How to Maintain Healthier Credit

How to Maintain Healthier Credit

So what can you do?

Before one of these bills winds up in collections, to the extent possible, try to be very proactive about your medical bills. Even if you have good health insurance, don’t assume everything will be taken care of. Review your EOBs (Explanation of Benefits) carefully and contact the provider and/or your insurance company quickly if it’s not being taken care of.

If you are contacted by a collection agency about a medical bill, ask them not to report it if you pay it right away (assuming you believe you owe the bill). Some won’t report if the bill is resolved quickly.

Again: Having a collection account updated as “paid” generally does not help your scores, unless a lender is using one of the newer credit score versions. So aim for removal of the item if possible. Some agencies will work with you, others won’t.

If you feel the situation is highly unfair — you never got a copy of the bill, for example — you can try two things. One is to file a complaint with the Consumer Financial Protection Bureau. The other is to contact the original provider and try to get them to pull it back from collections so you can pay them directly. If they do, the account will usually no longer be reported.

If you are contacted by a collection agency and you don’t believe you owe the bill, you have the right under the federal Fair Debt Collection Practices Act to ask the collection agency to validate the debt. You also have the right under the Fair Credit Reporting Act to dispute it with the credit reporting agencies reporting the account.

How Medical Debt Can Impact Your Credit Score

Medical bills can be painful, and even more so when they hurt your credit. The damage can be significant. Doctors or hospitals don’t usually report medical debt to credit reporting agencies. Instead, they turn unpaid debts over to a debt collector, and it is the collection agency that reports them.

In fact, according to the Consumer Financial Protection Bureau, roughly half of all collection accounts on credit reports are due to medical debt, and these accounts can significantly damage consumer credit scores. A single collection account can cause a good credit score to drop 50 to 100 points — or more!

Many patients don’t realize how easy it is for a medical bill to damage their credit. They don’t understand that:

• Even if you are making payments on a medical bill, it may be sent to collections. (It’s a common misconception that if you pay something, they can’t send the debt to a collection agency. That’s not true.)
• Medical bills sometimes turn up in collections before the patient even gets a bill. At that point, the damage may have been done.
• Collection accounts are usually damaging, regardless of whether they are medically related. (More on this in a moment.)
• Paying the collection agency may not fix your credit. In most cases, those accounts are reported for 7.5 years and are often very damaging — paid or unpaid. (See the caveats below.)
• The size of the debt is not as important as the status of the debt. In other words, even a relatively small bill that winds up with a bill collector can harm your credit scores.

It is critical that you review your credit reports annually, and monitor your credit scores on a regular basis. (Think of it as a checkup for your credit health.) You can get a free credit report summary and score, updated monthly, at www.creditchecktotal.com. One survey by Credit.com found that 10% of those who reviewed their credit reports discovered a collection account they didn’t know about.

You have many different credit scores, not just a single one. (Even among FICO scores, there are many different versions.) The newest version of the FICO score, FICO 9 — ignores paid collection accounts, and medical collection accounts carry less weight under that model.VantageScore 3 also ignores paid collection accounts of all types.

But most lenders still use older versions of credit scores that do not give medical collections any special treatment. For that reason, you should assume that if you find a collection account on your credit report, it will likely be viewed negatively when you apply for credit, insurance or employment.

All Credit Repair Companies Are Not Created Equal

With thousands of credit repair companies conducting business opposite the country, anticipation the  correct way may be tough and intimidating but it is needed that you take the time compulsory to not usually find a creditable, but moreover find that the knowledge, experience an skill ti give the time of service you designed the optimal results you deserve. Your preference should not be impulsive. Choosing a bad credit repair firm will leave you exposed and increase the luck that serve damage will be caused to your personal credit record but on the other hand, selecting a great credit repair firm has the prospective to be of the most appropriate financial decision of your life by dramatically cleaning up your personal credit record and enhancing your credit score.

CREDIT RESTORATION TIPS!: Credit Repair Tips

CREDIT RESTORATION TIPS!: Credit Repair Tips: There are numerous methods to credit repair and if you have bad credit report ratings after that you need to think about recovering your cr...

More Tips on How to Fix a Credit Score & Maintain Good Credit

Payment History Tips

Contributing 35% to a FICO Score calculation, this category has the greatest effect on improving your scores, but past problems like missed or late payments are not easily fixed.

