How Do I Handle Bankruptcy on My Credit Report?
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How Do I Handle Bankruptcy on My Credit Report?

There are two key ways that you need to handle bankruptcies on your credit report. Both of these involve tackling the bankruptcy head on instead of attempting to hide from it. One silver lining in a bankruptcy is that it erases your delinquent and outstanding account balances.

Your credit report will display $0 balances on any accounts that were successfully discharged via the bankruptcy. 

First Action – Check Your Credit Report

The first action is to ensure that your credit report correctly reflects these effects of your bankruptcy. Sometimes creditors will stubbornly keep reporting the negative account information even after your bankruptcy discharge. This is why you need to routinely check out your credit report. 

You can use a free third party credit report/score service like Credit Karma or Discover It to do this as often as you like. Checking it at least once a month in this situation is a good idea. 

It will not cause you any hard credit inquiries.

Should you find out that one or more of your creditors are showing discharged debts as active (with balances outstanding), then you need to talk with the appropriate credit reporting bureau right away. A more proactive approach is to send every agency copies of your discharge as soon as you receive it. This will alert them to the fact that they are not to report additional information on all included accounts. 

When you do come across reporting errors, you are within your rights to send out disputes to the three credit bureaus. They must address them within 30 to 45 days.

Second Action – Check Your Non-Discharged Accounts

The second action to take is to continue paying all of your non-discharged accounts on time. Not every one of your accounts will fall under the discharge order. Student loans are one prime example that can not be discharged. These active accounts will keep affecting your credit score, so be sure to pay all existing accounts and loans in a timely fashion. 

Just because an account does not yet show on your credit report is not a good reason to ignore it. Should you fall behind on payments, the accounts will be reported to the bureaus and appear tragically as if by magic. Your overarching goal is to let creditors see that your financial problems are in the past. 

Step by Step Instructions to Repairing Your Own Credit

Step by Step Instructions to Repairing Your Own Credit

There is an easy to follow set of ten steps to follow to repairing your own credit. This is not rocket science, but it does require some patience, persistence, and a little bit of elbow grease. Roll up your sleeves to do the following steps on your own.

1. Obtain the Most Recent Copies of Your Personal Credit Reports

You can not effectively begin to repair your credit until you know what you need to  repair in the first place. It is in your credit report where you will find the various mistakes that you have made which have caused you to have bad credit. When you read through it, you should be able to quickly find the derogatory items that are hurting your score. These are listed in their own derogatory items section. 

You can easily get your three credit reports for free by going online to the AnnualCreditReport.com website to request your annual free copies. You could order this via the phone or mail if you have plenty of time to wait.

2. Review Your Own Credit Reports for Potential Mistakes

This is actually your best hope to improve your credit right away. You are looking thoroughly for any mistakes that the bureaus might be reporting. For you who own a long credit history, these reports could easily be a few pages in length. 

Do not become overwhelmed or discouraged. Take your time to thoroughly go through them and catch any and all mistakes. 

Every credit report holds your personal identification information, detailed account history, derogatory information such as collections accounts and past due accounts, public records of bankruptcy, and hard or soft inquiries which others have made on your credit report. 

3. Determine What Needs to Be Repaired

There are three kinds of information that may need to be repaired on your credit reports. These start with inaccurate information such as accounts that do not belong to you, falsely reported late payments, and related information. You should carefully read the derogatory remarks section for any late accounts, charge offs, or collection accounts that do not belong there. Also pay close attention for inaccurately listed maxed out accounts which have gone over your credit line. 

You can use different color highlighters for the various kinds of information so that you can color code your personal credit repair plan. Each of the different types of information will require different tactics. For example, you would react differently to inaccurate information than to accounts that are past due. This is why using different color highlighters can save you time and help you to quickly find information when you contact (or write letters to) creditors, lenders, or the big three credit bureaus. 

4. Dispute Your Credit Issues

The next step is to dispute the issues that you have hopefully found needing correction on your three personal credit reports. There is a long running debate on which way you should file these disputes. Online disputes go quicker and are simpler to do, but they do not leave you with a paper trail. You might take dispute screenshots and save these. 

If you call the bureaus, you have absolutely no record of your disputes. 

As tedious as it may seem, filing disputes via the regular mail comes with a few key advantages. It allows you to include evidence to support your dispute, like cancelled checks that demonstrate making your monthly payments in a timely fashion. It is easy to keep a copy of any dispute letters that you send out this way in a file as well. 

A last significant benefit of using traditional mail is that you can send it out through certified mail using return receipt requested. This additional expense will provide you with the hard proof that you need of the day and time that you mailed your dispute. 

Credit bureaus are limited to no more than 30 to 45 days to research and rule on your disputes. 

