Beginnning this month, this newsletter will be published every 2 weeks.

Credit repair is about ensuring the accuracy and updating of the credit report of an individual. It becomes particularly important in the case of bankruptcy, as it enables the debtors to make a fresh start and rebuild their credit.

These days, you can prevent bad debts from ruining your life. You cannot be deprived of credit time and again. Instead of losing hope, you should strive hard to repair your credit history by seeking the help of one of the credit repairing companies. There are numerous credit repair companies from which to choose.

Credit repair companies are operating from all across the globe. Like other businesses, in this business also you’ll come across different kinds of companies; some are authentic while others are fake. Go for a reputed company that has a name in the industry and whose services are tried and tested.

Conduct a thorough search before deciding on the firm you would like to hand over your money to - and DO ask for some references! Beware of crooks whose sole motive is to fool you and extract lot of your money by making false promises. And make sure any company you hire is a member in good standing of the Ethical Credit Repair Alliance (ECRA).

It's necessary to know how these credit repair companies work. This will enable you to better utilize their services for improving your credit record.

The first and foremost thing these firms will do is help you verify the accuracy of information on your credit report. Did you know that anywhere from 1/3 to a shocking 90% of credit reports contain errors? And what's even more shocking is that only ONE error can cause you to be denied credit!

Company professionals will work with you and advice you on how to challenge information on your credit report that is likely to be inaccurately reported. They will study your credit report and look for discrepancies so that they can fix them in the right manner. They will give you the most suitable solution in the shortest time span. They will offer solutions that are most appropriate for your situation. In this way, these companies provide you with a customized solution to suit your personal needs.

Legitimate companies will give sound advice on how to overcome the problem of poor credit while acting within the boundaries of the law. They will ensure that everything is done fairly and that there is complete transparency of operations. They will look for different options to sort out the whole problem.

Another important function of a good credit repair company is that it teaches you how to maintain an income to debt ratio, so that all your bills are paid off within the prescribed time period. Negotiating with creditors also forms a part of their function. These companies negotiate with the creditors to get you a lower payoff amount or rate of interest. They convince the creditors to enter into a new agreement for debt settlement. You don’t need to deal with your creditors personally, because the credit repair professionals will come to your rescue and deal with them on your behalf.

Credit repair companies formulate a viable plan keeping in mind your budget. They engage their whole team of professionals to ensure everything is going as per plan.

Most often, you will find these plans tighter as compared to budget plans that you set on your own. Here you must keep in mind that the plan is prepared to reduce your debt as soon as possible. So, you should follow their advice. If the company finds your debt in really bad condition, it might ask you to follow stricter measures; for instance, you may be asked to sell your luxury car.

To conclude, people with a poor credit rating can now breathe a sigh of relief and depend upon the services of reputable credit repair companies for improving their credit record.

© 2008 Ethical Credit Repair Alliance
http://www.ecraonline.org

Every year more than a million people file for bankruptcy in the US alone. Being caught in a bad financial situation is bad; not knowing how to get out of it is worse. People tend to forget that a cash crunch is a temporary thing and that is the first thing you need to tell credit repair clients. Here are some tips that you can offer them about ways to mobilize funds to pay their debts. 

Selling an asset is one way of quickly raising money. Assets like a car or a house will bring in money without having any associated costs. It works out cheaper for them to make the sale rather than wait for the bank to foreclose. As a credit repair professional you have the expertise they need in order to make the sale of a major asset.

The money you help them raise will pay for what they owe on the asset. Any money that is left over can be used to pay off other debts. They will need to have alternate plans for housing or transport before they do this.

By cutting expenses they will be able to show creditors that they are indeed working on addressing the credit problem. Ways to cut cost can include not taking vacations or buying gifts, using a car pool or telecommute or take a bus.

Remind them to use food coupons and buy in bulk from discount stores. Cutting down on the use of water, electricity and gas will help. Ask them to stop subscribing to magazines and cable TV. Buying books and CDs are an unnecessary expense at this stage. Tell them to start using the public library instead.

Long distance phone calls are a strict "no no." Have them make calls in extreme cases during off-peak hours. Get them to check rate plans with different carriers to get the cheapest rates. Eating out too can be an unnecessary drain on finances. Recommend home cooking as a way to cut costs. Get them to buy clothes, appliances and furniture that are second hand.

Tell them about IRA or 401(k) tax-deferred accounts. They can withdraw or borrow money from these tax-deferred accounts to help them tide over the cash crunch. The down side of this is that they will have to pay a penalty and taxes for having withdrawn money from the account before retirement.

A 401(k) account lets them borrow up to half the money from it but the amount should not be in excess of $50,000. The money needs to be paid back over the next five with interest. If they fail to do that, they will attract an early distribution penalty and income tax on the amount.

Bear in mind however that the withdrawing or borrowing of money from a tax-deferred account should be among the last alternatives that they look for. They can do it only if they are desperate or if they have alternate plans for a retirement fund.

Take time to calm their fears about the future and reassure them that they are in good hands now. Getting out of a financial mess isn’t so daunting any more – you’re on their side.

US Trusty Program

FEDERAL TRADE COMMISSION

NBC-2.com