CREDIT » CREDIT REPAIR & REPORTS

If you are currently in an unstable financial position, use your communication skills to negotiate with your creditors on lowering your debts and/or interest rates. Just making the effort to work with your lenders to reduce your debt will save yourself lots of stress.

Before calling your lenders review your budget to get an overview of your financial situation. See how much money you can actually afford to pay monthly without putting yourself in financial jeopardy. List out who you owe money to and prioritize your list by order of payment. Depending on your personal financial needs there are lenders whom you will choose to pay off first.

Once you have organized your information make that phone call. In your call be sure to note the number of years you have been a customer, your history payments, and your current financial situation (including how much you can afford to pay monthly). By doing so and sticking to the facts - the representative or someone at the company may be able to help you out with your financial situation.

By being professional, polite, organized, realistic, and flexible you can make great in-roads with your creditor. Negotiating down your debt is not guaranteed, but it certainly would not hurt you to try. In the worse case scenario, despite receiving a "no" you have tried your best to work out a settlement and have faced up to your debt head-on. If at first you do not succeed, try and try again. In the current economic market, what may not seem like an appealing offer to a creditor, now may look like a great deal several months down the road.

In the prior year, it was previously announced that there would be revisions to how the FICO scoring system would change and that consumers should brace themselves for the new changes. As of the middle of August six changes to the existing system occurred and the FICO criteria has been altered in ways that you should be aware of. Although the "secret sauce" remain the same, the behaviors backing those numbers will be viewed very differently. From this point on consumers need to be aware that:

• Debts under $100 that were previously reported no longer have any impact on your overall score
• The total overview of your past behavior is more important then a single credit indiscretion so a missed payment or repossession from a couple of years will be negated with good overall debt management behavior
• Credit scores for children and spouses can be improved if they are put on an existing account as an authorized user of someone with great credit this changes the practices of "piggybaking" to increase one's credit score
• As always the credit utilization score is still extremely important. The less available credit (meaning the more tied up with debt) the lower your score will be
• In that vain, closing accounts will also decrease your utilization ration so if you are no longer interested in having a particular account, pay it off in full and lock your credit card in your safe. Use it periodically for small amounts and pay off the charges immediately to ensure that the account stays active
• Variety is the spice of life with the implemented FICO score changes. With a mix of loan types varying from credit cards, to mortgages and personal loans and responsibly handling them all, you can raise your score

It may appear that these behaviors were made to benefit the card holders, but they have been put in place in order for lenders to better estimate the risk behavior of potential borrowers. Many lenders have already made the changes to their system to accept the new rates from FICO '08, however some, like Freddie Mac and Fannie Mae have yet to get fully on board with the program.

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