A SPECIAL NOTE ABOUT "CREDIT REPAIR"

Credit Card

There are businesses that advertise that they can remove unfavorable remarks and clean up your credit report based on loopholes in federal law. These businesses or clinics often flood your credit bureau with disputes hoping the bureau will remove the disputed reporting based on the dispute not being challenged. The repair is temporary as accurate monthly reporting undo the disputes.

Only the credit reporting agency can legally remove erroneous information from your file before the seven-to-ten year reporting period expires

THE FUTURE: REBUILDING YOUR CREDIT WORTHINESS

CREDIT SCORE

Credit scoring is a method lenders use to determine whether you meet their lending criteria. It may also measure your desperation. The lower the score, the more desperate one may be. If one has the money why do we borrow? While technically a computerized secret formula, the biggest components to your score are available credit and payment history. A lender will often risk assess applicants with score ranges with higher interest rates for lower scores. Yet, credit scores are historical and cannot predict the future.

THE LENDER'S POINT OF VIEW

Lenders often evaluate you to determine how much credit to grant you based on the three C's: character, capacity, and capital.

-- Character - Will you repay? Lenders may consider factors such as the length of time you have been at your present and previous address, time at your present/previous job, references and credit history.

-- Capacity - Can you repay? Lenders may consider income from all verifiable sources and the reliability of your job, debt to income ratio, or how your monthly income compares to your monthly debts.

Some creditors prefer that no more than 28 percent of your gross income if employed or of your net income if self-employed pays for housing debt. In addition, the maximum overall fixed debt (including housing) is 36 percent of your gross income if employed or of your net income if self-employed.

-- Capital - What collateral do you own? Lenders typically look to secure their loans real estate, vehicles and other valued things of value to secure repayment.

WHAT STEPS SHOULD YOU TAKE TO UPDATE YOUR CREDIT HISTORY, BUILD WEATH?

Wealthy people don't care about credit reports because they only buy things when they have the cash. Note to self, to become wealthy don't borrow. Savings is simply deferred consumption as wealth is deferred consumption accumulated. Many earn a million dollars in their lifetime. The typical Millionaire most commonly buys a three year old vehicle, holds on to it for five years, does not divorce the spouse who is more frugal than they are, typically exercise and entertained

with low cost family events, has some college, average grades, lives in the established community neighborhood, not the game show contest or the lottery winner or the professional athlete five years after they retired.

Review your credit report annually, correct errors, but who cares if you don't borrow and you are Wealth Building?! To build wealth, preferably, cash or 20 percent down on home loans, 15 year repayment. Used cars as most new cars lose 25 percent value when drive off the new car lot. Paid cars typically only need to liability insurance. Continuing to primarily drive the older car saves the newer car value creates a with a good backup plan vehicle, reliable transportation with a multicar discount.

You'll need to update your existing file and start working toward establishing a strong, new credit history that proves you have changed poor repayment habits, if those were in fact part of your old history.

-- Supply the credit bureau with any positive information which may not appear on your report. You may do this online.

-- Make sure the status of all accounts on the report is accurately reflected.

-- Close any open accounts you're not using.

-- Work with your creditors to delete derogatory information that is not yours. Clear up any erroneous student loan issues. Clear up any incorrect public record information.

WHAT YOU CAN DO TO BUILD WEALTH AND REBUILD YOUR CREDIT AND IMPROVE YOUR SCORE

  • Enroll in your Employer's 401K retirement plan. Contribute to the Roth portion, at least the employer match, come "hell" or "high water".

  • Set financial and purchase goals, rather than impulse buying. Allocate expenses to your income to meet those goals. Increasing income may mean a second job or working overtime as one is typically not spending when one is working. IPay cash, to feel the "pain" of giving up hard earn money.

  • Debit cards are increasing given a discount over credit cards avoiding "credit" emergencies and impulse buying.

  • Keep your Clunkers! Five MPG per 15,000 annual miles at $4 per gallon will only typically save you $400 per year. Compared to $15,000 average loan balance at 8 percent is $1,200 cost, a $800 loss!

  • High interest or being turned down for credit should be telling you that too much debt and may be more of a favor than debt enslavement and being put on financial treadmill due to a "risk assessed" loan.

CONCLUSION

Going forward, commit to paying yourself first, live on the rest. Pay your bills timely, late payments incur late fees, better spent on other things as they ruin your credit score. If you must use credit, limit it to what you can pay back in a short period of time. Know what you can realistically and comfortably afford to pay for purchases with the income you have. No borrowing increases wealth. Most of all, take advantage of this fresh start save money, build wealth without borrowing or filing bankruptcy, again. When you need credit, shop around as banks compete. Make a spending plan and follow it. Don't be distracted by someone else's plan for your money.

TAKE CONTROL OF YOUR OWN FUTURE!

Contact Us

Jefferson City: (573) 635-6850
Columbia: (573) 442-8160

Our Office:

529 East High St.
Jefferson City, MO 65101

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DISCLAIMER:
The information provided in The Bisges Law Firm, P.C. web page is offered for informational purposes only, and it does not constitute legal advice. The Bisges Law Firm, P.C. does not have an attorney-client relationship with you based upon your visit to this web page. If you have a specific legal question, you should contact an attorney. The Bisges Law Firm is a debt relief agency.