Credit Repair Services

Insurance premiums combine to make up a substantial portion of most American’s monthly bills. Between home insurance, car insurance, health insurance, and others, it is likely that you are paying many hundreds of dollars every month to protect yourself from the worst case scenarios that life sometimes throws at us.

But while carrying the proper amount of insurance is very important step in ensuring your long term financial stability (an estimated 60 of all bankruptcies results from medical bills), there are steps you can take to lower your monthly insurance premiums so you will save money while not sacrificing coverage.

Repair Your Credit Score

Over 90 percent of major car insurance providers take your credit score into account when determining auto insurance premiums. Why? Because studies have shown that on average, people with lower credit scores file more claims and in turn cost insurance companies more money. For this reason, if your credit score is hurting, expect to pay more for car insurance regardless of your driving record.

If your credit score is less than desirable, you may be able to repair it either by yourself or with the help of one of the many quality credit repair companies operating today. And as an added bonus, after improving your score, not only will you be able to qualify for lower insurance premiums, but you’ll be able to save even more money via lower interest rates on credit cards and loans.

Get a Home Security System

Just like your car insurance provider will lower rates based on safety features in your car such as air bags and anti-lock brakes, home insurance providers will also reward risk reducing features in your home such as a home security system. If you already have a home security system, make sure your insurance company knows about it. If not, there are many good reasons to consider installing one on top of lowering your insurance rates. Even if you don’t end up saving money since in many cases the money saved on insurance will be offset by the monthly monitoring fees, you’ll still have the benefits of having a security system such as decreased odds of a break-in, intrusion detection, and fire alarms that will dispatch to your house even if you are not at home.

Bundle Multiple Insurance Products

Many insurance providers will offer a discount of 5 to 15 percent if you purchase two or more policies from them. Ask about discount for bundling and see if the cost of having multiple policies through one company is lower than carrying comparable policies with a variety of insurance providers. And while you are at it, if you have been with one insurance company for a number of years, see if you can get an additional discount for being a long-term policyholder.

Collection accounts on your credit reports are never a good thing. Even an isolated collection listing can lower your credit score far enough that you won’t be approved for low interest rate loans which can end up costing you a significant amount of money. The total damage from that lone collection account which may have been for less than a hundred dollars could amount to many thousands of dollars in higher interest rates and higher insurance premiums because of the impact it has on your credit rating. For this reason, before applying for credit, it is a good idea to try getting collections accounts erased from your credit reports.

If you have a small number of paid collections on your credit reports that are of a relatively small value, you’ll want to start by sending the reporting collections agencies a goodwill letter. Goodwill letters are essentially you asking the collections agency nicely to stop reporting the collection account to the credit bureaus. And while this may seem like a futile attempt, goodwill letters have proven to be surprisingly effective as long as you don’t have a large number of accounts that have been sent to collections.

When composing a goodwill letter, your best bet is to humanize yourself and make the person on the receiving end of the letter sympathize with your predicament. A sample goodwill letter to a collections agency might read as follows.

“Dear Sir / Madam,

Last fall I received a parking ticket during the last week of school because I was running late and had to take the first spot I could find. In the confusion of finals week, the holiday break, and the start of a new semester, I neglected to pay the fine and it was sent to your agency. As soon as I received notice from you, I paid the amount in full.

My husband and I recently began shopping for a new home and have discovered that the negative listing on my credit report is hurting our ability to get approved for some financing. I’m writing to ask if you would kindly remove the collection listing from my credit report.

Best regards,

Jane Doe”

Sometimes it is as easy as that: a brief, simple, non-accusational letter written in a friendly tone. If the letter does its job, your credit reports look that much better and your credit score can see a big jump. If not, worst case scenario you are out the time it took to write the letter and the cost of first class postage.

One last caveat, however. Make sure you do not try to use this method to remove an unpaid collection account. Not only will it not work, but it could make matters much worse for you. This seems like a common sense rule, but it is something people sometimes do not think about, especially if they are enlisting the help of a credit repair company to help clean up their credit reports.

Late payments on your credit reports are never a good thing. Exactly, how much a late payment affects your credit score depends on how late you are and how many late payments you have, but every late payment is negative and your credit score would be in better shape if they were removed from your credit reports.

