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Does Credit Debt Have a Statute of Limitations?

Most people realize that if they owe money, the company they owe money will try their best to collect it, oftentimes sending a collection agency after them, destroy their credit score and also, in some cases, take them to court. But here’s a question; how long exactly can add company keep trying to collect a debt?

The fact is, nothing in this life lasts forever. Nearly anything that a person does, even most (not all) criminal activity, has what’s called a “statute of limitations” that keeps it from going on forever. Debt is one of the things that definitely has a statute of limitations, meaning that after a certain amount of years there is no way for a company, or a debt collection agency, to continue to pursue a person who owes that particular debt.

Tread with Caution

Here’s the deal; every estate in United States has different laws when it comes to dealing with debt, and debt collecting. Also, every law has their particular statute of limitations. For example, if you live in Florida, debt collectors have four years to collect on what they call “open accounts”, which includes credit card debt. After this statute of limitations expires, they have very few, if any, legal remedies in order to force you to pay that debt. It doesn’t mean that they won’t stop trying, but it does mean that they can’t force you to pay in a court of law.

One situation you have to be careful about however is acknowledging that the debt exists, or making a payment on that debt, however small. If you do, the debt that you owe can be reinstated even if it was legally uncollectible. The fact is that even though the statute of limitations reduces the legal remedies that companies or debt collectors have to get that money from you, it doesn’t remove the fact that you have a  debt. You still owe that money, they simply can’t legally force you to pay it.

If you should happen to open the door just a crack however, you can rest assured that debt collectors will shove their foot in there and do everything in their power to get that money from you.

What about your Credit Report?

Most people don’t realize that the information on your credit report is determined by federal law, not state law. The “Big 3” credit reporting agencies, including Trans Union, Equifax and Experian, are obliged to remove negative information on your credit report after a period of 7 years. When it comes to bankruptcies, this information will stay on your report for 10 years or more.

What this means is that after the statute of limitations of either 7 or 10 years has passed, you can send a letter to all three of these credit reporting agencies asking them to remove these debts from your credit report, and legally they will be obliged to do so.

These are the Rules your Debt Collector is Hoping you Don’t Find Out

Millions of people around the country are in debt up to their eyeballs. We’re not here to sit in judgment of anyone, by any means, but instead to point out that, if that includes you, the debt collector hounding you about paying back your debt will sometimes take either unfair and even illegal advantage of you because you don’t fully know your rights.

While we won’t sit here and try to debate whether or not you should pay back any debts that you owe, we will admit that we don’t like unscrupulous debt collectors and want to help you avoid falling for their tricks and traps. The fact is, the FTC, and the Fair Debt Collection Practices Act that they put into law, were created to protect you from debt collectors that step over the line. Below are some facts about your rights that you definitely should know in order to protect yourself. Enjoy.

Fact 1: There is no law that says that you must communicate with debt collection agencies. If you’re being hounded by a debt collection agency, and they’re tirelessly calling you, sending them a “cease and desist” letter is the best way to get them to stop. Of course you have to realize that they can and might pursue legal action if you do this, and will send you a notification of their intent via snail mail. But it will stop those harassing phone calls.

Fact 2: Just because you paid an account in full doesn’t mean it will be erased from your credit report. Even if you pay off a debt in full it can still remain on your credit report for up to 7 years. If you wish to avoid this however, you can sometimes negotiate with the collection agency to have them remove the debt from your credit report once it’s paid. If they agree to this, you have to get it in writing to make sure it happens before you pay them a single penny. If you pay and don’t have it in writing you won’t have a leg to stand on.

Fact 3: Disclosing Personal Information is not legally necessary. Many debt collectors will insist that you give them vital information like your Social Security number and your date of birth, but the fact is that there is absolutely no law that says you have to do so.

Fact 4: Until an actual judgment is made by a court of law, none of your assets can be touched and your wages cannot be garnished. There are a few instances where this doesn’t apply however. For example, if you have federal student loan debts, the federal government can garnish your wages with or without a court order. Also, if you fall behind on your mortgage the bank can foreclose on your house without a court order. The same thing goes for a car loan.

