Post-Bankruptcy Credit Improvement

 

So you did that dreaded thing people call reputation suicide and you filed for bankruptcy now your credit is likely as low as it's ever been. But it doesn't have to stay that way. The moment you declare bankruptcy, there are actions you can take to immediately start rebuilding your credit. 

You are getting a fresh start and it's important to build a solid foundation of knowledge so you can avoid the pitfalls that led you to bankruptcy in the first place if it was poor personal financial management that led to bankruptcy in the first place. 

Here's how to start improving your credit score right after a bankruptcy event. 

Do a Careful Credit Report Check

 

Look over your credit reports. All three of them, Experian, TransUnion and Equifax. Then look them over again. Carefully check that each and every existing account is being reported properly in all three credit bureaus.

Old debts that were wiped out by bankruptcy should indicate a "BK" status. Debts that aren't reported properly can continue to damage your credit score, so make sure that any debts included in your bankruptcy filing are now "cleared debts" are indeed being reported properly.

 Pay Your Mortgage and Rent On Time

 

If you managed to keep your house in the bankruptcy process, make sure you do everything in your power to pay your mortgage on time. 

Your mortgage has a bigger impact on your credit than anything else. If you can manage to keep it current, that'll really help your credit score. If you go delinquent on your mortgage, the rest of the techniques in this article won't help all that much. 

If you are still struggling to make mortgage payments call your loan holder and try your best to refinance your mortgage loan. It's possible to refinance a mortgage after bankruptcy. If you are living in a rental PLEASE do yourself a favor and pay your rent on time! Your rental payment history can now be used to boost your credit score. 

Get a Secured Credit Card 

Get a secured credit card as soon as possible to start building up your post-bankruptcy creditworthiness. 

A secured credit card entails you putting down a small deposit, usually between $300 and $1,000, to open a cash-backed account. Your money will be held as collateral. You can then use your card as a credit card. Pay it off every month, on time, to start rebuilding your credit.  

Do your research and make sure that Secure Credit Card payment history is being reported to all three credit reporting agencies. 

Cutting Your Spending 

Having to file bankruptcy means that at some point in your life, you spent more money than you really had. In order to prevent that from happening again, you need to make sure that you're regularly making more money than you're spending. 

Any additional cash you earn can be used to improve your financial situation. It can be used on improving credit, paying off debts that weren't wiped out during bankruptcy, or building savings. 

Start by cutting back on auxiliary spending. Move into a smaller house or apartment if you can. Try to save 10% to 20% of your income every month. There is a whole other blog post on that coming soon. 

Make a Small Installment Purchase 

An installment purchase is treated differently on your credit report than revolving credit (e.g. credit cards). They're treated with more weight. 

An installment purchase includes car loans, home mortgages or even furniture purchases that are paid off in installment form. 

Make sure that any installment purchase you make is reported to all three credit reporting agencies. Getting installment loans and paying them off on time can do a lot for rebuilding your credit. 

Don't misunderstand me here, one loan at a time pay it off and then do another. You are rebuilding your credit worthiness not digging another grave.

If you apply these techniques, your after-bankruptcy credit can improve to the point where you can open new unsecured accounts within 2 or 3 years.

GOOD LUCK! 

The Easiest Way to Remove Bad Items from Your Credit Report

Did you know that it's possible to remove bad items from your credit report? Any inaccurate item showing up on your credit report that's damaging your credit can be removed, otherwise you have the right to sue the credit agency. 

Here's how to remove bad items from your credit report. 

1. Get a Report from All Three Agencies 

The first step is to get a credit report from all three credit reporting agencies. You can get your report once a year for free from annualcreditreport.com

Look through each and every one of your accounts carefully. Is there anything you don't recognize? Anything that's overstated or understated? 

Highlight any suspicious accounts. Note the account numbers and descriptions. 

Some bad items will appear on just one agency's report, while other errors will appear on all your credit reports. 

2, Beginning the Dispute Process 

Look for the dispute address of the credit agency you want to contact. It's usually on their website. Also look at their expected response times and policies for removing items. 