The credit bureaus are allowed to report a late payment on your credit reports for up to 7 years, but this does not mean a late payment MUST remain on your credit reports for that long. There are a number of things you may be able to do to get a late payment permanently removed in much less time.

Ask and You May Receive

If you have minor late payments on your credit report, your creditors may be willing to stop reporting it to the credit bureaus as a thank you for being a customer and to ensure your ongoing business. If your account is in good standing, try calling your creditor and asking them to stop reporting the late payment. If they are not willing to or you are unable to reach someone with the authority to do so, try also sending a brief but polite follow-up letter reiterating your request.

Disputing Late Payments

If your creditor is unwilling to remove the late payment, which will probably be the case if you have been late multiple times or have accounts that were not paid until 90 or 120 days past their due date, there are still other things you can try.

If you feel that the late payment is unfairly lowering your credit score (is misleading or unclear) or is inaccurate (not yours, wrong information, duplicate listing, etc.), you can dispute it with the credit bureaus. You can submit a credit dispute online via the individual credit bureau websites, however, credit repair experts suggest writing your disputes and mailing them via certified mail. That way you have a record of your disputes and verification that they were received.

Upon receiving your disputes, the credit bureaus have 30 days to verify that the late payment is being reported accurately. If they are unable to do so for any reason, then the late payment must be corrected or deleted from your credit reports.

Getting Help Deleting Late Payments

Getting late payments removed from your credit reports is not always easy, especially if you have a number of late payments which many people looking to repair their credit score do. For this reason, many people turn to professional credit repair companies to help clean up their credit reports.

Because credit repair companies have the knowledge and experience gained from helping a large number of people remove late payments, they will likely be able to generate better results in less time than if you were to work to clean up your credit yourself. On top of that, the best credit repair companies will be able to employ a number of other advanced credit repair tactics not discussed in this article.

The last thing someone with a poor credit score needs is to have to deal with yet another financial setback which is one reason why credit repair scammers are such a cancer in the credit world. They promise the world to people who are desperate for a better credit score and at a minimum, leave them lighter in the pocketbook with zero improvement to their credit. And at worse, credit repair scammers can lower people’s credit score, get them sued, or even get them in legal trouble.

Credit repair scammers also have the effect of damaging the reputation of the credit repair industry as a whole leading consumers, companies, and officials to doubt even the best credit repair companies. And perhaps this is the worst thing about credit repair scams; they keep people who could genuinely benefit from credit repair services from giving it a try. For every person who does get taken by a credit repair scam, there are probably dozens more who have avoided all credit repair companies because of the fear of being taken.

But this does not have to be the case. There are signs you can use to detect a credit repair scam and by knowing what to watch out for, you can weed out the shady companies and find a credit repair company you can trust.

Here are four warning signs of a credit repair scam:

Get a Second Credit Report

This gets pitched as the ultimate way to get rid of bad credit. Instead of trying to clean up your existing credit reports, these scammers claim to be able to help you get a brand new credit report. And while they may be able to do so by tricking the credit bureaus to generate a new report using a fake Social Security number, having that new credit report will not solve your credit problems. Not only will you still have poor credit (no credit does not equal good credit), but if you attempt to use your new credit report to get a loan or other line of credit, you are breaking the law. You could end up with the same poor credit score plus a criminal record.

Demand a Large Upfront Payment

Thieves want to get your money and get away. They’ll break your car window, grab the stereo and run. They’ll come through your back door, head straight for the jewelry and get out of the house before anyone is the wiser. Credit repair scammers can be the same way. They’ll take all the money upfront, often times many hundreds or thousands of dollars, and while they may pretend for a while to be doing something to help you, they already have what they want and are merely covering their tracks. Any company that requires you to pay hundreds of dollars before they will do anything for you should be avoided.

No Credit Repair Contract

You have a right to know what a credit repair company is going to do for you, how much it will cost, and when you will be expected to pay. You also have a right to know all the fine print surrounding any guarantees and to know exactly what the cancellation procedure is. And because of this, the Credit Repair Organizations Act requires that credit repair companies provide you with a written contract that must be signed before any credit repair work can begin. Simply put, if a company does not have a contract, they should not have your business.

