Many people, many more than usual and many more than in past years, have recently experienced the trauma of not being able to make the house payment, not being able to catch up after delinquencies and the horror of foreclosure, not to mention the people who never really missed a payment but were completely unable to sell the home for as much as they owed when they needed to move, thereby resulting in a “short sale” on their credit report.

And all of these problems affect your credit scores and your credit reports. The question is how much? And how long? And what can I do to improve now that the crisis has past?

Well the people at FICO, the credit score people, have long been tight-lipped about how much these types and even other types of problems can affect you. You can check out this article on Mintlife, “How Mortgage Delinquencies Affect Your Credit Scores” to see some of the worst details.

Apparently, it has much to do with how high your credit score was in the first place. If you had a score of 680 there is no difference between a 30 day late and a 90 day late (except of course, it is much easier to pull out of a 30 day late and if you haven’t been able to make payments for as long as 90 days, you may find that nasty foreclosure to be inevitable).

But if you had a 780 score to start there is a difference between the 30 and 90 day delinquency.

An interesting note is that if you had a 680 score, a short sale would negatively affect your score as much as a foreclosure. Rather seems extremely unfair for those millions of folks who just got unlucky in the market and couldn’t sell their home. You know, if you haven’t missed a payment that ought to count for something, don’t you think? Is the typical homeowner in the typical town in the USA actually responsible for the fact that real estate prices have plummeted since they purchase their home? See, these credit scores are not always reasonable and very often not really fair.

And no matter what your score was to start with, any one of these problems can make it much, much worse. It will take time to recover.

Approximately, 3 years for a short sale or a foreclosure, 5 years for a bankruptcy.

But one consideration is the fact that until mortgages are more readily available, even to the people who have struggled in the past recession the housing crisis will not really end.

And that is a boon for you if you had these types of problems in the past because the price of housing in coming down. By the time your credit has recovered the prices will probably be even lower.

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There are a lot of valid reasons for avoiding credit. However, there are also some reasons you should have credit.

Many mortgage companies are now requiring 3 open lines of credit along with a good down payment and a 750 plus credit score in order to qualify for a new mortgage to purchase a home. And with the mortgage crisis that is going on and the millions of foreclosures out there, this practice is just prolonging the agony of the bad market.

If there is a glut of inventory, which there is, and it is exceptionally difficult to qualify for a mortgage to purchase a home, how can the housing market get better?

And if you are an owner, who needs to move, but is likely upside down in your mortgage, meaning that you owe more than you could ever possibly sell the house for in the near future (remember, mortgages are hard to come by and there are probably hundreds of homes out there competing with yours) what do you do? Corporations in the same situation walk. Some people are starting to walk away, which of course, makes the market even worse. But what is the answer if you must move for whatever reason?

So if you want to buy a house with a mortgage in the future, you may need credit, good credit. And if you have had any difficulties in the past you may need to complete some credit repair.

So get a prepaid credit card. Use it regularly and pay it off. Then use it regularly and pay it off. And slowly expand, get a few more lines of credit, be careful of the type, however, as department store credit is not given as much value as a credit card or an automobile loan, but most importantly of all, pay all of your bills on time, do not charge more than 20% or so of your total credit limit, don’t shop for credit and get financially responsible.

If being financially responsible means avoiding credit, then avoid what you can but do what you have to do to get your house.

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Good credit is almost essential for most people. It can be extremely difficult to buy larger items outright with cash for an ordinary middle-class family. Therefore it becomes necessary to get loans for the bigger items such as cars and especially houses. Good credit can also help you to secure the lowest interest rates and the best terms for your new loans. And recently good credit has also become important to secure jobs and to get the lowest insurance rates.

However, even though it is very important to maintain good credit it has been estimated that as many as 70% of all credit reports have errors and mistakes. These errors can be as simple as under-reporting your good credit or as difficult as having bad credit that actually belongs to somebody else showing on your credit report. Many of these errors, be they errors of omission or outright mistakes can be repaired, removed or updated so that you can more easily achieve the good credit that you need.

