off your balance in exchange for clearing the negative mark from your credit report.

If you reach a deal, be sure to get all the details in writing before making any payment. Apart from having the cash, the most daunting part about this approach is speaking to the right person–you’ll need some patience and persistence.

2. Dispute the Repossession

You can clear a negative item from your credit report by disputing the repossession with the major credit bureaus in the U.S., which are Experian, Equifax, and TransUnion. Data from these bureaus influence your FICO score, which credit lenders consider before giving you a loan. 

To dispute a repossession from your credit report, you must look over the entry carefully, searching for any discrepancies you can find. For accuracy, check all the dates, payment terms, account numbers, balances, and other details. If you find a discrepancy, dispute the item with the credit bureau responsible for inaccurate data–the bureau has thirty days to confirm that its data is accurate. If the information is incorrect, the bureau must remove the entry or correct the data per the Fair Credit Reporting Act. 

Often, all the major credit bureaus will have the same discrepancy because they receive data from your lender. So, send dispute letters to credit bureaus, including your name, account numbers, address, and social security number. If you’re wondering how long a credit dispute takes, it’s usually around a thirty- to sixty-day process.

3. Seek Professional Help 

Suppose you don’t want to worry about calling your original lender and waiting on hold for ages to find the right person, writing letters, or coming up with the money to settle your repossession. In that case, you can hire a reputable credit repair company to help.

Credit repair companies do this type of work regularly and have the experience and expertise beyond common knowledge. A reputable credit repair company near you can get the job done if it’s possible to clear a repossession from your credit report. 

Although you have to pay a fee for this type of service, clearing the repossession from your credit report is worth it, as it leads to lower interest rates and the freedom of not needing a co-signer anytime you need to get a loan. 

Final Thoughts

Maintaining a good credit score is vital because a bad credit score can affect all of your requests for credit, and a bad credit score can have a long-term effect on your life. A repossession can scar your credit history, lowering your credit score by more than one hundred points. That combined with negative payment history leading up to the repossession may bring higher interest rates and lower chances of securing future loans.

Professional credit repair services, like those at The Phenix Group, can help you clean up your credit report and take the legwork out of the process by negotiating for new payments, disputing the repossession with credit bureaus on your behalf, and providing professional advice to keep your credit health in check.

However, most credit disputes are often resolved faster than that. 

The exact time required to resolve a credit dispute largely depends on the information in question and how quickly the lender or the other organization that furnished the credit bureau with your data can respond to requests to confirm the disputed information. Top credit repair companies can often expedite this process. 

How Does the Credit Dispute Process Work?

If you discover inaccuracies in your credit report, you can file a credit dispute by mail or online. When you dispute your credit information details via mail, provide proof of identity, including verification of address and a copy of your photo ID. Based on the type of credit dispute, you should also provide evidence of the inaccuracies, including a canceled check or a copy of a bank statement as evidence of on-time payments; it may even be possible to clear a repossession from your credit.

Further, it’s advisable to dispute information that misreports your credit history, including any payments that are inaccurately reported as late or missed or loans and other accounts that are still open when you’ve closed them. You must also notify the credit bureaus and the proper authorities if you see any listings for credit card accounts or loans you didn’t request or open; this might be a sign of identity theft or credit fraud. When assessing your credit report, note that one or more of your creditors might go by a different acronym or name on your credit report than what’s on your account statement. Cross-check to ensure the creditor listed isn’t one of your existing credit accounts.

How Long Does This Take?

If what you’re disputing isn’t a credit item but a typo in your Social Security number, an address, name misspelling, or other identifying details you can document yourself, your credit dispute will be resolved within a week. Suppose the information you’re disputing concerns your payment history and needs verification by a third party–in this case, the credit bureau must notify the information furnisher within five days of receiving your credit dispute. The information furnisher should respond fast enough to enable the bureau to meet the thirty-day investigation requirement.

If you submit additional backup documents to the credit bureau after submitting your dispute, the FCRA will extend the investigation-completion time limit by fifteen days, making the maximum turnaround time about six weeks. 

Because credit scores are calculated from your credit reports, removing inaccuracies from your report can affect your credit score. Conversely, removing missed or late payments could substantially boost your credit scores. So, in the long run, ensuring your credit report accurately reflects your credit activity, and usage is crucial. 

What Should You Do if You Disagree with the Outcome of a Credit Dispute?

If you disagree with the outcome of a credit dispute, you have many options, including:

• Communicate with your lender or data furnisher directly to seek corrections of any inaccuracies in their records.
• Re-file a credit dispute with the credit bureau, along with additional evidence documenting the discrepancy. Unfortunately, resubmitting the same evidence you supplied with the original credit dispute may not result in a different outcome.
• Add a statement of dispute to your credit history. This statement appears in your credit history when creditors check your credit, showing that you disagree with an item in your credit report. 

Final Thoughts

All of this information can be enough to make someone’s head spin, which is why a qualified credit repair specialist like those at The Phenix Group can help you get all sorts of inaccuracies or judgments removed from your credit report, without you having to so much as call a credit bureau. They’ll handle all the paperwork so you can go on living your life while knowing that your credit has been restored and you can once again enjoy financial freedom.

Read more about how to check credit score without hurting it?

Oftentimes, credit information is used as a litmus test to see if you’re reliable or a risky bet. Still, some people take advantage of loopholes in the strict and formalized ways that lenders and private credit reporting agencies (CRAs) communicate with each other.

Before we dive into if credit scores can be manipulated, you need to have a basic understanding of the credit reporting system.

The Consumer Credit System in the US

Three CRAs—Experian, Equifax and Transunion—gather extensive data about your loan and payment history. Lenders use this information to assess your creditworthiness. CRAs maintain files on everyone who uses credit in the United States. Many businesses, such as financial institutions, need credit history information. 

These reports act as accountability mechanisms and provide the lender with an estimation of the loan applicant’s credibility. While there are legitimate credit repair services in the market, there is an abundance of unethical ones, too.

Abuse of Single Shared Database

There are two types of credit report inquiries—hard and soft. Someone requesting a person’s credit file can view the hard inquiries. When a lender asks to look at your credit history to determine if you can qualify for a loan, this is a hard inquiry that can affect your credit history. 

Soft inquiries, on the other hand, are when an individual (or someone they authorize) checks their credit report; a soft inquiry might also happen if a credit card company or lender issues a preapproval. Keep in mind that every time a user asks for a copy of their credit report from one of the three CRAs, it generates a soft inquiry for that CRA.

After analyzing the transaction of information by CRAs, credit hackers found a loophole. Transunion and Equifax (two credit reporting agencies) use the same first-in-first-out database system to store both hard and soft inquiries. Even though the database can hold more than the number of inquiries that can be expected from legitimate businesses, it’s not capable of handling the volume of new soft inquiries from consumers submitted every day—so the database is cleaned once it’s filled up.

By constantly requesting soft inquiries from credit reporting bureaus, a significant number of credit manipulators are able to scrub negative information from their reports and improve their credit scores in order to get a judgment removed from their credit history.

Small Business Lines of Credit

In recent years, there has been an overabundance of competition in the credit market. Now, credit card companies regularly give business cards to small business owners and self-employed professionals. If a company files bankruptcy, the structure of the organization often protects the personal wealth of the CEO, but banks can still try to take the card owner’s assets.

A lot of financial hackers found that transferring large debts to small business credit cards can positively influence their credit score. Even though they still owe the money, the balance was transferred, making it hard for lenders to find out that the borrower is in financial trouble.

Because lenders make decisions based on the amount of debt carried by the consumer, individuals benefit enormously by keeping the debt in the dark–and it ends up boosting the credit score of consumers.

Piggybacking

Piggybacking is the practice of becoming an authorized user on another person’s credit account to build credit. People with bad or no credit histories use piggybacking to get loans they wouldn’t be able to get otherwise. Let’s take a closer look at how piggybacking works, which will partially answer the age-old question: does closing a credit account hurt your credit score?

First, you need to convince a relative or a person who has used a credit card properly for a long time to add you as an authorized user. You might feel like you’re co-signing a loan, but it’s not necessarily the same thing. Once you’re an authorized user of a credit card in good standing, the complete credit history and associated points will be shared with your account, too. So, even someone with no credit history can suddenly have a 750 credit score. 

The piggyback technique is widely used by unethical users to boost their credit scores and deceive creditors. Industry executives promised to investigate the scoring process, but later reversed their position. Thus, thousands of people continue to manipulate their credit ratings.

Manipulation of Balances

Maxed-out credit cards are bad news for your credit score, but some people manipulate their balances to achieve a perfect credit score. These unscrupulous individuals capitalize on the flexible utilization of credit accounts. To maintain a healthy credit score, your revolving balance (the amount that remains unpaid on a credit account) must account for less than 30%. So, to avoid poor ratings, credit hackers distribute the amount outstanding across several credit cards. 

Conclusion

Credit manipulators have been able to make tens of thousands of dollars thanks to numerous loopholes and discrepancies in the existing system. Of course, it is unethical and sometimes illegal to take these approaches with creditors. This is why working with reputable, experienced credit repair experts, such as those at The Phenix Group, is vital to maintaining the health of your credit.

Also read more about can you get a judgement removed from your credit report?

There’s nothing wrong with not wanting a credit card, but you should reconsider dropping the account–especially if you’ve been using that card for a while.

Canceling a credit card account does not impact your credit score. Most scoring models will not deduct points simply because you cancel a card; however, closing a card can have other unexpected consequences that can lower your credit score. Therefore, before making the final, irrevocable decision to close an account, it is important to understand what might happen down the road. 

Looking for credit repair in Fort Worth and wondering what a credit repair company can do that you can’t? They know how to leverage rules and regulations to help people restore their credit effectively. There are two essential ways that closing a credit card account affects your credit score:

Increases Your Credit Utilization Ratio

There are different credit scoring models in the market. FICO and VantageScore are the most prominent–30% of your FICO credit score is based on your credit utilization ratio. If your credit account is closed, it could actually affect the utilization ratio and your credit rating.

‘Credit utilization’ is the term used to describe the amount of credit you’re using (or how much you currently owe) divided by the amount of credit you have available (or your credit limit). Your credit score may suffer if your credit report shows a high credit card utilization rate. Daily balances don’t affect your credit score much because the card issuers sum up transactions and send reports once a month, typically at the end of the month. Therefore, the balance and the credit limit on the closing date will reflect your account’s performance.

The interest rate on amounts owed will jump if you miss a payment, and late payments will damage your credit score, too. It is best if you pay as much of the statement balance as possible before it is due to keep your credit utilization ratio low. Suppose your card remains inactive for a while–it doesn’t matter why the account was closed, because if there is no credit to rate, that’s bad news.

Reduces The Length Of Your Credit History

If you do some digging into the topic of credit card closures, you might come across a common warning. Many people think that closing a credit card will make your credit history disappear and that you would have to start all over to establish credit, but it’s not as simple as that. FICO and VantageScore take your credit history’s age into account. 

The average age of multiple accounts of your report can affect your credit score in a significant way. Keep in mind that the length of your credit history accounts for 15% of your FICO Score, and your credit account’s depth of credit is responsible for 20% of your VantageScore. If you close an account (credit card or otherwise), FICO scoring models still consider your account’s details when calculating your average credit age. Closed accounts that were kept current are taken into account for up to ten years, whereas delinquent accounts are discarded after seven years. As long as an account doesn’t disappear from your report, its age will be a factor in determining the FICO score.

Credit scores from VantageScore are calculated in a slightly different way. This model usually ignores closed accounts while estimating the credit score of a consumer–as a result, if a potential creditor uses the VantageScore scoring model to calculate your credit score, a credit card closure can negatively affect the score.

Wrapping It Up

There are upsides and downsides to closing a credit card, but the ultimate decision is up to you. If you do end up wanting to close your account, be mindful and strategic about the procedure. Don’t forget to pay off all your remaining debt before parting ways with your credit card if you don’t want to see a drop in that precious three-digit credit rating number.

Looking for more information on whether or not credit scores can be manipulated? Check out our latest article.

That said, settling debt is much better than not paying at all; it’s more beneficial than letting the account go delinquent or, worse, default.

After settling a debt, what’s important is what you do to get your credit score back up. There’s no one best way to rebuild credit; it requires consistent responsibility to pull off. However, getting help from the best credit repair companies, such as The Phenix Group, can make the process faster, simpler, and more convenient. 

What Is Debt Settlement?

A debt settlement is an agreement between you and your credit card issuer, lender, or debt collector to reduce (or completely wipe off) your balance in exchange for a lump-sum payment lower than the original total debt. 

Imagine you owe a credit card company $30,000. Due to financial difficulties, you struggle to pay your minimum amount due, pay your bills late, or even miss payments completely. With a debt settlement, you could work with the credit card issuer to pay less, say $20,000, with the provision that they will forgive the rest of the debt and mark your account as paid.

How Debt Settlement Affects Credit

A debt settlement rids you of heavy unpaid sums, and while it seems like a win, it has its trade-offs–settling a debt means you were unable to keep your end of the bargain as originally agreed on, which is a red flag for future lenders. Here are some ways that a debt settlement can affect your credit:

It Can Lower Your Credit Score

A settled debt will be marked on your credit report as “paid-settled.” While this is better than a charge-off (a balance the creditor has given up on collecting), it’s still a strike that’s not good to have. Depending on your credit report, financial history, and consumer profile, your credit score can lose anywhere from thirty to 150 points.

It Stays on Your Credit Record

The record of a debt settlement stays on your credit record for at least seven years—and that’s if you have no history of late payments. If you do, the seven-year countdown starts from the date when your account first became delinquent.

Fortunately, the severity of this on your record will go down over time because lenders first look at your most recent financial history. Still, your credit score will suffer as long as it’s there, making it difficult to get loans or new lines of credit.

It Affects Your Credit Utilization

The way a debt settlement can affect your credit utilization goes two ways. For one, a settled debt can mean less weighing down your credit utilization, which can positively affect your credit rating. On the other hand, if a debt settlement comes with a closed account, your credit utilization goes up, as the space available for some of your expenses is wiped away.

How to Repair Credit After Debt Settlement

Fortunately, there are ways to repair your credit after it takes a toll from a debt settlement. Here are some tips to bring that score back up:

Pay Your Bills on Time

Your payment history is the number one factor that affects your credit score. After settling a debt, you should not make the same mistakes that’ll end up in another unpayable amount. Moving forward, pay your bills on time–every time.

Lower Your Utilization Rate

Mind your utilization rate, making sure you don’t exceed 30% of your limit (which is the threshold recommended by most experts). Remember: the smaller the credit utilization, the better it is for your credit score.

Hire a Credit Repair Company

A credit repair company is an organization dedicated to helping consumers improve their credit scores. But, how do credit repairs work? For starters, these financial experts review your credit report to find any errors. They gather evidence to challenge these disputes and then negotiate on your behalf with lenders and credit bureaus. Credit repair companies can also guide you on healthy financial habits.

To improve your standing, you can perform a credit repair, but this process can be tedious and confusing, especially if you’re not knowledgeable about credit regulations and consumer laws. The best way to rebuild credit is to hire a credit repair company to help you. These organizations review your credit reports, dispute credit discrepancies, and even teach you sustainable financial health while adhering to credit laws and best practices.

What Is a Credit Repair Company?

A credit repair company is an organization dedicated to helping consumers understand and repair their credit scores; they do this by analyzing their client’s credit reports and disputing inaccuracies with credit bureaus and creditors. These companies are made up of financial and legal experts who have the knowledge and experience to address credit issues–they know what to review, what can be disputed, and how to proceed.

The Credit Repair Organizations Act

The federal Credit Repair Organizations Act (CROA) defines how credit repair companies must operate to remain compliant with federal law. It also outlines practices that these organizations are not allowed to do, including:

• Advising clients to make false statements to credit reporting agencies
• Advising clients to change their identification (to prevent credit bureaus from associating them with their credit information)
• Charging clients for services that haven’t been fully rendered
• Guaranteeing they can remove information from clients’ credit reports
• Hiding notices of their clients’ rights
• Forcing clients to sign a waiver to give up their rights

When you’re Googling “credit repair near me” to choose a credit repair company, be thorough in reviewing the legitimacy of the organization, and beware of any company that encourages any prohibited practices under the CROA.

What Does a Credit Repair Company Do?

Credit repair companies work to improve the credit scores of their clients–but how does a credit repair company work, exactly? Here are some of the responsibilities of a credit repair company:

Review Credit Reports

To start their audits, a credit repair company would typically request and review your credit report. While doing so, they look for errors such as duplicate accounts, incorrect inquiries, and inaccurate accounts. These can negatively affect your credit score, and your credit repair company must catch them before they do.

Dispute Credit Discrepancies

Once your credit repair company has pinpointed discrepancies in your credit report, they can gather evidence and then initiate challenges by requesting a credit bureau to review the disputed information. The credit bureau must then correct or remove the inaccuracy if they can’t verify it. If needed, your credit repair company will also handle negotiations with relevant creditors.

Educate About Better Financial Health

Credit repair companies also educate clients on how to build better and sustainable credit habits, such as only using up to 30% of their line of credit, using auto-pay online services to settle recurring bills, and not applying for additional credit. They may tailor their advice to the client for better results (and to prevent them from being repeat clients).

Research Credit Laws and Best Practices

Credit repair companies are built on experience and skill. The people working with you must be up-to-date and knowledgeable about credit laws and know-how to apply best practices every step of the way–it’s always a good sign if they’ve come from an adjacent field, such as real estate, mortgages, or financial law.

The Credit Repair Process

The credit repair process starts with the credit repair company requesting a copy of your credit report from the three major consumer credit bureaus: Equifax, Experian, and TransUnion. They’ll then analyze the reports for derogatory marks, such as charge-offs, bankruptcies, and tax liens. If there are errors, they’ll set a plan to dispute them to the relevant credit bureau or creditor; this may involve sending requests to validate information, dispute erroneous negative marks, or perform a cease-and-desist. 

Can a Credit Repair Company Really Help?

While you can repair your credit score on your own, the process can get complex and troublesome, especially if you’re unaware of the ins and outs of credit law and bureaucracy.

A credit repair company can help you improve your credit score by removing inaccurate and negative marks that are damaging your score–they do this by adhering to laws and following best practices, so you can ensure you’re doing everything by the book. If you’re interested in employing a credit repair company to boost your credit score, contact The Phenix Group for a free analysis to get you started.

Data from credit reports can affect:

• Eligibility for a loan
• Interest rates on loans
• Insurance premium rates
• Job opportunities

A low credit score or mistakes on a credit report can keep you from improving your life. That’s where credit repair comes in–if your credit score has taken a hit or isn’t good enough to get by, it’s time to fix your credit.

Credit repair companies improve people’s credit scores by going through their credit reports and correcting or removing any negative or incorrect information that is dragging down their scores. It may sound like something too good to be true—but it’s not, and it’s very much possible.

Let’s see how you can transform your poor credit score into a healthier one that appeals to lenders and others who use it to evaluate your financial stability.

What Is Credit Repair?

Credit repair is the procedure of restoring someone’s credit score after it has deteriorated for any number of reasons. It may involve some simple administrative tasks like writing a letter to credit reporting agencies, but oftentimes, it’s more complicated and requires a lot more effort.

You may have heard people, including those you respect, say that credit repair companies are scams or that you cannot remove or correct information on your report before seven years have passed since the incident that damaged your score.  Those things are not true–they are repeating common falsehoods about credit card repair.

Laws are what make credit repairs successful, and laws are what help you get any defaulted accounts removed from credit reports before seven years have passed. Credit repair companies leverage such laws to improve your credit score; most importantly, laws state that a credit report must be accurate, timely, and verifiable. These laws allow you to fix credit mistakes.

What Can a Credit Repair Company Do That I Can’t?

When you hire or employ a credit repair service, the company’s first step is to collect the current version of your credit report from the three major credit reporting agencies: Experian, Equifax, and TransUnion. Then, the company builds the groundwork needed to challenge these bureaus.

Bankruptcies, charge-offs, tax liens, and other negative entries are the items on a report that a credit repair company focuses on. When they find these, the company will sort and analyze them using years of experience and knowledge. The specialists will devise a strategy for disputing errors and negotiating with credit bureaus to get the negative reports removed from your record.

Credit bureaus have thirty days after receiving the disputes to conduct their investigation to determine whether the negative entry is accurate or not.

The results of investigations can be unpredictable–the bureaus might eliminate some or all negative entries from a credit report during the thirty-day investigation period. If this happens, the credit score should improve, but this is often not the case. If the results of the investigation are not favorable, the negative entries can become permanent on your record. The credit repair companies then do their job and make sure that any incorrect negative entries don’t stay on the records.

