The Credit Challenge

I’ve talked to many people over time who have been told about sending letters to their creditors to clear off items from their credit. This is definitely a great approach to take when working to improve your credit score.

Although sending out letters is a very effective method of boosting your credit score, there is one major thing that most people forget.

What is that you may ask?

Simple, it is to continue following up after the initial credit letter is sent out. You see, just because you send one letter doesn’t automatically mean that it will all work out.

A more powerful approach is actually to have a credit reporting service that will give you access to your credit score each month. That way, you can monitor if the letters worked or not.

If your letter worked, you would see those negative items removed from your credit. If not, you would know that sending another letter the following month would be your next step.

The point is, the magic is in the follow up. Be sure to check to see if you’ve gotten results. Only then will you truly know what else is left.

This approach is what major credit repair agencies take to clear your credit. They just use a system to continually monitor the results of the letters they send on your behalf, and then send them over and over again until they can clear those items off of your credit report.

So knowing this, you can take the same approach that credit repair agencies take, but save yourself the money that they would normally charge.

Right now, more than ever, it is crucial to rebuild your credit score if you’ve had trouble with it in the past.  The unfortunate thing about rebuilding your credit score is that you may not be aware of everything that your credit score impacts, so you are just reaping the results of having a less than optimal credit.

To help you gain a little more understanding on why it is critical to have a good credit score, here are the top 10 reasons to rebuild your credit score (you will get the first 5 right now, but watch out for the other 5 tomorrow);

1. Stop Wasting Money On Extra Interest – the lower your credit score, the higher your interest rates are.  This can mean paying thousands of dollars extra each and every year for the same exact things that others with better credit pay much less on.
2. Get Approved For Loans Much Easier – it’s a fact that lenders will be more lenient on individuals with a higher credit score because they have a higher chance of getting their money back on time.
3. Pay Less On Your Auto Insurance – not only do insurance companies look at your driving and accident records, they even look at your credit history.  Statistics show that people who are responsible with their money have a smaller chance of filing insurance claims.
4. Borrow Money At 0 Percent Interest – if you are going to borrow money, why not borrow it interest free, right!  These offers are only extended to people with a proven track record of making their payments on time and having low balances on their cards.
5. Keep More Of Your Money – when you have a lower credit score, then you are always required to put a much bigger down payment on purchases like a car or a house. The lender isn’t willing to take on the risk without a sizable amount of collateral.

So, with these first 5, you can instantly see why you should start rebuilding your credit score.  Who really cares if you’ve had trouble with your credit scores in the past, now its time to jump onboard again.

Make sure you come back tomorrow to read the remaining 5 to really get you serious about building your credit!

Credit repair is something that you hear about all the time.  First of all, there are credit repair companies.  Then there are credit repair kits.  There are many things out on the market that supposedly make the process of credit repair fast and easy.

In my time working with clients over time, there are have been many excuses why they haven’t taken any steps to repair their credit, however, there are 5 key things that have been consistent over the last 7 years.

1. Lack Of Knowledge – Because we’ve been served so many different ways to achieve good credit, it is obvious that people seem more overwhelmed because of not having the right knowledge about credit or how to improve it.  The first step is understanding how credit really works.  There are 5 key factors which determine your credit score, but sadly, even some professionals don’t really know this precise formula.
2. Different Opinions and Perspectives- Many people that I’ve spoken to have different perspectives on how and what to do to have excellent credit.  This is mainly because the people that we go to learn about credit don’t really know themselves.  So, if we get false information about credit, guess what?  We will pass on the same inaccurate information to others.  Every time, the right info gets diluted and becomes completely false.
3. Not Establishing A Plan To Improve Your Credit- You’ve probably heard the saying “If you fail to plan, you plan to fail.”  Well, that also applies to increasing your credit score and working on your credit repair.  There are a number of steps that it takes to boost your credit score, but often, people just shoot from the hip, or take a blind shot into the wind, without properly planning the steps necessary to increase your score.  It is very important to establish a plan because then you know that you are making progress, and you will also provide yourself with accountability to stick to the goal!
4. Can Be Overwhelming- At first, credit repair may look overwhelming.  After all, the task of going from a 537 score to a 700 seems like a huge undertaking.  The simplest way to achieve this and not feel suffocated is to break down your plan into smaller, manageable tasks.  Instead of paying down 5 credit cards so that they reach a 30% balance compared to the credit limit, focus on paying down the smallest one.  Once you do that, move on to the next one, and so forth.  This can give you motivation to continue and also make you feel like you are moving closer to the goal.
5. Lack Of Money or Time To Improve Credit- Let’s face it.  In order to repair your credit, you will either need time or money, or even both.  The more money you have available to do it, the less of your time it would take, and vice versa.  Again, making small adjustments can get you well on your way to credit repair.  First, is there anything that you can cut off from your spending that you can redirect to your debt?  Also, do you have an hour or two that you can schedule with yourself to review your credit and send out any letters to the creditors?  These are small things that you can begin doing to make a difference in your credit score.

As you can see, if you know what some of the road blocks are from improving your credit, then you can plan accordingly and make adjustments when necessary.

What are some of the things that are hindering you from improving your credit?  Feel free to leave comments or questions here and I will be sure to answer them.