The Essential Credit Repair Handbook

A Quick and Handy Guide for Anyone Who Wants to Get and Stay Out of Debt

Deborah McNaughton

• Publisher: Career Press
• Year: 2011
• ISBN:
  9781601636669
• Topic: Crescita personale
• Subtopic: Finanza a livello personale

The majority of debt-ridden consumers are in desperate need of financial budgeting and credit repair. The Essential Credit Repair Handbook contains all the information you need to walk you through the step-by-step process of repairing your credit and leaving debt behind!The book will teach you how to:

• Dispute late payments, charge-offs, and collection accounts
  
• Rebuild your life after a bankruptcy, foreclosure, or short sale
  
• Re-establish your credit in spite of a bad credit report
  
• Set new financial goals
  
• Understand the latest credit card laws and regulations The Essential Credit Repair Handbook is an easy-to-use guide for people who are getting over bankruptcy, foreclosure, short sale, or any financial hardship affecting their credit and are looking to rebuild or re-establish their credit.

SECTION I:

BUILDING YOUR PLATFORM

1

SETTING NEW FINANCIAL GOALS

Times have changed from the good old days when you felt as though you had set good, solid financial goals. You may be one of the survivors of a bad economy that left you with a drop in income and your world turned upside down. Your financial situation may be something that was totally out of your control and had nothing to do with the economy. The financial goals you had previously set were either diminished or set on the back burner.

The good news is that you are back and ready to undo any damage from your past and start a new beginning. It's not easy trying to regroup and get back on top, but you can do it. Stepping back and reassessing your financial goals is a must.

John and Cindy's Story

John and Cindy had been married for more than 10 years. They both had good, stable jobs. Life seemed to be going well. John and Cindy owned a home, had two luxury cars, purchased real estate they used as rentals when the market was booming, and had a nice savings account set aside for emergencies. Never in their wildest dreams did they ever think their life would be turned upside down.

Late one spring, John was laid off from his job. He worked in sales and the office he was working for was downsizing. Although Cindy still had her job, her salary wasn't enough to pay all their bills.

It wasn't long before their savings dwindled down to almost nothing. They had maxed out their credit cards and weren't able to continue making their credit card payments. Soon their mortgage payments started to fall behind, and they eventually lost their home in foreclosure.

After nine months of unemployment, John found another job. It didn't pay as well as his previous one, but he was satisfied being back to work. He and Cindy basically had to start from the bottom to repair their financial situation.

John and Cindy's fear was that they could never get back on track. The lofty goals they had made years ago to have a luxurious life were now substituted with goals of getting out of debt and being able to live within their means. Their priorities changed, and now they had an opportunity to rebuild their financial situation.

Their short-range goals were to get out of debt, live within their budget, and rebuild and repair their credit report. It would take time, but they could do it, and then aim for their long-range goal, which would be to purchase another home.

Goal-setting has changed for most people. Your priorities have changed and although those big goals and dreams are still on your list, they are repositioned to another level in the future.

Many of us have written down our goals, such as buying a home, saving for retirement, paying off student loans, taking vacations, starting a business, and so forth. These are great goals, but are long-range. Most of the time, these are things people will write down as their financial goals. But times have changed. The short-range goals need to be addressed in order to reach the long-range goals.

Rebuilding your credit portfolio includes strengthening your credit report, budgeting, living within your means, and controlling your spending.

Short-Range Goals

Setting goals for your credit and financial needs is just as important as setting goals for your life. As you accomplish each goal, you will gain confidence in setting new ones.

You need to determine how your short-range goals will help you position yourself for the long-term goals. Let's review the short-range goals that will be your building blocks for a great financial future.

