Improving your credit score before applying for a mortgage, personal loan, auto loan or student loan refinancing will save you thousands over your borrowing lifetime. It will:

  • Help you qualify for a loan without a co-signer or security
  • Lower the interest rate offered by lenders 
  • Increase the amount you can borrow
  • Assist with helping you purchase your first home and lower your monthly payments
  • Provide the best credit card offers that include the lowest interest rate and best rewards programs

If your FICO credit score is below 650, take the time to improve your credit score. Repairing credit is more about awareness and being conscious of your credit score. Repairing or increasing your credit score is 90% focus and 10% implementation. We believe that you can set up the systems and then following them becomes easy.

Repairing Bad Credit: Practical ways to Repair Your Credit Score

Many of us are so focused on making the next $100.00, we ignore the thousands of dollars in interest expense on credit lines, credit cards, car loans, and personal loans because we are not paying attention to where our money is going. This could be on items like paying a minimum payment on a credit card, leaving credit lines unpaid for years or being forced to take out a personal loan, secured home equity loan/line of credit or a debt consolidation loan with high-interest rates because we're unfocused on our existing debt. We want to provide you some simple ways to work through your current debt situation, get your credit score back to where it should be and hopefully get rid of the debt struggles.

We get into debt for so many reasons, but all debt is not considered equal. For example, a mortgage on a property that fits your budget is healthy debt while a mortgage that leaves you feeling house poor every month can be very stressful. An auto loan can be healthy debt while having a car that you cannot afford leaves you cash-strapped and unsatisfied with your purchase. Debt is not the issue, controlling and managing our spending is the challenge. We purchased our first RV on the

Afraid To Look at the Debt

Why do we keep racking up debt on our credit cards, overspend on properties/car/RV's, trips, clothing and ignore the debt we already have? This type of spending could be rooted in a plethora of issues. The most common is still basic overspending.


Most of us have overspend at some point in our lives. How have we become so good at ignoring that debt? Have you ever thought that the invoicing model is designed to help you ignore it? Here are just a few ways we ignore our debt issues:

  • We are afraid to look at our debt constructively. This is the number one issue for most of us
  • We are not organized and have never created a simple spreadsheet to manage our monthly expenses.
  • We don't want to get organized because we do not want to know the truth
  • For some of us, we just want to keep spending
  • We know that we are in so much trouble financially that we gave up a long time ago and just keep doing the same thing hoping something will change.

Unexpected Bills

This comment was sent to us by someone looking for a loan. "We are looking at all these "unexpected bills" in the mail. We have no life anymore and are just looking to consolidate this debt." They had a credit score of 450. They are stuck and completely fed up. This is a common theme that we hear from people. While there are many "unexpected bills" like funerals and medical issues, most of the debt we rack up is from simple overspending and living beyond our means.

Who Checks Your Credit Score

When Fico first came out with credit scoring, the purpose was to make decisions for mortgages and personal loans to assess risk and were mainly accessed by banks and credit unions. Today, you could have online lenders, utility providers, apartment rental provider, employers, insurance company, cell phone providers, auto purchase, auto refinance or auto lease buyout companies accessing your credit information. Your credit score is now affecting your life with almost everything you purchase or want to access. It's critical for you to understand how your credit is developed and what you need to do to manage it.

Key Elements that make up your Credit Score

The most common credit score system is called the FICO score developed by Fair Isaacs Corporation. FICO scores range from 300 to 900 and the higher the number, the better.

FICO is made of five elements provided by Fair Isaacs Corporation Payment History

Payment History

Your payment history makes up 35% of your total credit score and is the most important aspect of your credit score. Every time you sign up for a personal loan or credit card, your payments are tracked. They know if you are late every time a lender reports. A very simple way to make sure you always make your payment on time is to set up the auto withdrawal.</p

Setting up auto-withdrawal for your loans and mortgage payment is a simple process with your bank account. Go into the payments and or transfer section in your online banking and select make a payment. Your bank account should allow you to set up ongoing payments for any type of loan.     

