Credit Repair - High Credit Score Secrets

Three Ways to Protect Your Credit from Student Loan Debt

Let’s turn our attention to an area that has become an epidemic – student loans and the inability of young individuals to ever repay them. The latest figures as of time of publication have student loans at over $1.4 trillion dollars and climbing. Many of these borrowers will fall behind on payments and eventually default entirely.

1. Extended Repayment Plan

With an extended repayment plan, the magic is that the federal government will kindly allow you to simply expand the amount of monthly payments you will make in the lifetime of your loan. This can be for as long as 25 years. All that it takes to accomplish is to contact your lender and tell them that you want to extend your repayment plan.

By taking it out from the standard 10 to 25 years, you will massively reduce your payments on a $38,000 loan amount. Instead of paying back a crippling $381 per month, you will now repay at a rate of $196 per month, a dramatic monthly savings of $185 per month, or nearly half.

2. Graduated Repayment Plan

With an extended repayment plan, the magic is that the federal government will kindly allow you to simply expand the amount of monthly payments you will make in the lifetime of your loan. This can be for as long as 25 years. All that it takes to accomplish is to contact your lender and tell them that you want to extend your repayment plan.

You could also do this on a shorter time frame using the original 10 year repayment plan, with initial payments amounting to $213 per month and rising to $638 per month in year nine.

All that you have to do to get onto this advantageous repayment plan is to contact your lender and request it.

3. Income Based Repayment

There is also a little known and highly useful third option called Income Based Repayment. In this generally self explanatory option, your payments will be calculated using your underlying income. The formula factors in your income amount, the poverty line in your state, and then sets your repayment amount at 15 percent of your remaining income (or 10 percent for new borrowers).

Another fantastic appeal of this Income Based Repayment is that you can get student loan forgiveness on any remaining debt from this loan after either 20 or 25 years, depending on the date in which your loans originated. This is sometimes referred to as the Secret Student Loan Forgiveness Program.

Consider that if you obtained your original student loans before the date of July 1, 2014, then your payment could amount to as little as $77 per month. For those who got their loans after July 1, 2014, the student loan repayment amount could drop to as little as only $52 per month.

How to Find a Reputable Credit Counselling Service

One that will not harm your credit score!

If you find that you have started living from one pay check to the next, or have become worried about keeping to a budget, then you should start seeking out a good credit counsellor before you fall behind on your credit card bills and loan payments.

Credit counselling organizations of high repute are able to successfully advise you in managing your debts and your cash flow, assist you in creating a workable budget which you can actually stick to, and provide you with no cost workshops and other educational materials.

Request an Upfront Counselling Meeting

Their staff will be filled by highly trained and certified credit counsellors who are well versed in debt and money management, consumer credit issues, and budgeting matters. You can expect them to thoroughly review and talk over your whole financial situation with you as they help you create a specific plan to attack your money problems head on. These upfront counselling meetings commonly take an hour. They will always offer you follow up sessions to continue the discussions and review the working progress of your particular plan.

Get Free Information About Them First

You will know a reputable credit counselling organization by the way that they offer you completely free information on themselves and their services without asking for you to give them any personal details or information on your scenario. Firms that will not do this are waving red flags. Look elsewhere for your help.

A number of military bases, universities, housing authorities, credit unions, and U.S. Cooperative Extensive Service branches will run not for profit credit counselling programs. Your bank or local consumer protection agency can also help to refer good outfits. After you obtain a list of counselling organizations that you can work with, you should run each name by your local consumer protection agency (like the BBB) and your state’s Attorney General office.

They will know if other consumers have raised complaints about them.

Check With the U.S. Trustee Program

Remember that just because no complaints have been filed does not guarantee their legitimacy. Fortunately, the U.S. Trustee Program maintains a list of reputable credit counselling organizations that are fully approved to deliver pre-bankruptcy counselling. You can rely on all of these organizations to be honest as they have been both thoroughly vetted and have proven themselves time and again.

Once you have completed your background due diligence, you should interview your final short list of candidates. The majority of reputable credit counselling organizations are actually not for profit outfits. This helps them to provide their service in person via local offices. Otherwise they can give you these services either over the phone or even online.

