Category: Credit Restoration

What Makes Up Your Credit Score?

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Why do we have credit scores? What makes up your credit score? Did you know 56% of Americans have bad credit?

Credit scores were implemented to determine the creditworthiness of a borrower. The higher the credit score, the more likely the consumer will pay his or her bills on time. While the most important piece of your credit score can be paying on time, there are several other factors that play a role in determining your score as well.

Payment History 35%

When it comes to determining your credit score, the biggest piece of the puzzle is your payment history. What this means is you have to stay current on your accounts and pay on time. If your forgetting to make payments, set reminders for yourself or enroll in autopay. Just 1 missed payment can drop your credit score 100 points or more and take a long time to recover.

If you’re having trouble making payments, consider contacting the lender or switching to 0% balance transfer cards. 0% balance transfer cards will transfer your balance and allow you to make payments with no interest for a set period of time. You’ll be surprised how quickly you can pay off accounts when interest isn’t accruing.

Amounts Owed 30%

Don’t max out! Maxing out your credit cards is not good for a number of reasons. Maxed out cards with ensure that you are paying the maximum amount of interest possible. When you get to this point, climbing out of debt can feel like climbing Mt Everest. Making minimum payments will only pay off the interest, leaving you in limbo. It’s also noteworthy to say that consumers with maxed out cards have an average credit score of 563.

On the flipside, not using your credit cards will also hurt your credit score. You want to use them, but not overuse them. Pay your accounts down to 20% of the credit limit or lower. Doing so will give you a quick boost in score. Always try to remain below 20% of your limit. Once you pass the 20% threshold your score will start to decline.

Another method to raise your credit score would be to ask the creditor for an increase in your credit line. Increasing your credit line will see the utilization ratio drop, bringing your closer to 20% or lower and increasing your credit score.

Length of Credit History 15%

I see it all the time, clients call in wondering why their credit score had dropped. They just got a new credit card and closed their old one. Not a good idea. Old credit cards are not like old appliances. The older your card, the more impact it has on your score. Closing old accounts will almost always bring your score down.

If your old card has outrageous annual fees or super high interest rates, then you may want to think about closing them up. Before you do, call your credit card company and ask if they can waive the fee or reduce your interest rate. If they refuse to budge, then you may want to make the moves to close your account.

Variety of Credit 10%

Consumers with the highest credit scores have them because they have a variety of credit. There are 2 types of credit: Installment loans set at a fixed rate which are your mortgages, auto loans and student loans to name a few, and revolving credit which are your credit cards.

It’s always a good idea to have a few different accounts open on your credit report, including a few different credit cards. Doing so will spread out your utilization and make it easier to maintain a good score.

New Credit 10%

New credit can happen any time you apply for a new loan or account. When your credit score is pulled an inquiry is created. Inquiries will shave off a few points from your score and affect your credit for about 1 year (although they can report for 2 years.) Inquiries have strength in numbers and can really bring your score down if you’re constantly pulling your credit throughout the year. So make sure to keep a watchful eye on your inquiries.

If you are struggling with bad credit and would like a free consultation with an expect, please fill out the form below and we’ll be happy to point your credit in the right direction (up!)

Fill out the form for a free credit consultation


Bad Credit Will Control Your Life

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oburning money

How your credit looks can affect the way you live your life. Having bad credit can destroy you financially and be the difference between spending and saving some serious dough each month. A prime example of this would be an auto loan.

Cars are necessities. Bad credit will cause you to pay thousands extra on an auto loan compared to someone with good credit. A vehicle that costs $22,000 will cost $379/month for someone with good credit. That’s assuming they have a 5% interest rate and a 72 month term. After it’s all said and done $27,295 will be the amount paid out after interest.

If you have bad credit that same auto loan will cost you $636/month. This is because your interest rate will quadruple to an insane 21% and your term will be shortened to 60 months. The total amount to be paid will jump to $38,210 after interest. That’s over $10,000 more for the same car mentioned above!

Good and Bad Credit

The same goes for mortgages. An individual with bad credit and a $100,000 mortgage may wind up paying well over $300,000 in the long run. Bad credit can halt you from being approved and will suck your finances dry due to incredible rates.

Bad credit can be a tough hole to get out of. Making loan payments with bad credit will leave you in a financial battle and make it nearly impossible to save money. It’s no joke, Bad credit is expensive! Aside from being declined and extremely high interest rates, bad credit may be costing you your hard earned money. So what can be done to obtain better credit?