Help With Managing Debts

Apart from correcting wrong information or detecting fraudulent transactions, credit rebuilding and repair mostly depends on how carefully you use credit cards and when you use them. Your payment history plays a huge role in determining your credit score; the credit repairing agency will guide you to take steps to ensure that payments are current and/or improve the payment schedule for outstanding debt. 

In addition, the amount of outstanding debt you have affects your credit score–for example, even if you are making minimum payments on time, if you are actively using a large portion of the credit available to you, the size of the debt you are carrying can hurt your credit rating.

Does settling a debt hurt credit? Of course not. The problem is that your liquidity may be hampered by the amount of debt you owe. After a while, you may see improvements in your credit profile if you take the necessary steps to reduce the overall debt load.

Final Thoughts

There are some other instances when you need to consider credit repairing. If you are a victim of identity theft, for example, your credit restoration is essential and might require considerable footwork. Before choosing a credit repair company, be sure to check its authenticity and performance–of course, the experts at The Phenix Group are ready to help.

What Is a Bad Credit Score?

In the U.S., there are three credit reporting bureaus that essentially control whether or not you are able to obtain loans and credit cards–Equifax, Transunion, and Experian. Each of these credit bureaus has their own method of evaluating your creditworthiness, and using these methods, they calculate a score for your credit history based on a variety of factors. The score ranges from 300 to 850. If you’ve missed loan or credit card payments or had financial hiccups in the past, these may be reflected in a lower than average credit score. Filing bankruptcy can also have a major impact on your credit and FICO score.

Can You Rebuild Credit?

Many people may falsely believe that once their credit is ruined by financial mistakes, they’ll never again be able to have a credit card or obtain a loan. They also may think that their score will never improve. This couldn’t be further from the truth–they say time heals all wounds, and the same is true for your credit score. By making timely payments on any remaining accounts and cards you have, your credit will slowly heal. That said, many people may be wondering if there are other ways that their credit can be rebuilt–the answer is: yes, absolutely!

Fortunately, there are several steps you can take to rebuild your score, like paying your bills and credit cards on time, keeping your credit utilization low, being careful with new credit, and consistently practicing good financial habits. Another great way to do this is to hire a Dallas credit repair business like The Phenix Group, which can view your credit reports and help you settle any credit issues and grow your score.

How to Rebuild Your Credit 

Rebuilding credit can be tougher than starting from scratch, as you’re trying to prove that despite financial shortcomings–even those not of your own fault–lenders, credit card issuers, or other credit organizations can trust in your financial responsibility. Luckily, even incremental changes can impact your credit score, and every step you take can lead you toward better financial options than you have today. These steps to rebuilding your credit score and improving your report include:

Review Your Credit Reports

Your credit score is affected by several factors. You must understand these to figure out your current credit worthiness and pinpoint areas where you can improve. Request a free annual credit report from the three major credit bureaus: Equifax, Experian, and TransUnion. If there are any credit errors, dispute them immediately, as these can hold you back. Correcting any credit report errors can potentially add points to your credit score quickly. Credit errors can be anything from incorrect information on your accounts to something more serious like fraud or identity theft.

Pay Your Bills on Time, Every Time

Your loan and card payment history is one of the biggest factors that affect your credit score. Missed or late payments can leave a mark for up to seven years. Pay your accounts on time, every time, even if it’s just the minimum amount–though you should work on paying in full as you go. Consider setting up bill reminders or automatic payments to keep up with your credit card bills. Good money management and paying off your personal loans can go a long way towards improving your credit report.

If you have some debt you’re unable to repay, you might wonder, does settling a debt hurt credit? While it’s still perceived negatively in your credit score, it’s better than just leaving the debt unpaid, since it shows you’ve reached an agreement with your lender. You also want to do your best to avoid bankruptcy because it can have a negative impact on your credit.

Some people consider getting credit builder loans as a way to show that they can make consistent payments on time. But the effectiveness of these loans will vary and may not be worth it with high interest rates.

Mind Your Credit Utilization

Using too much of your credit limit can hurt your credit score; most experts recommend you never go over 30% of your credit limit–the lower, the better.

Try a Secured Credit Card

Your credit score can go down if you open too many credit card and loan accounts in a short period. Instead, consider getting a secured credit card that requires a deposit upfront but works like any other credit card. Paying the bills that come from secured credit cards responsibly can positively impact your credit score. 

Keep Older Credit Accounts Open

One factor that many people may not realize is important to the credit reporting bureaus is the length of credit history. Your credit report will state the date you opened the account; the longer the credit history, the better. This shows that you and the financial institution have a long relationship, which increases trustworthiness.  It also shows that you can reliably make the payments on your loans and cards on time.

How Quickly Can Credit Be Rebuilt?

Rebuilding credit takes time, but fortunately, rebuilding your score may take less than you think. In general, as long as you have caught up with your payments and are no longer behind, you should start to see your credit score slowly rise each month. While the exact formula used by each credit reporting bureau is unknown, experience with the industry has shown that the best way to rebuild credit is to make timely payments. Typically, you can see your credit score start to rise within thirty to ninety days of catching up on any credit card or loan payments missed.

How Many Points Can Your Credit Rise in a Month?

By making timely payments, your credit score may rise by anywhere from ten to forty points. Your payments will impact your credit score depending on how consistent the payments are made. However, the exact formula used by each credit reporting bureau is different, so don’t expect each score to be the same and anticipate some wide fluctuations between your scores at each financial bureau. After a certain point, your credit score will stop rising so quickly and will reach a point where it balances out; however, in theory, your score should continue to rise on track with your payments, though very few people ever reach the top score of 850.

How Can I Raise My Credit Score by One Hundred Points in Thirty Days?

One of the fastest ways to raise your credit score is by identifying errors on your credit report and having them removed. This typically involves calling the credit reporting bureaus and reporting the report inaccuracies. Next, you’ll need to call your banks and obtain letters stating the correct credit information so that the credit bureaus can update their information on your report. However, this is a daunting process to undertake on your own–it involves hours on hold and possibly months of waiting for letters to arrive and be sent. Fortunately, there is an easier way to deal with these problems–using a reputable credit repair company and credit score advisor.

Credit Repair Companies: The Best Way to Rebuild Credit Score

While you can rebuild your credit yourself, it’s helpful to get some assistance from a credit repair company like The Phenix Group. These financial organizations are designed to help consumers improve their credit scores through the guidance and advice of experts who know their way around credit laws, consumer rights, and financial regulations. Using a credit repair company is one of the best ways to rebuild credit.

How a Credit Repair Company Can Rebuild Credit

How does a credit repair company work, exactly? The first part of the process is analyzing your credit report and tracking down any errors on your Experian, Equifax, or Transunion credit report. The company can then gather credit evidence and submit it to the relevant financial parties to challenge disputes. As previously mentioned, you can also do this yourself for your accounts, but having a credit repair company like The Phenix Group can help you navigate the complex bureaucracy properly. 

Aside from fixing credit issues, a credit repair business can also educate you about budgeting and finance, following credit laws, and best practices. You can learn about how to better manage your credit card balances, pay off loans, and save towards a house or retirement all while improving your credit score. They will base their credit advice on expert knowledge and years of experience, so you can be sure you get the best advice.

Rebuilding Credit Conclusion

Your credit score is an overview of your financial habits, particularly your ability and responsibility to settle your credit card and loan bills on time. Maintaining it is key to better financial options and credit, but there may be obstacles that can bring your score down. Should this happen, there are some steps you can take to rebuild your credit–one of the most convenient ways for you to rebuild credit is to hire a credit repair company like The Phenix Group. With their team of credit experts, they can help you improve your credit rating by fixing errors, negotiating with credit organizations, and guiding you toward becoming more financially responsible. With the help of credit specialists, you can work towards a good credit score.

There are numerous services available that are directed at helping consumers raise their credit scores–but what do these terms mean?

As a consumer, it is extremely important that you understand the different terms associated with improving your credit so you can choose what services suit your credit needs the best. One way to improve your credit score involves credit repair; another popular term used by companies that offer credit repair services is “credit restoration.” These two terms are often used interchangeably, so it’s important to fully understand what restoring credit means.

What Is Credit Restoration? 

Essentially, credit restoration and credit repair are the same thing. “Credit restoration” is a term that credit repair companies have adopted to describe what they do. Credit repair is the process of disputing information on a consumer’s credit report that is incorrect and then working to have those items removed from the credit history in order to boost credit scores.

It is important to note that credit restoration is not the same as credit building. Credit building does not involve disputing and removing items from a consumer’s credit report–credit building is all about helping to improve overall credit status. The credit repair or credit restoration process involves fixing mistakes made in the past, while the credit building process focuses on future decisions that help your credit score grow. 

Credit restoration and credit counseling are two different things. While credit restoration organizations charge for their services, credit counseling organizations are usually nonprofits and provide advice for free. Credit counseling helps consumers improve their financial situations with strategies such as debt management and credit education. When you are having financial difficulties, it is reassuring to know that sessions with a credit counselor are free. 

Are Credit Repair and Credit Restoration Different? 

The terms “credit repair” and “credit restoration” refer to the same process, and both involve removing inaccurate information from your credit report that could damage your credit rating. Doing this will ultimately improve your credit score. That said, the term “credit restoration” most often refers to the services offered by a company in exchange for payment. “Credit repair” can be used in the same way, but credit repair doesn’t have to cost money. If you don’t want to outsource your credit repair activities, you can also fix the errors in your credit report yourself for free. 

According to the Credit Repair Organization Act (CROA), a credit restoration company should notify its consumers of this option in writing. This makes sure that the consumer knows they can reach out to a credit bureau to dispute any accuracies without paying a dime.  

Are Credit Restoration Companies Legal? 

Yes–the right to credit repair or credit restoration is protected by federal law and is legal in all fifty states. The Fair Credit Reporting Act (FCRA) and the Credit Repair Organizations Act (CROA) regulations and guidelines apply to credit repair companies in the United States. CROA was enacted in 1996 and clearly articulates what credit repair companies are allowed to do and what they can’t do to remain compliant with federal law. As per the CROA, credit repair organizations need to notify their customers of the following rights: 

• Customers have the right to dispute their own credit report information 
• Customers can sue the credit repair company if they violate the CROA

Conclusion

Quite simply, credit restoration (also referred to as credit repair) is the process of disputing the accuracy or verifiability of information in a person’s credit report. Disputing information in your credit report with the credit reporting agencies, creditors, and collection agencies is a legal right afforded to consumers through provisions of the FCRA and other federal consumer protection laws.

Of course, the process of credit repair can be daunting, so experts at credit restoration companies in Houston, such as The Phenix Group, can do the heavy lifting for you and make the process a breeze.

These days, even some employers check the credit scores of job applicants to see if they are reliable and accountable. If there is a problem with your credit score, it might be time to look into doing a credit repair.

You might be asking yourself, how do credit repairs work? A lot of people have misconceptions about credit repair services. They assume these companies treat all clients the same and don’t pay proper attention to the details of individual situations. 

As is in any industry, there are companies that are better than others, but you can find a legitimate credit repair company if you need one. Unfortunately, most people have no idea how these companies work and base opinions on negative reviews of some unnamed credit repair company–this is why guidance from experts such as those at The Phenix Group is invaluable.

What Can You Do?

To start things off, you need to collect your credit reports and go through them carefully to catch any obvious discrepancies–let’s assume you’ve found several issues and want to fix them. You can search online, find a template complaint letter, download it, and send it to the credit bureaus hoping that will be enough to persuade them to take action in your favor. 

Still, this process is not that simple–if you send a letter to the credit bureaus with the template letter you found online, there’s little chance you’ll get any meaningful response. Thousands of form letters like yours are sent to the bureaus daily. To filter through the mountain of requests, credit bureaus use systems such as Optical Character Recognition (OCR) and Online Solution for Complete and Accurate Reporting (e-Oscar). 

When you send in a letter, OCR scans and reads the letter to see what the issues are and if it’s a template letter that has been sent before. If the system determines it is, the dispute is automatically marked as frivolous and no investigation is started. You might get an auto response saying the item was verified or your whole dispute is frivolous, and you won’t see any real answer to your request.

If your letter makes it through the OCR, it will find e-Oscar waiting. After the OCR processes the content of scanned letters and translates them into a three-digit code, it sends the letters to the e-OSCAR system. The e-Oscar system then gets in touch with creditors to handle the dispute. 

Bureaus don’t handle the actual investigation–they normally send the creditors an email asking if the information is correct or not. As you can see, the entire process limits the results that you can get when you send in form-generated requests. 

What Credit Repair Companies Will Do

Well-versed companies, on the other hand, know how the system works. They’ll craft a letter that will convince the bureaus to actually look into the matter. Even if the first dispute letter does not work, expert companies know what to do next. If you were to do this yourself, you might opt to close the account after worrying whether or not closing a credit card account hurts your credit score.

But the credit repair company will not give up and will send different types of reinvestigation requests suited to your situation. Hundreds of scenarios can evolve from a request, and good credit repair companies know how to deal with them efficiently. If you try to do this on your own, you’ll need to invest a lot of time, energy, and money to gain the necessary knowledge and adapt to negligent or inefficient credit bureaus. You have to be persistent and not be deterred by frustration.

The company you hire will conduct a rigorous analysis of different credit solutions. The staff is responsible for communicating with you and keeping you up to date about various options for improving your credit.

Conclusion

Some credit situations require complex legal actions like filing a lawsuit and attending trials. You can easily avoid this lengthy and expensive procedure by opting for a credit repair service. So, sit back and relax while a credit repair specialist, such as those at The Phenix Group, takes care of your unpleasant credit score on your behalf.

We now live in the ‘buy now, pay later’ (BNPL) world. Thus, it is essential to critically look at the services being offered by different companies. One of such offers is the PayPal credit. 

Let’s explore everything there is to PayPal credit and if it impacts your credit score. 

WHAT IS PAYPAL CREDIT ALL ABOUT?

PayPal credit, launched in 2016, is a revolving credit line that is available on millions of online stores that accept PayPal payments. Basically, you use PayPal credit to order and purchase any item online from a vendor that accepts PayPal. It is uniquely flexible and has almost the same security as PayPal. 

The usefulness of PayPal credit is that you can purchase items online and use the medium to transfer money. One demerit to PayPal credit is that you cannot use it to buy things from physical stores or malls. 

HOW DOES PAYPAL CREDIT WORK?

When you want to purchase an item from an online store, you will be redirected to the payment page that displays various payment options. If the store accepts PayPal as a payment option, you will select it. 

The fee will be deducted from your PayPal credit balance. PayPal credit allows you to pay for items below $99 with no interest on repayment for the next 6 months. If you spend more than $99, the time of grace is limited to 4 months. 

If the repayment isn’t made according to the applicable date, interest will be charged from the purchase date at the purchase annual percentage rate (APR) that applies to your account.

The valuable purchase APR is 23.99% for new accounts and will vary with the market based on the prime rate. As long as you repay within the agreed time limit, you will not pay for any interest. 

DOES PAYPAL CREDIT AFFECT CREDIT SCORE?

Like all credit lending agencies, you’d need to be registered and approved to access PayPal credit. The payment platform is partnered with Synchrony Bank, which will critically review your application for approval. After which, it will complete an audit. 

For this to be possible, a hard check will be carried out, and it will appear on your credit report. Hard checks or hard inquiries typically impact your credit score by several points. 

PayPal reports to Experian, Equifax, and TransUnion. On the off-chance you miss your repayment dates, PayPal sends that information to the credit bureaus, impacting your credit score. 

According to FICO, a hard check will cause your credit score to reduce by 5 points. If you have an impressive credit history, the deducted points will be less.

DOES APPLYING FOR PAYPAL CREDIT AFFECT CREDIT SCORE?

Before applying for a PayPal credit, there are some requirements you’re expected to have: 

• Be over 18
• A US/UK resident
• Never gone through bankruptcy
• A minimum credit score of 700 

PayPal, using its partner bank – Synchrony Bank – will vet your credit information, employment history, and income before you are approved for her credit. This often requires them to run hard checks on your credit information and impact your credit score. 

Approval for PayPal credit only takes a few moments. If your creditworthiness is impressive, you will be approved to enjoy the credit. If not, you will get a decline, and a hard inquiry will remain on your credit information.

So, if you want to apply for the credit, ensure that you meet the requirements first. You can get a free copy of your credit report from the Annual Credit Report.

IS PAYPAL CREDIT A HARD INQUIRY?

When you apply for approval for a PayPal credit, it involves a hard inquiry. This means a couple of points will be knocked off your credit score. 

According to the Terms and Conditions on the platform, you cannot open multiple credit accounts with PayPal. Every purchase will be charged to your existing account.

DOES PAYPAL CREDIT IMPROVE CREDIT SCORE?

Paypal can help improve your credit score over time, on time payments, and making sure to not have a balance over 30% of the credit limit report. 

CONCLUSION

PayPal Credit can be beneficial for paying your online bills, purchasing items, and conducting transactions online with ease. However, it involves a hard inquiry that impacts your credit score. Also, the consequences of late payments are dire, affecting your credit score. 

You have to consider all these factors before moving ahead to apply for PayPal credit. 

Here at The Phenix Group, we are concerned with helping you improve your credit score and your creditworthiness. We offer free credit consultation and design a foolproof strategy to improve your credit as part of our vision. 

Typical scenario if a family/friend asks you for a loan; however, have you ever been asked to co-sign for a loan? It raises many questions that need to be resolved if you intend to follow through with it, or not. 

Why? Your creditworthiness is a big deal these days. If you’ve got an impressive credit report and score, applying for a loan, credit card, employment, and even mortgage are seamless and with the best interest rates. The reverse is often when your credit score is far from satisfactory.

It stands to reason that anyone who has ever been asked to cosign on a loan wonders if the mere act would affect their credit score. And in our typical fashion, we do our best to discuss every aspect of cosigning concerning credit scores. 

HOW DOES COSIGNING WORK?

Let’s consider this scenario:

Your brother, Brian, needs a loan to acquire a vehicle. He has been unsuccessful in his quest because lenders do not consider his request due to his inability to meet some of the requirements to be approved. More so, his credit score is low, and some lenders offer him high-interest rates to scare him off. 

Searching for a solution to get approved, Brian begs you to cosign a loan for him. Your stellar credit score will make his request for a loan more appealing to lenders. Brian will not only have his application approved but may enjoy the best interest rates. 

Basically, as a cosigner, you’ve helped your brother to qualify for a loan that ordinarily they wouldn’t have been ablet to attain; however, it goes beyond that. 

As a cosigner, you have committed to repaying the debt owed by your brother if he doesn’t pay. If the primary borrower defaults on the payment, you must repay the loan plus additional fees accrued. It doesn’t matter if you have no intentions of paying the loan or have zero stakes in the borrowed amount, you are now obligated. 

DOES BEING A COSIGNER AFFECT YOUR CREDIT?

When you act as a cosigner for someone applying for a loan, rental agreement, or credit card, you are obligated to pay the borrowed amount if the primary borrower fails to do so. Being a cosigner doesn’t affect your credit initially, other than a small decrease due to the hard inquiry.

Some examples of how it can negatively impact your credit:

• There are missed payments. If the primary borrower is late or misses the payment, and you don’t pay, the creditor can inform the credit bureaus. Every late or missed payment will appear on your credit report, affecting your credit score. 
• A cosigned vehicle is repossessed. If you cosign for a vehicle agreement and get repossessed, it will show up in your credit report and lower your credit scores.\
• The account is forwarded to collections. If the primary borrower is late on payments, the creditor can deliver it to a collection account. 
• If you are purchasing/planning to purchase a home. It will be factored into your DTI and will decrease the amount of financing you can qualify for. 

DOES COSIGNING AFFECT YOUR ABILITY TO BORROW?

When you agree to be a cosigner, it will reflect on your credit report but will not impact your credit score unless there are late or missed payments. Being a cosigner increases your debt-to-income ratio, which lenders consider when approving loan requests. 

Having a higher debt-to-income ratio will limit the chances of your request to borrow money approved. That is until the primary borrower pays off their loans on time. 

DOES COSIGNING BUILD CREDIT?

Being a cosigner can improve your credit. However, it can only be based on the following factors: 

• If the payments are made promptly. Your payment history makes up about 35% of your entire credit score. It reveals whether payments are made on time, how often payments are missed, and how recently you missed payments. If the borrowed money is paid on time (either by the primary borrower or you), it can give your credit score a boost.
• If the new account adds to your credit mix. Your credit scores can also improve if you manage various installment loans and revolving credit.
• If the loans are paid as agreed. When loans are paid as agreed, your credit scores are better for it. Lenders will begin to see you as financially responsible and your future requests to borrow. 

Cosigning can benefit your credit, so long as the loan is managed and paid off as agreed; it is just, in our professional opinion, too risky. 

DOES COSIGNING AFFECT DEBT-TO-INCOME RATIO?

Being a cosigner to a loan means you’ve taken responsibility to repay the loan if the primary borrower fails to do so. One of the significant impacts is that it affects your debt-to-income (DTI) ratio. 