The FCRA states that they must respond within 30 days. If you don't get a response within 30 days, you may be eligible for a lawsuit and the item has to be removed from your credit file. 

Your dispute letter must illustrate exactly why you believe the account is erroneous and it also needs to list the exact account number(s) as it/they appear(s) on the credit report including the account description listed on the report.

MyCreditSystem gives you full access to a DYI Credit Repair / Credit Literacy Program including precise credit dispute letters and instructions for each case scenario to dispute credit report errors and/or remove collections, charge offs, medical collections, bankruptcy, repos, foreclosure, evictions and even student loans,

Be sure to be very clear about what you want them to do. For example, if the account exists but isn't actually delinquent, let them know that you want them to update the status to "Never Delinquent" rather than to remove the item because your credit history can be adversely affected by removing long standing accounts you have paid but have been late on.

3. The Next Steps  

One of three things will happen once you've sent in your dispute letter: 

• They respond and remove the item. In this case, no further action needs to be taken. 

• They respond and say that the item is not an error. They need to also provide documentation stating why this is the case, including the actual credit filing by the creditor.  

Look over the filing. Was this account opened by you? If not, you may have an identity theft and credit fraud issue on your hands. If it was, but is being incorrectly reported, you need to contact the creditor directly to work out the issue. 

• If they don't respond. In this case, you have certain rights, including at times the right to have the items removed or the right to a lawsuit. Consult a lawyer for specific rights in this case or use MyCreditSystem to save thousands of dollars and repair your own credit legally.

The whole process of disputing a report item should take no more than three hours each. Those three hours could result in your ability to open credit cards, your ability to buy a home or your ability to buy a car at much better rates. The choice is yours. Can you rely on someone else to do this for you immediately or are you going to take control of your credit repair timeline. 

The Advantages and Pitfalls of Credit Counseling

Credit counseling services receive a lot of mixed reviews. There are many reputable services, but there are also credit-counseling companies with horrible reputations. Credit counseling is now required before filing for bankruptcy. 

If you’d like help with your debt, be aware of the advantages and disadvantages of using a credit counseling company. 

Positive Features of Credit Counseling 

1. They tend to have more clout with creditors. Some creditors are more willing to negotiate pay-offs and payment plans with credit counselors. You might get a better deal and more breathing room with a credit counseling service.

2.    It’s possible to consolidate your payments. Many firms will consolidate your payments into one payment each month. You’ll be making a payment to the counseling company. Understand that the credit counseling firm must then make all the individual payments for you.

3.     It can be easier to get new credit. As part of your credit counseling, it’s common for new credit to be secured for you. They’ll go out and work to have your credit applications approved.

4.     An end to the harassment. When you’re put on a repayment plan, the debt collectors will leave you alone. Remember that you can do this yourself by simply making a request in writing. 

A reputable and honest credit counseling service can be helpful. There are many potential advantages to utilizing the expert assistance they can provide. But there are also several possible negative consequences. 

Pitfalls of Credit Counseling 

1.     They might not actually pay your bills. There are many complaints every year of credit counseling companies taking your money and then failing to make the agreed-upon payments to your creditors.

2.     They often over-promise. Just like any other company vying for your dollars, sometimes the marketing is a little too good to be true. After the counseling company takes their cut, you might not be any better off.

3.   It can possibly make your credit worse. There is one tactic commonly employed that can have a negative impact on your credit score. The credit counselor may advise you to stop paying on your debt and instead put the payments into an account. 

·   Once a large enough lump sum has been accumulated, the counselor would then approach your creditors with offers to pay off the debt at a reduced amount.

·       During this process your credit will suffer due to the non-payment.

·      The account used to store the money is under the control of the counseling firm. Do you trust them? 

The potential pitfalls are serious. It’s very important to do the necessary legwork to locate a reputable credit counseling service. 

Many consumers believe that a service with non-profit status must be reputable. Understand that being non-profit is primarily about not showing a profit at the end of the year. Paying bonuses and higher salaries can accomplish this feat. 