If you are unable to pay off your credit card every month, you can be set up your bank account to cover either the minimum monthly payment or to pay off the balance. Set your credit card account up to take the minimum, then make a payment on your payday as well. This ensures that your payment history remains current and you will not make the simple errors like forgetting to make a payment.

This will stop late payments and help with your budget knowing that this money is assigned to come out at the same time every month. Set up all your payment to align with your pay dates. You may even want the lender to take two payments per month to take the pressure off each pay period. Once this is set up, you can forget about it and watch your credit score start to rise.

Focus on consistent, timely payments and watch your credit score improve.  

Amount Owed

30% of your credit score is made up of the borrows credit utilization. This is based on the percentage of available credit that you have used. If you use the maximum amount of credit available to you and leave it there, FICO would look at this as someone that can not manage debt responsibly. 30% is ok as a maximum amount of credit usage.

If you break this down with your credit card, credit line and all other forms of available credit, it is a small percentage of what you have available to you. As we discuss paying off your debt, we are suggesting that you get to a manageable level of debt and by doing so, that will improve your credit score.

If your credit card limit is $5,000, an acceptable usage is $1500 or 30%. 

If you are carrying a credit card with a $10,000. Credit limit, stop using this card at $3000. 

If you only use 20-30% of your available credit on any given month, it will improve your credit score and show the lenders that you can be responsible with the credit that you have available to you. If you are using 50 to 100% of your available credit, this appears like you could be in trouble financially. If you are carrying a balance on high-interest credit cards, it becomes even worse. If you can in this position, consider a 0% interest balance transfer credit card. Depending on your credit score, some of these cards have 0% interest for up to 21 months.  

The way to clean up your credit with ratios is to pay down any credit card that has over 30% usage. Quite simply, a credit card with a $1000.00 limit and $800.00 is owing is at 80% and will hurt your credit score. Pay this card down by $500.00, and you are now only 30% usage. Pay the minimums on the other cards until you get them all down to 30-40%. Once you get to this level, start paying off the highest interest cards.

This is also a really good time to find a 0% interest credit card And transfer high balances over to these cards. Now you are no longer paying interest, and you can focus on the interest-bearing cards and get them paid off them return to these cards and get them paid off before the interest starts.

Credit Utilization

A whopping 30% of your credit score is made up of the borrows credit utilization. This is based on the percentage of available credit that you have used. If you use the maximum amount of credit available to you and leave it there, FICO would look at this as someone that can not manage debt responsibly. 10 to 20% is ok with a maximum of 30%

If you only use 20-30% of your available credit on any given month, it will improve your credit score and show the lenders that you can be responsible with the money that you have available to you. If you own 50 to 100% of your available credit, this looks like you could be in trouble financially and if you are carrying a balance on high-interest credit cards, it becomes even worse. 

The way to clean up your credit with ratios is to pay down any credit card that has over 30% usage. Quite simply, a credit card with a $1000.00 limit and $800.00 is owing is at 80% and will hurt your credit score. Pay this card down by $500.00, and you are now only 30% usage. Pay the minimums on the other cards until you get them all down to 30-40%. Once you get to this level, start paying off the highest interest cards.

This is also a really good time to find a 0% interest card deals and transfer high balances over to these cards. Now you are no longer paying interest, and you can focus on the interest-bearing cards and get them paid off. Pay the minimum on the 0% interest credit card until you get the other cards paid off. 

Lenght of Credit History

15% of your credit score is the length of time each account has been available to you and the time since you used the checking or savings account.

This one is a bit of a catch 22. A long credit history provides any lender a longer window of time to look at how you've handled credit on every loan product. If you do not take out any form of credit, you have nothing to support a loan or mortgage when you need it. So the answer is: Keep your credit cards in good standing for as long as possible without overusing them and pay your bills on time. If you have not started using credit, apply for a credit card with no credit history and start using it now to build your credit history.

