Getting out of debt can be challenging. Persels & Associates can help.
Towson, MD (Vocus) September 16, 2010
Tough economic times have sent come consumers’ credit scores spiraling down. But consumers don’t need to despair – there are ways to raise credit scores even with a lost job or hefty bills.
Persels & Associates, LLC provides representation for over 50,000 clients with a staff of over 25 in the Persels central office and 160 field attorneys licensed in 47 states.
Persels & Associates and its predecessors have been working with clients to restructure debt payments for over 10 years. The law firm bridges the "gap" that can exist between the consumers and creditors. The firm’s ability to provide legal advice and negotiate payments consumers can afford can be essential to people working their way out of debt. In its years of working with consumers, Persels has developed the following tips on how to raise credit scores while getting out of debt:
First start consumers should start by getting their exact credit scores. The Fair Credit Reporting Act (FCRA) requires each of the nationwide consumer reporting companies — Equifax, Experian, and TransUnion — to provide a free copy of credit reports, at the consumers request, once every 12 months. If you’ve already used that option consumers can pay $16 at myfico.com. (The best free scoring tool, the report card at Credit.com, gives consumers only a letter grade and a range consumers score probably falls into.)
Lenders actually use three credit scores, one for each of the three major credit bureaus: Equifax, Experian, and TransUnion. Most lenders pull all three so it’s important to have each score.
Though based on the same model, these scores can differ -- typically by no more than 15 to 20 points -- depending on how lenders report to the bureaus and how the bureaus include that information in the report.
At myfico.com, consumers have the option of buying only Equifax or Trans-Union scores; Experian doesn't sell its FICO score to consumers. If shopping for a loan, get the two available, or request your annual free report.
Scores change whenever creditors report new information -- like credit card balances -- so consumers should start monitoring their credit numbers six to 12 months before applying for a big loan.
Consumers might also find it useful to sign up for a tool like Equifax's Score Watch, which for $13 a month will alert consumers when credit scores shift. For consumers who aren't loan shopping, there's no need to check the number more than twice a year and can use their FCRA free credit reports.
And if you find out your score is low? Don't worry. Here are the most important things you can do to get and keep your credit scores high:
1. Stay on top of your credit reports. You're entitled to one free copy per year from each bureau. Get them at annualcreditreport.com, and look for misreported delinquencies, over-reported loan amounts, and underreported credit limits. Request corrections from the bureau in writing.
2. Pay bills within the grace period. Lenders report tardiness to the bureaus once you're 30 days past due; if your score started at 780, it can go down to 680 after just one delinquency. So set up payment reminders or have payments automatically deducted by a certain date.
3. Focus on paying off credit cards vs. other debt. Whittling down revolving debt will do a lot more for your score than erasing installment loans. Paying off a $250,000 mortgage when your score is already high will boost it by only five or 10 points. But wiping away a few thousand on your credit card can add 100 points.
4. Stay under the magic 10%. Just paying credit card balances off every cycle doesn't mean you have a 0% utilization; issuers report the total amount you charge each month to the bureaus. That suggests you should use credit cards sparingly. Aim to spend no more than $2,000 on a $20,000 line; and put cards on ice a few months before applying for a loan.
5. Have a favorite credit card. The FICO model penalizes you for having multiple balances, so limit the bulk of your spending to one card. That said, issuers are closing inactive lines, which can hurt your utilization ratio. So make small charges to your other cards every three months or so.
6. Ask FICO what else will work for you. FICO offers a free Score Simulator tool to those who buy scores on myfico.com, and this allows you to see how your score would respond to certain actions, such as paying down debt or even taking on new loans.
It’s been a tough year for consumers, but raising your credit score – even in tough times is possible!
About Persels & Associates
Persels & Associates, LLC and its entities are pioneers in the field of offering "unbundled" legal services to individuals who cannot afford traditional legal services. As Americans credit debt rose, Persels & Associates bridged the "gap" between consumers and their debtors. Today the Persels & Associates employs over 140 lawyers in the 47 states and has 25 central office staff attorneys with 50,000 clients. For more information, visit http://www.perselsandassociates.com
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