Every one wants to be great – whether it is in their eyes, the eyes of their family or the eyes of the world. Status is important in all societies and all level of society. There are a limited number of ways that most people can achieve the status of great – usually it involves power, position or wealth. The most important factor is that the person feels a sense of self-worth and self-esteem.
The problem with these status points in modern society is that they aren’t based on anything that is real. They are just perceptions or masks of reality that have no substance. In the past decades and centuries a person’s status was tangible. He was the one who feed the community by hunting down the wooly mammoth. She was the one that educated all the family’s children. He was the one that slayed the dragon to protect the village.
Everyone makes mistakes. For many people just one mistake may be all it takes to damage the permit record for life – or at least for the 7 to 10 years that it takes for the mistake to fall of the credit history. Experts will often tell consumers that the only way to correct the problem is with time.
The industry has thrown up a brick wall that forces consumers with credit problems to beat their heads up against that wall. Instead of working to fix the credit ratings the industry wants to ignore the problem until it goes away on its own – by falling off the credit report because of time.
Consumer advocates and financial industry leaders decry credit as one of the worst things for any person any where and at any time. Many blame credit for the out of control debt that consumers (and the United States as a nation) face today. The truth is that credit is one of the greatest tools that consumers have ever been given. It opens up opportunities for individuals, companies and even communities that would otherwise be missed completely.
Credit it not a new tool for the financial industry. It has been around as long as there has been an economy. Merchants quickly learned that consumers needed the ability to buy now but pay later (usually when the crops came in or some other similar transaction occurred). Many people were simply living on a yearly budget and the merchants were the tally.
The credit rating has become the leading factor for many aspects of the consumer market. It can determine the interest rates that lenders offer applicants on loans. The credit rating can establish the limits on credit. Getting a certain credit rating can even be reflected in the price of insurance premiums.
Credit ratings are generated through the FICO score. The FICO score was developed by the Fair Isaac Company to predict the amount of risk involved with each customer. It uses mathematical formulas, based on past activities. Lenders look at these numbers to see what risk there will be of an applicant not repaying the money. The lower the credit rating then the higher the risk to the lender – translating into costly interest rates and small credit limits being offered to the borrower.
Some aspects of the financial industry thrive off consumers that have low credit ratings. These are the customers that are most likely to carry balances on credit cards, pay late fees and be willing to foot high interest rates. The low end of the credit score bracket is the cash cow for certain lenders.
It is important that you not be part of that bracket. There are things that you can start doing today to help you understand your credit history and help you work towards a better credit rating. Understanding the rules and regulations can be time consuming and sometimes confusing, but there are a number of financial coaches that can help guide you out of the low credit rating hole if you are concerned about taking it on by yourself.
Credit Scores are one of the biggest factors directing the lives of consumers. It is the one number that can determine how much companies trust a borrower, customer, or even potential employee. It is important to understand how credit scores are established in order to be in a position to direct the path of any decisions determined by that number.
Not all things are created equal and this goes for negative credit listings on a credit history. Lenders, companies, and reporting agencies give more weight to some negatives than to others.
Bankruptcy
Filing for Chapter 13 or Chapter 7 bankruptcy is one of the worst things that you can do to your credit report. It tells lenders that not only will you not pay your debts but that you will stiff them with the bill in the end. The recent change in the laws has made it more difficult to file bankruptcy, but this is a negative credit listing that will remain on your credit history for ten years.
Other Public Records
This is the information that is published by the county, state, and federal courthouses around the country. The same or similar information may be published differently in the various locations so it is hard for the credit rating to read these judgments but public records will pull down your credit score.
Credit reports are not always accurate. It may be surprising to discover that even with today’s technology people still make mistakes and ultimately it is the people that fill in credit information. That is one of the reasons that it is important for credit histories to be reviewed on a regular basis. It can be particularly valuable to review a credit report before applying for a loan so that any errors can be cleared up ahead of time.
Working out a credit history can get confusing and frustrating. It almost seems like creditors want to keep the information to themselves. And each creditor has a different process, form, or secret code that has to be understood before the process can begin. It may seem complicated but the good news is that every consumer has basic rights that each creditor is required by law to fulfill. The Fair Credit Reporting Act was implemented by Congress in 1970 as a way to help consumers navigate the maze of personal credit.
Finances can be a scary subject for most consumers. Trying to weave through the maze of codes, industry language, and account information can also make finances overwhelming. It is not a task that you should consider taking on without some experience, determination, and time. Sometimes it’s better to turn to a specialist even if you do have the ability to work out your financial situation on your own. This can be especially true when it’s time to work out any reporting problems in your credit history. All of the laws and rights may be spelled out and easy to read, but there are always exceptions to the rules and the experts are skilled at finding these exceptions and helping you to fit them to your own needs.