Raise Your Score

Set out on a path to take back your credit. Raising your credit score will allow you to refinance your loans. Refinancing will give you a better rate and ultimately allow you to pay less. Here are some quick tips to raise your credit:

Stay current on all your accounts.

Bring those late payments to a current status and you could see a big increase in your score. Although the accounts can still remain in derogatory standing for up to 7 years, a current account is way more beneficial to your credit than an account that is late or charged off.

Bring down your credit card balance.

Once your credit card balance hits 30% or higher of your limit prepare to start seeing your credit score decline. In fact, the average score for consumers with maxed out cards is 563 (yuck.) Use your cards, but don’t overuse them. Paying your accounts down to 30% or lower is a quick way to boost your score.

Remove Negative Accounts

Removing negative accounts from your credit report can increase your credit score tremendously. You can do this by disputing the negative accounts on your credit report, or by seeking professional help. Better Qualified has a team of credit experts that will go after your negative accounts and point you in the right direction. For a free credit consultation, fill out the form below:


Game of Loans – A Guide to Defeating Student Loan Interest

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GameofLoansInterest

Interest is Coming….

In the hit HBO series Game of Thrones, royal families prepare to go to war against each other in a quest for power. Recent college graduates are about to go to war as well…. war with student loan interest.

Maybe you’ve been out of college for some time now and are currently battling interest. If that’s true then you know it’s a long exhausting fight. A fight most of us are unprepared for as we blindly pay away our earnings. Worry not, there are some weapons you have to gain the upper hand against interest.

Times have changed and with change most graduates are met with crippling student loan debt that will limit their ability to buy a home, save for retirement, or start a business. Student loan debt is at an all time high of $1.2 Trillion (yes, trillion,) which is well beyond the amount of America’s credit card debt, which is only $884.8 Billion.

Part of the problem are the high interest rates on student loans. Once you’re locked into a student loan, there is no refinancing and the interest is stuck with you forever.

Prepping For the War Against Interest

Iron_Thronecrowcap

If you recently graduated and have not started paying your loans yet, the first thing you should do is get familiar with your loans. Keep track of your lender, balance, and repayment status. Make sure you contact loan services with any questions you may have. Update loan services with any current contact changes. Out of date contact information can be detrimental to your account if your lender needs to contact you and cannot do so.

Know When Your First Payment is Due

After graduation, your first payment will be here before you know it. Make sure you know how long your grace period is. When is your first payment? Stafford loans are typically due 6 months after graduation, Perkins loans are usually 9, payday loans online Las Vegas usually start much sooner. Find out when your first payment is and DON’T MISS IT! Don’t be afraid to contact your lender to find out when your grace period ends.

Pre-Pay Your Accounts

If you are financially able to do so, pay more towards your accounts. This could be your greatest weapon in the war against student loan interest. Making payments before your first payment is due and/or paying more than the amount due will result in paying less interest in the long run. Make sure you let your lender know the extra amount is to be applied to the loan balance. Otherwise, they may “credit” the amount to a future payment.

Target the Most Expensive Loan First

GameOfThrones Giant Loans

Gain the advantage in the interest war and take out the giant first! Find out which loan you are paying the most interest on and attack! Make extra payments towards that big loan and keep at it until it is no more. Once you’ve knocked off that loan, take aim at the next loan with the most interest, and so on. Private loans will most likely be the first to go. This is due to the fact that they have higher interest rates and aren’t as flexible as federal loans.

Eliminating loans with the most interest means you’ll ultimately be paying less in the long run.

Don’t Default

Missing or making late payments will not only make your loans more difficult to pay off and will destroy your credit for years to come. Missing enough payments will put your loan in default, causing your a lifetime of financial trouble. Once a loan hits default, prepare for battle with collection companies. Collection companies can be ruthless and will stop at nothing to get you to pay.

Defaulting on your loans may even cause your wages to be garnished. When this happens, the government will forcibly go into your bank account or paycheck and take out what it needs until your loans are paid off. Leaving you with nothing but an empty bank account and horrible credit score.

It’s also worthy to note that defaulting on private loans will bring your co-signers down with you. This will affect their credit and can potentially hurt them from getting approved. If you can’t afford your loans, don’t just ignore them. There are ways to get back on track without destroying your or your co-signer’s credit.

Trouble Making Payments? Don’t Surrender!

