Of course, it’s easy to talk about the importance of a budget.  Actually creating and implementing a strict set of guidelines is usually a whole different story.  But for those that embrace a disciplinary approach to budgeting, their financial burdens are lessened.

Understand Your Expenses

Before you can set a budget in place, you need to know exactly what your income is and what you’re spending that money on every month. Over the course of a week or two, write down every single penny you spend and what you spend it on.

The process can be time consuming in the beginning, but you will really benefit from the exercise. It’s much like tracking what you eat before beginning a diet — you must identify your strengths and weaknesses before establishing a plan of action.

What You Need vs. What You Want

After you’ve listed all of your expenses, prioritize them from most to least important. Ideally, things like rent and food will be at the top and entertainment will fall near the bottom.

Next, look for patterns. Are you spending a small fortune on daily lattes but consistently carrying a credit card balance? It’s probably time to re-evaluate your habit. You don’t have to give up the delicious drinks completely, just cut back in order to allocate a larger portion of your income to more important bills.

Divide and Conquer

Now that you have a better understanding of where your money needs to go every month, write down how you divide your income among your expenditures. After targeting all of your fixed spending like rent, utilities, insurance premiums, etc., keep what’s left over for variables like dining out, going to the movies and adding to your savings account.

If the numbers don’t work out perfectly the first month, that’s okay. You can’t predict the future. The great thing about a budget is that it can change. Make adjustments each month until you find a system that works well.

Build a Nest Egg

In addition to a solid budget, you should have a buffer in place in case an unexpected financial emergency comes up, and one will at some point. If you budget every dollar into a spending category without leaving some wiggle room for the unknown, you will end up in the red sooner or later. Plus, everyone should get in the habit of contributing to a savings account anyway.

The most important thing to remember when devising a budget is to keep it realistic. A budget should be a helpful tool, not a form of punishment, so be sure to allow for fun in addition to monthly bills. As long as you create a reasonable plan with both structure and flexibility, you shouldn’t have much trouble sticking to it.

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Where Do I Start Repairing my Credit?

Your credit reports shape your credit scores.  All three of the major credit reporting agencies – Equifax, TransUnion and Experian – allow consumers to pull their reports every 12 months.  These reports are free, so there’s no excuse.

How Do I Read Credit Reports?

If you’re new to credit repair then the reports may be a little difficult to read.  They’re full of numbers, codes and abbreviations to ensure that they’re both consistent and kept as short as possible.  If necessary, find a credit repair services company that’ll give you a free consultation.  Not only will they explain your specific problems, but they’ll also give you an idea of what your plan of attack should be.

I Found Some Mistakes on my credit report, Now What?

You need to challenge anything on your reports that’s not 100% accurate.  Find a sample dispute letter, list exactly what’s being reported incorrectly and mail it to the credit bureaus.  This is a fairly slow process as it’s still being done through the mail.  Expect a turnaround of about 45 days and make sure that you’re keeping detailed notes of all correspondences.

Should I Pay My Outstanding Debts?

If you want lenders to see that you’ve paid off all of the money that you’ve borrowed, then yes, you need to figure out your debt relief situation.   While it’ll still be listed on your credit reports, the fact that it’s showing as “paid” will certainly help.

Why Isn’t My credit Score going up?

It’s generally a misconception that once you remove some inaccurate or outdated items and pay off some debt that your score should shoot right up.  Really what you’ve done is stopped your score from tanking. While removing negative information from your credit report does help, you need to establish new, positive lines of credit in order to maximize your credit score.  If you have no cards at all your adding a new revolving credit line can add as much as 60 to 80 points to your credit score.

What If I Get Stuck?

It’s not uncommon to hit speed bumps on the road that is credit repair.  There are plenty of people that have dealt with the same financial problems that you’re dealing with.  Again, credit repair forums can be invaluable.  Don’t be afraid to ask for help either.  Just because you can repair your own credit doesn’t mean that everyone is up to the task.  I’d like to build my own deck, but I know that my family’s safety says that I should get a contractor to do it right.

How Do I Know When I’m Done?

The truth is that you’re never really done with credit repair.  Every month companies report to the credit bureaus regarding your finances.  The obligation to make sure that they’re doing so correctly falls directly on you and no one else.  The credit bureaus won’t verify to make sure everything’s being reported correctly.

What Am I Waiting For?

There’s not going to be an engraved invitation in your mailbox.  You simply need to pull your credit reports and resolve to get all of your finances in order.  It may seem like a daunting task, but once you’re getting the lowest interest rates possible you’ll be glad that you started.

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Actually, that’s not true but that hasn’t stopped me from ordering pizza online while taking out some random Facebooker’s mafia before he stomps all over my turf.

One major way the internet has made life a little bit easier is with the advent of online bill paying and credit card statements.  Now those of us with a high number of bills to pay can have them automatically withdrawn from our account without having to worry about pesky things like keeping my bills in order or remembering which one needs to be paid on which date.  I can also have my credit card statements sent to me via monthly emails, meaning I barely even have to go to my actual mailbox anymore. 

But are these services really making our lives that much easier, or could automatic bill withdrawals and online credit statements end up leading to more problems, specifically the need for debt relief, in the long run?

Let’s examine how switching from snail mail to email for your financial statements may be a Good Idea or a Bad Idea.

Good Idea

• It saves trees!  With the whole world on a quest to go as green as possible, switching to online statements and payments certainly makes you look good in Mother Nature’s eyes.  If that doesn’t matter to you at all, switching to online statement deliveries will at least help you clear up a lot of the clutter they usually bring with them.

• It’s much more convenient!  Most people generally have somewhere between 2-3 credit cards that they keep open.  Add in bank cards and statements, as well as any other bills you have (cell phone, utilities, cable/internet, etc.) and that’s a lot of unnecessary clutter clogging up your mail, especially considering just about every credit card bill and bank statement comes with a bunch of fliers for some new service or deal they’re promoting. 

