It is so easy for people to get swept up in an economic storm in these tumultuous times. With record layoffs, chronic underemployment, medical expenses going through the roof, and people generally living beyond their means, it doesn’t take much for an issue to spiral out of control and for a person or a family’s credit to be ruined.
Also, with record setting numbers of people defaulting on loans and home foreclosures, credit is harder to obtain than ever before. A person with a credit score of 700 today is about as economically viable as a person with a credit score of 600 a few years ago. Banks are looking for people with spotless or near spotless credit, and even the smallest negative marks on a person’s credit can prevent them from getting the money that they need.
Through diligent planning and patience, it is possible to work through the issue of not so perfect credit without having to resort to debt consolidation companies or bankruptcy. Bankruptcy stays on a person’s credit for many years and sometimes, over time, debt consolidation companies actually do more harm than good when it comes to a person’s actual credit rating.
What can a person do to repair his or her credit? The most important thing is to pull a credit report and analyze one’s situation. If items are not in collections yet, but bills are a few months behind, calling creditors can have surprisingly great results. Many creditors are willing to work with people and set up payment plans in times of hardship. Often, a person can negotiate the terms of this so that the bill shows current and never late. If this is possible, then it is a good idea to start paying off debt using the snowball method, which basically states that a person needs to pay off his or her highest debt with the lowest payment first, and once that is done, move on to the second lowest payment, rolling the additional amount of money freed up in the payment of the next bill.
If things are already in collections, however, it can be a bigger challenge. The best thing a person can do at that point is to try to get credit companies to verify the debts and then work on negotiating with them so that a person can settle the debts for less than they owe, but have the bill marked paid in full. This can be a challenge, but most companies are willing to negotiate in order to get a bill paid, even if they have to take a sizable hit.
Credit repair takes time, but with a proper strategy a person can often straighten out their credit in a relatively short amount of time. Bad credit can be catastrophic in a person’s life, so it is always advisable, no matter what situation a person is in, to try to keep one’s credit reports as spotless as possible.
See the original post here: Intro to Credit Repair