Fact 5: Although the debt collector wants to get the largest amount of money from you as possible in your initial payment, there is no law saying that you have to pay out a huge chunk of cash up front. In many cases a payment plan can be set up in order to help you pay your debt over a longer period of time with more palatable monthly payments.

Fact 6: The best time to negotiate a deal to pay off your debt is usually at the end of any month. The reason for this is that debt collectors, who work on commission and bonuses, will be more inclined to help you reach a settlement on your debt when the end of the month is near so that they can make their bonuses and get their commissions.

Fact 7: It’s not necessary to always work with the debt collector. In many cases you can work with the original creditor who might be able to give you better repayment options. On the other hand, if that creditor has already sold your account to a third-party debt collector you don’t really have any other option but to work with them.

Fact 8: Once the statute of limitations on your debt has lapsed, you don’t have to pay that debt. It doesn’t mean that debt collectors will stop trying to collect their money but, luckily for you, they can’t do anything legally in order to force you to pay.

Hopefully these 8 Facts have opened your eyes to some of the legal options that you have available when the debt collector calls. Our advice is that, once you have gotten out from under your debt and everything is paid off (no matter how it’s done), you remember how difficult it was and keep from going into debt again in the future.

How to Implement a Debt Reduction Plan

Is your unpaid debt wreaking havoc on your finances? Does the amount of debt you owe prevent you from meeting your financial goals? If you answered yes to either of these questions, it is time to take control of your debt and start the path to financial freedom. The best way to eliminate your debt problem once and for all is to create a viable debt reduction plan. If done correctly, a debt reduction plan will eliminate your debt slowly overtime and give you the freedom to start working on your own personal financial goals, like a new car, special, holiday, a new home, or your retirement.

Create a Budget

The first step to creating any type of debt reduction plan is to create a household budget. You must have a clear picture of all the income you have coming into the house and all the expenses and bills you are paying each month. If you have never had a budget before, you may want to start by tracking your spending for a few weeks by writing down everything you pay for. This will give you an idea of where your money is going and if you are overspending in a certain area, such as food or entertainment. Do your best to cut back on your spending, so you have more money available to pay off your debts.

Check Benefits

If when making your budget, you realize that your income is not enough to cover all your bills for the month, or you are not left with extra money to pay towards your debt, you should make sure you are receiving all the governmental benefits you are eligible for. These specialised benefits can help by reducing some of your monthly bills like your rent or utility bills, or it can bring additional income into the household.  Either way it will reduce the amount of out-of-pocket expenses you have to pay and will leave you more money that you can use towards paying off your debt.

Call Creditors

Once you have your household budget in place and know how much money you have available to spend towards paying off your debt, you need to call each of the creditors you owe money to. Based on the funds you have available, work with you creditors to create a payment plan that the creditor will agree to and you can afford. Most creditors will be willing to work with you if you are honest with them and have a debt reduction plan in place.

Consolidate Loans

If you credit is still good and you are eligible for a low-interest loan through a bank or credit union, consolidating all your debt into one loan could be a good alternative. It would only require you to make one monthly payment, which may be more manageable, and it may save you money by charging a lower interest rate. However, if you cannot get a loan with a low-interest rate there would be no real benefit to this plan. An alternative to a bank loan, could be a low-interest credit card that would allow you to transfer all your debt to. However, be very leery of credit card that offers a low-interest rate only for an introductory period. In this case, it may up costing you more in interest in the end if you are not careful.

Set Up Debt Reduction Plan

There are several different methods you can use to set up a debt reduction plan. The first method requires you to pay the minimum balance required on all of your debts, and pay any extra funds you have available on your debt with the highest interest rate. You need to keep paying the extra on the debt with the highest interest until it paid in full. Then you can start paying off the debt with the next highest interest rate. This plan continues until all of your debt is paid off. Another plan is very similar, but instead of paying the debt with the highest interest first, you pay off the smallest debt first until they are all paid off.

