I got online today after an awesome vacation in the Caribbean with my wife to find my February statement from FreeCreditScore.com in my inbox. In February I finally met my longterm credit score goal of 775. Wow… it was sort of a shock. Don’t get me wrong, it feels great, but when you finally hit a goal you’ve been working towards for literally years, it’s almost unbelievable.

It got me thinking about the past few years and all the ups and downs I’ve been through on my personal journey. In particular, I started thinking about how having bad credit affected my self-esteem. Bad credit is something that’s always looming in the background of your life. Maybe you don’t think about it all the time, but when you do, it feels terrible. For me, it was like this mark on my reputation that said “This person cannot be trusted”, even though I knew this wasn’t the truth.

So I suppose in that sense, it does affect your self-esteem. Nobody wants to feel like they can’t be trusted, or they are a deadbeat who doesn’t pay their bills –especially when the whole picture isn’t clear on a credit report. After all, your credit report doesn’t tell the story behind the negative marks. If they did, I’m not sure lenders would care, but if lenders actually knew you I’m sure it would be a different story.

Back when my credit score was in the low 500′s, I applied for my first secured credit card designed to help people rebuild credit. It was an Orchard Bank Classic Mastercard and I was approved. This was the card I used to really kickstart my credit improvement journey. Within months, my score was up 50 points.

The thing is, because this card is designed specially for people with bad credit, they pretty much approve anyone (as far as I know). Nonetheless, this approval, for me, felt great. After being declined again and again, this little approval gave me the confidence I needed to continue my credit improvement journey. Funny thing…

I would love to hear your stories and comments. Can you relate?

I wrote a post awhile back on how to remove late payments from your credit report and it was insanely popular. There are also some great tactics for getting a collection removed that I wanted to share with you.

1. Carefully look for ANY inaccuracies with the collection entry on your credit report

Get a copy of your current credit report and vigorously verify that all the information is being reported correctly. You should be checking every little piece of data. More than likely, you’ll find a mistake somewhere, and when you do, you can dispute the collection and write a letter to the credit agencies requesting that they remove the collection. Now, this doesn’t mean that they will –they might simply correct the inaccuracy. However, if they can’t verify or obtain the correct data, they might just delete the collection altogether.

You should check the following things:

• Account number
• Balance
• Date opened
• Account status (e.g., Closed)
• Payment status (e.g., Collection)
• High Balance
• Credit Limit
• Anything else that appears to be inaccurate

2. Contact the original creditor about the collection

I can’t speak from personal experience on this one, but several people have told me they’ve had success contacting the original creditor. Most of the time when a debt goes into collections, the debt is actually sold to the collection agency (or they get some kind of bounty for getting you to pay). However, some creditors have internal collection departments –they are usually under a different company name so you’d never know.

By contacting the original creditor, you will probably need to offer the pay the full amount due to make any headway. Even then, many will simply say, “Sorry, it’s already gone to collections”. However, if the collection agency is actually an internal dept. of the creditor, they may agree to have the collection removed if you pay in full.

Try it and let me know how it works.

3. Demand that the collection agency validate the debt

It’s no secret that collection agencies can’t be trusted. An article published by Kiplinger entitled, Confessions of a Debt Collector, attests to this. You don’t know what kind of silly fees they are adding to your original balance. Are the fees even legit? Who knows…

Luckily, you have the right to demand that they validate the debt under section 809 of The Fair Debt Collection Practices Act. If they can’t validate it, they have to stop contacting you and remove the entry from your credit report. The only downside to this is that you have to request validation within 30 days of their initial contact. Don’t put this off –if you get a collection letter in the mail, sit down and write a short, stern letter stating that you are requesting debt validation. If you don’t hear back from them, you can probably assume they couldn’t fulfill your request.

If you guys have any tactics you’ve been successful with that I didn’t list here, please share! I’m sure other readers would love to hear them.

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Source: Budgetable: The Bad Credit Survival Guide

One of the first things I quickly discovered when I began the process of fixing my credit was that many of things I had heard about credit were completely false. Here is a list of the most common myths about credit.

1. Canceling credit cards will improve your credit score. False!

   This is untrue for the simple fact that one of the largest determining factors of your credit score is age. In another words, by closing credit card accounts, in most cases, you are shortening your average credit account age. Many times this is advised by credit counselors for people who cannot control their spending, however, this does not translate into a credit score improvement by closing accounts.

2. Paying down installment debt will increase your credit score. False!

   Paying down installment loans such as student loans, personal loans, and mortgages will not improve your credit score. In short, FICO does not care about the amount of the loan –just that it’s being paid on time.

3. I only have ONE credit score. False

   The fact of the matter is, in most cases, you have THREE credit scores. Yes, there are three major credit agencies and while FICO uses the same method to calculate your credit score between agencies, there are usually minute differences between each credit report you have with these three agencies that translate into three different scores. What does this mean? It means that your credit worthiness partly depends on which credit report happens to be pulled when you apply for credit.

4. Once a negative entry is put on a credit report, there is absolutely NO way to get it removed until the required 7 years is up. False

   There are several methods that you can employ to remove negative entries from your credit report. In fact, I can say that the worst (credit wise) items on my credit report I got removed by sending off various letters. Try to negotiate with the free negotiation and dispute letters I offer to my readers.

5. Holding a credit card balance is good for your credit. False

   Actually, it’s the opposite. While it’s good to have credit card activity, the best way to improve and maintain a good credit score is to keep either a very low balance or no balance at all.

6. When multiple people apply for a home loan, ALL of their credit scores are taken into account. False

   If, for example, you and your spouse are applying for a home loan, the only credit score that matters is the person with the HIGHEST income. Note: This is general practice. Some lenders do take all borrowers into account.