Fortunately if you have bad credit there are some things you can do to repair and improve it. First off you need to obtain a copy of your current credit report. You can receive a free copy one time each year from each of the three main credit reporting agencies at annualcreditreport.com. Do not be taken it by advertisements claiming to offer a free credit report as many of these are for credit monitoring services and they will try to persuade you to purchase their services. The only place to get your truly free credit report is at annualcreditreport.com

If you identify mistakes on your report you can dispute them yourself or you can employ the services of a reputable credit repair company. Credit repair can be a time-consuming and frustrating process, as it rarely happens easily or quickly so if you happen to have a busy life, a family, a job, other commitments you may find it helpful to delegate the burden of credit repair to a reputable and professional credit repair company. They should have the professionalism, experience and expertise and that can save you a tremendous amount of added stress and setbacks.

As you are repairing any mistakes on your credit it is also crucially important to maintain our current credit. Are all of your payments up to date? Are you making every payment on time? Also if possible it will serve you to pay down outstanding balances to below 20% of your credit limit. The debt to available credit ratio is very important to achieving a high credit score.

Do not close out old accounts even if you are not using them. This again pertains to the all-important debt to available credit ratio. You want to have available credit that is not in use. This is very positive for your credit score.

By using the correct strategies in time you will have great credit again and that can be a huge relief for your financial situation.

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It’s been a full year since the complete implementation of the CARD act and so far it looks as if it has been a success. Even though the past year has brought on tighter credit availability and a rise in interest rates these have been attributed to economic downturns and not the CARD act.

The CARD act has significantly increased the transparency of the credit card industry and has been a boon for consumers as they have been able to be more informed. It has essentially eliminated many of the nasty surprises of credit cards in the past such as interest rate changes and retroactive rate increases. Hidden fees and planned interest rate hikes now must be disclosed along with the disclosures on how long it will take and how much interest will be paid if only minimum payments are made.

Read about The CARD Act’s Winners and Losers at Forbes.

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Rumor has it that everything is bigger in Texas. Bigger hats, bigger events, just bigger. But is it really bigger? Probably on a lot of things.

But if you have bad credit it doesn’t matter where you live. You have a big problem. Credit problems can affect the people in the smallest towns in nowhereville to the biggest cities in the state with the reputation for being big. Credit problems aren’t location specific and they have their negative effect regardless of where you live. Higher interest rates, higher down payments, rejection of credit applications along with trouble getting work and higher insurance premiums, all are problems caused from having bad credit.

So if you have bad credit you need to do whatever you can to improve your credit. That, of course, includes paying all of your debts on time but also that means making sure that your credit report is as positive as it can be, eliminating all mistakes and omissions and making sure that the credit that you do have if proportioned in a way that is beneficial to you.

Often it can be especially helpful to utilize the services of a credit repair company. While credit repair is definitely something that you can do on your own, it can be very time consuming, frustrating and to be successful it does take some knowledge and expertise. If you employ the services of a professional credit repair company that is highly experienced in credit repair matters, you eliminate these potential pitfalls. A good credit repair company can take the burden off from your shoulders and get the job done right in a timely manner, leaving you with your time and energy to be used for the more important things like attending to your own career or family.

So the question becomes “do you hire a local credit repair company or do you enlist the services of a large company that handles things all over the nation”?

Of course, there could be advantages to both. However, one of the most important considerations before hiring a credit repair company is their credentials, qualifications and experience. There are many “fly-by-night” credit repair companies and there are a few that have been around doing good work for decades.

Do your homework. Carefully, check out any credit repair company you are considering, How long have they been in business? How much experience do they have?

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There are some pretty vocal financial voices out there saying that your credit score is the most important number of your financial life. (Suze Orman for one).

And depending upon your own circumstances it may be. If you are unable to purchase a car unless you finance it, it may be important for you to have a good credit score.

If you want to purchase a home by taking out a mortgage you will also need to have a good credit score.

If you want to go to the nearest department store once a week and buy all of the latest fashions with a credit card, you don’t need a high credit score, rather you need cash and common sense.

