Credit Tips

Our CRS Tips section contains fundemental tips to get you on the road to improve your credit score.
This is the same advice credit restoration professionals would advise you but charge hefty fees for the luxury.

1. Knowledge is Power - Understanding your Score 2. Correct your report - Get the accurate credit report you deserve by law! 3. Pay your Bills On-time 4. Pay off any Outstanding Debt including Collections, Judgments, Charge-offs, etc. 5. Manage your Debt Ratio and Reduce Your Debt 6. Establish and Build Credit History 7. Check and Monitor your credit every 3-6 months 8. Create a Budget

1. Knowledge is Power - Understanding your score

Your credit score (FICO score) may be the most important number in your life in regards to financial decisions and transactions such as purchasing a home, car, cell phone or even getting a job. Your Credit score can range from about 300 to 850. The higher your score, the lower the risk you are to lend money to and the lower interest rates you will pay. The lower your credit score, the higher risk you are to lend money to and you will pay higher interest rates and may be denied credit if your score is too low. Your credit score determines whether you will get approved for a home mortgage, car loan, credit cards, and will determine the interest rates you will pay. So as you can see, it is very important that you understand what your credit score is and how it affects you.

Every day lenders, creditors, insurance companies and even potential employers are using credit scores provided by the credit agencies to make critical decisions about you. Everyday, consumers are being denied homes, cars, credit cards, cell phones, insurance and even jobs because of inaccurate credit scores. Your credit score is based on your credit history, your history of paying bills and how much debt you have in relation to your credit limits.

For a further understanding on how to obtain a credit report and how to read a credit report go to Reference section. Once you know how obtain and read a credit report you can manage your credit profile.

Your Score is based on five basic categories:
Payment History: 35%
Debt Ratio: 30%
Length of Credit History: 15%
New Credit/accounts: 10%
Types of credit and loans: 10%

2. Correct your report - Get the accurate credit report you deserve by law!

CRS will help maximize your credit score by helping you correct and update your credit report. CRS will help you get the accurate credit report you deserve by law. CRS will help you dispute errors on your credit report with our easy CRS Dispute Generator. Simply enter your Creditor and account information in our CRS Dispute Generator and CRS will automatically generate three personalized dispute letters for Experian, Equifax and TransUnion. Once these letters are generated, simply send them to the bureaus. The credit reporting agencies have 30 days to respond and send you updated credit reports to your home. Be on the look out for the updated credit reports. When you receive the updates for the agencies, review them for accuracy. If there are still errors remaining, continue to the dispute process until you achieve the desired result.

Under the guidelines by the Credit Repair Organizations Act, the credit reporting agencies cannot refuse to process your dispute. Note: the agencies may send out letters refusing to investigate or that the information was previously verified, but be persistent. It may take a couple dispute cycles to achieve the desired result.

3. Pay your Bills On-time

As we stated previously, 35% of your score is based on your payment history. Whether your paying your mortgage, car, credit cards, student loans, you must be on time. If you are thirty days late on any of these payments the creditors will report this to the three agencies and your score will drop. However paying your bills on time over time will help improve your score. Your ability to make payments on time is one of the primary attributes lenders making decisions about you look for. If you are currently late or have missed some payments, get current as soon as possible and never go over 90 days late. 90 days late is when creditors send accounts into collection. If you foresee problems making payments contact your creditors and see if you can work out a plan to get you back to current status.

4. Pay off any Outstanding Debt including Collections, Judgments, Charge-offs, etc.

The road to recovery and improving your credit score, for most American consumers, begins with reducing and eliminating debt. Americans are experiencing debt problems at epidemic proportions. American consumers are defaulting with their debt, stressed out over finances, tired of creditors harassing them daily because of outstanding collections, judgments, charge-offs, repossessions, medical collections, etc. at an alarming rate. CRS recommends setting a plan to pay back any creditors that are in default or over 90 days late. First, if possible, pay your creditors the debt in full to close the account resulting in a zero balance and paid in full notation on your credit report. However, if you cannot possibly pay all of your outstanding debt or are thinking about bankruptcy, there are options such as negotiating the debt with your creditors.

Creditors lend money with the intention of getting it back. Creditors will always try to recover their money when it is in default (later than 90 days), in the collection phase, charge-off or judgment stage. Settling your debt for less than the balance is an option and helps creditors get their money repaid without the creditor spending funds for collection. This is the reason most credit card companies and other lenders show interest in the debt negotiation process.

You Can Do It Yourself Too!