DTI ratio is your monthly debt that is divided by your monthly income. Say, for instance, you earn $7,000 monthly, and your debts for a specific month adds up to $1,500, your DTI ratio (1,500/7,000) is 0.21, which is 21%. 

If you cosign for someone, and they’re meant to pay off $700 monthly, that amount will be added to your monthly debts, taking it up to $2,200. Furthermore, this will push your DTI ratio to 0.29, which is 29%. 

Your DTI automatically increases when you agree to cosign for someone. 

CONCLUSION

Being a cosigner benefits the primary borrower, as it can help them qualify for loan requirements and boost their own credit if payments are made promptly. However, your credit could take a hit with an increased DTI ratio or lower credit scores if the borrower is behind on payments. You should properly review the pros and cons before agreeing to cosign on loan.

Here at The Phenix Group, we are dedicated to improving your credit. We offer free credit analysis, consultations, and strategies to improve and maintain good credit. Reach out to us today.

Your credit information and income play a huge role in being creditworthy and getting what you want. With an impressive credit score and an excellent income to boot, you can apply for a mortgage, get a car, open new credit card, and many other things.

We are going to dig deeper into these concepts and their relationship as it relates to obtaining a mortgage.

LENDERS ASSESS RISKS

When you meet with a lender to apply for a mortgage loan, they want to know that they can trust you to pay up. And so, they will begin to assess all the risks involved in granting your requests.

These risk assessments may involve checking your credit report and score to see if it’s impressive enough to be approved. Your monthly income is also checked out to see if you’re eligible for the mortgage loan.

If these risks are negligible, the loan process will continue to the next phase. However, if they discovered that your credit score and income are less than the requirements, they would not approve your loan. If they do, you’d typically receive an offer with a stiff interest rate attached.

HOW CREDIT PLAYS A ROLE IN GETTING A MORTGAGE

Your credit information plays a significant role in getting that mortgage loan approval. When you approach lenders to request a loan, below are the following factors they may look at in your credit information:

• Payment history. Your payment history is perhaps the most important factor lenders review. They want to ensure you have a habit of making timely repayments of all your loans. If your payment history is impressive, they see you as financially responsible. However, if they find out you have some late or missed payments, they may question you about it.
• Derogatories. They will also review your credit information to see any derogatories. Common examples of derogatories include bankruptcy, charge-offs, delinquent account that may make you look riskier to any lender.
• Recent applications. Your prospective lender also looks at your current loan, credit, or debt applications. Most of those applications result in hard inquiries, which affects your credit score. When you have too many hard inquiries, you appear risky to a lender who may decide not to approve your mortgage loan request.
• Disputes. Lenders also look at your credit report to see if there are any disputes, court rulings, or settlements. Your prospective lender may decline your request if you have a pending dispute on your credit information. Thus, it is recommended that you squash any dispute before applying for a mortgage loan.
• Credit utilization ratio. Your credit utilization ratio is another fact that lenders analyze. The ratio shows how much of your available credit you’re utilizing. For instance, if your credit card limit is $3,000 and you use $450, your credit utilization ratio will be 0.15 (which is 15%). Most lenders prefer you to have a ratio of 30% and less to be eligible for their loan.
• Being an authorized user. Another factor in your credit information lenders will be looking at is if you’re an authorized user on someone’s else credit. If you are, the activity of the primary credit will show up on your credit report. If the activity on that credit is impressive, your credit looks good to a lender and vice versa. However, some lenders may not see this as a good sign – being that you’re on someone else’s credit.

RANGE OF CREDIT SCORES FOR MORTGAGE AND IMPLICATIONS ON INTEREST RATES

Your credit score must meet their criteria to secure a mortgage loan from a lender successfully. Generally, more lenders will require you to have a minimum credit score of 620 to get approved for a mortgage loan. However, some lenders may require a higher credit score to qualify for their loans depending on loan type.

If your credit score doesn’t make you eligible, they may not approve your loan or choose to offer you a higher interest rate, resulting in increased monthly payments.

HOW INCOME PLAYS A ROLE IN GETTING A MORTGAGE

Your income also plays a notable role in securing a mortgage loan. Why? It will go a long way in repaying your loans. The Federal Housing Administration (FHA) doesn’t have specific income requirements in securing a mortgage loan.

Some lenders may review your employment record and your debt-to-income ratio in considering your request for their loans.

DEBT-TO-INCOME AND WHAT IT MEANS TO MORTGAGE LOAN AMOUNT

Your debt-to-income ratio (DTI) is vital in clinching that mortgage from a prospective lender. Your DTI reveals how much your income is directed towards paying off your monthly debts. The DTI ratio is your monthly expenses and debts divided by your monthly income.

If you make $6,500 monthly and your total debts for the month is $2,100, your DTI ratio is 0.32, which is 32%. This percentage is crucial in deciding the loan amount your lender will approve.

Different loan types require different DTI requirements. Generally speaking, you want your DTI as low as possible, but especially with FHA it needs to be below 43%.

CONCLUSION

Your credit information and income both play a massive role in getting the loan for that American Dream. The home buying process is a huge undertaking, but, ultimately, the reward is well worth the headaches.

The Phenix Group offers free credit analysis and consultations, including strategies to maintain good credit. Contact us today.

Your driver’s license gives you the privilege of driving out on the road. Whether that’s going to and from school or work or over to your friends for a movie night, a license gets you halfway there. You’ll need a car to literally take you places. It’s a hassle to have to ask for or schedule around using a car that belongs to your parents.

That’s why it’s such a big deal to own your first car. Even if you buy a used car, the expense of buying and maintaining a car is not pocket change. You need to save up to have enough money to buy a car. Using the easy savings and spending tips explained here will help get you behind the wheels in no time.

SET A SAVINGS GOAL

It’s useful to have a number in mind for any big purchase. So your first set is to decide how much you need to buy your car. The year, mileage, and condition of the car are among the things that go into the cost of a car. Do some internet shopping to find out how much a car that’s similar to what you want will go for.

If you want a newer car, keep in mind that will probably mean you’ll need a bigger down payment. Otherwise, your monthly payments could be very high. 15% is a good percentage of down payment to save up.

Other things you should think about are all the extra costs that are involved with owning a car. This includes things like maintenance (i.e. regular oil changes), car insurance, gas, and tolls. When deciding on what type of car to buy, it’s more economical to choose one that has a history of reliability and is fuel-efficient. Once you’ve decided how much a car will cost, you can move on to the next step.

FIGURE OUT HOW YOU’LL REACH THIS GOAL

Now that you know how much money you’ll need, you need to figure out how to save up the cash. You need to have money coming in to be able to put away to save towards a car. Find out if you’re parents are willing to help out.

But it’s likely that most of the money is your responsibility to save. A part-time job is probably going to be the best source of income. Most of these jobs are likely either in retail or foodservice and pay minimum wage.

Figure out what hours you can work between school and other obligations. You might only be able to work on weekends or a few hours each weekday while school is in session. Consider working full-time in the summers if you’re available to ramp up your savings.

Decide how much of your paycheck you can save towards a car. For example, if you calculated that you’ll earn roughly $400 a month, then you can put aside $250 a month. Or you could save more if you believe you can go with a little less spending cash.

Make sure that you think about when you purchase a car. If it’s a year from now, you’ll have a lot more time to save up than if you want to purchase one in six months. Depending on when you want to buy a car, you might have to become more aggressive in putting more of your paycheck towards your savings. Otherwise, it might make more sense to push it back a few months or more.

PUT THE SAVINGS IN A SEPARATE ACCOUNT

Keeping your car fund in the same account as your checking is like sitting in front of your favorite candy bar all day. Avoid the temptation of spending your money on other things. Using a little bit to go out to the movies and get snacks with your friends or dipping in to buy a new video game will eat away at your savings.

Set up a savings account to deter you from these spending habits. Treat the account like it’s off-limits from any other spending, aside from buying a car. If you earn a consistent paycheck, then each time you’re paid, set up an automatic transfer that movies that money to this savings account.

ADJUST YOUR SPENDING HABITS

While you’re saving up for a car, it’s a good idea to spend smartly. This could be simple changes like having your friends come over for a Netflix binge instead of going to the movie theater. If you’re going out to eat with friends and you never finish a meal, consider splitting one with a friend.

A big one is managing your impulse purchases. If possible, avoid them like the plague. Or you can try the 24 rule where you wait a full day before deciding whether to make the purchase. This waiting period discourages this type of spending for many people.

SPEED UP YOUR SAVINGS

Look for ways that you can put more money towards a car. Do you have a lot of old video games that you never play? Sell things that you don’t use anymore and put that money towards your savings goal.

Money that you get from birthdays, graduations, and Christmas can help reach your car goals faster. Consider trying to pick up some extra work around the neighborhood like mowing lawns, babysitting, or running errands. This money can really add up over time so it’s worth the effort to look for.

BUYING YOUR FIRST CAR

Once you’ve reached your savings goal, you have enough money to buy your first car. How exciting is that! When you head to the dealership, it’s important to remember that you should know what you can afford and what you need. Come in with some estimates on the prices of the car you want.

You might even get pre-approved for a car loan that has a low-interest rate and reasonable loan term. Remember that a longer-term may have lower monthly payments, but you’ll be paying more in interest over the life of the loan and it will take you longer to pay off the loan.

Even though you might have the funds to splurge on some extras, steer away from this temptation. Owning a car is always more expensive than you plan for so you’ll be happy to have some leftover cash to deal with unexpected costs.

Finally, don’t just take the sticker price on the car. Don’t be afraid to haggle because that price is rarely set in stone. Negotiate to get the best price and favorable financing terms.

There are many things that credit repair companies claim to be able to help you with. How many  times have you come across an ad or website claiming that a company can help you with a million different things like collections, charge-offs, late-pays, judgments, tax liens, bankruptcy, foreclosures, student loans, and more?   

Sounds nice, doesn’t it? 

However, this vague idea of “help” doesn’t necessarily address what will or can be accomplished.

So how can a credit repair company “help” with the other items they claim to be able to? Well, if they are a general dispute company, they can’t. If they are a true credit repair company that knows what they’re doing, they can probably help you out.

Let’s go over how the credit repair process works and what exactly a company can assist you with legally. 

How Does the Credit Repair Process Work?

Typically, “credit repair” done by most companies would entail an online dispute with the three major Credit Bureaus (Experian, Equifax, and Transunion) but there is more than this that can be done.

Many credit repair companies are Multi-Level Marketing (MLM) companies with individuals selling a service that utilizes “Credit Repair Software.” This allows only for online disputes with the bureaus.   

While some collections, charge-offs and payment history issues can be inaccurate and resolved with a bureau level dispute, other items such as liens and judgments, bankruptcy and IRS tax liens are not so easily addressed.

Many times, they are not actually associated with a physical credit report. To see public records, you would have to access this information from LexisNexis.  

What is LexisNexis?

LexisNexis is a separate entity that helps uncover public information that commercial organizations, government agencies, and nonprofits need to get a complete picture of an individual or business, and their assets.    

To give an example of why this information would be needed, in the homebuying process,  mortgage lenders will look at a credit report to see if individuals meet the credit score requirements for obtaining a home loan. Certain information on a credit report will alert a lender that a LexisNexis report is needed.  

LexisNexis gives lenders information about public records such as tax liens and judgments filed against a potential borrower to help them gauge that individual’s real credit risk. 

Unless these items are satisfied or at the very least on a payment plan to be satisfied, these borrowers will not be able to purchase a home.   

Inaccuracies on a LexisNexis Report

What do you do if you have a mixed file or inaccuracies on your LexisNexis report? 

An experienced credit expert with a reputable company will understand that a general bureau level dispute is not going to get you a resolution. It will take a detailed and individualized audit of your LexisNexis file as well as auditing the three major credit bureaus along with the original creditors of these accounts. 

It’s important to remember that there are no templates for these types of audits or investigation requests. They must be customized specifically to your situation.

What’s Next?

After receiving a LexisNexis report and confirming the validity of the debts through a customized audit process and investigation requests, you must have a plan of action to satisfy the liens or judgments. 

Working with a company that is familiar with LexisNexis and understands the most efficient way to deal with these types of accounts can give you peace of mind and take some of the burden off your shoulders, ensuring you are handling the problems in the best way possible.

There is nothing more intimidating than going through a process and not knowing exactly what to do; especially when it comes to your finances.  

Once you have satisfied these public record debts, you will need to be active in re-establishing your buying power and creditworthiness. 

If you have been doing all of this on your own, you may want to seek advice from a well-respected credit expert that can guide you on your way to rebuilding credit. 

If you are already working with one, they should already have a game-plan together to immediately start rebuilding. 

Use caution when hiring a company to help you re-establish your credit and buying power. Be sure to ask plenty of questions before moving forward with any company. Look up reviews, ask around, read blogs and find them on social media. 

Be sure that they are experienced with all aspects of credit, credit reporting and re-establishing buying power. This is not a process to be sold by some salesman that has no real understanding of the credit world. 

You need a true expert to help you along your way.

Having your credit limit reduced is common and can even happen if you’ve been good with credit and made all your payments on time. When a creditor lowers your credit limit, it can negatively impact your credit score. However, you need to know that there are things you can do when this happens to minimize the damage to your credit and to fix the problem.

Why Would a Credit Limit be Reduced?

So, you received a message from your credit card company notifying you that your credit limit has been lowered. It happens all the time, and while it’s frustrating because it limits your purchasing power and harms your credit score, you don’t have to sit around and accept it.

Why would a bank lower your credit limit anyway?

During times of financial crisis or recession, banks may evaluate outstanding risk, which is often unused credit. To minimize the risk to banks in uncertain economic times, the bank may choose to slash your credit limit in the event you decide to use your card more and wind up not being able to pay because of financial circumstances.

It’s important to remember that credit limits aren’t a right, nor are they guaranteed; a bank can reduce your credit limit at any time, and they don’t need to give you a reason. You did read the fine print when you signed up for your card, didn’t you?

Also keep in mind that the reduction of credit limits is usually made by an algorithm rather than a human being sitting down and assessing your financial health, payment history, and credit.

Another reason a bank or credit card company might lower your limit is because of ‘low usage.’ If you have a limit of $20,000 and you’re not using a fraction of that, the bank may alter your limit to reflect your usage pattern.

Does it Matter if Your Limit Is Lowered?

In a word: Yes. When a bank lowers your credit limit, it immediately affects your buying power and the amount you’re allowed to borrow. Also, a reduced credit limit can affect your credit score by increasing your overall credit utilization. For example, let’s say you had a limit of $20,000 and only had a balance of $5,000. You’re only using a quarter of your credit, which looks good on your credit report. However, if the bank suddenly slashes your credit limit to $10,000, now you’re at the half, which looks terrible and reflects poorly on your credit score. Credit utilization accounts for 30 percent of your credit score, so it’s easy to see how a lowered credit limit can reduce your score.

Now, it’s important to remember that while a bank can reduce your credit limit for any reason, what they can’t do is cut it and then hit you with an over-the-limit fee if you’re currently above your new limit. The bank is required by law to give you at least 45 days from the time they notify you about your lowered threshold before assessing any fees.

What to do if Your Limit is Lowered

Most people assume there’s nothing they can do when they get notified that their credit limit has been lowered, but that’s not the case. The first thing you can do is to contact your creditor and ask to speak to a representative. Remember, most times the limit was lowered by a computer algorithm rather than a person, so talking to a live rep is an excellent way to get answers as to why this happened, whether it was an error, and if your old limit can be restored. Remember to be polite when you call, and it never hurts to mention how long you’ve been a customer and never missed a payment if that’s the case.

If you’re new lowered limit has put your credit utilization in a bind, consider transferring the balance to a card with a higher limit. If you’ve been in the market for a new card, now is the time to go on the hunt to find one with zero percent interest for balance transfers. Just keep in mind that opening new lines of credit can cause your credit score to take a hit too.

What you don’t want to do is to close out your old card to spite the bank because if you have a long credit history there, that’s going to reflect negatively on your credit score if you wipe out years of on-time payments. Also, closing out that account lowers the available credit you have to work with, so transfer the balance, and suck it up. If you maintain good relations with that bank and continue to make on-time payments, there’s a good chance you can get your limit raised in the future if needed.

It’s also essential you monitor your credit reports when a limit gets lowered to see what kind of a hit you take. If you score does drop, you can take the necessary steps to build it back up such as using your card for small purchases like Netflix or coffee and paying it off every month to keep the account active and in good standing.

Finally, paying off your balance quickly on the card that got hit with the lower limit goes a long way to bringing down your credit utilization and pointing your credit score in the right direction.

Having your credit limit lowered isn’t a reflection on you or your credit, so don’t take it personally. These things happen to everyone; you have to be smart about how to handle it and roll with it until you can get yourself straightened around.

Make your payments on time and pay down your balances to ensure your credit score moves up. And keep in good standing with your bank that lowered your rating in the hopes it can be restored in the future.

While you can search the web for information on how to resolve negative marks on your own, a credit repair attorney in Miami can give you the individualized support you need. The Financial Industry Regulatory Authority reported that only 57% of Americans are financially literate, so don’t be frustrated if you are having a hard time figuring out how to resolve a credit report issue–such as payday loans going to collections–or how to stop an account from going to collections. 

How to Get Negative Items Off Your Credit Report 

The truth is, any outstanding debt or bills owed can go to collections and negatively impact your credit report and score. Here are some tactics for resolving this type of problem:

Submit a Dispute for Inaccurate or Outdated Items

First, get a free copy of your credit report. You can access this through AnnualCreditReport.com, which is the only free credit report website endorsed and authorized by the U.S. federal government. Get reports from the three major credit bureaus (TransUnion, Equifax, and Experian), and check all of these reports in case they contain different information from lenders or creditors.

Check for any inaccuracies, such as falsely labeled late payments, closed accounts listed as open, items from more than ten years ago, and other false data. You have the legal right to dispute any inaccurate information and submit a request to the credit bureau for it to be corrected. 

After you receive confirmation that they received your dispute claim, they have thirty days to make a decision. If they find your dispute is supported by the evidence you’ve provided, they are obligated to remove the disputed items.

Send a Request for a Goodwill Deletion

This is one of two options you can take when the item you want to be removed is correctly reported on your credit report. You can make a “goodwill deletion” request directly to the creditor if you are in good standing with them. This can be a bit tricky, but it’s not impossible. If you have been paying your bills on time and have a history of paying off your debt, you may petition the creditor to forgive certain negative items.

This is usually more successful for small one-off items, such as a single missed payment. This strategy probably won’t work if you have a history of late payments or having accounts sent to collections agencies.

A request for a goodwill deletion is a letter that details your history of on-time payments before the incident, an explanation of why you were not able to pay the account on time, and that you are taking responsibility for what happened.

Negotiate With Creditors Via Pay-for-Delete

Like a goodwill deletion, a pay-for-delete request can be made when all the items you want to be removed are correctly reported on the credit report. Of course, you will need to submit a letter to the collection agency or creditor. However, in this letter, you will notify them that you are prepared to pay off the account (either in full or in part), as long as the information is retracted from your credit report.

Keep in mind that this approach is a negotiation–creditors and collections agencies are not obligated to agree to your proposal or even respond. Because collection agencies want to collect as much of the debt back as possible, they may be incentivized to remove a negative entry. They may also opt not to delete the entry but instead mark it as paid (after you have paid it) on your report.

In Summary

You might feel ashamed or frustrated if you have a negative item on your credit report, but you are not alone. There could be many reasons why it is showing on your credit history, but there are also many ways to rectify the situation. Reach out to The Phenix Group if you want help getting negative information removed from your credit report–we’re ready to help!

Working with The Phenix Group, a reliable Miami credit repair company, is a great way to improve your credit status.

When it comes to your credit, you want to be thorough and accurate. Enlisting the help of professionals to navigate the confusing world of credit can be very helpful in understanding credit reports and developing plans to repair credit. They can help answer questions such as: Does tax debt affect your credit score? Do payday loans go to collections if left unpaid? How can I check my credit report for inaccuracies and get them removed? 

Credit repair groups can help you locate negative items that can be removed from your report. This process can be lengthy and requires clearly written letters, which these professionals can take care of. When reviewing your credit report, you want to get reports from all three credit bureaus—Equifax, Experian, and TransUnion. With so much documentation, you definitely want a professional in your corner. 

Ways to Deal With Negative Marks on Your Credit Reports

Identify Inaccurate Items

Inaccurate information can vary from report to report. One report may have an outstanding item that resulted from identity fraud or theft; another could have mixed borrower files and include data about someone with your same name or a similar name who applied for credit. There could also be errors caused by a bank, debt collector, or another agency that committed a clerical error or had data issues that negatively impacted your credit report.

