There are many positive and negative benefits to debt consolidation. The most common positive and negative occurrences are:

Pros:

• The remaining debt is only for the amount of the loan. The monthly payments on this loan are generally much smaller than the total amount of repayments on the original debts.
• The indebted individual will be able to repair their credit slowly with old accounts closed or paid up to current dates.
• The individual will only have a single monthly payment to make, simplifying their financial burdens.

Cons:

• The individual’s credit score can actually drop for a short time since all of their older accounts will be closed rapidly.
• In some instances the individual will have a lot of small debts. If this is the case it might be simpler to just pay those debts off one at a time. Once a debt is ninety days past due and in collection status it really cannot do too much more damage to a credit score.
• The borrower needs to be savvy in regards to debt consolidation lending practices and interest rates. These types of loans may end up costing the borrower far more in the long run due to the cost of the loan and fees.

Banks have created situations, some say by design, where clearing policies and penalties can create a situation where a single bounced check can cause a modest overdraft to balloon into tens or even hundreds of dollars in fees. If the fees are not covered (bounced check fee, negative balance fee etc.) the bank will likely close your account.

Many banks use a service called Chexsystems. It is a reporting service that reports on a consumer’s past checking account activity. A negative Chexsystems report usually means that banks who use the service will not open a checking account for you.

For instructions on how to be removed from Chexsystems, please see: ChexSystems Removal.

There are also some ways to  maneuver around Chexsystems. Banks do not normally use Chexsystems when a patron is opening a savings account. So, if you open a savings account and then join Paypal, using your savings account, you can pay bills and receive payments that will go directly to or from your savings accounts.

The other way around a negative Chexsystems report is to find a bank that doesn’t use the reporting system. While 80 percent of U.S.banks do use the system, 20% do not. The following is a partial list of facilities not using Chexsystems as of December, 2010:

AccountNow Vantage
Compass Bank
Currency Connection
iBankUP
Peoples Bank
Woodforest National Bank
Woodforest Bank

Branches may not be convenient. But, with Internet banking, direct deposit, and bill pay, branch location should not be an issue.

To open an account with any bank, you will need a photo ID and a social security number. These documents can be scanned into a computer and attached to the application. The majority of banks offer free checking if you direct deposit your paycheck or retirement check.

Some of these accounts are not exactly checking accounts. They are free debit card accounts that also provide you a routing and account number for direct deposit. These are the accounts mentioned earlier that you link to Paypal for bill paying.

Following these simple steps will help you fix your score and maintain a good credit report from that point forward.

1. Immediately apply for a free credit report from each of the 3 major credit bureaus. As a consumer you are entitled to 1 free report each year. Your report will be different with each of the bureaus so it is necessary to have a copy from each agency.
2. You will need to review each report carefully. Start with the personal information. Is your name spelled correctly? Is your address listed correctly? Are there addresses associated with your account that are not yours? Are their employers that do not belong on your report? All of this information is very important. Something as simple as having your middle initial incorrect can cause you to be associated with someone else. Birth dates are also a very common place to find a mistake. A miss-key in this area can cause you to have a second identity.
3. Review each and every entry on the report. Make sure that payment records are right. Verify that the balances on the accounts are correct and that the monthly payment reflects what you actually pay. If it is a bad account verify the last date of activity on the account. This is crucial! If the last date of activity is more than 7 years old for a regular account or 10 for a lawsuit, tax obligation or bankruptcy, you can demand that it is immediately removed.
4. Once you have found all the errors, dispute them using the forms located on their websites. If you select to dispute by snail mail this needs to be documented through return receipt and will cause the repairs to be delayed. The companies have 30 days to respond to your requests.

It is estimated that over 80% of all credit reports contain mistakes. It is the consumers responsibility to make sure that their reports are correct.

In order to improve credit scores, it’s important to know where one currently stands. More than 30 million people in the United States have credit scores under 620, and it is imperative for any consumer to know the basics of how to increase their credit score.
This is not an impossible task, but credit repair is definitely more difficult than getting into credit card debt in the first place. Anything below 720 lessens one’s borrowing power. However, with diligence and perseverance, one’s credit can be repaired. The following are a few points on how to increase credit score.

I. Know/monitor credit scores. The first step and it is absolutely required. Four major credit reporting bureaus can give consumers their current credit score: Experian, Transunion, Equifax and Annual Credit Report. Periodically, you need to check to see if any errors have occurred. It is unfortunate, but the burden is on the consumer to follow through.

