April, 2017 | ApproveNow

How To Repair Bad Credit Yourself For Free

According to Experian, in 2015 close to one-third of Americans had a credit score below 601.

If you are one of the millions of adults that are dealing with the headaches that generally come with having bad credit, you are not alone. Unfortunately, most people find out about their poor credit score when they are applying for some type of financing. This is the absolute worst time to find out that you aren’t approved due to your bad credit report.

There is some good news. It is possible to repair your bad credit. While you should have received a letter from the lender detailing why you weren’t approved for the loan, it won’t explain how you can resolve the problems. This is where we can help. In this guide you will find the information you need to legally repair your bad credit so you can get the financing you need.

You Don’t Have to Pay Credit Repair Companies

You can turn to a credit repair company for help, and there are several reputable ones. If you simply don’t have the time to devote to rebuilding your score, a credit repair company might be the best choice for you. They will have the time and resources necessary to start repairing your dismal credit score, but these companies also charge a fee for their services.

Credit Repair companies really aren’t necessary, you can rebuild your score for free.

It will take a little time, effort and careful financial planning but over time you will see your credit score start to rise, and here are the few steps to follow to get started.

Check Your Credit Report and Score

The very first step is to check your credit reports and scores. There are three main credit reporting bureaus, Equifax, Experian and TransUnion.

Under the Fair Credit Reporting Act you are entitled to one free copy of your credit report a year from each of the three agencies.

It is important to get a copy of all 3 reports since the data can vary, and it all affects your credit score. This means that there might be an error on one report, but not on the others. One error on any report could cause your credit score to drop several points.

What to Expect on a Credit Report

Once you have a copy of your reports you’ll find that they contain a lot of information. This will include basic personal details, and you’ll want to ensure that everything is accurate. You might also find previous addresses listed, and this is fine as long as the current one is correct.

Financial issues will also be on your credit report. All payments made on time, along with loans that were repaid will be included in your credit history. While these help to raise your score, the credit report will also contain a record of any liens, missed payments, foreclosures and bankruptcies. These are the items that cause your score to fall below the subprime rate.

Your financial information is divided into five categories, and this is what the credit reporting bureaus use to calculate your score.

Payment history (35 percent)
Credit utilization (30 percent)
Length of credit history (15 percent)
Types of credit accounts (10 percent)
Number of credit checks (10 percent)

Understanding how the information contained in your credit report affects your score, is the first step in knowing how to start repairing it.

How to Repair Your Bad Credit

Now that you know how poor your credit score is, it is time to start fixing the problems.

It is important to remember that you cannot have information removed from your credit report if it is accurate, even if it is responsible for dramatically lowering your score.

Trying to erase accurate information is illegal, and is a punishable offense.

This doesn’t mean that there aren’t some steps you can take to legally improve your bad credit score for free.

Pinpoint the Problems

Once you have a copy of your credit reports, you can start pinpointing the problem areas. You don’t even have to completely understand the complicated terminology used by the financial industry, if you know what is responsible for your poor credit score.

Your payment history accounts for 35 percent of your score, and is responsible for most of the significant drops. Even one missed payment will have a noticeable effect on your credit.

Thirty percent of your score is determined by your amount of revolving credit, which is compared to the limits on the accounts.

These two categories combined account for 65 percent of your credit score, and are where most problems occur.

The remainder of your credit score is comprised by how long the accounts have been open, along with the type. There are two types of credit accounts, revolving and installment. Revolving refers to charge cards and open lines of credit, while examples of installment accounts include student, auto and home loans. When you are applying for any type of financing, creditors will want to see that you are capable of responsibly managing both types of credit.

Your credit report will also list your history of applying for financing, and it makes up 10 percent of your score. If you have been actively applying for credit recently this can cause a temporary dip in your score, but most lenders also take this into account when they are checking your history. Potential lenders know that this usually only indicates that the applicant is simply looking for the best interest rate. These minor dings to your score generally disappear from your credit report in 12 months or less, making it a minor problem that you don’t need to fix.

Clean up your Credit Report

As you are going over your three credit reports, you might find errors. Even if it is only a minor mistake it is important to start disputing it as soon as possible. Once the dispute is filed with the three credit reporting agencies, they have thirty days to respond. There are a few exceptions which can extend the response deadline to 45 days, but in most cases it will take less than a month for the bureaus to dispute or agree with your claim.

