DIY Credit Repair Tips – Don’t Make These Silly Credit Mistakes

Looking for some tips on Do-it-yourself Credit Repair? Or maybe you’re still deciding if you want to take the D-I-Y route to better credit yet and need some more information? We’ve made list of some of the worst credit mistakes, so you don’t have to make them. Once you decide DIY credit repair is for you, check out our #1 rated DIY credit repair book, Credit Secret by Scott Hilton.

BEST SELF-HELP CREDIT REPAIR TIPS AND WORST CREDIT MISTAKES

The 100 Word Statement — Don’t do it

Credit Repair Letter

Credit Repair Letter

This is a credit repair tip everyone should know. Even if you choose to believe the 100-word statement does you no harm. It’s hard to argue that it will do you any good. The 100-word statement was an addition to the consumer credit report made by the Credit Reporting Agencies (sometimes more well known by their commercial names, the big ones are Equifax, Experian, Trans Union) to help consumers who had problems on their reports.

The statement does not affect your credit score, and considering credit applications are decided almost entirely on credit scores, what’s the point? What’s worse, it is the one of the most difficult parts (if not impossible part) of a credit report to change. Let’s just say, you have some bad things on your report, and you put a 100-word statement on your account explaining it. Then through credit repair you are able to clear up the credit report errors, you’re now stuck with an account of why have problems on your credit report. And even though it’s not normal for a creditor to examine the statement, it is possible a creditor would look at it, especially for something like a home mortgage loan.

 

Closing Credit Card Accounts the Wrong Way

This is one most people don’t get. Not using the card. Close it right? Not so fast. Closing accounts is one of the worst things you can do if you do it the wrong way. Because most people just call up and ask it to be closed, sometimes it leaves your credit report with an account marked “Closed by Guarantor” (and makes it look like the credit card company took your card away.) Instead, make sure that you request the account be labeled “Closed by request of Customer,” it may even be advisable to send written notice, that way you have proof if you get a surprise on your credit report.

Do-it-Yourselfers don’t always know this one, and it’s just another part of the information consumers need to know to take care of their credit. Before you decide to close the account read the next free credit repair tip, for more info…

 

Closing Credit Card Accounts with Good Histories

You hear it again and again. Don’t use too much credit. Close any unused accounts. And if you’re in a situation where you can’t control your spending, then this may be a good tip. Only you can decide whether you think you can control yourself and your spending wisely. But in terms of improving your credit score, keeping an account with a positive payment history active and using the credit line responsibly is probably the best tip.

In most cases, account information on your credit report will remain for no longer than seven years from the Date of Last Activity or “DLA” on the account. So, once you close the account, the seven-year clock starts ticking and, unless activity resumes, the account will be gone from your credit reports, and so will all the good credit history of on-time payments. In addition, a small percentage of your credit score is calculated on the length of your credit score. It may not have a huge effect on your credit scoring but any one of those little things could mean the tipping point between you and a higher credit score. So, the longer your credit history the better.

 

Applying for Credit to Get the 10% Off Special

This is a great free credit repair tip that could save you a lot of money. Say, you’re at the mall and a department store offers you “10% Off Your Purchase” if you apply for a credit card with them. We can’t tell you whether it’s worth it for you to apply for the credit card (you’ll have to do the math on that), but we can tell you it’s probably not a hot idea in terms of your credit score. Here’s why. Every time you apply for credit, a “hard inquiry” goes on your credit report, and they will lower your score (at least by a few points) especially if you have been applying for a lot of credit. The good news is the effect is not permanent. And the inquiry will not show up at a ll after 24 months. T

he bad news is that your score is going to take a temporary hit, and for what? To save $15 on a new coat? It’s not worth it for small ticket items, especially if you are not going to pay the account off right away anyway, because department stores do not have competitive Annual Percentage Rates (APR). You’re better off getting the best deal you can on a regular Visa, Mastercard or Discover Card, and using the lower APR to pay it off. And if you’re thinking about applying for a home or car loan, then you need to be even more aware of the harm that something so seemingly harmless (like applying for a department store credit card) could do to your credit report.

Even a couple of points on your credit score could mean the difference between qualifying a lower interest-rate loan.

 

Not Checking Your Credit Report Because You Think it Will Lower Your Score

One of the best credit repair tips we can give you, and one of the worst mistakes many people make. You need to know that checking your credit report yourself will NOT negatively affect your score. There are two kinds of inquiries that show up on your credit report “Hard Inquiries” and “Soft Inquiries.” A Hard Inquiry (the kind that happens when you apply for credit) will appear on your credit report for 24 months and will negatively affect your score (especially if you have been applying for a lot of credit over a short period of time.

