Have you ever wondered just how important your credit score is to your financial decision making process? When you consider that your score will determine whether you will get that new car or house that you have had your eye on for some time it’s no wonder many people share the same thoughts. The fact is , that even small credit problems can cause you to be turned down for a loan now and a few years later. It is important for you to know what your credit score is, and if it’s not very high then you need to learn how to improve it.
There are a lot of things that can negatively affect your credit: unpaid credit card bills, and even an unpaid traffic fine can give you a negative mark at the credit bureau. A short list of other things that could hold your credit back would be: having a loan go into default, having a loan being sent to collections, filing for bankruptcy, home foreclosure, and maxing out your credit cards.
Ignoring your credit card bills, or not paying your bills at all, is probably the worst thing you can do to your credit score and this is one reason you need credit and collections management tutorials. A late payment is much better than no payment at all. Lenders are looking for people who have a history of paying their financial obligations.
If you’re getting annoying phone calls from third party collectors then this is probably not the right time for applying for credit. When a debt is in the hands of a collection agency, it means that the original lender has given up collecting payment from you and decided to hire someone to do it for them. These days home foreclosure has become a big problem.
Many lenders are sympathetic to having problems of making your mortgage payments or having your home in foreclosure; however, this does not mean that you will have an easy time getting another mortgage loan. Instead of filing for bankruptcy, or going through a home foreclosure, you might try to see a consumer credit counsellor and get these management tutorials to help you.
If your credit is poor, don’t give up. Instead go see your lender and ask them to help you make a plan to improve your credit score. Many people who have a very poor credit rating have been helped to the point of obtaining loans and mortgage much faster than they ever thought possible just by making a credit repair plan with their lender.
Some people who have been turned down have found that their score was just below the limit and were able to make very small changes to obtain a loan by getting credit and collections management tutorials.
Most credit departments in America today have become computerized. The credit analysts and collection specialists have been replaced by customer service representatives. The receptionist has been replaced by an obnoxious sounding electronic voice. All these changes have come at a cost to you, the consumer.
When applying for credit, the consumer is now to reduced to a set of numbers that are entered into a computer. Based upon a specific formula, the request for credit is either accepted or denied. Each customer service representative in the credit department is issued a generic set of instructions, and granted an equal amount of authority regarding how to handle every request. In the collection department, the customer service representatives are also issued generic instructions about how to handle disputed claims.
In collection departments many times, extension and deferral requests are now handled by computers . Injecting technology into both of these departments results in financial and emotional costs to consumers. How many of us have designated thirty minutes of our lunch hour to contact one of our creditors to resolve a problem, and after navigating the electronic maze, have been told the estimated wait for this call would be fifteen to twenty minutes? We have various responses to this situation. Our first inclination is to hang up and get on with our lunch hour. This response is understandable, especially if we are sure that the creditor we are calling is the one who is at fault. Unfortunately it comes with the risk of damaging our credit rating and/or costing us significant late fees or finance charges. Another response is to wait on hold for fifteen to twenty minutes.
By the time we talk to a customer service representative, our frustration level is high, and we will likely will have to ask for a quick resolution because our time is running out. In most work places today, personal phone calls are not allowed on company phones. We are required to use our cell phones to make these calls. If it is necessary for us to spend sixty minutes a week contacting our creditors to straighten out their errors, we are using 240 anytime minutes of our cell phone plans. These calls account for over half of a 500 minute cell phone plan!!! In many cases we experience the ultimate in frustration when we spend thirty minutes of our lunch hour trying to deal with a problem, and we discover that the customer service representative we are talking to does not have the authority to handle our dispute. We end the conversation knowing that we will have to spend another lunch hour on the phone with that creditor.
Waiting on hold for long periods of time during a work day can cause people to compromise their jobs. Since people can ill afford late fees and finance charges, they feel as if they have no choice but to continue with the phone calls which cut into their work day. If contact with a collection department becomes too difficult, people who start the process in good faith, may convert to become people who do not care anymore. In many instances, being denied quick access to credit and collection departments results in customers incurring damaging information on their credit reports. One of the results of eliminating qualified people in credit departments in exchange for using generic computer driven credit guidelines to grant credit, is higher risk and more costly credit. Chances are that customer service representatives will not be able to solve problems such as a computer increasing an interest rate from 6% to 19.9% on a customer’s bill because the payment is recorded as a day late, even though the payment arrived on time and was misapplied by the creditor’s accounting department.
