Bad Credit Resource Center

This was one I found when I checked my credit report a few years ago. It happens more often than you think.

You closed a merchant credit card years ago - but it’s still listed as an open account?  Bureaucratic mix-ups happen quite frequently.  If you want to keep your credit score as high a possible, you need to follow up on financial details such as this. 

Whenever you close an account - whether it’s a credit account, bank account, or utility company account, try to get written confirmation that the account is closed and paid in full. Then it’s smart to follow up a few months later with the company to confirm that the account is closed.  This simple action can save you hours of frustration - not to mention a potentially lowered credit score.

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Lenders will often look at not only your credit score but at other financial indicators, such as your income, savings and employment record.  Keeping these things in order can complement your credit score and can help your overall credit. Lenders have their own ways of calculating credit scores, so keeping your overall financial affairs in good shape is one way to ensure that your credit is good in all lenders’ eyes.

Be aware that when a lender asks to see your credit score, the credit bureaus send not only your credit score, but also the top four reasons why your credit score was lowered.  The most common reasons for lowering credit scores are:
1) Recent unpaid or late paid debts or accounts

2) Seriously delinquent accounts or bills.

3) Public record of bankruptcy, civil judgment, or report to a collection agency

4) Numerous accounts with late payments, non payments or defaults

5) Limited credit record

6) Lots of newly opened accounts

7) Extensive debts or amounts owed.

Knowing that your lender sees these possible problems can help you present your financial picture to them in the best possible light.

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If you put on your lender’s cap, you’ll be able to see which habits and traits you need to develop in order to be considered a good credit risk.  Thinking like a lender will help you understand how you must manage your money to be appealing to lenders.

First of all, you should know how money works. Educate yourself by reading books about money and understanding how your accounts and loans work can go a long way towards helping you keep your credit strong.  For example, if you know that some loans have early payoff penalties while others don’t, you’ll be in a position to make the best financial decision. 

Also, the more you know about money concepts in general, the more comfortable you’ll feel with it and the better decisions you’ll be able to make.

You don’t have to go to great lengths to appreciate how money works.  One easy way to consider money is to think of it the way you think of time.  You probably hate to waste time and you want to make the best use of it.  Apply these same attitudes to your financial life and watch your credit score soar!

If overspending has caused you to have a low credit score, consider the following mind set trick: equate your money with your time.  For example, if you make fifteen dollars an hour, then a magazine subscription of $15 will represent one hour of your work. 

Imagine an hour of your work and ask yourself whether the subscription is worth the time you put into the fifteen dollars.  Once you start seeing money as something that comes from your hard work rather than a general “thing” impulse spending will seem much less attractive, and it will be easier to keep your credit card balances low and you bank accounts stacked with cash!

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One of the primary causes of credit problems is the lack of education. Too many of us lack basic money principles in the area of budgeting, banking and buying.

When it comes to learning money principles, you’re never too young. That’s because decisions about saving and spending occur throughout our live. The earlier you gain this knowledge, the longer you will enjoy the benefits of this knowledge… which is personal and financial freedom.

Some experts advocate teens should be getting lessons on such activities as opening bank accounts, making buying decisions, saving for college and avoiding debt. Learning these and other money concepts early in life will help minimize any bad credit issues that might occur in the future.

If you’re a parent, start educating your teens now. Most schools don’t do a good job in educating kids about money. As for you, you’re never too old to learn.

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Most bankruptcies are caused by the aftereffects of divorces, lawsuits, business failures and health problems. Getting a prenuptial agreement helps to protect you so that a divorce will not adversely affect your finances and lead to a downgraded credit rating.

Keeping separate accounts while married is also a good idea, as your spouse’s financial troubles can easily become your own.  Having an attorney review your contracts can at least reduce the effects of unfavorable agreements that can hurt you financially in your business dealings.
 

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I should have included this information in yesterday’s post because it deals with protection.

Insurance for your car, home, health and for liability can help you avoid the huge legal and medical costs that can occur from an accident or sudden problem.  For a relatively small cost, you are covered against unexpected events that can drain your finances and leave you with an unmanageable debt load. 

fix bad credit