Of course bad credit does not make you a bad person.

But that’s not what the financial industry wants you to believe. The financial industry works hard to make consumers believe that bad credit somehow makes a person “less”. Less creditworthy, less respectable, less worthy of courtesy and fair treatment. And the financial industry has proven for decades that the more consumers believe this myth, the easier it is to financially exploit them.

Think about this. If certain types of criminal activity makes you a bad person, felonies, theft, assault, murder, burglary, fraud, etc., people simply choose not to associate with you because they believe you’re a bad person. You’re not welcome in most neighborhoods and you can’t get many types of of decent jobs. So it’s understandable; most criminal activity makes you a bad person.

If certain personal habits, behaviors or characteristics make you a bad person, people choose to avoid you altogether, right? That’s understandable too.

So by following that logic, if bad credit made you a bad person like the financial industry wants people to believe, no one should be willing to lend you money or extend credit to you because you’re a bad person, right?

But they’ll lend you money alright. There is certainly no shortage of places specializing in “bad credit lending” and “sub-prime” loans or “sub-prime” credit. They’ll just charge you 3, 4 or even 5 times as much for it. Bad credit is BIG BUSINESS - HUGE BUSINESS in fact. Not because bad credit makes bad people … it just makes them a LOT easier to exploit.

You’ll hear that bad credit automatically means you’re a much bigger risk to lenders, so to make up for that risk, you must pay out the nose for home loans, car loans, or any other kind of credit extension. Instead of paying 7% on a loan secured by your home, they’ll charge you 9% to 15% for the same loan that is STILL secured by the same home.

Instead of offering you a 24-month or 36-month 0% interest loan on a car, your bad credit means that they get to charge you 13% to 25% interest on a 60-month or 72-month loan.

And since it’s riskier to give you a credit card too, they explain, instead of not giving you one, they give you a credit card with a 29% interest rate, a $199 annual fee, a $99 application fee and maybe even a $7 per month recurring “membership” fee.

So the big picture seems to be that as long as they’re making tons of money off of you, you aren’t such a bad person after all.

Aren’t You Fed Up With Being Treated Like That?

Isn’t it about time you changed all that? Why not make this year YOUR YEAR to turn things around in YOUR favor? Why not make this year YOUR YEAR to fix your credit and improve your life?

You didn’t invent the rules or write the laws that govern credit repair. Neither did the credit bureaus or the lenders who make a fortune lending money to folks with bad credit, but they certainly ARE using those laws against you. Isn’t it time you turned the tables? Isn’t it time you started using the laws to work FOR YOU instead of against you?

Credit repair IS legal, it IS ethical and it IS affordable. It is also your federally protected right as an American. In fact, in this new economy of ours, how can you afford NOT to repair your credit? 

Exercise that right and repair your credit, starting right now.

Learn More About Repairing Your Credit

This rating system is meant to develop a snapshot of the risk you currently represent to a lender. Several parameters in your credit file, including length of credit history, number of open accounts, loans, mortgages, public records, and others are formulated to produce a three-digit score between about 300 and 850. 

Usually a lender will use a combination of your credit score with other factors when determining your risk. They all claim to have the same objective, to determine the borrower’s potential risk. Regardless of whether the score was generated by FICO® or a system based on FICO® parameters, they all yield an industry standard three-digit score. This score places the borrower in one of three main categories (we named the third one ourselves.)

Prime, Sub-Prime and Shafted

• Prime: If your credit score is above 725, you are considered “prime” and, in a normal economy, you will have no problem getting low interest rates on home loans, car loans, credit cards and any other credit extensions you might need.
• Sub-Prime: In this new economy, if your credit score is below about 675 to 700, you are considered “sub prime”. As such you will be unable to qualify for most mortgage loans and you will be charged higher interest rates on car loans, credit cards and other credit.
• Shafted: If your credit score is below about 650, you are “shafted”. At least that is how banks, lending institutions and any other credit issuers will perceive you. You can still get credit cards but you’re going to be hit with security deposits, application fees, monthly fees, annual fees, membership fees, “risk assessment” fees, underwriting fees, origination fees and the list just goes on and on. In addition to that, your interest rates will never dip below 15% and will more likely be in the 16% to 29% range. In this economy you can forget about getting approved by any bank or lending institution for a home mortgage loan. The majority of new and used car loans will still be available, but you won’t qualify for anything under about 15% interest.

Below 650 is no place to be. You will pay tens or perhaps even hundreds of thousands of dollars more in higher interest and unnecessary fees on every loan and credit card you get during your lifetime if you don’t take action and do something to improve it. You’ll even pay more for insurance and a very low score can even prevent you from getting a job with many companies. If you’re in this catagory Click Here.

How are credit scores calculated?

The methods of calculating your credit score may differ slightly depending on the credit bureau. When obtaining your score from one of the Credit Bureaus it is important to understand that your score does not come directly from FICO®. It is adapted to each bureau and is given its own name: Equifax uses “Beacon”, Trans Union uses “Empirica”, and Experian uses “Experian/Fair Isaac.” These scores are also referred to as your “Bureau Scores.”

