Much like credit repair, debt consolidation has become all the rage among consumers who are dealing with a rough economy and seeking solutions to their credit woes. Almost every day sees a new posting somewhere about debt consolidation, its benefits and detriments. Here’s a recent one from Nurido News:

http://www.pressemeldungen.at/86628/credit-repair-and-debt-reduction-strategies/

First of all, at Veracity we’ve said time and time again that you should always do your homework when working with any company that is working closely with your credit. Know your rights as a consumer and be sure to do some research on any company that is going to have access to your personal credit information. Always do a Better Business Bureau search to verify a company’s good business standing.

One thing we at Veracity do not recommend to consumers or potential clients is to engage in credit repair if you are already behind in your bills. Credit repair services can be time-consuming, and during your time with a credit repair company you will have to pay for services. So if you’re already behind, trusted credit repair companies will most likely suggest you look into debt counseling and, possibly, debt consolidation, before looking into credit repair. Due to the difficult nature of credit repair, it is essential for finances to be stable and monthly bills to be paid on time to prevent further damage. Your credit can be terrible and still benefit from repair, but to maintain it you must stabilize your finances and make monthly payments on time.

In the end, though, every credit situation is completely unique, and so it is hard to advise on the proper steps a person should take without first reviewing their unique situation. That’s why Veracity suggests consumers contact us at 1.866.518.2194 or call a debt counselor for more information on what you need to do to begin repairing your credit and securing your own personal, financial future.

This in from Nurido News:

There is absolutely nothing magical about credit repair. This means that what ever the hustler on the phone or Internet says he can do for you for $1500, you can do for yourself in a few hours at the most.

Wow! We don’t know what credit repair service this refers to, but it certainly wasn’t Veracity Credit Consultants.

First and foremost: if a credit repair service tries to charge you $1,500, keep moving. Veracity’s fees range from $49 to $79 a month, depending on the level of service, with a one-time, membership fee of $69 to $99. For $1,500, you could utilize Veracity’s highest level of service for almost a year and a half! Just imagine how much we might be able to do to repair your credit in that amount of time…

The author makes some good points, such as:

Rule number one, is that no one can erase a bankruptcy from your credit report. Anyone that claims that they can is flat out lying!

He’s right. Furthermore, at Veracity, we remind our clients that this applies not just to bankruptcy, but to ANY LEGITIMATE DEBT. If it’s legit, then it’s legit. We can’t make it go away. Nothing can make it go away, except payments or time.

Eliminating legitimate debt or skirting the law is not what we do. What we get taken off your credit report is false information that had no business being there in the first place. Mistakes are made, of that you can be sure, and what we do is eliminate those errors, thus improving your credit score.

In the article, the author also advises against blaming the credit reporting agencies (i.e. credit bureaus), which is good advice. They simply calculate your score based on information reported to them. The author also mentions the “seven year” rule, which states that negative credit information will disappear from your report seven years after your last payment has been made. Also true, though you have to wonder who would want to wait it out when they can begin paying it down or consolidating it now. Because remember, if it is legitimate, it’s going to stay there … for seven years, at least.

We’d like to expand a little bit on this good piece of advice:

Get a hold of all three reports from the three major credit reporting agencies and compare them. It’s not uncommon that they don’t all match and that would be your first clue that there is a mistake.

See, the author’s right when they tell you that the first thing you need to do when it comes to credit repair is to pull your three reports. And, furthermore, it’s true that they commonly do not all match. However, that doesn’t necessarily mean there is a mistake.

While it is possible that a certain credit bureau may be reporting on different, more or less information, if the scores are only a few points off, it can be an issue of timing. Some information is processed at different times of the month, depending on the creditors and the credit bureaus. Because of this, it is common for scores to be slightly different at any given time. Furthermore, each credit bureau uses a different scoring algorithm to calculate their scores, meaning that the scores will almost certainly never match.

Now if the scores vary by a lot, then the author is right: there’s a good chance that a mistake exists somewhere. What’s important to look for is drastic differences between scores or information being reported.

The author also suggests that credit repair is “surprisingly easy” and that the reader “simply look it up.” While, there’s a lot of information that can be gotten online, none of it makes up for credibility and experience, both features found at Veracity!

We found yet another precautionary article concerning credit repair, this one coming from Diane Lade of Florida’s Sun-Sentinel:

http://www.sun-sentinel.com/features/time-money/money/sfl-credit-fix-tips-062709,0,266965.story

Ms. Lade, like so many others before, offers four rules, also laid out by the Credit Repair Organization Act, on what not to do when choosing a credit repair service:

• Do not pay a credit repair service up front for services.
• Do not create a new credit identity by applying for and using an Employee Identification Number.
• Do not dispute ALL the information in your credit report, especially when it’s true or accurate.
• Do not use a credit repair company that doesn’t inform you of what you can do on your own.

