Benefits Of Using Online Credit Reports And Scores
I have used FreeCreditReport.com for over 1 year and I would like to share how this has helped me.
I knew my credit was not in the best shape since I had issues in the past with late payments and with some accounts going totally delinquent due to changes in income, divorce and plain old fashioned poor financial planning. In other words, I was the typical American in debt up to his neck who no longer answered the phone.
Before I go on, let me make it clear that having access to your credit report or credit score does not indicate that this access provides credit repair. Viewing your credit report and monitoring your credit score is much more like observing an X-ray of your financial state of being. This service simply lets you know where you are and what you are up against and does not prescribe treatment.
I performed a search online and looked at a few companies offering credit card reviews, and repair, but overall, I was impressed by the list of benefits of using FreeCreditReport.com. After signing up and upon seeing that I had over a half dozen 'bad' marks on my credit report, I simply motivated myself to resolve these issues and contacted the firms and made payment arrangements. Some of the items that were listed were things I had let go for so long that I had forgotten about them...but they hadn't forgotten about me. Seeing my credit report provided me with the option to see where I could resolve unpaid debt and then improve my credit worthiness...all by myself.
As I set out to resolve old debts, I created a working budget of $300 a month that I could put towards old debt. I only contacted as many of the old accounts as I was able to afford to make payments. It took me the better part of 2 years to work through all the old debts. Keeping in mind that I was willing to make good on the debts and that I was the one contacting these companies to pay my debt, I did not let their managers bully me into paying more than I could afford since this would only have resulted in some current bill not being paid and that would hurt more on the credit report than something that was already 3 to 5 years old. I was determined to stick to my budget and payment plan. I was in charge. If they did not agree with my payment amount and schedule, then I told them I'd call at a later time and see if they are more willing to work with me and then I got to work on another one of my old accounts instead.
For the smaller debts, I learned that it does not help to try to negotiate a settlement since any form of settlement is also then recorded on your credit report and it's almost as bad as having not paid it in the first place. I decided that unless the amount exceeds several thousand dollars that I would try to find a way to pay it in full and resolve the issue with the bad listing once and for all. This lesson was learned when the manager at one collection agency convinced me to settle for a lesser amount on an $1800 debt (20% less or only $1440) so that I could pay off the debt sooner. I accepted, but still did not have enough to pay the full balance so I set up a payment arrangement. What I didn't realize was that as I made each payment and my balance dropped, so did the difference on the settlement price. It turns out that the settlement was based upon 20% off the current balance, not 20% off the original high balance. After paying for several months and thinking I had just a hundred dollars to go to hit the $1440 mark, they said I still owed $600 and they would only settle for 10% less now since the total is now below $1000. They offered a settlement of $540. I was so peeved that I had been ripped off and I decided I wasn't going to pay anything else, but then I finally calmed and grunted a final OK and paid the final $540, but here's the kicker...I had now paid all but $60 on a $1800 dollar debt and the final statement they put on my credit report was, 'Settled for less than the full balance'. They were the ones pushing the settlement and yet they ensured that I barely benefited from having paid the debt. I realized at that time that any future offers to settle must include a guarantee in writing that they will not show the account as 'settled for less' on the credit report, but will simply show it as paid.
Time is another factor. I often had to wait for over 90 days to see the credit listing change, especially when having paid off old accounts that might not have been submitting a monthly report on me in the first place. When paying off old debts that had been closed or sent to collection, it was frustrating to watch the monthly remarks still showing up as detrimental, even though I was making monthly payments. It turns out that since this item is in collection, you may still receive a detrimental monthly rating for that account, even though you are paying on time per your new schedule...until it is paid in full. From their point of view, it is so past overdue that they see no reason to let you benefit from an improved monthly rating. I realized that when it is in collection, the only way to fix my rating for that account was to pay it in full, so even when paying monthly and working towards that goal, my credit rating did not improve until the debt was paid in full.
Once I resolved the issues with most of my creditors, I decided to start creating new credit. My only option at that time was to accept one of those $250 limit credit/debit cards that also included setup fees, monthly fees and fees for just about every activity, but it was a start. After a few months of using the card and then paying it in full, I was able to get a small car loan. The only issue I encountered with my $250 credit card was when I started to let a balance carry and paid just the required payment. What happens is this... since this was my only revolving credit at the time, if I used $225 of the credit and just paid the required $15 monthly fee, my balance floated around $210. This might not seem bad, but my credit score plummeted....because as far as it was concerned, my available credit had dropped to only 15% and I was now a greater risk than I was before I even had the card. Since this card had such a low credit limit, it was detrimental to carry any balance above $50. I quickly learned to zero out this card and kept my eyes open for a card with a higher limit and without setup and monthly fees.
I eventually was approved for a regular credit card ( Apply for the DiscoverŽ Open Road Card
)that provided a $2500 limit to start and had no monthly or setup fees. This happened close to Christmas, so I did end up almost maxing it out, (will I ever learn?) which again lowered my credit score since my available credit dropped to around 5%, but I paid it off within the next 6 to 8 months and once again restored my available credit rating. I was going to drop the other card that had the yearly and monthly fees, but meanwhile I also learned that creditors look for a minimum of a two year payment history (three years or more is best) and so I decided to hold onto that card for now and use it only for small purchases every now and then, and always pay the balance in full. After it has provided a two year history or more, I will consider letting it go. Regardless of the yearly or monthly fees, I will always be thankful that the opportunity existed to get that first card in the first place so that I could start to generate an improved credit history.
Overall, having access to my credit report was the first and most necessary step towards resolving issues with my past credit history and the experience also educated me so that I now know what to watch for as I use my credit today. I am fully satisfied with having used FreeCreditReport.com and I highly recommend that everyone, good credit or bad credit, should view their credit report, monitor their credit scores and learn how to improve their credit ratings while also keeping watch on suspicious activities to prevent identity theft. With such low monthly charges, I just think of my monthly fee as a regular part of my monthly utility expenses and I know that it is both necessary and helpful...just like my phone, cable or electricity. Good credit comes from creating good habits, but a good credit rating comes from being able to see and learn how your actions are interpreted, and the only way to do this is to have regular access to your credit report. I wouldn't have it any other way.
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