It does not matter which plan you use, the most important thing is to create a debt reduction plan that you will be able to stick with. It is advisable to always seek the advice of a financial counsellor who can help you determine what type of debt reduction plan is right for you. Over time, you will be able to pay off all your debt and find the financial freedom you want. Then you can start setting long-term financial goals to help you get the things you really want.

Why you should swear off debt, but not swear off credit cards

While getting out of debt is no doubt a good thing, many consumers are surprised to see their credit scores fall after finally paying off their debt. That’s led to a bit of a misconception about needing debt in order to have “good” credit but, while using credit is a good way to increase your credit score, there are certainly good and bad ways to do it.

For example, if you use credit cards and pay them off in full every month you won’t have debt and you’ll also be building good credit. The lesson? Avoid debt but don’t avoid credit cards.

Many people fall into the trap of paying off their credit cards and then promising themselves that they’ll “never go into debt again.” While staying out of debt is definitely an excellent plan, cutting up your credit cards and never using them again isn’t, and could leave you with either a low or no credit score.

While there are different credit scoring models and the way they figure out your score isn’t always the same, in order to have a credit score you need to have had at least some recent activity on your credit report. Not using your credit card after you pay off the outstanding balance will likely cause the card issuer to close your account due to inactivity and, once that’s done, they won’t report anything to the major credit bureaus. If that card happened to be your only type of active credit, you will lose your credit score altogether.

The easiest way to work around this is to use your credit card occasionally and, when the bill comes due, paid it off in full immediately. If you’ve just emerged from heavy debt and didn’t have a credit card, getting a secured card and using the same strategy is an excellent idea.

The fact is that, depending on what type of debt you have and what you did to pay it off, paying off your credit card debt in full can cause a number of different shifts in your credit score. If, for example, a high percentage of your credit limit was being used before, your credit score might actually improve because your “debt to credit ratio” will be lowered.

If you stop using the card completely however, as we mentioned above, the card issuer may close your account. What this does is reduce the available credit that you have, something that could hurt your “credit utilization ratio” and lower your credit score.

The type of accounts that you are using at the same time, or the “mix” of credit that you have, can also affect your credit score. If, for example, you had credit card debt and student loan debt and you’ve recently paid off your student loans, your credit score may go down because you don’t have any active installment loans on your credit report. On the other hand, paying your credit bills on time and keeping your credit utilization rate as low as possible is much more important to your credit score.

Having an understanding of how your various credit accounts affect your credit standing, as well as how credit scores work, is always a good idea. If your goal is to get out of debt without hurting your credit score, use the advice above and do your own research as well so that you’ll not only be debt-free but also keep your credit rating healthy.

A case of Mistaken Identity? What to do if Debt Collectors start Calling for something you Don’t Owe

It’s happening more and more across the country; consumers receiving phone calls from collection agencies about bills that they don’t actually owe. In fact, the problem has grown so excessive that it’s now the #2 complaint that the Consumer Financial Protection Bureau is receiving. If you’re keen on understanding why it’s happening, and what to do about it if you find yourself getting these types of calls, read below and find out. Enjoy.

Simply put, people who don’t pay their bills expect to hear from a debt collector but what they don’t expect is to get calls or letters from a collection agency for debts that aren’t theirs. The question that this growing number of consumers have is what to do about it if it does happen, and the first thing that they should do is contact the Consumer Financial Protection Bureau or CFPB. In 2013 they started accepting complaints from consumers who were getting calls or collection notices that were unwarranted and, in the first six months, they got over 11,000 of them.

The most common complaint was mistaken identity, or collection agencies trying to collect on a debt from a person who didn’t actually owe the debt. The US PIRG, another consumer advocacy group, analyzed all of the complaints and found that the collection problems were already a major source of them, second only to complaints about mortgages during the same period of time.

