We are in some tough economic times. People in the City of Jackson, Ridgeland, Madison, Clinton, and all throughout Mississippi are suffering economically. Economists are not certain when the U.S. will come out of these tough economic times or when we do if the economy will ever be as robust as it was in the 1990’s. Dozens of people who need bankruptcy in Ridgeland, Madison, Clinton, and the City of Jackson call Frank Coxwell every week to help with economic issues. In addition to bankruptcy problems and after bankruptcy has been completed people need good credit in order to purchase items and household goods. Few people can afford to pay cash for all the household products they need.
There are a number of companies advertising on the internet to help “repair a person’s credit.” These companies often charge large fees and do little to help the person. The simple truth is anyone can repair their credit if they are will to take the time. There are good agencies and groups that can provide advice. The Federal Trade Commission has a very good website. There are also useful links on consumer issues.
The National Associaton of Consumer Advocates is another great resource. This organization can provide advice and suggestions on many areas of consumer law. The best way to start is to get your credit report from all three of the major credit reporting agencies and then follow the helpful tips below. If you run into a stumbling block don’t hestitate to call or look around on the internet for more information.
What to do and What not to do:
Many Mississippians have suffered financial hardships that left black marks on their credit reports. Salaries and hours have been cut, jobs lost, illness and medical bills, late payments and foreclosures have all damaged the FICO score. This is the standard most traditional lenders use to determine a person’s creditworthiness. The FICO score has a scale that runs from 300 to 850 points. With FICO, the higher the score, the better your credit.
Although time is the best cure for a low score, there are ways to hasten the movement of your score up to a higher number.
What to do.
First, get copies of your credit reports and see what is being reported right now. Each one of the three major credit bureaus-Experian, Equifax and TransUnion, create their own FICO scores from the information they collect about you.
Second, don’t get into more credit trouble. Pay your bills on time from now on. Call your creditors and try to negotiate payments that you can keep up with. Make sure you get any new agreements in writing.
Third, use the credit reports to clean up incorrect or outdated information. The bureaus are required to remove any information that they cannot verify. Paying off credit cards will give your credit score the biggest boost. Paying off student loans, car loans, mortgages, and other installment loans won’t raise your score that much. See how the ratio of the total amount of debt you have compares to your total available credit. The lower your balance is to the percentage of available credit, the higher your FICO score will be.
Also, each credit bureau will allow you to place a one hundred word statement on your report explaining any hardship or reason for your trouble. This may help explain your misfortune to some lenders or to an employer if you are job seeking, but it won’t affect your FICO score.
Fourth, what you are doing now and what you have done most recently has the most powerful effect on your score. That is why it is so important to get back on track and pay your current bills on time. But if you are paying a debt on time but it is not being reported to Experian, Equifax or TransUnion, one of the big three credit bureaus, it is not helping your score. There are methods for reporting these on time payments to the three bureaus, but paying some agency or company to do it for you is not the way.
Consider Joining a Credit Union.
Credit Unions connected with you or your spouse’s job may be more willing to work with you. They have better interest rates, and will give you a checking account when no one else will. Many credit unions have special loans to help you rebuild your credit.
If you already have very high balances, late payments, collections and charge offs, filing bankruptcy can actually improve your credit scores. Chapter 7 and Chapter 13 Bankruptcy affect your credit scores in the same way and the damage to your credit score is not as bad as you might think. You might even see a boost in your score. Bankruptcy gives you a clean slate, a fresh start, and will help you get back on your feet again.
Let’s Talk About Secured Credit Cards.
A secured credit card, if used correctly, can get your credit score back up quicker, but only if you use it cautiously and deliberately. These cards obligate you to put up money in a savings account which is used as collateral for the card. Your credit limit is usually the amount you put in the savings account. Make sure your payments are reported to the three major credit bureaus and read the small print before signing up for the card. Use the card, but remember what was said earlier about the debt to credit ratio of the card. Visit the web site CardRatings.com for their recommendation on the best secured cards.
What Not To Do.
Offers to Repair Your Credit.
Just assume all of these offers are a scam. There is nothing a company can do that you can’t do yourself at little or no cost. Most will dispute all the information on your credit reports, even accurate information, and this can make you look dishonest if you have to dispute inaccurate information. Even when they manage to get bad data off your reports, once the credit bureau validates the account and debts, it will reappear and your score will drop. Federal Law prohibits a credit repair company from charging you any fees up front until they deliver what they promise and since they can’t really deliver, you should not have to pay.
Credit Card Offers You Receive in the Mail.
If you have a poor credit history you may receive credit card offers in the mail. These cards are designed to get your attention as a way to rebuild your credit. They have high fees and high interest rates attached to them and there is a good chance they will hurt your credit rather than help it.
Frank Coxwell has been a bankruptcy and consumer mortgage fraud attorney for over 32 years. In Ridgeland, Madison, Clinton, Flowood, Jackson, and all the surrounding cities he is called dozens of times each day to help people with consumer bankruptcy issues. Frank is recognized statewide as an attorney with extraordinary knowledge. To increase his skills Frank attends conferences and learning seminars all over the U.S. to keep his knowledge up-to-date and ahead of the average attorney.
This post was placed for Frank Coxwell by Merrida (Buddy) Coxwell. Frank was out of town at a bankrupcty conference. Merrida (Buddy) Coxwell is the Managing Partner of Coxwell & Associates, PLLC, a firm that handles serious accient and injury cases and defends people charged with crimes.
Disclaimer: This blog is intended as general information purposes only, and is not a substitute for legal advice. Anyone with a legal problem should consult a lawyer immediately.