October 9, 2011

Fixing Your Credit 101

By Timothy Stull (http://www.fresh-start.co)

This recent economic blow out ~ The Great Recession ~ started in early 2007.  It is hard to believe that we are nearly 5 years into this fiasco.  The financial scars that have been left behind are extreme.  Credit profiles have been destroyed.  Nearly 47% of the public has damaged credit ~ 640 credit score or less….keep in mind that that number was at 13% in 2005.  Long term unemployment, underemployment, the housing crisis & massive over extension of credit have been the primary causes of destroyed credit profiles.  We all know it will be a long road back for many families ~ to achieve total financial recovery.  Many folks will have no idea where to begin…fixing credit reports is a long run, tedious & complex process.  Here are the basics that will help you start to get back on track.

1.  If you have a mortgage, pay it.  If you are behind on payments, do everything you can to fix the problem.  Most people hate this peice of advice.  However, this is you biggest debt & will have the greatest effect on your score.  The difference between a delinquent mortgage & a current mortgage is 100+ points on your credit report.

2.  If you can settle your old debt, do it!!  The sour economy has affected collection agencies too…..they are having a hard time collecting debt.  You can settle debt for 20% to 30%.  Back in 2005, settling debt for less that 70% was challenging.  Keep in mind that these great deals will not be around forever….settlement costs will be going up very soon as the economy improves.

3.  If you have old collections, review your report for accuracy.  You need to challenge debt that seems incorrect.  Scrap debt buyers love to purchase old debt and report figures inaccurately.  Just because it is old, does not mean it is gone.  Inaccurate reporting can cause drops of 40+ points.

4.  If you are grossly overexstended or have suffered long term permanent job loss, bankruptcy may be the best option for you.  However, if you can see a path to increased income down the road, buckel down & get a plan together.  Your credit score will increase much quicker if you pay off your debt voluntarily.

If you have credit problems, the worst thing you can do is nothing.  Many stick their heads in the sand ~ expecting the problem to go away.  If you tackle your credit problems head on, you will succeed in the long run.  an aggressive strategic plan is so important.  Fresh Start Legal Network has been helping clients develop the proper strategic plans for 22 years.  Feel free to call our office at 877.297.7011 for free consultation or visit our site at www.FRSLN.com

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