II. Be careful with credit card repair companies making unsubstantiated claims often for an upfront fee. Some/many are scams and will still leave consumers with damaged credit, according to the FTC.

III. Go slowly, pay on time and keep low balances on credit cards. One needs patience in re-establishing credit.

IV. Using current or new credit
Get only a “secured” credit card making sure it reports to a credit bureau.

Bonus Tips:
Don’t get new cards or max out existing ones. Rotate cards frequently, keeping low balances. Following these steps will facilitate re-establishing good credit.

The factors that are considered in rating a FICO score are:

1) Repayment history: 35%
2) Money owed: 30% (don’t over extend)
3) How long you have had credit: 15% (the longer the better)
4) Recent credit: 10% (too many is not good)
5) The kind of credit: 10% (credit cards, mortgages loans and others)

The above factors are then averaged into one credit score giving you a 3 number credit rating. Credit scores range from 300-850. The lower the credit score, the lower your chances of obtaining a good rate of interest on loans. In fact, a low credit rating can mean you will not be approved.

A rating of 700 is considered a good credit score. A credit score that is over 700 is excellent, and will allow you to obtain credit at a decent interest rate, and as everyone know, obtaining a lower interest rate will save you a lot of money on a loan.

Many people average around 650-700, but if your score is below that average below that average, there are ways to increase your score. Simply paying a little more each month on your outstanding loans will make a huge difference in your balance due and can quickly lead to a better overall score. Also, you must pay on time if you aren’t doing so already. If you are consistently late in paying your bills, your credit score will suffer greatly.

Are you wondering how to repair your credit? Tackling the task is not as daunting as it sounds. This is definitely something can do yourself and it is something that is may be in your best interest to do without the help of any company offering to assist you.

Under the Fair and Accurate Credit Transaction Act 2003, you are entitled to a free copy of your credit report from Equifax, Experian, and Trans Union once per year. This can be done online, by phone or by mail. Since all information is not always the same, it is very important to obtain a report from each of these three entities.

The most time consuming part of credit repair is carefully and meticulously checking each one, line-by-line, for errors and payment-date data, ensuring that all recorded information agrees with your personal payment records. It is very important to note any entries which may have been passed to a debt collections company.

When you find errors, it is very important to carefully follow ‘report dispute’ instructions. It is also advisable to include a copy of the report with ‘errors’ clearly marked or highlighted along with a cover-letter.

Once you have a clear picture of your credit situation, begin paying some of the past due amounts while maintaining current payment status on all other bills. Pay off one or more entries, or make payment arrangements, making sure to get any arrangements in writing before making a payment.

Begin establishing positive credit history by opening at least one new account. Major credit card companies may not accept your request; therefore, it is prudent to apply to only one company. If turned down, apply for a department-store card or a secured credit card which requires a deposit of 10-30% of the account limit.

If you cant follow these instructions, and anyone can, you will be well on your way to restoring your credit.

Though I am no literal farmer, I love farming metaphors.  And there are none better and more applicable to as many parts of life as “you reap what you sow.” Literally, it means that seeds put into the ground will produce the version of plant that said seeds came from. Figuratively, it means that everything you experience in life is a result of your own actions.

If you are in debt, it will take action to get out of debt. It really is as simple as that. And remember, action can be either acting or not acting. The first and most important action you can take is to gain control. You have to own what you do. This website is not the answer to your problems; you are.

Welcome to Self Help Credit Repair.  We are here to answer your questions about credit and debt repair! We have complied many bits of information that you may find of interest to help answer some of your questions. In addition, we have a vast collection of educational resources to help find what you need. Our goal is to provide you with useful information about your credit and encourage you to look at credit and debt responsibly so that you may learn to live and deal within your means. We have always recognized the need for this information but rarely is it found in the same place on the Internet. From day one, our desire has been that of a global, central resource to aid in the research of topics in this category. We hope that by creating this site, we may put all of the information you need at your fingertips.

