The growing industry of financial advisors and debt settlement agencies can make some people think that credit repair is something only an expert can do. This is not true. Credit repair is very much a do-it-yourself process. We will help you come up with a 3 step plan for repairing credit without the help of a financial advisor.

1. Get a credit report

The first step in repairing your own credit score is to figure out what your credit is and whether or not it is accurate. There are several agencies that will provide you with a free credit report. A credit report is a record of your financial history. It includes things like the accounts you have, your missed payments, your timely payments, bankruptcies and debt settlements. These are the factors that determine your credit score.

It is important to check this report for errors. Many of agencies put faulty information on your credit report, and this can seriously lower your credit score. An error on your credit report can prevent you from getting the loans that you need. After checking your credit report for errors, you can contest these errors by reporting them to credit companies and providing documents that refute the error.

1. Devise a credit repair plan

After making sure that your credit report is free of errors, you can begin to repair your credit through various financial options. The most powerful factor in determining your credit score is your history of on-time payments. If you have a low credit score and you can’t get a large loan like an auto loan or a home mortgage, you can begin to improve your history of on-time payments by getting a bad credit loan.

A bad credit loan is a loan that can be obtained even if you don’t have the best credit. Many websites and credit agencies provide bad credit loans. This gives people with a low credit score the opportunity raise their credit score by lengthening their history of good payments. The downside to bad credit loans is their high interest rates. Because these loans are generally supplied to people with bad credit, they are considered high risk loans. These loans are supplied at a high interest rate, but they give the borrower a chance to increase their credit score and get a lower rate in the future.

1. Make your payments on time

Bad credit loans—or any type of loan for that matter—will only help you improve your credit score if you make your payments on time. If you are going to improve your credit with a bad credit loan, you must make you payments on time, otherwise your credit score will actually be harmed by the missed payments. Missing payments will harm your credit score and cost you money in late fees. The most important part of any credit repair plan is to stick to it and make the payments on time.

You can repair you own credit. It will take some planning and commitment to making payments on time, but you can get the credit score you want without help from any type of financial advisor. Keep in mind that there are other ways to improve your credit score than by getting a bad credit loan. Credit cards, student loans, and other financial options can also help you improve your credit score but are less available to those with lower credit scores.

Common Credit Questions Answered

Many people are confused about the different types of loans offered by lending institutions and just how these loans will affect the borrower’s credit. Here are the answers to a few questions about the most basic types of loans:

Q. How can I get a loan?

A. There are three basic types of loans:

1. Secured loans—these loans can be for large sums of money, but they will require some type of collateral. Examples of secured loans are auto loans and mortgages where a car or house is used as collateral. You can borrow a significant amount of money, but if you default on the loan creditors have the right to repossess your car or house depending on the loan. These loans can extend over a term of as much as 10 years.
2. Unsecured loans—these loans have no collateral attached to them. The amount of money you can borrow and the interest rate on an unsecured loan will depend on how risky the institution feels it is to lend you money, so your credit will make this loan more or less expensive for you. These loans are usually for $1,000 – $25,000 and they are repaid over a term that will be decided with the lender but usually range from 1 – 5 years.
   1. Bad Credit loans—this is a type of unsecured loan designed for people with bad credit. Many lenders will grant a loan to an individual with less than ideal credit if they can prove they have a reliable source of income. These loans are typically for less money than unsecured loans that require a credit check. Their rate of interest is also going to be very high because they are considered risky to lenders. The term of this loan will also vary.
   2. Payday loans—sometimes called “cash advances,” this type of loan is for a small amount of money to be repaid over a very short term, usually no more than a month. Typically, a pay day loan will be for no more than $1,000. These loans do not require a credit check, so their rates of interest are very high.

Q. How will getting a loan affect my credit?

A. It depends on what kind of loan you get and how many loans you get. Pay day loans are a bit different, so we’ll talk about them later. Each time a lending company checks your credit to see if you are worthy for a loan, your credit score goes down 5 points. If you are approved for a loan, you will be able to make up that loss of points through making timely, monthly payments on your loan—that is, if you are below a certain amount of debt. If you are borrowing more than 40% of your total available credit, that will also hurt your credit score. So, for example, if you have a credit limit of $1,000 and you get a loan that requires a credit check for $600, then you will likely loss a significant number of points from your credit score, though this loss will be mitigated if you make consistent payments.

Payday loans are the exception to this rule. Getting a pay day loan will not affect your credit score because they do not require a credit check. If you repay your loan according to the lender’s terms, then a pay day loan will not show up on your credit report, so it will not affect your credit score. If you violate the terms of the loan, then that will show up your credit report and negatively affect your credit. But this is a double edged sword. A pay day loan will not hurt your credit if you pay it back on time, but it will not help your credit either. Pay day loans that are paid off according to the lender’s terms are not recorded on your credit report, so it will not improve your credit score by strengthening your history of consistent payments.