Braveheartnever surrender

Everyone goes through rough times and student loans aren’t exactly cheap.  Don’t give up if you are struggling to pay your loans! You have options to help get you back on track.

Change Your Repayment Plan

Contact loan services and see if you can change your repayment plan. You may be able to pay less each month with extended payments. Another option is a graduated payment plan. This will start you off with lower payments that increase over time. You may also tie your payments into your income. Making your loan your number one priority. Automated payments on dates your paycheck gets cashed can ensure you have enough to pay and are paying on time.  Changing your repayment play will have you paying more in interest over time, but it’s much better than destroying your credit.

Deferring Payments

If you will be out of work for some time you may be able to defer your loans to a later date. Going back to school, unemployment, or enlisting in military service are all reasons someone may want to defer their loans.

Just keep in mind you are still accruing interest during those months you aren’t paying.

Forbearance

If you’re struggling to pay the bills and don’t meet the requirements for deferment, forbearance might be your solution. If your loan servicer grants you forbearance you may be able to stop making payments or reduce your payments for up to 12 months. Financial hardship and illness are just a few reasons individuals seek forbearance.

Consolidation

Student loan consolidation comes with its many pros and cons. consolidating multiple loans will help you keep track of your debt and better manage your loans. The interest rate of all your loans will be averaged out into a fixed interest rate. If you’re struggling, this could mean less in monthly payments. There is also no minimum or maximum needed to consolidate your loans, making it easier for consumers to obtain.

You cannot include private loans in a federal consolidation. However, on the flip side, you may included federal student loans into a private loan consolidation. This is usually not a good idea as the interest rates for private loans are usually much higher. Another downside is you may be missing out on some cancellation benefits (more on these later.) Perkins Loans have cancellation benefits that will be voided if you consolidate it. Police, firefighters, and teachers are among those who may qualify for cancellation benefits that will disappear once the loan is consolidated. Keep in mind also, once you consolidate there is no going back. Your interest rate is fixed and you are stuck with it even if rates fall after your consolidation.

Winning the Fight

Emperor-Commodus-gladiator-gameofloans

So you’ve managed your loans pretty well, you’re on a good path, but you’re looking for that secret weapon to win the fight. Under the right circumstances you may qualify for student loan forgiveness, cancellation, or discharge.

School Closing Discharge

If your school closed during your enrollment or shortly after you withdrew (120 days.) Your loans can be discharged. If this is something that has happened to you, contact your loan servicer to get the application.

You are not eligible for School Closing Discharge if you withdrew more than 120 days prior to the closing, are completing a similar program at a different school, or have completed all of your coursework.

Teacher Loan Forgiveness

Teachers rejoice! You may qualify for Teacher Loan Forgiveness. The Teacher Loan Forgiveness program was created to encourage individuals to enter the teaching profession. If you qualify, you may be eligible for forgiveness up to a total of $17,500. Those who are eligible must not be in default of their loan and must be teaching full time 5+ years. One of those years must be in a qualifying school district.

Public Service Loan Forgiveness

Any current full time employees working in public service jobs may be eligible for the Public Service Loan Forgiveness Program. To qualify, you must make 120 on-time, full, scheduled, monthly payments on your loan. The only loans eligible for forgiveness are loans received under the William D. Ford Federal Direct Loan Program. Federal Family Education Loans and Federal Perkins Loans are ineligible. However, you may become eligible by consolidating your FFEL or Perkins loans, but your 120 payments won’t count until you start making payments on the new consolidated loan.

Perkins Loan Cancellation Benefits

There are a variety of jobs eligible for Perkins Loan Cancellation Benefits. Some qualifying jobs include: teachers, nurses, police officers, and firefighters. To find out if you qualify, contact your loan servicer.

Take Action!

Now it’s up to you. Prepare for war with interest. Map out your game plan and student loans may not seem as intimidating as they were before. If student loans have gotten the best of you in the past or you would just like some little more information, fill our the form below and we would be more than happy to take a look and point you in the right direction.

The Steps to Good Credit – Credit’s Do’s and Don’ts

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Excellent Credit score BQ blog

The Dos and Don’ts to Good Credit

Your credit score is the most important number in your life. It can determine whether or not you will be owning a new home, driving the car of your dreams, or even securing that new job you just had an interview for.

Having a good credit score can lead you to a long enjoyable lifestyle…. But having a bad score can feel like you’re trapped inside a terrible nightmare.

