Ways to Repair Bad Credit
Bad credit can have a serious negative influence on a variety of
things in your life...not only can it prevent you from getting
the loan that you need or the credit card that you want, but it
can also keep you from getting certain jobs or into certain
programs.
If you've been plagued with bad credit in the past or wish to
take action before your credit gets much worse, you're in luck;
with a little bit of work and patience, it's easy enough to
begin the process of repairing your bad credit so that you won't
have to miss out on these opportunities in the future.
Understanding Bad Credit
One of the first steps to repairing bad credit is taking a
moment to make sure that you understand exactly what credit is
and what it means to have bad credit. In order to determine a
person's credit, potential lenders or other interested parties
must request a copy of that person's credit score.
This score is compiled by one of several credit reporting
agencies, and is a numerical indicator of how much of a credit
risk an individual might be.
Higher scores indicate that the individual has had several
positive reports made to the agencies by past lenders, and is
therefore considered to be a low risk individual in regards to
defaulting on a loan.
Lower scores indicate that the individual has had several
negative reports, showing that there is a much higher chance
that the individual might default.
Removing Old Debts
Obviously, one of the key factors in improving your credit score
is stopping old creditors from continuing to make negative
reports to the credit reporting agencies. In order to do this,
you need to get the creditors what they want... the money to
repay the loan or credit line. By repaying these old debts, you
can eliminate the source of many negative reports.
The damage that has already been done to your credit score will
remain, but the debt will be reported as satisfactorily repaid
and there will be no additional negative reports filed because
of that particular debt.
This is important, because one of the first steps in making
things better is to make sure that they don't continue to get
worse.
Establishing Positive Reports
Once you've managed to repay some of your old debts so that they
can't damage your credit report any longer, it's time to start
adding positive reports to help even out your credit score.
There are several ways that you can do this, including opening a
new savings or chequeing account, applying for a credit card
that's designed for those with bad credit and keeping the
balance low, or even refinancing with a home equity loan to pay
off several old debts at once.
Regardless of the method that you choose, it's important to stay
current with any new payments that you may have... after all,
you don't want to start collecting negative reports again.
Expiration of Old Reports
The good news is that the negative reports that you've had in
the past will go away... the bad news is that it can take 5 to 7
years before the reports expire and stop affecting your credit
score.
This is where patience comes into play; though your credit score
might begin to rise slightly after you've repaid old debts and
established new credit lines, it will still take time to undo
the damage that has been done over the years.
The older reports will expire in time, though, and the new
positive reports will take their place.
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