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What Happens to Your Credit Score After Bankruptcy?

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Finances are a confusing subject for most people, yet everyone knows what “Chapter 11” means. In 2016 alone, there were a total of 819,159 bankruptcies filed. That means it’s not a rare occurrence.

Of those 819,159 bankruptcies, only 25,046 were by businesses. Therefore, most bankruptcies are being filed by consumers and not businesses.

Considering these numbers, it’s likely that you know someone who’s been affected by bankruptcy. If not, you’ve probably seen the topic broached more than a few times in entertainment or other media.

Once the paperwork is filed, the next question is, “What happens to a credit score after bankruptcy?” Read this guide to find out more.

Types of Bankruptcy

Before you even file bankruptcy, you need to consider what type of bankruptcy best suits your situation. Not all bankruptcies are treated equally, and not all bankruptcies affect your credit equally.

The two main types of consumer bankruptcies are Chapter 7 and Chapter 13.

Chapter 7

A Chapter 7 bankruptcy is the quicker type of bankruptcy. It will only take about a few months after you file to complete it. Of course, that’s only if you qualify.

Many people prefer Chapter 7 bankruptcy for its speed. However, this type of bankruptcy requires the filer to liquidate all assets. The money from liquidation then goes to the creditors. Finally, at the end of the process, all debts are discharged.

For other people, liquidation is not an attractive option. Sometimes, however, it is necessary. Unfortunately, this type of bankruptcy will remain on your account for ten years.

Chapter 13

Unlike Chapter 7 bankruptcy, Chapter 13 bankruptcy can take years to file. Some people prefer this method, however, because it allows them to retain all their assets.

Instead, the filer will be responsible for settling all their debts with their creditors. Usually, this is done through a payment plan that can last three to five years. At the end of the plan, the remaining debt is discharged.

With this method, the bankruptcy will only remain on your account for seven years if you complete everything properly.

The National Average

There’s no way to really know how bankruptcy will affect your credit score until you file, but looking at national averages can help you get a better picture.

Those with a higher credit score take a harder hit to their credit. On average, someone with an excellent score will drop a couple hundred points. For example, if your score is 780, it may drop to something under 550.

Those with a lower credit score have less to lose. It’s most likely that their credit will drop somewhere between one hundred and two hundred points. If you have a fair credit score, like 680, you may end up with something like 530.

Either way, the bankruptcy filer will end up with a score that is somewhere around or below a 550.

Past Due Accounts

Most people considering bankruptcy already have some bad accounts in their credit file. They may have missed some payments, gone delinquent or default on a loan, or may have even had a foreclosure. If you’re considering filing for bankruptcy, it’s likely because of your past due accounts.

Even if you include these accounts when you file for bankruptcy, they will still appear on your credit report. Once they are discharged, however, they will have zero balance. This means lenders can still see them when you apply for credit.

Despite this, these accounts will no longer be listed as “past due.” This can be very relieving for anyone facing a mountain of debt.

Impacts on Your Score

A collection of derogatory remarks is often more harmful to your credit score than a single episode of bankruptcy.

As previously stated, if you have an excellent credit rating, you will see the largest impact on your credit score. If you have more, you have more to lose. If your credit was already suffering, the impact won’t be as large.

This impact is not uniform. The amount of debt discharged and the ratio of positive to negative accounts on your report will be factored in. Those with more severe debt situations will end up with a lower score than those with less debt.

How Others See Your Score

A huge reason why people resist filing for bankruptcy is fear. They are afraid that life will be just as hard after bankruptcy as it was before.

Thankfully, no one goes through this process alone. Filing for bankruptcy is not uncommon, and creditors know this. That’s why immediately after filing, you’ll find your mailbox flooded with offers.

After filing for bankruptcy, people are ambushed with credit card and car loan offers. Those who file for bankruptcy are often afraid that they’ll never get credit again, but these offers clearly disprove that.

Additionally, it’s not as hard to rent an apartment as it may seem. You may be required to pay a larger deposit, but many landlords are willing to overlook bankruptcy. It’s only attaining a mortgage that becomes a bit more difficult.

Improving Your Score

The best thing about bankruptcy is that it allows people to rebuild their credit score. It’s something you can begin to do as soon as your debts are discharged.

If you make the right decisions, you can get your score back into the 700s in just a few years. Make sure to scrutinize every financial decision you make during this crucial time.

One of the best ways to do this is with a secured credit card. These credit lines are much easier to manage and control. The most important thing is to make timely and consistent payments.

After a few years of good credit behavior, it will be as if the bankruptcy never happened.

Your Credit Score After Bankruptcy

Bankruptcy may seem like a life-ending event, but it doesn’t have to be. As you can see, hundreds of thousands of Americans go through the same predicament every year. Knowing these steps, you know what to expect from your credit score after bankruptcy.

