By: Mevish Jaffer
Many people have come to realize the importance of credit in their daily lives. If someone wants to buy a new car or used car, then they will need to have a good credit record. Sure, a large down payment can alleviate most of the hesitation that a lender might have about the consumer, but a good credit report can literally erase the need for a down payment altogether.
Many folks have had problems with their finances at one point in time or another. As a result, large numbers of people have some kind of blemish or stain on their credit records and have only a few options, including a payday cash advance.
Some folks are in a worse condition than others in regards to their credit history; especially those in younger generations. When you are young, it is simply too difficult to think beyond your immediate needs, and that gets a lot of young adults into trouble for years into the future.
As people begin to age into their late twenties or begin raising a family, they start to look more closely at their credit and often realize the mistakes they made in their youth.
Credit Repair Myths
- You can create a new credit identity. You can, but it is against the law to do so. If someone promises you different, don’t believe it. Cleaning up your credit history is simply not a worthwhile endeavor to undertake if your actions could possibly bring the weight of the legal system to bear upon you.
- You can erase bad credit. You can, but not overnight or for a fee. More information on this topic is provided below.
- You can remove bankruptcies, liens, judgments, foreclosures and bad loans from your credit history. Once again, yes you can, but not overnight or for a fee
The Facts About “New” Credit Identities
You should be aware that if you attempt to create a new identity to escape your bad credit history, you are dancing on dangerous legal grounds. Many folks believe that they can get an Employer Identification Number (EIN) for the purpose of creating a new credit identity.
Before attempting to obtain an EIN for the purpose of escaping your bad credit history, you should be aware of the legal ramifications of such an action. An EIN is a number acquired by businesses to set up a tax identity for the business. To acquire an EIN for any other purpose is considered to be “obtaining an EIN under false pretenses,” and you could be charged and prosecuted under the federal statutes that address such behavior.
It is also considered a federal crime to misrepresent your social security number in a loan or credit application.
If you use the postal mail system or a telephone to file false information on a credit application, that is also a federal crime and can bring additional charges of mail or wire fraud.
The truth is that there are no shortcuts to repairing your credit history, but there are steps you can take to ensure that you can rebuild your credit at a much quicker pace than you would expect.
Erasing Bad Credit
Most people who talk about erasing bad credit are referring to the legal processes associated with correcting inaccurate information on your credit report.
No one can actually remove accurate and timely information from a credit report, even if it has a poor reflection on your history. And there is no amount of money or legal process that will permit you to bypass this fact of life.
Credit reporting laws allow you to ask for an investigation to dispute any inaccurate or incomplete information on your file. There is no cost for you to actually process a dispute claim.
Under the FCRA (Fair Credit Reporting Act), both the consumer reporting company and the information provider (that is, the person, company, or organization that provides information about you to a consumer reporting company) are responsible for correcting inaccurate or incomplete information in your report. To take advantage of all your rights under this law, you must contact the consumer reporting company as well as the information provider and follow the prescribed guidelines for processing such a claim.
As a public service, the staff of the Federal Trade Commission (FTC) has prepared the complete text of the Fair Credit Reporting Act (FCRA) and made it available on their website at: http://www.ftc.gov/os/statutes/031224fcra.pdf
Removing Bankruptcies, Liens, Judgments, Foreclosures and Bad Loans from Your Credit Report
Bankruptcies will be on your credit report for a minimum of ten years. At the end of the ten-year period, it is not the court’s responsibility to remove this from your credit report --- it is your responsibility.
Foreclosures will be on your credit report for a minimum of seven years. Once again, it is not your bank’s responsibility to remove this stain from your credit report --- it is your responsibility.
Liens and judgments are legal holds against you or your assets. So long as the person who holds the judgment against you or your assets continues to renew their claim against you, then there is nothing you can do to get those out of your credit history. Those items will remain in your report for seven years from the last time the creditor notified the credit-reporting agency of their legal claim against you.
Once again, bad loans will remain in your credit file for seven years from the last time the lender notified the credit-reporting agency of their financial loss as a result of your actions or inactions.
The Truth about Credit Repair
As you may have noticed from the last section, there is a strong presence of the seven- and ten-year cycles. Although diamonds are forever, bad credit is not. Once the window of bad credit reporting has expired, you will go from having “bad credit” to “no credit”.
The truth is that you do not have to wait for your “bad credit” to become “no credit” before you take actions to re-establish your credit. You can start developing your new credit right away!
Developing New Credit When You Have Bad Credit
- Pay your bills on time. Most small financial lending institutions are willing to gamble on folks who have paid all of their bills on time for a period of at least six months.
- A local payday loan company is an excellent place to start when trying to build new credit. Sure, the cost is a bit higher to borrow through them, but they are willing to take a chance on people who are considered to be too risky by other lending institutions. Same day payday loans help financially burdened individuals get quick cash to fund emergency expenses.
- Once you have established some basic credit history, retail credit cards and gas cards become much easier to acquire.
- When you have reached the level of having some base retail credit, it is time to go to the bank and get a small loan. As you repay all loans, arrange for a loan that is a little bit larger, and then pay that off as well.
Once again, it is imperative for you to pay your bills on time. Moving from one type of loan to the next does require a consistency of paying your bills on time. It is very important for lenders to know that they will be repaid the money that they have loaned and that this money will be paid on time.
You may get different advice about how to “repair your credit”. This advice may even come from companies who want to help you to rebuild your credit. Beware of the downfalls of credit repair by getting all of the facts in advance.
The federal government is the consumer’s best friend. Do take advantage of the advice they offer on this subject and many others topics. For more information on the topic of credit repair, we recommend that you read the articles provided here: http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre13.shtm