Ideally, you’ll be able to find a counseling service in your state that you can visit in person. Checking with your state Attorney General is an effective way to see if any complaints or legal action have taken place. Doing an online search is also likely to turn up any negative reviews or complaints. 

Inquire about the services offered and the fees. Ask how the employees are paid. Are they compensated more for signing you up for certain services? Get everything in writing. Verbal promises are likely to be conveniently forgotten. 

Credit counseling can be beneficial or counterproductive to your goals of reducing and eliminating your debt. Find a reputable credit-counseling firm by doing the necessary research. Be sure your financial situation will move in a positive direction. 

If you want to save hundreds or thousands of dollars and make sure your credit is repaired correctly you can do it yourself with a DYI Credit Repair System like MyCreditSystem it gives you access to a complete Financial Literacy Program and all the necessary template letters you will need to successfully fix your credit 

The Basics of Credit Clean Up

Credit can be a fickle thing and if you don’t know much about credit, your credit report or score and how credit works it can seem overwhelming to try and find ways to fix or clean it up.

As overwhelming as credit practices may seem there are ways to clean up your credit and plan for a better financial future with smarter spending and borrowing practices.

There are four main ways to clean up your credit and the more cohesively you use them together the better the result at the end. This article will briefly go through the four areas and how to take part in them. Through your research you are likely to come across more in-depth information that will play a part in working with the information provided here to give you the best results in cleaning up your credit.

The first way to start your journey toward better credit and a higher credit score is to review your credit report for errors, dispute and/or demand that all inaccuracies be removed immediately and any collections or accounts you do not recognize be validated. To do this you need to get all three of your current credit reports and lay them out in front of you. 

Take your time reviewing the credit reports and use different color highlighters to highlight all the accounts that are currently open and have a balance, collection accounts and credit report errors. Some of your the accounts are likely past due, while others may not be. To get a complete look at what you need to pay off, you need to color code and highlight them all. 

Remember NOT to include your monthly living expenses like utilities or rent that may be listed on your credit report. Highlight only the debt you need to get out from under, credit report errors and accounts you want to dispute or that need validation. Once you do that the next step to forming a debt pay off plan for your open accounts is to consider the highest balances or highest interest rates first since these are more harmful to your credit, though the smaller accounts may be easier to pay off. 

Remember, while you are paying off larger debts with larger payments, you must still maintain the minimum payments on monthly accounts and living expenses to keep from worsening your debt.

The next step in the credit cleanup process should be to consider the good accounts you have and work hard to keep them in positive standing. These accounts will help to steady and improve your credit when you get the "bad accounts" paid off or removed from your credit reports through disputes or debt validation. 

When you have paid off or removed "the bad" and past due accounts, you can consider adding a good or small account to keep in good standing, but don’t consider adding anything until you have dug yourself out of the hole you are currently in.

Next, you want to make sure you check over your credit report for errors at least once a year. This can happen by accident or through the presence of identity theft. Either way you need to find it and dispute it in a timely matter. 

Each credit reporting agency has their own dispute policies and procedures. Often times this information will print at the end of your credit report and should be readily available on the agency web sites as well however, never dispute anything on your credit report online. 

Always submit your credit disputes and debt validation requests it in writing via certified mail, return receipt requested so that you have proof of your dispute/debt validation requests so that the credit bureaus are obligated to follow through within the Federal and State Consumer Protection Laws.

When you dispute credit errors online you loose a lot of the protections and safeguards in place that benefit you!

The last and probably most important thing to consider when working to clean up your credit is to form and set up a plan for future financial success. You need to be able to handle money in a smart way and avoid getting back into the same situation or having to work so hard again. To do so you need to learn to live within your means and learn the difference between need and want. This can be especially hard if you’ve become accustomed to a certain standard of living or have friends with a higher standard of living than you can afford. 

You need to be honest with yourself and with others about the life you can currently have, this will help you be about to reach the life you want in the future. Realistic budgeting is a discipline that will take time to master but is essential to good credit and your financial future.