And since these bills all come at their own time, having a lot of them can make keeping track of your financial obligations a serious pain in the ass.  Switching to paying all your bills online just makes things much more convenient and less of an overall hassle.

Bad Idea

• Not paying it any more mind.  Of course, the downside to an “out of sight/ out of mind” online bill paying policy is that many companies will try and tack on extra fees while you’re not worrying about their bills, especially on older credit cards you may no longer use.  In addition to fees for going online only, many card companies feeling the heat of the recession are looking to raise all kinds of fees right under your nose.

• There goes your credit score.  One more serious misstep many who go online only can make is deleting every bit of email they get from creditors and their bank, except for their statements.  While it’s true that most of that stuff is spam anyway, this is also how many people lose track of the annual fees that may be added to their accounts. 

Before you know it, those unpaid fees start to pile up until BOOM, there goes your credit score.  Now, you’re left with a pile of unpaid bills you never knew you had, and a report in serious need of credit repair.

So what’s it to be in the end?  Do the benefits of paying your bills online outweigh the potential risks?  I certainly think so.  Just make sure to continue to monitor at least some of your emails and statements so you don’t fall into their fee traps.

Get Ready for the First Phone Call

You need to have any important information about the credit card debt that you’re calling about available. This includes recent bills or any letters that the creditor or collection agency may have sent you.

You also want to have an idea of what you can pay them, whether it be in a lump sum or broken down over a few months. Do not agree to pay more than you know is possible or you’ll just end up in the same predicament a few months down the road.

Don’t Get Intimidated

Collection agencies and creditors aren’t generally the nicest people to talk to if your account happens to be overdue. Their tone will be harsh and they will try to direct the phone conversation in the manner they’ve been taught. State your purpose from the beginning; that you are looking to negotiate a payment with them.

Do not get irate or use profanities no matter how upset you become. This will get you nowhere, and will likely result in worse results. Try to have the call elevated to a supervisor if possible as they are more likely to reach a deal for a reduced amount.

Be Detailed

Every correspondence or agreement you make should be in writing before you actually start making payments. Collection agencies are notorious for telling you one thing on the phone, then “forgetting” that the conversation ever happened. If you reach an agreement that you are happy with, get it in writing first.

Make sure that every last detail is part of your agreement. You need to be as specific as possible as to the dollar amounts that you will be paying as well as the exact dates that they will be receiving these payments.

Be Reasonable

If you’re trying to settle a $20,000 debt for $250 then you’re out of your mind. Expect to pay between 30 to 50 cents on the dollar for most credit card debts. There are various factors that play into what percentage a collector will accept; 30%-50% is just an industry average. You may encounter a situation where they are unwilling to negotiate at all. They may have a plan for suing you in court for the entire amount.

Be Patient

Make no mistake about it, while settling your own debts is intensely gratifying, it’s going to try your patience. You need to keep a detailed log of every correspondence made between you and each of your creditors, collection agencies and their attorneys. Make sure you seek help if necessary, there are plenty of debt relief companies out there that will give you a free consultation to let you know what kind of predicament you’re really in.

Make sure you know your rights as a consumer and that you’re versed in both state and federal laws regarding your situation. While it may seem like an impossible task your financial future may very well depend on it. If you settle those debts now, you may find your credit score in a year or two is much higher than you’d ever imagined.

Can Credit Repair Erase Negative Info?

Yes and no.  Credit repair is meant to correct inaccurate or outdated information on your credit reports.  Many consumers, even many credit repair services companies, try to use this process of challenging accounts for every derogatory listing.  This is not what credit repair is supposed to be doing and will only create more problems.

If the negative accounts on your credit reports are wrong, then yes, credit repair can have them corrected and possibly removed.  Don’t think that you can go run up thousands of dollars of credit card debt, not pay, and then have a credit repair company magically remove those accounts.  It’s not going to happen.  You’re going to need debt relief for those debts.

Does Credit Repair Boost My Credit Score?

Comprehensive programs should have no problem improving your score.  However, removing negative items from your credit reports doesn’t usually increase your scores.  What’s more beneficial is establishing new, positive lines of credit and using it responsibly.  The credit repair process will often times include creating new credit lines to maximize your scores.

Can Credit Repair Be Done in 24 Hours?

Absolutely not.  Credit repair is a process that generally speaking takes 3 to 6 months. Of course this depends on how bad your credit really is.  But 24 hours is completely unreasonable.  Most correspondences with creditors, collection agencies and the credit bureaus are still done via regular mail and has a turnaround time of about 45 days.

Is it Worth the Money?

If done properly, then yes, it is.  Credit repair can get you approved for credit cards and loans, but it can also improve the interest rates on those loans & cards.  You can end up saving thousands a year in interest payments just because your score was a few points higher.  So while it is an investment, the money you save can far exceed the money you spent.

Where Would I Begin?

If you’ve never taken a look at your credit reports, then now’s the time.  All three major credit reporting agencies – Equifax, Experian and TransUnion – offer a free credit report every year.  It’s free at annualcreditreport.com.  Take them up on this offer and see what your credit profile is saying about you.  The sooner you start, the sooner you’ll reap the benefits of a high credit score.

Now it seems the state of New York has had enough of these collectors and their prick-ish ways and has decided to do something about it.  The state’s attorney general is now suing 35 different law firms and 2 debt collectors, stating they hired a company called American Legal Process that did not serve thousands of consumers with legal papers.  They are now seeking to have as many as 100,000 judgments overturned – most of which went completely unnoticed by those on whom they were placed until they found their wages garnished or their bank accounts frozen.

How do you plead?