While a Soft Inquiry also known as a “Promotional Inquiry” (happens when you run your report yourself) and whenever a credit card company looks at your report to send you a promotional offer, like a credit card offer. Soft inquiries will not negatively affect your score. And not checking your credit report on a regular basis is just plain dangerous. It’s been estimated that more than 79% of all credit reports contain errors, yours could be one of them. Checking your credit yourself is also the one best ways to protect yourself against ID Theft.

 

Thinking All Late Payments are Created Equally

This is always one of our most popular free credit repair tips. It seems that a lot of people think a late payment is a late payment (no matter how late). In terms of your credit report score though a 30-day, 60-day, and 90-day payment are NOT all the same. If you know you’re going to make a late payment, a great credit tip to know is that you should still try to pay it as soon as possible. An extremely overdue payment will count more heavily against you on your credit report scoring. So don’t drag it out. Pay it as soon as you can, even if it’s only the minimum. The important thing is you pay on time, or as close to on time as you can get.

 

Size Doesn’t Matter

At least not when it comes to making minimum monthly payments and your credit report. While it’s not a great long-term financial strategy to only make the minimum payments on your credit cards, if know you’re going to be going through a period where you will be a little short of cash you may want to reduce your payments down to the minimum. In terms of DIY credit repair tips, it is better to reduce your payments to to the minimum monthly payment and pay them on time. The important thing for your credit report score is that you have a history of making on time monthly payments (not how large they are).

FOR SELF-HELP CREDIT REPAIR TIPS, KNOWING THE LAW IS THE FIRST STEP

We’ve put together some of the best and most effective credit repair tips we know so that consumers just getting started with learning more about credit won’t make the mistakes we’ve seen so many other beginners make. But going through the credit repair process yourself means that you understand the Consumer Credit Laws that protect your legal rights, namely the Fair Credit Reporting Act (FCRA), the Fair Debt Collections Practices Act (FDCPA), and the newly passed FACT Act.

Understanding those laws is crucial to how successful you will be at repairing your credit. Make sure that you or someone you hire understands the laws, so that your legal credit rights will be protected. Whether you decide to repair your credit yourself or hire us to perform the service for you, the best credit tip anyone can give you is to learn the important laws that protect the rights of consumers just like you. Get more info on the consumer credit laws that protect you and your right to legal credit repair in our credit laws section. We encourage you to read the full text of these laws if you are interested in doing your own credit repair yourself.

 

Important Things To Consider Before You Make A Bad Credit Home Loan

Don't Be Stuck With A Bad Home LoanUnderstand that your damaged Credit Score can cost you big money in higher monthly installment payments on your home mortgage loan. With a bad credit home loan, even a couple of points on your credit report score could mean the difference between thousands of dollars. Know that this home buying guide is for informational purposes only, it is only to help inform you, not to advise you about whether to buy a home or not. If you have time, fixing your credit with something like Smart Money Secret before applying for a home loan can save you thousands of dollars.

But please understand that you may be able to get a home mortgage loan even with bad credit. Many lenders are willing to take on the risk, because it’s not without reward — they’re going to charge you very high rates.
Your credit score can be improved.

Sometimes, only a few extra points on your credit scores could save thousands of dollars.
Already paying too much? Fix your credit report, and it could help you to refinance at a lower rate, and that means you pay less for your monthly mortgage bill.

Computer with credit score application on a screen

Buying a home is easily the most expensive purchase most people will ever make in their life. Your FICO score is a primary factor in determining the amount of money you will pay for your house. Your Credit Score is determined by your credit report, so once your credit report is improved, your credit score will go up. (Your Credit Score or FICO Score, as it is called when it is determined by the Fair Isaac Company, to learn more please see our section on Credit Scoring.) The better your credit, the less you pay. This is true whether getting a home loan, a cell phone, a car loan, or signing up for credit cards. And it’s even more true when it comes to buying a home.

Fixing your credit score could equal big bucks for you and your family. Use the following charts to calculate how much your monthly mortgage payments will be for your home based on your FICO credit score. Find your score, then look to the right side of the chart to find the APR (annual percentage rate) that you will be charged, and then you can estimate what your monthly payments will be. Please note that the chart should be taken as a guideline. Each lender will have its own criteria for determining your creditworthiness. But after learning more about the high cost of buying a home with bad credit, you may decide to make your first call to a credit repair specialist instead of a real estate broker.