At Credit Repair Answers, we can point you in the right direction to improve your credit after bankruptcy. Just make sure to check out our blog posts here.

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Fico Score vs Credit Score: What’s the Difference?

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If you are thinking about opening a line of credit, you’re probably doing research about your credit score. But with so much information out there, it can be hard to know where to look.

Are you supposed to look at your FICO score or your credit score? Which one matters the most?

We wrote this article to help walk you through the differences between a FICO score vs credit score. Read on to learn more.

FICO Score vs Credit Score

FICO scores are used most commonly be lenders. However, there are other scores out there that can help you figure out where your credit is.

Other than FICO, there are a few other companies that use scoring methods to determine credit scores. One of the common credit scoring models, aside from FICO, is the VantageScore model.

FICO and VantageScore look at many of the same factors, but they differ just a little. And your credit scores will look different depending on which scoring model the company used and which credit bureau they got your information from.

A Bit About FICO Scores

In 1989, lenders began using FICO credit scores and since then the company changed its scoring methods many times. And, accord to FICO, today over 90% of lenders use FICO scores when deciding on whether or not a consumer is a safe choice.

FICO offers industry-specific scoring methods in addition to the base versions, like those for car loans, credit cards, and mortgages. This means that the score your mortgage company has and the score your car company has for you are going to be different.

FICO scores range from 300 to 850, and it takes the following factors into consideration when giving you your final score:

  • Payment history: 35%
  • Amount owed: 30%
  • Length of history: 15%
  • New credit: 10%
  • Credit mix: 10%

Different scores mean different things. FICO generally defines different credit ratings like this:

  • 800+: exceptional
  • 740-799: very good
  • 670-738: good
  • 580-669: fair
  • 579 or lower: poor

Industry-specific scores have a range from 250-900 and they’re tailored depending on the line of credit you intend to open.

Each one of the different FICO versions uses unique formulas that cater to the different kinds of creditors as we mentioned.

That means that if you had a car repossessed or missed a payment on your car loan, your FICO Auto Score will weigh those factors more heavily than your base score.

You can get a hold of your FICO score through different card issuers or a number of other tools as well.

Now Onto VantageScore

In 2006, Equifax, Experian, and TransUnion started a joint venture in order to provide consumers with a more diverse and fast-acting credit score.

While FICO requires you to have an account open for six or more months, and one account reporting to the bureaus within the last six months to get your score, VantageScore wants to give you your credit score with just one month of history.

VantageScore claims that over 2,200 institutions use their system when checking credit scores, and they’re based on the following factors:

  • Payment history: incredibly influential
  • Age and credit type: highly influential
  • Credit limit used: highly influential
  • Rational of debt: moderately influential
  • Recent behavior: less influential
  • Available credit: less influential

Those factors are roughly the same as FICO scores, right?

The ranges of credit score quality are a bit different, though.

  • 750-850: excellent
  • 700-749: good
  • 640-699: fair
  • 300-639: needs work

VantageScore runs from 300-850 and they are also constantly updating their scoring practices.

Proprietary Scoring Models

Just like FICO and VantageScore, the credit bureaus also have their own proprietary credit scores. But because lenders don’t use these when making decisions about credit, they’re called “educational scores.”

Why Are They So Different?

FICO and VantageScore are just two scores on the tip of the iceberg. There are dozens of other credit scores out there.

While all of these companies score your credit in a different way, they all place their focus on how responsible you are with the money that you borrow.

There are a couple of reasons why your scores are different.

Some scores are going to be from different dates. Your credit score is constantly changing, so make sure that you checked all of your scores on the same date to get the most accurate comparison.

Also, your credit scores are calculated with different scoring systems. These are proprietary, so we don’t know what they are exactly, but they are all just a little bit different.

Scores are also calculated with different reports. If your lender only reports to one of the three bureaus, some credit agencies could be missing some information.

You have to check your credit report for errors over time. It is unbelievably common for people to get their credit report and find that it is filled with errors.

So, Which Is Better?

Truthfully, no one credit score is better or worse than the other. They are all different, and different lenders use different scores.

However, most of the leading United States lenders use FICO credit scores, so they might influence your financial life a little more than the others.

The Final Score

In the FICO score vs credit score debate, it’s important to remember that they’re all different but equally important in some way.

It’s hard to keep all of your different credit scores in mind because there’s just so many out there and they’re all changing constantly. But, as long as you focus on repaying your debts and keeping a healthy line of credit open, your scores should all remain healthy.

Just remember to check them yearly to ensure that you haven’t missed something or that the reports aren’t incorrect.

For more information about improving your credit score, visit us today!

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5 Reasons You May Have a Bad Credit Score

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Have you been told by the bank that you have a bad credit score?