Only Accept Cash, Check, or Money Order

What better way to get away with a con than to make sure you get all your profits in cash? There’s no paper trail and no method for charge backs. Once you have the money, it is up to the other person to prove not only that you acquired it fraudulently, but they also have to prove exactly how much you have taken. And for a few hundred dollars, most of the time, it simply isn’t worth the work which is a perfect situation for a credit repair scammer. These days, unless you are the neighborhood lawnmower, just about every legitimate company accepts credit. Be very skeptical of any credit repair company that does not.

There is an industry out there that, even though it is regulated by federal legislation and has been helping consumers for decades, is among the most maligned in the country. Even though many thousands of people have benefited from the services offered by the companies and individuals within the industry, there are still others who are adamant that the entire industry is nothing more than a scam and any company who is a part of it is a con-artist.

Reading the title of this article, it’s apparent that the industry we are referring to is the credit repair industry. Despite the fact that the oldest credit repair companies have been around for 20 years, that credit repair services have helped consumers remove millions of damaging listings from their credit reports, and that Congress created the Credit Repair Organizations Act in order to regulate credit repair companies and not to make them illegal, there are “experts” in the media, in major corporations, and in government positions who claim that any company who offers credit repair services should be avoided.

There are logical reasons why so many people think credit repair is a scam. To start with, there have been many “credit repair” clinics that truly were out to dupe people. These clinics promised the world but ended up just taking people’s money or in some cases getting them involved in credit repair schemes that were illegal. Left and right people desperate to improve their credit scores were getting suckered by these con artists to the extent that the negative attention paid to these clinics was enough to put a shroud over the entire industry. Instead of spending the time to distinguish the good companies from the bad, a lot of people opted to accept that the entire industry was fraudulent.

And once this conclusion is made, it is easy to find supporting evidence because there are some pretty massive institutions that want people to believe that credit repair services are not to be trusted. And who are these institutions? They are the credit bureaus who maintain your credit report and the lenders who use your credit scores. The credit bureaus would prefer that people do not work to fix their credit. It is bad business. The credit bureaus make their money by taking information about you, aggregating it in a report, and then selling it. Credit repair creates additional work that costs them money and when you are managing hundreds of millions of credit reports, that cost would be extremely high if everyone out there started trying to repair their credit. Many lenders, on the other hand, don’t want you to clean up your credit because if you increase your credit score, they won’t be able to charge you as high of interest rates. So, given the scale of the entities that would rather you didn’t improve your credit and the fact that their profits are on the line, it is little wonder that when people look to confirm their doubts about credit repair services, they are able to find plenty of information. Also consider the huge budgets these organizations can allocate for lobbying lawmakers and seeding stories in media outlets and it’s clear why the amount of anti-credit repair information dwarfs the voice of the pro-credit repair crowd.

When looking at all these factors it is easy to see why so many people whole-heartedly believe there is no such thing as a legitimate credit repair organization and why it is so difficult to convince them otherwise.

Someday this may change. As more and more people are able to successfully increase their credit score with help from credit repair companies there are more people who know credit repair works to counter the population that believes it does not. But until there are enough success stories to make a difference, the consumers who do their research, find a legitimate credit repair service, and work to repair their credit will be the lucky ones because their credit scores will be that much higher than those belonging to the people who will do nothing.

There’s a reason why so many people are talking about repairing credit now days and why so many are turning to credit repair services for assistance with fixing their credit scores. For decades, your credit scores have been a critical component of your ability to get approved for credit. The difference is that recently, lenders are offering their best deals in years, but you have to have a better credit score than ever if you even want to be considered.

The credit crisis has caused prices and interest rates to plummet. Combine that with the thousands of dollars new home buyers can get from the government and it becomes obvious that if you have a good job and a steady income, now is an ideal time to make a major purchase. The only problem is that unlike previous years where banks seemed to be bending over backwards to lend to people regardless of their credit rating, now lenders are being far more cautious. Some people are finding that a 700 plus credit score is necessary to even get approved for a loan. A 750 plus credit score is required to get the best interest rates and terms.

