Client Newsletters at GreenPath Debt Solutions, May 2009

GREENPATH CLIENT NEWSLETTER
May 2009

Act Fast to Improve Your Credit Score

Don’t let your credit score get you down. Instead, simply take steps to raise it. And take them soon. As any GreenPath counselor will affirm, there’s no time like the present to begin repairing your credit. Because despite what many “credit repair” agencies claim, there are no quick fixes. It’s all about creating a positive history — and that takes time and follow-through. So, the sooner you begin, the sooner your actions will make a difference.

“It’s never as easy to raise your score as it is to lower it. And it’s certainly never as fun. But the fact is, you cannot ignore it,” reminds Natalie Shannon, a counselor in GreenPath’s Immediate Counseling Group. “A proactive approach to improving your credit score is a vital step in improving your financial situation. It should be a top priority.”

After all, the majority of your interest rates — along with key expenses like homeowner’s and auto insurance — are based on your FICO score, the most widely recognized credit score. Primarily determined by your payment history, your available credit and your length of credit history, FICO scores give lenders a fast, objective measurement of your credit risk.

“In theory, the most important thing you can do to improve your score is manage credit responsibly over a long period of time,” said Shannon. “If you want to take an active approach, there are a lot of specific things you can do, and not do — to help move your score upward.”

Paying your bills on time each month is the most important action you can take to improve your credit rating. Other things you can do include the following:

Pay Down Your Balances
With the exception of paying your bills on time, the next most important thing you can do is pay down revolving credit balances. Ideally, you’re aiming to reduce your balances to below 30% of their limits. Keep in mind that moving debt from one account to another will not help — you need to reduce your overall credit balance in relation to your credit limit. The quickest way to do this is to pay as much as you can to drive these balances down. Another strategy used to improve your credit-to-debt ratio includes increasing your limit on a given card. If possible, this can improve your ratio while maintaining a history with that creditor — another factor in improving your credit score.

Maintain Your Credit History
The length of the relationship with each creditor — also known as credit history — also impacts your score. This is why moving credit to different accounts or opening new ones to carry debt, will reduce the average length of your credit history and adversely affect your score. This is also why it is not advised to close unused cards as a short-term strategy to raise your score. In most cases, it is in your best interest to keep old accounts active — even if it means making periodic, controlled purchases on a card.

Research Your Credit History
Check all three credit reports regularly — there may be variations from report to report. Pay close attention to balances, dates opened, notes, status and inquiries. You can get reports from all three credit bureaus — Experian, Equifax and TransUnion — for free from the official government site, annualcreditreport.com, or you can call 1-877-322-8228. Note mistakes found on each report and find the appropriate documentation to dispute each error.

Dispute Errors on Your Report
If your research reveals errors, you’ll have to initiate the dispute process with the lender/creditor and each credit bureau. First, contact the credit bureau with your claim. Include a copy of your driver’s license or social security card, to prove your correct name and address. Next, contact the creditor with a letter and supporting documents to nullify the claim. And last, follow up. By law, all disputes must be resolved within 30-45 days. Mark dates on your calendar to follow up with any outstanding issues after 50 days.

To effectively dispute a charge, it’s important to keep your communications organized and follow up attentively.

Use certified mail to help provide a paper trail to track each dispute.
Create a file that allows you to note all calls, letters and supporting documents that you use to dispute a claim — include certified mail receipts, fax transmissions, and copies of supporting documents.
Take detailed notes of all your communications — dates, confirmation numbers and names/extensions of people servicing your account.

Staying on Track with Your Payments

Sometimes it’s just as hard to break old habits as it is to start new ones. For those recently finishing their GreenPath program, we wanted to share a few ideas
to build better bill-paying habits.

Create a calendar. Sound simple? It is! By hand or computer, make a list of bills and due dates. Mark them off as they are paid.
Auto bill payment. Try online banking. Schedule payments with your bank or arrange auto- deductions with each of your creditors or bill collectors.
Stick to your budget. To the cent! Discipline is the key to free yourself from financial and credit worries. Live within your means and avoid, at all costs, incurring new debt.
Reward yourself. Create a carrot to dangle for yourself. Put room in your budget to reward responsible fiscal behavior.

Protect Yourself from Fraudulent Credit Repair

Based on information provided by the Federal Trade Commission, GreenPath Debt Solutions advises anyone using a credit repair company to consider the following:

Avoid any credit repair company that will not tell you your legal rights and what you can do, yourself, for free.
Avoid any credit repair company that promises to scrub your report of accurate, negative information.
Avoid any company that wants you to pay for credit repair services before they provide any services. It is against the law.
Avoid any credit repair company that tells you not to contact a credit reporting company directly.

Comment? Suggestions?
Write to the editor at editor@greenpath.com