MPI EDUCATION CENTER

Educating yourself about credit and financial issues that are relevant to you and your family is critical to your desire for responsible homeownership. Below are a few popular questions and answers to popular topics that our clients have asked us in the past. We want to give you a heads start. To view our available listings, please CLICK HERE! For more information about our Homeownership Program, CLICK HERE! We hope you find this helpful.

Question: What is the first step in the credit restoration process?

It is a reality that many people are faced with the difficult task of credit repair.  They may have found themselves overextended on their credit cards and have to repair some late payments and some bad decisions when it comes to credit history.  Credit repair isn’t as difficult as many people might think.  It takes time, but it can be done.

First, you need to obtain a copy of your credit report from either one or all three of the major credit reporting agencies.  The “big three” are Experian, Equifax, and TransUnion.  They can be found quite easily on the Internet and will provide you with a copy of your credit report.

The FACT Act that was passed by Congress back in 2001 allows all consumers one free copy of their credit report per year.  For this, you will need to go to either http://www.annualcreditreport.com/ or http://www.freecreditreport.com/.  Sometimes one of the agencies will provide you with the one report for free, but you are best off to go to one of these websites.

However, if you are serious about credit repair, you will really need to obtain copies of all three credit reports.  Creditors are not required to report to any of the agencies, and often they will just report to one.  Having all three credit reports on hand will help you make repair to your credit more effectively and more thoroughly.

Once you have these reports in hand, go over them “with a fine tooth comb”.  Check for any errors such as accounts that have been paid off but are still appearing as delinquent or accounts that you never opened or used in the first place.  If you do find errors on your report, it is essential that you contact the credit bureau to make the correction if you want your credit repair efforts to be thorough.

After checking your credit report, the essential part of making repairs to your credit is to change the way you are using credit.  That includes making all payments on time and not using credit the way you used to.  While it’s true that it’s virtually impossible to go through life today without using credit, you can use it wisely and not end up in trouble down the line.

Making repair to your credit is not a difficult task, but it does take time and patience.  Truly what you need to do is simply take steps to evaluate your use of credit and then see where changes can be made.  Then not only will your credit be repaired, your credit score will raise as well.

Question: How do I get myself out of the cycle of living paycheck to paycheck?

One thing that the recession has shown us is that there are many Americans that have been living paycheck to paycheck. Saving money which was so critical for the baby boomers 

Question: Are there credit cards for people with bad credit?

If you have bad credit, you might think that it is impossible for you to obtain a credit card.  Let’s start out by saying that if you have bad credit, the only possible reason could have for wanting another credit card is to try and rebuild your credit rather than to go on a shopping spree at the local Wal-Mart.  For people with bad credit, credit cards can be the bane of existence.

However, there are legitimate reasons for wanting a credit card.  First, they are helpful in emergencies.  For example, if you should get stranded by the side of the road with car trouble, a credit card can get you a tow truck quicker than if they have to bill you.  Having a credit card with bad credit can also help get you back on the road toward good credit provided you use it wisely.

Just so you can’t get into too much trouble with a credit card while you have bad credit, we recommend that you get a secured credit rather than try to apply for a standard credit card.  A secured credit card can prevent you from getting into credit problems and still show that you can be responsible with a credit card plus give you the peace of mind you need in the event of an emergency.

With a secured credit card, you deposit a certain amount of money into an account that is tied to that card.  You can then use your card just like you would a regular credit card.  The good part about a secured credit card is that once you’ve reached the amount of that deposit, you can’t use the card anymore until you deposit more money.

A secured credit card is a great way to start building your credit when you’ve amassed a bad credit history.  Most credit bureaus don’t look at secured credit cards quite the same way they do regular credit cards, but they do look at it as a good faith gesture on your part to try and rebuild your credit and show that you can handle credit responsibly.

Even if you have bad credit, you might also be able to secure a department store credit card.  Many department stores will offer you a credit with a low limit even if your credit isn’t stellar.  Of course, the big thing here is to make your payments on time and don’t overextend your credit.  It’s credit suicide to get a card, charge too much on it, and then miss payments or be late on payments.

Just because you have bad credit doesn’t mean you can’t get a credit card.  Just be careful if you do get one and remember that there’s a reason you have bad credit in the first place and learn from your past mistakes.