When you need to fix your credit, knowing the difference between legitimate credit repair companies and scams can help you save your time, money, and most important, your credit rating.

Say you’ve just obtained a copy of your credit report.  You open it only to discover you don’t have a clue what’s going on in there.  Not only is your score lower than you thought it was but the report itself is filled with terms and acronyms that make little to no sense at all.  It’s like they deliberately try to make things as complex as possible, presenting a riddle with absolutely no clues to help you solve it.

So where are you to turn?  Well, the obvious answer is one of those credit repair services you keep seeing online.  But there’s so many of them, and a lot of them are just scams anyway, right?  How do you keep up with the people who say they’re trying to help you back up?  In short, how can you tell the good from the bad (and the ugly)?

You’re gonna like the way your credit looks – I guarantee it!

Just about every other credit repair service you come across on a Google search promises to wipe out all of your bad credit at the drop of a dime.  No one can guarantee you results when it comes to credit repair, no matter what a bunch of dots on a map or front page testimonials may say.  Just because they all claim to be the #1-rated company in the business doesn’t mean they really are.

And while most reputable companies won’t make this claim, anyone saying they can completely wipe out your bad credit in a matter of days is outright lying.  Credit repair can take months to work through, not days or even hours.  Stay away from anyone who makes any promises beyond what they can legally accomplish.

Just sweep it under the rug

Another general rule of thumb when it comes to dealing with credit repair services is to gauge the emphasis they put on dispute letters.  Unless you keep meticulous records, chances are a couple of items on your report won’t look familiar at all, so a credit repair company may be quick to suggest this as your first order of business for fixing your credit.

What some may not tell you though, is that just disputing your trade lines is hardly the best way to repairing your credit.  The credit bureaus may take some of these accounts off your report, but they could show up again in a few months time, and you’ll be right back to where you started.  Except this time, your wallet may a bit lighter from those monthly fees the credit repair companies are hitting you with.

You’ll want to find a service that attempts to validate any outstanding credit or collection accounts with the creditor if you’re unsure of the account’s accuracy on your report, not one that automatically hits the big red DISPUTE button at every opportunity, with no thought to the affect it might have on your credit file.

Make ‘em an offer they can’t refuse

A good way to avoid this type of runaround is to familiarize yourself with your state’s SOL (statute of limitations, not the other type of SOL), i.e., how long the original creditor has to collect on a particular account.  Federal SOL is 7 years from the date of last activity on the account.  However, each state’s SOL varies depending on the type of account (oral/written agreements, promissory notes, and open-ended accounts), with some lasting for only 2 years, while others follow you for over 10 years.

So instead of allowing them to randomly send dispute letters to every negative account on your report (sort of like playing darts in the dark) familiarize yourself with your state’s SOL and be prepared to work out payment plans with the creditors themselves.

Going all the way

Finally, while credit repair alone is a great thing to have, there are some companies that offer more than just putting a band aid on your credit history and calling it a day.  Any credit repair company that offers debt relief services is worth looking into as well.  Bad credit doesn’t happen overnight, and it won’t go away the next morning.  Make sure you are able to work out payment plans with both the creditor and the debt settlement specialists so you can work towards reducing negative accounts within your means.

Want some help picking the right service for your specific credit needs?  Check out our detailed credit repair reviews; starting with a detailed review of My Credit Group.

Retiring with a good credit score can make living out the rest of your days completely carefree, allowing you to tackle larger expenses and loans with relative ease.

If you’ve been slacking on maintaining a good credit rating, however, your retirement may not resemble the golden age you were led to believe it would.  To help prepare your credit for retirement (no matter how close or far you are to punching the time clock one last time), here are a few tips to keep in mind:

Keep the debts down

If you’ve got too many debts, you’re already doing yourself a major disservice on the road to retirement readiness.

Having too much debt on your credit report shows a poor utilization of your debt-to-income ratio, and since how you use your available credit makes up a whopping 30% of your overall credit score, having this blemish show up in your history can make easy-living no easy feat.

Take the time to reduce your spending as much as possible by refocusing the money you once used to fuel your credit card debts into a retirement savings account.

Review your insurance needs

If you know you’re going to need to make changes to any insurance policies you have in your name (such as home, auto, or life), make sure you make the changes while you’re still a part of the workforce.

Remember that insurers give the best rates to consumers with the best credit scores, so get to work on improving your credit scores while you’re still getting a paycheck.

Lower interest rates

Another benefit to keeping the amount of debt you may have down to a minimum is being able to apply for better interest rates on any loans or large purchases you might be making.  Just think about how great it’ll be to be able to take out a loan without paying back twice as much in interest.