So what does it mean if your FICO score is lower than average? Basically, if your score is below 650, your chances of making the most of the credit crisis are not too good. Banks are no longer willing to lend to people they feel are a high credit risk and that is exactly what a bad credit score means to them.

A low FICO score tells lenders that you are not worthy of credit. But in many people’s cases, their credit scores should not be as low as they are. If you know you are worthy of credit, but still can’t get approved because of your credit score, then your credit rating is incorrect and needs to be fixed. Credit repair is how people are able to increase their credit scores when they are lower than they should be. Using credit repair, people have been able to permanently remove millions of items from their credit reports that should not be there for one reason or another.

You can repair your credit report on your own, but it is rarely a simple chore. For this reason, thousands are turning to credit repair law firms for help with fixing their credit. For a fee, legitimate credit repair companies take the hassle out of credit repair while providing results that can be quite literally life changing.

As you get started with learning about fixing up your creditscore, you will find that there are many different types of credit repair letters you may need to write. Unfortunately, there is no perfect credit repair letter that will work for all people in all circumstances. You will need to find the appropriate letter for your situation.

Credit Repair Letters

Listed below are a few examples of types of credit repair letters you may come across as you attempt to fix your credit reports. This is not an exhaustive list, but it does give you a general idea of the variety of letters you may need to write.

Credit Bureau Dispute

This is the letter that most people think of when they think of credit repair letters. The credit bureau dispute is you telling a credit bureau that you would like them to confirm the accuracy of an account listed in your credit reports. In a credit bureau dispute, you are basically telling the credit bureau they need to prove that an item is accurately listed on your credit report. If they are unable do so, then the account must be corrected or removed.

By law, you can dispute any items that are inaccurate or, in your opinion, give others an unfair impression of your creditworthiness. You should not dispute items that are accurate and verifiable.

Credit Bureau Dispute Follow-up

The same laws that grant you the right to dispute your credit reports also state that the credit bureaus are supposed to process your dispute and follow up with you within 30 days, but this often times does not happen. You may need to follow-up your initial dispute letter with another letter stating that you have already sent in a dispute, that the credit bureau was supposed to have replied, and again detailing which item or items you are disputing. This letter lets the credit bureau know you are serious about correcting your credit and you will not give up just because you don’t hear back.

Goodwill Letter

Not all negative items can be disputed with the credit bureaus. Plus, just because you dispute an inaccurate item doesn’t necessarily mean it will be deleted. Sometimes you will have to work directly with the creditor who is reporting the negative item.

The goodwill letter is a non-confrontational letter to creditors. In a goodwill letter you are asking nicely for the creditor to stop reporting the negative item. To help your case, you may bring up your current good standing with the creditor or request sympathy because of the effect the negative item has on your credit score in your request for the deletion.

Debt Validation Letter

If a credit bureau dispute doesn’t work and the creditor is not receptive to your playing nice, it’s time to play hardball.

By enforcing your rights under a number of consumer protection statutes like the Fair Debt Collection Practices Act and the Fair Credit Billing Act, you can make creditors and collections agencies have to prove that a debt is owed by following specific protocols set forth by these laws. Just like with the credit bureaus, if they are unable or unwilling to do so, the negative items must be deleted from your credit reports.

Getting Help with Credit Repair

After spending some time looking into credit repair and credit repair letters, or even after getting started cleaning their own credit reports, people often times see how difficult credit repair can be. Fortunately, there are many quality credit repair companies who have the knowledge and the experience to help make the process easier.

Comparing credit repair companies isn’t easy. Comparing the value of products offered by a variety of credit repair companies is no picnic to begin with and then when you consider the fact that very few people know much about credit improvement in the first place, it’s understandable why so many people have a hard time making an educated choice about which company to sign up with.

Combine this with the mountains of misinformation floating around about credit repair services and the decision of which credit repair service to select becomes even more confusing. Now it’s not just about choosing a company, there is the new complication of choosing whether to use a credit repair company at all. So afraid of becoming a victim of a credit repair scam, many consumers opt to do nothing at all about their bad credit.

