What Is A Rapid Rescore?

Buying a home is probably the largest purchase you’ll likely make in your lifetime. So it comes as no surprise that the entire process can be a stressful situation. After all, how often do you make a six-figure purchase?

couple looking at home

Between negotiations with the homeowner and a complex loan underwriting process, there are countless opportunities for things to go wrong. In fact, buyer financing is one of the likeliest issues to prevent a closing from taking place.

A common problem that many people face is having a credit score that is borderline, either for the best interest rates, the lowest down payment amount, or even being approved for the loan altogether.

A solution offered by mortgage lenders can help your credit score get the quick boost it needs during the home buying process. It’s called a rapid rescore, and if you’re considering purchasing a house or condo in the near future, it’s definitely worth learning more about.

What is a rapid rescore and how does it work?

A rapid rescore is a way to raise your credit score quickly to help you get approved or qualify for better rates and terms during the mortgage application process.

Maybe you’ve updated some important financial information already but the changes haven’t been reflected on your credit report yet. Or maybe you want to pay down enough debt in order to qualify for a lower rate.

Your lender can help you look at your credit history with a rapid rescore simulator and figure out hypothetically what actions could get your credit score to where it needs to be. Then you actually take those actions.

Since positive movement generally takes several weeks to appear on your credit report, you then get a rapid rescore done. Those new items will quickly show up on your credit history (and ideally, give you a new credit score as well).

When would you need a rapid rescore?

When you’re applying for a mortgage loan, lenders look at your credit scores to determine whether or not you’ll be approved. They also use them to decide what interest rates you’ll get and how much of a down payment you’ll need to pay.

It’s a big deal because even a difference of just a quarter percentage point in your interest rate can save you (or cost you) tens of thousands of dollars over the course of your mortgage.

And it’s one thing to be prepared to pay for a 5% down payment, but what if your lender suddenly requires a 10% down payment because of your credit scores? That’s a $10,000 difference on a $200,000 home.

How long does rapid rescore take?

Normal disputes with the credit bureaus typically take 30 days to resolve. The updates can take even longer to actually show up on your credit report. A rapid rescore, on the other hand, takes just between three and seven business days from start to finish.

The closing date on a home typically can’t be delayed beyond the original agreement. So, it’s not realistic for homebuyers to have to wait a month or more just to hear back on the results of their request to the credit bureaus.

Rapid rescoring is an expedited process that goes directly through your lender. It can have huge results, all within the timeframe you need. What used to take weeks or even months can be done in just a matter of days.

Does rapid rescore really work?

Rapid rescoring is usually a successful strategy. However, it can fail to produce the results you and your lender expect. It can even backfire. In some cases, your credit score may drop. But, that only happens if you’ve unknowingly taken actions that hurt your credit score before you request a rapid rescore.

In most cases, if your lender is experienced with rapid rescoring, this shouldn’t be a problem. Make sure you discuss the details with your lender before you use a rapid rescore.

What items can be addressed with rapid rescoring?

The easiest and possibly most successful item you can have updated through rapid rescoring is paying down a loan or credit card balance. Your amounts owed account for 30% of your credit score. So, if you have lingering debt, it might behoove you to pay it off.

Plus, on top of your credit, mortgage lenders also look at your debt-to-income (DTI) ratio. Your DTI ratio is how much in minimum debt payments you owe each month compared to how much pre-tax income you bring in.

If it’s over 43%, you might have trouble qualifying for a home loan. Your lender can use the rapid rescore simulator to give you a suggestion of how much debt to pay off to either raise your credit score or lower your DTI. Then, you can do a rapid rescore so that the information is quickly updated on your credit report.

Even if you regularly pay off your credit card balances, a zero balance might not be reflected in your credit score. Whatever your credit card balance was on the day your credit report was pulled, that is the amount of debt that will be factored into your loan application.

Plus, remember that most information has at least a 30-day delay. So, unless you’ve stopped charging your cards well in advance of applying for a loan, you’re likely to see some sort of balance, whether it’s up-to-date or not.

Another way to improve your credit is by filing a dispute regarding an error on your credit report. It’s always best to review your credit report for accuracy once a year. So, if something has changed or been added incorrectly since the last time you looked at it, rapid rescoring can help get it taken off.

You will also want to look for any signs of identity theft. Just remember that an item does have to be an actual error for this tactic to work.

How much does a rapid rescore cost?

A rapid rescore can cost between $25 and $50 for each account on each credit report but luckily, your lender pays for the service. It has to be done with each individual credit bureau. So, even if there’s just one item to update, that can add up between $75 and $150.

However, federal law prevents you as the consumer from being charged for this service. That’s because the Fair Credit Reporting Act prohibits individuals from being charged for disputing information on their credit reports.

Consequently, your lender will absorb the cost of a rapid score. It’s really in their best interest to do so. They run the risk of losing your business if you don’t qualify for the best rates and terms or for any loan at all.

Is rapid rescoring the same as repairing your credit?

No, the rapid rescoring service goes directly through your mortgage lender rather than a credit repair service. Rapid rescoring is really only used for quickly updating information that is outdated, or disputing false information within a quick timeframe.

If credit repair seems like a better option, check out our list of the best credit repair services. The sooner you get started, the better, especially if you’re about to start the search for a new home.

What is required for a rapid rescore?

A rapid rescore takes a few steps to complete. The first several steps can be done with your lender. Start by figuring out exactly how short your credit score is for qualifying for the loan or interest rate that you want.

Then, determine which credit reports need updating. Do all three major credit bureaus list the incorrect or outdated information? Or do you only need to update one report?

Your next step is to have your lender run the simulator program. This offers solutions on what you can do to potentially improve your credit scores.

Once you figure out the information you need, it’s your job to hand over any supporting documentation to your lender.

Perhaps it’s a credit card statement showing your new low balance, or other paperwork verifying a date for a particular item on your credit report. Once you provide your lender with the relevant documents, you should receive your updated credit report and credit score within just a few days.

Final Thoughts

Rapid rescoring can be extremely useful in getting approved for a mortgage or even taking advantage of the very best rates available. It gives you the chance to have all of your financial information completely updated before getting your credit scores calculated. This is a crucial moment in the home financing process.

You’ll need the help of a knowledgeable lender so make sure you find someone who knows the ins and outs of the process. After that, all you’ll have left to do is pack up some boxes and pick up your keys!

Improve Your Credit Score In 2021 With These 11 Proven Steps

Your credit score has a huge impact on your overall financial well-being. A good credit score will help you to buy a new car, purchase your first home, or just take a relaxing vacation overseas. However, without a good credit score, you will be saddled with high interest rates or unable to obtain any credit at all.

running up steps

What’s worse, your poor credit may not even be your fault. A recent FTC study of the credit reporting industry indicated shocking results. Five percent of consumers had errors on at least one credit report that was so severe it could lead to paying higher rates on loans and higher premiums for insurance.

This may seem like a low number, but consider this: around 20 percent of consumers who identified errors on one of their three major credit reports increased their credit scores so much that they moved into a lower risk tier. That means they were able to qualify for lower rates.

How many consumers haven’t checked their reports to identify errors? And how much more could they be saving if they did? Thankfully there are legal, ethical ways to improve your credit history and credit score which will let you secure the best rates possible.

Step 1: Get a Free Credit Report from TransUnion, Equifax, and Experian

The first step towards improving all three of your credit scores is to order a copy of each report and review it for errors. A free credit report is available on a yearly basis to every citizen of the US.

You can order from each of the three major credit bureaus: Equifax, TransUnion, and Experian. You can get an additional credit report for free in some states. If you’ve been denied credit or employment due to your credit file, you can also receive one for free even if you’ve already gotten a free report this year.

Step 2: Check Your Credit Score

In order to improve your credit score, you need to know what it is first. You can order your FICO score directly from MyFICO for a fee. You can also get it for free if you have any of the credit cards that offer free FICO scores.

