The Scared to Repaired Quick Credit Repair Guide

Preview: Chapter 7 —Turning Around Negative Credit Did you know you can successfully turn even current bad debts into a positive credit rating? Your goal is to approach these creditors and negotiate repayment plans that sincerely demonstrate your ability to make regular payments on time, pay off the debts you owe, and revive their interest in you as a customer. In return you are going to ask your creditors to restore your positive credit rating. Working with your creditors Even if your account has already gone to a collection agency, deal first with the original creditor. The creditor will not be as persistent as a collection agency, as it may have already given up any expectation of full payment. By dealing with the creditor, you may have more flexibility to negotiate the time or the amount to pay. Often, because of his agreement with the collection agency, the creditor may not deal with you after turning over your account for collection. Remember, the collection agency is not consumer-oriented and will be more difficult to negotiate with. Therefore, it’s always best to do what you can to avoid having a debt turned over for collection. A collection agency receives a percentage of what it collects from you, so it will try to get as much cash as possible from you. If you cannot avoid negotiating with the collection agency, use these five pointers, which are also helpful when dealing with a creditor: 1) Make a win-win offer. Keep in mind that your goal is to trade money for a positive credit rating on your credit report. Perhaps you can offer to set up a payment schedule in exchange for a promise to improve your credit rating. For example, you could agree to pay 100 percent of what you owe in 12 monthly installments in exchange for the creditor agreeing to recognize your new bill-paying commitment with better credit ratings. Let’s be even more specific: Perhaps you can agree that after three months of punctual payments, a negative rating could be raised to a non-rating. Perhaps after six months of regular payments, the non-rating could be lifted to a positive rating, and so forth. 2) Obtain open account status. It looks bad when your account is closed to further purchases, even if you are making regular payments. Therefore, when you are negotiating an offer, ask to reopen your account while you uphold your end of the agreement. If the creditor will give you a clean bill of credit health, your extra effort to pay him is certainly worth it. Caution: Make sure the terms you finally agree upon are within the range of your budget so you can faithfully keep your promise. 3) Put it in writing. The win-win negotiation procedure up to this point can be carried out over the telephone. However, once you have reached verbal agreement it is vital to put it in writing. Type up the agreement as a letter, sign it, and send it with a second copy and a stamped, self-addressed envelope. Before you send the letter, however, you may want your lawyer to check the wording. Once the creditor signs the agreement and returns it to you, it can become part of your credit record (see Creditor Settlement Agreement). Before putting your agreement in writing, carefully repeat all the points of agreement with the creditor over the phone to get verification. 4) Honor the agreement. Now that you have a written agreement, you need only fulfill it and your credit rating will be restored. So be punctual. Make every payment on or ahead of time. Be responsible. If your ability to meet the payment schedule in the agreement should be threatened by unemployment or illness, inform your creditor right away, before you miss any payments. Let your creditors know your plans for meeting the payments, and explore ways to solve your temporary setback that will meet everyone’s needs. 5) Verify your credit upgrade. Before using your newly improved credit status, remember to order an updated copy of your credit file to verify that the creditor has honored his or her side of the agreement and made the promised changes. Allow a reasonable time period from the date the creditor agreed to make the changes, and then request your update. If the changes have not been made, call the person who made the agreement and remind that person of his or her side of the agreement. If the agreed changes are not made, you can dispute the information on your credit report. Use a copy of the creditor signed agreement as supporting evidence for the change.