The most important step in dealing with a bad credit record is to accept that there is a serious problem with your financial planning and management. Unless this changes, you will land back into trouble again.

Repairing Credit Legally Is Easy

Never go for credit fixing that so many unscrupulous companies advertise on the Net. The majority of these ‘fixing’ companies are scams. Instead, take positive action and clear your name with four simple steps:

1.Ensure that your credit report is accurate – most of the credit reports have a certain number of inaccuracies that filter with time into it. You would need to ask for a free copy (you are entitled for one copy per year – and there are at lest three to four companies which give these reports free) and then go through it with a very fine comb.

As soon as you find anything that could be contested as inaccurate, write to the bureau. According to the law, the credit company needs to prove that such a claim is correct in 30 days or permit its removal. Many credit companies find this task a waste of time and money and do not contest it. If so, you could wait for 30 days and then ask that the item be removed from your credit report.

For best results you would need to write one letter for each of the inaccuracies you find and then ensure that you follow it up closely.

2.Increase you savings – start saving. Ideally about 15-20% of your total income should be kept aside for ‘rainy days’. In case you cannot put aside this amount, put any anything you are comfortable with – but ensure that you save. Savings is a great credit score enhancer – the more you have, the better.

3.Pay all your debts before the due date – if the due date in on 10th and you pay on 11th – you are late. The credit bureau would not see that you are only one day late; they would see that you are late and that hurts your credit record. Ensure that your payment are regular and before the due date.

4.Ensure ideal Income-debt ratio – ideally one should not be indebted by more than one third of their take-home income. This narrows the limit quite bit a bit, but it can be done if you plan and manage our budget wisely.

Ensure that the above four points are covered and followed strictly for about one year – and you are back in business. Remember, to stay out of debt and maintain a good credit record once you are back in the clear.

Is There Any Way To Repair Credit Quickly?

Changing Your Credit Score

Many people scan the Internet for easy and fast solutions to repair their credit and then fall prey to scams which promise them the impossible. Do not believe in any claims of an overnight change of your credit score. There is no such way to do this – legally; and if you do it illegally, you would find yourself in more trouble than before plus you would have parted with a hefty fee.

The first and foremost requirement is to show presence of mind so you would not fall into the hands of scammers who actually count on your desperation to run their business. Use instead, the following methods:

1.Re-negotiate terms – approach the lending organizations and explain your situation. Remember you would need to substantiate what you say with solid proof. Many organizations would be willing to re-negotiate terms rather than have you defaulting. You might lower the monthly installments or be allowed to pay only the interest for a period of time for example – hence, giving you the leeway you needed to recover from the financial crisis while still paying the dues.

2.Pay regularly – your score comes up when your payments are on time; by ‘on time’ it means on or before the due date. Remember, if you are offered two dates, i.e. pay x amount by this date or pay y (which is usually a little more) by another date – the first date is the due date. If you choose to pay by the second date, you would be paying late. Do not take the second choice when you are repairing your credit.

3.Do not close credit card accounts – often people pay off credit card dues and then close the account completely. They do so thinking that they would be better off without the temptation of credit cards. However, when you close a credit card account you also close a line of credit. The amount of credit that the card gives you is counted as your credit worthiness – and it would bring a positive score for you. Closing it would be negative.

4.Get a credit card – if you do not have a credit card, get one even if it is a secured credit card. Regular payments on this credit cards as well as the credit limit if offers – both would add to your credit score.

5.Ensure that your credit report is clear of any ambiguity – you would be stunned to see how much clutter a credit report collects over time. You need to check your credit report carefully – you can get a free copy from TransUnion, Experian or Equifax – and ask them remove all that you find inaccurate. If the credit company who put the remark there cannot substantiate their claim in 30 days, the credit bureau is bound by law to have these removed. Hence, contest whatever you think is inaccurate at once.