Step 3: Check for Accuracy

Once you have your credit report, read through it and make sure all of the listed information is correct. With nearly 60 million Americans affected by identity theft and credit report errors being so common, it’s essential to make sure your credit history is accurate.

Eliminating just one bit of wrong or negative information can cause your credit score to dramatically improve and increase your chances of qualifying for credit. Alternatively, you might find some missing positive information that could help raise your credit score, like a lower loan balance. Updating or adding the correct information could easily improve your credit score.

Your Credit Report Accuracy Checklist

  • Incorrect amounts owed: If the amount owed is listed incorrectly, your credit report won’t accurately reflect your utilization or the amount of credit used. High utilization can negatively impact your credit scores.
  • Accounts that belong to someone else: If you have no recollection of a debt, it may not even be yours. Any unknown debt should be disputed.
  • Incorrect delinquencies: Items may list as being paid late, even if they were paid on time. Late payments damage your credit score and should be disputed.
  • Inaccurate reporting of collections accounts: Collection companies are notorious for putting information on a credit report simply to extort money from unwary consumers. If the information is incorrect, it should be disputed.
  • Duplicated collections accounts: An account or debt should only be listed once. If it is listed multiple times by the same organization or by competing organizations, all but one listing should be removed.
  • Incorrect judgment information: If a judgment has been incorrectly listed, it should be disputed; judgments can hurt a credit score or impact your ability to secure a loan. Any inaccurate information about the judgment can be disputed, even if “most” of the information is correct.

You may also want to consider using a credit monitoring service to stay on top of your credit on a monthly basis.

Step 4: Disputing Inaccuracies

Once errors have been identified, they will need to be successfully disputed. As long as a negative item remains on your credit report, it will drag down your credit score. Therefore, the quickest way to improve your credit scores is to remove as many of these errors as possible. You can do this by disputing incorrect negative information with the credit bureaus.

When a consumer seeks to dispute an item on their credit report, the business or entity who listed the item is required to prove that it is accurate. For collection accounts, a collection agency will have to provide validation or proof of the debt within 30 days of the request or remove the item. For best results, validation requests should be sent in writing, with proof of delivery.

If the company is unable to prove the debt, they are required to remove it. If they do not, the debt should be disputed with the credit reporting agency. A dispute can be sent in the form of a letter or online and requires the reporting agency to confirm the debt or remove it. Once negative information is removed, your credit scores should see an increase.

Step 5: Pay Your Bills on Time

Having a positive payment history on your credit report affects 35% of your credit score, making it the largest contributing factor. So if you want to get your credit back on track, you need to keep up with your monthly bills. Not all creditors report your timely payments, although credit card companies and mortgage lenders typically do.

If your account becomes 30 days delinquent or more, just about all creditors can report the late payment to one or more credit bureaus. That will dock your credit score significantly, and it just gets worse every 30 days.

Late payments can also lead to charge offs and collections, meaning your outstanding debt is sold to a collection agency. That doesn’t do any favors for your credit score, and can actually cause an enormous drop.

Set yourself up for success by enrolling in an automatic bill pay for your recurring monthly payments. You can either go through your bank or do it at each of your creditors’ sites. As long as you have money in your account, you can benefit from the peace of mind that all of your bills are taken care of on time. Then you can sit back and watch as you increase your credit score month after month.

Step 6: Pay Off Your Debt

The next most important part of your credit score is how much debt you have. There are a couple of different ways of tackling this section. The first issue is having installment debt versus revolving debt.

The difference is that installment debt has a set term with regular monthly payments. If you have an auto loan, mortgage, or student loan, then you already have installment debt. This is looked on more favorably than the other type, revolving debt. That’s associated with credit cards.

There’s no set monthly payment, and you can pay off and take out more debt as you want to. It doesn’t look as good on your credit report because there’s no asset (like a car or house) tied to it. Improve your credit score by focusing on revolving credit card debt first.

Available Credit

Take a look at how much of your available credit line is used on each card. If a card is maxed out, your credit score is going to take a hit. It’s better to spread out your credit card balances among several different cards (assuming the interest rates are comparable) rather than putting everything on one card.

Most experts recommend charging no more than 30% of your available credit. This is called your credit utilization ratio. If yours is higher than 30%, you’ll definitely want to work on getting that debt paid off as soon as possible.

For credit cards, avoid maxing out any one account. The same amount of debt spread out over multiple cards is weighted better than having a maxed-out balance on one and no balance on the others. Shoot for keeping each account under 30% utilization. Assuming the rates and fees are all comparable, using that baseline can help you prioritize how you pay off your debt.

Step 7: Use Credit Responsibly

Once you have your debt under control, particularly your revolving debt, make sure you continue to use your credit in a responsible fashion. Using your credit card isn’t bad at all. In fact, since most credit card companies report on-time payments, it’s a great way to build credit.

Even if you don’t need to use your credit card (which is great), consider charging just one or two bills on it each month and making that payment before the due date. You’ll quickly rack up that payment history for your credit score.

Step 8: Keep Positive Accounts Open

Your credit score is also influenced by how long your credit accounts have been open, particularly the positive ones. Even if you don’t use a particular credit card and there’s no outstanding balance, consider keeping it open if you’ve had it for several years. Your credit score takes into account the average age of your credit cards because it indicates you’ve had a longer track record of payments.

There are instances where you might not want to keep a credit card open just for the account age. That’s if you pay an annual fee for the luxury of using the card. If you get reward points that vastly surpass the cost of the fee, that’s fine. But if you’re paying $100 a year for a card you don’t use, it’s probably not worth having in your wallet.

Authorized User

If you’re new to having credit cards, there’s a way to get around this area. You can become an authorized user on someone else’s account. Then the entire history should show up on your credit report. So, if the credit card has been open for eight years, you’ll have that reflected on your own credit report.

On the flip side, if that person has made late or missed payments, it could damage your credit score. Plus, they’ll need to trust you that you won’t charge exorbitant purchases on the card and that you’ll pay off anything you owe. Or you could just not take a copy of the card so there’s no temptation.

Step 9: Minimize Credit Inquiries

A final way to improve your credit score is to hold off on frequent credit checks. This comes from applying for a number of credit cards and loans. Each time you apply for credit from a separate creditor or lender, a hard inquiry is noted on your credit report. Each one adds up to a few points deducted from your credit score for a year. The inquiry itself will be listed there for two years.

However, if you are looking for the same type of credit within a several week period, then that’s counted as a single inquiry. Lenders appreciate that you want to find the best deal. But if you’re applying for a new credit card every single month, they’re bound to raise an eyebrow or two. So it’s wise to apply for credit only when you need it, and think about it in a strategic manner.

Step 10. Open a Secured Credit Card

A secured credit card is a type of credit card that is backed by a cash security deposit. The security deposit serves as collateral if you default on your payments.

Secured credit cards are generally used by people who have no credit or bad credit that are trying to establish a positive credit history.

With a secured card, your credit limit is usually the same amount as the deposit you make. For example, if you open a checking account and put $500 in it, you get a credit card with a $500 credit limit. You get that money back from the credit card issuer when you close your card or upgrade to a traditional one.

Step 11. Ask for a Credit Limit Increase

By increasing your credit limit, it will lower your credit utilization ratio which can really help raise your credit score. You want to keep your credit utilization ratio at 30% or below. Your debt-to-credit ratio is one of the most important factors that affect your credit score.

Another Option: Reputable Credit Repair Services

Repairing your credit and improving your FICO score can be a lengthy process, but credit repair companies do most of the work.

In many instances, the only thing you’ll need to do is order a copy of your credit reports, and make a note of any inaccuracies that you want to have disputed. They keep up with validation letters, dispute notices, and all the deadlines involved.

The money you spend on credit repair is an investment in your financial future and well-being.

Can I Sue a Company for Sending Me to Collections?

January 21, 2021 &• 4 min read by Gerri Detweiler Comments 21 Comments

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Disclaimer

It happens. A collections notice shows up, a debt collector starts calling or you find a negative report on your credit history, but you know you paid the account in question. Can you sue a company for sending you to collections for money you didn’t owe? Find out more about what the law says about your rights when it comes to protecting your credit history.