Since your score is derived from your bureau data, it will change every time your reports change. However your score is calculated, it will always take into consideration many categories of information. No one piece of information or factor determines your score. As the information in your credit report changes, the importance of one or several factors may change in your score. Lenders look at many things when making a credit decision, including your income and the kind of credit you are applying for. However, your credit score does not reflect these facts as it only evaluates the information retained by the credit reporting agency.

To Learn More Click Here.

What factors affect your credit score?

There are five factors which are used in credit scoring calculations that determine your overall credit score.

• Previous Credit Performance (Payment History) (35%) - A lender wants to know what your payment history is like. Have you paid everything on time, are you late on anything now, and so on. Your payment history is just one piece of information used in calculating your score, although it can be the very important.
• Current Level of Indebtedness (Amount Owed) (30%) - How much is too much? Can the borrower pay me and still afford to pay his other bills? Not necessarily. Having available credit can actually help your ratio of debt to available credit. These are the types of questions that most borrowers want to know and the answers are almost as important as your previous credit history.
• Amount of Time Credit Has Been In Use (Length of Credit) (15%) - Generally speaking, the longer the credit history the better your score. However, this factor only makes up 15% of your total score so even young people, students or others with short histories can still score high overall as long as the other factors show good. If you are new to credit than there is little you can do to improve this part of your score. Open an account and be patient.
• Pursuit of New Credit (10%) - Credit is much more popular today. Just look at the number of credit card offers you get via the Internet and in the mail. Consumers can now shop for credit and find the best terms to meet their needs. Each time someone runs a credit check on you, it creates an inquiry. Fair Isaac has changed some of its calculations to account for these new trends. Specifically, they treat a group of inquiries - which probably represents a search for the best rate on a single loan - as though it was a single inquiry (note: this only applies to auto or mortgage loan inquiries.) For example, auto loan inquires that are within 14 days of each other only count as one inquiry.
• Types of Credit Experience (10%) - A healthy mix of different types of credit, installment loans, retail accounts, credit cards, and mortgage. This score is not normally a key factor in determining your score but it can help a close score. Its not a good idea to try and open different types of accounts just to try and make this factor better. It will likely reduce your score in other areas. You should never open accounts you don’t intend to use anyway.

What type of accounts you have, and how many, can make a big difference. The optimal ratio of installment versus revolving accounts depends on your profile and differs from person to person. One factor that seems to have significant influence is your percent of open installment loans. Too many can lower this portion of your score.

Improving Your Credit Score

Now that you know how your score is calculated, you can begin making changes to your current financial planning. The best things you can do are simple.

Hasn’t your bad credit cost you enough already?

Do credit repair companies REALLY work?

Unfortunately there are many unscrupulous credit repair companies who claim to be able to remove any and all negative credit with the click of a mouse. Their advertisements make bold claims: “Remove bankruptcy, foreclosures, IRS tax liens, judgments … no problem!! One hundred percent guaranteed!! Credit report 100% cleared in 30 days!!” 

While many credit repair companies are outright frauds, there are a few that are not fraudulent and they use federally mandated dispute processes to obtain impressive results. In fact, they cause the deletion of thousands of negative credit items every day. There is one company that has been doing it quite successfully for more than 15 years.

Obviously it’s risky to trust just anyone who claims to provide consumer credit repair to help you restore your credit. It is estimated that fraudulent credit repair companies have bilked Americans out of more than fifty million dollars. In the 1990’s, the majority of credit repair companies were started by entrepreneurs with a penchant for marketing. Consumers have flocked to these “credit doctors” only to discover that their advertisements proved far more impressive than their results. Hiring an unproven credit repair company is like playing Russian roulette. A few of them are effective and legitimate, but it is difficult to tell a rip-off from the real article unless you look at their track record and satisfied clientele.

Can credit repair companies guarantee results?

Not if they are legitimate! Just as any competent attorney would never guarantee a particular jury decision, no competent, legitimate credit repair company can guarantee a specific outcome either. It would be like a defense lawyer guaranteeing that the jury will find his client innocent. Guarantees are a sure sign of credit repair fraud. A warranty however, where the credit repair company promises a refund if certain results don’t occur, is a better, more realistic claim.

What Do The Credit Bureaus Have To Say?

Not surprisingly, the credit bureaus have declared outright war against credit repair companies and those selling instructional do-it-yourself credit repair information. The bureaus blast credit repair companies in the media and send anti credit repair literature to anyone whom they suspect of using credit repair services. The bureaus unflinchingly deny that accurate information can be removed from a credit report.

The simple truth is that you do not have to endure bad credit for seven to ten years as long as you feel comfortable challenging the accuracy or verifiability of the negative or derogatory items on your credit reports. If so, it is possible to restore creditworthiness within a much shorter time.

However you decide to address your credit challenges, realize that regardless of what you may hear in the news media, hundreds of thousands of people before you have sought help and restored their credit. They can show you their homes, cars, and credit cards. Despite the newspaper articles, TV reports, and other credit bureau propaganda to the contrary, the simple truth remains: you CAN restore your credit.

Learn More About Repairing Your Credit