Spotting a company attempting to break any of those rules is a surefire way to know you’re dealing with a fraud. A good credit repair agency is a transparent one. If a company is honest and up front with you about their services, all of your options, and the best way for you to achieve your goals, then they are doing their job right. If a company seems to be simply seeking out clients for the sake of profit, be sure to take a closer look at all of their credit repair tactics. Make sure that the credit repair agency you work with is out for your best interests, not their own.

Veracity would like to comment on a few other tips made in the article:

Close out accounts slowly over time, newest first.

While each person’s credit situation is unique, in most cases, eliminating credit will not improve your credit score.

You see, a credit score is broken down into several categories including payment history (35%), amounts owed (30%), length of credit history (15%), new credit (10%) and types of credit used (10%).

Any time you close an account it can affect your credit history. Even if it is a fairly new account, it has already been opened, and closing it thereby lessens your credit history. You can do more good for your credit by keeping accounts already opened current and at a low balance. If you are “using” credit and immediately paying it off, it will do more good for your credit than simply closing the account. We suggest you keep your balances below 25% for optimal results.

Furthermore, when you close an account you lessen your overall credit limit. Say you have three cards, each with $1,000 limits, and you owe $500 on one, $250 on another and $0 on a third, the newest of the three. If you close the third card (under the guise that you never use it), you’re effectively lowering your overall limit from $3,000 to $2,000. Now, instead of being at 25% of your limit ($750 of $3,000), you’ve created a smaller limit ($2,000) but have the same balance. Now your balance is more than a third of your limit, which will affect your credit score negatively. This also goes for another piece of advice the article gives:

Keep your credit limits modest, even if lenders offer to raise it.

We actually suggest you only take on as much credit as you can handle. Too much credit can actually be seen as a risk in certain situations. However, if you are only using $300 of a $2,000 limit it looks much better than the same balance on a $1,000 limit, right?

If a consumer’s worried they might be carrying too much debt, there’s debt-to-income rule-of-thumb that sheds light on the situation. This article from Bankrate.com summarizes it well:

http://www.bankrate.com/brm/news/mortgages/20070116_debt_income_ratio_a1.asp

To translate, your debt-to-income ratio is your overall monthly income divided by all your debt obligations (which include long-term debt such as mortgage or rent, car payments, student loans, credit cards and revolving credit and exclude recurring monthly bills such as electric or groceries). According to most sites, keeping your debt-to-income ratio below 36 % is ideal in the eyes of lenders.

Online calculators like this one can help you see where you stand with your debt-to-income ratio:

http://hffo.cuna.org/13479/article/316/html

Ms. Lade also offers this advice:

Open a savings account to show creditors you have reserves.

At Veracity, we’ve seen so many different credit situations that we know this can hold true with certain types of creditors. However, for the most part we find that creditors place payment history over the consumer’s cash reserves. In the end, it can often depend on the particular creditor more than the consumer.

The point we want to make at Veracity is that you don’t have to shut down all of your credit to make your credit score better. Instead, we suggest sticking to budgets, making timely payments and using credit wisely so that you can optimize your credit score and have access to all the things good credit has to offer.

Mr. Steve Bucci with Scripps News’ Debt Adviser really hits the nail on the head with his advice to a forlorn, wannabe homeowner:

http://www.scrippsnews.com/node/43990

Sometimes at Veracity, we find information like this that can’t be said better ourselves. Like Veracity, much of what Mr. Bucci preaches is common sense and strong money-management. By managing money wisely and saving money whenever the chance arises, consumers can almost take the guess-work out of credit repair by avoiding it entirely.

However, Mr. Bucci and Veracity Credit Consultants both understand that saving money and adhering to a budget aren’t always the easiest things to do. When you find yourself getting into credit trouble, we like Mr. Bucci’s advice once again:

Keep paying down your debt based on your budget, and that alone will help you repair your credit. Paying your bills on time makes up 35 percent of your FICO score.

What he says is true. Although there are several elements to a credit score, payment history is the most important factor in your credit report. By following Mr. Bucci’s advice, you are essentially proving to lenders that you are a reliable borrower who pays their debts on time.

It is clear that Mr. Bucci knows his stuff when he gives this piece of advice, as well:

As you know, you can’t erase any of the accurate negative information on your credit report such as your bankruptcy. But each time that new positive data is reported to your credit file, your negative history will count for less. In addition, you still can make sure that all items that are on your report are accurate and not out of date. Get a free copy of your credit report from Annualcreditreport.com. If you don’t recognize a negative entry in your file or it’s over seven years old, dispute it with the bureau or the lender reporting the item.

At Veracity, we help you contact the right people and take the proper avenues in getting erroneous information removed from your credit report. We also support AnnualCreditReport.com as the only place where you can receive a yearly, free, credit report (although companies like Equifax also offer free credit reports when you enroll in credit monitoring, which can help you keep track of your progress when repairing your credit).

In the end, though, Mr. Bucci’s advice toward frugal living and endless saving is the best piece of advice when it comes to credit repair. Not only will this help keep balances low, but it will give you an extra boost when you finally find that home you’ve been looking for. And if you keep your credit optimized, you’ll find the best rates to go with it, too!