Here are a few tips on disputing an error on your credit report.

A separate letter must be filed with each of the three credit reporting agencies, Experian, Equifax and TransUnion.
If there are multiple errors, a separate letter must be filed for each mistake found.
Disputes regarding errors on credit reports can be filed online or sent in via traditional mail.

Work on Building Positive Credit History

There are a few steps you can take to start building a positive credit history, instead of waiting for the negative items to disappear on their own.

One of the best ways to improve a subpar score is to open a new line of credit.

Even if you were turned down for an auto loan or other type of financing, you might still be able to secure a credit card. The interest rates will probably be higher, but if you pay the balance off each month you can rebuild your credit without spending a lot on accumulated fees.

Here are a few other steps you can take to build positive credit history.

Pay down balances on credit cards, especially ones with a high interest rate. Try to only use them when it is necessary, at least until your see your credit rating improve.
You might want to consider applying for a “credit builder loan” from a traditional bank or other lending institution. This is always a good option for anyone worried that they might abuse a credit card.
Don’t close credit card accounts once the balance has been paid off. This will make it harder for it to have a positive effect on your credit score.
When you are shopping for an auto loan or mortgage financial experts recommend doing so within a 30 to 45 day time frame. This will give you plenty of time to find the best interest rate, without it having a detrimental effect on how potential lenders view your credit.
If you have any outstanding accounts with collection agencies, you might want to think about finally paying them off. While some newer formulas used to calculate credit scores do not factor in accounts in collections, there are still a few that do.

How Long Does It Take to Repair Bad Credit?

If the negative information on your credit report is accurate it will take time for it to come off. How long will vary depending on the type.

Past due payments: 7 years from the due date of the late payment.
Foreclosures: 7 years
Collection accounts: 7 years and 6 months from the date the debt enter into delinquency.
Short sales: 7 years
Bankruptcies: 10 years from the filing date or 7 years for Chapter 13.
Repossessions: 7 years
Judgements: 7 years if the payment was made in full, otherwise it could be significantly longer.
Tax liens: 7 years from the date they were paid.
Charge-offs: 7 years from the date the account was “charged off”.

Even though this does seem like a long time to see an improvement in your credit score, it is important to remember that you should already be taking steps to rebuild it.

With a lot of patience and self-control it is possible to repair your bad credit, and best of all you now know how to rebuild it for free.

The Complete Guide To Transferring Bad Credit Auto Loans

Considering transferring your poor credit auto loan or taking over the payments on one? Before you shake hands and start signing papers, there are a few things you should know.

The first is if it is even possible to transfer the bad credit car loan, the second is whether it is a financially sound decision.

In this guide you will find all the information you need to make the best decision for your finances, whether you are transferring or taking over the bad credit auto loan.

Why Transfer a Bad Credit Auto Loan?

There are several reasons why transferring a bad credit auto loan might be a good idea. Sometimes the monthly loan payments can be harder to make than anticipated due to job loss or other unforeseen events.

Occasionally people are talked into “upgrades” at the Buy Here Pay Here lots, without considering how it will affect the amount of their monthly payments. Before long they are at risk for repossession, and this can have a devastating effect on their credit score.

Another common reason people might be considering transferring a high interest car loan is that they simply don’t want the vehicle anymore.

Regardless of your reason for transferring your auto loan, you should be aware of the steps you need to take. This applies whether you are transferring the vehicle to a friend or dealership.

The reasons for taking over a bad credit auto loan also vary, but the most common is that the potential buyer doesn’t have the necessary cash to apply towards the purchase of a new vehicle.

How to Tell if a Bad Credit Auto Loan Can be Transferred

It is important to note that not all bad credit auto loans can be transferred, but this doesn’t mean that you are stuck with the payments. If the car loan cannot be transferred the vehicle can be sold. You will have to bring the person purchasing the vehicle to the dealership or financial institution so they can apply for refinancing.

Most auto loan contracts will state whether the vehicle is eligible for transfer, but it can be difficult to find if the agreement is lengthy or comes with a lot of fine print.