Anyone that’s dealt with debt collectors on their own knows how abusive they can be, and how ridiculous their claims can get, no matter how unsubstantiated they really are.  This is exactly what the attorney’s office is finding now when they demand for proof that a debt is even owed in the first place.  Many collection companies, when asked to present proof of the debt, quickly back down from any threat of legal action against a consumer.

Not failing to notice these red flags popping up in all these cases, the attorneys dug deeper and found that, of 238 in which a proof of debt was requested, collection agencies failed to back up their claims nearly 95% of the time.

You read that right: 95% of the cases that involved a collection agency demanding payment of a debt from a consumer failed to provide proof that there was a debt in the first place.  But wait, it gets even better.

The other 5% that could provide documentation on the debt?  According to the state attorney’s office, “rather than showing that the debt was owed, its own documentation often proved the opposite.”  How pathetic is that?  How completely incompetent are these people?

The attorney’s went on to state that, “the cases in the study bear a common thread: in many instances debt buyers sued consumers when they clearly had no legitimate claims. Debt buyers sued in cases of identity theft and mistaken identity, when their records did not reflect payments by the defendant, and when the debt was beyond the statute of limitations.”

Now, if you’re looking for someone to blame for this…

Then, believe it or not, you may as well point the finger right back on yourself.  This kind of gross incompetence is only made possible because the people who were being sued and taken to court for these “debts” never fought back.  They just assumed the debt was accurate and agreed to whatever payment plan the collectors envisioned to get them off the phone.  According to a recent study by the Legal Aid Society, debt collectors won nearly 95% of the 450,000+ cases they leveled against consumers in New York between January 2006 and July 2008.  Many of the cases were default judgments, where the person being sued never even appeared in court to defend themselves.  Only 10% who were sued answered the summons, and of that group, just 1% hired a lawyer.

Folks, if this doesn’t illustrate why it’s important to know your rights under the Fair Debt Collection Practices Act, I don’t know what will.  If you’re being harassed by a debt collection agency, know that there is absolutely no reason for you to be.  If you want sensible, not to mention friendlier, debt settlement or credit repair options, call one of our specialists.

Short for Fair Access to Credit Scores, the law would finally allow consumers a big behind the curtain at their actual credit score.

On Wednesday, July 21, President Obama will sign the Frank/Dodd Act into law, which includes the FACS Act, meaning there will finally be a way for consumers to see their actual credit scores for free, instead of having to sign up for a monthly service or pay a fee to see it through a credit reporting bureau.

This doesn’t mean everyone who asks will get to see their score, however.  Only those who have been denied anything based on their credit score, will then be allowed access to their score as well as a full credit report.  Being adversely approved (i.e. you got what you wanted, but not the way you wanted it) for a loan of any kind will also net you a peek at your score. 

Why this doesn’t mean free scores for all is kind of a mystery (after all, the more you’re educated on your credit, the better you’ll be able to handle it), but at least we’re now getting to see our scores with our reports for free, making things like credit repair just a little bit easier.

Not running up your credit card debt has its advantages.  Not having to involve yourself with debt relief or deal with harassing phone calls.  Plus if you’re budgeting, you can avoid falling into a similar situation that’ll require credit repair. 

Budget and Save

The primary purpose of budgeting is to make sure that you are not living beyond your means. But in order to put a budget to good use, you need to make sure that you are saving money too. Generally, savings is used for retirement, or the purchase of a home, however having money for a potential financial disaster is just as important.

Consumers that are living paycheck-to-paycheck would be devastated if they were to lose their job or have to add another expense because of a family tragedy. These things happen to everybody. If you’ve put money away for a rainy day, then it may not be such a financial hardship.

Don’t Miss Payments

If you’re budgeting properly, then you should never miss a monthly payment on either a credit card or installment loan that you may have. Even if something happens to your income or expenses for a brief period, the fact that you’ve been squirreling money away will get you through that time without a payment slip up.

Just one missed payment can lower your credit score 50 points or more. That’s why it’s so important to make sure that you never miss a payment. A missed payment can lead to higher interest rates, which means paying more money each month, which leads to less money for savings. It’s a domino effect that can be completely avoided with suitable planning.

Pay Balances Down

If your credit cards are maxed out you’re walking a very fine line between building positive credit and being completely overwhelmed by your debts. Keep your balances as low as possible. Use your credit cards as a convenience, not as a necessity.

If a financial crisis does happen, you’ll be glad that your credit card balances have been kept low. You may need those credit cards for a few weeks to get you through this rough patch. If they’re maxed out though, not only is it going to be difficult to pay off, but you’ll find that you may have absolutely no money on hand.

Your balances also have an impact on your credit scores. Keeping them at less than twenty percent of their balances will almost certainly cause your score to creep upwards. While having high balances will usually do the exact opposite.

The Bottom Line

Too many people have no desire to break down their finances and really budget. But if you’re able to stick to it and avoid impulse purchases, your ability to increase you credit score is significantly higher than someone who isn’t planning ahead.

So many people think that credit repair is going to be the answer to their credit woes when being financially responsible is by far the better, safer approach. These are steps that need to be part of your everyday life; however, when you’re paying the lowest interest rates in the industry and you have a credit score that’s in the 800s, you’ll be glad you took the time to budget.

You won’t be able to fix your credit problems in 24 hours!

Unless you’ve been perfect, every month for your whole financial life, no excessive credit card debt, your credit card balances are all at about 10%, you have money in savings, and you’re lucky enough to be part of the 21% of Americans that don’t have an error on their credit reports, then maybe you can fix your credit in 24 hours.  It’s not too difficult to fix what isn’t broken.

For the rest of you, get ready to devote some time and energy to credit repair and debt relief.  It’ll be well worth it when you’re paying the lowest interest rates allowed and you’re getting pre-approvals on everything from mortgages to credit cards.

