Consumer Issues

March 8, 2009

Credit Repair

Filed under: consumers — Tomi @ 3:41 am

Repairing your credit could be quite challenging especially at a period of time when the economy seems very much unfavorable to both the consumer and the creditors.  Even then, with determination and lots of self discipline, you can rebuild your credit.  Below are a few steps to get you going. 

  1. Negotiate. If you have an outstanding balance, ask if you creditors can cancel or reduce the interest if you will be paying the full balance.  Also, ask if late payment records could be taken off your credit. Not all creditors would agree to this but it never hurts to ask especially if this is the first time and you’ve been a long term customer.
  2. Don’t give up. If a collecting agency would not cooperate with you, call the creditor directly and see if you can work out something with them.
  3. Check all statements and always review your bills .There are sometime mistakes that can work in your favor for example a charge that should not have been made. Being able to pick out mistakes is often favorable to you when you are working on repairing your credit since it creates room for negotiations.
  4. Review all EOBs from your health insurance make sure you are not paying twice. Make sure your are being correctly billed and check the dates. Sometimes, you might find that you have paid to your doctor, more than what your EOB (explanation of benefits) states as due in a case like this talk to both the doctor and the insurance company with regards to getting a credit.
  5. Pay up your credit cards as soon as they are used. Weekly if possible. Most credit card companies these days have online account management which makes it easy to track the charges. Paying immediately not only helps save on finance charges, It also helps in avoiding lateness on your bills remember late payments affect your credit score.
  6. Use the same card for all bills if paying by credit cards this way you have all your payment in one place and you can pay it off all at once.
  7. Check out the competition. Don’t be afraid to switch companies.
    1. Telephone – check out VOIP. The cost of this service is cheaper than the traditional companies and the offer some options and flexibility as well
    2. Cell phones – switch to a lower plan or pay as you go.
    3. Compare cable/DSL/ satellite for TV and Internet service.
    4. Compare the cost of having separate individual plans to having bundled services for all your needs at a low monthly fee.
  8. Monitor your credit report. Late payments are sometimes erroneously recorded. The early you can detect the mistake the better it would be for you.
  9. Buy what you need and not what you can afford. If you don’t need it, don’t buy it.
  10. Shop at a bargain. Register and shop at warehouse stores (Sams club, Cosco, BJs etc). I find that shopping for perishables at warehouse stores isn’t sometimes cost effective especially for people with small families. I recommend that you shop these stores for canned foods and non perishables like paper goods (toilet paper, kitchen towels), laundry and kitchen detergents, cleaning agents, diapers, Canned foods etc. For perishables like fruits and meats clip coupons and shop at regular stores.
  11. Shop around and compare prices from store to store – easier done on the Internet before you go out the house. That way you can plan your route.
  12. Use a spreadsheet or personal finance software (eg. Microsoft money, quicken and quick books (for businesses) to track your expenses most of them have a feature that enables you create a budget.
  13. Be organized. Keep receipts, file bills etc for cross reference.  Also, keeping a record of your expenses helps in identifying where you spend your money and sometimes, you might find stuff you can do without and reduce your outgoings.
  14. Make payments online and save on stamps and envelopes.
  15. As a way to keep up with your bills, avoid direct debit except on fixed outgoings like insurance, mortgage, gas and electric ( Most gas and electric companies will let you go on an equal payment plan). 
  16. Do your own taxes – invest in Turbotax and it’s deductibles (to keep track of your deductions) or other similar products.  No one knows your situations as much as you do, just by sitting down to review your deductions, you might be able to find deductions that could have otherwise been missed. You can have your documents review before filing and the cost for this as well as the cost of the software is also deductible.
  17. When starting a new service – some companies will take down a deposit in lieu of credit check when trying to repair your credit, this might be a good option to take as the frequency of credit checks also affects your overall score.


Good Luck

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