I have learned a lot about personal financial management and how to clean up my credit myselt thanks to   myCredit System - myEcon  membership which includes myCashFlowManager  it has been a game changer that opened the door to better credit and better personal financial management for me and my family. 

Top 10 Ways to Get Your Student Loans Forgiven

With the climbing cost of education, student loan debt is becoming a bigger burden with each graduating class. Luckily, however, there are a few ways to reduce, or even eliminate, your student loan debt. 

Consider these career strategies to shrink your student loan debt: 

1.     Join the military. Serve Uncle Sam and you can eliminate up to 100% of your student loans. The amount of forgiveness depends on the type of student loan and where you’re stationed. If you’re considering joining the military, speak to a recruiter and ask for more information.

2.     Become a nurse. Due to the demand for more nurses, nurses are eligible to receive 100% forgiveness for Federal Perkins Loans. Nurses also enjoy high salaries, especially considering that it only requires two years to learn become a registered nurse.

3.     Work with the disabled. Many organizations offer this student loan forgiveness program. If you provide early intervention services to the disabled, you may qualify for up to 100% forgiveness of your Federal Perkins Loans. 

4.     Become a faculty member at a Tribal university. The government has labeled a few colleges and universities as tribal schools. These primarily serve Native Americans or Alaskan Natives. If you teach at one of these schools, you can have up to 100% of your Perkins Loan forgiven.

5.     Join the Peace Corp as a volunteer. You can have a great experience in a new country, help others, and reduce your student loan debt at the same time. You can earn up to 70% forgiveness of your Federal Perkins Loans.

6.     Join AmeriCorps VISTA. This is similar to the Peace Corp, but serves challenged areas of the U.S. Again, loan forgiveness can be up to 70%. Perhaps not exotic as the Peace Corp, but you can potentially stay close to home.

7.     Become a teacher. There are many places in the U.S. in desperate need of teachers. Most of these areas serve lower-income neighborhoods. Teach for five years and you can eliminate up to $17,500 worth of Federal Stafford loans. However, Plus Loans are not eligible.

8.     Become an educator. This program is much broader than the program aimed solely at teachers, and will forgive up to 100% of Federal Perkins Loans. You can be a speech pathologist, school librarian, staff member at a pre-kindergarten program, or even a teacher. Other professions can also qualify.  

·       Depending on the position, you may have to work for a certain number of years or have an advanced degree.

9.     Become a firefighter. If you’ve considered becoming a firefighter, there’s good news. You can receive up to 100% forgiveness of your Federal Perkins Loans after serving a few years.

10. Become a police officer or corrections officer. The firefighter plan also applies to police officers and corrections officers.

Many career options offer partial or complete student loan forgiveness. There’s a common theme to these programs: you must be providing an important service to those in need. You can gain valuable experience and enjoy the knowledge that you’re helping to improve the lives of others while you get rid of your student loans.

You can also use the DYI Credit Repair Program Template Letters in MyCreditSystem to have most if not all your student loan debt wiped out. 

What to Look for in a Contract with a Credit Repair Agency

Your most important tool against bad credit repair deals is your credit repair contract. Before you sign any kind of contract with a credit repair agency, you need to make sure you're protected.  

Most contracts are written by the credit repair agency and are naturally written more for their benefit than yours. That said, if you know what to look for, you can make sure that everything you need is covered in the contract. 

Here are the most important clauses to look for in any credit repair contract. 

What They're Agreeing to Do 

• The contract should explicitly state exactly what the credit repair agency will do for you. 

For example, they might commit to sending X letters to X agencies to help you remove items from your report. They might agree to follow up with those companies, as well as to advise you on lawsuit opportunities. 

• If you're having them also take on a debt consolidation role, make sure you also cover all your bases there. The agreement should spell out explicitly how the consolidation process is handled and what kind of support you'll have during the process. 

