How To Fix Your Credit Through Credit Counseling

In order to manage your money properly, it is just like anything else in life, where some folks seem to have natural skills with it while others struggle with it. Since credit card debt is reaching all time highs these days for so many people, combined with such a widespread use of credit cards to purchase just about anything, managing your money well is more important than ever. Your credit report is a history of how you deal with your debts and financial obligations, and the better your credit score is, the easier time you will have to get access to funds and better interest rates when you need it.

But there is also a downside. If you mess up and get behind with some credit card or mortgage payments or car payments, or even go into default with a creditor, your credit history and your resulting credit score will reflect that and will be suffering. One of the many downsides of this is that it will limit your ability to get approved for new lines of credit in the future. The moral of this story is that if your credit history is not perfect, you should take steps quickly to build your credit back up to a level that is attractive to lenders. Because of their diverse and widespread experience in helping people fix or repair their credit, a credit counselor can be a great help to you in this process.

You will usually find that credit counseling is offered by non-profit groups. There are some companies out there that are for-profit and usually charge a sizeable fee for their services, but these are not the same thing and should be avoided like the plague. Many of them advertise online and a good percentage of them are scams and ripoff artists, where they will not have done a beneficial thing for you. In fact, if you fall for some of the hype that they state on their web sites, you could find yourself in a much worse situation than you are today. While some of these credit repair companies are worthwhile and reputable, you do not want to hand over your money to a company that it going to do something that you can do yourself. Some of those companies use sneaky techniques to try to get you a clean credit report, like using a different address or a different spelling of your name, and those types of techniques are questionable and will not last long.

By contrast, a credit counseling service exists to provide you with good and sound advice. They do this because there is not a profit motive for them to recommend things that is not appropriate for your particular situation. While there are many things you can do yourself (if you know what the steps are), using a credit counseling service is a very good way to embark on a campaign and strategy to repair your credit.

One of the things that you need to keep in mind is that rebuilding a poor credit history does not happen overnight. It takes a good deal of time and effort, and a credit counselor can explain this to you by giving you a realistic picture and timeframe of what is involved with repairing your credit. This way you will understand why things take time and you will not be disappointed when your credit is not fixed within just a couple of days. This is a long term plan, and one that you need to adhere to for a long time, which will take discipline. But the end result will be more than worth it, and the credit counselor will work with you to create a strategy that is both effective and manageable for you.

Almost all of these credit counseling services will provide workshops and sometimes even educational materials to keep you motivated and on track. Since it is logical that you got into credit trouble by a lack of discipline or lack of a budget you could stick to, the credit counselor will also work with you to create and establish a budget. They will explain to you how money flows into and out of your household every month, and with that understanding, it will make it easier for you to stick to your budget and repair your credit.

Each person's situation is different, so you should be cautious and wary of companies who try to offer a credit repair solution where one size fits all. One size does NOT fit all because everyone's situation is different. Some of these companies make very bold statements about being able to fix your credit regardless of your circumstances, but there is no way that can be a true statement because everyone is different, with different reasons for getting to the place where they are today, and the method to provide credit repair services is also going to have to be different.

5 Quick Tips to Improve Your Credit Now

Credit is the foremost factor when deciding what type of loan you can get, or if you can get one at all. The plain fact is, is that if your credit is not good enough; you will unable to purchase a home.

Here are a few things you can do to right now quickly raise your credit score.

#1 Check Your Credit. If you do not know what your scores are, you have no idea where you stand. You may have errors that are affecting your credit score that you do not know about. A free resource to do this is annualcreditreport.com They will give you a 30 day free report once every 12 months showing all three of the Credit Bureaus information about your credit files (Experian, Equifax and Transunion). Check all information that has to do with your creditors information. If you see any inaccuracies, dispute them.

The reports you will see through annualcreditreport.com will not show your scores, but for free, it is a good start to see what you are working with. You will need a service that shows your credit scores.

MyFico will show you all three of your credit scores

Here is how to figure out which score a lender is going to look at. Lenders do not average your three scores. If your scores are 489, 510 and 562, a lender will look at the middle number from highest to lowest, which is 510. For a first time home buyer, this credit score can be approved with our programs.

#2 Dispute Inaccuracies. When you find inaccurate information, dispute it right away. All three credit bureaus will allow you to dispute items right online with the purchase of your credit report. The credit bureaus have to check your information and make sure that it is correct or inaccurate. It takes a while for the file to update (approximately 30 days), but when items drop off; your credit score will improve.

#3 Attain New Credit. If you have any credit cards that are at their max, it may be helpful to apply for another credit card. Make sure that you have the means and discipline necessary to be responsible with new credit. The wisest suggestion is to transfer some of the debt from other credit cards and distribute your debt evenly amongst all of your credit cards. Another credit card will not hurt your credit. If you lower your balance on all of your credit cards, ideally in the 30% range of your high limit, by adding another card and transferring debt, it will improve your score.

#4 Pay off Debt. This may not be the right time to pay off your debt. Sometimes, paying off debt can actually lower your credit score. MyFico has a good credit simulator that shows you how the choices you make affect your scores. If you are looking for a home it may even be best to leave it alone or deal with credit issues later when you are securely in your home. If you are struggling to come up with a down payment, it may be time to wait a little longer, or use down payment assistance such as AmeriDream or the Nehemiah Program.

If you have any collections, medical bills, small credit cards, or smaller items that have gone to a collection agency, it may be wise to call the collection agency and negotiate a settlement. If you explain that you want to do the right thing and pay off your old debts, try to get them to cut your payoff in half. Make sure you get an agreement in writing before you give them your money, and make sure that agreement says that the lowered payoff will zero out your balance, and that they will remove the item from your credit report. (check your credit report to see if this has been done after you have paid. If it still shows up, dispute the item off your report)

Remember!!! Items drop off of your credit report after 7 years, if your creditor does not renew them. If you have old items that have not been updated near the 7 year mark, LEAVE THEM ALONE. They are most likely to drop off your report and your score will increase shortly thereafter.

#5 Pay Your Bills. The best and most common sense way to have great credit is to pay your bills on time. This is sometimes easier said than done especially after the holidays or after big life events such as a wedding or misfortunes like divorce or job loss. But keep in mind, if you merely by pay your bills on time for 2 years will have good credit.