American businessman Lee Iacocca took a lot of criticism after his famous quote, “We’ve got to pause and ask ourselves: How much clean air do we need?” Despite public reaction, Iacocca raises a valid point that has been neglected by many: Sometimes it costs too much to get more of a good thing. This same principle applies finance. If you have a credit score of 700, do you really need to go through the trouble to raise it to a perfect 800? We have been told that having a great credit score is akin to finding the Holy Grail, but we’ve got to pause and ask ourselves: How much credit do we need?

Here are a few things to consider when answering this question.

1. Credit is the ability to acquire debt

Your credit score is a number that indicates how worthy lenders think you are when you try to borrow money. This means that a high credit score really translates to a high ability to acquire debt. It is important to note, however, that a high credit score not only helps get you approved for borrowing money, it also helps secure lower interest rates so you can borrow more cheaply. The ability to borrow money at a low interest rate has value, but how much value? By raising your credit score, you may be able to get a better interest rate on your next loan, but will you need another loan?

1. Debt Has A Price

Economic theory teaches us that everything has a cost. This is obvious with material things. A pound of apples has a cost of $1. What is less obvious is the fact that intangibles have a cost as well. This may seem like an abstract concept, but it is obvious that we assign values to intangible things when we select jobs. For instance, let’s say one job pays $50,000 a year and offers 5 vacation days a month and another job pays $60,000 a year and offers 5 vacation days a year. How much are those vacation days worth to you? If you would select the first job, then it seems as if 5 vacation days a month are worth at least $10,000 to you. This same principle applies to debt.

Debt has an obvious financial cost in the form of interest, but the intangible cost of debt is often ignored when we talk about credit. Having debt is stressful. Making monthly payments to avoid late fees can be an emotional drain. The more lines of credit you have, the more complex your budgeting must become. Many people hate the idea of knowing they are indebted to someone. Financial obligation can loom over your life like a black cloud. Excessive debt can feel like handcuffs. How much are these feelings worth to you? Maybe you don’t mind having debt, or maybe it is something you are morally opposed to. You need to determine debt’s intangible cost for you and your family.

1. To Get Better Credit, You Need Debt

Your credit score, or your ability to borrow money, is mostly determined by three things: Your history of payments, the amount of debt you have, and how long you have had debt. In order to get a payment history, you need to have debt to make payments on, and, as we’ve discussed before, having debt comes with intangible costs. Is having debt worth boosting your credit score? Only you can answer that question.

You might be able to boost your credit score by getting a personal loan or putting money back on your credit card, but how much is this worth to you? Will an increased credit score be worth making monthly payments and the feeling of having debt? If you plan on borrowing money to buy a house or car in the future, then the answer may be yes. If you feel that you would like to have the option of borrowing money in the future and fear that you may get rejected with your current credit score, then the answer may be yes again. It is up to determine the intangible cost of debt and compare it to your desire for a better credit score. Also investigate other ways of improving your credit score that do not require additional debt discussed in other posts on this blog.

We’ve been told that a good credit score is the ultimate financial achievement. Virtually every form of media is filled with advice on how to boost or repair your credit score. This article will talk about how to do that, but we will also address a question that is often overlooked: Is it worth it? How important is a credit score really. More specifically, how to do you decided how important your credit score it to you.

Making Good Out of Bad Credit

If you have bad credit, you are not going to be able to get a loan. Stated simply, credit is a number that is supposed to represent your worthiness to borrow money. It is a number between 300 and 850, and it is constantly changing. Just because you have your credit checked doesn’t mean that is going to be that number for long.

Credit is calculated on a number of factors, but two account more than half of your score. They are payment history (35%) and amount owed (30%). If you have bad credit, you probably have one of two problems 1) You haven’t been making payments on time, or 2) you owe a lot of money. There is a different approach to each dilemma.

1. Making payments on time

If your credit score has suffered because you haven’t been making payments on time, then you might be able to benefit from what is called a bad credit loan. A bad credit loan is a loan given to an individual with poor credit. It represents a chance to redeem a low credit score in that it gives you a chance to make timely monthly payments. The important decision is determining how much an improved credit score is worth to you.

