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IT’S NEVER TOO LATE TO CLEAN UP YOUR CREDIT

If you’ve ever applied for a loan or a credit card and was denied due to poor credit. You need to act fast. Most people do not realize they have rights that enable them to get their credit straight.

For starters, call the credit card company and ask them to lower your interest rate. Do you realize how much money this will save you? Usually creditors like for you to pay the bill on time for 6 months. Some creditors are more lenient than others, so give it try, even if you’ve only paid on time for the last 3 months.

Next, get a copy of your credit report free. Make sure everything on your credit report is accurate. Log onto http://www.annualcreditreport.comto get a copy of your credit report free. Many companies are advertising on television, their name even have the word ‘free’ in them. Don’t be fooled, there is always a catch. And the catch is, you will be required to sign up for some sort of ‘membership’ for a fee.

An amendment to the Fair Credit Reporting Act (FCRA) entitles you to a free copy of your credit report once a year from each credit reporting agency. Keep in mind that the only place sanctioned by the Federal Trade Commission for you to get your free copy is:http://www.annualcreditreport.com

Since there are 3 credit reporting agencies: , Equifax, Experian and TransUnion , we recommend that you get a copy from each. For example, in September get your free credit report from Equifax. In January, obtain your free copy from Experian. And in May, obtain your free from TransUnion. This is also an excellent way to protect yourself against identity theft. Only the credit report is free. There is an additional fee (very nominal) for your credit score. I suggest that you find out what your score is, it may not be as bad you think. Purchase your credit score from just one of the agencies but get a free credit report from all three credit reporting agencies. The reason for this is your creditors may not report to all three credit reporting agencies. Your credit score will not vary that much from one credit reporting agency to the other but the information on each report may vary.

Once you are armed with each credit report in hand, get to work. Check each one thoroughly. Credit report errors are fairly frequent; wrong addresses, debts that do not belong to you, incorrect name spelling, wrong social security numbers. To give an example, I checked my credit report last year and there was a $60.00 debt listed by a company I had never heard of. And the wonderful thing about credit reports, most creditors list a telephone number right next to the amount of the debt. I called the company (they were in Chicago). I explained the reason for my call. I gave them the last four digits of my social security. Remember, when verifying a debt never give out your whole social security number. If you owe the debt, they will have the whole number anyway. After hearing the last numbers of my social security number, the woman said the debt was not mine. I asked how did her company come up with my name. Her reply was: there are 4-5 people in the Syracuse area with the same name as mine. She went on to say, we placed the debt on each person’s credit report & by a process of elimination we will eventually find the correct person.
I realized had I not called that company the debt would have probably remained on my credit report for quite some time. The longer an incorrect debt remains on your credit report the more difficult it is to track the original source. Creditors are notorious for selling debts to other companies. That was some education I received. Review your credit report with a fine-toothed comb, chances are there will be erroneous information on it. Correct it as soon as possible.

What else can you do? Well, you can add information that is not required on your credit report, but will show stability to potential creditors. These items would include listing: your current job, your past jobs along with your salary history. You can also add your bank account number and the balance in your bank account. If you’ve resided at your current address for 2 or more years and your credit report does not reflect that, be sure to add it. This shows stability which is what creditors are looking for.

You can also open a bank account. It doesn’t matter how small, this shows potential creditors that you have a specific way of repaying whatever credit they may extend to you. Keep in mind that department stores tend to be more lenient with their credit requirements than the larger credit card companies. Make small purchases on your department store credit card and pay well in advance of the due date. Doing this will definitely improve your standing with the larger credit card companies.
Another way to improve your credit score, become a joint card or account holder on a family member’s credit card or account. Be sure to choose a family member with a long credit history of paying on time. This will do wonders for your credit score.

One other sure fire way to improve your credit score: deposit $1,000.00 in your bank account. Wait a few weeks and then ask that same bank for a loan for $1,000.00. If your credit is not the best, they will deny you. Your recourse is to ask them to secure the loan with the $1,000.00 that you have in your savings account (at their bank). They will most likely approve the loan because there is no risk to them. Please understand that you will not be able to withdraw the $1,000.00 that you have deposited until the loan is paid off.

Most of us may not have $1,000.00 just laying around. But most of us are employed and have a 401K. Borrow $1,000.00 from your 401K, then head to the bank. Set up a weekly repayment schedule with your employer to pay your 401K back. The more you have in your 401K, the more bank accounts you can open to apply for loans. Three is a good number to start with. This is an exceptional way to increase your credit score. Be sure to pay the loan on time – 2 weeks before the due date. Do this for 6-7 months. On month 8 pay the loan off. All you are doing is paying the loan back with the money you borrowed. Sit back and watch your credit score soar!

A few more tips to improve your credit…

If you are planning to pay a debt in full (many people do this with their income tax refund), contact the creditor first. Ask them if they would be willing to remove the debt from your credit report if you pay in full. Some creditors are willing to do this. Ask them to give that to you in writing. When you receive their letter, pay the bill in full as agreed.

Last but not least, if you find negative information that does not pertain to a bankruptcy over seven years old, whether it is yours or not it should be removed. Request this in writing from the credit reporting agency. Be sure to send the letter Return Receipt Requested. This obligates the credit reporting agency to respond. When contacting the credit reporting agency in writing, always, always send your letter Return Receipt Requested.
Your debt should be 30% of your credit card limit. For example, your limit on your credit card is $1,000.00, the maximum that you should charge on that card is $300.00. Remember to pay more than the minimum on existing debt.

I know all of this sounds like an enormous amount of work and yes, it is. But, if you do not clean up your credit, you’ll continue to have a tough time renting cars; your car insurance will be high; you’ll have a tough time renting an apartment , getting a mortgage. Those who manage to get approved for loans and/or credit will have high interest rates. And who wants that? Bad credit (low credit score) also affects your ability to get a job. Potential employers are now checking your credit report. We cannot escape it, so why not arm yourself by improving your credit situation? It can be done.

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