The Cost Structure 

• The contract should contain details on how the program is priced. Any implied verbal guarantees should be written into the paperwork. There should be no additional costs that you don't understand, no fine print with extra fees. 

• Different credit repair agencies charge differently. Some require an upfront fee, others don't. Some charge a percentage of debt and some charge a flat fee. 

• If you're just having the repair agency remove items from your credit report for you, usually the payment will be made in the form of a "per item" fee. For example, an agency might charge $250 for each item they can remove from a credit report. 

Make sure you understand the cost structure and any additional costs before signing the paperwork. 

How Long before You Can Expect Results 

• The contract should have a set duration. Six months to one year is a good period of time for an extensive credit repair project. 

• If a contract doesn't have a set duration, make sure you have a crystal clear cancellation period. After all, if you've seen no results for six months, you want to make sure you can back out and find someone else to help you. 

These are some of the most important things you should look for in a credit repair contract. Before you sign anything, make sure you read over every line and fully comprehend everything you're signing. If the contract accurately represents everything that you talked about verbally and you believe it's a good deal for you, then sign the paperwork.

Debt Consolidation to Raise Your Credit Score ?

Debt consolidation is a form of debt management that allows you to find a way out from under debt while still avoiding bankruptcy, garnishment and other extreme financial measures. 

Debt consolidation allows for you to use one loan to a pay off all other accounts and loans you have leaving you with one monthly payment and interest rate. 

The way this can help your credit score is by allowing your current accounts, regardless of status, to be considered paid and in good standing. You also open another loan account which shows a certain level of good credit and it then becomes your responsibility to pay the payments on time to keep the debt consolidation as a positive loan in good standing.

There are many debt consolidation companies and with any consumer driven industry there are fly-by-night scam companies to watch out for. When looking for a debt consolidation company and loan take the time to do a little research and learn as much as the company and the people who work for that company as you can. You should also ask for references to talk with real people who have experienced the company and staff members you are considering. The company and employees should be trained and certified to work on debt consolidation cases and offer debt consolidation loans that are reputable and quality.

Before contacting a debt consolidation company you should take the time to get your debt in order. This includes making a list of all the debt you want to include in the debt consolidation. For each of the items you include on the list, the following things should be included: creditor, creditor contact information, monthly payment, interest rate and current balance. This will give you an idea of the debt you have and the basic information about each one. You also need to total it all up and write it in big numbers on top of the list. This is often one of the hardest parts of debt consolidation, as you have to look at the whole picture and if you haven’t been keeping track along the way, it can be overwhelming. But, this is among the first steps to taking control of your debt, instead of letting it control you.

Debt consolidation can also be followed by other debt management tactics, like debt negotiation, that can help to minimize the debt to allow you to take out a smaller loan and save you more money in the long run. Many credit counselors are trained in the art of debt negotiation and should offer that as a service with your debt consolidation. When you negotiate your current debt you have the opportunity to settle at a lower amount than the current balance, which helps your debt consolidation loan and your repayment over the life of the loan.

If you are looking for a way to get out from under debt and help your credit rating and score, debt consolidation could be the right choice for you. Debt consolidation is a smart way to get rid of debt while still preserving integrity on your credit report and can boost your credit rating. When all your debts are paid, this changes the status of the account and when your credit score is recalculated it should reflect this new positive status and boost your credit score. This can bring you hope and instant success in getting your debt under control if and only if you are able to get a loan for debt consolidation. 

If you are struggling with your debt, paying bills and need to repair your credit score before you can get another loan I recommend a DYI credit repair program like MyCreditSystem which can save you thousands of dollars and may even help you remove those collection accounts from your credit report without paying them. 

Understanding Your Credit Report and Score

Your credit score is based on a formulation used by the credit reporting agencies that creates a general average of your credit history and assigns a number to show whether you have excellent, good, fair or poor credit. While, your credit score is an average of your credit history, it is often the first thing creditors look at when deciding whether or not to give you a loan or credit account. While, you are unable to change the credit score directly, you can change and better your overall credit and credit report which will directly reflect on your credit score.