Again, the better you’re able to handle your credit utilization ratio, the easier this will be to accomplish.

Don’t stop checking your credit reports

If you’re diligent about checking your credit reports at least once a year, you’ll want to keep at it even after you retire.

You’ll especially want to stay on top of your credit information if you plan to travel a lot, as retirees are at greater risk for fraud and identity theft than the rest of us worker drones.

Want a leg up?  Start preparing for retirement now!

For those of you nowhere near retirement age, but want to start preparing now so you’ll live like a king later, having a good credit score can seriously impact the type of job you’ll be able to land.

Many employers feel that your ability to handle credit also reflects your job performance and how readily you’re able to handle responsibilities financial and otherwise.  Plus, having a higher paying job means you’ll be able to sock more money than usual away for retirement or paying off debts.

Keep these tips in mind whenever your mind starts wandering down the “Where will I be in 10+ years?” path, and you’ll have saved yourself some major financial headaches when you’re ready to kick up your heels on the beach till the sun goes down.

Need some help getting your credit up to par?  Check out our credit repair reviews — starting with a review of My Credit Group.

People looking for ways to clean up their credit reports sometimes turn to credit repair services because they promise to dispute your bad credit and have it taken care of for you in no time.  What a lot of them don’t realize is that many of these services will simply take your money and dispute every negative account in your profile, in the hopes that one of them might fall off.

As you can imagine, this isn’t exactly the best way to go about improving your credit score.  Disputing every account on your credit report not only is a waste of time (unless the account you’re disputing is actually inaccurate), and in some cases can land you in a world of trouble.  If there’s a collection on your report, and you dispute the account information, you’ll not only have wasted time and money, but you could open yourself up to lawsuits by claiming an account isn’t your own.

So what’s the better method for cleaning up your credit history?  If you’ve got accounts and debts on your file that you don’t recognize, don’t dispute them – validate them with a debt validation letter.

Rather than claiming information about an account is inaccurate and refusing to take care of it, find out the creditor or collector’s contact information (usually listed in the report) and write them a letter requesting verification of the debt, and that the collector provide proof that you owe the money, and that they have the right to collect it.  If the collection agency is unable to verify the debt, problem solved.  If they are able to verify it, your next course of action should be to set up some type of payment plan to get rid of the debt (and put an end to those annoying phone calls).

Remember that debt validation letters are only a means of verifying an existing debt, not a way to eliminate the debt entirely.  You shouldn’t try to validate a debt that you know for a fact is yours, as it could land you in deeper trouble with collectors.

Need help picking the right debt validation service?  Check out our credit repair reviews — we’re the first in town to have a My Credit Group review!

“What does that even mean?” I hear you asking already.  “I thought all debt was considered bad.  You’re telling me debt is a good thing now…?”

Well, it is and it isn’t.  Today, I thought we’d touch real briefly on what I mean when I say “good debt” vs. “bad debt.”

Bad debt

Let’s start with the obvious: debts that you don’t want to find yourself in.  Most people will probably tell you that any type of credit card debt is automatically bad, and they’re not necessarily wrong, but that doesn’t mean they’re right on the money either.

Think about what you use your credit card(s) for.  If you’re like a lot of people these days and tend to break out the plastic for every purchase you make, from gas to clothes to a night at the movies and don’t pay off the balance in full each month, you’re already making a lot of headway on the highway to bad credit.  Before you know it, you’ll end up with a bill upwards of $600 for a bunch of items you could have SWORN didn’t add up to that; it’s gotta be a problem with their math, that’s all.

Bad debt doesn’t just stop at the checkout counter though; many people get into bad debt when they decide to use their credit cards to fund even something that might be good for them, like a vacation.  Now, I’m not about to say you shouldn’t take a vacation – God knows I could use one.  What I am saying is that you shouldn’t rely solely on your credit cards to carry you through that Caribbean cruise or Eurotrip without first planning for the trip and what you’ll be spending on it.

Good debt

These are all obvious examples of debt that’s gone wrong, but what about a good debt?  Is there even such a thing as owing money for a good cause?  A good debt can also been seen as something of an investment; one that you can actually expect a return on.  The most immediate example of a good debt is a student loan.  Higher education is always important and can usually lead to higher paying jobs, meaning you’ll be able to take care of your student loans over time.

You could also consider buying your home a good debt or investment.  And with the market in the slump it’s in now, it can be easier to get in at the ground floor and wait for the property to appreciate.

How do you tell the difference?