It is easy to come up with an effective template for credit report disputes when you will be mailing out multiple disputes. Save this on your computer, and then you can quickly and easily update it for any different consumer credit bureau or individual dispute. Be sure when dispatching your disputes to insert a credit report copy that includes a highlighting of the item being disputed. Also send your documented evidence that proves your case (a copy and not the original). 

Be careful not to file more than one or two disputes at a time with the credit bureaus individually, as they may simply decide that you are making frivolous disputes and dismiss them all out of hand. 

You should never include more than a single dispute in each letter that you send out to avoid arousing suspicions from the big three credit bureaus.

While you are at it, you might as well send copies of your disputes directly on to the business or bank that originally submitted the information incorrectly to the bureau. Their legal obligations are the same to investigate your filed dispute and update any incomplete, incorrect, or non-verifiable information to your credit report. 

5. Follow Up On Your Credit Dispute

Hopefully your dispute will be a success, and you will have the results you desire in an updated and improved credit report. They should also send the alert out to the other big two credit bureaus of the change, but you should follow this up personally. The bureau will dispatch an updated copy of your full credit report to you with the resolution. 

If they do not take away the item off of your credit report, they will at the least update it to reveal that you have disputed the negative information. You are then provided the chance and space to include your personal statement on your credit report. While this personal statement will not influence your actual credit score, it does provide more insight into why you disputed the item. Businesses reviewing your credit report manually will see it and consider it. 

6. Addressing Past Due Accounts

Past due accounts are devastating on your credit report. They fall into the most crucial category of timely payment history that comprises fully 35 percent of your entire credit score. Because they are so important, it is crucial to avoid multiple past due account listings on your credit reports. 

These can cause a negative impact of from 90 to 110 points on your final credit score. 

Getting these removed if at all possible is a key task in any process of credit repair. You want to see any and all past due accounts reported to say “paid” if not “current.” You can contact the creditors directly about removing past due payment notifications from your credit reports once you have brought them up to date. 

As far as any accounts go on which you are behind, you should make them current before they become charged off. Charge offs are among the most serious derogatory account comments. They do not happen until your account is 180 days delinquent. Any of your accounts that are in this delinquency period (but not yet at 180 days late) you can save by paying the full past due amount. 

You should know that the more you are behind, the higher your payment to catch up on the account will be. You should call your creditor at once to determine what it will take to bring the account current before they charge it off.

Many creditors will consider removing late penalties when you call them, or at least be willing to spread out the overdue balance over several payments to help you catch up. 

Make sure that they understand that you do not want to have the account charged off, but that you require a little help to catch it up. In exchange for catching up on your account, they might consider re-aging your account so that all payments are marked current instead of delinquent. You will have to speak with the creditor in question in order to negotiate such a beneficial outcome. 

Accounts that are already charged off you should pay off anyway. The balance is still your responsibility even after the creditor has written them down. Charge offs impact your credit score less as they age, yet having an outstanding balance such as this will make it night on impossible to receive approval on new loans or to obtain new credit. This is why a part of your credit repair task involves paying down charged off accounts. 

When you pay this charge off completely down, the creditor will then update your credit report. It will show the account balance as fully paid with a balance of $0. 

Unfortunately, the charged off status does not go away until after seven years from the original charge off date. 

At least you will have minimized the damage though. You might also settle the charge off amount for less than what you owe. Your creditor will have to agree to work with the proposed settlement and to cancel out the remainder of the original debt. 

This settled status will show on your credit report and not drop off for the full seven years. It is possible to negotiate with a creditor to take away the charge off status from your credit report in exchange for paying the full amount. 

Be warned that this is not easy to accomplish, but it is worth trying. The most critical step at this stage is to pay down the charge off. 

If you are able to get a favorable resolution to the account status, consider this a great and added bonus. 

You also need to handle your collection accounts. They would have gone to collections after having been charged off or alternatively after becoming past due a number of months. Accounts that would not typically be shown on your credit report can go to collections too, and at this stage unfortunately they do show up on your credit report. You will be using a nearly identical approach for paying off collections accounts as you did for charged off ones. 

Offer to pay in full in exchange for a delete of the negative collection account notation. You might also settle the account for a smaller amount that what you originally owed. Otherwise, the collection notation will remain on your credit report for a full seven years from the date of original delinquency. 

7. Reduce Your Credit Card Utilization Ratios and Outstanding Loan Balances

Remember that your credit account utilization is the second largest component of your credit score, worth 30 percent of the whole thing. The larger your balances on each card, the more damage it will do to your credit score. This is an area where you can get almost immediate results with improving your score. 

Start with any maxed out and over limit credit card accounts. These cost you important credit score points (on top of the over limit fees you are likely paying as well). 