How Does the Law Protect Your Rights Regarding Credit Collections and Reporting?

Numerous federal and state laws protect your rights to fair and accurate credit reporting. Some of those laws also cover your rights as a consumer to fair debt collection practices. A few of the laws that might come into play are as follows:

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Credit law can be complex. If you’re not sure which laws cover you or what the best course of action is in your case, you might need to consult with an attorney.

Can You Sue a Company for Sending You to Collections?

Yes, the FDCPA allows for legal action against certain collectors that don’t comply with the rules in the law. If you’re sent to collections for a debt you don’t owe or a collector otherwise ignores the FDCPA, you might be able to sue that collector.

It’s a good idea to do everything you can under the law to protect your rights before you sue. That might include requesting validation of any debt within 30 days of receiving the first notice, for example. But even without that action, the collector can still be liable if it breaks the law.

According to the FDCPA, civil liabilities are limited to the amount of damages actually experienced plus any additional damages awarded by the court. Those additional damages are limited to $1,000 in individual cases and $500,000 in class action suits.

Can You Sue a Company for False Credit Reporting?

Yes, you might be able to sue a company for false credit reporting. However, before you seek a civil remedy through the courts, you should properly exercise your rights under the law.

Begin by challenging the information with the credit bureau. False information hits credit reports for a variety of reasons, including misunderstandings and honest mistakes such as clerical errors. When you sent a credit dispute letter, the bureau must investigate and respond within a time frame dictated by the regulation.

The investigation typically involves contacting the reporting creditor or collection agency. That entity is given a chance to demonstrate the information is accurate via appropriate documentation. If the credit bureau determines the information is inaccurate or can’t be proven, it typically removes or corrects it.

The Fair Credit Reporting Act lists civil penalties for people or businesses that willfully refuse to comply with accurate credit reporting. Actual damages are limited to a range of $100 to $1,000. You might also be able to recover attorney’s fees and additional punitive damages the court can award on a case-by-case basis. Punitive damages are those awarded as a type of punishment for the person or business engaged in wrongdoing.

Coronavirus Impact on Credit Reporting and Your Rights

The Coronavirus Aid, Relief and Economic Security Act of 2020 (CARES Act) made some temporary modifications to creditors’ legal requirements for reporting. For example, it requires creditors to report accounts as current in certain situations where forbearances were granted.

Forbearance means the creditor agrees you don’t have to pay the loan for a certain period of time. During that time, you won’t be penalized by having the account reported as late.

If you think your collection or credit reporting issue should be be protected under the CARES Act, consider consulting a lawyer. One can help you understand your rights, which laws affect them and any action you might take next.

How Do You Sue a Collection Agency or Other Creditor?

We’re not legal experts at Credit.com, so we can’t give legal advice. We’ve provided a good amount of information to help you understand your rights under the law. But if you think suing a debt collector or other creditor is the next best step, consult an attorney.

A legal professional can help you understand if you have a claim against your creditor, for example. That person might also be able to advise you about other options, including debt settlement, if you do owe any money.

If you ended up here because you just discovered inaccurate information on your report, consider credit repair services from providers such as Lexington Law or CreditRepair.com. And if you have no idea what’s on your credit report, consider signing up for a service such as ExtraCredit to stay as informed as possible.

Disclosure: Credit.com and CreditRepair.com are both owned by the same company, Progrexion Holdings Inc. John C Heath, Attorney at Law, PC, d/b/a Lexington Law Firm is an independent law firm that uses Progrexion as a provider of business and administrative services.]


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How Long Does Bankruptcy Stay On Your Credit Report? (and How To Get It Removed Early)

Did you know that more than 500,000 Americans declare bankruptcy each year? While unfortunate, it’s helpful to know that you are not alone when it comes to dealing with bankruptcy.

working on credit report

Even after your bankruptcy is discharged, there is the aftermath to contend with as well, namely, repairing your credit.

With so many people experiencing bankruptcy and so much financial data going through the credit bureaus, the chance for error is great. That’s why you must review all of your credit report information for accuracy, particularly the data surrounding the specifics of your bankruptcy.

We’ll walk you through why it works, and what to do so you can start repairing your credit today, even with a bankruptcy in your past.

How long does a bankruptcy stay on your credit report?

The length of time you’ll see a bankruptcy stay on your credit report depends on what type it is. A Chapter 7 bankruptcy remains on your credit report for 10 years from the filing date. A Chapter 13 bankruptcy remains on your credit report for just seven years from the filing date.

However, contrary to popular belief, you can remove a bankruptcy from your credit report early, and you can get credit after a bankruptcy. You do NOT have to wait up to 7 or 10 years after the bankruptcy filing date to get a mortgage, car loan, or any other type of credit again.

In fact, it usually only takes a couple of years to be able to get access to loans and credit cards again. However, once you do start to qualify again, you may be paying extraordinarily high interest rates.

Rather than getting stuck with high interest rates and low balance maximums, work on negating the effects of bankruptcy as much as possible. Between disputing the bankruptcy itself and taking concrete actions to rebuild your credit, you can get much better offers for credit cards and loans.

One mistake doesn’t have to set you back financially for the next ten years. Read on to find out how to get a bankruptcy removed from your credit report and other ways in which you can recover from having a bankruptcy on your credit report.

Accounts Included in the Bankruptcy

After you’ve filed for bankruptcy, the accounts included in your bankruptcy will show up as “included in bankruptcy” on your credit report. Most of them will remain on your credit report for seven years. These include accounts like charge offs, collections, repossessions, and judgments. They can also potentially be removed from your credit report before the reporting limit of seven years.

How does a bankruptcy affect your credit score?

Having a bankruptcy on your credit report can be devastating to your credit scores. According to FICO, for a person with a credit score of 680, a bankruptcy on your credit report will lower your credit score by 130-150 points.

For a person with a credit score of 780, a bankruptcy will cost you 220-240 points. That one event immediately drops you several categories lower and impacts your ability to access credit, and yes, the higher your initial credit score is, the more it falls.

You might not be eligible for future loans or credit cards, and if you are, you’ll most likely end up paying much higher interest rates. Not only that, the amount you can borrow will probably become limited.

While filing for bankruptcy may be the best financial decision at this point in your life, it’s still important to understand how and why it affects your credit.

How to Remove a Bankruptcy from Your Credit Report

The credit bureaus have active campaigns online to make you think that it’s not possible. They pretend to be helpful, but they have ulterior motives. They don’t say it outright, but the way they word their interpretation of the Fair Credit Reporting Act (FCRA) makes people think it can’t be done.

The worst thing about that is that many top credit sites parrot the information, which makes for a lot of misinformation online. However, as you will see below, you can absolutely remove a bankruptcy from your credit report.

When disputing a bankruptcy, you can’t file a dispute with one of the credit bureaus and expect it to apply to all three. Instead, you’ll have to file three separate disputes with Equifax, Experian, and TransUnion.

Make sure the wording of your dispute doesn’t make it sound frivolous. Stick to the facts and don’t get emotional. Sometimes, the less you say, the better. Yes, you have certain protections under the FCRA, but the credit bureaus also have protocols in place to shut down consumers who don’t have legitimate disputes.

How can I rebuild my credit after bankruptcy?

The most important thing you can do to improve your credit after a bankruptcy is remove the bankruptcy from your credit report.

Equally important is learning and changing your personal finance habits so that it doesn’t happen again. This might involve reviewing your income and expenses or bulking up your emergency fund to prevent future financial hardships.

The most important ongoing habit you can begin is to pay all of your bills on time because your payment history accounts for the largest portion of your credit score. Even a single 30-day late payment can cause a significant dip, so imagine how bad it could be if you regularly miss a payment.

Your other best bet for rebuilding your credit after bankruptcy is to avoid accruing new debt.

Depending on the type of bankruptcy filing, you probably had much of your debt discharged. Even though the bankruptcy itself is a major negative item on your credit report, consider the rest a blank slate.

