Bad Credit Blog. WorstCreditEver.com

Most Americans are fond of overspending. People buy things they do not really need. Once they see something that catches their eye, they buy it - often without even thinking of how they will pay for it.

People usually do this due to lack of will power or budgeting. And lots of them use their credit cards as a reserve once they run out of cash. They tend to spend a large amount of money in order to “keep up with the Jones’” or to make them feel better about themselves. Unfortunately, this never really works, and it causes a lot of damage in the long run.

Almost everybody has a credit bureau, maintained by a credit reporting agency. Many people have bad credit items on their bureaus, such as defaults, charge-offs, repossession, and slow payment history. This means that when these people apply for loans, mortgages, or credit cards, car loans or even for a simple bank account, they may be turned down.

Sometimes these people are not even aware of the negative information on their credit bureau. When this is not corrected, it causes them to have a bad credit.

Having bad credit can adversely affect virtually every aspect of your life. A low credit score means severe financial limitations and difficulties. As if this is not enough, there are hundreds, maybe even thousands of debt relief, debt consolidation, debt management, and consumer credit counseling companies that promise to “cut your payments in half”, “save you thousands”, or our personal favorite - “get you out of debt with the click of a mouse”.

If only your computer had the debt relief magic that all of those bad credit spam emails promise. Although getting out of debt cannot be done with a click of a mouse button, it is probably not as difficult as you think.

If you are in this kind of predicament, it is imperative for your financial stability that you do everything you can to repair your credit.

What is bad credit repair?

“Bad Credit repair” is a common term often used to describe a systematic process of rehabilitating an individual’s creditworthiness, financial credit reputation, or just raising your credit score.

You can try to repair bad credit yourself, and sometimes the steps are simple. However many people find credit repair a difficult and discouraging process.

You start by obtaining copies of your credit report, reviewing the credit report for errors, omissions, and misleading information, and requesting corrections to such information by means of a formal dispute. Often times, it can be beneficial to dispute every negative item on your credit, even if it is true. Not all of the correct negative items are always confirmed.

If you are worrying too much about your credit, conquer that feeling! No matter how bad your credit is, you can take the following steps to make it better:

1. Pay all of your bills on time. Decide if you have the income to meet all of your obligations. Remember, late payments (payments that are 30 days late or more) have a negative effect on your credit rating.

2. Reduce the number of credit cards that you have. This will reduce the tendency to overspend. Contact your creditors about your plan and perhaps close some of your newer accounts. Keep your older credit cards, and pay them off. It helps your credit to have very old accounts that are still active.

3. Avoid bankruptcy. Bankruptcies are not the end of the world but it will be with you for years. It will stay in your credit report for up to 10-years and hamper your ability to get credit in the future.

4. Request in writing that your creditors reduce the interest rates on your accounts to lower the amount of your monthly budget that goes to just interest.

5. Monitor results and stick to your plan. Review your file every few months to make sure that any errors that you have disputed have been corrected. After a period of time inquiries will not count against you provided you have not been applying for credit.

These steps can help anywone with bad credit. If you are in that situation, do not waste energy stressing about it. Bad credit can almost always be improved or corrected.

In my line of work I hear people say it all the time, “I have the worst credit ever. Can you help me buy a car?”. So that got me to thinking. How does someone get to that point of having REALLY bad credit? I also though about what could be done to help people with really bad credit. Maybe I can share some of my experiences find other people to share theirs.

In my experience, it seems that people earn really bad credit for one of 2 main reasons. Either they get bad credit because of an extenuating circumstance that is really beyond their control, or they get bad credit because they lack the ability to pay their bills on time. In the second main reason there are really 2 sub-categories. The first is people who cannot pay their bills because they spend more than they earn and the people that cannot pay their bills because of laziness and lack of foresight when it comes to paying their bills in the future.

As an example of reason #1, we often get customers that make good money, drive nice cars, and have a lot of bills. Then something happens, whether it be divorce, loss of job, illness, or some other major life event, and all of a sudden it becomes very difficult to pay the loans, credit cards and other debts that have been accrued over the years. When something like that happens, it is usually very easy for us to help. When there is a singular life event that affects your ability to repay your debts it it obvious on your credit and we can convince lenders to give you another chance.