Your credit score will affect how much money you can take out for car loans, home mortgages, and personal loans.

Credit scores range from 300 to 850, and a score of 700 or above is generally regarded as a good credit score. Many people have credit scores between 500 and 650 and wonder what they can do to improve that number.

If this sounds like you, you’ve come to the right place. In this post, we’ll take you through a few reasons that you might have a low credit score–and how to improve it.

1. Payment History

Are you paying all your bills on time?

Late payments and skipped payments have a negative effect on your credit score. Payment history is significant–it makes up about 35% of your credit score.

If you are trying to repair broken credit, one of the best things that you can do is sign up for automatic bill pay.

Also, review your credit report and see if you can pay off accounts that are in default. Defaults weigh heavily against your credit score and could remain on your record for up to six years.

2. Amount Owed

You might be surprised to learn that the amount of money you owe can count against you on your credit score.

If you have several credit cards that are maxed out, it can seem like you’re having financial problems. You should always keep your debt at about half your overall credit limit. The amount you owe makes up 30% of your entire credit score.

On the other hand, not having any credit history can count against you as well. If you’re just starting out, it’s probably a good idea to use a credit-building card to establish the fact that you can pay on time and in full.

3. Credit History

Lenders want to lend money to customers who have been at their address for at least several years.

If you want to improve your credit, you should register to vote at your home address. It may sound funny, but it shows that you intend to remain at your address for a long time.

Credit history makes up 15% of your credit score and takes into account the average age of your accounts. The longer you maintain accounts like your electric, gas, cable, and phone, the better it looks on your report.

If you have a bad credit score, it might be due to the age of your accounts. Experts report that people with credit scores of 800 or more have accounts that are at least 25 years old.

4. New Credit and Credit Mix

Every time you apply for a credit card, it affects your credit. Even if you do not get approved for that card, the application still counts as a “hard search” on your credit.

If you’re wondering, “Why is my credit score dropping?” it could be that you’ve got too many hard searches on your account.

Instead of applying for a wide variety of credit, try to apply only to credit cards that you know you’re qualified for. New credit applications only make up 10% of your credit score, but lenders want to see that you’re making good use of your existing credit.

Lenders also want to see that you are responsible for several different types of accounts. Keeping a low balance on your credit cards and paying your home mortgage and car loans on time will affect another 10% of your credit score.

5. Mistakes

When you’re checking out your credit report and starting to repair your credit, make sure you check all your accounts for errors.

Identity theft affects more than 15 million people each year. If you notice a misspelled name or incorrect address, it’s important to raise a dispute with the credit reporting agency.

Also, if you have used more than one name in the past decade, it’s important to make sure that your credit report is free of errors.

To improve a bad credit score, make sure that your longstanding accounts are listed on your credit report. It may take a little while to remove any mistakes, but the benefits to your credit report are worth the effort.

How Can I Repair a Bad Credit Score?

The first step toward repairing low credit scores is to thoroughly assess your report. You might want to contact a professional credit repair team in order to get you started.

Pay off any debt that you can, especially on accounts that have defaulted. Often, companies will settle for a lower payment just to have the account cleared from their books.

Make sure that your credit report has the correct address, name, and social security number. Take the time to correct any mistakes that you find.

Don’t apply for too many credit cards or loans all at once, and pay down your existing credit cards. You shouldn’t be using more than about half of your available credit.

If you’re in the market for a home or auto loan, you may want to take it out at a higher interest rate. If you can, pay more than the minimum amount each month and see if you can refinance after a few years.

Should I Contact a Credit Repair Website?

If you’re serious about repairing your credit, finding a good credit repair website is a good step to take.

The average American household owes more than $15,000 in credit card debt. Once you add in car loans and home mortgages, you could be carrying hundreds of thousands of dollars in debt.

The higher your credit score, the better the rate that you’ll get on new loans. If you invest some time into repairing your bad credit score before you go in for a loan, you could save thousands in interest.

Take the time and see how much you can improve your credit in six months. Make sure that you report any inaccuracies and that you’re paying off as many accounts as possible.

We have helped thousands of people with their credit repair. Drop us a line with any questions you have!

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5 Key Credit Repair Tips You Should Know

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Bad credit is a more common problem than you might expect. Over 30% of Americans suffer from bad credit.

Another thing you might not realize is that bad credit makes your daily life harder and more expensive. For example, bad credit can lower your odds of getting a good apartment. It also drives up the costs of common bills such as utility services and car insurance.

Fortunately, bad credit isn’t a life sentence. You can do key credit repair activities that will improve your credit score over time.

Keep reading and we’ll cover five key credit repair tips.

1. Get Your Credit Report

Before you take any actions, you must know what needs work and what’s okay. That means getting copies of your credit reports.

