Everyone is aware of the fact
that bad credit can affect our ability to get a loan to
refinance our homes or purchase a new car. And, bad credit
reports are not just happening to people in the lower income
brackets. The financial difficulties of the country are now
affecting everyone. More and more people are skipping
payments and accumulating more and more debt. But, it is
possible to get your finances under control.
If you have damaging
information on your credit report, it is extremely important
to get it taken care of as soon as possible. It is never
easy and putting it off "until later" is never a good
choice. So, what can you do?
I believe your first step
should be to contact the credit bureaus directly to explain
any negative comments or tell them about items that may not
even belong to you. It is very common for the information
for another person of the same name to show up on your
credit report. This happened to us when we wanted to
refinance our house. A mortgage lien for nonpayment appeared
that was for my husband's father (who is the Sr.) on my
husband's credit report. It took a bit of digging and we had
to contact the attorney that placed the lien. He discharged
it with no problems, thankfully.
Credit bureaus get their
information from a lot of different places, so be sure you
check to make sure that the information that they have for
you is correct. You can get copies of your credit reports
for a minimal cost. If you've been denied credit, you can
get the report for free from the credit bureau that was used
to get your information. Again, it is very important that
you check your credit reports closely for errors. With the
high incidents of identity theft, you can never be too
careful. It's difficult to clear these negative comments
from your report because you have to "prove" that they don't
belong to you. That is not always easy.
You can contact those
creditors that have reported to the credit bureaus with
incorrect or negative information. Most will be willing to
cooperate in helping you restore your credit standing,
especially if it was an error on their part, or an identity
theft situation. If the poor reports are true, you can
explain your circumstances to them and they might take that
into account and adjust their comments accordingly. It never
hurts to ask, and you could be pleasantly surprised.
Of course, just contacting
your creditors and the credit bureaus aren't going to be
enough to completely repair your credit. You are going to
have to pay all of your outstanding payments and pay down
your high credit card balances. Loan companies consider that
having too much debt is a sign of financial trouble and it
goes a long way towards reducing your credit score. Debts
should be less than 25-30 percent of your credit limits. If
you pay off your highest interest rate credit cards first,
you will save the most money, and in the long run, will end
up paying them off quicker.
Create a budget for your
family that will help you pay off your debt and still be
able to live comfortably. It's possible that you might need
to find another source of income such as another job or by
selling some of your household items at a garage sale or on
eBay.
Repairing your credit won't
be easy but it will definitely be worth it in the long run.
