Credit repair the first steps

Posted: 02/09/2007--25/11/2008 || Rate this Article: 3 || Views|| Sign In || Register ||Hello Guest

The mail comes and you eagerly open a letter from a leading financial institution. Having recently applied for a credit card, you hope that the response is positive. Quickly you scan the letter only to find that your credit application has been denied. Again.

Learning that you have a poor credit record means that it's time to take steps to fix it. Here are some of the things you can do to clean up your financial act:

1. Stop charging. If you have too many credit cards, too high of a credit limit, or too many unpaid balances, chances are you have a poor credit rating. Stop acquiring new credit accounts and stop using the ones you have. Pay for purchases with cash whenever possible.

2. Pay off monthly balances. If you must charge emergency items, pay off the statement balance each month. Don't carry forward unpaid balances or they will accrue interest charges, compounding your debt.

3. Make payments on time. While this sounds simple, it may be challenging to coordinate payday with bill writing and meeting the post office deadlines for having your payment arrive on time at the creditor's company. Write out checks in advance of the account's due date and mail them several days before the late date.

4. Don't miss payments. While skipping a payment may not seem like a big deal, it is to most creditors. It's like your employer forgetting to hand you a check on payday, then saying "Oh well." Non-payment is an inconvenience to your creditor and it damages your reputation as well. Make payments promptly and consistently to show that you are a responsible credit user.

5. Check your credit report. Sometimes accounts get jumbled or reported inaccurately. Be sure that your report contains just the accounts that you've opened and the balances that you owe. Look for and report any discrepancies right away.

6. If you have a poor standing with a creditor, get in touch and say that you want to make amends. This may mean making double payments or paying extra interest. If you simply cannot afford the current payments, ask if you can make half payments until your income tax return or expected pay raise comes through, which you will forward toward the remaining balance.

7. Avoid high interest credit accounts or payment plans. Look for no-interest or low-interest programs if you must make furniture, car, or other kinds of payments. If possible, ask about a temporary no-interest rate even if interest must be added in a few months.

8. Consider a debt consolidation plan. This will lump all owed balances into one account and require just one monthly payment. This can make debt repair more manageable for some people.

Putting your credit history to rights is a big step toward financial responsibility. As your accounts begin to get paid off with no evidence of adding more debt, your credit rating will improve. Keep plugging away and soon you will see big results that will put you in good standing.