Credit Repair, Doing it Yourself
We all know what bad credit can do to our ability to get
financial help when it is needed the most. Although, it is a
part of life, things do get out of hand; missing payments and
piling up debts; we don't always control everything that happens
to us in life. But that does not make bad credit less damaging,
anyway. Bad credit could readily make a bad situation worse. It
prevents you from getting loans, financial help or credit cards,
or makes you pay neck-breaking interests on loans. Since we all
will need credit someday, the earlier you start doing something
about that bad credit, the better. It sure will be no good to
pay off debts just before requesting credit, because most
lenders are more interested in your financial history.
It may not be so easy to repair bad credit, but there are steps
you can take to make the whole process easier. So, when you find
yourself in such a situation, the following advice could be of
great help.
I think the first port of call should be the credit bureaus
responsible for providing credit reports in your locality or
country. Each country has established credit bureaus with the
task of monitoring your credit performance, as reported by
financial institutions and you can always get your credit report
from these bureaus, free or for a fee, depending on your
country. If there is more than one established bureau, you may
want to get each body's version of your report. It affords you
the privilege of comparing the different versions. The reason
why the reports may differ is that they are prepared based on
the information supplied to the bureaus and it is possible they
get different information about your accounts from different
reporters.
Once you have the reports, scour them for errors. Don't be
surprised to find mistakes or negative comments that are not
true in your reports, it happens. You will also want to take
note of credits that have been cleared but are still showing in
your report, or accounts you cannot remember opening. Fraudsters
do open accounts in people's names only to clear out the credit
when the attached credit line gets reasonable. These are all
very bad for your credit rating. You may also find scathing
negative comments in your report. For a start, you will need to
clear all these anomalies. Get accounts that are not yours
removed from your credit report. Talk to creditors who are
reporting negative comments about you or still showing bad debts
that have been paid. You may be pleasantly surprised at how many
creditors are willing to cooperate once you have explained your
situation. The bottom line is communication. Talk to creditors;
explain the situations you are facing. People can't help you if
you don't tell them what you are experiencing. Besides, you can
file a dispute, if you are sure some negative comments or bad
debts are not supposed to be on your credit and the creditor
don't want to cooperate, especially when you have documents to
back up your claims.
There are times when the scathing comments on your report are
indeed true. However, if your account is in a good condition
now, you could still talk with the creditors and arrange to get
the comments removed from your report. Your credit report will
look better with fewer of those negative comments. Another
factor that needs to be considered is the amount of debts
hanging round your neck. Too much debt, definitely, spells
pending financial crisis and a low credit rating. Lenders will
be reluctant to grants loans or credit lines, if your report
shows significant debts, even if you have re-paid most of the
debts. Too much debt is a sign of financial recklessness, it
does a heck of a lot of damage to your credit rating. The
ugliest side of the story is that you will be required to pay
higher interest rates for loans if your credit is bad, to cover
the risk of lending you money. It is wise a idea to keep debts
less than 30% of your limits and to pay off debts with the
highest interests rates first.
Just as too many accounts will pull down your credit, too few
accounts may also be harmful. If you don't have enough
established accounts, your credit may be poorer than it should
be. Adding departmental store or gas cards account that are in
good standing to your credit report will surely boost your
credit standing. Another idea is to get a loan or credit card
and buy something you know you can pay for quickly. Re-paying
debts on small loans or credit card purchases quickly will speed
up your chances of repairing bad credit.
Bad credit is not a thing to get over with in a hurry. It takes
time and requires patience. Take your time, clear your debts
gradually beginning with those with the highest interests rates.
Your seriousness in dealing with past debts could impress
lenders and show them you are financially serious and reliable.
Whatever you do, remember that you are affecting your financial
future.