Your Credit History Timeline

It stands to reason that if you have paid your bills on time for many years, people will start trusting you. FICO looks at the practicality of this as well. A longer stable credit history will give you a higher credit score.  We should all work towards having credit cards for years and looking for our lenders to be calling us with increases. As long as you are holding this credit with a 30% or less ratio, making your payments on time over time, your credit score should just continue to increase slowly. 

 Timelines are made up of some factors:

  • How long have you had each account
  • Age of your oldest and newest account

New Credit

New credit makes up 10% of your FICO score. New credit cards is a sign of trouble to people that have had credit cards for many years. The question arises, why now? Is there trouble?

If you are a new user of credit limit yourself to one card. This is responsible and makes sense to lenders.

Credit Mix

Credit Mix also makes up 10% of your FICO score. Experts say that holding and repaying a variety of debt shows responsibility and that the borrower can handle all forms of credit. They consider this type of person less risk.

There are many types of credit available to us.

Many of these loans come with fixed or variable rates and are only a few of the types of lending options. How you use these credit types is important to your credit score.

  • It is not necessary or important to use all of these different types of financial services
  • It does not matter how many of these services you have, what the credit bureaus are concerned with is the amount of overall credit that you have available
  • If you have any credit services that you are not using, take the newest credit card and cancel it.
  • The older services should be kept over the newer accounts. Anything with a long history has value to your credit score.

Steps in Repairing your Credit Score

Here is what we consider to be the best order of business:

  • Start by looking after your basic needs first. Pay your mortgage or rent, buy your groceries, pay your utilities and purchase your basic needs.
  • There is a free service for checking your credit score every year. It's important to know where you are today.
  • Contact Novita and sign up for their credit management program. 
  • Now for the difficult one. Stop spending on anything not focused on getting your bills back in order. What are you spending money on today that you do not really need
  • What bills are you behind on now and which one will hurt you the most. The way to break this down is simple; if it's a loan or credit card, make a payment of some kind, and it has to be on time, every time.
  •  When you originally took out the loan or credit card, this provider was your partner. As your partner, they understand that bad things happen to all of us. If you've lost your job and you're looking for a new one, let them know. Contact the credit card company and ask to speak to their hardship program.  Explain that you will continue to get them some form of payment, regardless of how small it is. Stay in touch with them on your progress good or bad. If you are making an effort to stay in contact, they may not report you to the credit bureaus. Credit bureaus report in 30-day increments. Being 30 days behind is bad, but going past this will hurt your credit score. As we described above, call them and let them know your in trouble.
  • Only paying the minimum on your credit cards and credit line will hurt you over the long-term. The credit bureaus know that you are in trouble and the balance owing will still be with you 30 years later. Your credit score will remain in trouble ongoing until you start paying down the balance. Create a payment plan where you are paying down something every month against the principal amount.
  • Mortgage loan-to-value. If you put very little money down on your home, you have little value in the property, so it appears more like a debt than an asset on a credit report. This will hurt you over time and make it difficult to improve credit scores. An easy way to improve this situation is setting up your mortgage payment every two weeks. By doing this, you will end up making an extra payment once a year that will go against your principal amount building equity in your home.
  • Only keep the credit available that you need and make sure to keep the credit card and credit lines that are your oldest. The older credit cards show your ability to hold credit for longer periods of time and this is a benefit to you.

Lexington Law

We have heard from many consumers that they had issues with their credit report and were having difficulty getting the vendors to reverse the problem and remove the information from their credit report. This can be very frustrating given that your current credit card rate and future interest rate charges will be based on your credit score. We were pleased to find Lexington Law and a company that specializes in this problem. 

Lexington Law is a consumer advocacy law firm and a trusted leader in the credit repair industry. They have helped hundreds of thousands of Americans work to improve their credit by working to ensure that client credit reports are fair, accurate and substantiated. For some years, Lexington Law Firm has led the credit repair industry. Unmatched in credit repair knowledge, technology, and regulatory compliance, we stand alone at the top of the field. Lexington Law Firm has led the charge to bring ethical and effective credit repair services to consumers. We have assisted more clients in their fight for fair credit than any other credit repair company or firm.