You can get free copies of your credit report by visiting annualcreditreport.com. Why do this? Because your credit reports contain a ton of important information about your past and current financial activities.

Some things you might see on a credit report include:

  • Active credit cards
  • Payment history
  • Loans
  • Old addresses
  • Bankruptcy
  • Current debt
  • Legal judgments

You should take the time and read through all three reports. Look for things that lower your credit score like past due accounts, charged-off accounts, and lots of hard pulls.

When you apply for a line of credit, like a loan or credit card, the bank does a credit inquiry or hard pull. These inquiries stay on your credit report for a couple years. While an occasional hard inquiry doesn’t hurt you, lots of them make you look like a risk.

Also, keep an eye out for mistakes in the reports. Highlight those mistakes so you can find them easily. It’ll help with our next tip.

2. Dispute Errors on Your Report

Let’s say your credit report shows that you owe a collection agency some money. The only problem is that you already paid off that bill. It’s annoying, but it does happen sometimes.

All you really want is for the report to say that you paid the debt. You can go a couple of different ways to make that happen.

You can ask the collection agency, store, or credit card to update the credit bureaus. As a general rule, you should make the request by mail.

This lets you keep your own copies of anything you send. It also lets you use certified mail, which leaves a paper trail. Most organizations will simply update the credit bureau when they get your correspondence.

If they don’t respond and don’t inform the credit bureau, you must dispute the error with the credit bureaus. Again, send the dispute by mail. The credit bureaus must investigate within a certain period of time, typically a month to six weeks.

If the investigation goes your way, the credit bureaus will update your reports with the correct info.

3. Organize Your Debt

Fixing errors will help your credit, but you must also get problem debts under control.

Don’t assume your biggest debts pose the biggest problems. The longer a debt goes unpaid, the more it hurts your credit.

So, let’s say your utility bill is $400 and one month late. Let’s also say your cable bill is $120 and three months late. That late cable bill might damage your credit more, even though it’s a smaller bill.

Organize your debts in order of lateness. Put things in collection at the top because those are your oldest bills. Follow that with your late or overdue bills. Then, list debts with on-time payments.

Organizing your debts this way can help you decide which debts need attention first.

4. Reduce Your Total Credit Card Debt

Reducing your total credit card debt is a key credit repair tactic. The amount of credit card debt you carry determines your credit utilization ratio.

Your credit utilization ratio is, essentially, how much of your credit you use at any given time. The ratio goes up the closer you get to your credit limits. A higher ratio hurts your credit more.

Remember, it’s not only about how much credit card debt you carry.

Let’s say you and your buddy Tom both carry $1500 in credit card debt. Your total credit limit is $2000 and Tom’s total credit limit is $4500. Your credit utilization ratio is 75%. Tom’s ratio is around 33%.

Your ratio hurts you because it’s high. Tom’s ratio probably doesn’t hurt him much, if at all, because it’s relatively low.

Say you cut your total credit card debt to $700. Your ratio is now around 35% and will automatically improve your credit.

5. Deal with Past Due Bills

First things first–you should always pay survival bills first. Putting food, shelter, and utilities at risk is never a good idea. You need those things.

Eventually, you want all your old debt paid off. When making your first choices, though, you should probably start with past due bills. On-time payments play a big role in your credit score.

Getting bills current and keeping them current is a slow but certain path to better credit. Paying your past due bills also prevents them from turning into collection accounts.

After you get your current bills up to date, turn your attention to those collection accounts. They stay on your credit report for years, but paying them off does help your overall credit.

You also face a choice with creditors between paying in full or paying a settlement. A settlement will close the account, but it doesn’t help your credit as much. On the other hand, a settled account helps your score more than an open collection.

Parting Thoughts on Key Credit Repair Tips

Bad credit can make your life difficult in obvious and subtle ways. Improving your credit can only help you in the long run.

There are several key credit repair actions you should take. Get your credit reports and dispute any errors. Organize your debts so you know what you face. Deal with your past due bills and reduce your credit card debt.

Each of these actions brings you one step closer to healthy credit.

Credit Repair Answers offers information and advice about fixing your credit. For questions or comments, please contact us.

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What to Look for in a Great Credit Repair Company

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Having a problem with your credit report can deal a blow to your finances. However, what if this particular, troublesome item in your credit report was a mistake?

Did you know that 1 in 5 Americans has an error on their credit report? It means that there are chances that you did not make that charge and you want that fixed. You could use some help from a repair company. The question is which company to go for?

The following details we have will help you understand how credit repair works and what to look for in a great credit repair company, should you choose to get their services.

What Is Credit Repair?

At first glance, Credit Repair would technically imply actions that that would help fix your bad credit in various ways possible. What the term implies when used is that it refers to disputing errors on credit reports.