What’s a Realistic Time frame?

This depends largely on how much there is to “repair.”  Generally 3 to 6 months is a good benchmark.  You should have an idea of what’s going to be on your credit reports.  If you’ve maybe missed a payment or two and allowed one account to go to collections, it could take 2-3 months.  If you’ve spent the last couple of years borrowing from anyone who would lend you a dime and not paying them back, it could take over a year to get everything paid off a listed correctly on your reports.  

What’s on My Credit Reports?

You won’t know that until you pull them for yourself or have someone get them for you.  All of the major credit bureaus offer a free report every 12 months at annualcreditreport.com.  It’s free!  There’s no reason that you shouldn’t do that as soon as possible.  The sooner you have your credit reports in front of you, the sooner you can fix your credit.

How Do I Read These?

If you’re new to credit repair, then the codes and abbreviations might be a little difficult to read the first time around.  What you may want to do is find a trustworthy credit repair company that gives free consultations.  They will analyze your credit report, explain what’s helping and what’s hurting your score, as well as lay out a plan for you.  It’ll give you an idea of how to get the ball rolling.

What If I Don’t Have Time for This?

Make time!  If you need support, credit repair experts can do all of the legwork for you.  That’s not to say that you should completely forget about it.  Worthwhile credit repair is going to take some work on your end whether you hire someone or decide to go it alone.  If you’re serious about maximizing your credit scores, you need to educate yourself as to what’s going to help you get to where you want to be financially.

When Should I Start?

Right now!  Finish reading this paragraph and go get your free credit reports.  It shouldn’t take you more than 10-15 minutes to have all 3 saved to your computer or printed and ready to go.  Learn the federal and state laws, or have someone that knows them take a look at your reports, and get started gradually.  You know it’s not going to take 24 hours, so plan ahead.

Paying a credit repair services company to fix credit problems may help with a lot of the legwork that needs to be done during the repair process, but there are still tips that if you incorporate into your credit habits will have you maximizing your credit scores in months.

Tip #1: Pay Bills on Time

You might think that this is fairly obvious, but you’d be surprised how many consumers will simply overlook a monthly payment.  Missing just one monthly payment can lower your scores over 100 points and could stay on your credit reports for up to seven years.

Tip #2: Pay More than the Minimums

If you’re only paying the monthly minimums than you are spending more money over time because of interest rates and other fees that’ll add up.  With new credit card laws, the creditor has to breakdown exactly how much you’ll be paying if you were to just pay the minimum each month versus paying it off faster.  Be sure to read through your statements to see what you could be saving.

Tip #3: Keep Credit Card Balances Low

Ideally, you want to get your credit card balances below 20%.  This will indicate to lenders that now you’re using credit responsibly.  Maxed out cards tells them that you need that money and that you’re using your cards out of necessity, not convenience.  Plus, maxed out credit cards are often what lead consumers to need debt relief.

Tip #4: Don’t Close Old Accounts

A portion of your credit score is based on the average length of your credit history.  This means closing out older accounts, even if you’re not really using them, can actually hurt your credit score.  Ideally you want to use these cards occasionally to make sure that the lender doesn’t close them out either.

Tip #5: Read Your Credit Reports

You can’t know if your reports are reporting negative information if you never look at them.  All three major credit bureaus – TransUnion, Equifax and Experian will allow you to pull your free credit reports every 12 months at annualcreditreport.com.  It’s free, so there’s no reason you shouldn’t at least be looking over them once a year.

Tip #6: Find Help if You Need It

You may not need to pay for credit repair services, these tips could boost your score to exactly where you need to be.  But if you’re ever confused or overwhelmed, there are tons of online help sites and credit repair forums you can use.

Tips Only Help if You Follow Them

I know that these tips are sometimes easier said than done, but when you’re being pre-approved for loans and credit cards or you’re being offered the best interest rates in the industry you’ll be glad that you were able to maximize your credit scores.  These tips usually involve a good amount of budgeting and saving, but if you’re committed to the process you should see positive results within a few months.

It seems the Chief of Police in Oakland, CA released a list of 44 different crimes – including grand theft, vandalism, and even identity theft – the department will no longer respond to due to budget cuts and lack of manpower.

A partial list of the crimes that no longer receive the attention they warrant includes:

• burglary
• theft
• embezzlement
• grand theft
• grand theft: dog
• identity theft
• false information to peace officer
• required to register as sex or arson offender
• required to register as a Raiders fan
• dump waste or offensive matter
• discard appliance with lock
• loud music
• possess forged notes
• pass fictitious check
• obtain money by false voucher
• fraudulent use of access cards
• stolen license plate
• embezzlement by an employee (over $ 400)
• extortion
• attempted extortion
• false personification of other
• injure telephone/ power line
• interfere with power line
• unauthorized cable TV connection
• vandalism
• administer/expose poison to another's

As you can see, this list runs the gamut from mundane (stolen cable TV) to pretty damn serious (embezzlement/extortion).  If you happen to be a victim of any of these crimes, you can let the police know via their website, though what happens from there is really anyone’s guess.

So why the decrease in police responses?  Blame the recession (again).  The department was forced to lay off as many as 80 officers – mostly new recruits – in an attempt to close the $30+ million budget gap left in the city.

And while negotiations are underway between the city and its police to bring money back to the department, those talks are slow-going, leaving many to wonder where to turn for help when they actually need it; especially considering that those 80 officers who were let go only comprised about 10% of the overall force.  This begs the question: What’s the other 90% doing now that they can’t be bothered to find my stolen dog or tell my neighbors to turn their loud music down?  Certainly not answering my ID theft claims, that’s for sure…

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What you want to do is figure out what approach is going to work best for your particular situation.  But to think that a company that only takes one approach to fix your credit is going to work is a risky proposition.  And one that'll probably fail and leave you aggravated with credit repair as a whole.