If you noticed the Bad section outweighs the Good portion of debt, that’s because it can be incredibly easy for a debt taken out with the best intentions to go sour real quick if you don’t keep an eye on it.  If you just skimmed the rest of the article, I’ll lay it all out for you here:

A good debt is something of long-term value, like a car, a house, or an education.  A bad debt is anything you buy that you basically can’t afford to pay for then and there, and won’t see an appreciation in value.  Simple.

There are advertisements for debt relief just about everywhere.  TV, radio, the newspaper, and even the paid ad on the search engine page I used to research this post.   With the economy still struggling to right itself, most Americans are trying to do the same thing.  Debt relief is one of the ways that consumers are using to regain control of their financial wellbeing.

The thing is which type of “relief” you choose will play a large role in how successfully you get rid of your debts.  Because there are several options available, and some are more effective than others.

Credit Counseling

Since this is a service primarily funded by the credit card companies, credit counseling deals exclusively with credit card debt. Realistically only about a third of the people who inquire about credit counseling are actually eligible.

If you’re dealing with any other forms of debt, medical debt, unpaid rent & utilities, personal loans, then credit counseling can’t even help you. What’s worse is that if you’re considered “too far gone” for their very specific services, they may suggest bankruptcy as your only option.

Meaningful debt relief solutions should be able to adjust for consumer’s specific situations, not the other way around. Credit counseling is only sensible if you have a minimal amount of just credit card debts and you’re looking to pay them back immediately.

Debt Consolidation

Debt consolidation is one of the more prominent approaches to debt relief. The thing is that it’s probably one of the worst ways of relieving your debt.  The allure of making just one payment every month may seem like a good bet, but what it’s going to do to your credit profile aren’t worth it.

Though you may have negotiated lower monthly payments, you may end up paying more in the long run because the terms of payment have simply been extended. This causes you to pay more money in interest fees as you’re taking out one high-interest loan to pay off all of your debts immediately.

Also, many debt consolidators in the market will suggest that you stop paying your bills so that it will be easier for them to negotiate payment of those accounts. While this may benefit you through lower payments, you’ll absolutely trash your credit score in the process.

Debt Settlement

While it may require the most work on your part, debt settlement has to be considered the best of the bunch. With settlement, a company will negotiate lower payments for you, sometimes less than half of what you owed, but it’s entirely up to you to make sure that your payments are made on time.

As with other forms of debt relief the fees for debt settlement can sometimes be outrageous. The industry standard is to charge you 15% of your total debt. Ideally you want to find a debt settlement company that’s reputable and charges less than 10%.

The Right Choice for You

Obviously each form of debt relief has its own pitfalls. Deciding on the best option for you is critical to erasing your outstanding debts. Overall, steer clear of debt management and debt consolidation as the benefits don’t outweigh the glaring negatives of those programs. Credit counseling is good if you’re dealing with only credit card debt, and that debt is held to a minimum. Debt settlement is the most comprehensive of these financial services, but requires you to be on top of your own finances while you get yourself back on track.

For help picking the right credit repair/debt relief service for you, check out some of our in-depth credit repair reviews – including a My Credit Group review.

More and more consumers are strongly considering switching to paperless billing statements for their monthly credit card and bank statements.  Instead of getting a paper bill in the mail each month, consumers instead would receive emails containing their statements in downloadable files.

Some creditors will even send out regular emails containing just the card’s balance and the next due date.  The idea is to better protect consumers from possible identity theft, as well as cut down on all the paper clutter.

But is going completely paperless for your billing statements really the best idea – especially if you’re trying to repair your credit and delete late payments or remove a charge-off?  Let’s take a look at some of the pluses and minuses behind paperless billing.

+ Less clutter

One major positive aspect of going paperless with your account statements is the “paperless” part.  I mean, seriously, who ISN’T sick of opening their credit card debt statements and having a redwood tree’s worth of paper spill out all over them.  Switching to online-only for your bill statements would not only save a few more trees, it’ll also help you keep your bills organized better.

+ Better protection against identity theft

Here’s the biggest positive paperless billing can have in its corner.  We’ve talked in length about the importance of protecting yourself from identity theft, and going completely paperless is a great way to help you do that.

-  It’s easier to forget things

Going online-only with your bills is certainly convenient, but the entire automated process can make it harder to catch an error on your credit card statement if you become complacent enough to let the whole process handle itself, and forget to regularly check your statements.  There’s also the fact that you’ll now have to go through a lot more security checks and come up with more passwords to navigate your way around each company’s website.

-  You’re more susceptible to email scammers

Paperless billing may help protect you from identity theft, but you’ll start to receive quite a few more pretty convincing looking emails that say they’re from your bank and/or creditors, but are really email phishing scams out for your passwords.  Pro tip: Never respond to an email that asks you for any of your personal information.  Your bank and creditors already have that information on file, and will call you if they ever need it again for any reason; not send you an email.

