Thursday, January 29, 2009

Eight Ways To Raise Your Credit Score

By Christina Couch

In an age of slashed credit limits, tighter credit card restrictions, and anxious lenders, having strong credit is more important than ever. According to Experian, one of the country's largest credit scoring agencies, the national average credit score sits at 692; however, Linda Call, vice president of the Richmond, Virginia - based mortgage brokerage firm, Berkley Mortgage, says that in today's market, those even slightly below average could be in trouble. "With the economy so down, 620 is the minimum for getting a loan, but people really need credit score around 700, preferably 720, to get something with decent rates," Call says. "It's very scary right now for anyone with a low credit score."

Here are eight ways to give your credit score an extra boost.

1. Keep the Balances Balanced

In a tough economic climate, keeping your credit balance under the limit isn't enough. According to Scott Scredon, director of public relations for the Consumer Credit Counseling Service of Greater Atlanta, GA, simply maintaining a balance that's close to your limit could weigh down your credit score.

"If you carry a balance on your credit card, you need to make sure the difference between your credit limit and your balance is 50 percent or less, so if your limit is $1,000, you need to keep your balance at $500 or less," says Scredon. "Not using all of your credit is a signal to card companies that you're managing your credit properly." Scredon adds that keeping an even lower balance -- 30 percent or less -- will boost your score even more. Should your balance go over the 50 percent mark on one card, Scredon recommends focusing any available financial resources on cutting the balance down, even if it means sacrificing a few daily luxuries until the credit's in check.

2. Eliminate the Mistakes

One of the fastest ways to up your score is to make sure it's yours. According to a 2005 study by the Federal Trade Commission, an estimated 8.3 million Americans are victims of identity theft each year. Of those victims, 1.8 million have new credit cards, loans, or financial accounts opened in their name without their knowledge.

An easy way to prevent paying off debts you didn't incur is to keep tabs on your credit score.

3. Diversify Your Credit

"People don't realize that 10 percent of your credit score is determined by what types of credit you use," says Gail Cunningham, marketing director for the National Foundation for Credit Counseling. "That's determined not only by how you manage revolving debt like Visa, MasterCard, and store credit cards, but also how you handle fixed payments like your car payments or your mortgage payments over time."

Instead of putting long-term purchases on cards, Cunningham recommends taking out short-term one to two-year loans in order to build a diversified credit portfolio. In addition to receiving lower interest rates and more flexible payment terms, consumers who use loans over cards also build positive credit and gain better credit terms in the future.

4. In With the Old, Out With the New

Another 15 percent of your credit score is determined by how long you've been managing credit. Those who can manage cards wisely by paying on time and keeping balances lower than limits can improve their credit score by getting plastic early. It's up to you to figure out when the time is right.

"It's to your advantage to get a credit card as early as possible and start building credit early," says Call, "but you have to do that when you're ready. People who start building credit in their early 20s will have a significant advantage when it comes time to apply for a home mortgage." Though college students are statistically poor at managing plastic -- ­the average college student graduates with nearly $2,200 in credit card debt according to Nellie Mae -- learning the basics of credit early can benefit in the long run.

5. Add Some Positives

Consumers in dire credit straits may be able to boost their score simply by showing credit scoring services what they're doing right. "If the consumer has positive histories in things like rent and utilities, adding those histories can greatly help the credit score," says Mark Guimond, executive director of the American Association of Debt Management Organizations.

"There are companies designed to get positive information on your credit score and that can have a significant impact," he says. Organizations like Credit Restoration Associates in Richmond Virginia can help consumers add daycare, insurance, rent, and cable credit histories to their score and set up online bill pay services to make sure those debts keep getting paid on time.

6. Flex Your Negotiation Muscle

If you see trouble on the horizon, nip it in the bud, says Scredon. "Making a late payment could affect your interest rate, not just on the card you're paying late on, but on all your credit cards," he explains. "If you know you're going to have trouble making payments, get in touch with your lender and have a discussion about it. We are hearing more and more from our counselors that lenders are willing to look at whether you can put together a different payment plan." Since even one late payment could lower your credit score, preventing disaster before it happens can protect your credit for years to come.

7. Prioritize the Debt

Those who are already in the plastic trap can begin digging themselves out by creating a debt attack plan. Start by making a list of all of your credit debts, then pick out which is harming you the most.

"If you have a card where you owe more than 30 percent of your credit limit, power pay that one down first to keep your credit score in tact," recommends Cunningham. "After that, I tell people to pay off their largest debts first unless it's just too daunting. If so, tackle your smallest bill first while making minimum payments on everything else, and once you've paid it and have that sense of accomplishment, move on to the next one."

By focusing your financial resources on eliminating one problem debt at a time, Cunningham says consumers can eliminate long-term out-of-control debt from impacting their credit score.

8. Research the Bargains

Credit inquiries are a major obstacle that prevents consumers from comparing loan rates and terms. While inquiries on your credit report can lower your score -- as much as five points according to -- consumers have a 30-day window before choosing their loan when all mortgage and auto loan inquiries only count once.

An easy way to avoid racking up inquiries on your account, says Guimond, is to comparison shop as much as possible before filling out a formal application. "Don't just apply to ten different lenders, talk to lenders, talk to customer service people, get as much information as possible," he says. "It pays to do the research."
CRA never charges for good credit advice.

