If you have ever been turned down for a loan, or perhaps even a job, chances are your credit history played a key role in that rejection. Credit reporting is like a financial report card that affects nearly every aspect of our lives. Those who want to do business with us use it as an indicator of our character, as well as how likely we are to repay our debts. Keeping our credit record clear of negative entries and repairing past damage is hard work but is necessary to live out our financial dreams. Get answers to those questions that will help you begin determining how to approach your own credit-repair process.
How Much Debt do I Have?
To solve a problem, you have to know the size and scope of it. If you have had a lengthy period of difficulty repaying your credit bills, it is highly likely one or two of those debts have slipped your mind. Get a comprehensive inventory of what you owe and to whom by starting with your credit reports and going to all of your creditors (or bill collectors) and asking them for a full accounting of your bill and payment history.
What is my Credit Score?
Credit scores are determined by a proprietary formula by the Fair Isaac Company. Your score includes measures of your payment history, the length of your credit accounts, and how much debt you have. Use your current score to determine where you are credit-wise and to set out the path where you want to go.
What are my Near-Term Goals That Require Credit?
Do you want to buy a house, a car, take a vacation, or in some cases, even get a job? Each of these requires credit. By assessing your debt, knowing your credit score and seeing the time line of when you want to make a credit-involved purchase, you will have a healthy sense of what it will take to accomplish your goals.
Are There Mistakes on my Credit Reports?
Before beginning the credit repair and debt payment process, determine first whether there are errors on your credit report that are hurting your score. Request your free annual credit report, through annualcreditreport.com, from all three credit bureaus: Equifax, TransUnion, and Experian. Review them carefully and, if necessary, begin a dispute process to eliminate these issues.
How Much Money is Left Over After Necessary Expenses are Paid?
Calculating how much money you have free and clear every month tells you how much money you can devote to credit repair and debt payments. Because you have also declared your goals and fixed errors on your credit report, this figure will tell you what you can realistically accomplish in the time frame you planned.
How Can I Decrease my Expenses and Increase my Income?
If you have a shorter time line or a large amount of debt, you need to find ways to put more money into credit repair and debt repayment. If you have open accounts that are at risk of going into collection, paying your debt down will have a great impact on your credit standing.
Can I Negotiate with Creditors?
Creditors and collectors can behave like barracudas. They have been known to say and do anything to get debtors to pay more money. First, know your rights by reviewing the Fair Credit Reporting Act and the Fair Debt Collection Practices Act before attempting to strike deals with creditors. You can do this on your own for free, but there are a number of reputable credit repair companies that will do this work on your behalf. If you cannot handle this high-pressure dealing, find a credit repair agency to help. If you do this on your own, keep in mind, paying the debt off is only half the goal. You want to negotiate your credit as well. So in exchange for your payment, you want the creditor to report something positive on your credit report. Get everything in writing.
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