What is Your Circumstances?

Have you looked at your credit reports?  Do you know what’s holding your credit score down?  Is it late payments, collections, a tax lien?  Everyone’s credit profile is going to be different and as a result, so is the solution that’s going to best repair your credit.

Each derogatory account on your credit report is probably going to need a different solution if you’re looking to improve your credit score.  Just trying to dispute every negative account, isn’t going to get you the results that you’re looking for.  And you’ll end up paying for months of service to see almost no change to your credit score.

Find a Complete Credit Repair Company

Good credit repair usually involves a range of credit repair tactics.  While disputing negative accounts has been advertized as the magical fix to your credit repair problems, the truth is that actually boosting your credit score takes a lot more than that.

Accounts that are yours may require letters sent to the creditors, or maybe you need debt relief too.  Potential lenders are going to want to see that not only that you’ve taken care of past credit card debt but that you’re currently using new credit responsibly.  Good credit repair services will help you get those new lines of credit that you need.  They’ll also layout a plan explaining where your credit card balances should be, and how to use your cards properly to max out those credit scores.

Taking the First Step

Deciding on the best credit repair services for your needs is going to take some work on your part.  Make sure you’re completely comfortable with the company you choose.  After all, you are investing your hard earned money to try and correct your financial future, not just to make someone else rich.

Credit repair is excellent at stopping any decrease in your credit score, but that’s usually where credit repair ends.  Excellent credit repair services won’t end there; they’ll explain exactly how to go about building a positive credit profile, improving your credit score in the process.

While credit repair will probably stop any decrease in your scores, it's going to take some time, some hard work, and a lot of patience to get your financial profile back on track. Companies can challenge your reports' inaccuracies, settle debts for you, even open up lines of credit for you; but they can't do everything. You are ultimately going to have to show some initiative if you are truly committed to maximizing your score.

Constantly Monitoring Your Reports

You've probably seen the commercials or read the advertisements about credit monitoring services, they're everywhere. There's a reason for this; it's never been so important to keep an eye on the accounts being reported to the bureaus. Not only are they used for loan and credit card applications, but an increasing number of employers and property managers are using credit checks as part of their application process.

Whether you choose to pay a monthly fee in order to monitor the bureaus on a constant basis is up to you. All three major credit bureaus will provide consumers with a free credit report once every 12 months. It is highly advisable to take them up on this free offer. Not inspecting your reports on a regular basis may leave you worse off than you were before you started repairing your credit.

Keeping Balances Low

This is one of the most overlooked aspects of consumers' credit scores. Your debt-to-limit ratio is a very large percentage of what goes into that score. A debt-to-limit ratio is basically the total amount of money borrowed on open lines of revolving credit compared to the total amount of the limits on those cards. Anything under 20% is considered adequate and should make a positive impact on your scores.

Simply going from a 20% debt-to-limit ratio to having all of your cards maxed out, and vice versa, can change scores by over 100 points. Once you bring the balances down though, make sure you keep them there. The longer the history of sensible credit usage, the higher your scores will peak.

Having a Favorable Credit Profile

The formula which determines your credit score is more heavily guarded than Fort Knox or the colonel's original recipe. However it is generally accepted that the Americans with first-class credit profiles tend to have anywhere between three and five opened lines of revolving credit, as well an installment loan and mortgage.

There are many consumers who believe that one credit card is all that they'll ever need. While this does limit your ability to get into too much trouble debt-wise, it may not be optimum in terms of your credit profile. On the other end of the spectrum, shopaholics with a card in their wallet for every store they've ever shopped at might want to think about trimming some of the unnecessary accounts out of their lives (being careful of course not to lower the overall age of your accounts)

If your credit profile was really damaged, you may have to start with a secured credit card. While they are very useful to the rebuilding process, the fees can be a bit much. Use them for a few months to demonstrate your newfound responsibility, and then open another line of credit that won't be so expensive.

Budgeting and Savings

This is perhaps the most difficult undertaking once the credit repair is done with. However, now that you've started on the road to a better financial future, you don't want to have to take a step back because you continue to spend frivolously. On top of that, unexpected events are going to happen that would create a financial burden; but if you have the money saved away you may just be able to come away unscathed. Thankfully, if you've planned ahead, your credit profile will not suffer as a result.

There are plenty of simple budgeting websites online, or you could always consult with your personal bank as to tips on saving and budgeting. Not enough Americans budget and this is what leads them down a path where they end up needing credit repair. If you've already repaired your credit, learn from your mistakes and put in the time that budgeting is inevitably going to take. You'll be happy that you did.

Be Patient

None of this is going to be done overnight so don't expect miracles in a short period of time. You need to be patient and understand that the longer you keep up your good habits, the more your credit score should improve and the more savings you should have put away. It's a fairly simple blueprint for success, but it's sometimes hard to stick to it. Remember to always keep your goals at the forefront of your mind and you will be successful.

Better clear out that drawer of unpaid parking tickets

Yes, it’s true.  The days of blowing off parking tickets in a lot of states are coming to an end.  Of course, if you’re a responsible adult, those days were never around in the first place.  But for the rest of us you, who throw out those ticket stubs almost as soon they’re handed to you and never pay any more attention to them, those days are over – assuming you care about the state of your credit history, that is.

Whereas before you may have only troubled yourself with minor worries like higher car insurance rates or the possibility of losing your driver’s license, local governments are cracking down and sending any and all unpaid or idle tickets (both parking and speeding) straight to collection agencies.  So now you not only have to worry about paying off that speeding ticket you got 3 years ago and dealing with the repercussions on your insurance rates, you add it showing up on your credit report and driving down your credit score to the list of worries as well.