If it’s one thing I’ve learned working in this business, it’s that credit is confusing and always changing. Back in March, the Credit Reporting Agencies made an announcement regarding new ways to report medical debt and disputed accounts. This change will benefit most Americans, especially those plagued by medical debt.

In an industry that’s consistently changing, how can a consumer know how to obtain a positive credit score? The general public is uneducated when it comes to credit and most are even unaware of their own scores. Well, you’re in luck! I’m here to give you the basic steps to good credit:

DO: Secure different trade lines of credit.

The first rule for the steps to good credit is to secure different trade lines. The more types of credit you have, the better your score will be (assuming the accounts are in good standing.) Ten percent of your credit score is determined by the different types of credit used. That doesn’t mean go out and start applying for as many accounts as you can (that will hurt you.) What that means is the credit bureaus like to see variety. A consumer with a mortgage, a few credit cards, student loan, and auto loan on his/her report should have pretty good credit score (again, assuming all accounts are in a good standing.)

DON’T: Close Out Old Credit Cards

“I’ve had this card for years. It’s old, and I just got a new one should I close this out?” The answer is NO! Old credit cards aren’t like old TVs or computers. You shouldn’t close them just because they are old. In fact fifteen percent of your credit score is based upon credit history. Closing old accounts can instantly decrease your credit score. If you have an old account you no longer use, you’re better off waiting for them to become inactive rather than closing them out.

What Determines your credit score? (Source myfico.com)
What Determines your credit score? (Source myfico.com)

DO: Use Credit Cards Regularly

Not long ago I met a gentleman who told me he only opens up credit cards to boost his credit score. He never uses them, just opens them up and locks them away.

While this may improve the score a little, his score can be substantially increased if he actually used the cards. A recent study from Credit Karma shows an average score of 692 for consumers that hold their cards at a zero balance. The same study shows average scores of 753 for consumers who used 1-10% of their credit limit, and 715 for those who used 11-20%. Which brings me to our next “don’t”…

DON’T: Go Over 20% of the Credit Limit

The bureaus want to see you using your cards, but they don’t want to see you overusing them. This is also a good strategy for your wallet, as the more in debt you go, the more interest you will pay.

It’s easy to start charging away on your credit card and not realize where your utilization lies. Stay on top of your balance. Make sure you budget yourself and keep track of where your account is at. In the same Credit Karma study mentioned above, the average credit score is 563 for consumers with maxed out cards.

Avg Credit Utilization Ratio (Source CreditKarma.com)
Avg Credit Utilization Ratio (Source CreditKarma.com)

DO: Pay More Towards Accounts

Any type of loan will have you make monthly payments. Do your best to pay more than the minimum. While making minimum payments won’t necessarily hurt your credit score, you’ll get a score boost if you pay them off in a timely manner.

Making minimum payments will cause you to pay more interest, which is money you could be saving. If the minimum payment is all you can afford at the moment, then there’s not much else you can do. When you do come into some extra cash, put it towards your debt. The quicker your debt is paid off, the quicker you’ll have some extra dough.

DONT: MAKE LATE PAYMENTS!

The most important Don’t on the list! Making a late payment with drop your credit tremendously and will remain on your report for up to 7 years. All derogatory accounts start with just one late payment so make sure you pay everything on time.

In today’s fast paced world it’s easy to forget when payments are due. It’s always a good idea to setup payments through autopay. Just double check to ensure the payments go through. If you’re not doing autopay, set reminders for yourself to pay. One late payment is all it takes to destroy your credit score.

DO: Monitor Your Credit

Always keep a watchful eye on your credit. Credit monitoring can alert you to any new accounts that will appear on your report. If you see something fraudulent, report it to the bureaus and the FTC immediately. It’s easier to get a recent mistake removed rather than a lingering old mistake.

DONT: Assume Your Credit is Fine

1 in 4 consumers have errors on their credit reports. Most consumers aren’t even aware of what is on their report. Get a credit report and find out what is on it. If you need help reading the report, consult a credit expert like the ones at Better Qualified. They can tell you exactly what is on the report and provide you with the steps toward better credit. They also specialize in removing negative items from credit reports. Don’t just assume your credit is doing great. Make sure you know what is being reported!

