What is Credit Repair?
'Credit repair' is a process in which consumers with
unfavorable credit histories attempt to re-establish
their credit-worthiness. The process usually involves
procuring a credit report from the rating agencies
and then taking appropriate steps to address any apparent
issues such as errors, omissions, misinformation,
misreporting or misinterpretation. A consumer can
then formally dispute those errors or issues which
unjustly distort their financial healthiness and credit-worthiness.
Various laws and regulations designed to ensure legal
and fair undertaking of the credit repair process
can then be utilized to formally and legally start
the credit repair process.
Consumers are entitled to a copy of their credit
report legally, if they have been denied a credit
card or loan and if the information provided on the
report is inaccurate, an investigation relating to
true facts is necessary for a credit repair.
Why Repair Credit?
A consumer's credit record significantly influences
his future purchasing power and his eligibility of
availing any credit facilities in the future. A good
rating, or score, can insure a low interest rate and
loans for longer term for various purposes like credit
card balances, car or home loans. A poor rating makes
a consumer vulnerable to finance companies charging
exorbitant interest rates and imposing various unnecessary
repayment and loan terms. Considering the stakes and
the consequences involved, it is absolutely imperative
for consumers to understand the importance of repairing
their bad or low credit ratings.
The Safe and Legitimate Way to Repair Credit
Credit repair can only be achieved through financial
discipline and hard work. Any easy way out of a poor
credit history is undoubtedly tempting, but it may
lead to further financial difficulties in the future.
If a poor credit history is due to circumstances
beyond a consumer's control, and they are able to
somewhat make amends to their credit records after
that time, then a creditor can be requested to upgrade
credit rating because of a sense of customer loyalty.
Most creditors don't trust the customers defaulting
on their debts, so it may be very difficult to obtain
new credit. But once a person is able to demonstrate
continuing income stability and prompt payment patterns,
his situation can improve in a period of two to three
years. This way, even in the case of bankruptcy, a
consumer is likely to be offered charge and credit
cards within a year or two if maintaining a steady
income.
What is most important is evaluating the financial
situation. If one finds that they are unable to make
at least the minimum payment on outstanding accounts,
a contact should be made with the creditors. Many
creditors will appreciate the willingness to pay and
are most likely to help set up plans for repayment.
Avoid making promises which cannot be kept as a small
payment is preferable to a large payment that never
arrives. Sometimes a small contact can be enough to
reduce payments and forestall more severe measures.
The next step is consulting a credit counseling agency.
These organizations are staffed with trained individuals
experienced in the credit field. A distinction needs
to be made between these and the commercial "credit
repair" companies who claim that, for a fee,
they will undertake credit repair.
No one can legally remove accurate and timely negative
information from a credit report. But the law does
allow one to request a reinvestigation of information
in their file that may be inaccurate or incomplete.
There is no charge for this. Everything a credit repair
clinic will do can be done by a consumer themselves
at little or no cost.
The most important factor in credit repair is recognizing
the legitimate and viable options available, recognizing
what the scams are, and differentiating between the
two. A poor credit history can make it difficult to
obtain additional lines of credit making consumers
fall prey to many unethical programs that target consumers
with less- than-perfect credit. There are no quick
fixes in credit repair. Common sense tells you that
a third party doesn't know your credit history better
than you. Through contacting credit bureaus, making
your own corrections, consolidating your debts and
budgeting, you can improve your own score. You don't
need to pay someone to fix it for you. It's better
to apply that money towards discharging your debt.
Summary
Understanding the basics of credit repair and knowing
what exactly is needed in order to rebuild your credit
history goes a long way to getting it resolved. However,
you must be disciplined, find the right credit repair
solution for you and not be tempted to fall back into
debt.
Claire Bowes is a successful
freelance writer and owner of http://www.uk-secured-loans-centre.co.uk
where you will find further advice and information
on all aspects of secured loans for debt consolidation,
car loans and home improvement loans.
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