Our Most Popular Guides:

ChexSystems Removal

Credit Repair Letter Templates

Top 10 Hidden Dangers of Credit Cards

Personal Bankruptcy

Selling Your Home Before a Deadline

Understanding Your FICO Score

Selling quickly to meet a deadline is a common concern for home sellers. A recent National Association of Realtors survey found that 55% of home sellers were in a hurry when they put their home for sale. Some of the most important items to keep in mind when selling with a deadline are:

Preparing your home for the sale

In most neighborhoods, if you must close on your home sale within 8 to 10 weeks, then you should put your home on the market quickly and not delay for home preparation. Remember, most closings occur 4 to 6 weeks after you have found a buyer and agreed on price. Consider hiring a cleaning service to thoroughly clean your house if you don’t have time. Follow the advice contained in Preparing Your Home, but remember that any delay in preparing your home may be costly.

Pricing your home for sale

Pricing appropriately is even more important for sellers with a deadline. Consider hiring an appraiser that can quickly suggest a value for your property. Calculate the financial and dollar cost of missing your deadline. If you are relocating to another city, don’t forget to calculate:

• the cost, time, or financial risk of buying another home without your current home sold;
• the cost and time required to get temporary housing if you need your current home to sell before you buy another home in your new city;
• the cost and time required to maintain and secure your home when you are out of town,
• the cost and time required to visit your family members who stay with the home until it sells,
• the cost and time of keeping pets in a kennel,
• the reduced purchase price you will receive because your home is vacant when it is shown,
• travel expenses returning to your town to move your personal belongings or attend closing, and
• any other costs or time your missed deadline may require.

Late payment fees are now averaging $29.00 per month. This can add up quickly and in some cases may wipe out the small amount of your payment going to principle.

Over the limit fees are also averaging $29.00 per month. Like late payment fees, these can add up quickly and in some cases may wipe out the small amount of your payment going to principle.

If your credit card statement shows that you have an outstanding balance, but your minimum monthly payment is not required, it is strongly recommended that you still make a payment.

Many consumers think this is a consumer incentive or a bonus. What some consumers don’t realize is that they are still paying interest on their outstanding balance. This means that the only bonus is to the credit card company. They will now earn more interest on your money, and you will ultimately owe more money. Unless your credit card company is offering an incentive for a specified period of time at no interest, don’t fall for this gimmick.

Some credit card companies will offer no interest for a period of time. This is usually in connection with new credit cards or new purchases. Make sure you understand all the requirements in order to receive the special offer. Some offers only apply at specific retailers, while others only apply if you charge over a specific amount of money in a single transaction. Most do not apply to cash advances.

We can’t begin to mention all the possibilities. There are as many rules as a marketing department can come up with. Make sure you read the fine print. Also, keep in mind that credit card companies may charge you all the back interest if there is an outstanding balance at the end of the offer

The interest rate you pay on retailer charges and the interest rate you pay on cash advances may be different. In many cases cash advances can be much higher and are usually the last to be paid. This means that your minimum payment will be used first to pay down your retailer charges and if any amount from your monthly payment is left, it will be used to pay off your cash advances. Paying higher interest rates combined with cash advancement fees and possible bank convenience charges, this can end up costing you a lot of money.

Beware, if you are offered cash advances at no interest charge make sure you know the terms and conditions. Remember, when the offer ends, and if you still have an outstanding cash advancement balance, you may find your interest rate jumping higher than you expected. We can’t stress enough how important it is to understand the terms and conditions of each credit card you use.

When offering a new credit card, many companies will offer incentives to new card holders. These offers may include very low or no interest for a short period of time, no cash advance fees, no annual fees etc. When the offer period ends make sure you understand what to expect. Many cards will jump to 8% or even as high as 24%.

Top 10 Hidden Dangers of Credit Cards

1. The universal default penalties. Card issuers regularly check their customers’ credit reports for late payments on any of their bills. Any late payment can be used as an excuse to trigger a hike in your credit card’s interest rate, even if you have never made a late payment to the card issuer.

A recent study by Consumer Action, a San Francisco-based consumer advocacy group, found that 39 percent of credit cards had universal default penalties in 2003. This year the figure jumped to 44 percent.

2. Bait-and-switch card offers. Direct mail offers generally advertise the issuer’s premium card at an eye-popping low interest rate, while the fine print says the company can issue a more costly non-premium card with a higher annual percentage rate if you fail to qualify for the premium card. Just because you apply for a card with a low rate doesn’t mean the card that shows up in the mail actually carries that low rate.