Normally, this particular action is possible to do for free with each of the credit bureaus. Though the act itself leads to a formal dispute with the bureau via online means or by mail. With the necessary documentation backing up the detailed explanation about the formal report on the dispute, the credit bureau will take action and have that fixed.

The problem is most people may not have time or knowledge to take this on. This is where a repair company comes into the scene to help in getting these credit errors disputed.

How Does a Credit Repair Company Work?

How does this work? A credit repair agency has to get the information from all three credit bureaus. By setting them side by side, they will have these reports cross-referenced while being on a lookout for errors that may appear on one but not on the other two reports.

Once they find the errors, you’ll provide the repair company the supporting documentation that you may have or need. In the instance that you don’t have any supporting documentation, the repair company can aid you in securing them.

Upon receiving the dispute and supporting information, the bureaus and data furnishers will work together with the repair company to determine if they should remove the item in question.

After which, the credit agency will respond and resolve the dispute within 30 days (although there are instances that this stretches to 45 days).

What to Look for in Great Credit Repair Companies?

Now that we know how credit repair companies work, do note that there are repair companies that may scam you. To aid you in this, we have taken note of what you should keep an eye on.

Be Cautious!

The FTC mentioned the following things to keep an eye on to test the credibility of companies that fix credit reports. Be wary when you notice the following.

One is when the agency asks you to pay their credit repair service before they provide any of their services. The Credit Repair Organizations Act states that they cannot require you to pay until they complete the services they offered and promised.

If the company doesn’t tell you your rights or what you can do your free, that should be a red flag.

If the company doesn’t tell you to contact EquiFax, TransUnion, or Exprian directly, that is also a sign to be cautious.

Another to keep an eye on is when they tell you that they can get rid of wrong credit information in a report, even if the information is true and current. No one can remove accurate negative credit information on your credit report. You can, however, have it disputed and have it done in the proper channels.

Take a step back if the repair company suggests that you apply for another EIN (employer identification number) to make a “new” credit identity rather than using your Social Security Number. The result is by committing a federal crime by lying on a loan or credit application or misrepresenting your Social Security Number.

In the end, these situations can drive you into a scam where you have the same error on your credit report but at a loss with the money spent, or worse.

Look for These Factors Instead

To answer the question of what you should look for in a repair company, remember that they should help you understand and make the process easier. In this case, keep an eye out for these.

First and foremost, they know your rights and they want you to understand them. A good repair company rubs disputes against the laws provided to help you. Reputable credit repair companies explain your consumer rights to you and answer any questions about them.

They will also take note of every possible detail to understand why you want to dispute an item on your report.

With all those details noted, they will line the report up with the three standards for credit reports as mentioned by Lexington Law’s Consumer Education Specialist Randy Padawer: accuracy, fairness, and full substantiation. This way, they can see if the data furnishers and credit bureaus upheld and adhered to those standards.

Every dependable credit repair agency understands what they are capable of doing and what their limitations are. Thus, they explain to you what they can do to represent you to the credit bureaus.

Getting a repair company would have varying prices, depending on the contract and the rates agreed upon. However, remember that whatever a credit repair agency can do, you can also do it for Free.

A Quick Takeaway

To sum that up, here’s what you have to be aware of when choosing a repair company that is refutable:

  • Can’t make false claims about their service
  • Will charge you after completion of service
  • Will help you understand your consumer rights

Now, it is also noted that you can also do the dispute process yourself, free of charge. The best times to contract the services of a credit repair agency are for legitimate errors, unverifiable errors, and if your lenders are willing to work with credit repair agencies.

Take Control of Your Finances!

Credit errors are among the problems that people face with their finances. By checking with the three credit bureaus and finding the errors that you can dispute, you can assure that you will be able to save money easily. This means that your credit score will also improve, helping you with loans and getting lower interest rates.

Did you find this article helpful? Looking for a reputable credit repair company that won’t scam you? We also have more tips and advice on credit repair and more, so feel free to get in touch with us.

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Everything You Need to Know About Student Loans and Credit Repair

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With over 1 trillion dollars of debt shared between millions of Americans, student loan debt is among the most common type of borrowed money you’ll find in the country.

This isn’t particularly surprising. After all, many student loans are taken on by people who just turned 18 on the promise of it being positive debt that will pay for itself in the future.

That may end up being true for some. But what if you have difficulty paying back that debt?

Will it affect your credit? Your opportunities?

And what about if you make payments on time? How would that affect your credit?

Our team at Credit Repair Answers has put together this article to educate consumers more on student debt, credit, and student loans credit score implications.

What are Student Loans?

Just to nail some definitions down, let’s quickly go over student loans. Student loans are money students would borrow either from the government or a private lender to attend a higher learning institution.

Student loans can be acquired for any degree type including an Associates, Bachelors, Masters, Doctorate, and Juris Doctorate.