If you have attending college in the past 10 years, it’s likely you keenly remember receiving about 20 pre-approval credit card offers your first semester. And gauging by the numerous emails I receive daily on the subject of credit card debt due to college, it’s likely you applied and received a few of those credit cards. In fact, it was the credit card debt I accumulated in college that served as a catalyst for my credit disaster.

Credit card companies, like cigarette companies, are smart when it comes to luring in potential lifelong customers when they are young and vulnerable. They cleverly setup booths on college campuses, give out free stuff like t-shirts and book bags, and mail students letters aimed to create a subtle hint of pride within. The statements usually say something such as, “You’re in college now! It’s time to start building you’re credit history!” How kind of them to notice and look out for my future. It’s quite alluring.

Students are obviously a good target. They are likely far away from their caution-invoking parents, don’t have a full-time job, need money for food and beer, and may or may not be financially educated. I could name a dozen more logical reasons why students are good targets for credit card companies, but I want to put at least some restraint on your ability to write, “duh!” in this article’s comments.

Universities are banning credit card companies from marketing on campus

There are has been some progress to limit credit card companies ability to market directly to student on campus. An article over at Bankrate says that some 300 universities have banned it altogether. While this is mildly encouraging, it doesn’t address any real plausible solution –again, clever marketing folks will find an equally successful way to grab students.

Financial responsibility should be taught in high school

I didn’t learn very much useful information in high school. In fact, I remember arguing to my algebra teacher in the 11th grade that I ought not be required to learn algebra, for I’d never sincerely have much use for it in my adulthood. I was pretty much right. God, how I wish they would have required a personal finance class. Had I been taught even the basics of personal finance, such as how compound interest can be good or bad for me, I honestly might have made some better decisions.

Some may bravely venture to postulate such arguments as, “you were taught sexual education in school, did you honestly take that seriously –do you think, in high school, you would take personal finance seriously?” Hell yes I would have taken it seriously. Two particular subjects, as I remember, seemed to occupy most of my thoughts in high school: sex and being rich. Of course I am not going to take sex ed seriously, for why would I listen to someone tell me not have sex when that’s all I want to do. However, had I been exposed to the mechanisms that enable building wealth, I would have ate it up. Furthermore, I would have retained it.

Let it be known that I am a badgering advocate of personal responsibility. However, in the real world, college in and of itself is difficult enough, and without much pervious knowledge or exposure to personal finance and credit, students will make mistakes that cause great future difficulties. These difficulties cannot be avoided by legislation banning the marketing of credit card to people under 21 as some lawmakers have purposed.

If schools cannot be depended upon, I am not opposed to the societal agreement being that parents ought to teach their children about finance. Perhaps the current epoch is such, but I am willing to bet that most parents don’t give the subject much thought. Personal finance certainly does not enjoy the same status as the infamous “Son, you’re at the age when you may be having strange but pleasurable thoughts about girls…”. Well, perhaps it ought to.

Finding credit help (particularly online) is difficult. As you may recall I expressed my frustration with the lack of honest, responsible resources available for people who want to repair their credit score in my first blog entry, “Why I Am Starting A Credit Blog“.

As a premise for my argument, I am going to assume that there are indeed a substantial number of resources available –they are, however, decentralized and flooded out by a competitive market. This market, of course, includes credit reporting agencies (which have no official status by the way –more on this in another article), debt consolidators, and so-called “organizations” designed to help folks fix their bad credit, etc, etc. These organizations and companies have been extremely successful in capturing the attention of their intended audience, and thus, furthering their ability to skew the playing field.

Sifting Through The Credit Repair Garbage

Without exhaustingly writing a whole essay on this subject, I am going to simply outline a few reasons why particular sectors have been so successful in flushing out people’s ability to gauge what information is being honestly provided, and what information is being marketed.

First, one must attempt to illustrate a general profile of a person looking for credit help. Generally, as it has been my experience, this profile encompasses people that want to fix their credit extremely quickly (usually in an attempt to buy a house in the near future) –they are basically in a hell of a hurry. Also, one must assume that people seeking help are not particularly interested in indulging themselves in a hoard of financial and regulatory documents that even lawyers find difficultly in deciphering.

Without invalidating all of the information provided by 90% of the results you will find when you google, “credit help”, I will say the factors I have already stated, have given these organizations the ability to project the process of credit repair as ridiculously simple, while also asserting that credit repair is a process that one cannot do on one’s own. This, of course, is not true. In fact, organizations that claim they possess some official ability to repair your credit are lying. The truth is, rather, that these organizations can only execute within regulation. Therefore, everything they will do to repair your credit, you can do –for free.

Credit “organizations” want you to be confused

These organizations obviously know this. Therefore part of their business strategy is to inject so much garbage into the arena that the normal person finds it extremely difficult to sift through it. Of course, if they can succeed in this, likely the person will give up, say, “this is too much information for me to read through. I am in a hurry!“, and decide to hand the task off to someone else, i.e., a so-called “credit repair” organization. Politicians engineer similar mechanisms during elections –with a goal of making something as simple as voting too complex to even bother. Such strategies are particularly well-utilized during presidential elections, because the major parties don’t want you to vote. If the majority of Americans (most of whom are not conservative or liberal but somewhere in between) don’t vote, they can narrow their uncertain votes and rely on hardcore party members.

I hope this provides a suitable explanation as to why it is so difficult to find credit help. I encourage you to continue reading The Better Credit Blog, as it is my sincere pleasure to sift through all of the credit repair garbage and provide you with the tools that will truly enable you to repair your credit. Also kindly note that the services and products I endorse on this website have been personally used by myself.