And unlike a ticket, which can be paid and forgotten in an afternoon, a collection on your report is like a bad case of herpes – it’ll follow you everywhere.

And while you’re at it, the library wants a word with you about those overdue books

Not content with adding to your worries with throwing your unpaid tickets to the wolves, many state governments are looking at library fees for extra income as well.  Your local library (that’s that big building where they store a bunch of books, for our younger readers) is tired of you not returning those overdue books and DVDs, and since revoking your library card doesn’t seem to do the trick (who’da thunk?), they’ve begun following the parking tickets’ example and begun forwarding your overdue fees to, you guessed it, a collection agency.

Unlike parking tickets, overdue fees from a library should really be a non-issue for most people, I would think.  Just imagine the embarrassment of opening a letter from a collection agency telling you they intend to collect on that long overdue copy of Twilight you checked out in secret, and that should incite you to pay off any fees.

Seriously, we’ve been in this business for over 10 years, and have seen every kind of collection known to man – from major medical bills to unpaid fees from Pizza Hut and Blockbuster – but collections for overdue library books?  That’s a little much, we think, but clearly local governments are trying every tactic they can to keep themselves out of the red for as long as they can.  And if you want to make sure you don’t wind up on the wrong end of these tickets and fees, and want to keep yourself on the right path to debt relief, stay on top of your finances before they’re pulled out from under you

To put this in even greater perspective, that’s over 25% of the US population that is now essentially staring into a financial black hole.

How did it come to this?

If you’ve read any of our other blogs or articles, you know how important it is to stay current on your bills and payments to maintain the best possible score.  One thing that’s important to keep in mind is how crucial not only your older credit cards are to your score, but how your recent payment history looks as well.  If you’re history shows a, uh, history of late or missed payments, collections and maybe a judgment or two for good measure, your score will reflect that.

If your aim is to secure a significant loan, like a home or auto loan, with score of 620 or lower, you can kiss those hopes goodbye for the foreseeable future.  Most mortgage lenders will tell you that the last two years are the most significant to them when scanning someone’s credit report to determine both their credit worth and their risk factor.  If you’ve been frivolous with your cards and ignored those payment notices, you can bet your score will reflect that in as little as a month.

And much like clawing your way back to an A grade in school after you’ve slacked on assignments and are threatened with a C- for the semester, getting your score back into its Sunday finest is much harder to do than it was to fall by the wayside in the first place.  Having a record of late payments shows any potential lenders that you obviously have no business handling a loan, especially a loan from them.

Okay, so how do I fix it?

Like anything worth fixing, all it takes is patience, time, and a little elbow grease (in the form of payment plans).  If you’re faced with no loan options until you can raise you credit score to something that resembles passable, start by getting in touch with your creditors who are reporting negative information in your history.  

If your low score is simply a reflection of late or missed payments, make it your prime goal to set up a payment plan so that you know exactly when each bill is due so you don’t miss it again.  You may also consider writing a letter of goodwill to your creditors once you get back on track.  A goodwill letter basically asks your creditors to cut you some slack for your missed payments and have them wiped from your record.  Of course how often you were late will influence their decision, so if you’re looking at multiple 90+ day late payments, you might have a little trouble getting the answer you want.

For other, more serious blemishes on your report, your best bet is to verify the charges with the creditor and, if all their information is correct, work out payment plans as well to get rid of the negative account.  More serious negative accounts, like collections judgments and bankruptcies stay on your report longer and look worse than late payments, so if you’re report is riddled with these, be prepared to wait a while if you’re looking for the best deals on loans.

Want to make sure your credit score rises back to the top in the quickest and best way possible so you can qualify for a better rate on that loan?  Give one of our specialists a call and wave goodbye to 599.

Even if you’re not involved in credit repair or debt relief, the ability to adequately budget affects your day-to-day and long term finances.  What’s so amazing about Mint is that they’re doing most of the dirty work for you.  You just enter in your online bank accounts and credit cards, and they’ll pull all of the vital information for you.

Most Financial Sites are Confusing

Most banking websites aren’t easy to use and credit card sites aren’t exactly helpful with trying to analyze where your money’s going.  The truth is that there’s no reliable way to examine all of my spending habits without manually entering information onto a ledger or spreadsheet.  But this is exactly what Mint is going to do for you.

Mint covers all that and more.  All you need to do is enter your credit card info, bank accounts, student loans from the federal government, even IRA’s.  Instantly you’ll have all of your account information stretching back a few years.  It’ll even organize your expenditures.  See how much you’re spending on entertainment or takeout food.

Taking a Hard Look at Your Spending

Most of our clients know that they’re credit profile isn’t exactly in tip-top shape, but what they don’t understand is why.  They know that they ran up a lot of credit card debt, but don’t even remember what they bought.  Mint is going to force you to take a look at what you’re spending your hard earned money on.

What too many people find is that they’re spending more than they’re making.  Not exactly a formula for success.  Now, it’s up to you to make the changes, some fancy internet site’s not going to do that for you.  But at least you’ll have an idea of what expenses are out of hand and need to be trimmed.

Creating a Budget

While it’s a powerful tool for analyzing spending habits, it’s even more helpful if you use Mint to put together a budget.   They’ll breakdown your spending habits month to month, set up savings goals and even tell you how much you have left in your budget for each category.

Again, just because you set up a budget using these tools, it’s entirely up to you to stick to your budget.  Don’t spend impulsively and don’t cut corners when it comes to your finances.  Create goals and utilize Mint.com to help you reach them.

And consumers are more educated in the ways of identity theft protection than ever, a 2009 study by the FTC found that 26% of Americans still fall victim to credit card fraud, finding themselves in need of credit repair and debt relief services fast.  So, in the interest of cutting that statistic down a few notches, here are 4 major identity theft and credit card scams to watch out for.

