Bad Credit Resource Center

Little things can make a big difference.  Incorrectly entering your social insurance number or using a slightly different name (Jane Doe Smith instead of Jane Smith) can make a big difference, since credit bureaus can count the two names as different people. 

Making sure that you fill out each financial form accurately and consistently helps insure there are no mistakes in identity that can affect your credit score.

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Credit repair usually takes time and effort.  Some days, it will seem that you’re getting no closer to improving your credit score at all.  In order to keep track of your progress and to be able to keep going forward, you need to set goals and keep track of what you’re doing. 

For example, setting a goal such as “I will improve my credit score” is far too broad.  Set smaller goals, such as “I will improve my credit score by xx points within six months” or “I will talk to my bank about budgeting this week” or “I will pay off half my credit card bill by next month.”  These goals work better because they are manageable and have a built-in deadline. 

Writing your goals on a calendar or planner will allow you look at them everyday. this will motivate you to keep working on your credit repair and will keep you making the small steps that can lead to better credit.  If you review how far you have come each month or week, you can really keep track of your progress and see how much you still have to go.

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Staying well organized and focused is very important when you’re trying to boost your credit score, because there are so many details to keep track of. A few basic organization tips can help make sure that you don’t overlook anything that can cost you your good credit score. The next few posts will list a few of them.

The most important thing you can do is stay financially organized. Keep all your financial records - including tax records - in one place.  Note the days you paid your bills on the bills themselves.  Track how much you owe and where you owe money.  Keeping your financial information in one place allows you to refer to it easily.  Storing all your financial life in one place also makes it easier for you to see where your credit and your financial life still needs work.

Here is some of the information you may want to keep in your financial file includes:

-Bills
-Tax receipts and forms
-Banking information
-Insurance forms
-Articles and pamphlets about debt
-Your credit reports and scores
-Deeds to your assets (such as your house)
-A list of contacts that affect your financial life (such as your bank and credit agencies, for example)
-Your written emergency plan, detailing what you should do in case of a sudden loss of job or other problem
-Financial forms
-Investment information
-Agreements you have signed for loans and other financial services
-A list of your financial goals

I suggest buying a buy a box and keep your separate information in different labeled folders (tax information together, for example, and bills in another folder) for easy referencing.  Whatever system you use, you’ll find it much easier to manage your finances and your credit. If you think it’s too time comsuming to do this, imagine having to look all over the house looking for random pieces of paper.

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If you’ve missed some payments or made some late payments to lenders, you’ve probably incurred non-payment or late fees. You now have to pay more on your bills and also get a ding on your credit record - but also your bills are more difficult to repay since they are now higher. 

You can contact the lender and try getting the charge waived. It probably won’t work if you have a history of late or non-payments. This is a secret that credit repair companies have long known and is one of the first services they will perform on your behalf.  However, you can easily accomplish this for yourself and save yourself some money.

Lenders want to get paid, and if they think that you will pay your bill more quickly by waiving the late fee, they will most often gladly remove the fee in exchange for prompt payment.
 

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Many people are hesitant to keep an open line of communication with their lenders because they are embarrassed about their financial situation or because they feel unsure about the position. 

Let me tell you something. Lenders can’t read your mind.  They don’t know that you can’t make a payment this month but will be able to make a double payment next month because of a banking error. Your lender will simply see that you have failed to make a payment - and to them this may indicate a temporary problem, or even worse, a decision on your part to default on your loan.

Without your input, your creditors have no way of knowing, and since their profits and money are at risk, they tend to take the more conservative view and even assume the worst. Keeping the lines of communication open as soon as a problem develops can help reassure your lenders and can help your creditors see that you are responsible with their money.

Talking to lenders as soon as a problem develops can be an effective way to prevent a ding on your credit score that can affect your credit score.  For example, if you are having trouble paying your bills, you can often work out a more reasonable payment schedule. 

In most cases, you will not get a ding on your credit record if you do this because the lender will have some assurance that your financial obligations will still be met.  In fact, one of the things that most credit repair companies do is to arrange for more reasonable payment schedules.

Lenders want, above all, to be repaid so that their interest rates can earn them a profit.  By communicating whenever there is a problem and showing that you are willing to work hard to meet your responsibilities, you show your creditors that they will get their money and this makes lenders more willing to work with you to ensure that your credit rating is not badly affected by one missed or late payment. Speaking with your creditors can help establish a good working relationship that can help keep your credit rating in good shape.

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If you move or relocate and forget to inform all your creditors of your new address, you may not get all your bills, making you look like a deadbeat debtor and negatively affecting your credit score. Make sure that you either close your credit accounts or inform your creditors of your new address and contact information.

When you move, make sure that you inform credit card companies, stores you have credit cards with, banks, credit unions, and anyone else you do financial business with.  Even better, also arrange with the post office to have your mail automatically forwarded to you at your new address.

This will help ensure that any creditors you may have overlooked will still be able to contact you - and you will have another chance to remind them of your address change.

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Not knowing what’s going on in your own financial life is playing with fire.  Maintain a file folder in your home which contains your financial information - and keep it current. 

If something changes in your life - you get married, you start a family, you get divorced, you move or change jobs, look through your financial folder and contact everyone who needs to be contacted to update them. 

This will help make sure that all your creditors have the information they need about you. Keeping your own records current will help you make sure that everyone who handles your finances is also up-to-date.
 

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Credit companies will often offer you promotions which include special introductory rates, generous free gifts or other incentives to switch accounts or companies.  However, you should resist the temptation to switch unless you have a sound reason.

Establishing a good credit relationship with one company, like having one credit card from your college days, is a good way to show lenders that you are a stable sort of person who is likely to take money matters seriously. 

That is exactly what lenders want to see. Switching accounts and lenders makes you appear unstable.

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Here’s another factor that could affect your credit that surprises many people… Don’t change jobs too often.

Of course, there will be times when you will have to change jobs.  However, avoiding changing jobs unnecessarily will help improve your credit score by allowing you to stay in one place and build a steady financial situation.

Your credit report shows your current and past jobs - if lenders see that you change jobs too often, they may wonder whether you have the life stability required to handle debt responsibilities.  Also, lenders can’t see why you left a job.  If there are many employers listed on your credit report, a lender may wonder whether you have been fired from jobs and may think that you will be unable to pay your debts due to unemployment at some point in the future.

A lender makes their money by the interest charged on a loan.  If you default on a loan, you cause the lender to lose money.  Above all, the lender wants to see evidence in your credit record that you have the traits that will enable you repay the loan with interest. 

Frequent job changes may indicate to some lenders that you will simply disappear with the money or default on a loan. Having a stable life, including a longer-term job and one place of residence, may indicate to lenders that you are building up roots in a place and so will be unlikely to move and default. 

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Lenders like to see stability in your financial matters as well as in your life, which makes you a better credit risk.  Also, every time you move, your credit information may be affected - including switching banks.  This actually negatively affects your credit score by not allowing you to develop long-term relationships with lenders.

Remember: Your current and past addresses are listed on your credit report even if they don’t directly affect your credit score.  Lenders looking at your full credit report will view it positively if it appears that you’ve created a stable life for yourself.
 

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