Managing Debt

When Do You Need Credit Repair

You will need credit repair at the point your credit score is less than 600 points due to the fact that this could make it difficult for you to apply for a loan or a mortgage.

Your DebtIf your credit score is catagorized below the minimum allow you shouldn’t get too upset because it is fairly easy to resolve this issue. You don’t want to jump to the conclusion that you will need to file for bankruptcy immediately because this will be on your credit record for between seven and ten years (depending on the country).

It is easy enough to get your credit report updated especially if there is a mistake on the report. First you need to get a copy of the report (it’s free) from one of the three credit agencies which are Equifax, Experian or Trans Union.

Once you have the credit report you will want to carefully review it to make sure there aren’t any errors. There is often problems in that one report will suggest something different than another report.

If you have had an issue that has been resolved, you will need to send a request to have this changed on the credit report. All you need to do is send a letter along with documentation that the issue has been resolved proving that the issue needs to be removed from the credit report.

Now should your credit report be accurate, what do you need to do then? There is only one solution and that is to pay off the charge.

However, if this is something you can’t do right away you will need to meet with a credit counselor who can help you by acting as a negotiator who will help to create a debt consolidation package.

Debt Consolidation Package

A debt consolidation package must always be in writing as it signifies an agreement between you and your creditors. This document is important in that should problems arise in the future you will have proof of your ability to improve your credit.

Once the debt consolidation package has been created you will need to start paying off the charge. One way is to set up a budget and cut out unnecessary expenses. Living frugally for a while will help improve your credit rating and give you a chance to make good on your debt.

If you are still having trouble paying off the debt, consider selling anything of value such as a second car or recreational vehicles. Perhaps you have some jewelry you no long wear. Anything that can help you get out of debt. You can always replace them when you get back on your financial feet.

Once the debt has been paid off you will need to get a settlement letter from your creditor. Once you have their letter you will then send it to the credit bureaus so they can update your credit reports.

How to Stay Out of Debt in the Future

Now that you have paid off your debts it is a good time to reflect on what you have learned and to put a plan in place so this doesn’t happen again.

  1. Keep an eye on your expenses by setting up a budget. Look at your budget as part of your financial planning. You don’t want to get back in debt again and this way you can stay on top of all of your expenses.
  2. Always pay off your creditors in full. The problem with paying only the minimum is that you will be accruing interest and adding to your debt.
  3. Remember that you don’t need to do this alone. Get help when you need it.
  4. Pay your bills on time. Waiting even a few days can add interest to the bill.

Having to repair your credit is always avoidable. Just make sure you follow a few simple rules and you will be able to stay debt free!

Get out of Debt