6 Tips to Financially Prepare your New College Student (1)

6 Tips to Financially Prepare Your New College Student – Credit Law Center

College Students all over the country are preparing to head to campus for their first semester. For many new college students, this will be the first time that they will be able to spread their wings, as well as their first shot at financial freedom.

Children of any age rely on their parents for guidance and words of wisdom, how many of you remember them saying, “Don’t Put Pennies in Your Mouth!” It is important that as your student enters into this new chapter of their life that provide them with the tools to succeed. Below we have listed a few topics we think will be helpful.

Help Your Student With a Budget

Sit down and come up with a reasonable budget with your child. Prepare a budget that allows for fixed items, extra curricular items, as well as larger unexpected items. Determine the easiest way for them to keep track of their budget, If you kid is a whiz at math you a spreadsheet, if they are more technical find an app that will better suit them.

Borrow as Little as Possible

Student loans should be utilized for tuition, books and necessary living expenses. It can be tempting to borrow more and use the money on a spring break trip or shopping at the mall, so it is important to remind that that student loans do not go away, and that trip may end up costing you thousands. Depending on how educated your child is with financial situations you may want to suggest that let you read over any loan paperwork before they sign it. The average college student in 2016 graduated owing $37,173.

Take Education Seriously

College is a new and exciting time for many young adults; it is often the first time they are away from home and able to find their wings. However, having too much fun and slacking at school can be detrimental to your education. Failing a class not only puts them farther from graduation, not only do you have to make up the class, but you will have to pay for it again.

Use Credit Wisely

The Credit Card Accountability, Responsibility, and Disclosure Act has limited the marketing on a college campus and preventing the issuers from extending credit to someone under the age of 21 unless they have proven income or an adult co-signer. If co-signing isn’t something you want to do, a parent may add their child to their card as an authorized user. Adding your child as an authorized user will allow them to begin establishing their credit and they can use in case of an emergency. Keep in mind that their sense of urgency may be a little different than yours, so determining the guidelines is essential.

 

Text Books

Text books are a major expense for college students, and over the course of the entire college career you could end up paying thousands of dollars on books. Ways to save on books may be buying used books, or renting or borrowing from a friend that may have taken the class the semester before you. There are several online companies where you can rent the books for a semester at a much lower price.

 

Basic Living Skills

Making sure that your child has a good understanding of basic living skills is important in saving money. Teaching your child how to cook or make a lunch instead of eating out daily, can save them thousands of dollars. Making sure they know how to do their own laundry can save you money by not having ruined clothes.

All parents want the best for their children and hope to provide them with the tools to become successful adults. The most important thing we can do is teach them by example, children learn by what they see.

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Wasting Money and Things You Waste - Credit Law Center

Are You Wasting Money? 5 Common Ways You May Be Wasting Money- Credit Law Center

If you actually took the time to add it all up you would be in awe of how much you have wasted.

Here is a list of the most common ways Americans waste money.

Coffee

How many times a week do you stop and get a coffee from a high-end coffee shop? Even if you spend on average $4 per cup 3 times a week, that equals $12 a week, dig a little deeper, and that equals $624 a year! Imagine if you made your coffee at home and put that extra $624 into a savings account.

Eating Out

With our busy lives eating out at a fast food restaurant can be very convenient, but also a huge waste of money. For a family of four, the average cost for eating at a fast food restaurant can be about $25 per visit. If you do this two times a week that comes to $50 a week if you stick with this weekly pattern that may cost you around $2600 a year!!!! Just cutting it back to once a week would save you a significant amount of money.

 

Grocery Shopping When You are Hungry

Have you ever went to the grocery store hungry and you spent a considerable amount more than you had budgeted? The grocery store is notorious for putting things at the end of aisles to catch your attention and increase impulse buying. Going to the grocery store hungry may be harmful to your budget, try eating before you go to the store. If you have a budget that you have decided on and if truly need to stick to your budget, you might consider ordering groceries online and having them delivered to your home. Ordering online will stop impulse buying and helps you stick to your budget.