Student loans can also be acquired for trade school certifications for those interested in jobs like an electrician or plumber.

How Does Paying Back a Student Loan Work?

Once approved for a student loan amount through your lending institution, paying back can work in a number of ways depending on the loan type. For example, some loans offered through the government are deferred interest loans.

With these loans, interest doesn’t start being charged to the principal loan value until after you graduate and have to start making payments. These are typically offered to students pursuing their first degree who represent a certain level of financial need.

Another loan type offered by the government as well as private lending institutions are standard loans. These loans begin to charge interest on the borrowed amount the moment the money is lent.

Some will still let you defer payments until after you graduate but that does not stop the interest from accruing. Depending on the amount borrowed and how long you’re in school, the amount of extra money you’ll need to pay as interest compounds on your loan can be immense.

A Little Bit About Credit

Credit is virtual commodity lenders use to judge how likely you are to act responsibly with money in the future. Credit is integral to your getting approved for quality future loan products such as a car loan, mortgage, and more.

Credit may also be a factor in deducing your eligibility for things like a particular apartment.

Typically, credit scores fluctuate based on a variety of factors. The most important two being the duration of your credit history (how long you’ve been actively borrowing money in some way, shape, or form) and your history with paying back your debt in a timely fashion.

Student Loans Credit Score Implications: How Do Student Loans Affect Your Credit?

Student loans are considered installment loans which get treated a little differently by FICA (the organization responsible for coming up with your primary credit score). This is in contrast to the way credit cards get treated, as they’re categorized as revolving debt.

With installment loans, you can carry a high loan amount and not get penalized for borrowing large amounts in the same way you would be if say, you borrowed a massive amount from your credit card.

Will Student Loans Hurt Your Credit?

Student loans are only likely to harm your credit if you’re not making payments on time and in full. FICA says that borrower’s on-time payment history accounts for over 1/3 of their credit score.

That means something as small as a single missed payment can cause big-time problems with your credit.

On a side note, given the amount of money borrowed on your student loan, having one could prevent you from getting other loan products. Some lenders look at your debt to income ratio to determine if they can lend you more. With $50,000 or so in student debt on your books, getting more money might be hard to get approved.

Will Student Loans Help Your Credit?

Carrying loans responsibly can significantly improve your credit. For starters, the longer you have a loan, the longer your credit history. The longer your credit history, the more your credit score goes up.

Also, every payment you make on time for your student loans gives lenders more confidence that you’re responsible with your money. So the more you pay back, the more lenders and your credit score will love you.

How to Repair Your Credit

If your credit has suffered as a result of not being able to handle your student loans, there are ways to bounce back.

For starters, if your monthly payment is too high, contact your lender and see if they will restructure your debt. It’s possible that they can make your monthly payments lower and extend the life of the loan.

Also, know that as you do catch up with payments and start paying on time, your credit will start trending in a positive direction. Credit is a very fluid rating so the second you start proving you can pay back what you borrowed is when you’ll start to notice your credit recovering.

Wrapping Up Student Loans and Credit

Student loans credit score implications can be scary for those who don’t know much about finances. Taking the time to educate yourself by reading articles like this will help you better understand how credit ratings and student loans relate to one another and will set you up for success in your financial future!

If you’re interested in learning more about all things credit, dig deeper into Credit Repair Answers. We offer a slew of free financial advice which works to answer all of the money questions plaguing your life!

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How the Credit Repair Process Can Help You Purchase a Home

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5.51 million. That’s the total number of existing homes sold in 2017.

Newly built home sales, on the other hand, totaled to 612,000.

And did you know that more than a third of all buyers were first-timers in the residential real estate market?

This goes to show that despite the rising prices of houses all over the United States, people still want to purchase a home. It’s part of the American dream after all.

But what if you have bad credit?

Worry not, as you don’t have to give up hope yet. With the right credit repair strategies, you can still fulfill that dream of yours to become a homeowner.

And we’re here to tell you just how you can repair credit to buy a home. So, make sure you read this from start to finish.

Why You Need to Repair Your Credit in the First Place

Before we get into the nitty-gritty of fixing credit to buy a home, you should start with understanding consumer credit, credit score, and why there’s a need to repair it in the first place.

At its core, consumer credit refers to a debt someone takes on whenever he/she buys a good or service. You may have heard of the term “consumer debt.” This is the same thing.

It includes anything you purchase using your credit card, a line of credit, or a loan. That credit card you use for the majority of your shopping activities? That’s one type of consumer credit and is the most common form.

Your credit score, on the other hand, basically measures your creditworthiness. In other words, it’s how lenders perceive you and determine whether to let you “borrow” money from them. It’s a three-digit number that indicates how financially trustworthy you are.

