Banks determine the risk of loan based on you – your past financial history. They are looking at your credit score, which is a record of all the credit that has been issued you and your history of paying that credit back.
You need to obtain a copy of your credit report; there are sites on the internet that offer credit reports for free, such as annualcreditreport.com.

Once you have your credit report in hand – review the entries, to verify that all the information is correct, as sometimes there are inaccuracies reported.

Time will cause some entries to ‘fall off’ your report, this usually happens after 7 years. Banks do understand that we all have a past. And if can be demonstrated that you have been responsibly meeting your obligations for an extended period of time that is usually taken in to account when reviewing your credit worthiness.

Banks speak of credit scores. These scores are called FICO (Fair Issac Company) that combine the results of the 3 primary reporting agencies – Equifax, Transunion and Experian into one number. Scores can range from 300 -850. Although the credit report in your hand does not provide this number – knowing the items that are used to calculate that number can really help.

FICO is based on several factors including;
• 35% on repayment history
• 30% on amount owned lenders
• 15% on the length of your credit history
• 10% newly open accounts or applications
• 10% on the ‘mix’ of credit type – credit cards, mortgage, car loans

Things that will help to improve your credit score (some may be obvious).
• Pay your bills on time – EVERY month
• Keep borrowing below your limit – maxing out credit cards is a red flag
• Limit the number of credit cards you have. Note in the FICO factors history plays a role, better to keep the older credit cards that establish a longer history.
• Don’t apply for new credit while trying to qualify for a mortgage

Banks are in the business of lending money – being prepared can help to make the dream of home ownership a reality.

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I Need to Buy a House- Where and How Should I Start Fixing My Credit?

Another reason for neglecting records may just be a sense of impotence. Perhaps they have heard that all too familiar voice on the other end of the line saying ‘I’m sorry, there’s nothing we can do’. Whatever the reason may be, sooner or later it’s going to end up costing you money if the information is not correct. An adjustment of just a few points on a credit score can mean the difference between getting approved or disapproved for a mortgage loan, for instance. Or, at the very least you may be settling for a higher interest rate.

Secondly, you need to understand that your ‘tool’ is being used by total strangers. You are living in the information age where personal privacy is pretty much a thing of the past. All the more reason to verify your credit information. The Fair Credit Reporting Act, adopted in 1970, gives people the right to challenge the accuracy of anything that may have been reported about them to a credit bureau. The ‘tool’ has been placed in your hands!

So, what should you do if there is a discrepancy in the information you find? You can send a letter of dispute detailing the entries you feel are inaccurate. The Federal Trade Commission has a website that gives helpful tips on the best way to approach this and what you may expect from the reporting company in return. There are strict guidelines that they must follow when you contact them. If you don’t feel comfortable doing this on your own you can hire someone to do it for you.

There is a caution here. You need to be aware that most of the advertisements promoting quick credit fixes are no more than scams. Consumers with poor credit histories are prime targets for these ads. A legitimate company will tell you that repairing a credit score takes time, serious effort and in some cases, a debt repayment plan.

Finally, know your rights. You are entitled to one free report a year from each of the three major credit bureaus. You don’t have to pay anyone for this service; it’s the law. But no one has the responsibility to do this for you; it is yours alone. Repairing your credit score and staying current with the information in your file will not only offer you the advantage of saving money on your purchases but will also keep you a step ahead of potential identity thieves. Take good care of that tool!

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Credit Repair- Your Right…Your Responsibility!

To be able to remove something from collections, you have to dispute it. This requires you to send in a dispute letter about the account you are reporting. There is more than one credit bureau, so you must send in the same dispute letter to each bureau. The dispute letter needs to state the account you are disputing and the reason why.

Once the credit bureaus receive your dispute letter an investigation will be opened. The bureau will then get in touch with the company who reported the information. By the bureau contacting the company, this will inform the company you are challenging the report. The bureau will want to make sure the report and information given by the company is valid.

If the debit is old and cannot be found by the company, it will be very likely that the collection account will be dropped and removed from your credit report. If the company can verify the debt and entry, then the debt will more than like have to be paid off or a negotiation of payment will be made. Once the debt is paid off, it will not automatically be removed from your credit and you will need to negotiate for the removal.

Here are three steps to removing collections from your credit report:
1. Dispute charges for collection- send in a dispute letter and have an investigation started
2. Pay off the collection amount-it may be easier to go ahead and pay it off
3. Wait the time period for the collection to drop off of your credit-collections must be removed seven years after reported

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Credit Repair- How to Remove Collections From Your Credit Report

Fortunately, rebuilding your credit score can be done. The first thing to do is to look at your finances and see where spending can be curbed. Eliminate any unnecessary purchases. This will free any extra cash to be used for paying down your debt. If paying current credit card charges, start by paying down the highest interest rate first with more than a minimum payment.

It used to be thought that prepaid credit cards weren’t worth the time. Actually, this is an excellent way to put a limit on your spending, while at the same time, if used correctly, will rebuild your credit score in a rapidly.

