With the constant flow of bad credit (foreclosures) news from the drive by media, most Americans realize that bad credit is a major problem today. A tarnished credit report is both stressful and expensive, but if you are serious about it, one can recover over a period of time into a credit worthy individual once again. As hopeless as your current debt situation might seem, bad credit will not last forever. There are things you can do right now that do not cost a penny, and will stop the bleeding and begin to slowly improve your ability to borrow funds from many different sources. Here are 5 little known credit repair secrets that most lenders will never share with you.
Keep your established credit accounts with balances open and current. Some people believe that the best way to repair credit is to close their existing accounts to avoid accumulating higher balances. This is not always a good idea for several reasons. If an account is closed, the available limit is automatically lowered to $ 0, and your account balance is considered to be over the limit. Creditors and lenders want to review your credit history, and this history is lost whenever an account is closed. Another reason you might want to consider leaving your accounts active is that 10% of your credit score is derived from your credit mix. Closing out, for example, all your credit cards could leave you with only loan information and can potentially lower your credit rating.
Be proactive. Call your creditors and explain your situation as professionally as possible. Listen carefully …. Creditors REALLY dislike credit deadbeats. Creditors want you to be able to make your payments, even if it means you make smaller payments and take longer than expected to pay the balance. Some creditors even have temporary hardship programs that allow you to reduce your payments until you are in a better financial position. Do not ignore the fact that you are having problems making your payments. Talk to your creditors and reach a workable solution to this temporary problem.
Prepare a written action plan to pay off your debts and find someone you trust to hold you accountable. A sure path to bad credit repair is to pay off existing debts. It may seem overwhelming to you now, but taking the time to write down a manageable debt payment plan on paper will significantly boost your self esteem and go along way in your personal commitment of repairing your credit. Your written plan plan does not need to be elaborate, but you should share it with someone close to you who can hold you accountable it does need to be realistic and fit your circumstances.
Swallow your pride and proactively seek professional credit counseling . If you feel that your situation is beyond what you are capable of handling, contact the National Foundation for Credit Counseling. The NFCC is a non-profit organization that offers free and low cost credit repair services as well as sensible advice for debt reduction. There are numerous credit counseling scams, so carefully research any choice other than NFCC.
Be patient. Plan your work and keep working at it! You must first realize that you have no one to blame but yourself. Once you accept this responsibility, you can move forward. Repairing credit requires significant and consistent effort, but it is definitely achievable if you desire to repair bad credit. Debt typically accumulates over a period of years, so it does not come with a quick fix. Using available credit repair services, planning, commitment, and patience will put you on the path to a secure financial future!