If you can’t find the information you need in the contract, the next step should be to contact your lender. Not only will they be able to answer your question, some will even walk you through all the necessary steps.

How to Transfer a Bad Credit Car Loan

The difficulty of transferring a bad credit auto loan will depend on the lender, and their rules and regulations. In some instances it might only take a few minutes if the potential buyer has excellent credit, but this is usually not the case. Not everyone is fortunate enough to have someone ready to take over their high interest car loan, and this usually means that it will take more time before a qualified applicant is found.

When you are ready to transfer your bad credit car loan here are a few tips to help you get started.

Transfer the auto loan to someone else

One of the easiest ways to “get out” of your high interest car loan is to transfer it to someone else. The potential buyer must have a credit score the same or higher than yours, and they will also have to show adequate proof of insurance. If you are considering taking over a car loan this might be an appropriate time to think about the benefits.

You can avoid dealing with “pushy” salesmen.
A down payment isn’t required.
If you have a below average credit score, it might be the only way you can get purchase a vehicle.

Decide on a new lender or staying with the original one.

This is an important decision to make since it can affect your credit score. In most cases it is best to stay with the original lender, and simply modify the loan. If this isn’t an option you can also choose to apply for financing from another lender that will pay off the original loan.

There are a few risks associated with using a new lender. Some auto loans come with penalties if they are paid off early.

If the amount of the loan used to pay off the old one is higher than the value of the vehicle, you could still be making payments even though you no longer own the automobile.

You also want to take into account the fees that come with transferring an auto loan that don’t include penalties for paying it off early.

Transfer all documents to the new vehicle owner.

All paperwork pertaining to the vehicle must be turned over to the new owner. State laws do vary on where the vehicle title can be legally transferred, usually at a local branch of the Department of Motor Vehicles or a licensed notary.

Before you leave the office it is crucial that you double check to ensure that your name has been removed from the car loan. If you are purchasing the vehicle, you’ll want to make sure your name is listed as the holder of the lien. Current emission and inspection paperwork should also be turned over at this time, along with any warranties that are transferrable.

How to Take Over a Bad Credit Auto Loan

If you are considering taking over a poor credit auto loan there are a few steps that you need to follow to make the process go a little more smoothly.

Here are a few things that you will need to do.

Check your credit score.

In order to be approved to take over a car loan your credit score must be the same or higher than that of the original owner. You could still be approved if it is lower, but at a much higher interest rate. In some cases it might not make good financial sense to accept the terms of the loan if the interest rate is too high. It could cause the loan to be significantly higher than the vehicle’s actual worth.

Wait for the loan to be approved.

There is very little to do during this time, except to wait for word from the potential lender. Depending on the financial institution you can get a response almost immediately or it might take a couple of weeks.

One thing to consider if the loan is not approved is to look for a private seller, instead of trying to secure financing through a dealership or bank.

If your credit score is significantly lower than the vehicle’s current owner, this might be the best way to purchase a car without having to pay high interest rates.

Sign the necessary paperwork.

After the loan has been approved it is time to sign the paperwork, and both parties will need to participate. The seller will want to make sure that their name is removed from the lien, and yours is added in its place. Since the lender technically owns the vehicle until the loan is repair, the lien will also be in their name.

Take care of DMV requirements.

You will have to show proof of insurance when you are registering the vehicle in your name, it will also help if you have copies of the latest emission tests and state mandated inspections. Once this last detail has been taken care of, you have successfully taken over a bad credit auto loan.

There are several advantages to transferring or taking over a bad credit auto loan, but there are also a few disadvantages that you should be aware of. For many people it is the right financial decision for them, and it can even have a positive effect on your credit score.

Before you make any decisions, it is always recommended that you seek advice from your lender or another qualified financial advisor.

Need Your FICO Score? Here Are 8 Ways To Get It For Free

If you think that credit scores don’t matter, you couldn’t be more wrong.

They are actually growing in importance, and are used by everyone from insurers and lenders to employers and landlords. Your credit score is used to judge the risk associated with dealing with you financially, and this can affect almost every aspect of your life.

The Fair Isaac Corporation (FICO) claims that their scores are currently used to assess financial responsibility by an estimated 90 percent of the top lending institutions in the U.S. While this number is supplied by the company that created credit scoring, there is no denying that it will have an effect on your life.