If you follow the steps to good credit, your score will increase tremendously. If you need help getting your credit back on track, just ask! We’ll provide you with a free credit analysis, go over your report with you, and determine what actions need to be made to improve your credit. Just fill out the form below:

Get a Free Credit Analysis From a Credit Expert


Paying Off Old Collections

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Can Paying off Old Collections hurt you?

The short answer is… Yes.

Paying off those old collections seems like a great idea, your credit score may decline if you pay a collection that is older than 2 years. When you pay off a collection that has been lingering on the report for some time, the date of last activity may change, causing the  account to appear fresh. Your credit report will take the hit and your score will drop.

Always try to pay your accounts on time. If you are like many Americans who have had an account fall to a collection, make an attempt to settle it as soon as possible. If the collection remains unpaid for more than 2 years, paying it will result in a decline in your score. Your best option would be to consult credit professionals.

3rd party collections must abide by certain standards set forth by the Fair Credit Reporting Act (FCRA.) If collection companies go against the FCRA, then your collection may be in violation. Violations can result in the collection getting removed from your account, and in some cases, a cash settlement for you!

Better Qualified has a team of attorneys looking through all of our client’s collections for violations. If  you were looking to pay an old collection, first find out if you can get the collection removed before it effects your credit score.

Fill out the form below for a free credit analysis.


Huge Credit Report Overhaul: Medical Debt to Weigh Less

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Medical Debt

It will be announced today that the 3 credit reporting agencies (CRAs) will be making some serious changes to the way they report your credit. After long meetings between the New York Attorney General’s office and the CRAs, decisions have been made to change the reporting of medical collections and the process of consumer disputing.

I know what you’re asking… “What does that mean and how does that benefit me?”
Here’s what you need to know:

Medical Collections

Countless times have I heard client’s horror stories: Their insurance company was late paying their medical bills, and now they have a medical collection reporting on their credit.

While medical collections won’t directly hold you back from obtaining a loan, they will bring your scores down which can indirectly affect the loan officer’s decision to get you approved. This new announcement ensures that medical collections cannot report on your credit until 6 months after your debt becomes delinquent. This allows those slowpoke insurance companies time to to pay off your debt before it hits your credit. The announcement also states that once the debt has been paid off or satisfied, it will be removed from your credit report. Soon the days of lingering paid medical collections will be long gone and your scores will improve!

New Consumer Disputing Process

Consumers who choose to dispute items on their credit report will now receive more information pertaining to those accounts. If the person disputing does not agree with the results they should receive, the CRAs will include actions each consumer can take.

The CRAs will have trained professionals examine and review all consumer disputes to ensure no mistakes will be made.

“The nation’s largest reporting agencies have a responsibility to investigate and correct errors on consumers’ credit reports. This agreement will reform the entire industry and provide vital protections for millions of consumers across the country,”
-New York Attorney General Eric Schneiderman

According to Credit Karma, 25% of consumers have credit report errors on their report. It’s no secret the CRAs are in a mess right now with consumer information. This new disputing process looks to fix the mess and help consumers eliminate incorrect information.

Changes will be implemented over the next several months in New York and nationwide within the next several years.

6 Steps to Handle Identity Theft

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ID-theft

You’ve seen numerous web pages and blogs about what you can do to prevent your Identity from being stolen, but what are the steps you can take if you are already a victim of identity theft? Approximately 15 million US residents have their identities stolen each year. Stats like this make identity theft the fastest growing crime in the country. Although there may be an infinite number of steps you can take to prevent it, sometimes identity theft is inevitable. So what do you do if you are a victim of identity theft?

1. Monitor Everything

From now on, make sure you monitor and document all contact that is made between yourself and your financial institutions. Every phone call needs to be recorded or written down and documented. Every email, saved and archived. Every letter or document you receive in the mail must be put away and kept in a safe place. This way you can keep track of all of your accounts, who you talked with, and when.

2. Fraud Alert

Immediately after you realize you have been a victim of identity theft contact fraud lawyers Melbourne and call one of the credit bureaus (numbers listed below.) Explain the situation to them. Tell them your identity has been stolen and you wish to put a fraud alert on your account. Confirm with them that they will contact the other 2 bureaus as well.

With the fraud alert, you will receive a free credit report. The alert will remain on your account for 90 days (or more if you wish to extend it.) Now every time credit is applied for in your name, the report will come back with a fraud alert. The applicant will be asked security questions and/or to provide proof of identity in order to become approved.