Cellphone Data

Cellphones are the norm in this day and age, and having one is no longer just for emergency situations. Having a cell phone with us now takes the place of bringing a camera along, we use the phone to look up directions, and anything else we can think of. An important money saving tip is to ensure you have the appropriate data plan from your cell phone provider. You may not be using the amount of data you have on your plan, or you may be going over the data and racking up astronomical charges per month. Be cautious and review your plan, so you get the biggest bang for your buck.

 

Gym Membership

At the start of every year, Americans rush to the gym thinking this will be the year you get fit. You get the gym and the enthusiastic representative signs you up for a yearly or monthly fee. Fast forward 2 months and you are sitting on your couch each night and not attending the gym anymore. What a waste of money! Gym memberships can be great for those of you that actually use them, however before joining a gym set a goal to work out on your own for a period of time. If you meet that goal reward yourself by joining.

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What an awesome credit

What Having an Awesome Credit Score Can Do For You – Credit Law Center

As an adult, we learn real fast that life likes to throw costly unexpected inconveniences at us. Having an awesome credit score could be a huge relief to you when these unexpected troubles happen. Think about this scenario, your car breaks down, and you need to borrow an extra $1000 to fix it if you have an awesome credit score getting a loan to cover it may not be much of a problem at all. Let’s say you have a less than average credit score, getting that loan may cause stress, anxiety, and leave you with that empty pit in your stomach. It’s not a secret of the benefits of having a higher credit can do for you, but can you imagine the sense of freedom and relief it would give you.

 

What Can an Awesome Credit Score Do For You?

Low-interest rates

Interest rates are the amount of money the lending institution charges you for taking out a loan. Interest rates are charged on personal, car and mortgage loans, as well as on credit cards. The higher the credit score, the lower the interest rate. Lenders consider high credit ratings a good bet to give a loan, as it shows you are credit worthy. The difference of one percent on a 30-year mortgage loan can be tens of thousands of dollars over the life of the loan.

Higher Limits

Lending institutions will most likely be more willing to lend larger amounts of money to higher credit score consumers. Having higher scores may also make you eligible for higher credit limits on your credit cards. The benefit of having higher limits not only gives you a greater purchasing power but if you use the credit cards correctly, it could help increase your credit score. Utilizing less than 30% of your total available credit limit could significantly benefit your credit score.  Credit utilization calculates nearly one-third of your credit score.

More Rewards and Perks

Many credit cards offer the best travel points, cash back and numerous other rewards and perks for high credit score customers.Some companies credit card companies offer bonuses for signing up with their bank. These are just a few perks offered for having excellent credit.

Approval for Renting or Leasing is Much Easier

Many landlords and leasing agencies run credit checks to determine the amount of security deposit they will require. They may decide not to even rent to you depending on what your credit score is. The higher your credit score is, the more certain the landlord will be in signing a lease agreement. Higher credit shows that you are financially responsible and more likely to pay your rent on time.

Low Insurance Premiums

Many home and auto insurance companies run what is a “soft hit”(soft means an inquiry that does not hurt your credit rating) to determine your risk as an insured. Having a high credit score shows them that you are less of a risk to them. Extensive research has proven that an insured individual with a higher credit score is less likely to file a claim or having a lapsed policy for non-payment.

 

Don’t Let Your Score Discourage You

If you have an average or below credit score doesn’t let it get you down. An important key to the puzzle is to remember that the credit score is yours and not anyone else’s, you have the opportunity to try and improve it anytime. It is important to keep in mind that 79% of all credit reports are inaccurate and report incorrect information, and you have the right to review your credit report once a year at www.annualcreditreport.com. The CFPB also has some great information on how to get your score up and keep it up.

Having an awesome credit score can save you thousands of dollars in interest rates, insurance premiums and offer you several rewards and perks. In my opinion, the greatest benefit of having a high credit score is the opportunity to have options in case of an emergency. We never know what life is going to throw at us, and being financially strapped in the time of need can cause many emotions to erupt.

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Are You Afraid of the Dark? How to Face Your Credit Fear

Are You Afraid of The Dark? How to Face Your Credit Fear

Throughout our lives, we all come across situations or things that we fear. As a child, I can remember being afraid of the dark and the monsters under the bed. I am positive many of you can remember lying still at night and not wanting to move or a make a noise, but suddenly you get the courage to get up and run for the light. Do you remember the exhilarating feeling that came over you when you realized there was no reason to be afraid of the dark? Magically, there weren’t any monsters at all.