Be forewarned that not for profit status does not mean that all services will be affordable, free, or even legitimate. Some credit counselling outfits assess considerable fees. They might hide these. Others will ask (and even pressure) their customers to give so-called “voluntary” contributions. These can lead to still higher debt.

Credit Repair

How to Deal With Bankruptcy on Your Credit Report

Sometimes events beyond your control (or mistakes that you made when you were younger and foolish) catch up with your credit and personal finances. At this point, it may actually be your best option to get a fresh start through filing for bankruptcy. The downside is that for the next several years, you will be a credit pariah.

Prepare for a Fresh Start

As you near the seven to 10 years when the bankruptcy falls off of your credit report though, lenders and creditors will once again start to approach you. They realize that you are unlikely to want to file bankruptcy again any time soon, and will be willing to give you another chance, albeit at much higher accompanying interest rates while you rebuild your shattered credit profile.

There is nothing that you can do to remove the derogatory remarks associated with bankruptcy from your credit report any sooner than the legal timeframe it must remain on there. You can double check that all of the information being reported to the big three credit bureaus (Experian, Equifax, and TransUnion) is at least correct.

Send Your Letter of Discharge

Any accounts that were charged off can not continue to be reported as delinquent or sent out to collections. It is a good idea to send your letter of discharge to each of the three credit reporting bureaus so that they are intimately aware of what can and can not be reported on your personal credit file. Taking this proactive step is the easiest way to effectively manage your bankruptcy once it has been discharged.

Credit Repair, Credit Report

How Do I Remove Negative Entries From My Credit Report?

The more serious the derogatory item on your credit report, the harder it will be for your credit repair company to get it completely removed. They will likely find that correctly reported collections and charge offs can only be removed by the use of tactic number three above with a Pay for Delete compromise.

This is the only real leverage that you have with accounts that are so delinquent that they have already been charged off and/or sent out to a third party collections agency. Your credit repair service can offer to make the full original past due payment amount (trying to negotiate away some of the charges and late fees in the process) in exchange for them striking all associated negative account remarks from your credit report.

Again, this will be much easier to negotiate for simple late payments than it will be for charge offs and especially collection accounts (which are doubly reported negatively under both charge offs and as collection accounts).

Removal of Bankruptcies

No matter how good a credit repair company may be, it is not possible for them to get a discharged bankruptcy removed from your credit files. These simply have to fall off after the stipulated from seven to 10 years time frame. They can get inaccurate information concerning the bankruptcy updated and amended however.

You should check over this section of your credit report and consult with your credit repair company to see if any information needs to be corrected here. Bankruptcies on credit reports may seem like they are permanent fixtures, but their impact becomes less damaging with every passing year from the date of discharge.

Removal of Repossessions and Foreclosures

Repossessions pertain to loans on cars, trucks, and boats, while foreclosures relate to houses on whose mortgage you have defaulted. In both cases, the credit repair company knows that your best chances of getting these devastating derogatory remarks removed from your credit report center on challenging the original creditor to verify and validate the debt. Thanks to the Global Financial Crisis of a decade ago, many of the original lenders went bankrupt themselves.

As a result, in the ensuing confusion, many mistakes were made and a huge number of original documents were lost forever. If your lender on your loan or mortgage is long gone, then your credit repair company has a decent chance of successfully challenging the creditor to produce the original debt documents. If they can not show original signed applications or other original proof of the debt, then they will have no choice but to contact the credit bureaus and have these accounts removed from your reports entirely.

Removal of Judgments

Thanks to that rarest of occurrences when the three major credit bureaus agreed on providing relief to consumers (as they did back in 2017-2018), judgments and liens (including tax liens) no longer appear anywhere on your credit reports, nor do they impact your personal credit scores. There is no longer any need to have them removed. Just because they are not listed on your credit profile any longer does not mean that you do not still owe the debt. It also does not stop the creditors from trying to collect one way or another.

Removal of Inquiries

Legitimately listed hard inquiries on your credit reports can not be removed either by you or any credit repair organization. They will drop off naturally after no more than two years from the point when the requester pulled your credit reports originally. Until then, the best thing that you can do is to avoid making requests for additional credit and loans.

