A good credit report is becoming increasingly important in today’s world. Good credit most often will allow savings on everything form mortgage loans to car insurance rates in addition to opening up possibilities for securing loans for auto purchases and, of course, home loans. Inadequate credit, however, will negatively impact your life in the opposite way. There are several companies which provide credit repair services but it is also possible to repair ones own credit, often with superior results, if one adopts a sound credit repair strategy.

Debt validation should be your initial step when undertaking a strategy of credit repair. This involves obtaining your credit history from the three major credit reporting bureaus, Equifax, Experian and Trans Union. Upon receiving these reports look at each and every item in the reports. Check for any errors or discrepancies. If there is anything that you think is on your report that shouldn’t compose a letter to the corresponding creditors asking for debt validation. If they do not furnish you written proof of the debt within thirty days they are obligated to withdraw the entry from your report and furnish documentation to this effect.

Once you have removed any incorrect information from your reports write down all remaining outstanding debts. Get in touch with any collection agencies that appear on your report and agree upon a payment schedule with each of them. Make sure it is within your means. Also ask if they will contact the credit reporting agencies to withdraw the negative entry after you have paid the account in full. They are generally amenable to this as long as you make good on your payment commitments.

While you are paying down your outstanding debts, according to the schedule you have set up, you can also set about to establish new credit. One way to do this is to acquire a secured credit card with your bank or credit union. You do this by depositing a sum of money, which serves as collateral against a credit card with a credit line equal to the amount you deposited. It functions the same way as a debit card but is in truth a credit card and will appear on your credit report as such. Every month make a nominal expenditure on the card and repay it as soon as the next bill comes. In doing this you will show a positive payment entry each month for this account.This will consistently increase your score.

Repairing your credit will certainly be worth the time and energy you put into it. You will reap the financial benefits of doing so for many years to come. Not only will repairing your credit allow you to obtain loans for very expensive purchases, such as a new auto or, perhaps, your dream home, but a higher credit score will also save you money. The amount of interest that lenders levy on loans are a direct result of your credit score. The better your score, the lower your interest rate. Additionally, there are other ways that a good credit score can favor you. Your car insurance rates, your apartment rent, and many others can also be affected by your credit score.

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Credit Inquiries are explained thoroughly in this informative article at the Credit Repair 4 Dummies main site. Click here to get useful info on how credit inquiries made by potential lenders impact your FICO score. Learn the very important do’s and dont’s so that you are better able to keep your credit score as high as possible.

Credit Inquiries, while potentially harmful to your credit rebuilding process, are an unavoidable element in building credit. There are things you can do to limit, and even eliminate completely, the negative impact on your FICO score. Careful planning is the key and this article will provide useful guidelines to you in order that you may effectively manage this aspect of your credit life.

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Understanding Your FICO Score

Considering how critical one’s FICO score is to modern day life, it’s surprising how little people know about what actually makes up this all-important number. We will describe some of these facts in the passages that follow.

First off, FICO scoring ranges from 300 to 850. The higher the score the better your credit worthiness is considered to be by potential lenders. While it is not totally uncommon for consumers to score above 800 it is extremely unlikely someone would have a score in the 300’s. A score in the 500’s is thought to be to be very poor, most often indicating a bankruptcy or other very serious credit missteps.

There are five components to the FICO score:

Payment history, making up 35% of the score

Amount owed, 30%

Length of credit history, 15%

New Credit, 10%

Types of credit used, 10%

What does not factor into your score:

Private information having nothing to do with actual payment history such as race, religion, sex, marital status, age, salary, location of primary residence, child and/or family support or rental payments.

There are actually 3 FICO scores, one for each of the reporting agencies: Experian, Equifax and Trans Union. These scores will vary, although not very much, depending on what information each of the bureaus have on you.

Creditors depend on your FICO scores in judging whether or not to offer credit, the amount to lend, the rate of interest to charge, and the terms of repayment. At the end of the day high FICO score will mean a big savings for the borrower over the life of the loan depending on the loan and terms.

Lets take a look at an example: Person A has a FICO score of 760 and Person B has a score of 640. Each one applies for a mortgage loan of $250,000. Person A will qualify for a loan and an interest rate of 6.36% and a monthly payment of $1,680. Person B would qualify for a loan with an interest rate of 7.95% and a monthly payment of $1,971. Thats a difference of $3,495 per year.
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About Credit Scoring

Most anyone who has obtained a home mortgage in the past 5 years or so has heard about credit scoring. How many of you have been told “your scores are great”, or “if your score were 10 points higher, your rate would be better by 1/4 point”? Probably most of you.

We in the industry started to become aware of “scoring models”, as they are called, as early as 1994. The use of scoring models in the mortgage industry came about as the major secondary market players, known as Fannie Mae and Freebie Mac, started to develop automated underwriting systems. They had been in use for a long time for auto lenders and credit card issuers.

The early creators of the automated underwriting systems felt that, if someone could go to a Mercedes dealership at 10 am and drive off the showroom floor an hour later with a $100,000 car (still more expensive than homes are in many parts of the country), they ought to be able to obtain a home loan the same way. The logic in this should be obvious… after all, cars are rolling stock, so they can disappear, they depreciate and usually people don’t live in them. Houses are attached to a foundation, they usually appreciate and people usually live in them. Using that logic, the industry should be able to make the home buying process easier for everyone. Read more »

Welcome! We’re glad you found your way to Credit Repair for Dummies. We will be presenting a variety of helpful articles, news items and links on Credit Repair. In today’s society good credit is a neccesity. Poor credit will have a negative impact on many aspects of day to day life. So, if one’s credit falls into the undesirable range, rebuilding as completely and as soon as possible is extremely important.

So please come back often as we will be continuously updating these pages useful information on credit repair and credit in general.

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