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This is a guest post by Joseph Hogue of Peer Finance 101

Joseph is one of the top-experts on how to repair your credit in the personal finance blogosphere. 

His advice here is spot on and all of it is something you can do yourself, for free.

Enjoy!


The debt-free movement has never been stronger and I hear daily from a reader that is shunning their credit score altogether.

The thinking goes, “I’m never going to apply for a loan again. Why would I need a credit score?”

The problem is that your credit score is much more than just the trapdoor to debt. I used a debt consolidation loan in 2009 to help repair my credit and get out from under a mountain of credit card debt.

But your FICO is still more than emergency loans. In fact, some of the most important uses of your credit score have nothing to do with getting a loan.

There are four ways your credit score can affect your life, from putting a roof over your head to saving money on some of the things you use every day. After revealing these four secret ways your FICO will affect your life, I’ll reveal my five favorite and fastest ways to boost your credit.

What is Good Credit…and Why is it Important?

The FICO credit score ranges from 350 to 850 and is calculated from everything on your credit report. While a 350 FICO is undeniably bad and an 850 score would be outstanding, there’s really no definition for what score is a good credit score.

The easiest cutoff is the general cutoff around 680 FICO where the distinction is made between prime- and sub-prime credit. It’s above this point that borrowers qualify for federal loan guarantee programs. That means banks can easily sell the loan to investors for cash to make more loans.

Below that point and you’ll likely be locked out of traditional lending from a bank or credit union.

But bad credit goes way beyond just getting money for a loan. In fact, a low credit score may be affecting your life in ways you don’t even know.

Ever wonder why you need your social security number to fill out a rental application? It turns out bad credit might keep you from putting a roof over your head, whether it’s getting a mortgage or renting an apartment. That’s because landlords can pull your credit and use it in their decision.

Looking for a job in banking or finance? You better know what your credit report says about how you manage money because employers can check your report during the hiring process.

All that is bad enough but the next two uses of your credit are going to make you mad!

The Federal Trade Commission (FTC) allows cell phone and cable companies to charge bad credit customers an additional fee on what’s called risk-based pricing. That monthly fee can start at $7.99 a month and goes up from there.

Auto insurance companies are also allowed to charge bad credit drivers more for insurance according to the National Conference of Insurance Legislators (NCOIL) Model Act of 2007. It’s called credit-based insurance scoring and all the largest carriers use it including Progressive, State Farm and USAA.

How To Repair Your Credit Yourself: 5 Quick Tips

More than a third of your credit score is based on your history of payments and other details on your credit report. The fact that any missed payments, defaulted loans and other bad marks can stay on there for up to ten years means fixing bad credit doesn’t happen overnight.

The good news is, there are a few things you can do to boost your credit quickly and some other tips to send it gradually higher over time.

  1. Remove bad marks. The fastest and best thing you can do is dispute any bad marks on your credit report. File with each of the three credit bureaus and creditors have 30-days to answer or the mark gets taken off your report.
  2. Negotiate. For missed payments and other bad marks that you can’t get removed, try negotiating with creditors. Agree to pay off the balance if they remove the marks and label the account ‘Paid Satisfactory’.
  3. Talk to your credit card company. For credit cards with missed payments, tell them you will close the account unless they get the missed payments taken off your report. It doesn’t work every time but can mean a jump of up to 30 points in your score when it does.
  4. Consider a debt consolidation loan. If you can’t pay off your credit cards immediately, consider a consolidation loan to lower your rate. Not only will it save you money in interest but it will also change the type of debt to non-revolving because the loan has a fixed-payment and payoff date, something that will help your score versus owing a lot of revolving (credit card) debt.
  5. Limit credit card spending. Building good credit means using your credit cards and other loans regularly and responsibly. Make it a point to only use your cards for must-have expenses like groceries and gas and only when you have the cash to pay off the balance. Making those monthly payments will help dilute any bad remarks remaining on your report.

Debt-free doesn’t have to mean bad credit. Make sure you protect your credit score by managing your report because it means much more than just getting a loan. Use credit responsibly and your score will increase over time, giving you financial protection and protecting you from all the under-handed ways your credit is used against you.

Joseph Hogue worked as an equity analyst and an economist before realizing being rich is no substitute for being happy. He now runs four websites and a YouTube channel on beating debt, making more money and making your money work for you. A veteran of the Marine Corps, he now makes more money than he ever did at a 9-to-5 job and loves building his work from home business.


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How To Repair Your Credit Yourself: 5 Quick TipsDiscover simple and quick tips on how to repair your credit quickly. Follow this advice to improve improve your credit yourself, fast.#debtfree #credit #creditscore #debt
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