Because I don’t have to look any of you in the face, I am going to share something with you that I am more than a little embarrassed about. Several years ago, I found a job that I desperately wanted. This job seemed like it was just perfect for me. The job duties were closely related to the still shiny degree that I held in my hands, was only a few blocks from my home, had benefits that I had previously only dreamed of, and came with a salary that was almost twice what I had been making while I was in college.
I applied for it, hoped for it, and had a wonderful interview with a woman I would have loved to work for. She invited me back for my second interview, and then the ball dropped. Of course I’ll let you do a background check. Of course, you can check my driving record and do a drug screen. Oh, a credit check? Now, that is a just a bit of a problem. Despite my sincere hopes that somehow my credit would have magically improved since the last time I’d been declined for something and that day in her office, it didn’t. My credit didn’t pass their evaluation, and unfortunately, I didn’t get that job.
You see, although I am very proud that I have raised my kids alone, and I am incredibly glad that I went to college, there were quite a few bills along the way that either never got paid at all or got paid late. Obviously, I’m like most of us, I never woke up one day and said “Hey, you know what would be fun? I am going to pay the rent, the water bill, and buy groceries. Then I’ll spend the rest on bubble gum and stickers”. I always wanted to pay bills on time and in full, each and every time. It just wasn’t possible for me to do so given my income, and my outgo. And if I had to choose between paying the rent or paying off a medical bill, rent won each and every time.
What I had to Do, and What May Help You, Fix Your Credit
There is no such thing as immediate, or overnight credit repair. If someone tells you that they can have your credit fixed by next Wednesday, you really might want to run, not walk, to the nearest exit. Either they are about to lie to you, steal your hard earned money from you, or attempt to involve you in some type of fraud. The fact of the matter is that it took you a while to get bad credit, and it will take a while to fix it.
I used a credit recovery service. I was very close to declaring bankruptcy, and actually had decided to wait because I couldn’t afford the filing fees, when I saw an ad for this service. It was a heck of a lot less expensive than bankruptcy, and I didn’t have to pay all of the fees up front, so I tried it. What I saw immediately was that I was able to make one payment to the company I began working with, and they called all of my creditors to negotiate lower interest rates , which obviously gave me lower payments. The bad thing about this arrangement was that I didn’t have the option of paying a little to this bill, and a little to that one. I had to agree to one large payment as part of the arrangement, and if I ever made my payment even a day or two late, I risked canceling the the entire arrangement.
Eventually, the process worked. I know that I could have done it myself, but I believe that in general credit card companies and collection agencies are more likely to negotiate with companies than with private individuals. I will admit that I have no real research on that, but I tried several times to negotiate payments that I could afford with different creditors over the years, and I never got the terms that the Credit Recovery Specialists did.
What Else You Can Do?
Credit consolidation is like putting all of your credit ( loans, credit cards, etc.) into one big pot. You get a new loan, from a new lender. The new lender pays off all of your old debts, and gives you a new loan. Now you are likely to have lower payments and a lower interest rate, although the amount that you owe will be the same. You will be able to get out of debt faster, and some credit experts have said that it looks better on your credit report to owe one large amount of money to one lender, as opposed to the same amount of money (in smaller amounts) to numerous lenders.
It is not unusual for the new lender to require that you do not get any new lines of unsecured credit until your debt to them is paid in full. If you are behind on monthly payments, this will probably improve your credit rating. If you were still able to pay your bills on time, you may not see much difference in your credit report, although you do have the obvious benefit of only paying one creditor each month.
Credit consulting is actually a relatively new industry. These professionals offer consultations that are aimed at improving your credit score. In order to accomplish this goal, they look at your credit score and your detailed credit report, and offer suggestions as to how you can improve it.
They will also help you to determine if any errors show up on your credit report, and if so, they can help you contact the credit bureaus to have them removed. You can also ask them to make sure that there are no inquiries that you don’t want that are showing up on your credit. Inquiries do have a small effect on your credit report, so you do not need anybody doing unsolicited inquiries.
If you are considering hiring a credit consulting firm, you might want to keep in mind that you can review your credit reports as well, for free, and you can also contact the corresponding credit bureau to request that the mistakes be removed. There are three major credit agencies, and they could all have different pieces of information about you. Each and Every American has the right to a free credit report from each of those credit agencies every year. If you’d like to get yours, visit here: https://www.annualcreditreport.com/cra/index.jsp.
Additionally, if you are declined for a new line of credit report, you have the right to see the same information that they used to decline you, which is usually going to be your credit report. If you got your credit reports six months ago, and you don’t want to have to pay for new ones, you could consider getting a free peek at your report in that way. And if you get approved for the credit after all, you know that your credit probably is improving, and you can decline the credit if you so wish.
Other Ideas For Improving Your Credit, and What NOT to Get Sucked Into
One idea that was very popular a few years ago involved applying for, and using a new Social Security number. Once that new number was used, a new credit file was created and available for use. There was just one VERY big problem with that little scheme. It was, very, very illegal and still is. So, if you have ever had someone tell you that you should do just do that instead of doing the work that is necessary and legal to fix your credit, I’d strongly recommend against it. Because although I have heard of people saying that having bad credit is like being in jail, I’d rather just have bad credit.
Of course, you can always just pay off all of your debts in one fell swoop. Just send every creditor you have now a payment in full for everything that you owe. That is a great idea in case you inherit a significant sum of money, or win the lottery, but until then, you might just want to stick with the professionals who know what they are doing.