It’s important to face the reality of managing paid or unpaid debts considering the potential impact on your credit report. Each one of us has a unique financial circumstance that differs in terms of tenure of mortgages, variations on credit cards, medium-term auto loans, shorter-term bank overdrafts, typical personal loans and more. An escape of harsh reality only leads to calamitous financial disasters.
Clearing outstanding mortgages & credit card loans.
One highly effective technique is to perform a thorough credit repair cleanup. Essentially, you’re undergoing the hassle to pen out several bad information, list out negative objects, or any other items harming your individual credit score.
However, your focus should be on clearing outstanding mortgages. It’s seemingly impossible to improve your credit score if there are many unpaid debts clinging on your personal credit report card. In fact, you can liaise with either of 3 major credit bureaus – Experian, Equifax and TransUnion – to provide you with a free credit report.
Note: You may request up to three annual credit reports for free only.
Additionally, your focus should also be on clearing loans pegged to credit cards. It’s difficult to navigate around lenders when your current credit limits are over-the-coverage while having your credit cards swipe until burst. Focus on certain powerful debt management techniques such as the “debt snowball”.
There is so much you can do within a short attention span. You could be busy with a regular job, watching your kids, or doing freelance plus monitoring household chores – do a good “job” in cleaning up bad credit and unpaid debts quickly.
Timely debt repayments & consolidate using balance transfer accounts.
Another highly effective credit repair technique is repayments. What you are actually doing is to build a strong relationship with your creditors as well as lenders. They’re not unreasonable in debt repayments but the grace period is usually the trust factor that most lenders “tested” their borrowers with the entrusted funds.
A timely debt repayment goes a long way. Imagine you loan a sizable amount of $10,000 to a friend and was promised to return within ten days. Once your friend defaulted on the outstanding loan, you’ll immediately break the friendship. Similarly, lenders too assumed this analogy in maintaining a business trust between the lender and borrower.
Note: When personal loans defaulted, debt collection agencies might be called in for recovery of bad debts.
Consolidation of all modes of payments is highly encouraged. In doing so, you’re effectively channeling your mortgages, credit cards, individual loans and other cash advances to an attractive balance transfer account. What is essentially happening is that your debts are consolidated into one current account which helps in ease of debt management & paying debt repayments under an account’s interest rate.
Note: The good news is that all your interests are being consolidated into a balance transfer account, letting you to pay off at a faster rate.
To ensure a clean sheet credit report records is not exactly difficult. It begins with financial discipline in personal budgeting as well as managing to service off outstanding debts in a timely fashion. Do think of applying for an interest-free balance transfer account to handle personal finances in the long term.
Engage a credit repair company.
Lack of the required expertise in managing bad debts, why not engage a credit repair company to perform an aggressive credit repair? Many people don’t really have an idea of how to fix bad debts or finding difficulties in resolving debt disputes in the short run. Ended up, they paid more than the initial principle debt repayments and not cost-effective at all.
A credit repair agency does have its pros and cons in managing a credit fix. You’ve to list out your existing financial problems stated in your free annual credit report before turning to the assigned agent for assistance. He or she has a credit checklist on the agency’s specialty in removing bad objects. Both your criteria and the credit fix checklist have to align in dissolving credit dispute errors.
Note: Do not make a full payment even if it is a cheap credit repair service.
Not all credit repair companies are trustworthy. Should you choose the route to hire a professional agency using an affordable credit repair, you’ll need to do a detailed check on verifying reputation of a good credit repair company and services rendered before signing on the dotted lines. Once again, never make payments to the company until the contract is done.
Doing a personal credit repair.
Feeling sophisticated enough to personally handle a credit repair, there is no need to hire an external credit repair company to help you. A few rounds of liaising and filing for credit disputes could make you a pro. Time to take up the responsibility of managing your unpaid dues in the right way (legally of course).
Impatient creditors usually file for claims after several rounds of failed debt collection attempts. It’s not always the case behind sending many debt collectors to your house for outstanding loan repayments. Some lenders seek local credit bureaus and governments in listing bad information out so other lenders doing offline & online credit inquiries will notice the stated negative objects – sometimes looking at unrelated items like tax liens and certificates.
Doing an individual credit repair is not hard. You’ll be requesting for a free credit report yearly to check on obsolete credit info, filing of credit errors, mistakes, or identity theft frauds. These items can pull your credit score down so pay close attention to the listed negative objects in your report card.
Unused lines of credit must disappear.
Why do you need so many credit cards? It is a hassle to be a cardholder to tens (if not 20s) of credit cards and credit lines. The probability of using them equally is very low, not to mention impulsive movements in drawing on cash advances, applying for bank overdrafts, and swiping credit cards without thinking – creating a mini financial turmoil at every month end.
Termination of unused credit lines is highly advocated. Financial experts do not want you to incur unwanted expenses like facing 4 to 5 monthly installment plans pegged to individual credit limits, thereby being penalized in downgrading your credit score. One missed payment also causes your credit report to have a defaulted item or a claim to personal assets for rightful ownership.
Why do you need to undergo such financial distress? Do not be involved in a credit crisis by removing all unused lines of credit. Terminate those that were rarely used while keep the best credit cards for optimal rewards. You should know which credit cards are best for you.
Good to know about optimization: highly effective credit repair techniques.
At the end of the day, you’re solely accountable to a personal financial mishap, an outstanding loan, an excessive credit card bill, or any negative information recorded in a credit report. The banks don’t want to increase the risk of delinquency and often rejected many credit applications with a poor credit score. You’ve been warned!
Quote of the Day: “Optimize spending habits first – KIG Hall [2013-2018]”
» What you need to know about a credit report: Beautify your credit report nicely!
» What you need to know about credit repair: Know whether a claim is right or wrong!
» What you need to know about a credit card: Spend within your financial means!
» What you need to know about credit score: Good things to take note in a scorecard!
» What is a credit repair?: Definition of credit repair!
This article was originally published on February 22, 2014. It has since been updated.