Some of the other complaints from consumers about the collectors included;

What exactly are your rights?

Although it’s hard to have sympathy for them, the fact is that that collectors have a very tough job. Very few people actually want to talk to them so many of their calls and letters go unanswered or completely ignored. This of course makes it extremely difficult for them to verify information. Also, many consumers feel that if they simply ignore their calls and letters and don’t respond, collection agencies will go away.

The first thing that you should do if you’re getting calls from an unknown collection agency is to simply inform the caller that you won’t do anything until a “validation notice” is sent to you, something that’s required by federal law. They are required to send you that validation notice by the Fair That Collection Practices Act, and to do it within 5 days of their first contact with any consumer. The notice must include the name of the creditor to whom you supposedly owe money as well as information on how to proceed if you believe that the debt is not owed by you.

“You should do that in writing as soon as possible, preferably within 30 days of your first contact with the debt collector,” explained Christopher Koegel, an assistant director at the Federal Trade Commission. “Once they get that letter, the collector is not supposed to continue collection attempts until it can verify that you are the right person.”

One of the reasons you need to address this type of problem as quickly as possible is that many debt collectors will have this debt, whether it’s yours or not, and add it to your credit report, something that could lower your credit score. That’s why getting your free credit report every year from is so important, so that you can find any incorrect information, dispute it in writing and get it taken off of your report.

By law if you inform a debt collecting agency that you want them to stop calling they must, but it’s best to do this in writing. If you actually do owe the debt it won’t make it go away, and the debt collecting agency could decide to take you to court, but the harassing phone calls to stop.

Should you consider refinancing a student loan?

One of the biggest debts that the average American has is their student loans from college. Recently there’s been a lot of talk about “refinancing” a student loan and today  we’ll take a look at a number of different factors that you should know about before making a decision on whether to do this or not. Enjoy.

The first question is simply this; should someone refinance their private student loan into a loan with a lower rate? Most private student loans feature variable interest rates that have been based on a specific borrower’s credit history. When that person first takes out their private student loan, he or she probably has a limited credit profile and will be treated as a higher credit risk by most lenders. What this means is that, for most student loan borrowers, a private student loan comes with interest rates that are quite high.

That being said, there are a number of borrowers who, after graduation, and obtained a job and gotten excellent credit. These people may be able to qualify for a refinance of their existing private student loan and turn it into a new private loan at a much lower rate.

For many borrowers however the situation is, unfortunately, not available. Not only that but there are few financial institutions that actually offer this type of financial product. If you do happen to find one there are a number of things to consider.

First, look closely at the APR. While the monthly payment on your new student loan might well be lower, the interest rate could actually be higher due to the fact that your new long-term may be spread out over a longer period of years. If you are an active-duty service member, you might wish to consider that if you refinance its possible you’ll lose the rate benefits on your pre-service obligations.

You also need to closely consider the tax consequences as your new loan may not be considered a student loan and might not qualify for the interest tax deductions that student loan’s qualify for. If claiming this deduction is something you do every year you definitely will want to take a look at whether or not you’ll be able to continue doing the same.

As far as federal student loans are concerned, refinancing them as private student loans with a lower rate depends on a number of factors. The fact is, Congress has not lowered the rate on federal student loans in quite some time, including the most common loan the Unsubsidized Stafford Loan. If you’re a borrower with excellent credit you may be able to qualify to refinance your federal student loan with a newer one at a lower rate.

There are a number of risks however. First you need to look closely at whether you’ll be switching from a fixed loan to a variable rate loan. Since most federal loans have fixed rates you won’t have to worry about your monthly payment increasing if interest rates rise but, if you’ve switched to a variable rate loan and interest rates rise, your loan amount could rise with them.

Lastly you want to be sure to understand what you’re giving up with your federal student loan before you make the choice to change it into a new private student loan, mostly forgiveness options. On the other hand, if you have sufficient emergency savings, a strong credit history, a secure job and likely won’t need any forgiveness options, refinancing to a new private student loan may well be worth considering.