A debt settlement is an agreement between a debtor and a creditor to fully satisfy a debt for a reduced payoff amount. A debt settlement is usually reached when a debtor is unable to fully meet his/her debt obligations due to financial hardships and attempts by the creditor to collect on the debt have failed. The creditor agrees to cancel part of the debt and accept the remaining sum as full repayment. Debt settlement is also called debt negotiation. Technically speaking, a debt settlement is the agreement while debt negotiation is the process through which both parties reach that agreement.

Consumers who use debt settlement are those who are experiencing legitimate financial hardships, cannot afford to repay their debts through debt management plans offered by consumer credit counseling agencies, and who also want to avoid filing bankruptcy. For this reason, debt settlement is a concept that falls between consumer credit counseling and bankruptcy.

5. Manage your Debt Ratio and Reduce Your Debt

Once you have managed paying your bills on time, now it’s time to reduce your debt (that is not over 90 days late) and get your credit card balances under control. If you are maxed out on all of your credit balances your credit score will suffer. As we indicated previously, your debt ratio accounts for 30% of your credit score. You debt ratio is the combined balances of your credit card and installment debt to the your total credit limit. For example, if you have four credit cards with $2500 credit limits, you have a combined credit limit of $10,000. If you combined balance of the four cards is 9,000, then your debt ratio is 90%, which is not good. The lower your debt ratio is, the better off you will be. To maximize your credit scores, keep you debt ratio under 50% when you are looking to make a big purchase.

6. Establish and Build Credit History

It’s simple, the longer your good credit history is the better your credit score will be. Why? Because you have shown the ability to pay your bills on time for an extended amount of time. Fair Isaac says that about 15% of your score is based on credit history. If you have a track record of late payments, and collections, then you can expect your score to be lower. Remember, you can always stop your score from dropping and work to improve you score by getting current on your accounts and establishing a better payment history. If you can show that you can make payments on time for six – twelve months you will start positively impacting your score. If you do not have any credit then you will need to establish credit. We recommend opening new accounts responsibly and not to over extend yourself and, obviously, to pay your bills on time.

7. Check and Monitor your credit every 3-6 months

CRS recommends you check your credit report two to four times a year to ensure that your credit report is accurate. A good schedule is every quarter. Every time you pay a bill, there is the potential for something to happen to your credit . . . this can be negative and positive. Ask yourself this question: Do you allow the bank to reconcile your checking or savings account or do you monitor and track your account and balance every time you take out or deposit money in your account? Most responsible consumers manage and reconcile their own checking and savings accounts and we believe the same is true of your credit report and score.

8. Create a Budget

Once you understand how your credit score works and how it impacts your life, and now that you have taken the steps to correct your credit report with CRS, you are paying your bills on time, reducing your debt ratio, establishing and building your credit history and finally monitoring and protecting your credit, this is the time to start creating a budget and building for the future.

Simple steps to Create a Budget:
1. Determine a budget strategy - Do you prefer the old fashioned way of using a pencil and paper or are you more comfortable with one of the many options of personal finance budget software? Another option is that you prefer a finance professional such as an accountant or CPA to create your budget? Which ever way you choose, even the best-laid plans won’t work you do not work the plan.

2. Calculate your income - Simply record and track your income including gross salaries and wages, bonuses, interest and dividend income, pension or Social Security income, tax refunds, rental income, child support or alimony payments received, and other similar sources of income.

3. Calculate your expenses - When calculating your expenses be sure include all of the money that you are spending on a monthly basis such as fixed expenses including mortgage, car, insurance, tuition, etc... variable expenses: credit card bills, utilities, groceries, cell phone bill, gas, etc . . . and lastly discretionary expenses such as dining out, entertainment, recreation, vacations, health club member ship, etc.

4. Compare income and expenses - You will know right away if you are spending more than you are bringing in. If you expenses exceed your income, then you are heading for trouble if you aren’t already. If this is the case, you need to do one of two things: increase your income or decrease you expenses. Decreasing expenses many times is the quicker way to get you in a better cash flow position. For example you may want to cut out dining out, entertainment expenses, recreation expenses such as vacations, cable TV, etc. A plan that works is a plan where your income exceeds your expenses and you have money to save and invest.

1. Knowledge is Power - Understanding your Score 2. Correct your report - Get the accurate credit report you deserve by law! 3. Pay your Bills On-time 4. Pay off any Outstanding Debt including Collections, Judgments, Charge-offs, etc. 5. Manage your Debt Ratio and Reduce Your Debt 6. Establish and Build Credit History 7. Check and Monitor your credit every 3-6 months 8. Create a Budget