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Credit Repair

More than 30 million have credit problems cause by everything from late payments to bankruptcy. The American Bankruptcy Institute reports that, “The number of bankruptcy cases filed in the 12-month period ending September 30, 2005, totaled a record 1,782,643.”

Whether it’s brought on by personal illness, the loss of a job, or overspending, credit problems can seem overwhelming. To ease the financial pressure you can always,

• Fill out a change of address card at the post office—and then don’t move.

• Ask the IRS to take you off their mailing list.

• Marry your car. Assuming your car produces no income and you file jointly, you can save up to 50% on your taxes.

If you want a more serious approach to credit repair, here are three things you can do.

<b>Clean Up Your Record</b>

No one can legally remove accurate and timely negative information from your credit report. Details about missing a loan payment, defaulting on a mortgage, or filing for bankruptcy, stay in your history for 7-10 years. The only thing that can erase such mishaps is time.

What you can get removed from your report are errors that could result in your receiving a bad credit rating. Consumer Reports magazine estimates that almost half of all consumers have errors in their credit files.

You should request and review your credit report from each of the three major credit bureaus. If you find errors, spell them out in a certified letter to the bureau involved. Include a copy of your report with the erroneous items clearly marked. Identify what you want corrected and include copies of any supporting documentation.

The bureaus are required by law to investigate and correct any listings that are inaccurate or that can’t be verified. At the conclusion of the investigation, the bureau must send you the written results and a free copy of your report if the dispute results in a change.

<b>Change Your Ways</b>

Fair, Isaac and Company, the people who developed credit scoring, offer the following common sense tips for changing your spending habits:

• Pay your bills on time.

• If you have missed payments, get current and stay current.

• If you are having trouble making ends meet, contact your creditors or see a legitimate credit counselor.

• Keep balances low on credit cards and other revolving credit.

• Pay off debt rather than moving it around.

• Don’t close unused credit cards as a short-term strategy to raise your FICO score.

• Don’t open a number of new credit cards that you don’t need just to increase your available credit.

• Do your rate shopping for a given loan within a focused period of time.

• Check your credit report from the three major credit bureaus regularly.

<b>Consider Refinancing Your Mortgage</b>

Mortgage refinancing involves taking out a new loan to pay off your original mortgage. Depending on the equity in the home, the new mortgage can be for more than the amount of the old loan, giving you cash for debt consolidation.

Refinancing could lower your mortgage payments, saving you money every month. It could also help improve a bad credit rating if you handle the money wisely. You can learn more about mortgage refinancing and get a free loan quote at

There is one caveat to refinancing. If you plan to move in the next three years, it might not be worth it as you won’t have time to recoup the costs of getting a new mortgage.

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