CREDIT CORRECTION

THINGS YOU SHOULD KNOW ABOUT CREDIT
Credit is a powerful tool. Credit cards, loans, and other types of credit are convenient to use, make managing your money easier, and can be especially useful during emergencies. Credit makes it easier to pay for large expenses such as cars and home improvements, and a mortgage can put you in a home without needing cash for the entire purchase price.

But credit is also a big responsibility. When you use credit improperly, it can lead to unmanageable debt and financial crisis. The more you know about credit, how to manage it, and the warning signs when you may need help with managing credit, the easier it is to use the powerful tool wisely.

REBUILDING CREDIT
We cannot stress enough the importance of staying out of trouble as a credit-rebuilding tool. Even doing nothing can help a bad credit report, but repeating poor credit habits can make things much worse. Creditors can be somewhat understanding of a bad credit incident, if corrected. This can be particularly true when the bad credit originated with problems outside of the debtors control such as emergency medical bills. Repeated bad credit behavior indicates a problem with deeper roots and looks to be a stronger indication that future credit worthiness looks shaky. If you want your credit to improve, be perfect with your new credit, as well as old credit where accounts remain open.

To accelerate the rebuilding process try to have at least three active credit lines open, and be perfect with them. Car loans or mortgages count if you still make payments, as well as old credit cards if they can still be used. If you need to obtain new credit store cards or gas cards can be easier to obtain than major credit cards. If even those fall beyond reach any one can be accepted for secured credit cards, make sure when taking a new credit for rebuilding purposes that the creditor reports to the major credit agencies. Not all creditors submit information to the credit bureaus, and almost no debit card or check card issuers do, even ones with a MasterCard or Visa logo. Use the credit you have obtained and make your payments on time (did we mention that we can't stress this enough). On time means never being 30 days late. At fifteen days you may pay a late fee, but late items must hit 30 days overdue before they will be reported. Using credit does not mean abusing it, you need not run the card up to its limit. On the other hand, leaving the card in your wallet will not help rebuild your credit as much as positive usage.

RESOLVE PAST PROBLEMS
Before beginning a full-scale attack on one's bad credit and repair of a negative credit report the person must first address each of the negative items and resolve them. Resolution may take many forms, which we will explore here. From a credit repair standpoint the significant starting point is "closing the book" on each of the bad credit items on the credit report. A horrible but old and closed bad credit item most often gets viewed better than an open current bad credit item. Believe it or not, a viable resolution method turns out to be a Chapter 7 bankruptcy. In this context the bankruptcy paves the way to the first step of credit repair by putting an end to the old bad credit items. While bankruptcy adds it's own significantly terrible credit reporting item, bankruptcy by definition will be "resolved" when the case ends. In the early stages of bad a credit incident the easiest and best solution can be catching up on a payment. As with many of the circumstances we will discuss the prior late payment will still appear on the credit report. The important point being discussed in this section is resolving the initial issue. Catching up on a past due payment constitutes resolution. When payments continue delinquent for a long enough time catching up may become out of reach. Negotiating a payment plan with the creditor either directly or with the aid of a credit counselor constitutes resolution of the item for credit repair purposes. Settlement of a debt, even at a fraction of the original amount due, means resolution.

Eventually banks charges off unpaid debt balances. A charge off does not mean that a forgiveness of debt occurs, it only indicates the creditor has made an accounting notation that they do not believe that the debt will ever be repaid. A charge off represents a significant black mark on one's credit report. Charge offs can be noted in several ways. A charge off which is unresolved appears as such on a credit report. Charge offs can be resolved the same as any other debt by either paying them in full, paying them at a discount, making a payment over time or filing a bankruptcy. Aside from the obvious downside of a charge off in that it paints the debtor in a very poor light, an open unpaid charge off indicates to a potential creditor reading your report, not only was there financial trouble at one time but further more that the debtor has not made any effort to deal with the problems. A bankruptcy is certainly not a favorite resolution by the creditors but it shows that the debtors have recognized there is a problem and has taken some action. In terms of a credit report a bankruptcy is not a clean slate. A bankruptcy remains a nasty item on one's credit report as long as ten years. On the positive side, however, the bankruptcy is a clear time or "line in the sand", from which the debtor can begin to rebuild. With open unresolved charge offs there is no such point in time where rebuilding can start. Open unresolved charge offs remaining glaring poor credit cavities on ones credit report.

To convert this concept into terminology in the medical or financial industry, the first step is to "stop the bleeding". Many people look at their financial picture and think they must cure the entire situation in one huge step. Most times this is neither something an individual with limited resources has the ability to do nor something anyone with unlimited resources could achieve. The debt and credit resolution process takes several steps. One does not go to a hospital with a gaping wound and expect to walk out perfectly cured the same evening. In the first step the doctor stops the bleeding then, as we will see, there must be time for healing of the wound itself followed by an inevitable scar and perhaps in time fading of the scar itself or cosmetic surgery.
The Answer is clearly no. If your loan broker tells you otherwise, replace him or her. Closing accounts can never help your credit score, and may hurt it. While it is true that having too many open accounts can hurt your score, do not compound the problem by closing them. Once you have opened the accounts, you've already done the damage and you cannot repair this damage by closing them. In fact closing them might actually make things worse.
The credit score looks at the difference between your available credit and what you're using. Shut down accounts, and your total available credit shrinks, making your balances appear larger. This typically hurts your score. The score also tracks the length of your credit history. Closing older accounts can also make your credit history look younger than it actually is, which can hurt your score. Rather than closing accounts, pay down your credit card debt. That's something that actually can and almost always will improve your score.

WILL CHECKING ONE’S SCORE HURT THEIR CREDIT
Applying for new credit is generally what hurts your score. Ordering a copy of your own credit report or credit score doesn't count. Those mass inquiries made by credit card lenders, who are trying to decide whether to send you an offer for a pre-approved card, also aren't going to hurt you, either unless you actually take them up on their offers.
If you want to minimize the damage from credit inquiries, make sure that when you shop for a mortgage you do so in a fairly short period of time. The FICO score treats multiple inquiries in a 14-day period as just one inquiry and ignores all inquiries made within 30 days prior to the day the score is computed. For most people, one inquiry will generally knock no more than 5 points off a score (and scores typically run from 300 to 850, so that's not a big percentage).