Each day as I sit in my cubicle and listen to our credit analysts help our customers face the same kind of fears only this time it is adult situations. Many of our credit repair clients start out “Afraid of the Dark.”

1. Shining the Light on Your Fear

The first step in overcoming your fear of your financial situation, you must be willing to shine the light in all the dark corners of their situation and face it head on. A significant amount of our clients are afraid to look at their credit reports; they fear their credit scores are so low or what the report might have on it. Most of the time once they have faced that fear head on and build up the courage to flip that light on they get that same exhilarating feeling they did as a kid.

2. Replace the Negative Words and Thoughts.

Recently a friend of mine gave me a copy of the hit book, “The Secret” by Rhonda Bryne. This book goes into great detail on the “law of attraction.” and how our thoughts and words affect our daily life. How many times as a child do you remember hearing “Can’t never did anything?”As much as we hated hearing that phrase, we all know that if we don’t believe in ourselves, we will never achieve it. Same thing goes with the words like fear, or it is going to take forever for credit repair. Each day wake up and decide that you will succeed, you will achieve your ultimate goal. For example, remove the phrase ‘ I am so worried my credit score will take forever to improve’ replace that phrase ‘ I have faith my score will improve enough to qualify for a home.’

3. Setting small goals to help eliminate fear

The definition of Fear is a vital response to physical and emotional danger. Fear is often the cause of our mind wandering or creating a sense of fear for the unknown. The best way to overcome fear is to conquer it. One key factor to overcoming our fear with credit issues is to set small obtainable goals. If you set small goals that you can achieve you will quickly start to see the results. Exposing your fears will be a key to succeeding.


 

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Insurance Premiums being affected by low credit scores

Are You Paying Higher Insurance Premiums Due to Low Credit Scores? – Credit Law Center

If you’ve ever applied for a home, auto, personal or small business loan, you probably already know or figured out pretty quickly that your credit score plays a large part in the interest rate you’ll pay or if you can qualify for financing at all. What you may not realize is the fact that your credit score can also determine what you will pay for insurance premiums.

 

Insurance companies underwriting departments have been using what’s called a credit-based insurance score (CBI score) since the early 1990’s to calculate the risk of the insured having an insurance claim/loss.  The insurance underwriting departments will collect data from one or all three of the major U.S. Credit bureaus; at this time the data will be entered by the underwriters in a computer program that generates the score for them. FICO estimates that 95% of auto insurers and 85% of homeowners’ insurers use credit-based insurance scores in states where it is allowed.

 

What Factors Into a Credit-Based Insurance Score

An ideal CBI score is typically 760 and above and a riskier score is 600 and below, according to the Insurance Information Institute. The score that you receive will depend on several factors, per the National Association of Insurance Commissioners:

  1. Payment history, indicating the timeliness of payments made on any outstanding debt (this makes up for 40% of your score)
  2. Unpaid debt, this is the amount of money you currently owe to creditors (30% of your score)
  3. Length of credit history, which is the time you’ve had a line of credit in place (15%)
  4. New credit history, indicating if and when you’ve recently applied for new lines of credit (10%)
  5. A mix of credit, which represents the categories and types of credit you currently have, such as a mortgage, student loan, and credit cards (5%).

 

Your CBI score can be negatively affected by having judgments, liens, bankruptcies, and repossessions within the last five years of applying for insurance.

Important Things to Remember about Your Credit-Based Insurance Score

Insurance companies DO NOT consider the following in the calculation of your Credit-Based Insurance Score:

    • Income
    • Ethnic Group
    • Gender
    • Religion
    • Disability
    • Nationality
    • Public Assistance Sources of Income

Having a higher CBI and good driving record allows insurance companies to charge you less for your insurance premiums.