Indeed, it could help you take advantage of today’s historically low interest rates as well as the improved credit profile that you (hopefully) have today. It’s definitely a useful way to lower your monthly college loan payments as well as build your savings and retirement fund, but you need to closely consider all of the risks before signing on any dotted line.

What kind of Debt is the Worst?

We all know that carrying any kind of debt isn’t exactly a “good” thing but is there actually a “worst” kind of debt to carry? Is credit card debt worse than student loan debt or mortgage debt? The fact is, even financial experts don’t agree on which debts are “good” and which ones are “bad” so, as a consumer, it can be rather confusing. To help with that confusion we put together a blog today that looks into what the worst kind of debt is and gives some advice from getting out from under it as well. Enjoy.

Debt: Student loans.

Why they might be the worst: Student loans are given to people with the least amount of credit experience (students, duh) as well as absolutely no idea about how to pay them back. Student loan balances are usually very high and, especially today, the jobs that students are relying on to be able to pay back these loans are sparse. Even worse, some students actually never graduate from college or university and thus have absolutely nothing that will help them to eventually increase their earning power. Also, student debt can’t be gotten rid of through bankruptcy like most other debts.

Why they might not be the worst: On average, college graduates still earn significantly more money during their working lifetime then people who don’t earn a degree. Student loans can thus be looked at as a type of investment whose payoff is the ability to earn more money in the future. If a student has some type of economic hardship they can also defer their payments (with interest, of course) and there are some loan forgiveness programs like the Income- Based Repayment Program.

Debt: Mortgage loans.

Why they might be the worst:  With nearly 9 million homes that either have negative equity or are very close, mortgage debt can be extremely bad. In the case of a homeowner with negative equity they actually owe more to the bank than what their house is worth. Selling it means either losing money or having a “short sale” that can damage their credit. The rising cost of taxes and insurance as well as maintenance add to the problem, as well as the fact that most mortgages take 30 years to pay off.

Why they might not be the worst: Holding onto a home (albeit for many years) is still one of the best ways for the average consumer to build wealth. If a person can keep up with their mortgage payments they will eventually pay off their home and it will then provide relatively inexpensive housing and the possibility of rental income as well. A reverse mortgage can allow them to use the equity that their house has built up and they can make a profit by selling it or pass it along to their heirs.

Debt: Credit Cards.

Why they might be the worst: Credit card debt usually carries an interest rate of 15% to 20%, some of the most expensive for any type of loan. When you take into account the low minimum monthly payments that some credit cards offer, a consumer can find themselves in debt literally for decades.

Why they might not be the worst: if a cardholder finds themselves in a financial crunch, having the option to make minimum payments on their credit cards, while not the best of solutions, can give them time to get back on their financial feet without damaging their credit. When compared to falling behind on a mortgage or automobile loan, credit card debt isn’t nearly as damaging and even though they will have to deal with collection agencies, that may not happen for months or years and will usually end up with some kind of settlement package that reduces the debt considerably.

Debt: Auto loans.

Why they might be the worst: On average today, and auto loan will last for 66 months or 5 and half years. Some auto loans actually get stretched out to 6 and even 7 years meaning that, long after they have lost their value (and that new car smell) the buyer is still making payments. By the time the auto loan ends the car or truck might not have any value left at all and could also have cost the owner hundreds or even thousands of dollars in maintenance and repair costs.

Why they might not be the worst: Cars are a modern necessity that people used to go to work and earn money and thus can be seen as a business expense. If a consumer budgets well, makes their car payment a priority and takes very good care of it (and if they aren’t surprised with unexpected repairs), they may be able to sell it or trade it in for a good price when they need to purchase a new one.  Today you can also refinance an automobile loan and lower the monthly payments, and automobile loans that are paid on time can actually help someone’s credit score too.

At the end of the day the worst type of debt is simply the one that you aren’t able to pay back on time. When this happens your balance will grow larger and your credit scores will take a big hit. You might even be forced to borrow more money just  so that you don’t fall behind on payments.

