changing tax laws - are you up-to-date?

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changing tax laws - are you up-to-date?

Taxes are a complicated subject and making the slightest mistake could end up costing you quite a bit in penalties. Do you spend time each year keeping up with the changing tax laws? These laws change more often than you might think. Before you consider filing your taxes on your own, stop and think about what it will cost you to have them professionally prepared versus paying the penalties for making mistakes. My site includes information about the ever-changing tax laws as I know them to be now. The information here is only meant to guide you to making the best possible decisions for your personal situation.

5 Credit Repair Mistakes To Avoid

Taking steps to improve your credit is always a good decision. However, if it is your first attempt at repairing your credit, there are a few pitfalls that you must be careful to avoid. Here are five mistakes to look out for if you are in the process of improving your credit.

Paying Charged-Off Debts

Everyone feels pressured when they are harassed by collections agencies, and you may be tempted to simply pay the amount they are asking for. However, it may surprise you to learn that paying collections agencies will often do nothing for your credit. The fact that a charged-off debt is included in your credit history will do the same amount of damage whether the debt is paid or unpaid.

Rather than paying the debt, you can stop the harassing calls of a collection agency by requesting debt validation. According to the Fair Debt Collection Practices Act, you have 30 days from the time that a collector contacts you to send a written request for validation of the debt. The collection agency must stop all attempts to collect, verify the debt information with the creditor, and mail you the verification before they can resume their attempts.

Closing the Wrong Credit Card Accounts

There are several cases where closing credit card accounts can be detrimental to your credit score. You should never close a credit card that still has an available balance, as it will appear that the card has been maxed out. This is because the credit limit on the card is reported as zero, while there is still a balance on the account.

If you only have one card with available credit, you should keep it open to maintain your total available credit. The greater your total available credit is, the lower your overall credit utilization will be. Maintaining a lower credit utilization will increase your credit score.

Using Loans to Pay Debt

Borrowing money from another lender to pay a creditor is almost never a good strategy because, in the end, you are left with the same total amount of debt. Home equity loans are one of the most dangerous types of loans to use for debt repayment, because of their fixed monthly payments and the risk of losing your home.

Submitting Frivolous Disputes

Disputing charges on your credit report can be one of the most effective methods for improving your credit score. However, you need to be careful that you are not disputing credits that improve your credit score, or submitting too many disputes. This is one of the biggest risks of hiring a credit repair company. Some disreputable companies may submit template letters that attempt to dispute almost every credit on your report. Credit bureaus will keep a record of every dispute that you make, and may flag your account if they determine your disputes to be frivolous. The best route is usually to review your credit report on your own and submit every dispute in your own words.

Filing Bankruptcy

Bankruptcy is never a good choice for improving your credit. While it may save you from debts you cannot pay, it will have no effect on your credit score. Additionally, it will haunt your credit report for seven to 10 years, making it difficult for you to take out new loans or apply for new credit cards in the future.

Repairing your credit will take a lot of research and dedication, but the effort is worth it to get back in good financial standing. Keep these tips in mind so that you can avoid costly mistakes that could do permanent damage to your credit.