What You Need to Know About Your FICO Score

Monitoring your credit score is important, especially if you ever plan on purchasing a car, home or any other “big ticket” item. While keeping an eye on your FICO score has never been easier, it won’t matter if you don’t know what you are looking for.

Some of the basic information everyone should know about their FICO scores include,

Credit scores typically range from 300 to 850, though these numbers can vary depending on the reporting agency. When you are looking at your credit score, you want it to be in the higher range. Lower credit scores usually mean higher interest rates on home and auto loans.

All credit scores, including FICO are generated with data provided by your creditors. These records are compiled by the three major credit reporting agencies, and turned into your financial report and FICO score.

An important step that everyone should follow is to keep a close watch on their credit reports. Everyone is entitled to one free credit report from each of the three agencies. Most financial experts recommend requesting one every few months from a different reporting company, instead of collecting all three at once.

Consumer Reports stated that 28 out of the 60 versions of your credit score produced by FICO are regularly used by top lenders. This only emphasizes how important it is to check it every few months.

What’s A Good FICO Score?

Since there are several systems that calculate credit, including FICO scores , it can get a little confusing trying to determine what a “good” number is.

Even though the range for a good or bad FICO score can vary slightly, most lenders agree that 740 or higher will probably get you the lowest interest rates on home and auto loans. You should also remember that your credit score is not the only factor that will determine loan approval or even guarantee low interest rates.

Individual lenders have their own criteria that will not only include your credit score, but a list of other items that will all be factored in together. If you are one of the millions of Americans dealing with bad credit scores, it’s nice to know that it’s not the only factor that will be used to determine loan approval.

If you need some guidelines to follow when you are trying to determine where your credit score falls here is the unofficial range used by the Fair Isaac Corporation.

Bad Credit: 300-629
Fair Credit: 630-689
Good Credit: 690-719
Excellent Credit: 720 and higher

According to financial experts if your FICO score is below 620 you can expect to pay higher interest rates, and experience difficulty securing loan approval.

How to Get Your FICO Score for Free

With the growing importance of knowing your current FICO score, it only makes sense that there are several ways that you can monitor it for free.

You no longer have to sign up for credit cards you don’t need or subscribe to a service to receive regular reports and updates. You can take charge of monitoring your FICO score, and here are 8 easy ways how you check it for free.

Discover

One of the fastest and easiest ways to check your FICO score is via the Discover website. You do not have to be a member, card holder or even sign up for one, it is a free service that they offer to everyone. In less than 5 minutes, in most cases, you can have a copy of your credit score.

Banks and Credit Card Companies

While you do have to be a card holder or have a loan account with the following lenders, they do provide you with free access to your credit scores. Simply log into the website and you’ll find your current score listed on your statement. Not only can you check for any errors in your account, you can also monitor your FICO score on a monthly basis.

Bank of America
Citi Bank
American Express
Chase Slate card
Barclaycard US
USAA (via CreditCheck1)
Merrick Bank (GoScore)
Wells Fargo (mobile banking app)

Credit Unions

Unlike traditional banks Credit Unions have only recently begun offering members free access to their FICO scores. Currently there are only a few officially listed which include,

Pentagon Federal Credit Union
Digital Federal Credit Union

If you are a member of a Credit Union the best advice is to ask if your branch offers this convenient free service. You might also find it listed on your monthly or quarterly statements, but this can vary.

Checking Accounts

Many financial institutions are now providing customers with free access to their FICO score even if they only have a traditional checking account. While most will post current scores on loan or credit card statements, only a few are including it on checking accounts.

Before you use another method to retrieve your FICO score, it is best see if your bank offers this service with your checking account.

Loan Applications

It is important to note that this is only a “one time” way to check your FICO score for free. You don’t want to continuously fill out loan applications every time you want to check your credit score. Not only is this time consuming, it will actually hurt your overall score.

According to the Dodd-Frank Act you have the legal right to see your credit score if your loan application is denied or if you believe that you weren’t offered the best interest rate. This approach to viewing your FICO score only works when you are filing out the application in person, not if you are using an online lender.

