Credit scores are not permanent. Your credit score changes every time you use credit, pay off a credit card debt, miss a payment or apply for credit because the information is stored in your credit file. Negative items such as collections, judgments, foreclosure or bankruptcy have more of an immediate impact right after they occur. The more time passes, the less impact negative items have on your score. Bankruptcy stays on your credit 10 years. Foreclosure stays on your credit 7 years. Collection or charge off stay on your credit for 7 years from the original delinquency. Judgments stay on your credit at least 7 years and as long as 12-20 years or until the statute runs out and some are renewable. However, the good news is you can restore bad credit to good credit over time. It will require some work on your part such as making a budget, sticking to it, being sure to pay all your bills on time and not going over your credit limits.
You should start rebuilding your credit by ordering your free annual credit report. For a nominal additional fee, you can also order your credit score. Always review your report carefully for errors. Don’t be surprised if you do find incorrect information and errors. It is quite common. You can dispute the items right online if you order your report on the Internet or by writing to each of the major credit bureaus- Equifax, Trans Union and Experian. Even if you see an incorrect address, dispute it. The more items you dispute, the better chance you have of the credit bureaus taking negative or incorrect information off your credit report. If your creditor does not respond to the dispute within 30 days from the time the credit bureau contacts them, the credit bureau must take the item off your report and notify you in writing. This tactic works well if you have any judgments against you. The courts are so backed up the odds are in your favor that they won’t respond to the credit bureau within the required time frame, or they may not even respond at all.
Consequences of bad credit can affect the interest rate you receive on mortgages and credit cards. The lower your score, the higher interest rate you can expect to pay. In fact, you may even get turned down for a mortgage or credit card because your score is too low, or you have too much credit. It’s much harder to get a new mortgage or credit after a bank foreclosure than it is after a bankruptcy. After a Chapter 7 bankruptcy, you are starting over fresh without debt so when you do apply for new credit, your creditor knows you don’t’ have any other debt, and you should be able to pay them back.
Employers run background and credit checks on potential employees to determine their level of responsibility. You may be ineligible for certain types of employment, especially high clearance government and security type jobs if you have bad credit. If you are trying to rent an apartment, chances are the landlord will run a credit check on you with your permission, of course. You could be turned down. So you can how credit impacts everyone’s daily lives and why it is very important to maintain a good credit history.
To avoid late or missed payments on your credit card or mortgage loan, you make want to set up automatic bill payments with your creditor and your bank. This way you know that your payments will be reported timely every month on the same date of each month. It’s much easier to have the payments on automatic debit then to have to remember to mail bills at different times of the month. Electronic payments of your debts from your checking or savings account are more efficient for you and your creditor to keep track of and they saves trees and the environment.
You may also want to hire a credit restoration and debt settlement company to help you get on the path to credit restoration. Credit repair specialists are experts in credit repair. They help consumers negotiate debt settlement with their creditors and get negative or incorrect items from consumer’s credit reports removed. The benefits of using a credit repair specialist are many. They are trained to spot items that you may not be aware of that can be removed or deleted from your report.
Since they do this all the time, they know how to get items deleted that you may not be able to do if you attempt it on your own. A credit specialist will be able to take you through a step by step program to either repair, restore or rebuild your credit depending on your situation.
If you need debt reduction, the credit specialist can negotiate a debt reduction plan with your creditors so you can be debt free in a few years. It may be a good idea for you to consolidate your credit by obtaining a second mortgage or home equity line. Your credit repair specialist can help you find a lender for your needs. However, keep in mind that you have to secure the second mortgage debt by using your home as collateral. So if you default, you could lose your home to foreclosure. There are some costs involved with second mortgages such as points and fees. Still, it may make sense for you to take out a second mortgage to lower your debt, if you have enough equity and can afford to repay the loan.
If you have filed bankruptcy, the specialist can help you obtain a new credit card to rebuild your credit. If there are errors on your credit report, the credit specialist can write to the creditor, and request that they remove them and track the reporting with the three major credit bureaus. If you have had a short sale or deed in lieu of foreclosure, your credit repair specialist may be able to get your lender to change their reporting to paid or satisfied to improve your credit score.
Only work with a reputable and honest credit repair and debt settlement company. It’s a good idea to check the company with a local consumer protection agency or the Better Business Bureau to make sure there are no complaints against them. Be cautious and trust your instincts regarding who you do business with, and you should have a positive experience working with a credit repair and debt settlement company.
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