Equifax: 1-800-525-6285

Experian: 1-888-397-3742

TransUnion: 1-800-680-7289

 

3. Contact Your Accounts

Contact all of your financial accounts and let them know you had fallen victim to identity theft. Tell them you had already placed a fraud alert with the credit bureaus. Make sure your accounts are all where they need to be. If some money is missing or something seems off in one of your accounts, make sure you notify them as soon as possible.

Change all of your passwords and pins. Try not to use the same password for every account. This can make it really easy for your identity thief to log into all of your accounts. If need be, close old accounts and open new ones.

4. Call the Federal Trade Commission

The FTC processes complaints by consumers who have fallen victim to identity theft. The FTC will provide you with the necessary steps you need to take in order to resolve your identity theft issue. You may also fill out the FTC’s online form.

After completing your call or online form, you will be given a report called an Identity Theft Affidavit. Take this report to the police station for our next step.

5. File a Police Report

With your Identity Theft Affidavit in hand, go to your local police station and file a police report. It is very important to always file a police report if you believe your identity has been stolen. Although the chances are extremely slim to none that the police will catch the responsible party, the police report can help you in the future when dealing with creditors or financial institutions. After you file your police report, make sure you make a copy for yourself.

6. Get Credit monitoring

If you don’t have credit monitoring by now, get it! Credit monitoring is the best way to stay on top of your accounts and help prevent ID theft from happening. Just because you make have had your identity stolen once before only makes you more liable to have it stolen again. Make sure you are on top of your accounts.

Luckily for you, Better Qualified is giving away 3 months of credit monitoring for free! Our credit monitoring service includes a free credit report and free money manager. Just click the link here!

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How to Stop Collection Harassment

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Stop those pesky collections from interrupting your life!

There’s nothing more annoying than coming home after a long day of work only to be bothered by pesky collection companies. They call your home, your relatives, and workplace. They flood your mailbox with their notices. This kind of treatment can leave you drained and stressed. Often you might think you’ll never be able to get out of this mess. Well I’m here to tell you, you can stop collection harassment today!

First, you must know your rights. Instead of of dodging the calls only to be pestered later on, confront them. There is an easier way to deal with the calls and mail rather than just ignoring them and hoping they’ll go away (they won’t).

Know Your Rights

According to the Fair Debt Collection Practices Act (FDCPA) there are a certain standards that collectors must comply with when attempting to collect your debt. If a collector violates these standards, the collection company may be subjected to a fine, removal of account, or a cash settlement for the consumer.

  • Collection companies are prohibited to call before 8am or after 9pm
  • Cannot call you at work if your employer doesn’t allow
  • Collection companies cannot lie
  • Cannot use obscene language or insult you
  • Cannot make demands to pay more than the debt owed
  • Cannot pretend to be an attorney
  • Cannot claim the papers they send you are legal forms if they are not
  • Cannot threaten to sue unless this threat is followed up

Pay the debt if you know you owe it and you can afford it

The first time you speak to the collection company, you can get a good idea of where the debt is from and how much is owed. If you know the debt is yours, and you can afford it, feel free to go ahead and pay it off. This will get you out of debt and stop collection harassment. If you think the debt is not yours, is a wrong amount, or simply cannot pay it, then you will want to start with a cease and desist letter.

Cease and Desist Letter

After talking to the collection company and telling them you cannot/will not pay this debt, they will continue to contact you whether it be by phone, mail, email, you name it. Your first step to get this burden off of you is to write them a cease and desist letter. When collectors receive a cease and desist letter, they must stop contacting you for the debt. Send the letter certified mail with a return receipt. This will give you the documentation needed to show the collector had received your letter.

Now the collector may only contact you to acknowledge that your letter had been received, or to inform you that they will be suing you for the debt. The phone calls and excess mail will stop now. Do you feel that? that’s the stress starting to lift already (but it’s not over yet!) Just because you are not longer falling victim to collection harassment, does not mean the debts are gone.

If you need a Cease and Desist letter format, download one from us for free here!

What if I don’t owe any money?

IF you feel that the debt is not yours, or that the amount is incorrect, send the collection company a letter stating so. These letters must be sent 30 days after you receive the validation notice. If the collector responds with a verification of debt (like a copy of the bill) they may begin to contact you again. If this happens it will not stop collection harassment, and you may have to send them a cease and desist letter (See Above)

What happens if I don’t pay the debt?