Avoid racking up additional debt because that also has a significant impact on your credit score.

You may also want to get a secured credit card. It’s a credit card designed for people who want to rebuild their credit. The credit card issuer will give you a credit limit based on the security deposit you pay upfront. By making monthly payments on time, you can start to rebuild your credit immediately.

Can you remove a bankruptcy on your own?

Like all negative item disputes, it’s entirely possible to complete the process on your own. However, removing a bankruptcy from your credit report early can be a lengthy and tedious process that doesn’t guarantee results.

You can dispute the bankruptcy either by stating an inaccuracy of the information included in your credit report or by asking the credit bureau how it verified your bankruptcy. As with any dispute, they must respond to your procedural request letter within 30 days.

In most cases, they’ll say that they verified it with the courts, but this is unlikely. You must then contact the court to ask how they verified your bankruptcy.

If they respond that they never verified it, you should get that statement in writing, send it to the credit bureau, and ask them to remove the bankruptcy.

This method isn’t guaranteed, but it might be worth trying. Otherwise, enlist the help of a credit repair company to navigate the process for you.

Credit repair companies are highly experienced at disputing negative items on your credit reports. They specialize in getting bankruptcies deleted from your credit report. They also work to remove other negative information included in the bankruptcy like charge offs and collections.

Get Your Bankruptcy Removed Today!

If you’re looking for a reputable company to help you with collection accounts and repair your credit, we HIGHLY recommend Lexington Law.

Call them at (800) 220-0084 for a free credit consultation. They have helped plenty of people in your situation and have paralegals standing by waiting to take your call.

Chapter 7 Bankruptcies Removed

bankruptcy removed from Equifax
bankruptcy removed from TransUnion

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Lexington Law is now offering $50 off the initial set-up fee when you and your spouse or family members sign up together. The one-time $50.00 discount will be automatically applied to both you and your spouse’s first payment.

Active military members also qualify for a one-time $50 discount off the initial fee.

Earn Extra Money by Joining Online Focus Groups

A couple years ago, I was invited to participate in a focus group. I visited in-person along with about 15 other people. For two hours, we vented all of our feelings about the ways a particular health insurance company interacts with its customer base.

At the end, we each walked out with $125. The health insurance company wanted consumer feedback on their products and customer service, and it compensated us for providing our insights.

Focus groups can be a lucrative side hustle when you break down per-hour pay. You get to be a part of a company’s market research efforts, magnifying your opinion above those of other potential consumers.

These days, you don’t have to participate in paid focus groups in person. During the pandemic and beyond, you can use online focus group platforms to earn anywhere from $20 to as much as $600 per hour.

Online Focus Groups: a Viable Side Hustle

Focus groups can pay extremely well for the amount of time you actually “work.” They can provide surges of side hustle income all at once.

However, they’re not likely to sustain you in lieu of traditional income. Earnings can be extremely inconsistent. First of all, you won’t qualify for every survey, as each focus group has a specific demographic it’s targeting.

Often, though not always, the highest-paying surveys also have the most exclusive demographic requirements. The company may be looking to work with construction foremen who work with specific brands of equipment, for example, or with mobile app developers who use a specific type of programming.

In addition, some consumer research companies will only allow you to participate in one focus group every six months.

Just because work is sporadic doesn’t make this a bad side hustle. When the money does come in, you’re getting paid so much per hour that it’s worth setting aside 30 to 90 minutes of your time.

What You Do in a Paid Focus Group

Most focus groups require between 30 minutes and 90 minutes of work. When you’re doing a focus group remotely, you may be asked to fill out a multiple choice survey. Most of the time, though, you’ll complete a phone or Zoom interview with a live person.

Topics for focus groups are unlimited: You could find yourself answering questions about your favorite margarita recipe, how you’re coping with pandemic parenting or a survey related to your profession.

Some focus groups may require you to dedicate some time outside the interview itself. For example, you might have to give a specific product a test run or keep a journal of your experiences. This extra time is often accounted for in the compensation.

Where to Find Online Focus Group Jobs

All of the following focus group companies currently have online opportunities. In the past, many national opportunities could be completed remotely. But during the pandemic, even most of the city-specific assignments are virtual, too.

These market research companies pay well for your time and consistently update listings for more opportunities. We surveyed current listings for hourly pay and estimated average hourly pay given the jobs currently available.

Respondent

An overwhelming percentage of the focus group opportunities listed on Respondent are remote. The majority of the listings are not city-specific, allowing you to qualify regardless of where you live.

Current job listings range between $20 and $400 per hour, with the average focus group paying around $120 per hour.

WatchLAB

WatchLAB doesn’t have as many opportunities listed, but it does regularly update its inventory on its Facebook page.

Jobs are often city specific, though there is a wide variety of cities with opportunities available. Even city-specific assignments have been primarily remote through the pandemic.

Pay for WatchLAB focus groups ranges from $60 to $150 per hour, with the average focus group paying around $100 per hour.

Focusscope

Focusscope is another smaller consumer research company. It updates its users regularly about new opportunities on its Facebook page, and most studies are now completed remotely.

Focusscope pays $75 to $250 per focus group, with an average payout of $100.

FindFocusGroups.com

FindFocusGroups.com isn’t a consumer research company in and of itself. Instead, it’s a job listing board. It aggregates current opportunities available across the country, and allows consumer research companies to submit listings.

You can search these focus group listings by state. For example, the pay range for current listings in Pennsylvania is $65 to $160 per hour. The average focus group pays around $100 per hour.

User Interviews

If you’re looking for online or over-the-phone focus group opportunities, User Interviews’ listings are plentiful. However, compared to the other companies on this list, more of these focus group opportunities are in-person. Use filters while you search to ensure you’re only being shown the remote opportunities.

A portion of the listings on User Interviews are medical studies rather than focus groups.

Participating in medical trials can be another lucrative way to hustle together some extra cash.

Listings on User Interviews pay between $25 and $600 per hour — though very few studies get close to the $600 mark. The average focus group pays $60 per hour.

Brynne Conroy is a contributor to The Penny Hoarder.

Source: thepennyhoarder.com

How Late Can You Be on a Car Payment, Mortgage or Other Bill?

December 1, 2020 &• 8 min read by Gerri Detweiler Comments 1 Comment

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It’s always frustrating to come across a bill and realize it was due yesterday—or last week. If you’re late on a payment or if you miss it completely, you could end up paying late fees and taking a hit on your credit score. It can be especially difficult if you want to apply for a loan or credit and are about to make a big purchase like a house or a vehicle.

If you’re a reliable customer and have only missed this one payment, it likely shouldn’t be a big problem, and you can probably avoid a late fee. But if you wait too long, it might not be possible.

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Either way, we’re going to help answer some of your biggest questions:

  • How late can you be on a car payment before it affects your credit?
  • Is there a late car payment grace period?
  • What about for rent?
  • What happens if you miss a payment completely?
  • Who should you notify?
  • How will it impact your credit score?

Read on to learn how late a credit card or car payment can be before it affects your credit score and what to do if it does.

How Late Can a Credit Card Payment Be?

People often wonder how late a payment has to be before their creditors report it to the credit bureaus. A credit card payment is considered late if it’s received after the cutoff time in your credit card agreement or if the payment submitted is less than the minimum amount due.

Missed credit card payments are generally added to your credit report when the payment is more than 30 days late. This same entry is updated if your payment is 60 days late, and then 90 days. It is important to know what your specific credit card issuer’s policies are, so you can know what to expect.

Keep in mind that one late payment among years of on-time payments is far less serious than a late payment and limited credit history.

When Is a Credit Card Payment Considered Late?

As far as credit card companies are concerned, the payment is considered late if it’s submitted after the cutoff period, which varies depending on the lender. Sometimes it’s 5 p.m. on a business day while for others it’s 8 p.m. or 11:59 p.m. Also be aware of when a late fee will be charged. Generally speaking, a late fee is issued if payment is received after the credit card issuer’s cutoff time.

