Did you know that banks WANT you to repair bad credit?

Over 70% of Americans have a FICO score that is considered to be sub-prime — that is, a credit score lower than 670. When people have a credit report with a low score, it alerts lending institutions to the fact that they already have a history of being unreliable when paying their bills.

Customers with bad credit are penalized by banks in the form of higher interest rates and fees when they apply for a credit card or loan — or if their credit report is bad enough, a bank will simply refuse to give them credit at all.

You see, although some people believe that these extra costs are unfair, and merely take more money from those who can least afford it, in reality banks are not charities. They are in business to make a profit, just like all other businesses. For this reason, they need to see whether you are a good risk and likely to repay their money, or a poor risk who has already shown a tendency to renege on a financial contract.

Credit Reporting Bureaus were created to provide lenders with accurate information about those who wish to borrow money from them. The credit history provided by the Credit Reporting Bureau tells your bank what kind of customer you’ve been in the past… and because most people tend to repeat the patterns they’ve established in their lives, it also tells them what kind of customer you are likely to be in the future.

When you have a high credit score, a bank or credit card company will generally assume that you will be a great customer. You have a history of managing your current credit well, and you’ve shown that you pay your bills on time. When you apply to a financial institution for additional credit, the bank already knows that they are going to get their money back and that your payments are very likely going to be made on time and as agreed. When customers have high credit scores, banks will reward them with more favorable interest rates and lower fees.

However when a customer with a poor credit score applies for a loan or credit card, their credit report has already shown the bank that he or she has trouble repaying debts and may often be late with their bill payments. The bank is taking a much higher risk if they approve a credit application from a customer with a bad credit score. The poor credit score indicates that there have been financial issues in the past or the customer’s repayment history is bad, so the bank will charge higher interest rates and fees to offset the risk they take in giving this client money.

In banking terms, this is referred to as rate for risk. The higher the risk to the bank, the higher the interest rate that will be paid by the client.

No bank, lender or credit card company, or financial institution anywhere in the world wants to take legal action against a customer. They really don’t want to repossess your car, motorcycle, or boat, and they don’t want to foreclose on your mortgage and make you homeless. Really. As a business, they are much more successful and profitable when you when you pay all your bills on time and are therefore entitled to keep all your assets.

But if they are not receiving their payments on a timely basis, they are losing money and have little choice but to try to salvage the situation somehow. Banks will only resort to these tactics when it appears that they have no remaining alternatives to get their money back — the money you did promise to repay when you applied for and agreed to the terms of the loan.

So if you already have bad credit or if you’re behind on your payments, it’s vital that you call your creditors and arrange for payment terms immediately. They won’t bite you and they won’t threaten you. Most importantly, they don’t want to lose a customer. In fact, you’ll be pleasantly surprised by what they’ll be willing to do to help a profit-making customer to catch up any late payments.

If you’re falling behind, then they still believe you can catch up, fix your bad credit and be turned into a great customer. This is why they’re so willing to help you! It also means that you can save yourself a lot of money on interest rates and benefit from easy credit terms simply by being aware of how the system works and doing your best to comply with it.

So, if your credit score could use some improvement, it’s time to start taking some steps to repair your credit and reduce your interest rates today!

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Credit repair companies advertise that they can help repair your credit. They are happy to take your money and then proceed to write a simple letter for you that you could easily write on your own.

The usual advertising spiel from these credit repair companies is that only they know how to begin an investigation into the bad listings on your credit report.

What these companies are looking for are any listings from creditors who might have reported incorrect information –  for example, they might have mixed up your report with someone else who has a similar name. They could also be looking for a listing from a creditor who forgot to report an already repaid debt.

Why should you pay high fees to a credit repair company when you can write a credit repair letter on your own and achieve the same result?

The types of issues listed above are all easy to investigate and easy to verify if they are incorrect. By writing a simple letter to the Credit Reporting Bureaus on your own you can dispute these listings and have them removed. Once they’re removed, you’ll see your credit score improve.

Before you begin you should order an accurate copy of your credit report. This is so you’ll know exactly what is listed and who listed it. Make a mark beside anything listed on your report that doesn’t belong to you or should show as repaid.

If you see any entries noted on your report that are actual debts you did apply for and did take out, then these can’t be removed even if they have negative listings for them.