Credit reports are lengthy, and it can be difficult to navigate them on your own, especially when looking for inaccuracies. Credit repair companies help you comb through seven years of credit history to find inaccuracies to submit for dispute. Once a dispute claim is submitted, credit bureaus have thirty days to make a decision about it and remove the items from your reports if they are found to be inaccurate.

Send a Goodwill Letter

A goodwill letter (or goodwill adjustment) is when you submit a request to a credit bureau asking them to remove accurate, negative items from your report based on your otherwise positive credit history. This works if you have a longstanding history of paying your bills and loans on time but perhaps made a one-time late payment. It is important to remember that a goodwill letter is not a dispute–a dispute is sent to all three credit bureaus informing them that there is inaccurate information on your credit report. A goodwill letter acknowledges that the information is accurate, but you are asking for forgiveness. 

Because it is based on goodwill, a creditor is not obligated to grant or acknowledge your request for a negative item to be removed. Another option is to pay the outstanding debt in full and request the creditors list it as “paid in full,” which is viewed favorably by lenders. It will still show in a credit report and conveys that you repay your debts.

Ask for Outdated Information to Be Deleted

The statute of limitations for credit information is seven years. When you go through your reports looking for inaccuracies, you may find accurate but outdated information. Any information on a credit report that exceeds seven years is considered obsolete. You can write a letter, or include it in an inaccurate item letter, providing evidence to the credit bureau that this item is outdated and should be removed from your report.

Just as when asking that inaccurate items be removed from your credit history, a credit bureau has thirty days to investigate and make a decision on your dispute. If they agree to the request, they will remove the outdated information within five business days after informing you of their decision. Otherwise, the item will remain on the report. In most cases, outdated items are removed due to the statute of limitations.

If the prospect of asking to have negative credit items removed from your report is overwhelming, don’t hesitate to reach out to the experienced professionals at The Phenix Group. We’re ready to help make sure you can get your credit back on track today!

So, if you’re experiencing financial problems, your lender might deny your loan application, even after receiving your pre-approval letter. If these problems are related to a drop in your credit score, a reliable Miami, Florida credit repair company like The Phenix Group can help.

What Does ‘Pre-Approval’ Mean?

In credit finance, pre-approval refers to the preliminary evaluation and approval of a potential debtor by the creditor to determine their eligibility for a loan. A pre-approval letter is generated by the lender in collaboration with a credit bureau, which conducts the pre-approval evaluation through investigations. A pre-approval analysis helps the lender to estimate the appropriate interest rate offer for you as well as the maximum principal amount.

This scrutiny is important because it reveals whether you have had a debt collection report on your credit score. This report can have a major effect on your credit score, which may prevent lenders from giving you loans, which is why you have to work harder to have any collection reports removed from your credit score.

Reasons Your Loan May Be Denied After Pre-approval

Increase In Debt

If you add more debt to your credit profile after receiving a pre-approval letter, you increase the risk of having your loan application denied because of a higher debt-to-income (DTI) ratio. DTI refers to the amount of valid debt you have compared to your total income. Creditors prefer to lend money to borrowers with low DTI because they’re more likely to repay their loans promptly.

However, if your DTI is too high or close to the lending limit, your loan is likely to be denied after pre-approval, especially if you add more debt after being pre-approved. So, once you receive your pre-approval letter, avoid additional debts until your loan application has been accepted.

Change of Employment

Most lenders consider a sudden change of employment by a borrower as a significant red flag because it could mean a drop in income. For instance, if you change from full-time employment to an hourly job after getting the pre-approval letter, your lender may deny your loan application.

The chances of having your loan application denied after pre-approval are even higher if you change from a salaried job to a commission-based one because your paychecks will be unpredictable. The same is likely to happen if you change from a high-paying position to a lower-paying one.

Adjusted Loan Requirements or Guidelines

Most lenders keep updating their loan requirements and guidelines, which could affect your eligibility after pre-approval. If these changes are made between when you receive your pre-approval letter and when the underwriter decides whether your application should be approved, your lender may decline your application if you don’t meet the new requirements.  

Find a reputable credit repair company like The Phenix Group to help you get the effects of collections out of your credit score as quickly as possible–we know the most effective steps to take to get a creditor to remove a collection from your credit score immediately.

Your credit repair company should also help you be able to handle collections agencies by informing you about your rights and the available legal actions that you can take against the agency when they violate the Fair Debt Collection Practices Act (FDCPA). Wondering who Dynamic Recovery Solutions collects for? The experts at The Phenix Group can answer this and any other debt-related concerns you may have.

Saving money isn’t as hard as you might think. These ten life hacks will make saving money just as easy as tying your shoes. Just making small lifestyle changes can snowball into saving hundreds, or even thousands of dollars each year. Wouldn’t you want that extra money in your bank account? Read on to learn about ten life hacks that’ll save some extra dough.

1. Brew Your Coffee at Home

Kicking your Starbucks habit can save you loads of money in the long run. Depending on where you get your daily caffeine fix, you’re probably spending anywhere between $1 to $5 dollars on your precious cup of coffee. If you brew it at home, you’d be spending somewhere between 16 and 18 cents. The next time that you’re in need of a boost, look no further than your home kitchen.

  2. Borrow from the Library

Libraries offer a ton of different services and currently, they’re most technologically efficient than ever. Instead of buying books from a bookstore or an online retailer, try borrowing the next bestseller from the library. You have thousands of books at your disposal and you don’t have to worry that you’re wasting money if you don’t finish them. You can also borrow movies and magazines from the library as well. If you’re looking for some in-home entertainment, make the library your first stop.

 3. Buy from the Thrift Store

        If you’re looking to buy clothing, small appliances, or even furniture, try looking at the thrift store first. Your first thought might be to run to a department store or the mall, but if you don’t check out the thrift store first, you could be missing out on the deal of your life at the thrift store. There’s a wide variety of pre-loved items that are available at thrift stores near you. You’ll surely be surprised at the excellent quality that you’re able to find at thrift stores. You can’t find a better deal! Also, since you’re getting a bargain on the item that you’re buying, you might be able to turn it into a DIY project in order to make it perfect for you. There are so many opportunities available when you’re buying from the thrift store.

  4. Carpool with Friends or Coworkers

        If you have a consistent commute to work or even an event, try to work out a carpooling schedule with your friends or coworkers. Even if you can only carpool one or two days out of the week it’ll help you both save gas and wear and tear on your car over the coming years. You both can get to know each other, and you may be able to make a new friend in the process. Also, you both are helping save the environment. It’s definitely a win-win situation.

  5. Buy in Bulk

        Items like toilet paper, deodorant, or toothbrushes are things that you’re going to need forever. So, why not buy these items in bulk and save about 20% in the process? Also, if you’re looking to buy food in bulk as well, be sure it’s non-perishable. Wasting food is terrible, and it throwing away money instead of saving it. Who wants that?

  6. Buy Neutral Clothing

Buying clothing items in neutral colors (white, black, grey, brown, etc.) will allow you to better use your wardrobe. All of your clothing items will pair with each other well. If you’re looking to add a pop of color, try out lower-cost accessories like jewelry and scarves. This’ll give the appearance of having a larger wardrobe without having to dish out tons of money for endless pieces of clothing.

 7. Buy Generic

        Whether it’s groceries, prescriptions, or toiletries, using the generic brand will always be cheaper. Most of the time they’re using the same ingredients anyway, so it’s an easy decision to make. You might think that the brand name tastes or works better, but give the generic a week in your home before you swear it off. You might end up finding your next favorite ketchup or body wash.

 8. Use Coupons

Using coupons can help you save a ton no matter where you go. For groceries, look through your Sunday paper and keep a sharp eye on the deals that are happening in your neck of the woods. You can also look at sites such as Groupon and RetailMeNot to look for coupon codes and offers that are happening with the stores that you’re using every day. There are usually coupons available for most shops that you frequently go to, you just have to take time to research them.

 9. Start a Piggy Bank

Take a note from your younger self and store away your change in a piggy bank or change jar. Every day, when you come back home, take the time to store away your loose change. The money definitely adds up and it sure to come in handy. At the end of the year, you might even have enough to pay an extra bill.

10. Drink Water

This is a simple change to incorporate your lifestyle, but it’s saving you money every time you take a gulp. Whenever you get thirsty, take a drink of water instead of grabbing some soda or juice. It’s also better for your health as well, which is saving you money in the long run. If your tap water is less than savory, try to invest in a water filter. They’re easy to install and can be equipped straight to your faucet so you can have beautifully filtered water no matter what. Be sure to keep an ice cold bottle of water with you wherever you go so you can always have a refreshing drink to enjoy.

        Each of these life hacks can help you add a couple of extra bucks to your monthly budget. You’ll be able to save more money and use that money in a variety of different ways. Whether you’re trying to plan a much-needed vacation or just looking to pay your bills, utilizing these life hacks will help you save money for whatever adventures life will take you on. Be sure to incorporate one (or all!) of these life hacks into your daily lifestyle and your bank account will be better because of it.

The National Consumer Assistance Plan (NCAP) has made it difficult for credit bureaus to add judgments on your credit history, but it’s still possible to see a civil judgment lower your credit score. If so, removing the judgment from your credit report shouldn’t be an enormous problem. Fast credit repair services can get it done quickly and with zero headache. 

Three Ways to Remove a Judgment from Your Credit Report

Regardless of why you see a judgment on your credit report, you should try removing it as soon as possible. Here are some effective strategies that can be helpful:

1. Confirm the Court Ruling

According to the Fair Credit Reporting Act, you must validate debt from civil judgments, just like with consumer credit. To validate your debt, you must write to the court that made a ruling against you. Request that the court authenticates and proves the judgment is yours and accurate–if the court doesn’t respond with valid information, including the filing date, your correct Social Security number, your correct address, and your date of birth, under the Fair Credit Reporting Act, you can dispute your debt as inaccurate and get it removed from your credit report. It should be noted that getting a judgment removed mayincrease your credit score, but if you’re wondering if credit card scores can be manipulated, the answer is not so much about manipulation as it is influence.

Because the National Consumer Assistance Plan now bars this type of private information from appearing on credit reports to begin with, the civil judgment will automatically be removed as it’s considered invalid by default. 

2. Appeal for a Vacated Court Judgment

If you follow the news, you know that single court judgments are rarely the final word on legal matters. Thus, you can appeal the court judgment and other resulting court orders.

If, for example, the person who sued didn’t follow the correct legal steps, your judgment might be overturned. Or, if your state’s statute of limitations on debt doesn’t predate your debt, then your ruling may also be overturned. After this, you may legally get the court judgment removed from your credit report.

If you’re wondering how long a credit dispute takes, with a proper credit repair agency, it can take a matter of days or weeks, as opposed to months if you were to try to do all this yourself. 

3. Pay off the Debt You Owe

A simple way to remove a court judgment from your credit history is to pay off your debt if you can afford it, assuming it’s yours and valid, and can’t be removed from your credit report via the validation process. However, only pay off the debt if it’s yours and the lawsuit was handled properly, meaning you may not lodge an appeal successfully. Unfortunately, paying off debts doesn’t always result in credit bureaus removing the court judgment from your credit history. 

So, if possible, make your payments contingent upon the creditor removing the debt from your credit history. Have this agreement in writing, and don’t give the collection agency or creditor your credit card number or bank account details. You don’t have to pay the entire debt–instead, you and your creditor can negotiate your balance down. This approach is helpful if the money is going to a collection agency. 

Final Thoughts

A judgment lingering on your credit history is problematic. For example, it may mean you can’t secure a loan or mortgage in your name. Luckily, there are steps you can take to get a civil judgment removed from your credit history. All that paperwork is quite the hassle, and a qualified credit repair company like The Phenix Group can make the process a cinch.

Also read more about can credit scores be manipulated?

Unlike many other forms of debt, defaulting on your auto loan often puts you at risk of repossession. When faced with repossession, many people start to panic. The idea of losing your vehicle and subsequently ruining your credit seems daunting at best and terrifying at worst. It’s reasonable to worry about the long-term impact repossession can have on your credit health.

However, if you’re facing financial hardship, it’s reasonable to be worried about how a repossession may negatively impact your credit score. Below, we’ve answered some commonly asked questions about repossession and its long-term impacts on your overall credit health.

HOW LONG DOES A REPOSSESSION STAY ON YOUR CREDIT REPORT?

One of the most common questions people ask when facing potential repossession is how long it stays on your credit report. Unfortunately, repossessions often remain on your credit report for seven years. Additionally, reclaiming your vehicle can also affect how your creditor reports the repossession. Therefore, it’s vital to discuss the reporting policies with your creditor to ensure accurate information.

HOW MANY POINTS DOES A REPOSSESSION DROP YOUR CREDIT SCORE?

Multiple factors determine how a repossession will impact your credit score. For instance, the length of your credit history, percentage of on-time payments previously, and other credit events can have an impact on how repossession affects your score. On average, a repossession tends to drop your credit score by about 100 points. However, this drop in your score can range anywhere from 50 points to 150 points based on your current credit history.

DOES A REPO RUIN YOUR CREDIT?

One of the biggest concerns for many individuals is the concern that their credit will be “ruined” due to repossession. As we previously mentioned, a repossession can significantly impact your credit when it happens. However, responsible borrowing after a repossession and careful work to rebuild a positive credit history has shown that individuals who have a repossession in their credit history can often bounce back over time.

It’s also important to keep in mind that repossession can be removed from your credit report in various ways or can be reported differently based on the actions you take. For instance, if your lender repossesses your vehicle and you reclaim it by paying the amount owed to the lender, they likely will not report your vehicle to the credit bureaus as a repossession.

Additionally, some lenders will work with you on repossessions and update your report once you meet agreed-upon terms. Therefore, having your vehicle repoed doesn’t permanently ruin your credit, and there are ways to mitigate the long-term consequences.

HOW MANY POINTS WILL MY CREDIT SCORE INCREASE ONCE A REPO IS REMOVED?

In most cases, having a repo removed from your credit report will help your score increase. However, it’s hard to pinpoint precisely how much your score will improve once your creditor removes the repossession from your record. Several factors can determine how heavily the removal impacts your score. For instance, the length of time the repo remained on your report can affect your score. On average, however, many individuals see their score improve anywhere from 75 to 150 points once they no longer have the repossession on their report.

DOES A VOLUNTARY REPOSSESSION AFFECT MY CREDIT DIFFERENTLY THAN AN INVOLUNTARY REPOSSESSION?

Both voluntary and involuntary repossessions can drop your credit score. In the case of involuntary repossession, your creditor decides to take the vehicle once you’ve fallen behind on payments. Voluntary repossession typically indicates that you returned the car to the dealership or creditor when you could no longer make payments toward your outstanding loan balance. Creditors often lead borrowers to believe that voluntary repossession is better than involuntary. However, in most cases, voluntary repossession and involuntary repossession have similar impacts on your overall credit score.

Both types of repossessions are going to impact your credit score negatively. Some financial experts suggest that for individuals looking to get a new vehicle soon, voluntary repossession, instead of involuntary repossession, may provide some positive benefits and improve your chances of securing another auto loan. However, when looking at the overall impact on your credit score, you likely wouldn’t see a significant difference when comparing decreases caused by both.

HOW CAN YOU REMOVE A REPOSSESSION FROM YOUR CREDIT REPORT?

You can remove repossession from your credit report in several different ways. The first, and for many, most common way to get repossession removed from your credit report is to wait it out. In most cases, a repossession falls off your credit report in seven years. If you have time to wait, this is the most reliable way to get it removed. However, other solutions can resolve this issue more quickly.

Check items such as the date, balance, payment terms, account numbers, and other information for accuracy. You can dispute any incorrect information with the bureaus directly. For instance, if you see that the repossession on your credit report contains erroneous information, you can potentially fight it to have it removed from your credit file. However, you will need to provide relevant information in your dispute, proving the inaccurate information on your credit report.

FINAL THOUGHTS

Ultimately, a repossessed vehicle often has a significant negative impact on your credit score. However, a carefully constructed game plan can help you recover in a reasonable timeframe. Additionally, many lenders allow you to reclaim your vehicle from repossession by paying the current amount due. Regularly reviewing your credit history for inaccuracies can also help you find new ways to dispute and remove outdated or incorrect repossessions from your credit score.

Whether you’re applying for a loan or an apartment, at some point, the state of your credit will likely matter. Before entering into a monetary arrangement with a customer, a lot of businesses and business owners will check your credit.

As important as your credit is, a lot of people know very little about credit and how it works. That’s why we’re going to break down a few of the most common questions regarding credit, credit scores, and why they’re checked. 

What is a Credit Score?

Your credit score is an average score based on your credit history. This score is affected by several factors, the biggest of which is your payment history. Your payment history is basically a record of your payments that takes into account whether or not they were made on time. 

What is a Credit Check?

Simply put, a credit check is a report to understand your financial behavior. It can show if you paid back your credit on time, how much credit you currently have and how well you are managing it. 

A company doesn’t need your consent to do this, but they must have a legitimate reason for looking it up. 

Who Can Check My Credit?

Anyone from banks, credit providers to landlords, and even employers can run a credit check. However, to do so they’ll need the right information. To check someone’s credit you’ll need their social security number, address, and employment information. This is why landlords will often ask for this type of information on the rental application. 

Why Do Landlords Run Credit Checks?

When it comes to renting to a potential tenant, landlords want to make sure the applicant is dependable. Late payments and broken leases can be a real inconvenience for landlords, so they typically avoid situations like as much as they can by choosing less “risky” tenants. 

To avoid entering into a contract with someone that regularly submits late payments, Landlords will often run a credit check. While your credit is mostly determined by your payment habits, several other factors can affect your credit score.

What’s Included in a Credit Check?

A lot more than your credit history goes into a credit check. In addition to credit-related payments, a credit check will provide your potential landlord with a history of your finances, criminal convictions, and lawsuits. 

Additionally:

A credit check will provide your potential landlord with information regarding your financial stability. They can check your employment status as well as your income during the screening process. 

A credit check will also provide landlords with information regarding their applicant’s debt. However, debt doesn’t usually play as big a part in the landlord’s final decision. Typically, they’re more interested in your income and your credit. 

What Do Landlords Look For in a Credit Check?

Different landlords have different standards when it comes to who they’ll sign a lease with. In some cases, landlords won’t even run credit checks, although most choose to do so. 

Landlords have the right to refuse an application due to criminal convictions. However, according to the law, they aren’t supposed to let an arrest affect their decision unless that arrest was followed by a conviction.

When it comes to a credit check, the two biggest factors for a landlord are your income and your credit history. Landlords typically want to make sure you make enough money to pay them. Furthermore, they want to make sure you have a habit of paying your bills on time. 

What Are Some Dealbreakers for Landlords?

Again, different landlords have different standards when it comes to what they would consider a dealbreaker. 

Most landlords want to rent to tenants that have a credit score of 620 or higher. A credit score lower than 620 might be a dealbreaker for some landlords. Similarly, past evictions are another red flag that landlords will often take into consideration. 

A credit check doesn’t provide your landlord with information regarding past evictions. However, they can find out about evictions through other means. While a single eviction might not be a dealbreaker for a landlord, it’s still a red flag that will likely affect their decision. 

Another potential dealbreaker for landlords is the applicant’s income. Your potential landlord wants to make sure that your income is substantial enough to cover the cost of your rent. 

How Do I Check My Credit Score?

Checking your credit is particularly easy. All you’ll need is your social security number, address, and employment information. However, you should be very careful when it comes to giving your social security number. Be sure to only check your credit score with trusted platforms.

One of the most commonly used and trusted credit check sites is Experian. To check your credit, just click the link! It’ll redirect you to Experian’s online credit check. 

A Good Credit Score is the Key to Financial Freedom

At the end of the day, having good credit mostly comes down to paying your bills and rent on time. There are a few other ways to increase your credit score. However, as long as you live within your means and spend responsibly, your credit score will usually be okay. 

If you’re worried about what a potential landlord might find on your credit report, look first. You’re entitled to a free annual credit report. Plus, there are several ways to check your credit for free online. 

You can’t control how a landlord or property manager might interpret your credit report, but if you know what’s on it, you’ll be more prepared to answer any questions they might have.

Hard times do happen. With constant economic changes, we see people finding it difficult to pay bills, running into debts. And if you’re in debt, searching for a concrete solution to get out quicker lingers on your mind.

In your search for a solution, you may have already heard about debt consolidation. But before moving forward with this decision, it’s essential to know how it works and what impact it has on your credit score.

Get all the details right here.

WHAT IS DEBT CONSOLIDATION?

Debt consolidation, often incorrectly referred to as Debt Settlement (it’s not the same), is the process of rolling multiple, high-interest debts into a single monthly payment and applying for a personal loan to pay them off.

Most people apply for debt consolidation through their credit unions, credit card companies, or banks if the working relationship is excellent. However, if these institutions do not approve such loans, you should explore lenders and private mortgage agencies.