Wanna read some credit repair reviews?  Start with our My Credit Group review.

Your credit profile and scores are serious business.  Your credit follows you around everywhere you go – I like to refer to it as the permanent record your teachers always warned you about I grade school come to life.  You need credit to buy just about anything these days: a home, a car; hell, even a cell phone.  If your credit score is low, or nonexistent, you’re not going to qualify for most of these purchases, and that’s where credit repair comes in.

Repairing your credit profile and improving your credit scores requires developing a realistic, well-rounded plan.  Having a plan in place can work wonders on your report, and make getting your finances in order easier than it needs to be.

The problem is that NO ONE  seems to understand this.

Other credit repair services subscribe to what we like to call the “dispute mill” approach to fixing your credit.  This basically entails disputing every negative account on your credit report, and then kicking back and relaxing until the results come in.  That’s like playing a game of darts blindfolded, and hoping at least one of them hits the board.

This approach to credit repair is not only a waste of time and money, it can also:

• Make your credit situation even worse, and drop your scores
• Get you sued
• Prevent you from buying a home (temporarily, at least)
• Cause the credit bureaus to stop taking your requests seriously, and ignore you until you provide proof of your claims.

How disputes make your credit worse

Disputing every negative account in your report can come back to bite you in worse ways than you might think.  The original creditor might receive your dispute and think you’re trying to get out of paying money you owe them.  You need to consider your state statutes – if the account’s within the statute this could prompt them to come after you legally or sell off the debt to a collection company, which will add a whole new collection trade line to your report.  So you’ll either have a collection company hounding you night and day for the money you owe, worse, you’ll end up getting sued.

If the above scenario were to actually play out, your creditors could respond to your disputes with a lawsuit.  They know that they have to collect money within a given time frame or it becomes less cost effective.  Often times once they have crossed that “profitable time line,” your account gets sidelined while they go to work on those more profitable accounts. While you may still owe the debt at least the collector has given up harassing you.

Sending them a dispute letter so close to the statute of limitations on the account makes it look like you know the account is accurate and about to close on its own – you just want to make sure you never have to pay a dime on it.  If the account is significant enough to the creditor, they could sue you.

How random disputes will keep the bureaus from taking you seriously

The chances of an error showing up on a consumer’s credit report are pretty high.  While it could be something as minor as a wrong previous address, or something major like reporting the wrong account entirely, errors on credit reports are pretty common, and you have every right to dispute them.

When you start sending out random dispute letters regarding every negative account you want removed – whether they’re accurate or not – you run the serious risk of the credit bureaus rejecting your disputes as frivolous; refusing to even investigate your claims unless you can provide proof.

If the disputes are accurate, you obviously won’t have anything to back up your claim that the account is reporting in error, and so will have wasted time and, if you hired a service that promised to take care of your credit problems while you never gave it a second thought, money.

The bottom line

Your credit is very important to just about every aspect of your finances.  If it needs to be fixed, and you feel you can’t handle it on your own for any reason, you want to entrust it to a service that treats it as importantly as you would.

Any service that tells you they’ll take care of everything is doing it wrong; you need to be kept in the loop and develop a plan with the people working on your credit that’s tailored to your specific situation and goals.  Doing so ensures your credit gets the best treatment it deserves, and makes getting your finances in order much easier.

Looking for a place to help repair your past credit mistakes?  Check our credit repair reviews — starting with a review of My Credit Group.

For those of you who realized a little too late that you should’ve paid more attention to your credit card and utility bills when they came in and are now in desperate need of a car or home loan, you’re in luck!  There’s still some hope for you yet!

There is?!

Yes, you spend-thrifter you, there is – in the form of bad-credit loans.  These loans exist to allow people with low credit scores (and in need of debt relief anyway) to still get the money they need for a loan.  Not everybody with a lower score may necessarily get this type of loan, but those of you with a less than stellar credit history may be able to qualify when all others turn you down.  Why?

Well, for one thing, you have no other options

Most people who get bad-credit loans have either exhausted all other options, or never really had them in the first place.  I mean, let’s face it: most sensible lenders have already taken a look at your past deeds and deemed you too much of a potential risk to loan any substantial amount of money to, and so you wind up here.

I’m all outta time

Generally, it isn’t a good idea to apply for a new credit line when you already have a bad credit history.  That said, many people turn to bad-credit loans because they just don’t have the time it takes to fix their credit on their own.  And since there are no time-traveling Deloreans around so you can go back and fix the mistakes you made (or just jump to the future, where everything’s already better), you’re left with a loan that’s going to charge you quite a bit more than others would in interest.