By reducing any over limit or maxed credit cards below their limits, you will be moving that credit utilization ratio down significantly. From this time, make it a point to tackle first one credit card and then another, dropping their balances one by one to less than 30 percent of available credit utilization. Your credit score will be higher when each balance (plus your average balance) is less than the 30 percent ratio. 

Under 10 percent is even better and gives you still more score points. 

Loan balances are important to consider too. Your credit score algorithm considers your present loan balance versus the original loan amount. The nearer your balances are to the original borrowed amount, the more significantly this impacts your credit score. Credit card balances have the largest effect on your credit scores, so focus all efforts on paying these down to under 30 percent (or even under 10 percent) before you address your loan balances. 

8. Prioritize Your Payments Effectively

The truth is that you will only have a limited number of dollars to apply to your credit repair activities every month. This means that you need to prioritize effectively in where you send your payments. 

The best strategy is to concentrate on accounts that are nearing past due status. You should make all of these (or as many as possible) current. 

Next you will focus on reducing your credit card balances and credit utilization ratios. Your last priority is to make payments on accounts that are already marked as charged off or which have been dispatched to collection agencies. In general, the damage here is already done on these with derogatory remarks likely to remain on your credit report for years (seven), even after you pay them off or settle them. 

9. Applying for New Credit

Once you have done everything that you can to address any derogatory items in your credit report, your next step is to focus on having some positive credit information included on your report. Even as late payments do great damage to your score, timely payments on accounts improve it. Once you get a few credit card and loan payments reported as on time, this only helps. 

Keep these balances at less than 30 percent and be sure to make all payments on time every month. 

You can improve your credit (or rebuild it) through opening up a new credit account. It may be hard to receive approval if you have past delinquencies, so do not make more than one or two applications until you see an improvement in your credit score. This is crucial for keeping the number of hard credit inquiries down. 

Every time that you do another application for credit, another hit appears on your credit report under the inquiries final section. Too many of them within a two year period (after which they drop off) will harm your credit score and worsen your chances of becoming approved for new credit. 

A good strategy following a rejection from a MasterCard or Visa is to approach a retail store for their store charge card. They are known to approve applicants with either poor or limited credit history. You might also try obtaining a secured credit card with a deposit which you make against the credit limit. 

Secured credit cards are extremely useful as you can use them everywhere that MasterCard or Visa is accepted (whereas store cards can only be used at the store or on its website). There are a number of subprime credit cards whose focus is on assisting their customers with rebuilding their credit. Check out their interest rates and fees before you apply, as these will be higher. It is smart to pay down these balances in full every month if they come with high APRs.  

10. Salvage As Much As You Can

One thing to keep in mind is that you should not ever sacrifice an account (or several accounts) that are current for accounts that are past due or charged off. The most important thing at this stage is to keep making on time payments for each of your current marked accounts. 

You want to hold on to all positive payment history that you can while you are repairing your damaged credit. 

The Main Advantage of Doing Your Own Credit Repair

The Main Advantage of Doing Your Own Credit Repair

You have seen ads on television for credit repair or heard them over the radio. The good news is that you do not have to engage a credit repair professional in order to repair your credit. In fact, credit repair companies can not do anything for you to improve your credit that you can not actually do for yourself. 

You can save a substantial amount of money (hundreds of dollars) and the time to find the right repair company by doing these activities yourself. In this article, we look specifically at the many actions that you can undertake to improve your credit on your own. 

The Advantage of Self Repair

There are two main advantages to doing your own credit repair personally without getting a credit repair company involved. The main benefit is all of the costs that you will save. Credit repair companies can not guarantee anything except that you will pay for their services, regardless of how successful they prove to be. 

The costs for having them write letters and make calls on your behalf runs well into the hundreds of dollars. They will consistently bill you by the month after they furnish these services.

There is also the possibility that you will hire a company that is a scam. There are many illegitimate operations out there claiming to do credit repair. Watch out for these scamming operations. In the end, they can get you into legal trouble and will only take your money in a best case scenario. Avoid the time that you need to invest to find a legitimate credit repair company by simply taking these steps to repair your credit on your own. 

What to Watch Out For

The Federal Trade Commission warns you that the credit repair industry is littered with scams. This is why you have to be careful in reviewing any potential credit repair company before you engage their services. You should start out by reading Better Business Bureau reviews for the company in question. You can also search through the complaint database of the Consumer Financial Protection Bureau. 

The main thing that you need to be watching out for is companies making claims that appear to be too good to be possible. The following claims are all likely proof of a company running a scam:

  • They offer to make a new credit profile for you
  • Promise to take off negative information that is accurate from your personal credit reports 
  • Guarantee that they will better your credit
  • Ask you to pay before they provide their services

Instead, look for companies that are completely legitimate. Several of these are Sky Blue and Lexington Law. But remember that there are risks if use credit repair companies, which we look at next.