One way to do this is to first decide the amount you want to put on the prepaid card. These can be purchased at almost any grocery or discount store. When paying your bills, total the amount of all the bills that you are planning on paying(utility bills, phone, television, etc.). Be sure to include a little extra, ($10) so you will have enough. You can then pay your bills as usual without incurring any interest. As these prepaid cards are Visa or Master Card, it will be reported to the various credit agencies.

Obtaining a secured credit card (small credit limit) is an option. These cards usually have a fee attached when applying for one. The interest rates are higher than a traditional credit card, however, you will have a pre-determined amount to use. Paying a bill or purchasing something of an amount that you would be able to turn right around and pay off and doing this several times each month will build your credit very quick. Remember, If you wait until the bill is due, you will incur interest.

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Repairing Bad Credit with Prepaid Credit Cards

To determine whether to approve or not to approve any kind of loan or Denver home mortgage, the lenders always analyze your credit score. This way, they want to know the possibility of repaying the money that you loan from them. Higher credit score offers higher chances for repaying and less risk involved.

For improving your credit score, you must look at five parts of your credit reports:

1. You have to improve the payment history- this means that you have to pay all your bills on time. This is very important part for improving the credit score. If you have difficulties with on time payments, then contact the creditors and make arrangement with them and negotiate to keep some parts of late notations off the credit record.

2. You have to keep your debt to a minimum level- Lower credit card balances makes your credit score higher. Never close your unused accounts because zero on your account makes your credit score higher, but don’t open new accounts just for that for at least the first three years of your credit report. Opening a lot of accounts can send a bad signal for your credit score.

3. The length of your credit history- only time is needed for this improvement on your credit score and better managing with time can make your credit score higher.

4. You have to manage a new credit wisely- requesting a several credit loans in a short time period can reduce your credit score. Checking the credit score often will not have an influence on it. If you have had problems with the credits in the past, try to open a few new accounts and pay on time.

5. The type of loans and credits you use- if you have loans with fixed payments or different credit cards, then your credit score might go higher if you manage your credit cards seriously and responsibly. Your credit score can be lower if you have many installment loans. Closing a bank account will not be removed from your report. It will be still considered in the scoring process.

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How To Improve Your Credit Score

With the economy slowing and holidays just around the corner, many consumers may be looking to credit cards to help them get through the heavy shopping season. While that may be a good short-term solution, you want to make sure you don’t overlook the long-term impact on your credit rating. After all, the actions you take today could hang over your head for years to come–and may make it tough for you to get the home loan or car loan you want in the future.

To help you make sure you manage your credit cards–and your credit score–during the upcoming holiday spending season, follow these steps:

Double-check your card limits. Many credit card companies today have started lowering credit limits. That means you have less credit available, but it also may mean that your credit score is about to take a hit. That’s because approximately 30% of your credit score is based on the amount you owe in relation to your available credit. So, if a credit card company cuts back your limit, you may find that you’re suddenly almost maxed out. That’s not a good sign for your long-term credit score rating.

Ask, pay down, or move around. If some of your credit limits have changed or are nearly maxed out, you can take a few steps to help alleviate the problem. First, consider simply asking for a higher limit to your card…not necessarily to use up with spending, but to allow more unused credit line to be available and therefore boost your credit score. You can also pay more money to the cards that are near the credit limit, if you can. Or, if you have cards with little to no remaining credit line, transfer some of the larger balances onto the cards with lower balances. That’ll give you a more… well… balanced financial picture.

Leave home without it. One of the best tips for the holiday season is to: make a budget, identify specific items, and then leave home without your credit card. Instead, bring just enough cash to purchase the items on your list. That will help you resist the urge to impulse buy, and keep your credit card balances lower.

Pick a card… not just any card. If you can’t bring cash, make a credit card plan. Identify specific items that you’ll pay for on specific cards. By making a plan and spreading your purchases to different cards, you won’t overspend and you won’t risk running up one or two cards that are near the credit limit, which will hurt your credit rating.

Resist card offers at the counter. Retailers are famous for offering “savings” when you open a credit card. But those savings often don’t outweigh the long- and short-term negatives. For one thing, opening a new account–or multiple accounts in a short period of time–can negatively impact your credit score. In addition, consumers often spend more than planned when a new card is suddenly available. So this holiday season, resist the temptation.

Stay active. If you have older cards that you don’t use, make sure you keep them active. For one thing, some of those older cards help establish a longer history of positive credit. For another, the available credit on those older cards can help keep your credit score higher because it improves your overall debt-to-credit ratio. To keep those cards active, make sure you charge one or two items on them throughout the year… like, say, when you go shopping for the holidays. Then, pay them off when the bill comes in.

Always pay on time. Your payment record is a very large part of your credit score, so it’s crucial that you have an idea how your holiday shopping will impact your credit card bills and that you make a plan to pay those bills on time. If you have trouble for any reason, contact your card companies right away to work out a plan that helps you pay down your debt… and save your credit rating from a huge hit.

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Holiday Season Credit Strategy