Christina Couch is a freelance writer based in Richmond, Virginia, and Chicago, Illinois. Her writing credentials include,, Yahoo! Finance, and MSN/Encarta Online. She is also the author of "Virginia Colleges 101: The Ultimate Guide for Students of All Ages" (Palari Publishing, 2008). She can be contacted at


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Wednesday, January 21, 2009

Identifying a Legitimate Credit Repair Firm

Text originally from the Better Business Bureau of Chicago and Northern Illinois:

Due to the troubling economic situation, many consumers seek out credit repair or debt settlement companies- here is what you need to know about them and how to determine their legitimacy.

1. These services cannot ask for money in advance.

2. They cannot automatically get legitimate negative reports off your credit report.

3. Be extremely cautious about a service that recommends you not pay your creditors so it can negotiate with them for you. This could negatively affect your credit report. A service should never guarantee that they can cut your debt by a specific percentage.

It is against federal law — the Credit Repair Organizations Act — for any credit repair company to charge you in advance for their services. The only time they can ask for payment is after all of the services they were to do for you are completed.

A credit repair company cannot tell you that they can get negative (but legitimate) items off of your credit report. The main aspect of credit repair organizations' work is writing to the credit reporting agencies to dispute the items on your report by asking for their validation.

If the items on your report are real, such as liens, bankruptcies, etc, the credit reporting agencies will not have a problem validating them. Also, keep in mind that disputing items on your credit report is something you can do by yourself, for free (although it is very time consuming). You can easily find the appropriate dispute letter templates on the internet

Many debt settlement or negotiation companies request that you don't pay your creditors and wait until you are behind in payments so that they can contact your creditors and attempt to negotiate to have your debt reduced in exchange for making a payment on the spot.

While some creditors may agree to this to get at least partial payment, your credit rating will suffer, your interest rates may go up, and you may have trouble obtaining future loans or financing.

Debt settlement or debt negotiation companies should not guarantee that by enrolling in their services, they can cut your debt by any specific percentage, such as "40-60 percent".

At CRA, we do not believe that debt negotiation is a way to go. It will destroy your credit rating. Many of our clients have used services such as this before enrolling in our program, and it is very difficult (but not impossible) to repair their credit.

Please call us for a free professional credit consultation. We can answer any questions about debt negotiation companies at that time - 1-800-671-1454.


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Monday, January 12, 2009

CRA Exclusive: 10 Ways To Help You Beat a Credit Hangover

It’s economic Armageddon. House prices are cratering, banks are begging for spare change, and it seems everywhere you turn someone is in need of a rescue plan -- including you. With the incoming bills from this past holiday season's charge-fest, you're starting to get buyer's remorse, big time.

Don't panic, we have 10 ways to help you beat a credit hangover.

Credit Hangover Tip No. 1:

Don't Panic

First, calm down and stop hyperventilating. According to Lesley A. Hoenig, a bankruptcy attorney licensed in Michigan, Illinois, and Minnesota, realizing that your debt problem is not the end of the world is extremely important. “You will make it out of this situation one way or another,” says Hoenig. “What's imperative is to make a definitive list of all the debts you owe.” She explains that doing this will help to ensure that everything debt-wise can be dealt with properly, which should help you breath a lot easier, thus avoiding a credit-induced aneurism down the road.

Credit Hangover Tip No. 2:

Pay Off High-Interest Debts First

It's always a good idea to pay off the debt with the highest interest rate first, advises Hoenig. “The higher the interest rate, the more interest that will accrue. With an APR of 30 percent it takes only three years before you wind up paying more than twice what you originally owed.” Determine which credit cards or debts are costing you the most interest, and work double-time at paying them off first. Remember, the two-fisted monster of compound interest works in your favor when you’re saving money, not when you’re borrowing it.

Read the rest of the article at:


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Friday, January 2, 2009

5 Credit Repair Tips

by David Wada

1) if you have a credit score of 677, you are in the same situation as 70% of all Americans. If your credit score rose just 30 points, your family can save, on average, $421 every month or $5,052 every year on house payments, car payments, credits cards, loans, etc.

2) A lot of people ask whether credit repair really works. The simple answer to that is, “Yes, absolutely.” Millions of items have been removed from credit reports, and tens of thousands get deleted every single day (i.e. late payments, collections, bankruptcies, and foreclosures get deleted). A study released by the U.S. Public Interest Research Group in June 2004 found that 79% of the consumer credit reports surveyed contained some kind of error or mistake.

3) Although there are many credit repair companies out there…use caution and avoid being scammed. The Fair Credit Reporting Act guarantees any customer the credit repair process.

4) Also, the credit repair organizations must give you a copy of the “Consumer Credit File Rights Under State and Federal Law” before you sign a contract. Unless they give you a written contract that spells out your rights and obligations, assume you are being scammed.

5) Read all documents, and before signing anything.

Know that a credit repair company cannot:

* Mislead you with false claims about their services.

* Charge you unless their promised services is completed.

* Perform any services until they have your signature on a written contract and have completed a three-day waiting period. During this time, you can cancel the contract without paying any fees.

Be sure the contract specifies:

* Payment terms for services and total cost.

* A description of the services down to the itty-bitty details the company will be performing.

* How long it will take to achieve the result.

* 100% guarantees the company offers.

* Company title, phone number and business address.

Call today for a free credit analysis!

At Credit Restoration Associates, we pride ourselves on providing the highest quality of credit repair service, while maintaining the ethics and integrity required. By strictly adhering to the standards and practices outlined by the Federal Trade Commission we can offer our clients the very best service and still provide Low Cost solutions.


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