Credit Financial Planning

• What are the risks of doing credit repair yourself using one of the books available over the internet and in bookstores?
  Most how-to credit restoration books for sale use outdated techniques that include example form letters for the reader to use in disputing negative credit. Not only should one wonder why these books are so much less in cost than a professional credit repair company, but why would someone sell the secret formula? The answer is, "They would not sell the formula if they had it." Beware of promises that you can effectively repair your credit in 30 days or less. This is just not possible and shows that the author has no idea that the laws have recently changed to give creditors 45 days to investigate a disputed item. And, employees of the credit bureaus are usually the "first in line" at the newsstand to buy the new how-to book. So, the credit bureaus immediately spot any of the standard forms. Once the bureau has zeroed in on the structure of the form, any such letter will immediately earn a frivolous or irrelevant response from the checker. Many times, the credit bureau will see this as a sign that the customer is "yanking their chain" and the checker will red flag the client's credit report for future reference. Our instruction will not provide for specific techniques or form letters, as the credit bureaus have proclaimed publicly that they can spot these forms. Rather, we shall provide general outlines and strategies that you may follow as we dispute your negative credit. It is important for you to understand that there are risks in restoring your own credit. These risks are greatly multiplied if you cannot dedicate sufficient time to the task, or if your skills or organizational skills aren't top notch. Countless do-it-yourselfers have made seemingly harmless mistakes in the process of disputing their credit; only to make their credit files worse, ultimately seeking professional help after too much damage had been done.
• Collections
  Buying and selling bad debt is the practice of collections. Bad debt is bought and sold everyday and if you have been contacted by a collection agency, chances are the debt that the collection bureau is attempting to collect was sold to them by a creditor that you once shared a relationship with. Bad debt is commonly bought and sold for much less than the original amount owed. If you see that the amount the collection agency is billing you for is more than the amount you owed the creditor, keep in mind that there are fees generally added to the account for processing and interest. It is not uncommon to have multiple collection agencies listed on a credit report all showing information in an effort to collect. There are many ways to deal with collections. The most important thing to remember is that an unpaid collection is as damaging to a credit report as a paid collection in the credit scoring model. There is strong motivation for the collection agency to collect not only the added fees, but also the full amount of the account. The collection agency account representatives are generally paid a commission on the amount collected, hence the higher amount that you pay, the higher the amount of commission earned. Negotiation is the only tool for resolution that most favors the consumer.