Aside from this account sitting on and destroying your credit, if the debt remains unpaid the collector can file a lawsuit against you. This can results in a judgment being entered against you by the court. After you get hit with a judgment, your wages may potentially be garnished either from your bank or your paycheck.This ordeal is court ordered and will continue to happen until the account has been paid off.

Judgments are serious! If you receive a summons, make sure you respond to it either through your attorney or personally.

Better Qualified legal help

Instead of going through the hassle to get an attorney, Better Qualified has a legal team to work with your collections as soon as you enroll to stop collection harassment. Our attorneys will send out validation of debt letters and look for violations in the collection accounts. If violations are found, the collector accounts will be removed, erased from your credit report, and you may be subject to a cash settlement. It’s all included in your service with Better Qualified!

New Years Resolution: Get Out of Credit Card Debt

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It’s a new year and that means everyone is off to an inspiring start on their new years resolutions. You may already have your plan in effect to lose weight, get fit, and aim for that new promotion, but what are you doing about the pile of debt you racked up over the holidays? It’s well worth noting that only 8% of the population will be successful in their new years resolutions (according to the trivia flip calendar on my desk.)

While you pay the minimum balance on your credit card accounts, that debt is going to continue accruing interest and take you years to pay off. Wouldn’t it be nice if you started to take control of it today before it controls you? (And if it already does, I can help.) Here are a few tips to live by to get your mountain of debt in order.

Find out what is on your credit report

You would be surprised at the amount of people who have not a clue as to what is reporting on their credit report. Most people aren’t even sure how much debt they are actually in. They may say its one number when it’s actually much more. Your first step towards paying off your debt is to find out how much of it you have. You’re going to need to get a credit report. You can obtain one by visiting www.annualcreditreport.com. They will give you one free FICO credit report every calendar year. You may also go with free online sites like Credit Karma or Credit Sesame. However, the free online sites only pull from one bureau and their scores are not FICO. (For more on FICO vs FAKO, read our past blog here.)

Once you get your credit report make note of all of your debt. Write it down and add it up so that you know just exactly how much debt you are in. For some of you this may be devastating, but don’t worry, look at it more like a goal to obtain and keep you mind focused on the end result.

Make a budget

Now that you can see how much debt you are in and how many bills you have to pay, it’s time to make a budget. Study your past bills and bank statements and write down all your necessary living expenses. This includes: Rent or mortgage, utility and credit card bills, car payments, ect. Make sure you’re paying everything on your credit report on time so that your accounts don’t fall into the negative.

Be realistic with yourself and cut out any unneeded expenses. Goodbyes are never easy, you may have to start making some sacrifices. Cook meals at home and bring lunch to work instead or dining or ordering out. It may be a good time to cut Netflix, HBO, or any of those other premium channels out of your life (you’ve already watched everything good on there anyway.) Once you get rid of all your unused subscriptions and services, you may find yourself with much more money than expected. Those $8/month subscriptions really add up when you have  a bunch of them.

Try for better rates

Most of the population today takes whatever is given to them without asking any questions. I’ve found that you can actually go far and get more out of life by simply calling and asking for it. If you get denied, you’re in the same position you were in before. Some of your credit cards may be impossible to pay off simply because their rates are too damn high! If you can get a better rate on the card, then why pay more money if you don’t have to? Try calling up each of your credit card accounts and asking them to lower your rates. Just make sure you prep yourself and do your research. You may want to find out what the prime rates are for that card. If you’re unsure of how to ask, try doing what Sally from creditcards.com did here

Apply for 0% balance transfer cards.

As stated before, the interest rates may be too close to the minimum payment on your card. This will take forever to pay the account off if only making minimum payments. Most large credit card companies will offer 0% balance transfer cards, interest rates worst enemy. 0% balance transfer cards are the secret play in your playbook to get out of credit card debt. These cards will allow you to transfer your balance to a new card with 0% interest for a period of time. Making it perfect people who are trying to pay off debt! Your balance will drop surprisingly faster if you are not paying interest. Transfer your debt to a 0% balance transfer card and make it your goal to pay off the balance before the interest rate kicks in.

It is vital to note you should NOT CHARGE THE CARD as you will only make your debt situation worse. These cards should only be used to pay off the debt, not add to it. You will need to get approved for the card as they may only issue them to people with good credit. Shop around, and choose the right card for you.