If you’re having trouble with debt of any kind and looking for financial advice or solutions, please let us know by sending us an email or leaving a comment and we’ll get back to you right away with answers that you can use.

How to dig your way out of student debt. Part 2

Welcome back for part 2. The subject today is student loan debt and how to dig your way out of it. In part 1  we talked about some of the consequences of not paying your loans on time. They were going to be looking at your options to continue paying, avoid those nasty collection agency people and keep your credit score from taking a big hit.  So if you’re ready, let’s get started. Enjoy.

If you have federal loans, including Perkins, Stafford and Grad Plus loans, you’re in luck because you’ve got a number of options that you can use. (Keep in mind that the Perkins loan differ somewhat from the other two options. Check with your school to be sure.)

The first plan that’s offered is called the Standard Plan and, if you choose to use that one, you’ll be done paying off your loans after 10 years and 120 equal payments. For those people who can’t afford payments that high now but expect to be making more money  in the future, there is the Graduated Plan. With this one, your payments are lower in the beginning years and higher towards the end of the 10 year span. Keep in mind that, even though you’re paying less during the beginning of the plan, you’re going to be paying more interest overall for the Graduated plan.

For those people who owe $30,000 or more to the federal government there is the Extended Repayment Plan. This plan gives you 25 years to stretch out those monthly payments and they’ll be much lower per month but the overall cost will be higher. Depending on how much you owe, you can also consolidate your federal loans through the federal Direct Loan program which will extend your payments from 12 to 30 years.  (If you’d like to research more about this, surf to

If your federal debt outstrips your annual income you may wish to look into Income Based Repayment Plans, a payment program that is definitely better than the 1st two and, in some cases, will reduce your payment as far down as zero. If your total debt exceeds your annual income you will probably qualify and, after 25 years, any debt that you have remaining is automatically forgiven. You will owe taxes on the forgiven amount however, and if you end up getting a much larger salary, the standard plan will be used to calculate your payments from that  point onward.

If you’re a police officer, a public defender, a public school teacher or are in some way working in the public sector, after 120 payments you may qualify to cancel any remaining debt that you have that was accrued on or after 1 October, 2007. You must have federal Direct Loan program loans in order to be able to qualify and you can consolidate FFEL loans into that direct loan program. With this program be forgiven amount is also tax-free.

If you suddenly become unemployed, you’re attending college at least half-time, you’re experiencing some type of economic hardship or  you are in the military on active duty, you automatically have the right to defer any federal loan repayments for as long as three years.

Finally, if deferment is an option in your case, you can ask your lender for a forbearance. Remember that with the federal loan you can also suspend payments for 12 month periods at least three times, depending on the amount of money that you owe the federal government and the amount of money that you earn. You may not qualify but you should definitely ask because it’s in the lender’s best interest to give you the time you need to get your finances in order. Also keep in mind that during forbearance  interest will accrue.

If you’re swimming in a sea of financial aid that we hope that the last two blogs have been helpful and have given you a number of ideas about how to go forward with your student loan problems. As with any financial problem, it’s always a smart idea to talk with lenders, be they private or federal government, and advise them of your situation. In most cases, they’d rather help you somehow then let you go into default.

How to dig your way out of student debt. Part 1

Due to federal laws, bankruptcy has never been an option for people who are suffering from massive student loan debt. Although technically it was possible to claim bankruptcy and have your student loans forgiven, it meant proving to a judge that it would cause  extreme hardship and a ‘certainty of hopelessness’. In other words, very few people would qualify. The standard is the same whether you have a federal student loan or a private student loan but current legislation in Congress is seeking to change that standard, at least for private student loans.  The change would make them eligible to be discharged under rules that will be similar to those that apply to credit cards and other types of consumer debt.

Until that change happens, there are a number of federal loan programs that will help you to reduce your payments and, in some instances, qualify for forgiveness of your loans. If you have private loans, the good news is that many lenders are offering deals to their borrowers to keep their payments coming, rather than letting  them go into collections.