HOW DOES DEBT CONSOLIDATION AFFECT YOUR CREDIT SCORE?

Debt consolidation may affect your credit score, both positively and negatively. It is crucial to put these factors under consideration before moving forward with your plan.

RESULT IN HARD INQUIRIES

When you apply for a loan to pay off your debts, your lender issues a hard inquiry on your credit. Hard inquiries are carried out to ascertain your creditworthiness – the tendency to repay the loan if approved. Hard inquiries impact your credit score, reducing it by 5 points.

Now, if you’re applying for debt consolidation from multiple lenders, they may issue hard inquiries on your credit information. But do not fret. These hard inquiries will not have a compounding effect on your credit score as long as they’re within a period of 14 to 45 days. Thus, these inquiries will be roped into one when your credit bureaus calculate your credit score.

Note that hard inquiries aren’t necessary when you apply for a loan. Take a look at a lender’s website or brochure to see if you meet the requirement for a loan without hard inquiry checks. Some lenders require a soft inquiry (or soft pull) which doesn’t impact your credit score.

YOUR CREDIT UTILIZATION WILL EXPERIENCE CHANGES

Financial institutions and lenders also take a keen interest in your credit utilization ratio. This ratio is the percentage of available credit you make use of at any given time and typically makes up about 30% of your FICO score.

Now, if you have a credit utilization ratio greater than 10% after debt consolidation, your credit score will lose a few points. If you choose to pay the balance with a personal loan, the percentage will drop, and your credit score will improve.

YOU MAY BE TEMPTED TO CLOSE YOUR ACCOUNTS

When people go through a debt consolidation process, they are predisposed to close their old accounts after transferring a balance. If you’re thinking about it, hold that thought. The average age of all your accounts makes up about 15% of your credit score. Thus, older accounts make up better credit scores.

Opening a new credit account and closing your old accounts could lower their average age and increase the credit utilization ratio. These actions will significantly reduce your credit score. We recommend keeping your old accounts (even with zero balances) after a debt consolidation for the sake of your credit report.

IT IMPROVES YOUR PAYMENT HISTORY

If you maintain a record of paying off your debts promptly, your credit score will not be affected. For a fact, it will improve in the long run. Your payment history makes up about 35% of your credit score.

Thus, if you consolidate your debts into a single loan to pay off at lower interest rates, your credit score will face significant improvements.

PROS AND CONS OF DEBT CONSOLIDATION

Debt consolidation comes with several merits and demerits. Let’s check them out:

Pros:

• Streamlines your finances. When you combine multiple debts into a single loan makes it easier to pay them off. You don’t have to worry about numerous payments or interest rates. It also reduces the chances of late payments.
• Lower monthly payments. After consolidating your debts, you will experience lower debt repayments, as your payment plan is spread out over a period.
• Have a fixed repayment schedule. When you consolidate your debts for a loan, you know how much you’ve meant to pay each month and when your last payment will be. You won’t have to worry about random increments in your repayments.
• Boost your credit score. Debt consolidation results in hard inquiries that will impact your credit score. However, when you pay off your loan promptly, it will improve your credit scores. Your payment history is 35% of your credit score, so repaying on time will improve it in the long run.

Cons:

• Added costs. Some debt consolidation loans come with extra expenses such as bank transfer fees, closing costs, origination fees, and annual fees.
• Potential increase in interest rates. If your credit score isn’t sufficient to nail competitive rates of lenders, you may be stuck repaying your debts at a higher rate.
• You risk missing payments. When you miss payments on a debt consolidation loan, your credit score takes a massive hit. You also risk paying extra fees.
• It won’t solve bad financial habits. Even if you consolidate your debts, it will not solve the inherent financial behavior that got you there in the first place. Thus, it is essential to practice reasonable financial behavior to limit unpaid debts.

HOW TO CONSOLIDATE YOUR CREDIT CARDS WITHOUT HURTING YOUR CREDIT SCORE

If you’re looking to consolidate your debts without impacting your credit score, try out these alternatives:

REACH OUT TO A NONPROFIT CREDIT COUNSEL AGENCY

You can sign up for a debt management plan from a nonprofit credit counseling agency. They can help work plans to alleviate your challenges, budget your finances, and work with your lenders to set up payments. Instead of paying your different lenders, you’d only have to make a monthly payment to the agency, which then pays your lenders.

CREDIT CARD BALANCE TRANSFER

Another way you can go about it is to transfer all your current credit balance to a new credit card with zero annual percentage rate (APR). It makes it easier to repay all balances without incurring any interest.

You may likely pay a balance transfer fee of up to 5%, but it’s way better than taking a personal loan.

BUDGET OVERHAUL

You can still pay the debts on your own if you create a feasible budget. Cut down unnecessary expenses and channel the funds into your repayment plans.

TAKE A 401(K) LOAN

Taking a 401(k) loan does not appear on your credit report. Thus, these loans do not impact your credit scores.

TIPS ON HOW TO AVOID HURTING YOUR CREDIT SCORE WITH A CONSOLIDATED PLAN

While you’re repaying a loan for a consolidated debt, there are several tips you should practice to avoid tanking your credit scores. They include:

AVOID TAKING ANOTHER LOAN DURING THIS TIME

You should not apply for another loan while repaying a consolidated loan to a lender. It would involve a hard inquiry which would impact your credit score and reduce your creditworthiness.

AVOID CLOSING YOUR OLDER CREDIT ACCOUNTS

Do not close your older accounts, as the average age of your accounts makes up about 15% of your credit score.

MAINTAIN GREAT FINANCIAL HABIT

Maintaining excellent financial behavior will ensure your loan is timely repaid for your consolidated debts.

FINAL THOUGHTS ABOUT THE PROS AND CONS OF CONSOLIDATING LOANS

Debt consolidation goes a long way in ensuring you pay off your debts in a quicker manner. You don’t have to bother about various interest rates and payment dates. It also helps you budget better before payment day and boosts your credit scores in the long run.

However, debt consolidations come with hard inquiries, extra fees to pay, bad credit scores if you miss payments, and higher interest rates if you’ve already got a bad credit score. It is recommended that you take crucial steps to pay off your loan promptly if you choose to go with it. Is your debt behind you and now looking to improve your credit? Get a free consultation from The Phenix Group.

Whether you’re just learning the basics of cultivating your credit score or are a credit health expert, you’ve likely heard of the three credit bureaus: Equifax, Transunion, and Experian. If you’re looking to improve your credit score, take out a loan, or finance a large purchase, you’ll need to have a decent understanding of these three reporting agencies to get started.

However, there’s a lot of information out there, and diving in can seem a little overwhelming, especially considering a lot of the information available on credit bureaus is full of legal and financial jargon that is difficult for most people to understand. Developing an understanding of each bureau has significant benefits, though. So, to help you take control of your credit, we’ve gathered all the information you need to know about the three primary credit bureaus below.

WHAT IS THE PURPOSE OF CREDIT BUREAUS?

Credit bureaus – also referred to as credit reporting agencies – are companies that collect specific data regarding how you manage your finances throughout your life. Most importantly, these organizations analyze your income, timeliness of payments, and borrowing history. They then use this information to calculate your credit score, which many lenders use when deciding whether to offer you a loan.

Ultimately, all three agencies compete for business from creditors. These companies exist to provide creditors with guidance when making a lending decision. They house your financial history, as it relates to credit, and they, in turn, provide creditors with that history as well as your credit score. This allows the creditor to determine the potential risk of defaulting on your loan.

WHO ARE THE THREE CREDIT BUREAUS?

Now that you know why credit reporting agencies exist, it’s important to understand who the primary three credit bureaus are, the information they gather about you, and how they calculate your credit score.

EQUIFAX

Equifax is one of the primary credit reporting agencies that many lenders pull information from to make lending decisions. Typically speaking, Equifax uses the VantageScore credit reporting model to determine your overall credit score. The agency utilizes a variety of identity monitoring and protection software to analyze your financial history accurately. The company developed from the Retail Credit Company, established in 1899, to Equifax in 1975.

TRANSUNION

Transunion is another primary credit bureau that gathers personal and financial data to provide potential creditors with a picture of your overall financial health. One of their core values is establishing trust for both lenders and consumers through fair, safe, and accurate credit reporting, which they call Information for Good.

EXPERIAN

The final major credit reporting agency, Experian, utilizes information from multiple sources and across many reports. Unlike the other two bureaus we’ve discussed, Experian uses the FICO score model to determine your credit score. They view themselves as a consumers’ bureau and strive to ensure consumers have access to the resources they need for financial health.

WHAT IS THE DIFFERENCE BETWEEN THE CREDIT AGENCIES?

There are several differences between the three credit agencies. First, it’s important to remember that each agency competes with the other to earn business. Therefore, they use different models to assess your borrowing history and analyze risks. Because each bureau competes with the other, some creditors may not report financial information to all three agencies. Contrary to popular belief, these credit agencies are not government entities and do in fact charge the creditors to report your information to them. Therefore, your credit report can look different on all three bureaus, and no one is “better” than the other.

WHERE DO THE CREDIT BUREAUS GET THEIR DATA?

The three main credit agencies receive data from various sources. In most cases, creditors report your information to the bureaus, which serves as the primary source for the information that appears on your report. Any information you provide a potential lender, such as your name, address, yearly income, occupation, and monthly bills, may go to one or all of the bureaus.

Additionally, the agencies may receive information that appears on your report from public records. If you apply for public assistance, update your driver’s license, voter registration, or file your taxes, these agencies may use the information on those reports. Additionally, any public records on file with local courthouses, such as evictions, debt settlements, and bankruptcies, may impact your credit report.

WHY ARE MY CREDIT SCORES DIFFERENT AT EACH BUREAU?

Most likely, your credit score is at least a little different for each credit reporting agency. There are several reasons you might see varying scores, such as:

• Whether your lenders report your loans to all three bureaus or just one or two.
• The frequency with which the individual credit report updates.
• The length of time an account is on your credit history.
• The scoring models that each agency uses to determine your score.
• Whether an account is in dispute or was recently updated.

To keep up with your scores and make sure your lenders correctly report your accounts to the bureaus, you should check your credit scores frequently. While it does take some time for certain changes to reflect on your credit report, if you see something you don’t expect, it’s best to reach out early.

WHAT DO THE CREDIT AGENCIES REPORT?

Despite being three individual and competing companies, all three major bureaus report the same type of information. Here are some examples of the information they may include on your credit report:

• Employment information, such as your current employer and estimated yearly income.
• Student loan accounts, balances, and payment history.
• Credit card lines, utilization, and payment history.
• Bankruptcies, evictions, repossessions, and other public records.
• Charged off debt and collection accounts.
• Accounts paid in full or settled in full.

WHAT TO DO IF YOUR INFORMATION IS REPORTED INCORRECTLY

Sometimes, agencies receive inaccurate information that can negatively impact your credit score. If you check your report and notice something is incorrect, you can submit a dispute with the reporting agency. You should dispute any wrong information. Something as simple as an incorrect payoff date can significantly impact your credit score, so it’s important to take action once you’ve noticed the error and fix your credit. If you find yourself overwhelmed or getting nowhere with your efforts, please contact us for some free advice.

Most everyone who has ever had bad credit has sought for improvement tips to remedy their situation. Why? A poor credit report caused by erroneously input items poses a lot of damage and places you in a bad light. The current state of your credit history determines your financial worthiness and your life in so many ways.

Adverse credit history can lower your chances of getting a loan or credit card, renting an apartment, buying a car, or even getting a good job.

Improving your credit score by correcting harmful data on your credit report is vital. While there are several ways to address the situation, we will discuss the 609 Dispute Letter route and how you can go about it.

WHAT’S THE 609 DISPUTE LETTER?

A 609 dispute letter is a request to the credit bureaus (TransUnion, Equifax, and Experian) to remove harmful, inaccurate, and not verifiable data from your credit report. This letter got its name from Section 609 of theFair Credit Reporting Act (FCRA) that seeks to protect you from illegitimate credit reports and collection practices.

If you have applied for a loan or other forms of credit from a lender, you may be denied based on the data on your credit report, which impacts your credit scores. When you check it yourself and find information that has no business, you have one option to draft and send a letter to the credit bureau(s).

The dispute letter encourages them to investigate the discrepancies and rectify the mistake properly.

Most people think that these credit bureaus do not make mistakes, especially when tabulating your credit information. But they do. In fact, according to a report by the Federal Trade Commission, one in five Americans have a piece of incorrect, erroneous information in their credit reports.

Thus, if you notice an error in your credit report, you should forward a 609 dispute letter to the credit bureaus.

WHAT IS SECTION 609?

Section 609 of the FCRA highlights a consumer’s right to request copies of their credit report and its reporting information. While the Act doesn’t precisely outline your right to repute incorrect information in your credit report, you have a right to assess and review all the information in your report. And if you spot something out of place, you can dispute it with the letter.

Section 609 of the FCRA permits you to request the following:

• That every prospective employer that has reviewed your credit report for the past two years
• Businesses that have made soft inquiries on your credit information
• All the data in your credit file and their respective sources.
• Access information that the credit bureaus are using to develop your credit report.

By doing so, you can make sure the credit bureaus aren’t calculating your credit scores using incorrect information. However, if they are, you can clean up your credit report by forwarding a 609 dispute letter to them.

WHAT THE 609 DISPUTE LETTER CAN’T DO

After discussing what the 609 dispute letters can help you achieve, you must know what they cannot do. Most people think the dispute letter is a leeway to exploit the system and polish any accurate information that impacts your credit scores.

However, the credit bureaus will not remove any verifiable debt; it will remain on your report. More so, the dispute letter will not remove existing debt from your credit report. Thus, the letter will not stop lending agencies from collecting their debts.

CORRECTLY DISPUTING ITEMS ON YOUR CREDIT REPORT

The following steps are to be taken by you in forwarding a 609 dispute letter to your credit bureaus:

GET YOUR FREE CREDIT REPORT

Before making a move to write a dispute letter, you need to know the current standings of your credit report. You need to request a free copy of your credit report online. Ensure that all the information recorded is accurate. If they aren’t, you should take action.

You can get a free copy of your credit report at theAnnual Credit Report

WRITE YOUR DISPUTE LETTER

Now that you’ve gotten your credit report and spotted some erroneous information, you should write the letter. The letter should contain the following:

• Personal Info. Include your full name, contact address, phone number, government-issued ID, and date of birth.
• Attorney Details. If you have an attorney representing you, include their name and contact details.
• Your account number. You need to include your account number reporting on the credit report if different than the actual account number.
• A statement from FCRA exercising your rights. You should state that you’re exercising your rights under the FCRA Section 609. Write that it is your right to review all the documents, credit applications, and contracts that have your signature.
• Highlight items of dispute in your credit report. You should highlight all the objects of conflict in your credit report and attach them to the letter.
• Removal request. You should also request the removal of the items you highlighted in the attached credit report. Remind the credit bureaus that they remove an item if they cannot identify and verify it within 30 days.
• Enclosures. If other documents support your statement, attach and refer to them.

MAIL YOUR DISPUTE LETTER

After writing your 609 dispute letter, you should sign and make copies of it and other documents. Mail the letter via certified mail through the United States Postal Service. You need to request a return receipt from USPS.

The postal service will give you certified mail at the point of mailing the letter and a return receipt upon delivery.

The addresses for the three credit bureaus are as follows:

TransUnion LLC Consumer Dispute Center

PO Box 2000

Chester, PA 19016

Equifax Information Services LLC

PO Box 740256

Atlanta, GA 30374

Experian

PO Box 4500

Allen, TX 75013

WHEN TO HIRE A PROFESSIONAL

While anyone can draft 609 dispute letters, it is essential to hire the professional services of an expert credit counselor or credit repair attorney. You may not be conversant with the technicalities in drafting the letter and other aspects in repairing your credit report. The Phenix Groupoffers free credit consultation and can help you with a custom strategy to get your credit back on track.

Constantly reviewing your credit report will help spot discrepancies and make moves to correct them before they impact your chances on a loan or other forms of credit.

Raising your credit score can sometimes be a long, slowly evolving process. But it doesn’t always have to be. With a little knowledge and focus you can pinpoint the areas of your credit that need the most work, and begin the process of boosting your credit.

While it may take longer for a significant transformation — like jumping from a rating of “poor” to a rating of “excellent”, pushing your score up by 200 could be a realistic goal. There are two parts crucial to succeeding at the 200 point equation: practicing fiscal responsibility with current credit and evaluating areas of weakness on your credit report.

Your Credit Report

Whether you have good or poor credit, knowing what’s on your credit report can greatly assist in moving your score upward. Monitoring your credit is crucial in light of the seemingly countless security breaches into major financial corporations to include Equifax in 2016, on of the three credit valuation bureaus. According to CNBC, only half of all Americans have checked their credit report since the Equifax breach, despite 147.9 million consumers being affected.

The only way to understand if and/or how your credit has changed is to know what’s on your credit report. Having a copy will help you find inconsistencies and mistakes that need to be corrected or removed from your report entirely.

Obtaining Your Report

Every consumer is entitled to one free credit report per year from each of the three credit bureaus: (Equifax, TransUnion, and Experian) according to the Federal Trade Commission (FTC). It’s easy to order online at annualcreditreport.com or by calling 1-877-322-8228. All you need is information to verify your identity such as name, date of birth, address, and social security number.

When obtaining your report, each section of your credit history should be reviewed. You’ll be able to see information on each of the following categories: summary, revolving accounts, mortgage accounts, installment accounts, other accounts, consumer statements, personal information, public records, and collections.

Check each section for accuracy. Any credit related mistake you find and rectify should help boost your score in some degree. Even the smallest bump is movement in the right direction.

Listed Credit Lines

The most important thing to look for when reviewing your credit report is fraudulent or inaccurate credit line entries. Review each account to confirm that it’s one that’s been opened by you and that the balance reported is accurate. Review all of your closed accounts too. Depending on the length of your credit history, this may take some time and a bit of memory jogging.

Payment Timeliness

One area of your report worth taking a look at is the payment history on each of your credit accounts. As payment history accounts for at least 30% of your overall credit score. Make sure all information is accurate, even on closed accounts. 

Hard Inquiries

Another important section of your credit report worth checking is Hard Inquiries. This section will list inquiries made by companies at your request that may impact your credit score. If there are entries in the hard inquiries section you do not recognize, you may be able to dispute it.

How To Dispute

Each credit report provided by either Equifax, TransUnion, or Experian will contain a section for disputing file information with a web address to enter and check on the status of a dispute.

Fiscal Responsibility

Even the most dedicated financial wizards slip up now and then, or neglect an area of their credit from time to time. When working to improve your score, the areas that will give you the biggest boost – close to that 200 point mark, are debt to credit ratio (30% of your score) and payment history (35% of your score).

Payment History

No matter how much or little discipline you’ve practiced in the past in this department, your credit score will be dynamically impacted by any future payment timeliness. If you ensure that 100% of your accounts are paid on time from this point on, you’ll see your credit score begin to climb.

Even a thirty day late payment will be registered into your score, so the timelier you are with all of your payments, the better. This can be tricky for those who practice the credit card rewards points chasing game, which requires juggling several rewards cards at a time. But as long as you stay organized, you can ensure solid numbers in this category.

Debt to Credit Ratio

This may be the harder part of the equation depending on your financial situation. Whether it takes you years, or you’re able to allocate money now, paying off debt will help that ratio improve — which means big jumps in your credit score.

Beware of zero balances though. If you decide to no longer use one of your cards at all, the creditor may close the account, which may shorten your credit history.  The more established your credit is, chances are the better your credit score will be.

Type of Credit

Although this is a smaller category (10% of your score), every bit helps. When assessing your creditworthiness, many creditors look at the mix of your current credit profile. This is where having a mortgage, as stressful as they can be at times, is a very good thing. The more distributed your credit, the healthier you appear credit wise to potential lenders. Be careful of having too many credit cards compared to other lines of credit, especially if you’re a rewards chasing super star.

New Credit

New credit lines account for 10% of your overall credit score. Be careful how many new credit you take on or inquire about obtaining. Too many credit lines opened recently will hurt your credit. Instead of opening new lines, you may want to consider contacting your current lenders and renegotiating the interest rates or terms.

Building or growing credit is neither quick nor easy. It takes time. But, it also takes diligence and mindfulness. With one eye on your credit you’ll be able to keep a handle on your spending and conduct best practices to help your credit score soar.

Most people aren’t keen on checking their credit reports. Oftentimes, the rationale behind this is somewhere between the lines of “I feel like checking it will impact my credit score.” However, when you check your credit report and notice the words “Hard Inquiry,” don’t fret just yet.

Knowing what information you find in your credit report is vital in taking charge of your financial records and cultivating intelligent credit behavior moving forward. Thus, a credit inquiry is critical. Nonetheless, there’s a stark difference between checking your credit score and granting access to someone else to do so.