When looking for a way to improve your credit score there are many steps in the process and it will take a little bit of time for the improvements you make to reflect on your credit score. You can go through the process alone, or you can enlist the help of a credit counselor which can help with the process, paperwork and the law on what you are allowed to change and dispute and what you are not.

1-    Request all of your current credit reports 

Your credit report is available from each of the three major credit reporting agencies, including Experian, Equifax and TransUnion. All of these agencies have a web site where you are able to order your credit report that can be delivered in paper form or instantly electronically. Once you have your credit reports, print them out. This will take lots of paper, but it worth it to have them spread out in front of you for the best results when looking over them. 

2-    Know your credit

You may not know your current credit or have kept up with what is on your credit report until now. This is a big mistake. You should purchase, or get a free credit report, once a year to check for mistakes or fraud. If you never have, you will need to pay extra close attention to the items on your credit report.

3-    Go through your credit report with a highlighter

Go through every part of your credit reports including the personal information, highlight anything that is incorrect. This should include wrong addresses, misspelled name(s), any accounts and other items you don’t recognize. Also, mark items that are yours but that you may want to dispute the balance, interest rate or other parts of the account.

4-    Follow the directions for disputing inaccurate information

At the end of the printed and electronic credit reports are the instructions on how to dispute items on your credit report that you feel are inaccurate. You can complete this process in writing or online. When doing so you will need to provide ample proof of the item you are disputing, whether that’s receipts for an item you paid or proof of your identity to dispute an identity or past address problem. You should also always make copies of everything you send to the credit reporting agency.

Regardless, of the information you find on your credit report, it’s important to understand how credit works and how you can improve and dispute the information on your credit report. The most important thing to take away from this is the need to get all three of your credit reports every single year to check for inaccurate information. This is not only smart financial practice, but one of the best ways to protect yourself from identity fraud.

What Debt Collectors Can and Can't Do

Debt collectors are like mosquitos. They can be annoying and they’re hard to dissuade. Fortunately, there isn’t a whole lot a debt collector can do besides call you and send you mail. The Fair Debt Collection Practices Act (FDCPA) spells out the actions that a debt collector may and may not undertake in the process of collecting a debt. 

Your state has additional laws that may limit debt collectors even further. It’s worth investigating these laws, so you understand the rules and can play the game accordingly. 

What Debt Collectors can do: 

1.  Call you directly between the hours of 8 am and 9 pm. However, you have the right to request not to be contacted by phone again in the future. This request must be done in writing. You can also insist that the debt collector only contact your attorney instead. 

2.   Contact you via mail. However, it can’t be obvious to someone looking at your mail that the correspondence is from a debt collector. Postcards aren’t permitted, since the nature of the correspondence would be obvious. 

3.  Take you to court. The details are very state specific, but your creditors can certainly take you to court. For smaller debts, this rarely happens. If you had the money, you’d have already paid it. If it you don’t have it, an expensive legal proceeding isn’t worth the effort. 

4.   Request postdated checks. This is allowed under the FDCPA but may not be permitted under your state’s debt collection laws.

5.  Report your payment delinquency to the credit bureaus. Paying your bills on time is an important part of your credit score.

6.  Accept less than the full amount as payment in-full. This can be a great option to get the collection agency off your back. The debt may appear as “settled” on the credit report, which harms your score. You may also have to pay taxes on the amount of the debt that was forgiven. 

Debt collectors must follow the laws provided by the FDCPA and your state of residence. If you owe money, it’s reasonable to expect that your creditor will try to collect that debt. However, there are limitations. Many collection practices are illegal. 

What Debt Collectors Can’t Do: 

1.  Call you on a Sunday. Monday through Saturday is fair game, but even debt collectors have to take a break on Sundays.

2.  Call you after 9 pm or before 8 am. They only way debt collectors can call you outside these hours is with your permission.

3.  Contact your employer. Unless the debt is related to non-payment of child support, your employer is off limits. They also can’t contact you at work if they know you don’t want to be bothered there.