• A solid budget. Everyone hates a budget, but if you want to be successful in reaching your financial goals, you must have a workable budget. You need to tighten up your budget so you can save money for your future.
• Getting out of debt. For some people, this is a New Year's resolution. To be successful, you need to eliminate your debt so you can use that money for your long-range goals.
• Paying your bills on time. Sounds easy, but if you get sloppy at paying your bills and they fall behind, your credit report will be affected and your credit score will decrease.
• Saving money. Putting money into a savings account will help you achieve your goals.
• Having a good credit report. It is important that you have a good credit report to achieve some of your long-range goals. Your FICO score is derived from what your credit report says.
• High FICO scores. High credit scores are a must. Qualifying for most large purchases, such as a home or automobile, will be based on the credit score on your credit report. This should be a high priority on your list.

If you are able to achieve these short-range goals, you will be in a better position to make major purchases. After reviewing your income, net worth, what you can afford with your debt-to-income ratios, and your credit scores, you can see whether these purchases will fit into your budget. Once you have accomplished this, you can move toward your long-range goals.

Long-Range Goals

Most long-range goals constitute some type of investment, luxury item, or type of credit that you want to acquire. As you review these different goals, most of them can only happen once you have accomplished your short-range goals. It is important that you accomplish the short-range goals to further your financial gain.

Review the following long-range goals that most people have, and the basics of accomplishing them.

• Home. A home is probably the largest investment an individual will ever make in his or her entire life. In order to qualify for a home mortgage or equity line of credit, you must be credit worthy. Without a good credit history and high credit scores, you will not be able to qualify for a home loan. If your credit score is too low, you may not qualify for the best interest rate and terms, or you may be disqualified altogether. Having a high credit score is a must in qualifying for a mortgage approval and low interest rates. The less debt you owe, the higher your credit score will be.
• Automobile, boat, or motor vehicle. Most people need an automobile or some type of vehicle for transportation. In order to qualify for a motor vehicle, the lender or bank is looking at your FICO credit score. The interest rate and terms the lender will offer you will be based on your credit report score. The higher the credit score, the lower the interest rate will be.
  Occasionally, finance companies will let you establish credit if you've never had credit, or if you've had negative credit. For this type of scenario, the cost of the loan and interest rates are substantially higher. An automobile purchase is probably the second-largest investment you will make. If you cannot pay cash for the automobile, try to pay the loan off as quickly as possible.
• Business. Your goal may be to start or purchase your own business. Establishing a line of credit for a business is frequently needed. A line of credit may be necessary for the start-up of the business or to have on hand for future reserves. This can be done through your bank or a large credit line with a credit card.
  When applying for a line of credit, one of the main things banks are looking for on your application is your credit report. If you are unable to qualify for a bank loan, or decide not to apply for a loan, you can use your credit cards as a line of credit for cash advances, but the interest rates are usually higher. By using the line of credit from your credit card, you can request an increase of your credit limit, provided the account is current and in good standing.
• Student loan. With the rising cost of college, many students need financial aid, which usually involves student loans. Many banks offer students special financial programs. Many of these programs are government loans, which students can defer making payments on until several months after they graduate or leave school. The interest rates are usually low. If you have a child entering college, you may have to qualify for a student loan. Having a good credit report is necessary.
• Retirement. Although saving for your retirement does not involve your credit report, it does involve being able to save and manage your money. It is important that you have a strong budget in place and stick with it during your retirement days.
  As a retiree, you have worked hard to get to this place in life, but you need to make sure that you are able to live comfortably without any financial stress. Staying out of debt is one way to manage your money.
• Investing. There are many different types of investing. If you are investing in real estate, most of the time you will need to get a loan for the property. A loan for an investment property is more challenging to qualify for. Your credit scores must be high enough, and a substantial down payment and cash reserves are required.
  If you are investing in other things such as stocks, bonds, mutual funds, and so on, you must have cash....

Table of contents

• Cover Page
• Title Page
• Copyright
• Dedication
• Acknowledgments
• Disclaimer
• Contents
• INTRODUCTION
• SECTION I: BUILDING YOUR PLATFORM
• SECTION II:: CREDIT REPAIR 101
• SECTION III:: A FRESH START
• SECTION IV:: PROTECTING YOUR CREDIT
• CONCLUSION
• RESOURCES
• INDEX
• ABOUT THE AUTHOR