There are similar people with similar jobs that never can seem to quite get their act together. Maybe their car payment is always a little late, maybe the minimum payment on their credit cards does not seem like a big deal, maybe they decided not to tell one of their creditors that they changed addresses and since they are not receiving the monthly statement they decide the bill does not need to be paid. This type of person will eventually come to the realization, “Maybe I should have taken my credit more seriously.” Often by that time it is too late.

When you establish a long track record of not paying any meaningful bills, you will earn a very low credit score and any loans or credit cards you receive will be unfavorable. Loans will have a high interest rate and/or a high down payment requirement. Credit cards will have higher rates and/or high fees.

It seems so obvious to most of us, but to people with chronic derogatory credit it does not seem obvious. In fact, usually they tend to blame it on the bank, or on the postman for losing the mail, or for someone for stealing their identity. Why would someone want to steal the identity of a person who has never paid a bill in their life up to that point? They wouldn’t.

In my job I often interview people about their credit. Sometimes I ask someone about a particular account on their credit, and before I get a chance to congratulate them for having that one positive account, the customer says “That account isn’t mine, someone stole my identity.” It is hilarious! The one actually good item on their credit, and they say it wasn’t them. Do they think someone stole their identity so that they could pay a loan or credit card on time? I usually tell them to NOT dispute that account because it is the only piece of positive credit on their bureau. Usually, it was an account that was in their name AND another person’s. That is why it actually got paid on time…the other person made sure of it.

So what are we looking for on the blog? We are looking for people that have questions about their credit and we are looking for people that have meaningful thoughts to contribute. Perhaps someone can share their bad credit story and how they were able to turn it around. Maybe some experts in the credit or law fields could have some ideas to share. I do not know what kind of response to expect, but I hope it is a positive one.

A good credit score can lead to lower interest rates, better loan approvals, and even give job opportunities. If your score is currently lower than you would like, there are things you can do to improve it. By knowing the basics of how credit bureaus work, you can start boosting your credit score today.

What is a Credit Score?

“Credit Score” refers to the overall strength of your finances. Fair Isaac Corporation usually calculates this three-digit figure (FICO Score). Fair Isaac takes data from your credit report and crunches the numbers through a series of calculations. Your payment history (especially how your accounts look right now) and the amount of outstanding debt you have are taken into consideration. The length of credit, amount of new credit, and type of credit you have are also reviewed.

Before issuing a new credit line, most lenders check your credit score. You may be accepted or denied  (approved or declined) based on your credit score. That is why it is important to maintain a good score, and it can be easy to do so. The following are several steps you can take to help you boost your credit score.

Make Payments on Time

The easiest and best way to raise your credit score is to avoid late payments. By paying all of your bills on time, you show lenders that you are reliable and consistent. If you have a hard time remembering when payments need to be made, there are things you can do to make it easier. Find a method that helps you pay on time, every time. Here are some suggestions:

• You can even call your lenders and ask to have the due date changed to a certain day of the month.
• Have them automatically taken out of your checking account.
• Have reminders sent to your email.

Pay Down your Debt

Paying off your debts (especially credit card debts) is another way to boost your credit score. Try to use 30% or less of your credit limit. So if you have two credit cards that each have a $5,000 limit, you have a total credit limit of $10,000. Keep your total outstanding balances under $3,000. This will lower your credit risk and help you have a better credit score than you would if the accounts were maxed out.

Keep Credit Accounts Open

If you have had a credit card for a long time and don’t use it much, try to stop yourself from closing it. If you have a good history of on-time payments, it may be in your best interest to keep the account open. It will show lenders that you have a longer credit history. Even if you cut the card up, and don’t use it, it is better than closing the account.

Use Your Cards Wisely

Raising your credit score does not mean you get rid of your credit cards or not use them. Before you make a purchase, think about how you will pay it back. It isn’t play money! Look into what you can and cannot afford before saying “Just Charge It”.

If you decide you want a new loan or credit card account, try to keep all of your application submissions within a 14-day window. Once you have the credit card or loan, pay it down as best you can and ALWAYS make on time payments. This will improve your credit score over time.

These are just some of the ways to boost your credit score.

Managing your finances correctly will help boost your FICO or BEACON score.