You probably already know that just having credit means you’re essentially using someone else’s money to pay for your purchases. It also means that you are obligated to repay the money to the person, agency, or lender that lent you the amount.
If you’re trying to apply for a mortgage, credit card, or any other form of loan, it’s normal for the lender to check your current creditworthiness. This credit check helps them determine if you are a credit risk and also has a big impact on the terms of your loan to include the rates used. A positive or high credit score indicates that you have a good financial record and increases your chances of being approved for credit at favorable rates. Unfortunately, if your credit is poor, you must find a way to repair or fix it by raising your credit score and removing items.
What is credit repair?
Consumers who have been identified by a loan agency or by all three credit reporting agencies as having bad credit or poor credit history should try to restore their credit worthiness by going through a credit repair process. This typically involves obtaining your credit report from the bureaus and carefully taking the appropriate steps necessary to address or identify any visible or apparent problems including misrepresentations, omissions, misreporting, and any other inaccuracies noted or found.
Once a person has identified these discrepancies and errors on their credit report, they have the right to dispute errors that will negatively affect their creditworthiness and financial health in the eyes of potential lenders. There are numerous laws and regulations that are designed to ensure a fair, impartial, and lawful conduct of the credit repair process. These laws form the basis for formally starting the credit repair process for a consumer with bad credit due to errors found on their reports.
To help facilitate this process, each consumer is entitled to receive a free copy of their credit report from each of the three credit bureaus. An investigative process regarding the actual nature of any errors found or inaccurate information is vital to a successful credit repair situation.
Every consumer needs to understand that what allows them the opportunity to make future purchases and their real purchasing power is their credit history. Always keep in mind that a great score is extremely helpful when it comes to buying a car, applying for a mortgage, a loan, and in some cases even a job. A low or bad credit core puts you at risk of being charged high interest rates and many companies tying you to outrageous loan terms. These are the reasons why maintaining a clean credit history is critical to your financial security, both now and in the future.
Tips on how to repair your credit
The credit repair process can be accomplished successfully, but it requires a lot of work and discipline. Although well-publicized easy methods may seem appealing, in fact, they are often associated with getting someone into future financial hardship, especially if something illegal is done in an effort to repair someone’s bad credit history.
In the event that your poor credit history is the result of circumstances or problems beyond your control, you may reserve the right to request an upgrade to your current credit rating from your creditor. However, this usually requires that you correct your logs after the fact or situations that led to the problem or error.
Most creditors do not normally trust consumers who have a history of defaulting. Naturally, this can present a challenge for someone trying to get new credit. The good news is that once you can demonstrate the ability to make timely payments and a solid income, you can improve your poor track record in as little as two to three years. This allows down-on-his-luck consumers who have filed for bankruptcy the opportunity to obtain a credit card two years after the bankruptcy filing, provided they can demonstrate a stable income.
Never underestimate the ability to correct any error on your credit report, but always keep in mind that there are no quick or easy solutions when it comes to legally repairing your credit. By practicing sound financial planning, following a budget, contacting the credit reporting agencies, and creating your own fixes, your credit score will naturally improve on its own.