Auto Dealers

Some auto dealerships, including a few Buy Here Pay Here Lots lots will share your FICO score with you, but only if you are applying for financing with one of their lenders. While this method will only allow you to check your credit score every few years, unless you frequently purchase new vehicles, it is one more way that allows you to monitor it for free.

College Loans

Not all student loan lenders provide their customers with free copies of their credit scores, but the Sallie Mae Smart Option undergraduate program does. They not only provide borrowers with free access to their credit scores, but their co-signers as well. This method does only apply to a select group of people, but if your student loan is through a different lender you might want to check with them to see if they offer the same services.

Credit Counseling Services

You will want to remember that most credit counseling services do charge a fee. The good news is that FICO has started a free program. 30 credit counseling agencies are participating and will help you learn how to manage your money for free.

A complete list of the participating services is not available, but you can easily find the help you need by contacting the National Foundation for Credit Counseling.

One important tip to remember before using any credit counseling service, even a free one, is that if they won’t provide you with your FICO score it is probably a scam.

Avoid These Scams

It seems that as there are more ways to check your FICO scores for free, the number of scams also increases. Not only does falling for one of these cons usually end up costing you fees, it could also comprise your identity.

Giving out your personal information is one of the most common ways identity theft occurs.

While the number and type of scams promising to get your FICO scores are constantly changing, there are a few red flags that you will want to watch out for. These typically include,

Being offered a “free” trial period.
Told that your credit card or other personal information is required.
A “subscription” is needed.
Unsolicited links and attachments are sent to your email.

Downloading the attachments or clicking on the links can leave you open to malware, viruses and even put your personal information at risk. With so many safe and legal ways to get a copy of your FICO score, there is no need to ever have to use someone else’s services.

Take Control Of Your FICO Score

You don’t need to pay a company or even a lender to get a copy of your credit score. You can easily get it yourself for free.

Knowing you current FICO score is a part of being financially responsible, and now there isn’t any excuse for you to not know your own score.

Have Bad Credit? You Can Still Buy A New Car

A few missed or late loan payments, along with substantial credit card debt can make getting a new car seem impossible.

After all, what financial institution would take a risk on someone with a poor credit score and preexisting debt? The answer may surprise you. While most financial experts don’t recommend taking out a new car loan if you are dealing with bad credit, getting approved isn’t as impossible as you might think.

If you desperately need a new vehicle to get to work or just around town, keep reading to see how you could possible get the financing you need.

Can You Get Financing with Bad Credit?

It might surprise you to learn that it’s not impossible to get a new car loan, even if you have bad credit.

The financial crisis caused by the collapse of the housing market is no longer being felt, and now lenders are seeing the potential value in approving what was considered a high-risk loan.

Lenders know that a new car has more value, and this will help repay the loan is the buyer is incapable of making the monthly payments. A new vehicle typically requires less maintenance, and this means that the buyer’s money is more likely to go towards repaying the loan and not on expensive repairs. Even with bad credit, lenders are now more willing to offer financing on a new vehicle.

This also applies to getting approved through the dealership’s financing department. Many new car dealerships are also willing to approve a bad credit loan application, though the interest rates are usually higher. Even though the dealership may not be making a large profit off this vehicle sale, they are establishing a relationship with the customer that could last for years. This is where car dealerships expect to make their profit, on referrals and return sales.

The Steps You Need to Take

Knowing the steps you need to take before you apply for a bad credit new car loan can dramatically improve your chances of being approved. There are only a few things you need to do, and when you are driving off the lot in your new vehicle you’ll be glad that you did.

Here are the few details you need to take care of before you start shopping for your new car.

Prep Early

The first, and most important step, if you want to finance a new vehicle and have bad credit is to start preparing for your purchase early. If possible, at least three months in advance.

Lenders also know that emergencies can happen, and not everyone will be able to take the time to prepare to apply for vehicle financing well in advance. Don’t worry, most lenders will still work with you and give you the time you need to get your paperwork in order. If you are lucky enough to be able to plan your new vehicle purchase in advance, here are a few things you can do to help the loan process go more smoothly.