Need Loan with a Poor Credit Score

There are a couple of ways to get a lower interest rate and borrow the amount of money you require even when you have a poor credit score.


A co-signer can put you in position to get the loan and interest rate you require. Requesting a co-signer can be a difficult thing to ask someone as it extends the credit of the person that you ask to sign for you. If you default on the loan, it falls on your co-signer.

Secured Loan

A secured loan or credit line will provide you quick access to a loan. If you have access to the equity in your home or other assets, this will offer you the best interest rates and terms that will help you pay off high-interest debt with a debt consolidation loan.

Debt Settlement Services

Afraid to call your lenders and credit cards companies? To help people out that struggle with this problem, the world has ushered in debt settlement companies. They will call the creditors on your behalf and charge you a fee to make these calls on your behalf. 

How debt settlement Works:

  • First, you stop making payments to all of your creditors and start sending a monthly amount of money to the debt settlement company. Credit bureaus report every 30 days and going past 30 days will hurt your credit score. 
  • Then the debt settlement provider will take the money that you've sent them, contact your creditors one at a time or more if you provide the money, and attempt to negotiate a lower payment amount with each one of your creditors.
  • The debt settlement companies reasoning behind this is because when your debt becomes delinquent, the lender will pass your file over to a collection agency. Once passed over to the collection agency, they will settle to close the file.
  • Before the lender moves to this stage, you may not have been delinquent for many months on paying your bills.
  • This can be a very nasty way of dealing with the lenders that were originally your partner.
  • Your debt settlement company charge you a fee to do this negotiation.
  • You need to realize that your lenders may say no to debt settlement. 
  • Debt settlement is very hard on your credit score.

Could You Manage the Debt Settlement Process?

Calling you creditors to let them know that you are having a difficult time is an everyday occurrence with many credit card and loan providers. They understand that people go through issues. Many of the credit card companies have created hardship programs that you should ask to speak with when you call.  

If you can find information on your free annual credit report that is incorrect, you can contact the governing group and start a dispute any errors that you may find on your credit report. This link will direct you to the forms required to complete this. Once you start a dispute, the credit reporting agency will start an investigation to verify the information that is reported on your account.

If the creditor does not respond within the required 30-day period, the account can be deleted from the credit file. You can dispute an item as often as you want. If the creditor responses within the 30-day period, you can dispute it again anytime you feel it necessary.

When you work with debt settlement companies, they will also be trying to do this on your behalf. They can dispute information with the credit bureaus until they get the desired results. If it is removed, your credit score should improve. 

If you start disputing and reporting negative information just to try and get your credit dropped, you may be committing a fraudulent act. You have to dispute items that you consider to be real.

Some disputed accounts are deleted because creditors do not have the time or manpower to react to so many reinvestigations. If you are trying to dispute a single issue on your account, like an inaccurate interest fee charge, the file will be removed from your credit file if the creditor fails to respond to the issue within the 30-day limit. 

We highly recommend that you look at your monthly invoices for legitimate issues on your account and dispute them if you are having issues with your credit score. If you do this over and over, the odds are that your bad credit reporting issue could go away.

Searching for a Mortgage

If you are looking for a new mortgage as an example, you may go to 5 different lenders looking at finding better interest rates or terms. If every one of these banks, online lenders do a hard pull of your credit, it could look like you are being denied credit, or that you’re trying to get credit from multiple places at once. While this is probably not the case for most people, it can create suspicion. In this case, we have a simple fix for you, contact a mortgage broker. They can pull from all of these lenders at once and provide you a comparison of many providers and only pull your credit once.

Struggling with Addiction

Getting into debt can be a lot like any other addiction. We go to the bar and have a few. We start to loosen up and have a few more. We will deal with all that serious stuff another day. Then we wake up, and we have another $500.00 on the credit card that we cannot afford to pay. Rent or the mortgage is due, and we still need groceries. This is no different than shopping binges or holidays we cannot really afford. We want what we want, and we want it now. If you think you are struggling with a spending addiction, check out this link.