It was only a short time ago that lenders rushed to offer private loans to students, even those students whose credit wasn’t exactly sterling. Today those borrowers, who couldn’t afford their loans to begin with, are defaulting in droves. Mr. Joshua Cohen, an attorney who specializes in debt, believes that “ the industry is either going to take a bath or start coming after people”. Lenders, of course, wish to avoid that.

Many are beginning to offer interest-only repayments and other types of arrangements that lower payments for specific period of time. To see if you qualify you need to check your promissory note and see if this is a provision that’s been included. While this doesn’t work for everyone, it is definitely worth a try and should be talked about, if not negotiated, with your lender.

If you and your bank can’t reach an agreement you can ask them for forbearance, something that will allow you to make no payments at all, usually in increments of three months and usually for no more than a year’s time. While lenders are a bit less willing than they once were to sign off on deals like these, if you can prove that it will get you back on track they might just do it. It’s also important to remember that, in most cases, contacting your lender sooner is better than later, before problems become more pronounced.

As far as going into default, you simply have to miss one private loan payment in order to be seen as being in default while, with federal loans, you can be quite a few months past due before that happens. With private loans, the first thing that’s going to happen is that a collector will start calling, looking for their money. If this doesn’t work a third-party collection agency usually takes over. Luckily, the Fair Debt Collection Practices Act was enacted by the federal government, to protect American citizens from collection agencies and their sometimes abusive collection tactics.

On the other hand, the federal government can tap into your resources much more easily if you do go into default, whereas private creditors are forced to go through the court system if they want to collect your debt. Until such time as that actually happens, there’s nothing that they can do to touch your money. Your specific state’s statute of limitations covers defaults, and the average is six years. If you decide to sue and you lose your case, the creditor can garnish your wages, wipe out your bank account and put a lien on your house.

And the last rather scary note will end of part 1. In part 2 were going to look at all of the options that you have to deal with your student loan debt, lower your payments and, in some cases, get out from under them completely. Make sure to bookmark our website and come back here to see us soon for part two. Have a great day.

Getting an Auto Loan with Poor Credit

Everyone really needs a car if they live outside of a big city and have to make a living.  The problem that a lot of people have is that, when they have bad credit, getting a car loan is about as easy as getting to the moon. The good news is that there are some finance companies that specialize in car loans to people with less than excellent credit. You may have to pay a bit more in interest rate if you do but it’s still possible.

Before you do this however you’ll want to clean up your credit report as much as humanly possible and make sure that any debts that have been paid have been taken off and any mistakes that were made have been cleaned up and taken off too. By doing this you’ll get a better interest rate which could save you literally hundreds, if not thousands, of dollars over the life of the loan.

In order to do this first you need to go to the 3 credit reporting agencies and get a copy of your credit report from them.  All 3 are required by law to give you a free copy once a year.  TransUnion, Equifax and Experian are all together on and will get you your free reports with very little hassle. (The federal government sees to that, in one of the few instances of the federal government actually helping us out.) Remember to order directly from the designated website of all 3 found on because if you order on their commercial site they will charge you.

Once you have your reports you need to look them over carefully and slowly to check and see if there are any mistakes or bad debts that should have been take off. (If you paid something and/or if the statute of limitations has expired they shouldn’t be there.) Federal law allows you to dispute practically ANYTHING if it’s not correct so look for dates, numbers, addresses, names or whatever that is wrong in any way. If you find any go back to the web and fill out the dispute forms that are there for all three credit agencies, depending of course on the one where you found the mistake(s).

Once that has been done and the mistakes have been fixed it’s time to go and get that car loan. Selling your old car online to reputable companies like We Buy Cars is a great way to reduce your loan amount. If there were a lot of mistakes and your new credit score is higher you will have a much better chance of scoring a loan.  If your score didn’t change too much you may still want to go to your credit union or local bank first to try. Good luck!

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