Powered by Max Banner Ads
Restoring and Repairing Credit – The Grind!
If you have amazing credit, scores above 750 then you can pretty much call the shots on what credit card you get, what the terms are, and what kind of incentives you can get with it. If you have a 700+ score you are still in real good shape. About 42% of Americans have a sub 680 credit score, and that was last check. So what about those with tarnished credit? What about those with credit that is in the process of healing? How do you build credit when you have collections and accounts with bad history on your credit report?
I know it may seem like a uphill battle that may seem to never end. If no one will give you any type of credit instrument to build credit, go with a pre-paid card. Make sure that the card is reporting on your credit. Try to get a card with no annual fee (if possible), and find one you can afford! I know it may be a bit hard to make demands, as the old saying goes “beggars can’t be choosers”; and while that is true, you sill do not want to get ripped off in the process. Or we will call it, minimizing the collateral damage.
Remember, you didn’t ruin your credit history overnight! You did not go out and run up all your cards and the very next day, woke up with terrible credit. NOPE, it happened over time. So just like trashing your credit, repairing and restoring your credit will take some time. I generally see people with tarnished credit having to spend about three times the amount of time repairing their credit, than they did destroying their credit (sometimes that figure is even higher)!
Most people have about a 6-12 month period where everything goes bad. The time frame will extend a bit further depending on some other factors like Bankruptcy, garnishments, judgments, and how long it takes to pay the bad debt on your credit report to 0. But as a general rule I normally see people spend 3-5 years restoring your their credit after they have stopped the bleeding!
Now there are two different schools of thought here. Some people will tell you to suffer the extra 2-3 years or so and wait out your debt to fall off your credit report. And the other half of people will tell you pay it off (or settle it). To be honest with you, it comes down to personal preference.
There can be circumstances where someone would want to wait it out and let it fall off. For instance, what if you didn’t make a lot of money, or have a lot of money. Your probably reading this right now and saying “well isn’t that most everybody?” Not really, depends on if you can afford to pay it back. If you don’t make a lot of money, all money you do have is dedicated to paying bills and living day to day, then you may not have the resources to pay off your debt. Sometimes people go through medical issues, failed marriages and businesses, or even a death in the family. I also have some friends who went into schooling debt, paying for tuition, books, and room and board; only to get out of school and find their degree to be 100% worthless! Happens a lot now with the economy being in turmoil.
I highly recommend paying your debt, making payments, calling your creditors and settling your debt. Sometimes a $0 balance card with a few lates can help your credit more than having NOTHING there at all. Being a credit ghost with a 0 FICO can suck too, without a credit score of any kind. I have seen people with terrible credit get approved for credit and watched people (including myself at one point in time) get turned down over and over with a 0.
Which ever route you decide to take, paying it or waiting it out; you have to make sure what you decide is what is best for you. Listening to people tell you what decision to make at this crossroads is the worst thing you can do! People who will tell you this do not know your situation, do not fully understand your morals (they may, but most likely will not), they do not have the same credit score you do, they do not have the exact same financial situation you have. No two situations are exactly alike, so do not trust anyone who tells you. Make your decision, stick to it, and hammer out a plan of attack.
I have set up an online resource, for the every day person to learn about credit. You can get the information you need as you need it. You can sign up for a FREE newsletter to stay up to date about all things credit. Check out The United Credit Authority! And if you have not gotten started on cleaning up your credit, then crab my 100% FREE Credit Repair Course. It has a step by step walk-through and 4 letters to get you going. If you want everything, all at once, all in one place; check out our Credit Repair Systems page. There I have reviewed some of the top web courses on the market…everything from an attorney’s handwritten course to a program that you point and click! It can be that easy, depending on what your time is worth!
As always, if you have any questions at all, just shoot me an email and I will respond within a day.
Good Luck!
Share on Facebook
Latest Comments