Don’t give up hope on saving money on those premiums. Your CBI score is much like your FICO credit score; there are ways to improve both scores.
Here are some steps you can take:

  • Pay all your household bills on time.
  • Pay your credit card balance on time each month, stay below your credit limits. A Balance of 30% or below the credit card limit is ideal.
  • Think twice before opening up new lines of credit, be credit wise and do not overextend yourself
  •  Don’t get your credit pulled (hard hit) more than ten times in a 12 month period.
  • Monitor your credit report on a credit monitoring sites such as www.freecredithub.com to make sure your report is accurate and resolve any errors or discrepancies you discover as soon as possible.

Last but not least, do not make frivolous insurance claims, shop around occasionally, make sure you are getting the most amount of coverage for the least amount of money.   Nothing contributes to high insurance premiums like a lackadaisical or naive consumer. Don’t be the consumer who stays with the same company for years without knowing what shape their credit is in and by not taking the time to compare insurance companies and rates. The Arkansas Insurance Department published a report in 2015, analyzing the impact of credit scores on different lines of personal insurance. Across all lines of coverage, the department found 86% of consumers with credit-based insurance saw their premiums decrease or not be affected at all. If it has been a while since you had a quote you reach out to CLC Insurance Group to see if you can save.

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Are you among the 12 Million Americans?-2

Tax Liens and Judgements Removed Equals A Jump in Your Credit Score – Credit Law Center

If you are one of the 12 million consumers that have derogatory tax liens or civil judgments on your credit report you may see a score increase after these critical items are removed.

As of July 1, the three major credit reporting agencies, Equifax, Experian, and Transunion, will be removing the derogatory information on credit reports. The information being removed will be tax liens and civil judgments and will affect approximately 7% of all credit reports.

The credit reporting agencies have made the decision to eliminate these items after lawmakers recently settled within more than 30 states. Attorney generals alleged that tax liens and civil judgments were often attached to wrong consumers and hurting millions of Americans from obtaining credit.

The New Guidelines for the Reporting

The new guidelines will require all tax liens and judgments to match three of the four items to attach the derogatory information to the consumer accurately.

  1. Name
  2. Address
  3. Security Number
  4. Birthdate.

If the tax lien or civil judgment does not match 3 of these items it will not be reported.

What does the removal of Tax Liens and Judgements mean for Lenders

Tax liens and judgments are in the major derogatory events category; this could be rather concerning for lenders. The removal of these items may fool banks into to thinking the credit application may be a better credit risk. Lenders will need to find a way to balance the consumer’s needs versus the banks need to assess who is likely to pay back the loans accurately.

 

Benefits to Consumers

According to FICO, out of 200 million Americans with credit scores, 12 million will see an increase in their score. The increase could be at minimum 10 points and maybe as much as 40 to 60 point increase. The removal of this items could help consumers who were not able to get approved for items as little a cell phone contract without a large deposit, to as big as a lower interest car loan, or a home mortgage.

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What's The Time Frame of Credit Repair- - Credit Law Center

Time Frame For Credit Repair? – Credit Law Center

How long does it take actually to take for the credit repair process? There seems to be no definite answer on the time frame for how long the credit repair process takes. If you google it, you will see there is not a standard amount of time and no straightforward answer. Unfortunately what happens most the time is when the question is asked” how long does it take for credit repair” you end up more confused then you were before you asked the question.

So here’s the answer broken down as simply and clearly as possible.

Scenario 1

The perfect scenario would be someone that has two to three credit cards, and one to two installment loans. An installment loan could be a home loan, personal loan, or a car loan. In a perfect world, it would be at least twelve months or older, and in good standing, and would have zero collections or negative items on the report but have high credit card balances. If you pay the credit card balances down as little as possible 3 to 5% balance vs the limit is ideal. Paying down the balances will give a significant boost to your credit scores. A great rule of thumb to keep in mind “The older the credit card, the lower the balance, the better your FICO score will be.” This scenario will be the fastest way to since a jump in your scores.

Scenario 2

If you have established trade lines; a few credit cards and installment loans that are in good standing, and have a few medical collections it may take around 35 to 45 days to several months. Depending on how you choose to dispute these items you may see faster results. It is important to remember by law credit reports needs to be accurate and verifiable. Whether you choose an actual Law firm or doing the credit repair process yourself, it is important to remember for faster results you will want to dispute all information at one time, not just one or two items every month.