Pay off the large accounts first

So now you’re ready to start paying off your accounts, but which ones do I take care of first? The best method would be to flood your extra cash into the largest accounts with the highest interest rates, while making minimum payments on all others. This will ensure that you are paying less in the long run. The higher the interest rates, the more money you will have to spend paying off the account. Once you finish with your biggest baddest account, flood your extra cash into the next biggest baddest account until that one is paid off. Continue this process and you’ll be out of debt much sooner than you think.

Some people may suggest the opposite. Take care of the smaller accounts and work your way up to the big ones. While this is still not a bad idea, in the long run you will be paying more due to the accruing interest on the big accounts.

Don’t use your credit cards

The whole point of this process is to pay off your debt. If you continue to use your cards while attempting to get out of debt you’re going to get nowhere. Do not close your credit card accounts as doing so will drop your credit score. Start paying for items in cash rather than credit. You’ll find cash is a much cheaper and safer means of currency.

Don’t apply for new lines of credit

This one should be a no-brainer. Applying for any new lines of credit such as new credit cards or loans will only hurt your process towards a debt free life. New lines of credit means new debt and a new bill for you. Hold off on applying for any new credit until your debt is gone.

If you start utilizing these methods, you’ll find getting out of debt isn’t as hard as you may have thought. It can be a timely process but the end result is very rewarding. Living a debt free life will take a heavy burden off your back and will result in a happier less stressed you! Once you are out of debt, remember to always pay your bills on time, and don’t rack up your credit cards as you once did before.

What Black Friday Means for your Credit

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In just a few weeks we’ll all be bombarded with pre-Black Friday ads and promotions as we flip through the channels or tune into your favorite radio station. But before you put together your list and get ready to face the shopping anarchy on November 27th, there are some shopping precautions you may want to take.

In this week’s credit blog, we’re going to look at the facts, the deals, and the safest shopping methods for your 2015 Black Friday.

The Facts

First, let’s get some of the Black Friday facts straight. In 2013 $12.9 Billion dollars was spent on retail sales on Black Friday. $1.964 Billion was spent on online retail. In 2012, $59 billion dollars was spent on Black Friday weekend (Thurs-Sun). That averages out to about $423 per individual shopper. The average holiday shopper will spend around $804 for the entire holiday season. According to these statistics, more than half of holiday shopping is done on Black Friday.

The “Deals”

Are those “Outrageous Doorbusters” really THAT outrageous? On Black Friday you will see doorbuster sales in every store you go. You may even camp out in line to secure your item. Just remember retailers aren’t here to give you a deal. Retailers are here to make money and turn a profit. Once you’re in the store and you get that doorbuster, prepare to be pounded with a plethora of add on items that seem to fit so well with you “deal”. Once you walk out of the store chances are you’ve spent more than you’ve planned and bought things you didn’t need.

Opening Store Cards

You’ve stood in line for an hour waiting to get into the store. You’ve shopped for an hour, and now you’ve been standing in line for another hour waiting to check out. Suddenly a new lane opens up and the cashier says “Anyone opening up a new store card can come to this line.” Sounds tempting doesn’t it? They may even offer you another 20% off on your purchase on top of the line cut.

While you time and possibly money will be saved, your credit score will take a hit. Taking on new debt and a new inquiry will cause your credit score to drop. On top of that, most consumers will pay off the debt in increments. This will cause you to pay interest on the purchase. Now that great deal you just got doesn’t happen to be a deal at all and you may wind up paying even more than you thought.

No Payments Until 1 Year

Retailers will try to get you to buy large purchases with the promise of delayed payments. “Buy now and you won’t pay until next year!” What they won’t tell you is once your payments begin, you’ll still have to pay interest for that entire year you weren’t paying. Suddenly, this doesn’t sound too great. If you do fall victim to this scheme, make sure you pay off the entire purchase BEFORE your payments start. This way you can avoid all those pesky interest fees.

Shop Safely

Last year Target fell victim to a massive security data breach. Millions of Black Friday shoppers had credit card info and valuable personal information stolen. Data breaches seem to be showing up more and more in today’s tech filled world. If you fall victim to one, your credit could suffer for the rest of your life.

The simplest solution to this: Pay in cash! If you are going out shopping this Black Friday, it might be a good idea to swing by the bank and take your shopping budget with you. This way you can protect yourself against cyber criminals and stay within your budget as well.

 

For more do’s and dont’s of credit, consult our credit blog here!

For more information on data breaches, check out Data Breaches: Why you Should Worry