3. Shrinking grace periods. Historically, grace periods — the time during which your transactions don’t accrue interest — were 30 days long. They now average 23 days, and some issuers have whittled the grace period to 20 days. Some cards have no grace period at all.

4. Two-cycle billing. While most card issuers use the standard one-month method to calculate interest charges, some use a method that calculates interest on two previous months’ balances. Companies compute interest charges on your average daily balance by adding each day’s balance and then dividing that total by the number of days in the billing cycle. Some do it on a monthly basis but others use the average daily balance over the last two billing periods. If you carry a balance this usually means that you’ve lost any grace period on your new purchases. Unless you pay off your balance for two months in a row, the two-cycle method will include the prior cycle’s average balance in calculating your finance costs even though you paid off that cycle’s balance in full. You don’t face that expense with a single-cycle card.

5. Inactivity charges. Credit card companies don’t make money if you don’t use your cards. Keeping your card in your wallet could incur a hefty fee, as much as $15 if you haven’t swiped your card in six months, but charges may be incurred for shorter intervals.

6. Late payment fees. A recent study by Vertis, a marketing company that researches consumer credit usage and payment habits, found that 2 percent of all credit card holders occasionally miss getting their credit card payment in on time. They pay dearly. The national average is $29. MBNA (one of the largest issuers of credit cards), Bank of America and Providian are among the steepest chargers. Their late-paying customers get squeezed $39, according to Consumer Action.

And there’s yet another downside to paying late: A higher interest rate. In a 2003 survey, Consumer Action found that just one or two late payments will trigger a higher interest rate.

7. Over-limit fees. Exceed your credit limit by even one cent and you’ll be hit with over-limit fees of $25 to $39. And don’t forget — charges such as a $39 late fee can then trigger a $39 over-limit fee.

8. Balance transfer fees. It’s the big tease: A rock-bottom introductory rate to transfer your balance, but that tantalizing low rate may come with a steep transaction fee, 3 to 5 percent, for transferring your balance to their card, which means transferring $1,000 at 4 percent will cost you $40. “It’s really very tricky,” says California attorney Howard Strong, author of “Credit Card Secrets.” He adds, “They have all these sneaky fees. You need to be extremely cautious.”

By the way, last year, the industry took in $43 billion in fee income, up from $39 billion in 2002, according to R.K. Hammer Investment Bankers. The industry’s take is expected to increase again this year.

9. Mandatory arbitration. “If there’s a dispute, you may have given up your right to your day in a court of law,” says attorney/author Strong. “If that’s the case, your only recourse is mandatory arbitration.”

10. Payment allocation. If you’re carrying a balance, and you use your credit card for purchases and cash advances, or you’re paying off a promotional rate and then add charges beyond the promotional period, your card company will first allocate your payments to the charges that will earn it the most money. In most cases, that means it will apply your payment to the balance that has the lower rate, thereby allowing the balance with the higher rate to accumulate and compound interest.

Tips for Choosing the Right Low Interest Credit Card

What do you look for in choosing low interest credit cards? This should be based on your lifestyle, and the way you repay your credit cards. There are also a few choices that only you can decide for yourself such as whether you prefer Visa, MasterCard, a Discover Card, or something else.

A few things which you should consider each and every time are covered below.

Introductory APR: Do you have outstanding credit card debts on other higher interest rate credit cards? Do you want to enjoy an extremely low or zero percent interest rate for a period of time? Companies these days are offering great introductory rates to convince you to swap to their low interest credit cards. Be sure to check if their introductory APR applies to balance transfers as well as purchases before assuming you’ll save compared to your present credit cards.

Ongoing APR: When your introductory rate (if offered) runs out, this will become very important. Some of the very low interest rate credit cards do not offer introductory rates because their ongoing is just that low. Before deciding on a card, choose whether you want up front savings, or ongoing savings. The choice is yours.

Grace Period: How long do you get interest free to repay any purchases made on the card? Depending on your spending habits, a longer grace period may just be what you’re after.

Annual Fee: If they have an annual fee associated with a card, you need to take this into consideration. If you do not use your credit cards that much, all savings from other features may be forfeited through the cost of your annual fee.

Credit Line: They may start you off with a minimal credit line, but over time you may have the need for more. Check each card to find out just what size credit limit you can build yourself up to. Then again, if you’re a high roller and a big spender, starting off with a card offering a substantial credit line may be the right move for you.