• Beware the ATM.  Most people never think twice about going to the ATM, especially when it’s part of their bank’s preferred network, or even outside the bank itself.  So it comes as quite a shock when they open their monthly card bill to find someone charged a fortune in IKEA furniture to their account, despite them hardly using the card for transactions in the first place. 

So how did this happen?  What you may not notice about your friendly neighborhood ATM is an extra bit of plastic stuck over the card slot.  That extra coat of plastic may actually be a magstripe skimmer, which can be outfitted over the reader to swipe any card that passes over it.  Coupled with a pinhole camera placed above the keypad to capture your PIN number once you enter it, you now have the makings of card scam that you help orchestrate yourself.

• The Fraud Department of Frauds.  Here’s something everyone who’s had some experience in credit card or identity theft goes through – the phone call from your card’s fraud department, asking you to verify recent charges to your account.  They’ll run through a list of recent charges, you’ll tell them none of those are right, they’ll assure you they will take care of the issue and end the call.  A month later, you open your credit card bill to find a whole new list of charges that weren’t yours and weren’t mentioned during that call from your provider.

So how did this happen?  I’m sure you’ve guessed by now that that phone call wasn’t from your card company, but another credit card scam instead.  These types of calls are on the rise, and can be difficult to spot if you don’t know what to watch out for.  If you do receive a call like this one, be on guard if they ask you to verify all of your personal information; from your home and billing addresses to your card number and verification code (that 3 digit number on the back of your card).  Your credit card provider already knows this information, and shouldn’t need to verify it all with you again just to clear up some fraudulent charges.

• The “winning” bid.  Say you’ve finally found the perfect rims for your ride on eBay.  These are some of the sweetest rims you’ve ever seen; you’ll be the envy of everyone on the road with these, so of course you have to have them!  After a fierce bidding war, you emerge victorious, ready to claim your reward.  The seller then asks you if you wouldn’t mind doing them a solid and using a link of their own to pay for the rims, separate from eBay’s checkout system.  You oblige and weeks later, find yourself with a list of fraudulent credit card charges and no rims in sight.

So how did this happen?  That link the seller sent you for forwarding payment was instead used to capture your credit card information to buy something for the seller (probably not rims).  If anyone ever asks you to go around an online retailers payment options to “help them out,” consider it a major red flag.  You should always be cautious with your credit card information, especially when dealing with online merchants.  The best way to avoid a scam like this is to stick with major retail websites and, when dealing with other users directly, keeping payments to PayPal options only.

• “[Don’t] Click me!”  Finally, while we’re on the subject of the internet and the many ways it can screw your finances over without you ever knowing, be on the lookout for any type of malware your computer could contract.  While some viruses are content to simply crash your computer, others like to set their sights on your finances, leaving you with no money and no idea of where it went. 

So how did this happen?  While most people know to be on the lookout for any computer-crashing viruses, a truly insidious piece of malware will infect your computer by posing as something completely innocuous like a music, game, or screen saver file before installing a keystroke logger to your system.  These things track every character you type on your keyboard and sends them off to a remote location, where they can be used to uncover all sorts of personal information, from social security numbers to bank card passwords. 

Keep these tips in mind whenever you feel like swiping some plastic.  They could save your credit card from looking like just another washed-up piece of plastic.

But it's not just the BBB who’s sounding the alarm. The U.S. Government Accountability Office just came out with the results of an undercover investigation of the industry. It found that a handful of debt relief companies are engaged in "fraudulent, deceptive and abusive practices." In April, legislation was put forth by New York Senator Chuck Schumer in an attempt to regulate the industry.

Now it's not as if every debt settlement company is a scam. The truth is that it's a viable financial service for those that don't have the time to deal with it, or don't have the patience to negotiate with their creditors. There are however

How Debt Relief Scams Works

The debt relief company has you set up an account to deposit money. They suggest that you stop paying all of your creditors and instead put all of that money into your debt relief account. They explain that this money will go to settle all of your debts within 6 to 36 months. I would not hire ANY DEBT SETTLEMENT COMPANY THAT WANTS YOU TO OPEN A NEW ACCOUNT.

Stopping payment to your creditors might be the worst bit of financial advice that anyone can ever give you. Especially coming from someone who's supposed to be a financial expert. This will absolutely ruin your credit profile and ultimately your credit score. Just one missed payment can lower your score over 100 points, imagine what this tactic will do.

The reason that the debt relief companies have you do this is because creditors are much more willing to negotiate payments after you've been late for a few months. There's no reason for creditors to negotiate with you if you've been paying on time.

Not only are you destroying your credit profile and your borrowing power for the next several years, but you're running the risk of litigation. If your creditors sense that you've stopped paying them in an attempt to pay them less, they can take you to court and even garnish your wages.

What to Watch For

High upfront fees are a sure warning sign that a debt relief company is more worried about their own bottom line than they are about trying to dig you out of debt. Some companies charge 15 to 20 percent of your total debt before they're even willing to start work on your accounts. Plenty of ethical, reliable firms will charge you 5 percent.

Settling your accounts wholesale. Telling you to stop making payments is a terrible option. The best advice a debt relief company should give you is to continue paying off accounts you're current on, and settle those accounts that have gone to collections or are several months late already.

Excessive promises that seem too good to be true probably are. Commercials run all the time about cutting your debt in half, or getting you out of debt quick and easy. If you're in debt then there is no quick, easy or cheap way out. You've made your bed, now you're going to have to lie in it.

Sure debt relief companies can help you out, but you need to be prepared to actually pay off your debts, work hard and budget properly, and do so ethically, without having to ruin your credit in the process.

Do your homework before you chose a company. The BBB is a good place to start. Make sure their complaints are low and their overall rating is at least an "A" before you even give them a call.

