How to Clean Up You Debt and Improve Your Credit Score
Step One: Get All Three of Your Credit Reports
Lenders use your credit reports to assess how much of financial risk you are to their organization. In other words, it tells them whether you are going to pay your bills or not. It also determines the numerical outcome of your credit score.
The three major credit reporting bureaus are Experian, Trans union and Equifax. To get a copy of all three of your reports go to https://www.annualcreditreport.com/cra/index.jsp. Follow all the steps and request all three of your credit reports. The process takes less than an hour and you will be able to look at your credit reports instantly on your computer. Save each report to a file on your computer and start going over them line by line. If you notice any inaccuracies, dispute them immediately with the appropriate credit bureaus. Ninety percent of all credit reports contain inaccuracies. Don't pay for debts that don't belong to you.
Step Two: Know Your FICO Score
Your FICO score is a number that represents how reliable you are as a borrower. The number is calculated using complex algorithms that would take half a novel to explain, so I won't. All you need to do is get that number and remember it. To do this, go to http://www.myfico.com/lp/free-score.aspx?cm_mmc=Twitter-_-FSTlink-_-TUCO-_-FST. You will have to have a credit card to sign up for a ten day trial to their monitoring service, but as long as you cancel within the allotted time you will not be billed. Don't let this or anything else keep you from obtaining that number. Mortgage lenders, credit cards companies and banks know it, why shouldn't you?
Here is a quick rundown of the numbers according to FICO (with a bit of humor on my part):
Below 600 – 660: You are a high risk borrower. Lenders and credit card companies aren't going to give you the time of day. This is probably why you are reading this article.
661 – 720: You are an average borrower. The American lending industry loves you. Lenders can demand large down payments and bury you in high interest rates. You are the guy that feeds the American lending industry. Congratulations!
721 – 850: The American lending industry despises you. They have to give you just about anything you want, often times without a down payment and with the lowest interest rates that the market has to offer.
Step Three: Pay Your Bills on Time
I am not talking about your utility bills here. Although I suggest that you pay them on time as well, late payments on utility bills do not show up on your credit report unless you stop paying altogether and they go to collection. The bills that you want to be especially careful about paying on time are your mortgage, car loan and credit cards payments. These are instantly reported when paid late and have a negative impact on your credit rating. Your credit score will drop and your interest rates will rise. Pay your bills early whenever possible and try to pay more than the bare minimum. These activities are reported as well.
Step Four: Monitor Your Credit Card Spending
Don't make anymore purchases on your credit cards than you have to. Over half of the credit card purchases made in America today are for household toiletries and groceries. Why on earth would you want to pay for those purchases today and then pay interest on them months from now? Stop it! Pay off as much of your balance as you can and use them for emergency purchases.
Step Five: Summarize Your Debt
Get all of your bills together and lay them out on the kitchen table. This includes medical bills, old utility bills, credit card bills, everything. In a moment I am going to show you how to earn a little extra money to start paying all of this debt off, but for now you just need to know where you stand.
Now look at your credit report and find the oldest debt on there. That is the one that you want to pay off first. Always pay from the oldest to the newest, starting with items that are on your credit report.
Always send your payments to the companies that you originally incurred the debt with and not debt collection agencies. Call the company that you hold the debt with and ask for an address that you can use to send your payments to. Keep all of your receipts and make a record of your payment activity. After you have paid the debt off, begin monitoring your credit reports to watch for the removal of that debt. If it hasn't been removed after a month or so, call the company back and ask them to make the necessary calls to get that debt off of your credit reports. If it still doesn't come off of your reports, then file a dispute with the appropriate credit bureau.
Step Six: Get Some Debt Paying Money
There are companies out there right now that are paying people to donate sperm, blood serum, hair and even to participate in medical studies. Check around to see if any of these opportunities exist in your area.
Aluminum Recycling – Find a stretch of road somewhere in your town that no one seems to care about and start cleaning it up. Gather some friends and family together and go out there every other weekend with trash bags and poker sticks. Keep the aluminum for recycling and toss everything else. You will earn a little money to pay off your debts and your family will earn some much needed community clout.
Write articles for Associated Content, write some ebooks and sell them on eBay, go to work for gather.com and use your imagination. Make the money, get the debts cleared and get on your way to financial freedom.
Good luck!
Questions and Answers
Strange though it may sound a credit card can be a useful tool in controlling debt. The properly chosen credit card can, in fact, be used to consolidate debt. There are several features to look for though if you plan to use a credit card in this manner. As is always the case before you scrutinize any credit
Applying for a credit card is not always an easy task when you have not a credit history or your credit report reflects a poor or bad credit history. Although most financial advisors will suggest work around improving your credit score, obtain a credit card is nowadays necessary because there is a large number or services you can only access by paying or booking with a credit card.
For those interested in buying your own home, there’s a very important factor that creditors consider when deciding the interest rates of your loan. Your credit rating. A credit score is a numerical description of your credit report.
You may possibly not understand it, but every time you take out any kind of bank loan or credit score or spend something back, it will get counted on your credit history. Who looks after a record for you will vary based on where you live, but the large three credit research agencies tend to be Experian, Equifax and Trans Union. They will supply your credit score to the company that is thinking of financing you money.
Credit scores analyze a borrower's credit history. They consider numerous factors in calculating your credit score like: any late payments you have made, the amount of time your credit has been established, the amount of credit you used versus the amount of credit you have available, length of time you have lived at your present residence, and any other negative credit information. But primarily your credit score is made up of 5 main factors.
Debt settlement firms and agencies in New York have made it easier for New York debt negotiation to be easier for those who are in debts.
Debt firms that handle settlement of debt lawsuits are one of the most beautiful settlements of debt lawsuits that can be seem in the debt settlement mortgage market.
In the beginning Debt settlement IIc firms that take care of loans started with products that were fascinating until the impressive Debt settlement firms that take care of loans debt settlement firms came to limelight.
Most people in UK nowadays live with credit cards and loans. Majority of the population would use these plastic cards to pay for items they purchase in big shopping malls and supermarkets.
Debt comes natural nowadays due to economic downturn and budget crunch. People who experienced unexpected circumstances would certainly apply for unsecured loans without even thinking about interest and additional charges.
Primitive fire building is one of the most basic wilderness survival skills, but most of us never give a thought to practicing it so that we know how to do it in times of trouble. In this article I am going to cover the basics of wilderness fire craft.
Discuss this Article
