May 21, 2002

Welcome to 0nly4Homebuyers Issue 43.

 

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In this Issue:

Credit Repair-How To

Why Budgets Don't Work and How to Fix It
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Credit Repair-How to

 

You see the ads all the time on TV, newspapers, the internet.  Here is an example:

 

"Erase bad credit-100% guaranteed or your money back!"

"Create a new credit identity legally!"

"Remove ANY bad credit from your credit file."

 

Do yourself a favor and save your money. These companies appeal to

people across the country. They promise to help you get your credit

straight so you can get a car loan or a mortgage. After you pay hundreds

of dollars, you will likely end up with nothing to show for it. Except possibly

a jail sentence if you do something illegal.

 

Some companies are claiming to create a "new credit identity" by applying

for an Employee Identification Number from Social Security and then using

the EIN instead of your social security number when applying for credit. 

Not a good idea!   It is a federal crime to make false statements on a loan

or credit application, misrepresent your Social Security number or obtain an

EIN under false pretenses.

 

You CAN improve your credit file, but there are things that you can not fix! 

If you have a legitimate lien, judgement or bad mark on your credit, the chances

are you are not going to get it removed.  If it is NOT a legitimate charge, you

can fix it yourself by simply writing a few letters. Write the credit bureaus and

make a formal complaint.  Write letters to the creditor and be sure to send

copies of your letters to the credit bureaus as well.

 

For charge offs or written off accounts, you may be able to "settle". Here is

how it works.  Lets say you owe Johnson's Dept store $328.  You never

paid and now it is on your credit report as a written off account.  You really

do owe this money.  Now, you could dispute the fact that you owe it and if

the store doesn't respond to the inquiry within 30 days, the credit bureau

DOES have to remove it. 

 

However, the store can re-enter the charge as soon as they are able to

prove it really is owed by you, so if you really owe it, why bother?

That is what these credit repair companies do....They dispute the

claims of the creditors in the hope the creditors will not respond! What

they don't tell you is that the creditor can come back AFTER the file has

been removed and have it put back on your file simply by sending the

information to the credit bureau, showing that you DO owe the money!

 

There are several options for you to get bad credit off your file. The first

thing you should do is get a copy of your credit report.  You should do this

at least once a year anyway, just to see what is on there.  Then, if you do have

something on the file that you feel is in error, dispute it.  You can get a FREE

credit report by clicking this link.  AOL users, copy and paste into your browser. 

http://www.freecreditreport.com/index.asp?sourceid=00330369275596272479 

 

In the case of written off accounts, contact the store and ask them how much it

would take to settle the accout.  You may be able to settle the account for a

fraction of what is owed.  It will still show on your file, but will be marked paid, which

is a plus.  After a certain length of time, it will automatically come off.  If it remains

unpaid, it can stay there indefinitely, if the debt is sold to a collection agency.

 

For late payments over 30 days, you just have to live with it until it comes off. 

Length of time varies depending on what type of account it is.

 

For judgements and liens, you generally have to pay them in order for it to be

marked satisfied. Then it will come off eventually.

 

If you have open accounts that you are not using, close them and notify the

credit bureaus that they are now closed. Too many open credit accounts

count against your credit score.

 

The best advice anyone can give you is to guard your credit carefully. 

Don't fall into a credit trap and overextend yourself.  But, if it happens....and

it does....you just have to bite the bullet until you can get things right again. 

Don't waste your money on these "credit repair" folks, your money would be

better spent paying your bills!

 

 

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Why Budgets Don't Work and How to Fix It

By Terry Rigg

 

This article is for those families that have sat down at a desk or the kitchen

table time after time trying to develop a family budget that they can live with.

Why don't they work?

There are several answers to that question. Most budgets are doomed

from day one because they are too complicated, don't have the

commitment of all involved or the numbers simply don't add up.

The biggest culprit is that most people don't allow for unexpected expenses.

Let's tackle these one at a time:

Too Complicated: When you list every expense you have on your

budget you set yourself up for defeat. Some budgets include such

things as cleaning supplies, dog food, haircuts and car gas. In order

to keep track of all of these you would need a new box of envelopes

every month.

Answer: Streamline your budget. By simply including a topic on your

budget entitled "Household" where you can include everything you

spend money on each month, excluding bills. Groceries will undoubtedly

be the largest expense in this category. By taking the extra time to figure

what needs to go into your household budget when you set it up, you can

save a lot of time each payday.

Commitment:

1. Many times the commitment to live by a budget is lacking.
2. People get into spending habits that are hard to break.
3. There is constant friction in the family over money.
4. It is more comfortable to live beyond your means.

Answer: You have to consider all of the above problems when setting

up your budget. The Family Budget is just that, the FAMILY BUDGET.

Everyone in the family that is old enough to count should be included.

I don't mean to say that children should have a say in where the money

goes, but they should be aware of what the spending limits of the family

are. If you work closely with your spouse in developing a family budget

you both are more likely to stick to it. There is one other detail that will

help. By setting aside money for yourself and your spouse, that you don't

have to account to the other for, your budget is more likely to succeed.

The Numbers Don't Add Up: You have more budget than you have paycheck.

Generally, this is caused by not being realistic in your budget. You try to make

your paycheck fit your budget.

Answer: Start by listing your household expenses and bills. Then include 10%

of your income for long and short term savings. If this total is more than your

paycheck, you have to cut back. Start by looking at your household budget.

Are there items that you can do without? If you have money left over after

considering all of the above, then increase your savings.

Unexpected Expenses: This can be from your car breaking down, need

a new washer or any number of other expenses that you can't predict.

Answer: While long term savings is for things such as a home or car

purchase or college for the kids, short term savings is just as vital to

your financial security. A short term savings will accomplish two

things. It will provide you with the money you need to pay those

unexpected expenses and it will cut down on the use of credit

cards. The short term savings could save you hundreds of dollars

a year.

When you develop your budget, keep the following things in mind:

1. Make your budget a simple as possible
2. Get the family involved.
3. Make your budget fit your paycheck, not the other way around.
4. Plan for the unexpected.
5. Visit The Complete Budget and Bill Organizer for more details

Terry Rigg is the author of Living Within Your Means - The Easy Way

and editor of The FREE Budget Stretcher Newsletter and Budget Stretcher web site.

He has 25 years of experience counseling individuals and families concerning

personal finances.
 

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* CREDIT SECRETS 2001

 

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If you would like to read more articles about
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Til next time. Have a great month.
Cindy

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