And if you are unemployed or underemployed, your credit score is not the most important number but in your case the most important number is your income. You need to work on increasing that before you work on your credit score. You can’t maintain a great credit score without having some debt and you should never accumulate debt unless you have a secure income.

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So you have bad credit? How desperate are you? Really, how desperate are you?

Imagine having a card with a $1000 balance and a 59% APR (yes, that is correct, 59%!!)

If you happened to land in dire straits (the trouble, not the band!!) and you were only able to make the minimum payment of 2%, it would take you 50 years to pay off that $1000.00 –(50 years, 5-0, Fifty!!)
and along with the interest paid you would end up paying an astounding, yes, absolutely astounding…(drumroll, please!!) $86,500,932,454.00

Well that is some pretty expensive money!

Apparently if you pay 3% of the balance the interest would bring that total down significantly to only $231,468,110.00

Still incredibly expensive money.

And not, absolutely not, never, never, never a good way to rebuild your credit. Remember what is the most important between your finances and your credit score?

And I didn’t just make this all up. Nope. Not at all! In fact I found it on ABC news’ website.
(take a look yourself!).

Apparently First Premier Bancard in South Dakota offered a card at 79.99% interest rate (it later got dropped down to the relatively more reasonable…not!… interest rate of 59%).

And they directed their marketing efforts and targeted the people with bad credit.

One of the worst things about this whole store is that over 700,000 people signed up for the card.

700,000….desperate people!!

700,000 people who were fooled and foolish enough to believe that this might possibly benefit them.

700,000 people who bought into that whole nasty paradigm that you can’t live without a credit card, that your credit score is the most important number and that these things are more important than your own financial peace and stability.

It’s pathetic.

And sad.

Take care of your own finances first. Usury cannot and will not ever benefit the consumer. And that’s you!

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Well it is not nearly as important as the banks, the lenders, the credit bureaus, the entire system will have you believe.

Of course, a high credit score can get you lower rates and better terms when you borrow money. A good credit score will also enable you to borrow money if you need to.

But there are many other things that are much,much more important for your financial peace than a credit score.

Saving for retirement, for example. Getting your finances in order so that you can save, another example. The peace of mind of knowing that you are not living beyond your means. The peace of mind of actually paying cash and owning whatever it is outright.

Credit scores are always skewed for the benefit of the lenders, the banks, the credit bureaus, the credit reporting agencies. Everyone or rather everything (since they are typically corporations which contrary to what some believe, are not human) except you, the consumer.

Credit scores will not make you or break you. Many people live with low credit scores everyday.

But focusing on your credit score to the detriment of your own financial freedom can break you.

Take care of yourself first. Pay yourself first.

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So after you finally got to the point where you couldn’t do it anymore and you decided that you had to file bankruptcy, what happens?

Well, if you file Chapter 13 you will, of course, still be paying back your debt at reduced rates. But you may still have most of your assets.

If you filed Chapter 7, you may have lost some assets but you’re essentially free and clear.

The bankruptcy will stay on your credit report for 10 years and everyone will tell you that it is near impossible to get credit for awhile.

But watch you mail the next day and the day after that and the day after that. The car dealers want you to buy a car. They’ll help you finance. They want you despite the fact that you just declared bankruptcy.

It may be at higher terms however.

There is more to life than just cars, though. Your chance of getting a mortgage is slim and none. Right now, mortgages are difficult to come by for the non-credit-challenged! Your chance of getting a decent credit card is also not good. You may have to start out with a secured card.

No matter what, though, you need to make a commitment to get your finances in order and pay whatever bills you have on time, every time.

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Well the perfect credit score is 850 but it seems that the worst possible credit score is only 300.

Even so, apparently it is rather difficult to get a 300, you have to hit bottom in every single category and then probably go back and do it again. However, it is highly doubtful that many people aspire to that goal.

You can, however, not qualify for a credit score and therefore not have one, since it takes 6 months after you open an account for it to be reported. But the way that usually happens is that you go from no score at all to a decent score.

Credit scores have been dipping though and very few people ever get to close to that 850 score either.

Read “How Low”.

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