30 Days Past Due

Late credit card payments usually aren’t reported to the credit bureau until after 30 days. In other words, if you make a payment after the due date but within this initial 30-day period, it won’t show up on your credit report, but you may have to pay a late fee.

60 Days Past Due

If your payment is more than 60 days late, the 30-day entry on your credit report is updated and your card’s interest rate could increase. If it increases and by how much depends on your card’s terms.

How Late Can You Be on a Car Payment?

Typically, the grace period on auto loans is 10 days, but this depends on the lender. The grace period your lender allows should be listed under the terms and conditions of your loan. This is where you’ll also find the details of the loan, including your loan balance, your interest rate, the term of the loan and the fees associated with a late or missed payment.

If you can afford to pay but simply forgot, you’ll want to pay it as soon as possible. But if you feel you can’t afford the car payment, you should get in touch with your lender and see if they would be willing to renegotiate the terms of the loan.

Deferring Car Payments

You can also look into deferring your car payment if you don’t have the funds now but you expect to later. A deferment essentially means you’re changing your due date by postponing the date of your next payment. Deferments usually don’t negatively affect your credit score.

What If I’m Late on Paying My Rent or Mortgage?

If you’re a few days late paying your rent, usually you shouldn’t have to worry about this affecting your credit score. If you know your landlord, chances are they’ll say something if you continue to submit late payments. If you’re paying a property management company, they likely won’t be as lenient on late payments. Our best advice is to pay your rent within the week it’s due.

Mortgage lenders typically report late payments to credit bureaus and usually have different grace periods. Paying within seven days should help you avoid decreasing credit scores.

One of the best ways to stay on top of your mortgage or rent payment is to set up a monthly reminder for a few days before the first of the month or, if possible, set up an automatic payment. Because your rent or mortgage payment is the same each month, it should be easy to calculate it into your personal finances.

Can a Late Credit Card Payment Made Under 30 Days Still Affect My Score?

If you make a credit card payment within the 30-day period, it generally should not be reported negatively or have any effect on your credit score. Beyond that time, however, there is a possibility your credit score could be affected. Make sure you know the terms of your credit card however, terms can vary and you don’t want any surprises.

If it turns out your late payment has been reported, know that its impact on your score generally diminishes with time, especially if it’s an isolated event. Other on-time payments can help counter the negative effects of late payments. And, as with almost any other mistake, the sooner you realize you’ve made it and try to fix it, the less likely it is to turn into a big problem.

Late Fees vs. Overdue Payments

Late fees are essentially fees charged by lenders to borrowers if a payment is received after its due date. So, if your payment is sent late—or is not the minimum payment or above—you could be charged a late fee.

Most credit card payments are due within a minimum of 21 days after the billing cycle ends, but remember, the grace period is usually only 30 days, so you’ll want to pay them off as soon as possible. Credit card late fees vary depending on your lender and requirements under the CFPB, but the late fee amount can’t be more than the minimum payment. For example, if your minimum payment is $35, your late fee won’t be higher than that.

An overdue payment, however, is a payment that was not paid by the due date. If you miss a due date, you will see the minimum balance plus the overdue payment on your next billing cycle. The overdue payment may be the full amount or a partial amount, such as if you paid part of your minimum but not all of it.

Removing Late Payments From Your Credit History

If there’s an error on your credit history, such as if a car payment is marked late but it actually wasn’t and you have proof, you can challenge it with the lender. The process involves explaining exactly what happened and asking that the error be fixed. Technically, the lender or servicer has 30 business days to respond to the error. If you don’t hear from them within about 45 days, follow up with them.

If a late payment ding on your credit report is accurate, you can still contact the lender and dispute it, especially if you’ve been diligent about paying your bills on time. The lender can provide what’s called a goodwill adjustment, which is when the lender essentially forgives your late fee.

As part of this process, you may be asked to explain the circumstances surrounding the reasons for your payment being submitted late. For example, maybe you went on vacation and forgot or you had to pay a large unexpected cost, such as medical fees, and you couldn’t afford the payment that month.

The lender may offer you a chance to enroll in automatic payments to lessen the chances of a late payment happening again.

How Long Does It Take for a Missed Payment to Come Off My Credit Report?

Unfortunately, if there’s a missed payment or a negative item on your credit history and you’re not able to have it removed, it can stay on there for seven years.

Keep in mind that if the incident occurred five years ago and you’re applying for a loan, it will have less effect than if it occurred last week. The more time that passes after the missed payment occurs, the better. Why? Because credit scores are based on recent financial behavior, so if you only miss one payment and not multiples, eventually your credit score takes your frequent on-time payments into account.

How to Prevent Late Payments in the Future

It’s hard to keep track of everything—grocery lists, kids’ schedules, work to-do lists and, of course, bill due dates—but there are ways to manage your personal finances better to ensure you never miss a payment.

  • Go paperless. Going paperless may increase the likelihood you notice when a bill comes through each month instead of being lost in piles of other mail.
  • Set up reminders. Banks sometimes offer text and email reminders that tell you when a bill, such as a car payment or credit card payment, is coming up. You can also set these up yourself to recur each month on your personal digital calendar.
  • Enroll in automatic payments. Automatic payments ensure your car payment or other loan payment is made on time. Just make sure the funds are available in your account on the day it’s due to be withdrawn to avoid potential overdraw fees.

Keep an eye on your credit report and past late payments when you sign up for Credit.com’s Credit Report Card. It gives you a letter grade in each of the five key factors of your credit.

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Source: credit.com

What Is A Credit Reporting Agency?

Credit reporting agencies are an integral part of the credit scoring process. Whether you’re working on repairing your credit, building it from scratch, or maintaining an excellent score, it’s important to understand what these agencies do and how they work.

Experian

After learning the basics, you can use this knowledge to your advantage when trying to get your credit score as high as possible. And since loan approvals, credit card offers, and interest rates all hinge on the quality of your credit, it’s vital to know the ins and outs of the entire system.

What are credit reporting agencies?

A credit reporting agency (also known as a credit bureau or consumer reporting agency) collects and records the credit information of both individual consumers and businesses.

In the United States, the industry is dominated by the largest credit reporting agencies: Equifax, Experian, and TransUnion. They are three separate companies in competition with each other and, consequently, don’t share information back and forth. So, it’s not uncommon to see different information from each credit reporting agency.

Data Collection

The most common types of credit information collected by credit reporting agencies include loan balances, credit card balances, payment history, account statuses, and public information.

Consumer reporting agencies then sell your information to banks, insurance companies, credit card companies, and other lenders. These companies use this data to create a customized prescreened offers based on your credit profile. They even sell your information back to you.

This process provides these financial institutions with a way to better judge your creditworthiness based on your past choices and current debt load. Insurance companies also decide what your rates will be and employers can decide whether to hire you or not based on this information.

Private Companies (Not Federal Government Agencies)

However, it’s important to note that despite their seemingly official role, all 3 major credit reporting agencies are for-profit companies and are in no way affiliated with the federal government.

Their primary purpose is to maximize profits for their shareholders just like any other publicly-traded company.

That’s why it’s so important to monitor your own credit report to ensure the accuracy of the information there. Making sure everything is complete and correct is in your best interest, but not necessarily theirs.

How did credit reporting agencies get started?

The big three credit bureaus, TransUnion, Equifax, and Experian, all trace their ancestry to small, local investigative companies. These early credit bureaus would collect every bit of seemingly relevant information they could about a person including employment history, marital status, age, race, religion, and testimonials.

They then provided this information to creditors who used it to determine whether or not a person was worthy of a loan and how much interest they would be required to pay.

Over time, they grew and merged until the credit reporting system moved from one with many local bureaus to the current system of three major nationwide credit bureaus.

As this happened, the three largest bureaus became so powerful that it became necessary for them to be regulated. This resulted in the Fair Credit Reporting Act (FCRA) being passed to protect you from their growing power.

How do credit reporting agencies work?