2. Lots of Debt

If you have a low credit score because you have lots of debt, there might be a solution for that too. Most people who have a significant amount of debt owe money to several different credit card companies, banks, or stores. Each of these payments has late fees attached to them, so if you start to get behind, you can quickly fall so far behind it may seem like you can never get out. In this situation, you can get a refinance loan, one loan that allows you to pay off all of your debt at once. You can replace all of your monthly payments with one manageable payment. Through doing this you avoid late fees, begin to make payments on time, and gradually reduce the amount of money you owe.

 But Is It Worth It?

The real question though is whether or not its worth it. The answer is, It depends.

If you have lots of debt, you should usually refinance and begin to pay off your debt. Some people will warn you that you will damage your credit score by applying for a refinance loan. This is true. Each time you apply for a loan, your credit score drops. But your credit score is usually not more valuable than the peace of mind that comes from knowing you are on your way out of debt. You shouldn’t be afraid to sacrifice a little of your credit score, your ability to borrow money, to get out of debt.

If, on the other hand, you have had a history of not making payments on time in the past and want to improve your credit score by getting a loan, you need to think hard about your decision and evaluate your future plans. If you are planning on borrowing money for a home loan or an auto loan, then it will be helpful to have credit down the line. But if you cannot anticipate needing to borrow money in the future, then you might not need a great credit score. Is having a good credit score worth the stress of monthly payments and debt?

You need to make decisions about credit and borrowing with the long term in mind. Weigh the value of a credit score against the cost of monthly payments. It is helpful to know what options are available to you. If you are considering getting a bad credit loan to repair your debt, be sure to carefully investigate the specific interest rates and the term of the loan you are receiving.

So, times are hard and you are short of cash. Isn’t everyone in the same situation these days? The current worldwide economic situation has taken a toll on a lot of people and you are not alone. With almost ten percent of the population out of work and plenty of homes in foreclosure, there are a lot of people out there who are looking for easy personal loans.

You may think that you have nothing to offer a bank or a loan company as a means of collateral to secure any kind of loan and that could be correct. But, you can still get a loan if all you have is a job and a checking account. These kinds of loans are usually for just a short period of time, usually a month or two, but they should provide you with the funds that you need to take care of an emergency or unexpected problem. We all have these in life from time to time.
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If you are in financial trouble and need to get some money quickly, your options are very limited. If you still have access to credit on your credit cards, then you can take out cash there, but it is a very dangerous way of borrowing money. You don’t realize that the money you take out today on your credit card will be paid off for years to come, and that the interest rate (not to mention all of the fees), is exorbitant. There are other ways to get quick personal loans, though.

If you need money very quickly, within a day or so, the best way to do this is by using a cash advance or payday loan. These loans have had a bad reputation in recent years, but that is because they were not regulated – but now they are. These companies are not able to “rip off” anyone, and they are very clear about what their requirements are before you take out a loan. It goes without saying, that with any loan, you should never take it out unless you have a plan to pay it off on time and this is definitely the case with short-term loans.
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There was a time when if you wanted to get a personal loan, you had to sign over some sort of collateral. Normally, you could use your home equity or the title on your car (if you owned it in full), to secure the loan. This meant that if you defaulted or even missed one payment, the bank or loan company could come and confiscate (and sell) your collateral. This was a dangerous way to borrow money!

The good news is that today there are many options for you to get unsecured loans for bad credit. An unsecured loan means that you are putting nothing up for collateral. The loan company is taking you at your word that you will pay the loan back in full, on time. Of course, if you don’t, there are still substantial penalties, so make sure that you are fully able to pay back the loan when you take it out.
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With the economy in such a bad way, it is no wonder that so many people are also having problems with their personal economic situation. Plenty of people have lost their jobs, gotten behind on their mortgage payments, or maxed out their credit cards, and that is why it is a great time to start looking for a cheap personal loan.

Believe it or not, it isn’t credit cards that get most people into financial trouble, it is medical bills. Just one small accident or mishap can turn into a huge medical bill. One night in the intensive care unit can cost $10,000, and a little work on your heart could cost six figures! If you are a parent and your child breaks a bone, the cost of a few hours in the emergency room, a few x-rays, and a cast can run well over $1,000. No one budgets or these kinds of expenses and that is why so many people are getting into debt when they happen.
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You know that it is time to do something about your debt when you are afraid to pick up the phone at home. When debt collectors are calling every hour of the day, you are actually past the time when you should have dealt with this issue. But, you can still use debt consolidation personal loans to get over this hard time in your life and get your credit back on track.

Most Americans have between 8 and 12 different credit cards, and most of them are maxed out. This equates to a lot of debt, debt that is inefficient, and keeps all of us without money for years and years. A small purchase you make today could end up costing you ten or twenty times the amount, with interest over the years. For this reason alone, debt consolidation personal loans are a great idea to help minimize the problem and get you back to living a debt-free life.
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