Information on Credit Repair and Restoration

Credit repair and restoration is needed if you have plans to purchase a new home or finance a car. The disadvantages of a poor credit history include higher interest rates on loans, and if desiring to work in the banking or finance industry, having a bad credit rating can disqualify you for certain jobs. Fortunately, you can restore and repair a bad credit history.

Effects of Paying Bills

• Restoring your credit rating and maintaining a high score is often a matter of paying bill statements before the due date. Late payments have a significant impact on your credit rating, and lenders often charge late fees and report delinquencies to the credit bureaus. Having one or more delinquencies on your record can stop you from getting financing.

Considerations

• Consider paying off your debts to help bring up your credit score and restore a good rating. Misfortunes, such as losing employment or simply not having enough money to meet everyday expenses, can contribute to excess credit card usage. Unfortunately, maxing out your credit cards reduces your credit score. Think of ways to make additional money, such as getting part-time employment, and then make higher payments to eradicate your debt.

Benefits of Communication

• Open communication with your creditors or lenders can help restore your credit rating and ward off future problems. Creditors do not want to report negative information to the credit bureaus, nor do they want to harass you for payments. If you are unable to make payments due to legitimate problems, speak with your creditors and work out a deal. They may forgive a portion of your debt, temporarily suspend payments or reduce your monthly minimums.

Prevention/Solution

• Don't hide from collections and delinquencies. Information of this nature has a way of following you, and once reported to the bureaus, collection accounts stay on your record for seven years. Seeing this information on your report may scare off potential lenders and prevent you from getting a loan. Take steps to get rid of these old debts by calling up creditors and settling or paying off the debt completely.

Warning

• Bad credit may result from situations beyond your control, such as someone taking your personal information and opening accounts in your name, or one of your creditors mistakenly reporting negative information. The best way to prevent these types of problems is to check your credit report at least once a year. Free credit histories are available from Annual Credit Report.