Every month, banks and other creditors send millions of records to the credit reporting agencies, updating them about their borrowers. These reports include whether the borrowers paid the money they owed that month, if they were late making a payment, or if they defaulted on their balance.

They accumulate all of the data given to them by the banks and list it on each individual’s credit report.

While most information is updated monthly, they usually have a processing time of several weeks before everything is completely up-to-date.

Equifax

Reporting Is Not Required

No creditor or business is required to send consumer credit information to the credit reporting agencies. Most of the large lenders and credit card issuers do report regularly, but it’s less likely that smaller financial institutions take this extra step. Or, they might only report to one or two agencies.

Some companies, on the other hand, may not report your positive payments each month, but do let them know if you’ve missed a payment.

If you’re trying to get some type of financing while rebuilding your credit, ask your lender or creditor whether or not they report to all three agencies to ensure you’ll improve all three credit scores.

What is the function of Equifax, Experian, and TransUnion?

Credit reporting agencies collect data from participating lenders and creditors, then report the information back to financial institutions on the overall credit history of credit applicants. Too many negative items on your credit reports can result in a low credit score.

You could then either be denied financing altogether or be subject to a higher interest rate and lower credit line. This can make borrowing money extremely expensive.

Reporting Payment History

You can avoid going through this situation by understanding everything that they include on your credit reports. One of the most common negative items that can appear on your credit report is late payments.

Late payments come from credit cards and loans, like your a mortgage, car loan, student loan, or personal loan. Even if you don’t borrow money, other companies can also report late payments, such as cell phone carriers and utility companies.

It’s crucial to make your payments on time for your bills each month. A late payment can be reported at the 30-day mark on your credit report and is re-listed in 30-day increments after that.

Your credit scores will continually drop as the balance remains unpaid. However, many lenders and credit card companies also report on-time payments, which can go a long way towards building a strong credit score.

Public Information

In addition to your payment history, credit reporting agencies also import public information from the court systems. This includes bankruptcies, judgments, tax liens, charge-offs, repossessions, credit counseling, and collections. Most of these items stay on your credit report for seven to ten years.

It’s difficult to prevent this information from appearing on your credit report, but it’s not impossible to have it removed. A knowledgeable credit repair company can help you create a strategic plan to get negative items removed from your credit report to improve your credit scores. Click here for a list of our top-rated credit repair companies.

Credit Report Errors

Credit reporting agencies deal with millions of data records every month, and they are very prone to making mistakes. According to an FTC report, one in five Americans has a mistake on their credit report.

These errors can be costly, so it’s imperative to make sure you see what’s being reported about you often, especially before you apply for a loan of any kind.

Due to the passing of the FCRA, you can request a free copy of your credit report from each credit reporting agency every 12 months to see if there are any mistakes listed.

If you see any mistakes on your credit report, you can file a dispute to get the incorrect items removed. Also, know your rights regarding credit reporting, so you aren’t unfairly penalized the next time you need financing.

Who oversees the credit reporting agencies?

Credit reporting agencies aren’t public entities or government agencies, but that doesn’t mean there’s no government oversight involved.

Since 2012, the Consumer Financial Protection Bureau has been tasked with supervising the largest agencies at a federal level. The CFPB conducts exams to monitor how the credit reporting agencies screen for accuracy, how they investigate consumer complaints, and other procedures.

If you have a complaint with one of them, you can contact the CFPB, the FTC, and your state attorney general. It may seem like many steps, but it’s best to cover your bases and get as many regulators involved as possible if there’s any potential wrongdoing.

How does the FCRA regulate credit reporting agencies?

In addition to ongoing government oversight, credit reporting agencies must also comply with the FCRA. This federal law helps to protect consumers by requiring the agencies to investigate all disputes within 30 days.

While this does not mean the credit bureaus now make sure your credit reports are accurate, it does give you recourse when they unfairly report your credit history. You also have a right to a free yearly copy of your credit reports.

Opt-Out

Additionally, the FCRA allows you to opt-out of being included on marketing lists sold by the credit reporting agencies. You can do so by calling 1-888-5-OPT OUT or visiting www.optoutprescreen.com.

Unfortunately, the FCRA did not eradicate all the problems of the credit reporting system. The credit bureaus are still enormous corporations with enormous power.

TransUnion

Handling Credit Disputes

Credit reporting agencies are also still primarily motivated by the money they make by selling your credit information. Providing you with credit reports and investigating credit disputes is something they are forced to do and not something they were willing to do on their own.

As such, the credit bureaus do what they can to avoid these practices. Knowing the history and motivations behind them is essential for understanding the nature of the credit reporting system.

When you know the true persona of the credit bureaus, you can then see why you are granted access to your credit reports. You can also see why you have the right to repair your credit and why it can be beneficial to have a credit repair expert working on your side.

Take the time to learn about the FCRA and the FDCPA and any other laws that govern credit bureaus, creditors, and collection agencies.

Getting Help from the Professionals

The FCRA has certainly made the dispute process better regulated. However, it can still take a lot of time and effort to get a negative item removed from your credit report. That’s because oftentimes, you not only need to work with the credit reporting agencies, but you also have to get agreement from the creditor.

If you are too busy to spend your time writing dozens of letters to credit reporting agencies and creditors, there are legitimate credit repair services that can help you out.

Credit repair companies help consumers deal with credit bureaus and get negative items removed from their credit history.

They can also help you deal with your creditors and collection agencies. And since they have teams of lawyers with specific expertise and experience in this field, your chances of success are a lot higher.

Credit Bureau Complaints

Specifically, as it relates to repairing your credit, the credit bureaus have developed a full arsenal of tactics to keep from investigating disputes. These tactics range from general propaganda to strong-arm tactics to methods of questionable legality.

How many times have you heard that the only way to improve your credit is to wait seven years, and any company that offers to repair your credit is a scam?

Surprisingly, so many people believe some or all of these statements when not a single one of them is true. Misinformation allows the credit bureaus to dissuade so many people from even attempting to dispute their credit—no wonder they are so quick to promote this flawed perception.

You can find their contact information on this page: Credit Bureau Contact Information

Getting Your Finances Back on Track Post-COVID

January 19, 2021 &• 5 min read by Credit.com Comments 0 Comments

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Disclaimer

It’s safe to say 2020 was a pretty hard year for everyone financially.

Even if your wallet hasn’t taken a hit in the last few months it’s likely either your employer or someone in your family has found themselves stretched financially by the effects of COVID.

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No point dwelling on the past, though. We may not be able to go back in time and stop COVID happening and ruining our 2020, but we can ensure we’re at least in a better position financially in 2021, avoiding bad credit scores and getting our savings back on track.

There’s no better time than now to start planning for post-COVID life, so here are our essential financial tips.

Tips for Getting Your Finances Back on Track

Draw Up a Budget That Fits Your Lifestyle

Throughout the pandemic, your monthly budget probably changed quite dramatically.

You probably saved on fuel, travel, and evenings out with so many offices and restaurants closed—but no doubt spent a whole lot more on your utility bills.

As the economy reopens and some sense of normality resumes, you need to restructure your budget to a post-COVID world.

Now, this doesn’t mean penny-pinching. COVID may have been kind to you, and reassessing your budget is simply a matter of moving funds that you would have spent on your home into your socializing budget. However, if you’re one of the many people no longer getting some kind of financial support on top of your diminished wage, you need to figure out how you’re going to pay rent, buy food, and cover all the other essentials.

The end of remote working, catching up on vacations, covering childcare—these are all real-world requirements your budget will need to be able to answer for.

Secure All the Incomings You Can

A huge part of getting your finances back on track properly is about making sure you’re making the most of every incoming payment available to you.

With so many people across the world struggling with a lack of work caused by the pandemic, it’s important to be aware of any possible financial aid available to you.

Most importantly, you should check if there are systems unique to your personal circumstances or line of work. There are businesses and charities with systems in place to provide or acquire support for everyone from professional actors unable to perform throughout the pandemic (such as Actors Fund) to retired veterans who have returned from tours with physical or invisible injuries and conditions (such as Vet Comp & Pen). Whatever line of work you are or were in, there will likely be some level of support available for you.