Like with academic scores, the higher your credit score, the better. In most cases, good credit scores mean that consumers pay their loans on time. There are, however, many other factors that influence it, including the credit history length, types of credit, and total debt owed.

So, what happens that lead to people having bad or poor credit scores?

One of the most common reasons is for failing to make loan payments on or before their due dates. Another is for having only one type of credit. And there’s also the possibility of errors on credit reports.

It’s dangerous to think that the last won’t happen to you. As many as one in every five consumers may have an error on their credit report.

Remember: Your credit score can have a drastic impact on your life. After all, it’s a primary consideration lenders look at when deciding whether to qualify you for a loan. That bad credit you have may be the only thing getting in your way of finally becoming a homeowner.

Starting the Credit Repair Process

There are a number of ways on how to fix your credit score. Note, however, that repairing credit takes time and diligence. It’s totally doable, but it’s not an overnight fix.

First things first: Know what your credit score is. Just to give you an idea, the nationwide average last year reached an impressive 700. This signals a rise in consumers’ credit scores, although this still greatly varies based on age.

Also, some good news for you: Last year, over 50% of consumers in the country scored above 700. Only 20 more points and the score will already classify as excellent. This said, you should know that what seems to be an increase of only a few points can already make a difference.

Ensuring Your Credit Report is Spotless

To know exactly where your credit score stands, it’s best you get a copy of your credit report. Aside from letting you know what exactly your score is, this also lets you spot any possible errors in the report.

Remember: You won’t know that you’re part of the 20% of the consumer population potentially having errors on their reports unless you get an official report copy. So, once you have this, inspect it from top to bottom. And in the event you discover any mistakes, report it right away.

Every Payment Counts

The last thing you want is to take out a mortgage to fund your home purchase but have serious difficulties paying it. Pushing through a mortgage application despite your bad credit almost always mean higher mortgage rates. And the higher this is, the greater your monthly mortgage payments are.

In other words, you’d have these higher mortgage payments on top of your outstanding loans. This can be quite difficult to make good on, which then increases your risk of missing payment due dates. And whenever you fail to pay on time, your credit score once again takes a hit.

And the vicious cycle won’t end.

So, rather than taking on an even bigger debt, it’s best you pay off your current ones first. Every payment, no matter how small (minimum payment due), helps you lessen your debts. This doesn’t just reduce what you have to pay for every month; it also helps you improve your credit score.

From here, you have better chances of securing funding for your home purchase. And of course, greater odds of getting more reasonable mortgage rates.

Settle Payment Dues As Soon As Possible

Even the most prudent and responsible consumer can still forget about due dates. The thing about missing payments is that they automatically raise red flags for lenders. They also show up on credit reports, which means that lenders you’d want to work with in the future will see them.

One of the best strategies to never let a payment due go unpaid again before its due date is to set up reminders. Or if possible, set up payment schedules. This way, even if you forget about them in the hustle and bustle of your hectic work schedule, you’ll receive reminders or have them paid automatically.

Start Repairing Your Credit Now

As early as now, you’d want to begin the credit repair process. Again, because it takes time to fix a credit score. And of course, because you want to finally make that transition from being a renter to a homeowner as soon as possible.

Want more help with your credit score? Head to our website now for more tips and tricks like this!

credit recovery

Guide: How to Achieve Credit Recovery After Divorce

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Are you worried about credit recovery after divorce?

When you go through a divorce, finances are often the last thing on your mind — at least at first. But soon, the toll the process can take on your financial life becomes apparent. Divorce and credit is no joke, and you may find yourself with a lot of rebuilding to do.

It might seem impossible right now, but credit recovery after divorce can be done. In this guide, we’ll show you exactly what you need to do to protect your financial future. Keep reading to learn more!

Protecting Your Credit Through Divorce

If you can, take steps as early as possible in the process to protect any good credit you have.

When you get a divorce decree, you’re not off the hook for joint debts that were taken on during the marriage. Instead, you’ll still be responsible for payments on any joint account. This includes credit cards, mortgages, and car loans.

Even if your former spouse is ordered by a judge to pay a bill, it’s still your responsibility to make sure it gets paid, because your credit is at stake. If the responsible ex-spouse fails to pay, both of your credit becomes damaged.

The lender (such as a bank or credit card company) is legally allowed to make a negative report to a credit reporting agency if an ex-spouse makes a late payment. If they don’t make any payment, you’ll be responsible for paying, or facing the consequences.

How can you protect yourself and your finances? Here are a few smart steps to take.

1. Close Any Joint Accounts

As soon as you can, work to close or at least separate your joint accounts. If you can, talk to your former spouse so you can work through this process together. It’s much harder if you try to do it alone.