Scenario 3

If your credit report only has one trade line that has only been open 12 months or less and has collections accounts reporting, removing the negative collections could only take 35 to 45 days, to several months. Although your scores may increase slightly, you will want to establish a thicker credit file, by establishing more trade lines. A good rule of thumb is to have two to three installment accounts and two credit cards accounts.

Depending on your situation your scores may or may not be high enough to get approved for installment loans or credit cards. If you are unable to get approved the traditional way, you may look for a bank or credit union that has a CD credit builder loan and look for credit card companies that have secured credit cards.
After these new trade lines have seven or more months of positive credit history and balances that are 30% or below of the limit, you will see a more significant increase in your scores. Waiting for thirty to sixty days before you get your credit ran after the seven months is the best.

Helpful Tips to Remember

If your credit profile is lacking the recommended amount of trade lines, think of trade lines as your ongoing homework. Trade lines are similar to homework for the credit bureaus to grade, if you do not have them, they have nothing to grade you on. Your credit score is like a grade, the better you handle the trade lines, the better score you will have.

If all you have are collections and negative items, and zero positive trade lines open, the negative items should still only take anywhere between thirty-five days to six months to remove depending on the severity of the negative things. Opening active and positive trade lines as soon as possible is an important piece of the credit repair process. The longer the account is open, the better it is for your credit profile.

Having any late payments or slow pays will be very damaging for your credit profile, and will affect your credit for about twenty-four months. Each credit profile is unique and has its own individual information, and having one thirty days late could lower your credit score by one hundred points.

Repairing your credit could take anywhere from forty days to years depending on the scenario and how you go about correcting it. If you just wait for things to fall off, it could take seven or more years. It is important to remember that credit reports must be timely, accurate, and verifiable by law. Seventy-nine percent of all reports have inaccurate information on them. There are many rules and regulations that debt collectors and credit bureaus must follow, and if you are not familiar with these laws, you may want to reach out to a professional law firm to make sure your report is accurate.

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Credit Law Center- Golden Ticket

Having a High Credit Score Could Be The Golden Ticket to Credit

A Credit score is a three digit number that could potentially make or break you when it comes to obtaining credit. Having a number above 740 is like having the Golden Ticket to getting credit.

Potential creditors look at your credit score to determine your risk. Your credit score is similar to a report card, with a grade on how financially responsible you are with your money.

What makes up your credit score?

  1. Payment History – 35% of your score, paying all bills on time will be a key factor. It is important to know that any late payments you have had will affect your score for some time and anything over 60 or 90 days late will be detrimental to your score.
  2. Amounts Owed – 30% of your score is determined by the percentage of available credit you being used. A good rule of thumb is keeping the amount owed under 30% of your available credit.
  3. The Length of Credit History – 15% of your score is based on the length of time you have had your cards open. Keeping the oldest account open and active will give you a stronger credit profile.
  4. Credit Mix – 10% of your score, having a good mix of credit shows you will be able to handle multiple types of credit lines. It is best to have a few credit card account and installment accounts.
  5. New Credit – 10% of your score is determined by how many new accounts you have opened. Having a few brand new accounts will affect your score.

Data from your credit report goes into five categories to make up a credit score.

Credit Report Grade Card

700 – 850 Excellent
680 – 699 Good
620 – 679 Average
580 – 619 Low
500 – 579 Poor
300 – 499 Bad

Having a zero credit score doesn’t always mean you have terrible credit, it usually just means you haven’t begun to establish credit yet. A zero score may also mean that you may have a harder time borrowing money from creditors since they have nothing to grade you on.

Having a score of 740 or higher qualifies you for the best interest rates, credit cards, and loans. It is also important to remember that the credit score is just a filter in the process of getting approved. Lenders will also look at your actual credit history.

It is important to remember that even if you have had a few mishaps or haven’t established credit yet, it is fixable. Remember the factors that are used to calculate your score and be conscious of your decisions, if you are unsure reach out to an expert.

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5 Tips to stop Living Paycheck to Paycheck.

5 Tips to Stop Living Paycheck to Paycheck- Credit Law Center

Many Americans are ending up broke month after month, even when their income is well above the poverty line. A recent survey by Suntrust Banks found that a third of higher-income households, (those that bring more than $75,000 or more a year) are living paycheck to paycheck.