Remember, you can’t legally remove accurate information. However, just because you can’t remove genuine negative listings doesn’t mean you can’t ask the credit reporting bureaus to conduct an investigation into every item listed.

There is no fee for writing and submitting a credit repair letter. This means you can write a letter and request an investigation into every listing — even the real ones.

The credit reporting bureaus are then required to respond to your enquiry within 30 days. If they find a listing that they can’t verify, then they must remove it – which is great news for your credit score!

Here are some tips on writing your credit repair letter:

1. Before writing your letter, do a quick search on the Internet to look for a ready-made template. Be sure to change the wording on the template to include your own information and your own listing details.
2. When you’re done writing, make three copies and send one to each of the three major credit reporting bureaus. You’ll find the contact information listed clearly on each of their websites.
3. Use registered or certified mail to send your credit repair letters out to the credit reporting bureaus. Always keep a record of the date you posted your letters.
4. Keep all copies of all correspondence for future reference.
5. Be patient. It takes time to conduct investigations into your credit report. They will respond, but it does take time.

Writing a credit repair letter might seem like a lot of work for very little reward, but if you can succeed in removing even one negative listing from your credit report then you will have achieved your goal.

Popularity: 4% [?]

If you will be applying for any credit in the near future, it is important to make sure that your credit score is as high as it can possibly be. If you can repair your credit report or increase your credit score, you will increase your chances of having any credit application approved.

In addition to improving your chance of approval, there is a strong possibility that you will also be offered a loan or credit card with lower interest rates and fees. Most lenders only offer their best interest rate deals to borrowers who have positive repayment histories and good credit scores. If you can resolve issues on your credit report you have a good chance of raising your credit score into a lower risk category. In this manner, you will qualify for more competitive credit deals.

It is possible for anyone to take some simple steps to improve their credit score. Easy steps like making sure you catch up on any overdue payments, pay all your outstanding bills and keep up to date with your current bills will definitely help to improve a credit score that’s less than stellar.

However, while these actions will help increase your score slowly, they won’t remove any negative entries that were placed on your credit report by past issues you may have, so your simple steps may not be enough to help you.

And there is another danger if you try to repair your credit on your own: doing the wrong things can actually do even more damage to your credit score.

At this point, it will be helpful for you to understand a bit about how your credit score is calculated. Your creditors submit reports about your financial activity, good and bad to the three major credit reporting Bureaus (Experian^®, Equifax^®, and TransUnion^®).  These bureaus examine your current loan activity as well as your past repayment history. They consider how much credit you have available to you, how much you are currently using, and if you’ve been responsible with the money you’ve already borrowed. Using this information, a score is calculated that lending institutions can use to determine whether or not you are likely to be a good credit risk.

Therefore, if one of your creditors has made a negative report about your credit activity, then the simple act of catching up on a few late payments on other bills will not remove this negative information, nor will it help to increase your chances of being approved for any new credit.

Neverthless, if you are careful and follow the proper procedures, it is possible for you to remove incorrect negative listings from your credit report on your own. To do this, you should write to each of the Credit Reporting Bureaus and request that they investigate the listings on your credit report. They then have 30 days to investigate your claim and if they can’t verify the information on your report, they are required to remove it. I need to emphasize that if you go about this in the wrong way, you risk doing even more damage to your credit. It’s also important to keep in mine that any negative items that are truly accurate can not be removed.

In many cases, a reputable, professional credit repair service can be of enormous assistance. With their experience and the knowledge they can very possibly negotiate with your creditors to remove any negative listings you have on your report. These professionals are also trained to know which types of negative information can be removed and which ones can’t.

Most of the time you will also find that if you call your creditors to question a negative credit report item you find, they won’t be willing to work with you directly. When a company is in the business of credit repair, they have many different levels of access to your creditors, which means they may be able to negotiate where you couldn’t.

Of course, there are fees involved when you work with any reputable credit repair company, but you should keep in mind that those charges will be well worth it when you find that your credit score has been raised back into the normal ranges and out of the sub-prime ranges.

Always research any credit repair company thoroughly before agreeing to anything. Ask questions and read the fine print. When you’re sure this is the option you want to take, call your chosen credit repair company and get your bad credit repaired today.

Popularity: 5% [?]