Credit Repair and Budgeting
When it comes to budgeting one may think that there are is not much to
discuss. You get your check, pay your bills and then take a little extra for fun, savings, etc. While that is probably the plan of attack for most, I am here to tell you that there are other ways to plan, better ways.
No depending on your goals (keep in mind they may change from time to time) you may actually want to structure your budget different ways. There are many opinions and budgeting tools around. Dave Ramsey has a couple different tools (such as the envelope system, my personal favorite), Suze Orman promotes the debt eliminator and expense tracker to name a few.
Now the first step in creating your budget is to determine your goal(s). If your goal is to be debt free as soon as possible your plan is going to be different if your goal is credit repair with the goal of increasing your scores. If credit repair is your goal so you can buy a home for you and your family, we have some great tools and tricks for you.
Credit Repair and Budgeting Tip #1
Now if credit repair is the goal of your budget at this point, much of the money you are setting aside is probably going to be used to settle the debts that are hurting your credit reports and credit scores. Credit repair and paying debt’s is not common sense. You see the balance of collections (unless credit cards) are not what’s hurting your credit reports and credit scores.
The piece of information that’s hurting the credit score is actually the date last reported and date of last activity. The older those dates are the less of a negative impact the account is having on your credit scores. So when attempting credit repair simply paying off accounts may actually update older accounts and hurt your scores more than help. Credit repair just got a little more tricky didn’t it? Before you repair your credit you must first get your credit reports and check out the date last reported and date of last activity on the negatives on your reports.
Credit Repair and Budgeting Tip #2
Now that you have reviewed your credit reports and located that date last reported and date of last activity it’s time to determine your next steps. Credit repair is a process so the next step(s) can actually take 30-90 days. Yes I said 30- 90 days. Why you ask? Well if you have not already noticed credit report’s are full of errors. Take another look at the accounts on your credit reports, are they reporting correctly? Are there duplicates? Are there collections on the reports that you could have sworn you already paid? or accounts that your insurance should have paid for you?
Well the fact of the matter is, credit reports contain errors. This is where the 30- 90 days comes into play. You are going to want to validate/dispute the accounts on your credit reports (whether collections, judgement’s, charge-off’s, tax lien’s, etc) with the goal of getting these accounts updated or deleted. When you initiate a dispute the credit bureaus have 30 days to investigate and make the necessary changes. Sometimes you get two bureaus that delete the account and one that doesn’t You now have to communicate with the bureau that didn’t delete and demand that they follow suit and update or delete as the other bureaus have.
Once you have completed the dispute process you can use the different responses from the bureaus as leverage to negotiate settlement’s with your creditors to get the account deleted as part of the settlement. You have just successfully budgeted and used you finances in a way to complete the credit repair process and save money on settling debts in the process. Congrats on credit repair done right, credit repair with results and credit repair with your goals achieved. Credit repair can work and you can reap the benefits.