Why do a lot of people suffer from low credit scores?

The importance of credit score is undeniable. Yet, many Americans today have errors and other problems on their credit reports that drag down their credit score. Why is this so? Chances are, your credit score is lower than it should actually be.

Most people would like to believe that the credit reporting system is accurate because they think they can do nothing about it for seven years. But here is where they are wrong because the Fair Credit Reporting Act and other laws give you the ability to do something about it. You can make your credit score as good as it can possibly be!

Disadvantages of negative credit scores

Your credit score can mean the difference between paying $1,500/month and $2000/month for the same house. With this apparent benefit in mind, you might be wondering why only a few people decide to take action to improve their credit score. Well, the common reason why people do not undergo credit repair has something to do with apathy and their lack of understanding with regards to the credit reporting system.

Many people assume that the credit reporting system is an official government bureaucracy that has a thorough process of checking and balancing every aspect of a person’s credit history. But you need to realize that this is not the truth.

What you can do about it

The credit bureaus that rate your credit score are not actually official organizations. Rather, they are corporations that collect data from your creditors and they make money by using this information in the form of the credit report. So the question is how can they ensure that the data provided by the creditor is correct?

The answer to this is that they don’t. When a creditor reports inaccurate information, the credit bureau will record it, and the story will end there for most people. No one in the credit bureau or even the government is going to make extra effort to ensure that your credit reports are correct; that becomes your responsibility.

You are the most important factor in the credit reporting system because you are the one who will either suffer or benefit from your credit score. Make it a point to dispute any questionable items found in your credit report. Remember, the sooner you start, the better.

Getting help from an expert

If you are interesting in improving your credit score but don’t know where to start, you can consult with a credit repair expert. By taking a role in improving your credit score, you can improve your lifestyle and quality of life because of the amount of money you can save from smaller interest payments.

In getting help from an expert though, you should also consider how reliable the credit repair organization is. In the past, a lot of people have already been deceived by companies that offer credit repair services. You need to check their credibility as well as the feedback of other clients to ensure that you are not being tricked.

Empower – Educate – Take Action

H & I Credit Solutions

If you have had dealings with the credit bureaus you know that they can be very sneaky and demanding. Credit bureaus have a process that they use in order to process disputes, and you have to play by the rules in order to get the best results. When you dispute an item or items on your credit report you may receive several different responses from the credit bureaus.

Typical responses are listed below:

• We are processing your dispute
• We have received your dispute and are investigating the items you listed
• We have finished our investigation and the results are listed below
• We are unable to process your dispute because proper verification as not been met
• Please provide the required forms of identification in order to process your dispute

You may receive one of the five responses above when you start your journey in repairing your credit. You must know how to handle the last two stall tactics. Stall tactics are used by the credit bureaus in order to by time and discourage consumers. Imagine if you knew nothing about the process and you received a letter from a scary “Credit Bureau”, you may either send in the requested information or feel like they are going to find out that you’re not telling the truth. This type of tactic is very powerful when dealing with consumers as many will just give up and continue to feel helpless.

The credit bureaus have a habit of sending a response like the following:

Dear consumer,

We have determined that your dispute in fraudulent. We will not investigate this item again. If you have anymore concerns……..

Or,

Dear Consumer,

We have determined that your dispute has not been initiated by you and could have possibly been sent by a credit repair company. It is illegal to use a credit repair company………….

How do you get around these stall tactics? There are 5 items you will need to send in when you are repairing your credit. These items are a must in order to not get road blocked by the credit bureaus.

1. Dispute letter
2. Copy of your ID
3. Copy of your Social Security Card
4. Copy of a recent utility bill
5. Copy of your recent paycheck stub (black out the amounts)

Sending in these items will allow you to have more success. Do not get intimidated when dealing with the credit bureaus, even though they make money on processing your dispute they are not your friends.

Empower – Educate – Take Action

H & I Credit Solutions

At some point in many of our lives, bad financial decisions are made that can affect your credit rating in a negative way. A rating of less than 580 is considered bad credit (some may say terrible credit), which limits the options of getting loans and other forms of credit available to you. Nobody wants to live their entire life with such a bad credit rating, certain measures may need to be taken to rectify the situation. One remedy for a negative rating is to apply for a bad credit loan. Believe it or not, there are institutions and individuals that specialize in giving out bad credit loans to persons with negative credit ratings.

The first step is to meet with a financial adviser and ascertain exactly how your credit rating is, so you can have a clear picture of the status and the options available as far as bad credit loans go. It is prudent to borrow what can be repaid quickly without further affecting the credit rating. A common form of bad credit loans, are loans for , computers, or jewelry. Most pawnshops will accept these items against a loan that has to be paid back with interest within the stipulated time frame. If the full amount is not repaid by the expiry of the said period, then the pawnshop can sell the item to recover their investment.

Another form of a bad credit loan is a loan against a car that you currently own. Proof of ownership (car title) has to be provided and left as collateral with the lender. It is usually common to be offered an amount a little less than the true value of the item used as collateral. Some lenders will also give bad credit loans against pay slips as long as the employment of the borrower can be verified. These loans are also known as payday loans. Payday loans are where the borrower agrees to repay the loan when they receive their next paycheck.

In most cases financial advisers will recommend that the borrower get alternative forms of bad credit loans instead of payday loans. Over the years, payday loans have got a bad rep due to high interest rates. A person with a low credit score can get a bad credit loan with good terms when they get someone with a good credit rating to co-sign with them. A co-signer should be a person that is well known to the borrower so that the borrower will not default on purpose thinking that because they know that the other person, they will cover the loan amount. Pay your bills, and you will be in good shape!

Empower – Educate – Take Action

H & I Credit Solutions

Some folks are under the impression that the older the items are the easier they are to remove. Is that true? Sometimes it is, sometimes not. Depending on the type of item that is being reported it really depends as always if the item is verifiable, accurate or misleading.

Just because an item is old doesn’t mean that it will be easy to remove. Remember, if your old items are verifiable and accurate, they will not be removed. The FCRA strictly states that the credit reporting agencies have to report verifiable and accurate information.

Now, having said that, if your old item or any item is NOT verifiable or accurate it has to be changed or deleted.

Having an accurate credit report with verifiable information will allow consumers to better represent themselves when applying for a loan. It will empower consumers by knowing exactly what is on their report and know what their credit scores are.

It is a great feeling knowing where you stand when negotiating for a loan. There will not be any surprises.

As always Empower Yourself – Educate Yourself – Take Action

H & I Credit Solutions

A lot of consumers want to do something about their credit for many reasons. The problem is that most people do not know what they need to do to take that first step in repairing their credit. The first step to repairing your own credit is very simple.

Step One: You must find out what is on your credit report.

I’ll admit, that I thought at one point, I pay all my bills on time so there is nothing negative on my credit report. My thinking was completely understandable because, if I pay all my bills and I haven’t done anything to jeopardize my report then it should be ok, right? Well stop right there, just because you are a responsible consumer doesn’t mean that someone else hasn’t stolen your identity.

So back to the first step…

Obtain a copy of your credit report from all three credit bureaus. This will allow you to see what is being reported and what is not being reported on each credit bureau. You may find that something that you were completely unaware of is reporting on your report. Something that is not even yours, how would that make you feel?

There are a lot of different sources of which you can pull your credit report. On a previous topic, I discussed how to get your credit report for free from www.annualcreditreport.com. The choice of how you receive your credit report is up to you. After you choose a method, get your copy and look through it. So that is your first step. Remember, all negative items on your credit report have to be verifiable. If the negative items are not verifiable, then by law it has to be removed.

Take that first step.

H & I Credit Solutions