One recent story from the San Francisco Examiner  in particular shows why it’s important to choose wisely when looking for debt relief or even credit repair services.

Dumb & Dumber

So we have two guys in the Bay Area who ran an elaborate debt elimination scheme, called the “Dorean Process,” which they promised homeowners would wipe out their mortgage debt completely.  This should’ve been a major red flag right here to most people, but the story goes on.

These guys, Kurt Johnson and Dale Heineman, proceed to convince homeowners to transfer their property titles to a trust that they both ran (major red flag #2), then produce completely fake documents that indicated the owner’s previous mortgage was canceled before having the owner’s refinance their homes (red flag the 3rd).

They managed to pull this scheme on over 3,500 homeowners and lenders across 20 banks and 35 states, collecting more than $3 million dollars before they were caught and sentenced in 2007.  They recently tried to appeal the original ruling, because, it seems, they thought it was a good idea to defend themselves in court the first time around.

The verdict?  According to the circuit court judge who presided over the case: “They had the right to represent themselves and go down in flames if they wished, a right the district court was required to respect.”

It could still happen to YOU

While that may seem a little unusual for a cautionary tale – after all, these guys thought it would be a good idea to show up to their trial in prison clothing – the fact that they were able to pull a scheme like this on so many people is pretty unsettling.

If you’re searching for quick schemes to get rid of all of your debt overnight, you’ll only end up with people who’ll take what’s left of your money and leave you with all that debt and more.  Whenever it seems too good to be true, it generally is.

If you want legal, sensible, and most importantly effective solutions to any and all credit and debt problems you’re facing, give one of our specialists a call.  You deserve a fresh start.

My moving day is fast approaching.  As in, this Friday.  Should probably step up my packing efforts…

A friend and I have been searching for an apartment in San Diego's North County area for almost 2 months now, and after several instances of trial and error, false starts, faulty information, and empty promises — after running the gamut of every kind of possible homestead, from luxury condo to some creepy old cat lady's pool house — we've finally found a nice 2 bedroom/2 bathroom (anyone who's ever lived with another person knows separate bathrooms are MANDATORY) apartment that's less than 5 minutes from both of our jobs, close to major shopping areas, and even has its own bad-ass fitness center.  And here I thought I'd have to board up my windows and invest in a guard dog…

So how did we get to this point?  Why did it take us so long to find an apartment?  Well, we probably could’ve taken some extra time off for credit repair.  My credit was too new and untested to guarantee a lease on my own, and my friend had a couple of falsely-reported student loans in his history that would need to be taken care of before we could secure a lease. 

Yet here we are, packing up and getting ready to move into our nice new digs.  How did we manage to secure a nice, affordable place in SoCal despite our setbacks, I hear you ask?  Like just about everything else in life, all it takes is a little planning and a LOT of negotiation skills.  So, I thought I’d share some tips I’ve learned for finding the best rental deals for cheap.

A diamond in the rough

If you’ve lived near a metropolitan area at some point in your life, you already know living in and around a city can be pretty expensive.  As much as one may want that prestigious property – with its own fridge and space for a washer and dryer – their finances show they may have to settle for something a little less flashy.

What most people may not realize is that those rundown-looking condos over in the ghetto are almost as expensive as those more upscale-looking one-bedroom units across town.  Now, I’m not saying that you’ll find beachfront property for the same price as a former crack den, but with some digging, you can find a one bedroom apartment that is actually cheaper than the studio you feared was your only option.

Laying all your cards on the table

As we’ve seen already, finding an apartment to rent when you have poor credit can be difficult, but it’s hardly impossible.  If you know your credit history isn’t quite ready for prime time, and you can’t afford to wait until it’s ready to go, one solution is simply to be honest and upfront about your situation. 

Since just about every managed apartment complex requires a credit check before you sign the lease papers, letting the apartment manager know ahead of time that your credit report isn’t quite as glowing as you hoped may actually work in your favor.  Most landlords would be willing to overlook poor credit if you explain your situation to them beforehand, and you don’t owe a substantial amount of money to anyone else. 

Barring that, try to get in touch with your creditors and work out some sort of payment plan to take care of any major debts that may be holding you back.  If you can prove in writing that you’re actively seeking debt relief options, leasing agents may be a bit more receptive to your case.

Don’t sign that lease just yet…

Say you’re out hunting for a new place to stash your bed, and you drive past one of a thousand apartment complexes that are throwing a “Look and Lease” event.  Why not, you think to yourself, as you head in to take a look.  You need a place to live, and this one seems nice enough – even affordable.

But consider this before you sign that lease: these see-and-sign type of deals are a dime a dozen, and aren’t going anywhere.  Much like those discount furniture stores that advertise MIND-BLOWING SAVINGS DEALS week in and week out, apartment complexes hold events like these on a near weekly basis, and they usually change the deals as well.  So before you sign up for that new place, check around to see if it offers the best bang for your buck, and if it doesn’t, consider waiting it out another week or so.

Make ‘em an offer they can’t refuse

Let’s say you’ve zeroed in on an apartment that works for you.  You’ve checked the place out, and everything is in its right place, so all that’s left is to sign the lease.

Before you do, ask yourself – does this new place have everything you want in a home?  Most leasing specials are great ways to negotiate add-ons you may not normally be offered.  If the agent trying to get you to sign that lease wants you as bad as they say they do, you may be able to tip some of the odds even more in your favor by negotiating for some more services.  If they weren’t mentioned or shown in the tour, ask about any offers the complex might have on garages or an apartment with a dishwasher.  Many places throw in great deals to entice you into signing their lease.  If it’s something you really can’t live without, make them an offer – chances are they’ll be hard-pressed to refuse it.

Keep these tips in mind the next time you’re looking to move, and you may end up with a better deal than you ever thought you would.