Repairing Your Credit

Your credit rating can often determine whether or not you are approved for loans such as mortgages or car financing. It can also affect what interest rate you receive and therefore how much your monthly payments are. Therefore it is important to maintain a good credit rating to the best of your ability. However, once your credit has been damaged it is equally important to immediately begin the process of repair. While repairing your credit there are several steps that should be taken:

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1. Change you spending habits immediately. Stop the behavior that let to the financial troubles in the first place. Lock away the credit cards and create a budget.
2. Add necessary information to your credit file. Your credit can be damaged by information that has been omitted. You are entitled to add up to 100 words in the case of a credit dispute. This explanation will be provided to all creditors who request information. You can also request an investigation if you feel something has been reported by error. If the investigation proves something was reported inaccurately you can request that a corrected report be sent for free to anyone who received the bad information in the last 6 months.
3. Negotiate your payments with creditors. This can be done individually or through an attorney or credit counseling service. Many creditors are willing to negotiate in order to receive some kind of regular payment. Many lenders also look at continued payments favorably if you ever need to apply for credit in the future. Please note that if your account has been place in collections it is much better to deal directly with the original creditors than it is to deal with the middle men (creditors).
4. Be wary of companies guaranteeing that they can get rid of your bad credit. This should raise some large red flags. Many of the companies in this line of business are participating in scams. Never pay them money before services are provided.

Be aware that regaining good credit is not an overnight process. By law creditors can report negative credit for 7 years and a bankruptcy can be listed for 10 years. However, by taking quick action to implement the above mentioned steps you will be on your way to repairing your credit.

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About the author:

Mark Carney is a professional consultant with First American Debt Consolidation and Loans, a debt consolidation service specializing in financial education, credit counseling, and debt reduction management nationwide.