• Pay your bills on time.
  Delinquent payments, even if only a few days late, and collections can have a major negative impact on your FICO Scores.
• If you have missed payments, get current and stay current.
  The longer you pay your bills on time after being late, the more your FICO Scores should increase. Older credit problems count for less, so poor credit performance won't haunt you forever. The impact of past credit problems on your FICO Scores fades as time passes and as recent good payment patterns show up on your credit report. And good FICO Scores weigh any credit problems against the positive information that says you're managing your credit well.
• Be aware that paying off a collection account will not remove it from your credit report.
  It will stay on your report for seven years.
• If you are having trouble making ends meet, contact your creditors or see a legitimate credit counselor.
  This won't rebuild your credit score immediately, but if you can begin to manage your credit and pay on time, your score should increase over time. And seeking assistance from a credit counseling service will not hurt your FICO Scores.

Amounts Owed Tips

This category contributes 30% to a FICO Score's calculation and can be easier to clean up than payment history, but that requires financial discipline and understanding the tips below.

• Keep balances low on credit cards and other "revolving credit".
  High outstanding debt can affect a credit score.
• Pay off debt rather than moving it around.
  The most effective way to improve your credit scores in this area is by paying down your revolving (credit cards) debt. In fact, owing the same amount but having fewer open accounts may lower your scores.
• Don't close unused credit cards as a short-term strategy to raise your scores.
• Don't open a number of new credit cards that you don't need, just to increase your available credit.
  This approach could backfire and actually lower your credit scores.

Length of Credit History Tips

• If you have been managing credit for a short time, don't open a lot of new accounts too rapidly.
  New accounts will lower your average account age, which will have a larger effect on your scores if you don't have a lot of other credit information. Also, rapid account buildup can look risky if you are a new credit user.

New Credit Tips

• Do your rate shopping for a given loan within a focused period of time.
  FICO Scores distinguish between a search for a single loan and a search for many new credit lines, in part by the length of time over which inquiries occur.
• Re-establish your credit history if you have had problems.
  Opening new accounts responsibly and paying them off on time will raise your credit score in the long term.
• Note that it's OK to request and check your own credit report.
  This won't affect a score, as long as you order your credit report directly from the credit reporting agency or through an organization authorized to provide credit reports to consumers.

Types of Credit Use Tips

• Apply for and open new credit accounts only as needed.
  Don't open accounts just to have a better credit mix – it probably won't raise your credit score.
• Have credit cards – but manage them responsibly.
  In general, having credit cards and installment loans (and paying timely payments) will rebuild your credit scores. Someone with no credit cards, for example, tends to be higher risk than someone who has managed credit cards responsibly.
• Note that closing an account doesn't make it go away.
  A closed account will still show up on your credit report, and may be considered by a score.

To summarize, "fixing" a credit score is more about fixing errors in your credit history (if they exist) and then following the guidelines above to maintain consistent, good credit history. Raising your scores after a poor mark on your report or building credit for the first time will take patience and discipline.

How to repair my credit and improve my FICO Scores

It's important to note that repairing bad credit is a bit like losing weight: It takes time and there is no quick way to fix a credit score. In fact, out of all of the ways to improve a credit score, quick-fix efforts are the most likely to backfire, so beware of any advice that claims to improve your credit score fast. The best advice for rebuilding credit is to manage it responsibly over time. If you haven't done that, then you need to repair your credit history before you see credit score improvement. The tips below will help you do that. They are divided up into categories based on the data used to calculate your credit score.

3 Important Things You Can Do Right Now

1. Check Your Credit Report – Credit score repair begins with your credit report. If you haven't already, request a free copy of your credit report and check it for errors. Your credit report contains the data used to calculate your score and it may contain errors. In particular, check to make sure that there are no late payments incorrectly listed for any of your accounts and that the amounts owed for each of your open accounts is correct. If you find errors on any of your reports, dispute them with the credit bureau.
2. Setup Payment Reminders – Making your credit payments on time is one of the biggest contributing factors to your credit scores. Some banks offer payment reminders through their online banking portals that can send you an email or text message reminding you when a payment is due. You could also consider enrolling in automatic payments through your credit card and loan providers to have payments automatically debited from your bank account, but this only makes the minimum payment on your credit cards and does not help instill a sense of money management.
3. Reduce the Amount of Debt You Owe – This is easier said than done, but reducing the amount that you owe is going to be a far more satisfying achievement than improving your credit score. The first thing you need to do is stop using your credit cards. Use your credit report to make a list of all of your accounts and then go online or check recent statements to determine how much you owe on each account and what interest rate they are charging you. Come up with a payment plan that puts most of your available budget for debt payments towards the highest interest cards first, while maintaining minimum payments on your other accounts.