We explore what hard inquiry means and how it impacts your credit score. But first things first:

WHAT IS A CREDIT INQUIRY?

A credit inquiry is a process where someone (or company) requests for your credit information from any of the top three credit bureaus: TransUnion, Experian, and Equifax. The bureaus, aforementioned, can share your information, if the person making the request has the legal backing to do so.

It is your right to know who has had access to your credit information. As a matter of policy, your credit bureau is under obligation to document each credit inquiry in your credit report.

WHAT IS A HARD INQUIRY?

Hard inquiry typically starts with you. When you apply for a loan from a lender, the lender requests to check your credit report to assess your worthiness regarding credit. That’s to say your creditor is looking to check how likely you’d pay back the funds you want to borrow and reduce risk. The lender may opt to request from TransUnion, Experian, and Equifax. In some cases, they may request your credit information from other credit bureaus to get access to your credit scoring.

That request, when approved by the credit bureau, is registered as a Hard Inquiry. When you have a great credit score, you pose less risk to your creditor, and you’d be more likely to qualify for the loan. A hard inquiry is also called ‘Hard pull.’

Hard inquiries are different from soft inquiries, as soft inquiries aren’t recorded in your credit report. Unlike soft inquiries, hard inquiries do have an impact on your credit, whether approved or not.

EXAMPLES OF HARD INQUIRIES

Hard inquiries aren’t limited to loan applications. Some other examples of hard inquiries include:

• Apartment rental applications
• New utility applications
• Credit card applications
• Collection agency skip tracing
• Application for credit limit increase
• Loan applications for students, automobile, personal, mortgage, etc.
• Request for lines of credit

HOW MANY POINTS DOES A HARD INQUIRY AFFECT CREDIT SCORE?

According to the analytic company FICO, a hard inquiry will cause your credit score to be less than 5 points. And as the hard inquiry grows older, the score will reduce until it is no longer significant.

When it comes to your credit scores, other factors might impact it even more than credit scores. While hard inquiries influence 10% of your credit score from the FICO analysis, your payment history affects 35% of your score.

WHY HARD INQUIRIES ARE SIGNIFICANT

When a company or lender requests your credit report, your credit score is likely to drop a few points. The reason isn’t farfetched. People who apply for loans or credit are considered risky than those who do not.

According to FICO analysis, people with five or more credit inquiries in the last year are more likely to surpass 90 days past the due repayment than customers with zero hard inquiries. More so, people with six or more hard inquiries are eight times more likely to file for bankruptcy than those without hard inquiries.

From all indications, lenders use credit scores to determine the risk factor of approving your loan or credit card request. Hard inquiries affect your credit scores which may affect their decision to approve your request.

HOW LONG DO HARD INQUIRIES AFFECT CREDIT SCORE?

When you apply for a loan or credit card, hard inquiries can remain in your credit report for up to 2 years. However, a hard inquiry will have minimal affect your credit score after one year.

HOW MANY HARD INQUIRIES IS TOO MANY?

When you make several applications for credit or loans, it could drastically impact your credit score, particularly if you’re new to this process.

For instance, applying for auto, mortgage, and utility loans could result in multiple hard inquiries, which will impact your credit score. However, for instance, if you have 3 mortgage inquiries, these will be roped into a single hard inquiry – if they’re made within a 14 – 45 days window. Thus, your credit score will only be impacted by one inquiry.

The only exception here is if you apply for different types of credit cards. Every hard inquiry will be documented, and your credit score will reduce.

HOW TO REMOVE A HARD INQUIRY ON YOUR CREDIT REPORT

You cannot do anything about a hard inquiry that is genuine (that is, you were applying for a credit). However, there may be instances when you might spot a hard inquiry that is illegal. In that case, you must remove it before it impacts your chances of getting your loan approved.

There are several steps you should take:

• Constantly check your credit report. You need to check your credit report from all of the top 3 credit bureaus. There may be instances where the same information isn’t recorded across all three reports. Thus, it is vital to get all 3 to check for consistency. You can also check with the Annual Credit Report, which you can check for free.
• Check for inaccurate hard inquiries. Now that you’ve gotten your credit report, you should critically review the inquiry section to check for legitimacy. If you see an inquiry for a creditor, who you currently do business with, you should bring this to their attention. It is known as an account review inquiry and should be logged as a “soft inquiry”.
• Tender a dispute. Inaccurate hard inquiries could simply be a fraudulent act or an honest mistake. It is your responsibility to tender these dispute errors with TransUnion, Equifax, and Experian, if you need help doing this, you can schedule a free credit consultation with The Phenix Group.

Regularly monitoring your credit report is crucial in maintaining your credit score. There are several apps at your disposal to extract this information. Review and ensure you’re getting the appropriate information from your credit score and address discrepancies where necessary.

There are many intricate details that make up your overall credit score. This includes the amount of new credit that you receive, the amount you currently owe, and your payment history. But, another factor that goes into your overall credit score is the number of times that it’s checked by specific institutions. Credit checks are put into two categories: hard inquiries and soft inquiries. It’s important to know how each type of inquiry affects your credit so you can have more control over your credit score as a whole.

Hard Inquiries

Hard inquiries (often known as hard pulls) happen when someone is trying to decide whether to loan money to you or not. They are supposed to happen with your consent only. When you’re trying to apply for a student loan, an auto loan, or a home loan, credit checks from these affiliates companies will stick to your credit report. These credit checks do affect your credit score and can take off as much as five points from your FICO score. Mostly, they’ll have a minor, if any, effect on your credit score. Hard inquiries only stay on your credit score for about two years, and they often stop affecting your credit score after one.

If you’re trying to shop around for a credit card or a student loan, it’s best to not procrastinate and only apply for credit cards that you think you’ll receive. All those inquiries within a 14 to 45-day period are considered one inquiry on your credit report. So, if you’re looking to shop around, be sure to stay smart during your journey. But, having an excessive amount of hard inquiries might make you seem high-risk to lenders. Don’t let these facts keep you from shopping around for the lowest interest, but also don’t go crazy with your applying. Also, keep in mind that FICO gives a 30-day grace before loan inquiries are affected in your credit score. If you can minimize the number of hard inquiries that you have on your credit report, then it’s a good idea to do just that.

Soft Inquiries

On the other hand, soft inquiries (or soft pulls) don’t affect your credit score at all. They’re utilized for a variety of different reasons often without your permission, including when credit card pre-approve you for loans. It wouldn’t be in their best interest to waste postage on a person that they would probably not accept, so they check their credit. Also, when companies do background checks, soft inquiries happen as well. Companies might check your credit as an indicator that you’re a responsible adult with good habits. Also, when you check your own credit score it doesn’t affect it at all. It’s often a common misconception that checking your own credit score will lower it, but that’s just not the case. Whether you’re getting your free yearly credit report from any of the credit bureaus or using an on-demand service like Credit Karma, they’re all recorded as soft inquiries. These types of inquiries might be included on your credit report, but that often depends on the specific credit bureau. You can check your credit score as often as you’d like.

Hard or Soft: More Information

There are certain situations that could involve either a hard inquiry or a soft inquiry. They include leasing a car, opening up a utility account, requesting a higher credit limit, and more.

If you’re not sure whether a credit check is going to be recorded as a soft inquiry or a hard inquiry, then it’s important to get in contact with the lender or financial institution. Being informed with it comes to your financial history is very important. Also, if there’s a hard inquiry on your report that you didn’t authorize you can get in contact with them and ask them to remove it. If they aren’t budging, then you can dispute them directly with the credit unions. It’s very important to keep the information on your credit score as up-to-date as possible to get the most honest report.

To best protect yourself against the effect of hard inquiries, it’s important to maintain a solid credit score in order to minimize the effect that a hard inquiry would have on your credit. Also, ask them if you can do a soft inquiry instead. It might be just as effective for you to pull on your own credit report, print it out, and show them instead of them doing a hard inquiry on your own. 

Hard inquiries and soft inquiries are very different, but they’re both important to know when it comes to your credit. Hard inquiries happen with your consent, and they often affect your credit score in some way. Soft inquiries often happen without your permission, but they don’t affect your credit score. Knowing these two separate concepts gives you the best chance of taking control of your credit score and staying as fiscally responsible as possible.

Having good credit is essential if you want to obtain a loan for a house or a new vehicle, open a credit account at a retail store or even get a cell phone contract. Even some employers look at credit scores when determining whether or not to hire an applicant. 

According to Experian, it’s estimated that 30% of Americans have poor credit, bad credit, or no credit at all. When speaking of credit scores, most reporting agencies use a model that scales credit from 300 to 850, and the cutoff for what’s considered to be bad credit is anything below 499. 

Most people need credit at some point in their lives, so it’s essential that you keep your credit score above 661 if you want the benefits of being able to get a loan or open a credit account.

In this article, we’re going to look at what causes your credit score to go down and how to fix it.

What Determines A Credit Score

It’s easy to fall into bad habits and find yourself behind when trying to keep up with your credit score. So, how does one get bad credit? Well, let’s take a look at the factors that go into determine your score.

• Late Payments — 35% of your credit score is determined by your payment history. In fact, it’s the most important factor in determining your credit score. If you’re consistently late with payments, your credit score will remain in the ‘bad’ range. Also note that bankruptcies and charge offs fall under this category too.

• Amount Owed — This represents 30% of your credit score and it includes the amounts you owe on each individual account as well as the total amount you owe in relation to the amount of credit you have.

• Credit History — 15% of your credit score is your credit history or how long your accounts have been open and active. 

• New Credit — 10% of your score is determined by any new accounts that have been opened and the number of inquiries that have been made to your credit history. 

• Types Of Credit — 10% of your score is made up of the varying types of credit you carry; it looks better on your report to have a few credit cards, an installment loan and a mortgage rather than having all of your credit tied up in credit cards.

How To Fix A Poor Credit Score

Now that we know what goes into your credit score, we can look at how to set it right.

The first thing to do is to get hold of your credit report and monitor it. You can do this if you have a smartphone by downloading an app that lets you view and track your credit. Most of these apps will even alert you any time you have a change in your score so it’s a good idea to start there, because you can’t know where to go if you don’t know where you stand. 

Once you’ve seen your credit score and determined it’s in need of fixing, you can set about doing that. 

Now that you have your credit report, check it for inaccuracies and dispute anything you see that’s not right. You can dispute these errors you find online, and while there’s no guarantee you’ll be successful, there’s no reason you shouldn’t try. 

The first step is to get payments up to date and make them on time; this is the most important step you can take and you must be vigilant. Set up autopay or reminders if you’re forgetful, make sure every payment is made on time. 

The next thing you have to do is to work on getting your debts paid down quickly; that may mean paying more than your monthly payment, but whatever you have to do, pay off your balances as soon as you can, starting first with the accounts with the highest interest.

Another thing that can help is getting another credit account. We get it, you’re trying to get out of debt, not go deeper in! But here’s the trick. If you open a new account, but don’t carry a balance on it, that increases your credit to debt ratio, and will improve your score. 

How Long Will It Take?

The good news is that bad credit isn’t forever. If you follow the steps outlined and use credit wisely, your score will improve. The short answer to how long it takes is: it depends. It depends on how low your score was to begin with and what kind of negatives you had. But you can expect the process to take anywhere from six months to a year. The key is to be patient and keep monitoring your score every month to see the progress.

Thinking about becoming a first-time homebuyer in Dallas? Congratulations! The decision to buy your first home is both exciting and overwhelming, especially when you start thinking about the financial impact it’s going to have on your life. 

You want to make sure that you’re in the best financial position possible so that when you approach mortgage and financing companies, you walk in with confidence. 

If you’re looking to purchase your first home in Dallas, here is the credit score that you’ll need and additional tips to help you gain that financial confidence before heading to the bank.

Dallas Housing Market for First-Time Homebuyers

Average Home Prices in Dallas

The average pricing of single-family homes in Dallas is currently $385,000. As home values go up, the average price follows. Just in the past year, there has been a 3% increase in home prices, with a continued rise predicted by another 4.5% by September 2020. 

One of the primary reasons for the rising costs is because Dallas is becoming a major hub for large companies. As one of the leaders in the United States for employment and population growth, Dallas has a booming housing market that’s steadily growing year over year, with no end in sight. 

In fact, homes in the Dallas area are forecasting an 11.4% appreciation in just 3 years! 

If you’re eyeing Dallas for your first home purchase, you’d be better positioned to get in on it now rather than waiting. 

Credit Score Needed to Buy a Home in Dallas

Getting approved for a home loan or mortgage is one of the most daunting aspects of going through the first-time homebuyer process. One of the main factors that any bank will look at is your credit score.

For Texas homebuyers, the average credit score for first-timers is 671. But that doesn’t mean you can’t get a home loan with a rating under that. The minimum score depends on the type of loan that you’re requesting and lender guidelines. 

However:

You should also consider that the higher your credit score is, the better interest rate you’ll possibly get for your loan.

Conventional home loans are typically given through a private bank or financial institution. These loans usually have the highest credit score requirements, especially if you’re putting less than a 20% down payment. The minimum credit score for conventional loans is 620.

FHA or other government loans (USDA, VA, etc.) provide an alternative path for first-time homebuyers that can’t meet the stringent conventional home loan requirements. 

These lenders are often willing to take on riskier financial situations because they’re typically backed by mortgage insurance, as well as federal funding. While each situation is unique, you’ll want at least a 580 to qualify for a loan through one of these programs.

Getting in on the Dallas market can be tough, but with a tight financial situation, you’ll be well-positioned to get the home of your dreams!

Tips to Budget for Your First Home

As a way to help you get your finances in order, here is some of the best advice we have to get you ready for taking the homeowning journey!

Pre-Shop Early

What you want in a home is going to dictate the price you’re going to pay. If you know you’d like to buy a home in the next few years, start trying to figure out what your target location would be. Go to open houses, get a feel for different areas of the city, and decide what’s important to you. 

By checking out what you like and what you don’t like, you’ll be able to narrow down your requirements. For example, how important is the location? How big of a home do you want? Are there particular features that are important to you, like a garage or backyard?

Once you have an idea of what you’re actually looking for, you’ll have a greater understanding of how much you’re looking at spending and what you need to save for a downpayment. 

With a target number in mind, you’ll know what the goal is.

Figure Out Your Household Net Income

You have a goal amount for your downpayment, but where is that money going to come from? What you need to do to figure that out is understand how much money you actually have each month after taxes. 

Check your pay stub or use an online income calculator, and figure out how much money you get in your paycheck each month after taxes. 

Once you have that number figured out, you can then calculate your monthly household expenses, like bills, utilities, groceries, insurance, to see what you’re “disposable” income is. This is the sum of money you have to take a portion of towards saving that downpayment.

Know Where to Cut Back

Once you understand how much money you have each month, after your bills, you should be able to see where exactly your money goes. Are there areas where you are overspending, and can easily cut back? 

Think about things like how often you eat out or go shopping, and where you can cut those expenses back. Are there subscriptions that you really don’t use much, that you could live without? 

Remember, the end result you’re after is homeownership. The more you can make adjustments to your budget, the more you can put towards getting to your goal. The more you can build up your savings fund or pay down outstanding credit cards and loans, the quicker you’ll get there!

Pay Off Your Debt

Unless you plan on saving the entire sales price of a home before buying, you’re going to need a mortgage. And, with a mortgage application comes a credit check, so you’ll want to make sure your score is as high as possible.

Paying off outstanding debt improves your credit score immensely, and you should work on getting yours down not only for mortgage approval but for the best interest rate you can get. 

Many financial professionals suggest starting by paying off the debt with the highest interest rate first. This strategy will save you money in the long run because you won’t be paying interest as long. 

However, if this really isn’t feasible for you right now, a good rule of thumb is to pay off your debt on time and try to pay slightly more than the minimum payment. 

Even if this is all you can do, you’ll have all current accounts and a history of on-time payments at more than a minimum. These factors will play into a creditor’s evaluation of your finances.

If your credit score is significantly below the minimum, and you’re struggling with figuring out how to pay off your debts, consider hiring a credit repair company. They have the expertise and knowledge to put together a personalized plan to help you get out of debt, straighten out your credit score, and achieve your goal of homeownership in Dallas!

uying your first home is a significant life change – both personally and financially. Ensure you’re making the best financial decision possible by planning ahead to understand what you’re getting yourself into. 

Understand your current finances and create an actionable budget to squirrel away that downpayment, and consider hiring a credit repair company to help you get there quicker. With just a few steps, your dream of owning your first home is within reach!

It is true, most of us have debt; some tend to accumulate a lot more debt than the average person. Often these same individuals may find themselves needing to file for bankruptcy to be able to get the head above water with their finances. What does that mean? What initial impact will it have you your credit? How long will that impact affect your credit score? Is bankruptcy the best option for you or are there other options available? Read on as we discuss these questions and many more!

1. What is bankruptcy 2. How does filing bankruptcy affect your credit score 3. The pros and cons of filing for bankruptcy 4. Steps to take after you file for bankruptcy 5. Tips on how to rebuild your credit rating in the future 6. Final thoughts on whether or not you should file for bankruptcy

WHAT IS BANKRUPTCY FOR CONSUMERS? CHAPTER 13 VS. CHAPTER 7

Bankruptcy is a legal process used to discharge debts, which are, most often, unsecure. There are two types of bankruptcies available for consumers: Chapter 13 and Chapter 7.

CHAPTER 13

Chapter 13 bankruptcy is for consumers who have an income but don’t have enough to cover their monthly expenses. Suppose you have more money going out than coming in; this opens up the Chapter 13 option for you and allows you to work out a repayment plan with your creditors to pay them back over a three-to-five-year span. In this case, the court will act as a steward of your money to assure the repayment plan is satisfied. A person who files for Chapter 13 will generally keep all of their assets and property.

CHAPTER 7

Chapter 7 bankruptcy is for consumers who don’t have any income or are below their state poverty average, and they also owe more than what their assets are worth. Chapter 7 is the most common form of bankruptcy, and it is dicharged faster than Chapter 13.

HOW DOES FILING BANKRUPTCY AFFECT YOUR CREDIT SCORE?

Bankruptcy will most likely lower you credit score initially. However, that doesn’t mean you won’t be able to rebuild your credit! The good news is bankruptcy can help stop the bleeding on accounts reporting as continuously late and possibly help with repossession status. The bad news is that filing a Chapter 13 or Chapter 7 could stay on your credit report for up to ten years.

THE PROS AND CONS OF FILING BANKRUPTCY:

Pros

• Unsecured debts will be eliminated, which can help create more financial stability in the future.
• You may have to go through a repayment plan or debt management program if you file Chapter 13, but it’s better than the alternative of not having a plan in place.
• The elimination of debts through Chapter 13 can help you qualify for a future loan, which may be cheaper or easier to get approved.

Cons:

• If your secured debt is something like a home mortgage and the house needs repairs, filing for bankruptcy may mean you lose your home.
• Some jobs may not be able to hire you because of the bankruptcy filing on your credit report.
• Possible misuse of funds or fraud will make a case for prosecution and result in jail time if found guilty.

STEPS TO TAKE AFTER FILING FOR BANKRUPTCY:

• Inform your creditors about the bankruptcy right away.
• Review the repayment plan with creditors or debt management program before it goes into effect, so there are no surprises later on down the line.
• File your taxes and any other necessary paperwork.
• Be prepared for possible adverse effects on your credit score.
• Take care of debts with the help of a bankruptcy attorney or debt management company approved by the courts to assist you.
• Keep making your monthly payments to the court for any debts mentioned in your bankruptcy, including credit cards.
• Don’t open new accounts because it will affect your credit score and tempt you to spend money again.

TIPS ON HOW TO REBUILD A GOOD CREDIT RATING AFTER FILING BANKRUPTCY:

• Start by paying all of your monthly bills on time to keep your credit score trending in the right direction.
• Be sure to not spend more money than you make. Staying within your means will help rebuild any equity lost through bankruptcy.
• Check-in with the court on how long it may take before you can apply for any loans or mortgages after filing Chapter 13, as there are usually waiting periods and requirements.

TIPS ON HOW TO REBUILD YOUR CREDIT RATING IN THE FUTURE

• The first tip and most important is, be patient. It will be a timely process.
• Keep in touch with the bankruptcy court and make sure you are still making payments for any debts mentioned in your filing.
• Stay in contact any bankruptcy attorney or debt management company with any questions.
• Keep records of all payments made to creditors, as well as the court fees that you owe them, and make sure to pay on time.
• Get a copy of your credit report to keep track of any added or changed information.
• Paying off as much debt and keeping balances as low as you can in the future will help rebuild your credit score quicker and make it easier for you to get loans when necessary.

FINAL THOUGHTS ON WHETHER FILING BANKRUPTCY MAY BE RIGHT FOR YOU:

Whether or not filing for bankruptcy is the right choice will depend on your financial situation.