Job Loss

Job loss can happen at any time to any of us. Companies go bankrupt; we can become ill. Fire burn down businesses, flooding and wind from hurricanes can put everyone's life on hold or out of work. We all know this could happen to us, so how can you plan for it.

If you are living beyond your means, how many months could you live if you lost your job tomorrow? Most people could not last six months. That would be a savings of approximately $25,000.00

If you are struggling with saving $25,000.00, the simple answer is that you are currently living beyond what you earn. If saving money was your priority, what would you need to do to change your lifestyle? Here is a simple plan for you.

How about a $20.00/day saving plan? This would take 3.4 years to save $25,000. Don't laugh at this idea, most of us are not doing this now. The reason I like this plan so much is that it gets you looking at a day. Just one day. What do you spend money on every day that you do not need? Coffee, lunches and eating out are just a few items that would be easy to trim back to save $20.00.  Here is a great link with lots of ideas for saving money every day.

Get Rid of the Credit Cards and Start Living on Cash

Why would you ever want to switch to cash? It has never been easier to pay for purchases than now with debit cards, credit cards, and Apple Pay; you should never have to carry cash ever again. Spending has never been easier, and that is the problem for so many of us. 

The process of switching to cash is quite simple. Set up your regular payments with pre-authorized payments for utilities, mortgage/rent, cell phone and so on with auto prepay. This will immediately start helping your credit rating by making your payments on time and help you manage your money. This money is now allocated, and you do not have to worry about these creditors. Try to stagger the payments to match your pay periods, so you balance out your month evenly.  

The rest is your spending money will be the largest costs like fuel, groceries / eating out and leisure cash. How much do you spend every week? It will take you a few weeks to get comfortable with this, but rest assured when you pull out cash every time to pay for whatever it is you're buying, spending your cash changes your attitude very fast. (Don't forget to budget your $20.00/day savings plan.) 

Divorce and Separation

With a 40 - 50% divorce rate in the USA, we need to cover this topic. We hope this never happens in your life but for many of us its a reality. If there is ever a time that people ruin their credit score, it's during divorce and separation. I know this one very well because I've lived through both. My ex-wife had a spending addiction. You can only imagine how much fun that was trying to keep a bank account. When it came time for the separation, the credit card debt was falling back on me as well as the store cards, all the business debt and everything else. My ex-wife was focused on her addictions and believe it or not, was protected by our government as being unfit. I had to take all of the responsibility and pay 50% of our savings to an addict who immediately blew all the money. This cash would have been our children's university expenses, wedding and so on. The system protects idiotic behavior, so start planning if you see an end to your marriage. Pay off all of the credit cards, get the house ready to sell and stop spending. Tighten up your budget in all areas and focus on getting your house in order. This is not the time to start hitting the gym looking for your future partner.  

If you have children, make sure you do everything you can to stop hurting each other regardless of the circumstances. The cost to split a family is devastating already, and the kids are the ones that pay in the end. They pay by no longer getting holidays and being shuffled around every week. That is already enough for them. Here is a link explaining what you and your children will go through during a separation. 

You will now have double rent or mortgage payments. Fuel costs go way up with traveling the kids back and forth. Try to move closer to each other and downsize both properties to roughly the same size as the home. In our city, we now have divorce sectors. All of the homes are tiny, closer to 800-1000 square feet. Families sell the one big house and move into two little ones that keep their mortgage costs in line.  

Divorce is only one of the dozens of ways we can fall into the unexpected debt trap. Job loss and medical bills will also take you out. But consider this, I was not responsible for my credit line or credit cards for years. This just didn't happen overnight. There was nothing unexpected here. I got myself in this place and did not want to deal with the debt. I wanted to keep living the high life. It finally caught up with me.  

Why Consolidate Debt

The biggest reason you need to consolidate is to start paying down that credit card balance. Remember, its 25 years to pay this credit card if you only pay the monthly minimum. 

Why not Consolidate Debt

Debt consolidation can be dangerous if you are an overspender. It can drive you into bankruptcy. Once you have completed debt consolidation you have a credit card with no balance; if you run this credit card up to its maximum again, you may not have another way out.

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