A lot of people fall in the trap of bad credit for different reasons.
The recent economic slump is certainly a huge factor that has lead many people to bad credit. Some had to file for bankruptcy because of unmanageable debt, sudden loss of job, divorce, illness or unexpected turn of events.
Whatever it is that led you to bad credit, you can be comforted to know that you can get yourself out of that situation. So get informed, exercise your consumer rights, and be prepared to do the necessary steps towards credit repair.
Clean up your credit report.
Errors in your report can add more damage to your credit score. There are also instances when another person’s credit file may get mixed up with your file. Old negative remarks can also cause your credit score to drop lower. If it has been 7 years, then you should request the bureau to have those remarks deleted from your file.
This is why it’s important to personally order a copy of your credit report from the three major bureaus. Make sure that your report contains accurate information. Exercise your right to dispute errors if needed.
Understand the root of the problem.
What is the reason why you have bad credit today? Is it because of circumstances beyond your control or is it the result of poor spending habits and financial mismanagement? Knowing the root of the problem is crucial. Recognizing that there is a problem is the first step towards real credit repair.
Work out a budget.
To be sure that you can keep up with your monthly payments, you need to allocate your monthly income efficiently. Create a workable budget that you can follow for the coming months. This could mean giving up some of your personal whims to save money but rest assured that your sacrifices will pay off.
Apply for new credit.
Applying for new credit is another way to repair bad credit. For instance, you may acquire a secured credit card or a bad credit loan. The goal here is to show creditors that you are capable of managing debt and credit. Hence, it is crucial to submit your payments on time.
Seek professional advice.
It will not hurt to seek out advice from a trusted credit counseling agency or a non-profit credit counseling group. However, you need to make sure that you are dealing with a legitimate organization. Check the National Foundation for Credit Counseling (NFCC) and the US Trustee’s website (http://www.justice.gov/ust/eo/bapcpa/ccde/cc_approved.htm) for a list of trusted credit counseling agencies.