Self Help Credit Repair: Take Control of Your Credit Score When Opening A Home Based Business

Before you can consider starting your own home based business, you will need to make sure that your credit score is a minimum of 620 in order to qualify for lines of credit. In order to get lower interest rates, you will need a higher score. Scores range from the low 300s to the mid … Continue reading “Self Help Credit Repair: Take Control of Your Credit Score When Opening A Home Based Business”

Before you can consider starting your own home based business, you will need to make sure that your credit score is a minimum of 620 in order to qualify for lines of credit. In order to get lower interest rates, you will need a higher score. Scores range from the low 300s to the mid 800s. On average, about 50% of the population have credit scores averaging around 700.

Your credit score is calculated from several different factors used from your credit report. The breakdown of your score is calculated from your payment history, types of credit that you use, amounts that you owe, length of credit history, and new credit accounts. Payment history and amounts owed comprise approximately 65% of the total score. Your credit score considers both positive and negative information that is processed on your credit report.

In order for you to be able to do any kind of self help credit repair to affect your credit score, you will need to know exactly what is on your credit report. There are several ways to find out, You can get both paid and free reports, the paid reports not only give you your credit report but also give you your credit score. To start out, I recommend the free version that you can get from annualcreditreport.com. You can get a free credit report once per year per federal law. When you get your report, you will want to verify all information on the report. You are looking for all accurate and inaccurate information so that you can then make an impact on your score to raise it. To update the information and remove items that should not be on your report, you will need to contact the three major credit reporting agencies Equifax, Transunion, and Experion via certified US Mail. You can get their address on each of their main sites. This is the first step to self help credit repair.

By sending communication certified through the US Postal Service with return receipt requested you are protected by the rights afforded to you by the federal government. When you use the online system of these agencies to dispute claims, you waive these rights for each incident that you are using the online disputing system for.

Each error on your credit report needs to be disputed with each agency. None of the agencies share information and your score with each of them will be different. Look for inquiries that you do not recognize, loans that have been paid off but are still showing as debt, and inconsistencies that you can justify as incorrect. Once you send the letter they are bound by law to contact the company and verify the information. They have 30 days to get this verification. If they do not then the information must be removed per law.

What Can You Do About Your Upside-Down Car Loan?

If you put ten people who have bought a new car in the last couple years in a room, chances are that four of them are upside-down on their car loans.

An upside-down car loan is the less onerous euphemism for saying that they owe more on their car than they could ever get if they sold it or traded it in. Is this a bad thing? And if you are one of the four upside-downers what, if anything, can you do about it?

Owing more on your car that it is worth is not necessarily a bad thing if you intend to keep the car until it’s paid off, and you have the auto insurance coverage to satisfy the loan if the car gets totaled in an accident. Doing nothing is always an option.

If you are looking to replace the car then you have to do something to close the gap in the unpaid balance of your current loan and the car’s resale value, or be prepared to eat the difference and go even deeper upside-down on your next car purchase.

Some new car lenders will add the amount of the unpaid principal on your old loan to the principal amount on your new car loan. In effect you would be paying that much more for your new car, or still paying for the old car you no longer own, which ever way you want to look at it. Do that a couple times and you’ve paid for somebody else’s Hawaii vacation.

If your current car loan contract doesn’t have a prepayment penalty, you can refinance your current car loan. Refinancing home mortgages to get a better APR is a national pastime but not nearly as many people have done the same with the second most expensive thing they own. Interest rates change all the time and it may be worthwhile to investigate this route. Even if you refinanced at the same rate for a shorter term, your monthly payment would be higher, but you would get out of the negative equity situation faster too.

Pay your current lender extra every month. This can close the gap in a hurry but only if your lender has agreed ahead of time that all the extra money you send will go to paying down the principal balance on the loan. If you just add something extra to your loan payment without working it out first, the lender will most likely just credit the extra toward a future payment. There is no advantage to you paying extra unless the principal portion of your car loan is being reduced proportionately.

Pay off the car loan with a real estate equity loan or a loan from another source. The main advantage to this approach is that you go instantly from upside-down on the car to 100% ownership. You can now sell the car yourself to raise cash for a substantial down payment, or you can trade it in toward the new car.

Car loan amortizations are set up so that the money from most of your early payments goes almost entirely to the interest portion of the loan. During the first two years of the loan, the resale value of the car plummets while the principal portion of the loan barely budges. The sooner in the loan cycle you address your upside-down loan the better off you will be.