It’s easy to get caught up in debt, once you are living paycheck to paycheck. You are more likely to use credit cards to pay for monthly expenses, therefore racking up more debt. Each month you will pay just the minimum amount owed, and continuing to rack up more and more interest.

If your income is steady, but your financial habits are what is causing you to live paycheck to paycheck, here are some helpful tips to overcome the paycheck to paycheck struggle.

1. Create a Monthly Budget

Many of us are poor at money management because we haven’t been taught the proper ways to manage money. Creating a monthly budget and sticking to it is much as possible. Budgets are a great way to get you back on track. Some budgets can be as simple as keeping track of your paydays and the due dates of all your monthly expenses, then determine items you might be able to cut back on to start saving money.

2. Stop Spending Impulsively

How many times have you grabbed something that has been placed at the end of an aisle at the grocery store, or Target? At some point or another, I am sure we are all guilty of this. Often we don’t ever use the product, or we may get home and instantly regret purchasing it.

3. Stop letting your feelings sway your shopping

Instant gratification can be a huge culprit in buying items we do not need. Emotions play a significant role in buying unnecessary items, your child may be upset about something, and you go and buy him/her a new toy, or maybe you just rearranged your living room, and you decided that to make it complete you need a new chair. You go and buy, and regret spending the money later. When you are feeling this way, maybe writing it down on a wish list will help curb the impulsive spending.

4. You’re Still Paying for Unused Memberships

With debit cards and credit cards being readily assessable to pay for things in this day and age, it allows for us to sign-up for gym memberships, video programs, and more. I know I have a gym membership that I have paid for the last 12 months and never used it.

5. Pay Attention to Your Bank Statement and Credit Card Statements

If you find yourself broke month after month, it may be a little easier to stomach if you avoid looking at your bank statements and credit card statements. Avoiding these important financial documents could be detrimental to your financial health. How can you possibly create a budget or tackle your financial situation if you are avoiding the key to your situation? You can’t! It is also important to review your statements to make sure all information reporting is correct, in this day and age there is a significant amount of fraud going on.

After you find ways to cut unnecessary spending and begin saving it will be important to start paying more than the minimum on your current credit card obligations. This will significantly help pay down the amounts owed and the interest you pay.

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Late Payment

One Late Payment May Tank Your Credit Score! – Credit Law Center

You may be one who pays all your bills on time every month, but maybe you had a financial emergency or even an oversight that caused you to pay one late payment.

If you miss a payment on one of your credit cards, mortgage or any other loan, you could see a drastic drop in your credit score. Having a late payment may cause lenders to look at you less favorable, even it is was just one late payment.

Banks use the information on your credit report to determine the risk of the borrower, therefore the payment history has the strongest impact on your credit score. You may have a history of years of on-time payments, but unfortunately, they will look at the most recent history of the missed payment as a greater risk.

How Will One Late Affect Your score

When a lender looks at your FICO credit score, the late payment will be evaluated on how severe the late is, how recent it is. According to FICO data, one 30 days late payment could cause as much as 90 to 110 point drop on a FICO score of 780, for a consumer that has never missed a payment. The higher the credit score you have, the more significant impact it could have on your credit score. While a consumer with a 680 FICO score and two late payments, may experience a 60 to 80 point drop after receiving another 30 days late.

I recently had a friend who had a score of 720, and she made an error in paying her car payment, and it dropped her score by 100 points. She didn’t have any collection items reporting; all her credit cards were paid to a $10 balance. That one late payment tanked her score.

Each credit reporting agency has its algorithm to come up with your credit score, depending on what report you pull and when your scores may vary with each report. Each time a report is your credit score will be refigured so that the recent information will be calculated in the score.

What to do after a late payment

If you have missed a payment, it is important to try not to let things snowball. It is important that you continue to pay all current accounts on time, and not let yourself get behind on them.

Things you may want to consider doing to keep bills current.

1. Make a budget or a calendar with the due dates of all accounts.
2. Continue paying all bills on time.
3. Take a look at setting up payments on automatic bill pay.
4. Contact Creditors to work out a payment plan on any accounts that you may be behind on.
5. Monitor your credit report regularly.

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