Step By Step Guide To Debt Repair & Rebuilding Credit

A severe debt situation is a huge financial misfortune that can ruin your ideal credit scores. If you are bothered by this excruciating condition, never worry. You are not alone in this regard. During the periods of financial crisis and recessions credit scores did suffer a lot. On the negative note, a poor credit score can decide whether you are eligible for a credit and also the interest rates you will have to confront. The situation can also affect your ability to find and job and also the insurance premiums you pay. Rebuilding credit after a bankruptcy requires a step by step approach discussed here.

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Fix the credit report errors

Your past financial mistakes have already caused you enough harm in terms of a poor credit score. Now it is time to ensure you do not get penalized for the mistakes you did not do. Studies show that over 70 percent of the credit reports have some grave errors. Hence there are chances that there are some errors in your credit report too. Once in every 12 months, you can get each of your three credit reports at annualcreditreport.com. You can order for one contacting 877-322-8228. Go through your credit report in detail and arrange to rectify the errors you spot over there that are hurting your score.

Make the default payments

Under most debts crisis situations people have defaulted the outstanding payments. If this has happened with you, evolve a payment plan by consulting your creditors or the authorities in a non-profit credit counseling organization in order to negotiate on your behalf.

Remedy your payment history

Ensure that your payments on your debts and the bills on rentals and utilities are made in time. Research shows that payment history is the biggest aspect in arriving at the credit score. When you have to apply for some credit, these companies will be able to give your letter of recommendations. It is a smart decision to get your payments deducted automatically from your checking account. It is hence essential not to overdraw the account. When you happen to miss out a payment, you may contact the creditor with a request to remove your late payment from your account as a matter of goodwill.

Credit is important

It is never likely that you can build a positive credit history if you do not have any credit. The point here is that it takes credit in order to get a credit. The right place to start with this is to check if your bankers will permit you to open up a secured credit card. These cards mandate you to deposit the amount in proportion to the credit limit into a specially operated savings account so that the bankers can collect the payments that you might have missed out. This can help the risk the bankers have in front of them. However, you will need a co-signer to get qualified for getting your secure credit card. After making timely payments for some time, you can get upgraded to an unsecured credit card.

Check the amount of credit you use

Pay off as much of your credit card debt as possible. However, it is not advisable to close down the credit card. Know that what really matters is the amount you own as a percentage of the total amount of credit. If you open many accounts within a short period of time in order to increase your available credit, it might end up hurting your credit score. Also, do not close down the credit cards that you have not been using for a long time. This can have a negative impact the length of your credit history. When you confront annual charges for a credit card, it is in fact better to switch the card to one without any fee.

Never enquire for a new credit card

Know that enquiring for a new credit card can also impact your credit score. When you want a loan, the good approach is to shop for the same within a specific period of time. When you search for a single loan within a short period, your position is more favorable than looking for several new lines of credit.

Protect your credit from identity theft

Contact every credit bureau to place a security freeze on your credit. This will avoid the risk of opening up new credit lines in your name until you unfreeze it. This method is usually a better approach than using a temporary fraud alert. Though the charges might vary between states, freezing and unfreezing your credit will cost no more than $10 every time you make a request. Since experts have the opinion that credit freeze cannot be a completely fool-proof method, it is advisable that you purchase a more reliable identity theft protection service from a competent agency.