A TALE OF TWO HOME LOANS – HAVING GOOD CREDIT VS. BAD CREDIT HOME LOAN

Buying a home with bad credit could be the worst buy you ever make, just look at the difference improving your credit score by only a few points can make. Let’s say, two families the same house right next door to each other in the same neighborhood, and let’s say they both pay the exact same selling price and get their mortgages from the same bank, let’s call them A and B. Family A will pay $414,245 but Family B will only pay $489,215. A whopping $74,970 difference! How can that happen? Very easily.

If these two houses look a lot alike, it’s because they’re identical.

The only difference is how much more buying a home costs with bad credit.

House “A”                                                          House “B”

Selling price: $200,000                                              Selling price: $200,000

Price paid at end of 30-year loan= $414,245               Price paid at end of 30-year loan= $489,215

Why would anyone pay $74,970 more for the same house? Unfortunately, people with bad credit. are doing it every day. How much more you’re going to pay will depend on how bad your credit problems are. Use the below charts to help you calculate how much more you will have to pay for a house depending on your FICO credit score.

FICO Score/Mortgage Calculator for a $150,000 30-year, fixed-rate mortgage*

FICO SCORE        —>       YOUR  APR

760 – 850    5.41% = YOUR MONTHLY PAYMENT OF $843
700 – 759    5.63% = YOUR MONTHLY PAYMENT OF $864
680 – 699    5.81% = YOUR MONTHLY PAYMENT OF $881
660 – 679    6.02% = YOUR MONTHLY PAYMENT OF $901
640 – 659    6.45% = YOUR MONTHLY PAYMENT OF $943
620 – 639    7.00% = YOUR MONTHLY PAYMENT OF $998

FICO Score/Mortgage Calculator for a $300,000 30-year, fixed-rate mortgage*

FICO SCORE  —>     YOUR  APR

760 – 850    5.41% = YOUR MONTHLY PAYMENT OF $1,686
700 – 759    5.63% = YOUR MONTHLY PAYMENT OF $1,728
680 – 699    5.81% = YOUR MONTHLY PAYMENT OF $1,762
660 – 679    6.02% = YOUR MONTHLY PAYMENT OF $1,802
640 – 659    6.45% = YOUR MONTHLY PAYMENT OF $1,886
620 – 639    7.00% = YOUR MONTHLY PAYMENT OF $1,996

IMPROVE YOUR CREDIT BEFORE BUYING A HOME WITH A BAD CREDIT HOME LOAN!

Rebuilding Your Credit After Bankruptcy

How to Rebuild CreditRebuilding credit after bankruptcy can be difficult and often a hard road to travel. People do not ever expect having to file bankruptcy and they do not expect on having to rebuild their credit.

Getting credit can be hard, especially after filing bankruptcy but there are things that you can do to rebuild your credit and have a great credit score.

Don’t ever think that you will not have good credit again. Many people have had great success with rebuilding their credit and having a high credit score.

Ideas On Rebuilding Your Credit After Bankruptcy

When it comes to rebuilding credit after bankruptcy, you have several options to choose from. Here are some ideas on how you can rebuild your credit and increase that credit score.

  • Secured credit card. Find a local bank or credit union in your area that offers a secured credit card. A secured card from a bank allows you to put money up front on a card and be able to use the card. For example if you give the bank $200 you will be able to spend $200. In this choice in rebuilding your credit you will need to shop around and make sure that the fees are not too high. Some banks may charge tremendous fees for these cards. You will also need to see whether or not they are reporting to the credit reporting agencies. If they are not reporting to all three, then that is not the bank or credit union that you will want to go with.
  • Bank loans. Some credit unions and banks will give you a secured loan. Meaning that you pay the loan off up front and then you get the money. This can help build your credit quickly and help repair whatever damage was done.
  • Unsecured credit cards. Generally after you have been paying on a secured credit card for several months you may be able to get an unsecured credit card. This means that you will not have to pay anything up front. If you do get an unsecured card you will need to make sure that you make the payments on time and never skip a payment. If you do your payments the wrong way it could hurt your credit.
  • Retail cards. Some stores offer their own version of credit cards. You may be able to get one and if not you will be able to once you have built your credit with the options above.
  • Gas cards. Gas cards can help you build your credit as well. Make sure that you pay the payments on time and never default on them.

As you can see there are many ways to go about rebuilding credit after bankruptcy. Be sure that you take your time and put forth the effort to make sure that your credit is rebuilt. In no time you will have your score back up to where it needs to be so that you can get the things that you need without any problems.

For an even better way to rebuild your credit after a bankruptcy, click the link below!

Scott Hilton’s Smart Money Secret

Rebuilding Your Credit After Bankruptcy

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