4.  Contact your friends, family, or neighbors regarding your debt. They can, however, contact these people to determine your address or phone number. It cannot be revealed that you owe money.

5.   Use threatening language over the phone. Vulgar language or the threat of prison or loss of reputation isn’t permitted.

6.  Call you repeatedly in a short period of time. This is open to interpretation. But if you’re constantly receiving calls, it can be considered harassment under the FDCPA. You can sue the debt collector in this case.

This is the short list of items that many debt collectors have been known to violate. Familiarize yourself with the FDCPA for additional restrictions. Remember that these rules only apply to debt collectors and not the in-house collection employees of your creditor. See your state laws for additional guidance. 

Debt collectors may be annoying, but they are required to follow the law just like everyone else. Each violation of any of the rules can carry a $1,000 fine and debtors have been very successful collecting these fines in court.

What is Credit and How Does it Work

Credit may seem like a complicated fickle thing, but it can be demystified and used to help better your credit rating or credit score.  So what is credit? Credit is when you borrow money against your own name in order to make weekly or monthly payments on an item of high value or price. 

The highest forms of credit or loans (borrowing) are often for vehicles and homes, though jewelry, electronics, recreational vehicles and many other items are available on credit including cosmetic procedures, dental care and even home furnishings and home goods can be bought on credit. 

With the expansion of credit over the past decades stores have cropped up their own store credit cards that you can use to purchase items in their stores and on their web sites on credit.

The positive of credit is the ability to finance something you cannot immediately afford and the option to build a solid credit rating, or name, for yourself for future borrowing power for the larger items like a house, which for 98% of people requires a loan. 

This borrowing power can also be extremely useful during an emergency when funds are low due to job loss, medical problems, injury, catastrophe or the death of an income earner. Borrowing allows people to get through these tough times without sacrificing their quality of life.

The negative aspect of credit is that it has allowed people to live outside their means and everyday millions of people find themselves further in debt which is how credit card companies make their money (profits). It can bring great hardship to those experiencing high levels of debt. 

Credit, when used wisely, can offer opportunities where there are none and help you find a greater level of borrowing in the future and help during a present situation, but when used recklessly it can push you into a worse financial situation and negatively affect your future borrowing power.

When you turn eighteen it seems that every bank and financial institution in the country suddenly has your personal information and wants to offer you “free money”, this is a dangerous time and you should avoid a good majority of these offers. 

• It is wise to open one account, but only charge during a month what you are able to pay off completely before the due date. 

One or two open revolving accounts that are constantly in good standing offer a great way to build good credit. This can also be used when someone is bouncing back from bad credit or a bankruptcy but it can also be a slippery slope if you have not broken your bad spending habits.

Your credit reports offer a reporting mechanism through which the  three major credit bureaus  (Equifax, Experian and TransUnion) that gathers account, financial and personal information about you from the creditors and bills you have to form together a credit rating and thus a credit score that represents your ability to pay debt, your timeliness in paying your bills and how often you move or change jobs. 

While, much of this information may not seem connected it is all used to gauge whether or not you are a person worthy of credit, a job or even renting an apartment to. So, it’s vitally important to set a good credit rating and practices from the start as credit impacts you your entire life. For some, bad credit and financial practices can lead to a bankruptcy which allows the debtor to wipe their debt clean, except for a few different areas (like school loans, taxes due and others) and start over. 

While, this may seem like a dream to many, it sets you back and means you not only have a note on your credit report showing the bankruptcy and your inability to pay any of your bills, but now you have essentially no credit and have to start over as if you were eighteen again. Regardless of how you choose to handle your credit and your potential borrowing power, it’s important to take the time to understand the credit rating and reporting process, not to mention the staying power they both have. 

Credit ratings, scores and reports are essential to the quality of life and options available to individuals and can have a direct effect on your status or level of success throughout your life. Take the time to understand these things and work to set yourself up for better financial success. MyCreditSystem is a DYI credit repair and financial literacy program that can help you repair your credit and learn how to maintain a good credit score.