But for those who realize that a reputable credit repair company really is able to help consumers, something any of the many people who have successfully and permanently improved their credit score with the help of a credit repair service can vouch for, the sole challenge becomes figuring out out which company to trust. Naturally, each credit repair company touts itself as being the best choice so, looking to find unbiased information to base their decision off of, many people begin researching credit repair review websites as well as sites listing company complaints.

This may appear to be a smart practice, but as you may have seen, these review sites are rarely without bias. Websites like CreditRepairReviews.net and CreditRepairCompanyReview.com are most likely owned and operated by the very companies they endorse, and sites like TopConsumerReviews.com and BlemishFreeCredit.com are owned by affiliates of the companies they have reviewed so if you click through the links on their site and sign up with one of the credit repair companies they have listed, they will receive a commission for the sale. Now, this is not to say that the credit repair reviews on these types of sites are worthless, but it is important for you to remember that they are probably weighted towards the affiliate offer that pays out the most.

And this bias doesn’t only apply to reviews sites that have positive things to say about credit repair companies. You also need to think about the origin of complaints on sites such as RipOffReport and the BBB. Often times these complaints come from competitors trying to discredit a certain company, disgruntled customers who distort the facts, or even from the website owners themselves. RipOffReport has been accused multiple times of listing inaccurate or embellished negative information about companies which for them is a very good model since they have been known to charge companies $50,000 or more to clean up these damaging listings.

So instead of relying on what may very well be false credit repair reviews, it is worth the effort to learn a little about credit repair and the services credit repair companies provide. Then, set aside an afternoon to call a number of credit repair companies so you can get an idea of how responsive they are and how professionally they handle themselves.

FICO – More Than Meets the Eye

Fair Isaac and Company is the developer of the FICO score, the credit score used by most lenders today. The exact formula is not published, but Fair Isaac offers a breakdown of the categories of influence, and the relative importance of each. The breakdown is a helpful starting point for anyone in credit repair mode who wishes to optimize his or her scores, but it is only a starting point…

Credit Repair and the Logic of FICO

If you are in a credit repair program and aspire to optimize your credit scores it is handy to understand the logic behind the scenes. Fair Isaac is in the business of providing lenders with a measure of the risk they will incur in lending you money. Fair Isaac has spent years analyzing the implications of every measurable behavior and developed a formula to communicate risk with a single number. Here is a breakdown of the components of the FICO score along with some powerful tips you can apply to your own credit repair efforts.

Pay History

Your pay history makes up 35 percent of your score. Clear enough, but let’s take a moment to understand the implications. A late payment is an indication of financial stress. Financial stress translates into risk of default, and FICO communicates this risk to lenders by reducing your credit score. A lower credit score says, “don’t lend to this person.” But there is more involved. FICO weighs recent late payments more heavily than older late payments. A brand new late payment can send your credit score to a level that no lender will consider. On the other hand, anyone in credit repair mode should be happy to hear that the impact of a late payment fades quickly as time goes by.

Balances – Installment

Your account balances make up 30 percent of your score. Both installment and revolving accounts are considered. Let’s take a quick look at installment debt before discussing the far more important category of revolving debt. When installment debt, such as a car loan, appears on your credit report FICO sees it as an unknown and drops your score to warn lenders of the new risk. After a few months FICO acknowledges your ability to manage the payments and adjusts your score accordingly. Not a big credit repair concern.

Balances – Revolving

Revolving balances are tricky and may hinder or help your credit repair efforts more than you think. You can clean up your credit report, pay your bills on time, and still end up with a miserable credit score. FICO puts a huge emphasis on the relationship between your balance and your high credit limit. The latest FICO model acknowledges six balance-to-limit ratios: 20, 40, 60, 80, 100, and the deadly over-100 percent category. The two lower tiers will increase your scores, the middle tier is neutral, 80 percent is bad, 100 percent is awful, and as for the deadly over-100 percent category – I think you get the message.

Credit Repair and Your Balances

People often get a credit card, and quickly use it to the limit. Sounds like fun! Unfortunately, a new account with a high balance is credit repair suicide. The new account warns FICO about unknown stress on your budget, and the high balance says that you are out of control. This may not be the case, but big brother is watching and he doesn’t like what he sees. But there is some good news too. If you take that same new account and keep the balance below 20 percent of your high credit limit for 6 months FICO will think you are fantastic and reward you accordingly. This is solid credit repair gold.