At best, it will probably take multiple calls to the institution to correct the problem. The number of credit cards issued to people that can ill afford to have them is another outcome of generic credit policies. Once again, the subsequent payment defaults on these cards are passed onto all cardholders. Due to the considerable sums of money generated by late fees, finance charges and increased interest rates instated after late payments, credit card companies can afford to carry substandard credit card holders.
Some of the results of eliminating collection specialists in collection departments are:
1) Generic instructions do not cover all collection problems.
2) Customer service representatives do not have enough authority to enable efficient solutions for some common problems.
3) Customer accounts become referred further into the collection process due to inadequately trained customer service representatives who cannot “think outside the box”.
4) Due to computerization, it is rare to be able to access the same customer service representative twice. Therefore the customer has to give the complete account history each time he or she makes a call in order to bring the new representative up to speed.
5) When customer service is outsourced, the people working in the phone banks have no background on the accounts, and are unfamiliar with the original representations made by the company.
6) When outsourcing occurs outside this country, many times communication is difficult due to the limited English vocabulary of the customer service representatives.
Before technology was introduced into corporate America, the sales, credit and collection departments worked in concert. In the corporate environment of today, too many times the sales, credit, and collection departments live out the cliche that the “right hand does not know what the left hand is doing”. The consumer is the one who pays for this chaos.
The mere mention of the phrases “online debt collection agency” or “debt collector” is enough to strike fear and loathing in the hearts of many consumers who are struggling to stay current on their monthly bill payments. No one wants things to deteriorate to the point at which they are being hounded by an online debt collection agency, and if you know your financial positions is becoming precarious, you have noting to lose by contacting your creditors to see if you can arrange an easier payment schedule.What To Watch Out ForYour credit score will be reevaluated any time a collection agency reference appears on your credit report at one of the three major credit reporting agencies. Fair Isaac, the company which developed the mathematical formulas by which credit scores are compute, has determined that consumers who have a history of making late payments are very probably going to continue to make them in the future.So if you are late on even one monthly payment (regardless of the reason) it will have a negative effect on your credit rating, and if you fall behind so much in your payments that your loan accounts are turned over for debt collection, you will feel the negative effects for a very long time.How Long Do I Have To Deal With This?An online debt collection record can stay on your credit history for as long as seven years, dragging down your credit score no matter how faithfully you pay your bills in the meantime. As time progresses, the weight it is given when your score is computed will diminish, but as long as it is there you will be penalized when you apply for more credit. Lenders will classify you as a higher risk borrower (which could be seen as a fair debt collection issue in itself), and you’ll pay the price in higher interest rates on those loans for which you are approved which is all the more reason to get that debt collection off your reports ASAP.
If you have just been denied a loan based on low credit scores you are probably wondering how do I fix a ding on my credit score? Well keep reading because the article below will give you a overview of what you need to do to clean up your credit and boost your FICO scores using simple credit repair methods.How To Remove Negative Credit With Self Credit RepairThe very first thing that you’ll need to do is to secure a up to date copy of your credit report and look it over for mistakes and negative information. In most cases the negative information will be late payments, judgments and collection accounts. Errors are generally incorrect loan payment records. If you are unsure where to get a copy of your report you can get a free one or buy them directly from the reporting bureaus websites.When you have compiled a list of the incorrect and negative information its time to dispute it. This process is called self credit fixing and is quite easy. all you have to do is write a credit dispute letter telling the bureau that you disagree with the information on y our report.Under Federal law they will have to get in touch with the original account issuer and ask for documentation proving the information. The original account issuer has 30 days to provide that proof. If they fail to prove the information correct in that time period then the negative mark will have to be taken off of your report and your FICO score will improve as a result.