If you have many debts and feel like this would help eliminate some stress, it may be worth talking to an attorney about what type of bankruptcy is right for you, if any. Just make sure you research your options before committing to anything.

If you do decide to file bankruptcy, make sure to get good advice from a reputable source and the right attorney or company that the courts approve before proceeding with any filing decisions. The more information you have going into bankruptcy, the better.

If you’re considering bankruptcy or looking to recover from bankruptcy, we suggest getting a complimentary credit analysis from The Phenix Group!

If you’re in the market for a home loan, you will want to take a look at your credit score first, before starting the homebuying process. Since the housing mortgage crisis of 2008, practices have become much stricter when determining who qualifies for a loan, the amount they are willing to loan, and at what percentage rate.

Your credit score has a major influence in determining what kind of home loan you can qualify for. Essentially, the higher the score the better; but there are home loan types that take other factors into consideration, such as, employment history, income, and debt to income ratio. Other lenders will offer loans to consumers with lower credit scores, assuming a large down payment accompanies the loan.

Why Credit Matters

Home loans are incredibly common. Even though almost half of the U.S. population has a fair credit ranking or lower, most of us still own homes — about 60% of households in fact. The terms of the loan varies largely based on your credit score. So the best credit score will save you thousands of dollars in interests and fees.

Home lenders look at your home loan as a product that they can sell off to other mortgage carriers. So they need to make sure their products are enticing to potential buyers. A mortgage granted to a consumer who is less than reliable with their payments makes for a far less attractive product to other mortgage carriers than a home loan granted to a consumer who has impeccable credit.

To do business with buyers with a less than stellar credit profile, different types of mortgages have become popular. These alternative loans tend to have built in guarantees backed by federal programs and often require little or no money down. Traditional loans, however, are still the most prevalent, and are granted based on a combination of credit rating, employment stability, and income.

Types of Home Loans

Traditional home loans tend to be fixed-rate 30 year loans. A fixed rate mortgage features an interest rate that remains the same for the entire lifespan of the mortgage. While adjustable rate mortgages were more popular ten years ago, since the mortgage bust, the fixed-rate mortgage has become the first loan of choice once again. Adjustable rate mortgages feature a fixed rate for a short period of time, then switch to a variable rate that climbs higher every year.

FHA Loans

For individuals recovering from poor credit, FHA loans are available. Buyers with a minimum of a 500 credit rating can apply for an FHA loan. An FHA loan is insured by the Federal Housing Administration in an effort to keep the house purchasing market robust. To help mitigate the lower credit score, buyers usually are required to place a larger down payment or suffer a higher interest rate.

FHA loans are a great choice for first time home buyers who may not have much of a credit history established yet, resulting in a lower credit score. Buyers who are able to only put 3.5% of the sales price down, must at least have a credit score of 580. But, if a buyer can put down 10% they can qualify with a lower credit rating, between 500 and 579. Besides looking at credit, buyers need to have two years of established employment with the same employer.

VA Loans

VA Loans are home loans guaranteed by the U.S. Department of Veterans Affairs (VA). They are dedicated loans for U.S. military veterans, active duty military, reservists, and some other select qualifying individuals. VA loans are financed through approved lenders and allows borrowers to finance 100% of their loan with no down payment.

Credit scores don’t come into consideration with VA loans like they do with other loans, since any qualifying veteran can obtain a VA loan. The VA will guarantee up to 25% of a home loan up to $113, 275. VA loans were started in 1944 through the Servicemen’s Readjustment act, aka, the GI Bill of Rights in an effort to provide housing stability and home ownership for the welfare of veterans and their families. The VA loan is still widely popular today thanks to it’s 25% guarantee and availability to qualifying veterans.

USDA Home Loan

Another popular federally backed loan is the one offered through the U.S. Department of Agriculture to eligible rural and suburban homebuyers. The program known as the USDA Rural Development Guaranteed Housing Loan Program aims to help rural and suburban families by offering low interest rates and no down payments.

USDA loans are granted in two ways: either directly through the USDA to very low income buyers at interest rates as low as 1%, or through qualifying lenders at a low interest rate and no money down conditional upon the payment of a mortgage insurance premium.

The intention behind federally backed loans like the USDA, FHA, and VA is to keep the housing market robust and accessible to buyers of all income levels and financial background. Not everyone qualifies for these types of loans, however. So the best thing you can do to ensure you get the best loan terms, is by monitoring your credit in the expectation that you’ll be applying for a traditional loan.

Improving Your Credit

Before applying for a home loan, the first thing you need to do is look at your credit report to see where you stand. Identify your weaknesses, and create a plan for improvement. The most important areas to focus on are debt to credit ratio (30% of your score), and payment history (payment timeliness – 35% of your score).

The easiest way to watch your credit score rise is by paying off debt. If you’re looking to buy a new home loan, it may be worth waiting until you can pay off a good portion of debt, since a higher credit score will save you a great deal of money in interest over the life of a 30 year loan. The other way is to make sure all of your payments are made on time, every time, no matter what kind of credit line you’re paying on. Lenders update payment history regularly, so staying on top of payments is crucial.

Before plastic credit cards were invented, the concept of credit was around for centuries. With today’s modern society and technological advancements, credit cards have come a long way.

How Did the Credit Card Start?

Credit cards got their start way before you were born. In fact, they got their start before the internet, planes, automobiles, trains, and the lightbulb. They go back before the French Revolution, and Benjamin Franklin discovered the power of lightning. They even go back before the age of Victorian England, the printing press, and Shakespeare. So just when did this credit system start?

The Early Beginnings of Credit

Historic records provide evidence of a written credit system that goes back to the ancient Code of Hammurabi. Named after the ruler of Ancient Babylon from 1792 to 1750 B.C., this code provided an example of a written credit system. There were rules for lending and paying back a loan with interest. There were even rules for how interest rate worked. According to the code, a loan served as a financial agreement between one borrower and one creditor or merchant.

The Rise of Credit Cards

In the early days of the “Wild West,” owners of general goods stores often extended a line of credit to their customers who were farmers and cattle ranchers. Because these men only got paid after the harvest or when their herd sold at the market, the store owners allowed them to purchase on credit and pay their bill when profits came in.

Fast forward to the 1900s and the rise in travel, commerce, and an economic boom. Larger hotels and department stores started issuing paper cards to valued customers they could trust to pay them back. By 1950, Diners Club launched its first general merchandise charge card. They were issued to well-off customers and used it for travel and entertainment expenses. This credit card system created by Ralph Schneider and Frank McNamara required customers to pay off the balance each month in full, creating our modern-day credit card system.

In 1958, Bank of America launched its general credit card called the BankAmericard. It came with a whopping $300 credit limit and was the first of its kind of offer revolving credit, giving people the option to carry over a balance.

Credit Cards and Modern Technology

By the 1980s, cards transitioned from paper to plastic with a magnetic stripe on the back. This strip allowed the credit reading to be taken by special computer equipment. In the 1990s, they continued to evolve and were soon embedded with computer chips called EMV smart chips. These chips allowed for encrypted, two-way authentication between the merchant’s credit card terminal and a payment processing network.

What is the Future of Credit Cards?

With the history of credit solidly in place, let’s turn our attention to the question of their role in the future economy. What will be their place? Will there be some other form of credit option, or are the plastic cards in our wallets here to stay?

Cashless Transaction

These days, everything we purchase from the grocery store to the movie theater is likely bought with a credit or debit card, or alternative mobile wallet, cash-sharing app, or cryptocurrency. There are plenty of alternative ways to pay for your purchases these days, including:

PayPal Credit: PayPal has a line of credit in addition to providing a platform to pay directly.

Cryptocurrency: The most well-known currency is Bitcoin, but there are others, including Litecoin and Ethereum.

Prepaid Cards: These function like debit cards but preloaded with cash.

Mobile Wallets: The most popular options are Apple Pay and Google Wallet. These link directly to your bank accounts, debit or credit cards, allowing you to access all financial resources without a card physically present.

More Security Features

Fraud prevention is one of the top concerns when it comes to credit and debit cards. As technology evolves, features are added to increase security and protect the purchaser. However, the security system in place is far from complete. In the future, you can expect credit card companies to incorporate AI to detect and fight fraud. 

Artificial Intelligence in Credit Cards

AI technology is exploding in its applications, uses, and intelligence. Expect that AI will soon be employed to detect and fight fraud, in addition to providing customer-focused services. Credit AI will likely resemble something close to Amazon’s Alexa and manage payments, identify spending patterns and trends, make suggestions for purchases, and remind you about upcoming payments.

Contactless Payments Through Smart Phones

Numerous banks are rapidly adding features to their apps that allow their customers to control credit and debit cards through their app. Consumers currently can lock their cards, control spending limits, report lost cards, and alert the company to potential fraud the minute it happens. Eventually, the use of smartphone apps for credit and debit cards could go the same way as Apple Pay or Google Wallet and become a completely contactless form of payment with no physical card required.

Will Plastic Credit Cards Disappear?

Technology is rapidly evolving, and both consumers and merchants alike are focusing more attention and energy into online, app, and contactless payment. However, with the advent of Google Wallet, PayPal, Square, and CashApp, major credit cards have received another platform to conduct business. Far from hurting credit card companies, apps, and online methods have made it easier to gain customers and provide credit to people in nearly any situation. Major credit card companies such as MasterCard, Visa, and American Express have all come up with a mobile payment platform for their customers.

Though consumers might start paying in varying ways beyond using the physical credit card, they’ll still be using credit extended to them by the companies that issue cards.

Credit Cards Are Evolving

Credit cards have come a long way from being tied to a single merchant. Today, credit is extended from major companies to people of all ages and economic status. The future possibilities of credit cards are endless.

Knowing your credit score is a key step in determining where you sit financially when it comes time to apply for any type of credit. Having your own report on how lenders view your credit worthiness can help you take appropriate measures, if needed, to improve your credit. Improving your credit in key areas will make you the most attractive loan candidate you can possibly be.

 A good credit score, however, often means different numbers depending on the type of credit you’re seeking. What may be an ideal score to obtain an excellent interest rate on a car loan, might not be the same for obtaining the optimal rate on a home mortgage. If you’re a business, then interpretation of credit scores will again, be different for particular loans.

 A great credit score means so much more savings due to lower interest rates obtained on loans. Someone with poor credit, if he/she is able to obtain another loan at all, will get one at a very high interest rate. This type of person has an uphill struggle due to continually throwing money away in interest, while at the same time attempting to get out of debt.

 A person who can maintain a high credit score is someone who is already saving money by paying very low interest rates, and someone who will continue to be awarded low APR credit lines in the future. If you’re looking to earn or maintain good credit for an upcoming future purchase, you may benefit from knowing exactly what number range you should be looking to fall in based on the type of loan you’re looking for.

 General Ratings

Generally speaking, on a FICO or VantageScore rating of 300 to 850, a score of 750 or above means you have excellent credit — so congratulations! If your score falls between 680 and 749 you are no longer deemed excellent, but your credit is still good. You’ll start to feel the interest rate pain at a score between 620 and 679, which earns you a rating of fair. 580 to 619 is bad — literally your rating is “bad”. And if it couldn’t get any worse, there is actually a category called “poor” for anything lower than 580.

 Auto Loan Scores

If you’re looking to shape your credit score with the intention of getting the best possible rate on an auto loan, then you’ll want a score 740, at least. 740 and above, according to Experian, will get you somewhere around a 4% APR or lower for a new automobile, and 5.6% or lower for a used car. If you have a score higher than 780, you’re in luck. You’ll be enjoying around a 3% interest rate for a new car, and 4% interest rate for a used car.

 Mortgages

Wiggle room is much smaller on home mortgages, mostly because the average mortgage amount is so much higher than the asking price for a car. Still, the better the credit, the better the interest rate. Anything 720 or higher should get you into the sub 4% range on a 30 year fixed mortgage according to FICO (2017). A score of 760 or higher will do you one better, getting you a monthly rate of around 3.5% or lower.

 Business Loans

Minimum good standing scores are a little lower with business loans, but not by a huge margin. If you have a credit score of 680 or higher, chances are you’ll be able to score a good long term business loan for a decent chunk of change with long repayment terms. Of course, the higher your score, the better terms you’ll be able to acquire.

 Within the world of business loans, there are different tiers of eligibility based on the type of loan you’re looking for. Minimum credit score eligibility lowers for short term loans compared to long term loans. Equipment loans also carry lower score requirements than long term business loans.

 Business Credit Scores

If you’re an existing business with credit, you’ll be assessed for a credit score by different means than the personal credit scoring algorithm implemented by FICO or VantageScore. Business credit scores range from 0 to 100. They fluctuate widely as there is no industry standard between the three bureaus for determining a business credit rating.

 For the most part, business credit scores are calculated based off of credit history of your business accounts. However, if you are a small business, such as a sole proprietorship, there may be some mixing of personal and business credit data.

 Which Score You Should Choose

The two primary scoring systems used by the three major credit bureaus are FICO and VantageScore. However, most lenders use proprietary score calculating programs for their own use; these scores you’ll never see.

 Luckily these numbers are similar enough to FICO and VantageScore algorithms, that you can feel pretty confident that your excellent credit score on your report will translate to the excellent credit score that a potential lender sees as well.

 Differences between FICO and VantageScore are also very minimal. FICO has been around the longest, but they both use the same scale — 300 to 850. Small differences include minimum debt amounts for inclusion into credit score calculation, differences in influence on score based on the type of existing debt (i.e. mortgage vs. auto vs. credit card), and established credit history minimum lengths (one month for VantageScore vs. six months for FICO).

 There are key components of credit that also have different levels of influence on your credit score. FICO and VantageScore use a credit score formula that allots 35% of the score to payment history, 30% to outstanding debt, 15% to how long you’ve had credit, 10% to the types of credit currently in use, and 10% is given to the frequency of newly opened accounts or consumer initiated inquiries.

 Whichever you choose to access – FICO or VantageScore – knowing where you stand financially and what specific areas within your credit report you need to improve upon will set you up well for obtaining the best rate you can on the next auto loan, business loan, or home mortgage.

GC Services is notoriously known throughout the debt-collection industry. They’re arguably one of the biggest collection agencies in the world. They’re often the mouthpiece or middleman for companies in many different industries such as retail, traffic, and automotive. But, they’re most known for collecting student loans. Once one of these companies has spent a while trying to collect a debt from you, they might hire a third-party, such as GC Services, in order to pursue their debts for them. But, it’s important to understand the history of this company and the things that they have been accused of in the past.

GC Services currently has over 8,500 employees all across the United States and the Philippines. The company is based in Houston, Texas, but it also outsources much of their business overseas. They deal with both first-party and third-party debts. This means that they’ll often deal with debtors that have a delinquent account and those who have a defaulted account as well. They allegedly have 60 years of business experience and call themselves, “the largest business process outsourcing providers in the U.S.” But, even though this company boasts many successes, their name has been a hot topic in the news because of their FDCPA (or, Fair Debt Collections Practices Act) violations.

If you aren’t too familiar with the FDCPA, it contains rules and guidelines that debt collectors have to abide by. They’re designed to protect you as a borrower and keep you away from harassment and abuse.

Recently, GC Services has become a hot new topic because of a hefty $700,000 fine to settle a lawsuit that alleged that the company was engaging in illegal and invasive debt collection practices. The company did not confirm or deny any wrongdoing, but it did agree to pay the fine to the FTC. The lawsuit mentions that GC Services repeatedly called third parties (family, neighbors, etc. of the borrower) even after being told that they have the wrong person. The lawsuit even alleges that GC Services said that they would stop calling them and falsely take steps in order to remove the third party’s phone number. Under the FDCPA, debt collection agencies are only supposed to call third parties once.

Also, the lawsuit alleges that GC Services revealed consumer debts in voicemail. Another person, who wasn’t the consumer, ended up hearing these voicemails. That again is in violation of the FDCPA. In the lawsuit, the debt collection company proclaimed that collected approximately $1.4 billion in gross collections from consumers in 2014. Also, the lawsuit stated that in that same year they had gross revenues of approximately $133 million.

This company also deals with a variety of customer complaints. According to the Better Business Bureau (BBB), there have been 111 closed customer complaints over the past three years. 25 of those complaints have been closed over the past twelve months. There are also currently 13 customer reviews on the company’s BBB profile, aggregating into a score of one star. On the other hand, the company currently has an A rating with the BBB. The percentage of consumers that have a problem with GC Services tends to make their voices heard in any way that they can. GC Services has an often bad reputation with the consumers they deal with, but they still maintain a high level of success in the industry.

Dealing With Harassment

If you’re currently dealing with a debt collection company such as GC Services, then it’s important to know your rights as a borrower. The FDCPA was put into place in order to protect borrowers from the predator like behaviors that debt collectors often exhibited, like GC Services, in order to collect the debts.

If you’re experiencing any of these abusive behaviors from debt collectors, you should seek help:

–       Receiving calls at work

–       Receiving late night or early morning calls

–       Receiving multiple calls per week

–       Collectors are threatening you with violence

–       Collectors are proclaiming that you owe more than you think

–       Use of obscene or explicit language

When a debt collector exhibits any of these behaviors, it means that they are breaking the law. There are steps that you should partake in order to have the best chance of proving your case if need be. First, it’s best to contact the debt collection agency (whether verbally or in writing) to stop contacting you. By law, they should abide by your request. If they haven’t stopped contacting you, it’s best to record all of the illegal behavior. This ensures that you’ll have the information to backup your claims. Next, you can send complaints many different ways including the Federal Trade Commission and to your state’s attorney. Representatives from these camps will be able to give you all the information you need in order to make the next step in your case. You don’t deserve to be treated unfairly by debt collection agencies like GC Services. Knowing your options as a borrower will ensure that you’re treated with dignity and respect.

It’s a new decade, and you have the gigantic goal to purchase your first home by the end of the year. But you worry about your credit score. What if you can’t get a reasonable interest rate for a home loan? Is it really possible to purchase a new home this year? 

Well, put those fears to rest, because with some dedication, a clear plan of action, and maybe a little help from a credit repair company, you definitely could be handed the keys to your first home in 2020.

 Keep reading to see how you can make your homeowner dream come true!

A Good Credit Score Is Important When Buying a Home

The essential first step in purchasing a home is making sure that your credit score is as healthy as possible. Your credit score is the foundational piece of information that determines the interest rate you’ll pay on a mortgage. It provides essential information to your lenders about how responsible you are with your money. 

A high credit score shows that you’re more accountable and that you have a consistent history of paying your bills and debts on time. A lower credit score, however, is a red flag for most lenders and is considered a red flag. 

If you have a lower credit score, and you are approved for a home loan, you’ll probably have a higher interest rate because lenders see you as a liability. 

What Credit Score Do You Need to Buy a Home?

The baseline credit score for obtaining a mortgage will vary from lender to lender. Generally speaking, any score that is in the 700s or higher is considered excellent. 

Why does this matter?

High scores get the lowest interest rate available in the market. When it comes to determining how risky you are as a borrower, however, the minimum score differs from. Some lenders have a baseline of 660, while others have 640 or 620. 

If:

Your credit score is lower than 700, that doesn’t mean homeownership is out of your reach. 

There are still a variety of other mortgage programs through the Federal Housing Association (FHA) and Veteran Affairs (VA), which provide more flexible requirements to help you purchase a home. These programs are for borrowers with scores as low as 580 in some cases.

How to Buy a House with Bad Credit

If your credit isn’t good, your dreams of homeownership aren’t completely gone. Here are a few steps you can take to regain control of your credit and reach your goals.

Get Your Credit Report

Before you can work on repairing and raising your credit score, you need to understand your current state and what’s affecting it. You are entitled to a free credit report from all three major credit bureaus every year so that you can take a look at what your current status is. 

This report includes your personal information, payment history to all your creditors and debts, and whether or not you’ve ever filed for bankruptcy. Review your report, and if you find any errors, you should work to fix them immediately. 

A credit repair firm may be a good investment in this case. They are professionals at helping consumers remove and correct inaccuracies quickly and correctly.

Start Saving for a Down Payment

No matter which lender you go with, you’ll more than likely need to put a downpayment when you get a mortgage. Saving for a down payment is one of the best ways to show lenders that you’re serious about purchasing a home, and also that you’re responsible enough with money to save a significant amount. 

This is especially important if you have bad credit. If your credit is less than stellar, consider setting aside a larger down payment. Putting a more substantial chunk of change down can help you get a better mortgage rate, too, since you’re borrowing less. 

There are a variety of mortgages that will accept down payments for as low as 3.5%, but you should still aim for higher if you can.

Apply for FHA or Low-Credit Loans

If your credit is below the threshold that most private lenders will accept, consider looking into an FHA loan.

The Federal Housing Administration provides a few different options for prospective homeowners that may have challenging financial histories to obtain a private mortgage. Many borrowers can qualify for a mortgage through these programs with a credit score of 580 plus a 3.5% down payment. 