Deleting of Medical Bills

Delinquent medical bills have a lower impact on your credit score than they used to in both the FICO 9 and VantageScoring 4.0 models. For older models though, they still rank alongside delinquent credit accounts in their negative impacts on scores. Getting these removed from your credit report will require the credit repair company to use the four step process we outlined earlier in this chapter.

As a recap, this involves the following:

Submit a Dispute of Inaccurate Information to the Three Credit Bureaus
Submit a Dispute of Incorrect Information to the Original Creditor
Make An Offer for a Pay for Delete Compromise
Request a Goodwill Deletion if You Have Already Repaid the Debt

With medical bills that are delinquent, you can also request that your credit repair company make an Offer for a Settlement for Delete. You may not have the money to pay off the entire debt, but in many cases the creditor will be willing to negotiate in exchange for a partial payment of the debt in one lump sum amount.

It costs them nothing to delete the derogatory information from your medical account and gets them money back that they would likely never again see otherwise.

Deleting of Charged Off Accounts

The original creditor is the party that your credit repair company will have to approach directly about getting a charged off account deleted. In many cases, if this debt was correctly reported, the only way to get it removed will be in an offer to Pay the account in full in exchange for a deletion of derogatory items.

Many creditors will recognize that this is the only way in which they will be able to recover on an account that they have already given up on entirely.

Credit repair companies have years of experience in handling these kinds of negotiations and know the right buttons to push to get it done.

Deleting of Tax Liens

Fortunately for millions of consumers in the U.S. today, the credit bureaus automatically took care of the deleting of all tax liens in the years of 2017 and 2018. There are no longer any liens of any kind, nor even any public or private judgments of any kind (except bankruptcies) shown on any of your credit reports today.

How Do I Remove Derogatory Items From Your Credit Report?

Credit Repair

How Do I Remove Derogatory Items From My Credit Report?

Getting specific derogatory items removed from your credit report is an essential part of credit repair and improving your personal credit score. There are four different ways to approach this successfully, and any good credit repair company will likely pursue as many of them as necessary (and even concurrently) to get your desired results.

1. Submit a Dispute to the Big Three Credit Bureaus

Your credit repair company will likely start by leveraging the Fair Credit Reporting Act. This Federal law details the kinds of information that the credit bureaus can list on your report and for what amount of time (typically seven years). Because of the stipulation in the FCRA that you possess the rights to a credit report that is accurate, credit repair companies will file disputes on any errors with the appropriate credit bureaus first.

2. Dispute with the Original Creditor who Reported the Remark to the Credit Bureaus

A good credit repair company will likely simultaneously work a second approach to having the items removed from your credit report by going around the credit bureaus to directly address the creditor regarding the error on your report. This could be a debt collector, bank, or credit card issuer who they are contacting.

They will send out a physical letter that forces the creditor or lender to begin an investigation as a credit bureau would. It will require that they verify the debt with original documentation. If they can not substantiate it, then it will have to be removed from your credit report altogether.

3. Dispatch a Pay for Delete Compromise to Your Creditor

The credit repair companies have several other tricks up their sleeves if the derogatory information is both correct and can be verified as a legitimate debt. They know that the credit bureaus will never take off such information even when it is disputed (once their investigation affirms the debt and its accuracy). So they will go to the original creditor and make them a negotiating offer that is hard to refuse.

Pay for delete simply means that the creditor will allow you to pay off your delinquent account in exchange for having all negative remarks regarding the account itself deleted from your credit files. There are creditors who will be only too happy to accept such an offer, which really costs them nothing but a few minutes of their time and gets them paid back in full.

4. Pursue a Goodwill Request for Deletion

If you are not much behind on an account, or if you have already paid off the debt, then you have given up your negotiating power for the credit repair company to offer the Pay for Delete. Instead, they can appeal to the mercy of the creditor in a request for goodwill deletion.

Here is how this works in practice:

The credit repair company will write a professional and heartfelt letter to your original creditor explaining the reasons that you were behind on the account and reminding them that you were generally a timely paying customer. They will request as a gesture of goodwill that the creditor adjust the reports on the account to be more favorable.

Creditors are not required to do this, and some will outright refuse. But then again, it costs nothing but some time and letters to make such a request. Another advantage to working with credit repair companies is that they will be able to speak to the right people at the lender who can make such a positive decision on your behalf.