What Is the Risk of Using Credit Repair Companies?

Aside from the real possibility of engaging a credit repair scamming operation, the main risk in hiring a credit repair company is that you will pay hundreds of dollars in fees and not see the results that you hoped for. 

Since you can do all of these activities on your own at no cost, there is no reason to pay someone else to do it for you. This is especially the case because there is no guarantee that they will get you the results that you need. 

If you must get involved with a credit repair company, try to work with one that offers a 90 day money back guarantee if you are unsatisfied with the results of their efforts. 

How to Handle Medical Collections on Your Credit Report
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How to Handle Medical Collections on Your Credit Report

Medical collections are a pressing issue for many consumers today thanks to inadequacies in the health care system in America. Medical collections are those that specifically pertain to an unpaid medical bill.

Such an account sent to collections will probably cause a negative effect on your credit scores. There are a few ways of addressing these accounts in regards to your credit reports. This may involve working with the three major credit reporting bureaus Experian, TransUnion, and Equifax to update any information that is old or inaccurate. 

If the account in question is accurate, you should be aware that it may stay on your credit reports for seven and a half years from the point it first went delinquent. 

This negative effect will decrease with the age of the collection account. Newer credit scoring models like FICO Score 9 and Vantage Scoring 4.0 place less emphasis on unpaid medical collection accounts than they do on other ones when generating your credit scores. 

The federal law NACP makes it illegal for any medical debt to be included on your report until at least 180 days after it was first reported as delinquent to them. The law also stipulates that any bills later paid by insurance must be taken off. 

If these scenarios do not pertain to you, you should start by writing the debt collector directly. Insist on your rights to have the debt validated. According to the FDCPA, they must furnish you with proof of your medical collection account debt in order to proceed with their efforts. You must request this in writing within five days of their first effort to contact you about it. 

Demand Proof of Debt

If you do not think you owe this money, it is sensible to demand proof of the debt before you take any other steps. The collector may not be able to verify your debt, in particular if you have already paid the debt or if it mistakenly belongs to someone else. It would make things far simpler to have the collection account taken off of your credit reports if this is the case. 

After you have your proof of debt, you can still file a dispute with the individual credit reporting bureaus if you feel there is an error. Any official disputes that you file you must do one by one with every credit bureau, generally through their website is much faster in resolution. 

If you have already paid off this debt but it is still illegally contained on your personal credit reports, you should send in documentation showing the payment in full. You could have payment records from the doctor or hospital to include, or a credit card statement or bank statement for proof of form of payment. 

The credit bureaus have a month to resolve your issue and respond. 

Finally, you should be intimately acquainted with the statute of limitations regarding your medical debts in question. It may be that they will fall off of your credit reports soon enough that you do not need to worry about them. Your legal liability is also limited by the statutes of limitations. Collectors may still trouble you, but they will no longer have the ability to sue you or file judgments past that point. 

Be careful about making even small payments on a time limited debt. This can cause it to be revived in some states, which resets the appropriate statute of limitations. 

It may be that you actually do not have the money to pay the medical bills. In this case, it is always possible to arrange for a settlement with the debt collector. You would consent to paying a more reasonable amount that you can afford in exchange for them marking the account as settled and ceasing future collection efforts to recover the debt. 

How to Repair Your Credit If Your Identity Has Been Stolen
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How to Repair Your Credit If Your Identity Has Been Stolen

The most important thing with repairing your credit report after your identity has been stolen is to move fast and with patience. The quicker you are able to find and dispute fraud, the easier it will be to have them removed. 

The first thing that you should do is call the credit bureaus and request an immediate freeze on your credit. This will prevent any fraudsters from opening additional accounts. 

You should make an unabridged list of all fraudulent accounts. After you have this, go through the steps to dispute each account error on all three of your reports. These mistakes have to be separately reported one by one up to the point that they are all fixed.

Trying to report multiple fraudulent errors at one time could cause them to miss some of your disputes. You ought to also write letters of dispute for every fraudulent entry and mail them in. Describe the fraud that has occurred in your letters. 

It is imperative that you send the letters using certified mail too. This gives you tracking numbers on when everything is received. Be sure to keep a log of all of your phone calls along with records of electronic and written correspondence. Notes about content and dates of conversations are important to have. 

Finally, you should also contact the financial institutions involved directly so that they are aware that there is fraud on your accounts. Do this in writing to fill them in, as you did with the credit reporting bureaus. Send along copies of the police reports and any other documentation that you have as well. 

Be aware that this takes time to work through these fraudulent mistakes on your credit reports. It will require persistence and patience to get all of these accounts that are fraudulent removed from your credit report. The more of them that there are the longer it will take.