Look at all the debts, and make a decision as to who will be responsible for each one at the end of the day. Then, call the creditor in charge of each account to find out how it can be transferred to the person who will be responsible for payments.

Keep in mind that even if you’re no longer on the account, you could still be held legally responsible for making sure payments get made. However, if the creditor agrees that you’re released from responsibility, you’re no longer legally attached to those debts.

2. Figure Out Properties

If you bought a home together, you could have to refinance it in order to remove one name from the mortgage. Of course, another option is to sell the house and split the profits.

3. Continue Making Payments

While your accounts are still together, it’s crucial not to miss any payments. Even while you’re in the throes of divorce negotiation, make sure you’re making the minimum payments at the very least. If you miss just one payment, it will continue to mar your credit profile for as long as seven years. If you want to build credit in your name, it will become very difficult with that mark against you.

Some people might advise you to run up debt to get back at your spouse. However, this harms both of you, so it’s not worth it. The marriage may be ending, but you’ll still have to live with your credit score.

Divorce Credit Recovery

You’ll need to start establishing credit on your own once your finances are separated from your ex-spouses. Let’s take a look at the steps you should take.

1. Start Small

Take out a credit card with a low limit in your own name. A trusted bank or department store can be a good source for this card.

Make sure to pay your bills on time, no matter what, to keep your credit score great (or work your way up to excellent no matter what you’re at). Pay off your full credit balance each month – just use it for small purchases, so you don’t have to pay interest.

In six months, apply for a second card and keep making the same consistent, small payments. Avoid running up debt as much as possible. You’ll quickly see your credit score rise if you stick to this strategy.

2. Get a Cosigner

If you can’t get approved on your own, find a family member or friend who’s willing to cosign. Keep in mind that your actions with that credit card or loan will show up on your cosigner’s credit profile, so just use it to build your credit carefully. After a while, try to apply on your own again.

3. Try a Secured Card

A secured card uses an existing savings account as security for the line of credit. This can allow people who wouldn’t otherwise be approved to start building credit. However, keep in mind that these cards sometimes have extra fees.

Get Your Finances On Track

In addition to building credit, you need to get your whole financial life in order. Do you have debt after divorce or other financial concerns? Here’s how to get everything under control.

1. Take Inventory

Start by taking a thorough inventory of your financial life.

Create a spreadsheet or use a binder to track your expenses, income, liabilities, and assets. Use one sheet for each of these.

On each sheet, note information about accounts, amounts, and institutions, as well as whose name is on the account. Now, you have a one-stop information shop for everyone going on with your finances. You can update or change it whenever you need.

2. Start a Budget

If you haven’t been keeping a budget, it’s a good time to get started.

Use your inventory to figure out where your income and expenses currently lie. Avoid racking up debt if you can, even though divorce can be costly. Most importantly, start tracking your average spending, so you can find places to cut back or start looking for new income sources you’ll need.

Need More Credit Repair Advice?

Credit recovery after divorce takes time, effort, and patience. However, you can do it if you follow this guide – and in the end, your financial life might be even healthier than it was before.

This beginner’s guide will get you off to a great start. But if you want to know more about your credit repair options, check out our advice here.

credit repair and how fare to go

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credit repair is often different from one person to another but still there are common methods of getting it done. For example; on your credit report there are more than likely errors that need to be reported to the credit bureaus, these can hugely affect your credit and the powers that be want to know of the error so that you have a credit report that better represents you. But that then brings me to my next credit repair point, its in your best interest to report anything that looks negative as an error… there are so many moving parts on a persons credit report that little edits like this could mean the difference in getting that new car you need to get to work with. See most people in todays economy dont want to “not” pay their bills on time or at all, its people are out of work or cant get to the work they can get.

when i went through my little unemployment experience, it nearly destroyed me and i know it destroyed my credit… but more importantly i knew i owed these people money, i just had no options, i sold anything i had of value… eating cup-o-noodles… the whole 9 yards, i really wanted to pay these people and it really took me digging deep and getting two jobs to get out of it. Take care of your credit, any way you can, you never know when you’ll need it again. Trust me credit repair.

Credit Repair Intelligence System

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The well know software Credit Repair Intelligence System is undergoing an upgrade from its creator Zodiac Publishing. from now on all issues of this software will come with a “debt free bible course” to help people keep their credit high after the software does its job.

for those of you that dont know the Credit repair intelligence system includes a 250+ page printed manual, an online members only forum to get real time help, and a “Random Dispute Generator” software for creating unique credit dispute letters.

Zodiac Publishing Corporation has published credit repair courses and materials for over 15 years. Owner Jay Peters and his staff have spent much of that time researching, developing, and testing credit repair methodologies to help consumers navigate the often confusing credit system. The company has taught thousands of people how to fix their credit and maintains an “A” rating with the Northern Nevada Better Business Bureau.