Likewise, you should start to consider how your talents could be put to good use to make that budget stretch a little further.

Side hustles such as running an Etsy store or becoming an online tutor become massively popular alternative revenue streams for out of work professionals during the height of lockdown. This is still a highly viable way of rebuilding your finances post-COVID. If you have a little bit of cash to invest, it can go a long way.

Have a Plan for Deferred Payments

Pandemic solutions have seen governments, banks, and landlords offering mortgage, loan, and rent deferrals to people who cannot pay them.

As things return to normal, people are going to need a plan to pay off these debts.

First, start by referring to the deferment terms so you know exactly what payment will be expected and if it can be broken up into installments. This will massively affect the overall structure of your budget.

These are perhaps the most important payments you’ll be making, as they concern your home, so make sure they’re priority number one post-COVID.

Start Saving Now

After all, any savings are good savings.

No one can be sure where we’ll be in six months or even a year. If we see another major spike across the world it could mean your finances take another hit and you need to dip into those rainy day funds to stay ahead.

Start working out a savings plan that works for you now. Don’t plan to give up everything you love for a year to get some extra cash, but, much like a budget, notice where you can cut back.

 Online banks and apps like Monzo and Chime are a great way to save within even realizing it. These apps allow you to set a monthly budget on different types of purchases, sending you alerts when you’re about to break them. So much of budgeting is about self-control and being across your financial situation, so why not take responsibility out of your hands?

Tips for Businessowners

Before we go, here are a few tips for small businessowners who may be worried about how they can secure their enterprise’s financial security as well as their personal one.

  • Find alternative revenue streams for your business. Is there a second service your business could offer to bring in some extra cash, such as gift wrapping for a small online store during the holiday period?
  • Make sure you’re not overspending on digital tools. They may have stepped up and helped us host meetings, manage teams, and schedule inspirational social content remotely, but are you paying a subscription fee for an app that doesn’t actually boost your business all that much?
  • Use freelancers rather than employing new staff. The freelance sector could really use a hand up right now, and freelancers present a cheaper, less permanent way for you to pick up lucrative contracts and projects without investing in hiring and training staff on permanent contracts.

It’s important to be realistic when financially planning for the end of COVID. We don’t know when that will be, and you can’t expect yourself to come out of this in better financial shape than you’ve ever been. That’s an unrealistic pressure.

Follow these tips and make sure you’re making the most of this period of reflection to ensure a healthy financial future for you and your loved ones.

Rodney Laws is an ecommerce consultant with EcommercePlatform.io. He has more than a decade of experience providing marketing advice to online entrepreneurs and businesses. He’s set up and marketed his own businesses and consulted on crafting campaigns for established companies.

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How To Remove A Charge Off From Your Credit Report

What is a charge-off?

A charge-off occurs when you are seriously delinquent in paying a credit card or other type of debt. Typically, an item is only listed as a charge-off once it’s over 180 days late. In simple terms, when one occurs, your creditor lists the account as not being collectible.

Credit card issuers list bad debts owed as a charge-off primarily for tax reasons, so the amounts owed can be counted as a loss and tax write off for them.

Although creditors consider the item a loss for tax purposes, they still expect the debt to be paid off entirely.

If you have a charge-off appearing on your credit report, creditors can still try to collect on the debt. They will often involve a third-party debt collection agency to collect the money owed.

How long do charge offs stay on your credit report?

Charge-offs remain on your credit report for seven years from the date the account was charged off.

Charge-offs can cause a huge drop in your credit scores. Just having one on your credit report will more than likely lead to being declined for most loans or credit cards as they are one of the worst items to have on your credit reports. However, it’s possible to remove a charge-off before the seven-year mark.

Will paying a charge off improve my credit score?

A paid charge-off is better than an unpaid charge off and may have a positive impact on your credit. However, even a paid charge off counts as a blemish and will still negatively affect your credit for seven years.

While the direct impact on your credit score lessens over time, potential creditors can still see it listed. This can ultimately hurt your chances for credit approval and competitive interest rates.

Plus, there are many implications of paying a charge-off based on its age and other factors. Review the pros and cons of paying a charge-off before you make a decision.

When You Should Pay a Charge-Off

If the Charge-off is Recent

If the charge-off is very new, you are likely to see a big dip in your credit scores – and the higher your credit score, the bigger the dip. A charge-off may only drop your credit score by 20 or 30 points if you already have poor credit. However, for someone with a higher credit score, it can cause a drop of around 100 points!

This can mean the difference between qualifying with excellent rates and not qualifying at all for some types of loans.

If possible, make arrangements to pay the charge-off on the condition that it is removed from your credit report entirely. This is typically easier if it’s new and you are dealing with the creditor’s in-house collection team.

To Qualify for a Home Loan

It is fairly common practice in the mortgage industry to require that all outstanding debt be cleared before a loan can be approved. This includes late payments, judgments, liens, and charge-offs as well.

If the charge-off is old, you may be able to negotiate a partial payment to get the debt settled. However, always verify with the lender if a partial payment is enough to satisfy their lending requirements.

If the Creditor Will Delete/Re-age It

Some creditors will remove a charge-off from your credit report if you pay the full amount. However, not all creditors will do this, and some will claim that it isn’t possible, though this is not the case.

You may have more luck asking them to “re-age” the account, however. In this instance, it would reset the timer on the payments and essentially your payoff would look like you settled the account in a timely fashion.

past due notices

As you can see, there are several scenarios where paying a charge-off is the best option. They all hinge on the assumption that it is actually yours and you have verified the amount is correct.

If you have not verified that the debt is actually yours and that the payment amount is accurate, you may be better off seeking professional assistance from a credit repair specialist. Give them a call before you commit to making a payment.

When You Should NOT Pay a Charge-off

If It’s Listed by Multiple Companies

It is all-too-common for debts to be sold to a third-party debt collector and then re-sold by them to another debt collector with very little (if any) documentation. If you see the same charge-off account listed several times with multiple collection agencies, it is worth it to have each debt collector verify the debt before proceeding further.

Confirming who actually owns the account will ensure that you don’t pay an unscrupulous debt collector who will take the money even if they no longer own the debt.

You Aren’t Sure You Owe the Amount Listed on the Charge-Off

Sometimes a collection agency will try to tack on bogus fees and interest. Unless the agreement you signed with the original creditor stipulates that a third-party debt collector can add their own fees and interest, they cannot do this.

It is also possible that you paid off the balance, but due to an error in the system, your account was flagged as a charge-off. If you have any proof that the balance was paid, you absolutely should not pay it.

However, even if you don’t have proof, having the debt verified may still work in your favor. A professional credit repair specialist will be able to advise you on the best course of action if you aren’t sure how to proceed.

It’s Past the Statute of Limitations

This last scenario varies from state to state because collection laws are different. However, if the charge-off is past the statute of limitations, you have a built-in defense against having a judgment brought against you for non-payment.

The catch is, you must go to court and defend yourself against any lawsuit brought by the collection agency.

Most collection agencies don’t bother filing a lawsuit if your debt is past the statute of limitations. Some people choose not to pay and instead let the charge-off drop from their credit report after the credit reporting period expires.

This doesn’t help your credit score in the short term, but it can save your finances if you are trying to pay down debts on currently open accounts.

Can a charged off account be removed from my credit report?

Yes, there are several ways to remove charge-offs from your credit report before the credit reporting period of seven years.

Pay for Delete Agreement

One way is by negotiating a “pay for delete” with the original creditor. With the pay for delete method, you convince your creditor to remove the charge-off from your credit report in exchange for payment. They may even be willing to report the account as “paid in full”. Of course, the pay for delete method only works for unpaid charge offs.

Many times creditors do not want to bother with this, and chances are they’ve already sent the account to a collection agency, but sometimes they are willing to negotiate. While you can negotiate over the phone, it’s always best to get the agreement in writing before sending payment.