If you don’t want to pay more in interest payments than you pay for whatever loan you took out in the first place, and can afford to wait a few months, start working to improve your credit now.  Your bank account will thank you in the long run.

Could you co-sign here please?

No?  Oh, well, thanks anyway.  If you don’t want to wait to repair your credit for the loan on your own, and don’t want to get a bad-credit loan, you can always try tracking down a co-signer and latch onto their better credit score.  Of course, depending on the type of loan you’re going for, this could prove to be pretty tricky, as co-signing anything makes that second person just as responsible for the loan as you are, and with your history… things may not look too good.

For comprehensive credit repair reviews, check out our My Credit Group review.

In an effort to help curb consumers’ anxieties over missed payments (or perhaps to capitalize on them), credit card companies started offering debt protection plans, as a way to ensure those card payments are made on time.

These plans seem like a great deal for consumers who don’t want to have to worry about missing their due date, but a new study from the Government Accountability Office shows different.  The survey, conducted in 2009, revealed that consumers are actually paying an awful lot of money for relatively little protection.

Of the nine credit card companies polled in the survey, not a one offered what I would consider an affordable protection plan.  Most of the plans ranged at around $1 a month for every $100 in outstanding debt.

So say you have a $3000 credit card debt that you decide to take a debt protection plan out on – at $1/month, that comes out to $30 a month extra that you’ll be paying on that debt, or up to $360 a year (obviously, that fee will fluctuate based on the account itself).

So exactly what kind of protection do these plans afford?  The policies vary by card company, but should you suffer any sort of personal hardship (disability, sudden job loss or unemployment, or death; some even extend protection to include child birth, marriage, divorce, or other important life events), the card issuer could cancel the balance or monthly payment.  They could also suspend the monthly payment and waive the interest fees.

Obviously, some restrictions apply: If you lost a part-time job, or get sent to the hospital for a pre-existing condition, you might not get the debt protection you thought you would.  Some plans limit the amount that you might receive for debt protection, while others place a cap on the number of emergencies you can have in a year (so don’t plan on getting divorced and losing your job in the same month).

According to the GAO survey, up to 24% of consumers who applied for debt protection were denied – many of them because they couldn’t provide necessary documentation the plans require, i.e., a piece of paper saying you were involuntarily laid off.  Meanwhile, the card companies are raking in billions of dollars for their protection plans, and only paid out 21% of that amount in protection claims.

So are they worth your time and money?

In my opinion, these types of debt protection plans don’t really help you out in the long run; they only serve to add more fees on top of what you’re already facing.  Based on the asking price for most of the plans, and the types of “protection” you’re getting out of them, your money is better spent on the debt itself.

Check out some of our credit repair reviews — starting with a review of My Credit Group.

Here’s a pretty startling statistic from FICO, the firm that assigns you your credit score; apparently, over 25% of the US population (or 43 million Americans) currently has a credit score lower than 599. For reference, a score of 599 is pretty bad.  Actually strike that, it’s hella bad.  So bad, you won’t even qualify for most loans with a score that low; lenders would only laugh at you for attempting a loan with that score.  43 million people in need of serious credit repair…

This only illustrates what I’ve been saying from the get-go about how important it is to stay current on your bills and payments to maintain the best possible credit score.  If you’re aiming to improve your credit score through credit repair, it’s important to remember that your payment history looks good and that you’ve got some credit cards that have seen some charging in their day.  If you’re not as on top of your history, your lower score will reflect that.

Don’t bother applying for anything significant like a home or auto loan, with score of 599 or lower, either.  The last two years are the most significant to mortgage lenders when reviewing your credit report to determine whether you qualify for a loan or not.  If you’ve been frivolous with your cards and ignored those payment notices, you can bet your score will reflect that in as little as a month.

The fix is in.

If you’re faced with no loan options until you can improve your credit score, start your road to recovery by getting in touch with your creditors who are reporting negative information in your history.

If you’ve only been late on some of your payments, set up a payment plan to insure that chances of it happening again are minimal.  Also consider writing a goodwill letter to your creditors to wipe out some of your past missed or late payments.  This’ll be easier to accomplish if you’ve only been late a few times vs. late on every payment.

For other, more serious blemishes on your report, your best bet to improve your credit score is to verify the charges with the creditor and, if all their information is correct, work out payment plans as well to get rid of the negative account.  More serious negative accounts, like collections judgments and bankruptcies stay on your report longer and look worse than late payments, so if you’re report is riddled with these, be prepared to wait a while if you’re looking for the best deals on loans.

Need help in picking the right service for you?  Check out our credit repair reviews — including a review of My Credit Group.