There are a few things you should know about going through an FHA program to get a mortgage: 

All FHA loans require you to pay mortgage insurance, which is a premium that’s added to your home loan, throughout the lifetime of the loan. Mortgage insurance provides peace-of-mind for the lender because it protects them if you stop making your mortgage payments. Currently, the mortgage insurance premium on an FHA loan is 1.75% upfront and then 0.7% to 0.85% annually. 

If:

You’re a veteran, you should also consider looking into VA loans. The VA doesn’t set a minimum credit score, but they do prefer to have borrowers with at least a 620. 

Both the VA and FHA mortgage programs provide borrowers with challenging credit scores a path to homeownership.

Rebuild Your Credit

If you do find yourself unable to qualify for a loan, you’ll need to concentrate on taking steps to become more creditworthy to prospective lenders. Take a detailed look at your credit report again and try to identify what is impacting your score. 

For example, if you have a very high debt-to-income ratio, you can improve that by paying off high-interest debts first. However, if you’re stuck and don’t know how even to attempt to repair your credit, the best thing you can do is to hire a credit repair company. 

Their job is to help you by creating a detailed, personalized plan to help you get your credit back on track. With their expertise, you’ll know precisely what you need to do to get your credit back up to par, and realize your dreams of homeownership in no time!

The path to financial freedom and homeownership isn’t out of your reach, no matter what your current credit situation is. Awareness is the first step in making any changes, and knowing where you stand now gives you the ability to create a pathway to the future. 

And if you want a detailed, expert plan to change your credit situation, hiring a credit repair company is one of the best things you can do. 

Don’t wait until it’s too late and make your dreams of homeownership come true!

Headquartered in Atlanta, Georgia, National Credit Systems is a third-party collection agency that operates independently. Initially founded in 1991, the agency specializes in recovering money for apartment owners and managers that is owed to them by consumers who have failed to fulfill their lease obligations. 

If you happen to be someone who is on the receiving end of round-the-clock phone calls and aggressive letters urging you to pay owed funds to National Credit Systems, it’s essential first to educate yourself on your consumer rights. A common mistake that consumers make is to pay off their debt in collections, believing that this, in turn, will improve their credit standing. 

According to FICO, the scoring system used to determine your credit score, having collections added to your credit report can negatively impact your credit score, docking the number by up to 100 points. It’s logical to thank that by paying off collections, it’ll be removed from your credit report. However, the collection listing will remain on your cred report, changing from an owed item to a paid collection. 

Showing something is paid is good, right? In this instance, it can work against you, acting as a negative listing and damaging your credit score. What’s worse, is the belief that ignoring debt collections altogether will make them magically disappear. More often than not, outstanding debt collections can wind up escalating to a lawsuit. 

This means National Credit Systems has the authority to slap you with a lawsuit for owed money. Should this happen to you, it could lead to a judgment that causes asset seizure, wage garnishment, and liens placed against you. And make no mistake, the judgment will be filed on your credit report and basically annihilate your entire credit score. To avoid a lawsuit and ensure you are fully aware of your rights as a consumer, here are four things you need to know.  

Make an Account Validation Request

When faced with National Credit Systems debt collections, the first thing you want to do is make an account validation request. Your request, which is asking for proof that this debt belongs to you, should be sent in writing using certified mail. Under the Fair Debt Collections Practices Act (FDCPA) you are entitled to making this request. Once received, National Credit Systems will need to furnish you with evidence that the account does, in fact, belong to you and therefore, they own the collection rights. Should the company fail to provide authentication of your debt, then the legal responsibility to pay owed funds no longer falls on your shoulders. Also, NCS will contact credit bureaus to have the collections listing removed from your credit report.

Time Restrictions

What happens if NCS does adequately validate your debt? The next step requires you to carefully examine the documents they provide and locate the last activity date recorded with the lender. Per the statute of limitations, a majority of consumer debt must be collected within a seven-year time frame. Confirm the laws for your state to ensure you know the exact number. This way, if debt collection agencies are attempting to re-age your account in an attempt to collect payment, you can exercise your consumer rights and prove that funds are no longer legally owed.  

Settlement Negotiation

You’ve validated your account and confirmed it’s within the legal time limit. Now, you’ll want to begin settlement negotiations with NCS for your collections account. As a best practice, your negotiation should always focus on paying less than the total balance listed. For example, if they claim you must pay $600, it’s likely you settle your debt for less. It’s typically recommended that you negotiate a settlement payment between 10% and 40% of the entire balance owed. 

A crucial part of successfully negotiating with National Credit Systems is to establish an agreement that you’ll remit payment in exchange for NCS agreeing to cease all reporting to the credit bureaus. This is a critical part of your settlement negotiation because without doing so, the collection listing will remain on your credit report and continue to damage your score. The collection listing needs to be removed, rather than just updated to a paid collection on your credit report. 

Disputing Errors on Your Credit Report

Due to the Fair Credit Reporting Act (FCRA), you’re entitled to exercise your rights as a consumer and dispute a questionable, inaccurate, or erroneous items listed on your credit report. By working with a credit restoration company, like The itPhenix Group, you can partner with a credit specialist to dispute and remove all reporting errors on your behalf. 

For example, by filing a credit bureau dispute for the NCS collections listing, the reporting bureaus will conduct an investigation to validate your claim. During their investigation, they’ll connect with National Credit Systems for account verification. Since the terms of your settlement agreement require NCS to stop their reports, they will be unable to verify your account, and the item will be removed from your report. Taking these types of steps will help repair poor credit. 

Final Thoughts

Many collection agencies take advantage of consumers, violating their rights because they assume consumers aren’t knowledge about these laws. Cleaning up your credit report is incredibly important for maintaining a healthy financial standing. Seeking assistance from a qualified and trustworthy credit repair agency is the most effective way to ensure negative items are removed from your credit reports.

A good credit score depicts a person’s creditworthiness, and this will give you a chance for lower interest rates when you apply for a loan. If your credit score is not where you want it to be, there are many ways that you can do to improve your score.

How Fast Can You Build Your Credit?

A credit score takes time to build and improve. While you can’t transform your score overnight, with steady and consistent efforts, you can see dramatic improvement. If starting from zero, you can expect to build a decent credit score in six months. For the major credit scoring companies to compile enough history of your credit use for a score, you need at least one active account open for a minimum of six months. If you’re trying to repair damaged credit, the longer you have to rebuild it, the better, but you can start to see improvements within three months.

What Can You Do to Boost Your Credit?

Consistent, steady improvement will do the most to improve your credit over time. Nothing happens overnight when it comes to your credit score, but some things contribute more than others. Here are six things you can do to increase your credit.

Apply for a Secured Card

If you want an easy instant-boost to your credit, apply for a secure credit card. These cards require a cash deposit upfront as collateral against the purchases you’ll make. The benefit of this card is your ability to control the credit limit by paying a higher security deposit. 

One of the factors in your credit score is how much credit you use. It’s best to stay under 30%, so if you apply for a secured card and place $1,000 as your security deposit, keep your credit usage under $300. Each month you consistently stay under a 30% credit utilization, you’ll see your credit score improve.

Become an Authorized Credit Card User

This is an incredibly easy way to build your credit, so long as you choose the right person’s credit card. By becoming an authorized user on a friend or relative’s credit card, their credit utilization and history of payment will be reflected in your score. If you have a little credit history, using this tactic works well.

To do this right, you’ll want to make sure you choose someone who has a credit card with a consistent low balance, a history of no late payments, and a high credit limit. Do not sign on to another person’s card if they have a history of poor credit utilization. Their credit behavior, good and bad, will be reflected in your score.

Ask for a Raise of Credit Limit

If you consistently struggle to stay under your credit limit, apply to your credit card company for an increase in your credit line. A higher credit limit can help improve your score by keeping your utilization lower. When your credit line increased, the increase itself is also reflected favorably on your credit score. An increase in credit demonstrates that you are viewed as a stable cardholder by credit card companies.

Correct Wrong Information on Credit Reports

There are many ways to track your credit score. Popular websites and apps such as Experian and Nerd Wallet offer free credit score tracking. But why is monitoring your credit score important? Because knowing when incorrect information is entered into your score is vital for getting it fixed. 

Though it may not happen often, there are times when incorrect information may get entered into your credit report. When this happens, your score could be negatively affected. The only way to reverse this is by having the credit scoring companies such as Equifax, Experian, and TransUnion remove this information. 

When it comes to removing false information from your credit score, it usually takes more than a phone call to point out the mistake. There will be checking, referencing, and the potential for documentation needed from you. It will take some time to get the incorrect information removed, and your score repaired. It is best to get the process started as soon as you notice an inaccuracy pop up, so get your score back to normal quickly.

Make Payments on Time

Your payment history is one of the most significant factors when improving your credit score. On-time payments will always contribute to improving your score. The more record you have of never missing a payment, the more your score will go up. When it comes to payments, you should always pay at least the minimum, as noted on your credit statement each month. Paying more than the minimum is advisable to reduce interest payments and lower your credit utilization. But, if you can only do the minimum, at least do that.

It may not seem like a big deal to miss one or two payments. However, a late payment can cause a drop in your credit score, ranging anywhere from 90 to 110 points. That’s enough to take you from a “good” rating to a “fair” rating and instantly increase interest rates on loans or even disqualify you from obtaining loan approval. Though the score will rise again as you faithfully make payments, you could feel the effects of late payment for as long as seven years. 

Applying Credit Utilization

Credit utilization has to do with how much credit you use in contrast to your credit limit. Low credit utilization is beneficial, and, in general, you shouldn’t use more than 30% of your limit. If you have a credit limit of $1,000, for example, you should keep your credit under $300 each month or until you pay it off. Low utilization sends the message that you know how to manage credit well, and you aren’t at risk of borrowing more than you can payback.

Improving your credit score takes time. Being financially responsible and practicing the steps outlined in this article will help you boost your credit. And while there are many things you can do on your own, if you’re still at a loss, it could be best to hire a credit repair company to help you out.

Whether you like it or not, your credit is a reflection of you. It’s basically a snapshot of how trustworthy you’ve been with money in the past. Throughout your life, credit can affect many different milestones such as getting a job or an apartment. Also, when you choose to make bigger purchases such as a car or a home, credit can make or break whether you’re going to be willing to afford it. It’s important to realize how important credit is before you can work on increasing your score as much as possible. To learn more about how credit impacts your wallet, read on.

1. Your Rent

        More and more apartment managers, landlords, and rental agencies review their tenants’ credit scores. When they look at your credit report, they are trying to find a record of fiscal responsibility (or lack thereof.) Negative information like missed payments can influence them to believe that you may not pay your rent on time. They might be looking to see if you have any large debts as well, which may prevent you from paying your rent. Having a low credit score means that you might have to find a co-signer, put down a larger deposit, or that your housing application might just get passed on altogether. Causing you to settle for an area that you’d rather not live in or pay more than you were planning to for rent.

2. Your Utilities & Cell Phone Service

        As with your rent, having a low score may force you to have to get a cosigner or pay a large deposit on your utilities. Cell phone providers might ask to take a look at your credit history before giving you service. Also, if you have a lower credit score, you might miss out on deals that individuals with better credit scores are being offered.

3. Your Career

        Even though you may not think it’s fair, the truth is that many employers check the credit reports of prospective employees as a part of the screening process. Some of the reasons why include assessing trustworthiness, discipline, and figuring out the potential for theft or embezzlement. It’ll often happen if a person is going for a high-stakes position, or if someone yearns to be in an industry that deals with money quite a bit (i.e. banking.) But, in the end, it’s a possibility that many people will face when they’re trying to get a new job.

        By law, employers are required to have your written consent before they look at your credit history. And also, they might not see your actual credit score. In turn, they’ll see a modified credit report that could omit some details. Still, if your credit report involves a number of negative factors, it may be the thing that stands between you and getting the job that you have always wanted.

4. Student Loans

        If you’re looking to continue your education, then finding a student loan might be a frustration instead of an ease. But, this depends on a couple of different factors. When you’re dealing with Stafford, Perkins, or PLUS loans they don’t rely on your credit score. But, if you’re planning on getting a PLUS loan, it requires that you don’t have an “adverse credit history.”

        Private student loans are a completely different story. They, in turn, do look at your credit score when deciding whether to give you a loan or not. When it all comes down to it, the borrowers with the worst credit are going be offered loans with 5-6% more of interest than those with an excellent credit score. Sometimes, the rates are even higher depending on the lender. This means more money is going to come out of your pocket in the long run than someone who has already established an excellent credit history.

 5. Your Mortgage or Car Loan

If you’re currently in the market for buying a house, one of the first things that you’re going to do is apply for a mortgage loan. If you are dealing with a terrible credit score, then you might not even qualify for getting any type of mortgage loan at all. Many lenders use your credit score as proof of your reliability as a borrower. If you’re dealing with bad credit, that’s definitely going to be a red flag for a lender that they might not get their money back if they lend to you. Even if you have unestablished credit, you might not get a good deal for a loan as well because lenders are basically taking a bet on you.

        Even if you do get approved, the loans that are available to you will probably have high-interest rates. In the long run, you’ll probably end up spending tens of thousands of dollars more than someone who has a much better credit score than you.

        Car loans work the same way. If you don’t have a decent credit score, then you might not even have car loans available to you. If you do, you’ll probably end up drowning in interest for years to come. Having bad credit can not only stand in the way of your goals, but they can also cost you thousands of dollars in the long run due to interest.

        The status of your credit can affect your wallet in many different ways. It can come between you and many of your life’s goals including getting a job, getting an apartment, and qualifying for an auto loan. Also, your credit can cause utility and credit card companies to see you as “untrustworthy” and keep the best deals from you as a result. Choosing to better your credit means, inevitably, choosing a better life for yourself. Having good credit gives you the ability to choose the things that you want whether it is your job, your place to live, or your car. Choose today to work on bettering your credit, and give yourself the gift of choice.

Losing a job is difficult in the best of times. When the economy is down, however, the impact of job loss is felt even more. When you pair this with the fact that finances will need to be adjusted and your credit score could be damaged if you can’t pay, job loss becomes downright terrifying. Let’s take a look at how unemployment can impact your credit score and what you can do about it.

Does Unemployment Show in Your Credit Report?

This is one concern you don’t have to be worried about. The fact that you are unemployed will not become part of your credit history, and it won’t show up in your score. Filing for unemployment, likewise, will not show up in your credit history. The only private information contained in your credit report is records of your financial accounts and hard credit inquiries. The only other record that could be included is if you’ve ever filed for bankruptcy. 

How Does Unemployment Affect Credit Scores?

Being unemployed in and of itself doesn’t directly impact your credit score. The primary areas of concern you have to face is the requirement of continuing to pay at least the minimum on your credit card statements and loans. 

High Utilization of Credit Cards May Affect Your Credit Score

The difficulty in unemployment is the potential necessity to use more credit than you usually would. Credit utilization is one of the most significant factors that contribute to determining your credit score. It’s recommended to keep your credit utilization to no more than 30% of your total credit limit. This means if you have a total limit of $10,000, then you should only have $3,000 of credit used at any one time.

If you go slightly over the 30% ratio, you won’t see significant changes to your score. If you go far over the percentage, however, your score will lose points. High credit utilization will always reduce your credit score. The higher you go over the recommended 30%, the more your credit score will be impacted. Nearly maxed-out credit cards indicate to credit rating companies that they might be dealing with a risky borrower. Even if you have all the intentions of paying your credit cards back down in full once you get a new job, your score will be impacted during the period when your utilization is too high.

Limited Funds or Income May Result in Late Payments

The most significant contributing factor to your credit score is your payment history. If you have limited funds and you don’t have savings stashed away to compensate for lack of a paycheck, you might need to miss payments on your credit cards. Unfortunately, this can significantly reduce your credit score. Even one missed payment can lower your score by as much as 90-110 points. If you miss enough payments that your account is sent to collections, your score could be damaged even more. 

How to Help Lessen the Impact of Unemployment on Your Credit Score

Thankfully, there are several ways to help lessen the impact on your credit score when you’re unemployed. The key with each of these is to reach out to your lending agency and ask. Credit card companies can often provide a form of financial relief to customers, but they can’t help you if they don’t know you need assistance.

Common Forms of Assistance that Creditors Can Offer

Credit card companies and loan agencies can offer help when customers encounter a time of crisis, such as unemployment. Inquire with your lending agency to determine which of these options might be accessible to you during this time.

Lowering a Monthly Minimum Payment

If you need more time to pay off your bills, credit card companies and lending agencies can offer help to lower your monthly payments for a short duration until you get back on your feet. Ask them about these options to work out something that will help you manage your finances during unemployment.

Waiving or Refunding Late Fees

If you have a history of on-time payments, your credit card company will likely be more than happy to work with you and provide this option. When there is history and proof that you’re a reliable customer that pays back your bills, they’ll be more willing to waive the associated fees with late payments while you’re unemployed.

Reducing the Interest Rate

By lowering the interest rate, you can extend the amount of your loan and pay back less each month without it negatively impacting your finances.

Establishing a Payment Plan to Pay Off Existing Balances

A payment plan differs from your minimum monthly payment. Your lending company can work with you to adjust your monthly payment and come up with a better payment plan that you can manage even while dealing with unemployment. This may look like lowered interest, a lengthened period, or a waiver of monthly payments during a specified period. 

The CARES Act

CARES is short for the “Coronavirus Aid, Relief, and Economic Security Act,” and it was signed into law in March. This act provides consumers with credit protections during a time of uncertainty, unemployment, and upheaval. 

The act specifies how companies are to report data to credit bureaus for consumers that have payment accommodations in place. It also specifies that you can request that lending companies add a code to your credit report that indicates you were impacted by a natural or declared disaster. Coronavirus is a declared disaster. Though FICO doesn’t recognize the codes, VantageScore will disregard late payments for any accounts with the code attached.

It can be challenging to handle finances when you lose a job. Naturally, we tend to rely on credit cards to meet our needs and get us through. Keep this article in mind, so you don’t indirectly impact your credit score. Thankfully, however, there are options and financial relief that may help lessen the impact on your credit score during this unprecedented time.

 How a Charge-Off Affects Your Credit Report

        A charge-off can stay on your credit report for up to seven years. This up to a variety of different factors including when you start paying it off and if it has been passed on to a collections agency. If you have a charge-off, then you’ve probably been dealing with multiple hits to your credit report for a long time. These hits would have come from the multiple missed payments. But finally getting a charge-off makes a huge dent in your credit report. Also, if your debt ends up getting passed off to a collections agency, then that’s could affect your credit score as well. If you neglect to pay the collections agency that has taken responsibility for your debt, then that could negatively affect your credit score. Dealing with a charge-off can set off a never-ending chain of events that could deal out a huge blow to your credit that could inevitably take years to recover from.

        Even if you pay your charge-off debt in full, that doesn’t mean that your charge-off is going to be wiped off of your credit report. When you pay off the debt, it’ll change the status of the debt on your credit report to “charge-off paid” or “charge-off settled.” This is more favorable than having the charge-off on your credit report, but it’s still going to linger on your credit report for seven years.

Another option that you have is to negotiate with your creditor. They might take the charge-off off of your credit report if you pay the debt in full. If your inability to pay the debt dealt with a life event like jobless or a major medical issue you might be able to influence your creditor one way or another by displaying a pattern of positive payment history before that life event. It’s not a sure thing, but it’s definitely worth a try.

 How to Pay Off Charge-off Debt

Contrary to popular belief, getting a charge-off doesn’t mean that you aren’t still responsible for the money that you owe.  It just means that the debt is deemed unlikely to collect. Your debt is still going to be owed until it’s paid, settled, or discharged in a company proceeding. Your debt might have been sold to a third-party debt collector after your debt was charged-off. That just means that you’re going to have to get in contact with someone new in order to deal with your debt.

If they haven’t sold your debt to a collection agency yet, then try to get in contact with the original lender. Talk with them about your options which may include introducing a payment plan, paying off the debt in full, or settling it for a lower amount. If they have sold it to a collections agency, be sure to ask for proof beforehand that they have ownership of your debt. Once you have that proof, get in contact with them as soon as possible in order to figure out the best path towards paying off this debt. Sometimes, new creditors won’t lend you out any new credit until you take care of all of your debts that are past due. If you’re planning on acquiring any new debt (home, auto, etc.) then it’s very important that you take care of this debt as soon as possible. Don’t let a charge-off debt take control of your life any more than it already has.

         If you have a charge-off on your credit report, it’s not the end of the world. You absolutely should work towards getting that debt paid off and possibly even getting the charge-off taken off of your credit report. But, if you’ve done all you can do, then practice positive credit management (paying your debts on time, monitoring new credit lines, etc.) in the meantime in order to build back your credit score. The effect that the charge-off has on your credit report will wane in time. In turn, be sure to use your credit responsibly and your credit score will be stronger before you know it.