Credit has become an important aspect of society today. It is hard to purchase a home, a car, or many other items without utilizing credit. Even something as simple as finding insurance can be affected by credit. Many consumers are looking for quick and easy fixes to credit problems. Although there are some relatively easy fixes for credit errors, most of the situations will take time to repair and some will take longer than others. The internet, the books store shelves, and even the public libraries are all filled with ideas for creating healthy credit. The sheer magnitude of information is one thing that drives consumers to talk to and work with professionals that specialize in credit corrections. Some consumers prefer to go it alone and that choice can get them in more trouble than when they first started.
Creditors are not evil – despite what some financial industry experts say. These are companies that have risked their money to let consumers live a life beyond what their means would allow. Creditors may be annoying and greedy, but they are not necessarily evil. Finding problems on your credit history means you will have to deal with your creditors. It doesn’t matter if you are handling the credit corrections yourself or if you have decided to hire an outside credit corrections specialist. The odds are good that at some point you will have to deal with creditors. If you can keep the idea in the back of your mind that credit is a business then it will make the encounter much easier to handle.
Credit problems have driven many consumers to desperation and the wolves have smelled that desperation. A number of companies, systems, and clinics have popped up to take consumer’s money – with the promise of quick and easy fixes for credit problems – only to disappear without results just before the law can catch up.
It can be confusing and difficult to determine which credit correction company or individual is real and which ones are charlatans. Desperation to get things back on track may make it tempting to ignore the signals and choose the company with the most promises. Choosing the wrong credit corrections expert could leave you in more trouble than when you began (and with less cash if you have to pay up front). A little research will go a long way toward helping you uncover the pretenders and locating the best credit corrections professionals in your area.
The credit reporting system is an arbitrary one. Most listings can remain on a credit history for seven years and some (like bankruptcy) will last 10 years. Although many of those listings lose importance in the algorithms that the reporting agencies use long before the time is up, those marks still hurt the creditability of the consumer.
Creating change is one way that consumers are learning to combat a bad credit history. There has been a long line of companies stepping forward to assist with the changes. Some of the companies follow the guidelines set up by the government and the credit reporting agencies, but others step completely out of bounds. It’s these renegade companies that have put a stigma on credit changes and made many consumers begin to question how ethical these changes might be.
Long ago, in a far away place, the powers that be issued a decree that matters on credit histories would be good for seven years. In the most severe cases it would be ten years. There was no research to support the decision. It was an arbitrary number placed on unknowing consumers.
The credit ratings are based on the FICO number. This number system was started by Bill Fair (an engineer) and Earl Isaac (a mathematician) back in the 1950’s. The two came up with the concept that business decisions could be bettered decided by using the right combination of data. The age of the information was not that important to the algorithms that were created.
The credit industry can be a confusing world for consumers. It is even more frustrating because of the number of myths that exist about credit reports, credit ratings, and the credit industry itself. Many of these rumors can be easily put to rest with just a little research and review.
It only makes sense that the credit industry has a way to flag consumers that are not paying the debts that are incurred. The algorithms used by FICO and the systems created by the different reporting agencies use the negative listings to help lenders make better decisions about where to lend capital.
The problem with the equations that the credit industry uses is that they don’t also give some weight to good behaviors that consumers may practice. Those consumers that make timely payments, early payments, or pay off balances early get no recognition for the diligence or wise financial moves required to make those payments.
Tough times can cause a ripple effect in a person’s life. It is possible that a bad situation can trigger another problem that ends up making the bad situation much worse. Major changes in life can be the tough times that push a person’s credit score straight down the drain. Although it may not be possible to avoid most of the tough times there can be ways to manage them.
It would be nice for consumers if they could be the ones to design the credit scoring system. Currently the credit industry looks at the circumstance that consumers face – how much debt, type of job, savings, and other financial events. Most consumers would prefer that lenders look to the heart of the situation instead.
The average American household owes around $18,000 in consumer debt. That does not include any educational loans or mortgages that might also exist. Although there are more experts on the television and the radio telling consumers the importance of living debt free and there are enough books on the shelves to reach to the moon, consumers continue to bury themselves in debt.
The crisis has only been made worse over the last few years. Relaxed lending practices may have seemed like the way to help everyone reach the American dream but the dream has turned into a nightmare. People that should not have qualified for loans have been allowed to qualify under special exceptions. As the exceptions expire the inability to pay is revealed. Consumers face few choices.
It may seem like the credit industry holds all the cards, but that is just an illusion. There would be no credit industry without consumers utilizing the system. The power lies in the discretion of each consumer. It comes down to making the right decisions in the right way and anticipating problems before they can arise. The best defense to credit problems is a good offense.