Experian recommends getting a copy of your credit report at least 3 months before you are planning on financing a new car. This will give you time to take care of any items that need your immediate attention like errors and outstanding debts.
Since your credit rating is below 620 and is considered subpar scheduling a meeting with a credit counselor could help get on the right track towards being financially responsible.

Your credit report will have black marks, and they cannot be removed unless they are errors. If you are meeting with a credit counselor they can help you get any mistakes erased from your reports, and this could cause your score to rise before you apply for the loan. Not only can this increase your chances of being approved, it could also result in lower interest rates.

Get Pre-approved

Once you have a copy of your credit report and have taken care of any errors and outstanding debt, it is time to start applying for bad credit new car loans.

Since you already know that your poor credit score will translate into higher interest rates, most financial experts recommend applying with several lenders. While one might offer you a loan with an interest rate of 18 percent, another might be lower.

Your interest rate will be set by the lender, and it is possible to get a better one if you have the time to “shop around”.

Some of the financial institutions that might be willing to offer approval on a bad credit auto loan include,

Banks
Credit unions
Online lenders

According to Experian applying for multiple new car loans won’t hurt your credit, since lenders will realize that you are only searching for the best interest rate.

After you have been pre-approved for new car financing it is time to choose a dealership.

Bring Documents

Before you head into the finance office at the dealership you will want to have your paperwork in order.

Appearing well organized will go a long way towards convincing a potential lender that you really are a low risk option, regardless of your bad credit score.

The documents that all finance companies will require when you are applying for a new car loan with bad credit typically include,

Driver’s License
Copy of your most recent pay stub
Utility bill in your name
Three personal references

With these documents you can establish your residency, ability to make the monthly auto loan payments, and provide the potential lender with a list of contacts. Even though you already know that you have a below subpar credit rate, bringing a copy of your score or recent report might also be helpful when you are discussing possible financing with a potential lender.

If any other documents are needed the lending agent will let you know before the initial meeting is over. These can usually be brought when it is time to sign the loan agreement.

Stay in Your Price Range

One important tip to remember is that just because you can afford a higher priced car, this doesn’t make it a smart purchasing decision. Before you even start looking for a new car, you should already know exactly what you can afford in monthly loan payments. This way you don’t end up borrowing more than you can comfortably afford to pay back.

Sometimes, even with bad credit, loan applicants can be pleasantly surprised and qualify for a higher priced vehicle.

Even if you can still afford the loan payments each month, it is still not a good idea to go above the amount you were originally planning to seek approval for.

The extra money you are saving each month by sticking to your original loan amount can be used to pay other bills or set aside for your next down payment. Even if your credit score is still poor after the loan has been paid off, being able to make a larger down payment might allow you to still qualify for lower interest rates the next time you apply for a new car loan.

Know the Difference Between a “Good” Deal and a “Bad” One

Auto Industry experts warn bad credit new car buyers to be careful, and pay attention to the numbers before signing any loan agreement. Just because you were approved for the auto loan, doesn’t mean that you are necessarily getting the best deal for your money.

Make sure that the total repayment amount, with interest isn’t too high, and refrain from accepting “cash back offers”. These are often made to car buyers with bad credit in an effort to keep them from noticing how much they are paying in interest rates.

In some cases new car buyers with bad credit could end up paying twice the original price of the vehicle.

Don’t “trade-up”

It can be tempting to take advantage of a car dealership’s offer to “trade up” to a higher end vehicle, especially if your monthly payments won’t increase at the time. This is a common incentive new car dealerships frequently offer to their credit challenged customers.

Even though it can seem like a great way to purchase a nicer new car, you will end up paying extra on your next loan. After you’ve made you monthly car loan payments on time for one year, most credit counselors recommend applying for refinancing with a lower interest rate instead of trading up to a nicer vehicle.

The lower interest rates will help you save money that can be used to either pay the existing new car auto loan off, or put aside for a down payment on a newer model.

Paying off your existing car loan before trading up will also make it easier for you to make the monthly payments, and this is one of the easiest and most effective ways to raise your poor credit score.

Congratulations! You’ve Become Financially Responsible

Once you’ve done your research, looked for a vehicle in your price range and made all your payments on time, you have just taken a big step in becoming financially responsible. Not only have you improved your credit score, but you have also established healthy financial habits that will help you anytime you need to make a large buying decision.