Dispute the Charge Off

Another way is by disputing the charge off with the credit bureaus. By law, the Fair Credit Reporting Act (FCRA) allows you to dispute any items that you deem to be questionable. Once the credit bureaus receive a dispute, they contact your creditor and give them 30 days to verify the account.

If they can not verify the account for any reason, they must remove the charge off from your credit report. There are actually many reasons that they can not or will not verify the account.

You can dispute charge-offs by writing letters to the credit bureaus or you can hire a professional credit repair company to handle the tedious legwork for you.

What is the best way to remove charge offs from my credit report?

Getting a charge-off removed from your credit report can make the difference between qualifying for a loan for a house or car, and not qualifying for financing of any kind.

Read the story below from one of our readers (and check out the image for proof) to see how it can be done.

A Success Story from One of Our Readers

A few years back, the company I worked for went under and I lost my job as a result. My bills, including some medical charge offs that I had from an injury and some credit cards were piling up and I could no longer pay them.

After a while, my accounts were all charged-off and I started getting calls from debt collectors.

The phone calls were incessant and it caused me a lot of hardship as they tried to collect. Finally, I declared bankruptcy and as a result, my credit suffered the consequences.

How I Took Control of My Credit Score

For the next several years, my bad credit didn’t allow me to qualify for a mortgage, auto loan, or anything else. Being rejected again and again for financing was an embarrassing process.

A buddy of mine referred me to Lexington Law. I was skeptical, but he showed me how they had helped him, so I decided to give them a shot.

Where I Got Help

I called 1 (800) 220-0084 and I spoke with a lady who specialized in helping people repair their credit. She sincerely tried to understand my situation and help me out.

I signed up with Lexington Law here. After only three weeks, I got my first letter in the mail saying that a credit card charge off had been removed from my credit report. I continued getting more letters after that.

My credit scores started to climb and after a while, I was finally able to buy a new home. I feel like it would have taken me much longer if I had tried to do it on my own. Giving them a call was one of the best financial decisions I have ever made (see below).

Charge Offs Removed from My Credit Report:

charge offs removed

Click Here to Start Repairing Your Credit Right Now!

If you’re sick and tired of having bad credit, I recommend you visit Lexington Law Firm. They can dispute all kinds of negative items from your credit reports, including: bankruptcies, foreclosures, repossessions, charge offs, judgments, tax liens, collections, late payments and more.

Discount for Family Members, Couples, and Active Military!

You can now get $50 off the initial set-up fee when you and your spouse or family members sign up together. The one-time $50.00 discount will be automatically applied to both you and your spouse’s first payment.

Active military members also qualify for a one-time $50 discount off the initial fee.

How to Protect Your Credit Score During COVID-19

July 2, 2020 &• 5 min read by Credit.com Comments 0 Comments

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Disclaimer

The COVID-19 coronavirus pandemic has affected everyone all around the world. Extended isolation and sudden job losses have everyone thinking about their futures. Lots of people are concerned about losing a reliable income source during this time of crisis. Some have even been forced to shut their businesses. The global pandemic has turned many people’s financial lives upside down.

As you work on keeping your bills in good standing and your finances going strong, you should also pay attention to your credit score. Even if you’re delaying some major purchases like buying a car or a home or going on a trip, you still need to maintain good credit. You’ll eventually start spending again, and you’ll need a good credit score.

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  • …we live in Oklahoma.

Get everything you need to master your credit today.

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But how can you protect your credit score during COVID-19? Keep in mind that your credit scores and reports play a crucial role in your future financial opportunities. The following steps will be your handy guide in managing and protecting your credit score during this global pandemic.

Stay on Top of Your Credit
Reports

Even on good days, make sure you regularly review your credit reports from the three credit bureaus. You can get free annual credit reports at AnnualCreditReport.com. Through April 2021, Experian, Equifax, and TransUnion are allowing consumers to access their credit reports for free weekly. Take advantage of this offer to make sure that any accommodations you request from lenders are appropriately reported and that your identity is safe and secure.

You can also sign up for the free Credit Report Card from Credit.com. With our report card, you’ll see your VantageScore 3.0 from Experian, as well as personalized information on what is affecting your credit score and how you can improve. If you want to dive deeper, sign up for ExtraCredit to see 28 of your FICO scores from all three credit bureaus.

Keep Up with Your Payments

Late payments can affect your credit history and credit reports for up to seven years. Prioritize paying your bills on time when you can, even during financially difficult times. You can do this by setting up reminders to alert you of payment deadlines. Also, you should make it a habit to make at least the minimum payment each month. Doing so will help you in keeping a good payment history record and prevents you from paying late fees.

Contact your lender whenever you can’t
make payments on time. Lots of lenders have announced proactive measures to aid
their borrowers affected by the global pandemic. Some are willing to provide
loan extensions, interest rates reduction, forbearance, or repayment
flexibilities. The best thing to do is to get in touch with your lender and
explain your current situation. Don’t forget to ask for written confirmation if
any agreements were made. 

Be Aware of Your Protections

The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) has protections to help your credit score remain unaffected during the pandemic. This Act puts special requirements on some agencies and companies reporting your payment information to the credit reporting companies. The requirements are applicable if you’re affected by the COVID-19 pandemic and specifically covered by the Act.

If you request an accommodation under the CARES Act, your creditors will report your account to the credit reporting agencies based on the current standing of your credit when the agreement is made. The requirements set by the CARES Act are only applicable to agreements made between 31st of January 2020 and 120 days after the COVID-19 national emergency officially ends.

Get to Know What Impacts Your
Score

If you’re currently unemployed and wondering if it will affect your credit score, the answer is no. Unemployment itself will not impact your score. Making late payments and missing payments are the things that most significantly affect your credit score. This is why we recommend getting in touch with your lender as soon as you suspect you may not be able to make a payment in full on time. Inform them of your current situation. This can also help you cope with your anxiety.

Hard inquiries, account mix, and credit age also impact your credit score, but to a lesser degree. Your major concern should be keeping your credit utilization low and paying bills on time.

Keep Yourself and Your
identity Protected

Securing your personal information and identity is also crucial in protecting your credit score. Identity theft and scams are rampant during this coronavirus pandemic. Your personal information can unlock different financial resources. Hackers and cybercriminals can utilize all your personal information to impersonate you and open credit card accounts, make purchases, transfer funds, and borrow money. If left undetected, this activity can significantly damage your credit score.

Though the damage is reversible, the entire process will be costly. That’s precisely why prevention is always the best option. ExtraCredit from Credit.com, for example, offers $1 million in identity theft protection and dark web monitoring, among other features.

Make Budgeting and Planning a Habit

During this crisis, budgeting is essential for keeping your credit card debt low and your credit score high. Pay attention to how much money you make and the amount of money you spend. Identify expenses where you can cut the usual costs, at least temporarily.

Reworking your budget is necessary, especially if you’re currently unemployed or earning less money. You can consider the following money-saving ideas to maximize your savings:

  • Put nonessential purchases such as online shopping and clothes on hold
  • Temporarily suspend nonessential services such as cleaning and lawn care
  • Cancel subscriptions on cable, music streaming, video streaming, etc.
  • Search for affordable meal planning solutions
  • Cancel fitness and gym memberships
  • Cut back child-related extracurriculars such as tutoring, lessons, and sports
  • Spend less on takeout

Although reducing costs is not fun, the
result will reduce your financial stress and will allow you to better protect
your credit.

You Can Protect Your Credit Score from COVID-19

All the things mentioned above have one thing in common: All require taking a proactive approach to your finances and credit. Follow the six credit-protection strategies mentioned above to maintain and protect your good credit even if you are facing a financial crisis.

About the Author

Lidia S. Hovhan is a part of Content and Marketing team at OmnicoreAgency. She contributes articles about how to integrate digital marketing strategy with traditional marketing to help business owners to meet their online goals. You can find really professional insights in her writings.



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Source: credit.com