The Age of Accounts

This category makes up 15 percent of your score. There are a few credit repair angles here. There is nothing you can do about the age of installment debt; when it’s paid, it’s done. But revolving accounts are a different story. FICO loves old accounts as much as it worries about new ones. Many people start a credit repair effort and cut up their credit cards; a strategic error. Generally you would be advised to keep your accounts open. There are exceptions. If you have lots of established credit cards you should close the inactive ones. There is a bit of a balancing act; too many cards work against your score.

New Credit and Inquiries

This category weighs in at 10 percent of your score. If you are planning to apply for a mortgage or a car loan soon, or are in a credit repair program and watching your scores, you should minimize your credit activity. New accounts will reduce your score, and an inquiry is interpreted as the intent to open a new account, so FICO will downgrade you to warn prospective lenders that there may be trouble ahead.

Type and Mix of Credit

This is the final 10 percent of the calculation, and not much of a credit repair concern. FICO does not publish their idea of the optimal mix of credit, but if you really want to know what the perfect 850 credit score looks like, here you go! One mortgage over 5 years old, two car loans more than halfway through their life span, and five credit cards over five years old with balances under 20 percent of the high credit limit will take you to the summit!

Copyright 2007 James W. Kemish. All Content. All Rights Reserved.

Article Source: http://www.articlesbase.com/credit-articles/credit-repair-credit-score-secrets-425150.html

About the Author
Jim Kemish, a nationally recognized credit repair and restoration expert, is the president and founder of Sky Blue Credit, a leading credit repair service since 1989. Jim is also the president of Power Mortgage, a Florida mortgage company based in Delray Beach, Florida.

You have three choices when dealing with bad credit: you can put forth the effort to learn how to repair your credit yourself, you can pay a credit repair service, or you can do nothing and wait years for your credit to hopefully improve on its own.

Since you are reading this I’m going to assume you have already decided to do something about your credit so option 3 really is not an option. Congratulations, most people don’t even get that far. Most people with a low credit score think there is nothing that can be done.

So your options are to attempt to improve your credit on your own or to get help. There are definite pros and cons to each.

Working to repair your credit on your own may be the best way to learn the ins and outs of the credit reporting system, how the credit reporting agencies work, and how your credit score is calculated. This is an education that, once acquired, can be of use for years to come. And on top of that, repairing your own credit is something you can do at little to no cost. But fixing your credit on your own does have its drawbacks. Credit repair is rarely easy, especially when you are starting out with a low score. The big three credit bureaus (Equifax, Experian, and TransUnion) make it seem like removing negative listings on your credit reports is as easy as filling out a form on their websites, but make no mistake, those forms are for their benefit, not yours. For someone just getting started with credit repair, effectively fixing a bad credit score will involve a lot of learning and a lot of time sending letters to credit bureaus, creditors, collections agencies, etc. There’s a reason why so many people who attempt to repair their credit end up turning to a credit repair company to finish the job.

Good credit repair companies have invested the time and resources it takes to learn the credit repair process and will be able to get started on your reports right away. will also give you advice about additional things you may be able to do to improve your credit such as managing your credit accounts.

This is not to say that there are no drawbacks to using a credit repair organization. A credit repair company is going to charge you a payment for services rendered that will probably amount to many hundreds of dollars and you will not be getting the first-hand knowledge of how your credit works, there are unfortunately certain risks when dealing with credit repair organizations. All too many credit repair clinics are only in the business of taking people’s money and are not as concerned about helping you out. This is why on creditrepaircompare.com we have provided a lengthy article titled that details things to watch out for when shopping for a credit repair service.

At the end of the day, it is a decision you will have to make on your own. A good suggestion would be to start by calling a few of the well known credit repair companies and get a better feel of your options. CreditRepairCompare.com provides information about some credit repair companies we recommend and you can find many others with a quick Google search. Then, if you think you would rather repair your credit on your own, spend some time on the various credit repair forums. There you will be able to find many do-it-yourselfers who have fashioned themselves into experts in self credit repair.