Credit Repair Basics

By Owen Jones

Once you have accepted credit, you are, in effect, using someone else's money to pay for your purchases. In addition, it also indicates that you promise to repay the money to the agency or person that loaned you the money within an agreed time frame.

If you are applying for a loan, credit card or mortgage, it is usual for the agency or bank to check up on your credit worthiness. This is essentially based on an assessment of your credit history, thereby helping them determine the possible risks of the deal and decide the terms of the loan. A positive assessment means that you have a good financial background, which increases your chance of being given credit.

Credit Repair: This is the process whereby consumers with a poor credit history try to re-establish their credit worthiness. It involves procuring a copy of your credit status from the agencies and taking careful and appropriate steps to address apparent issues, such as omissions, misreporting, misinterpretation or other inaccuracies.

If there are any discrepancies found in the credit report, the consumer is entitled to dispute the errors that have unjustly harmed their credit worthiness. There are several laws and regulations that are meant to guarantee the fair and legal reporting of someone's credit status. You can use these laws to legally and formally commence the process of your credit repair.

Every consumer may ask for one copy of his/her credit report each year from each credit reporting agency. You will have to investigate the real nature of the inaccuracies and errors for successful credit repair.

Your credit record influences your purchasing power and eligibility for acquiring credit facilities in the future. You should bear in mind that a good credit score can help in several spheres such as: mortgaging a home, buying a car or applying for a job. On the other hand, a bad credit rating can make you vulnerable to outrageous interest rates and unnecessary loan conditions from the loan companies. These two facts are important in helping you understand why maintaining a good credit score is absolutely vital.

How Should You Repair Your Credit?: The method of credit repair can be achieved through conscientious work and discipline on your own. However, some firms will offer you 'quick and easy' ways to repair your poor credit history and they really can be quite tempting. However, these easy methods can also create more difficulties in the end, especially if they are not legal.

If your poor credit history was caused by circumstances beyond your control, you can request an upgrade to your credit rating from your creditor. However, this can only be done if you were able to make amends to your credit records afterwards.

Creditors do not usually trust people who have defaulted on their payments. This can pose difficulties for you obtaining any credit. However, once you are able to demonstrate a stable income and patterns of regular repayments, the situation could improve over two to three years. In this way, even if you are a bankrupt, you will probably be considered eligible for credit cards within about two years, if you maintain a steady income.

Keep in mind that there are no quick fixes when repairing your credit. However, by contacting the credit bureaux, correcting any errors, budgeting and consolidating your debts, you can improve your own credit rating very quickly. - 31382

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