Credit Repair Tips

If circumstances such as a loss of job, a cut in salary, medical bills, or just poor financial management has led to a credit crisis in your life, the tips below offer some suggestions on how to get your credit back on track.

1) Do a self-evaluation: if you do not have a budget, prepare one. Make a detailed list of all income and expenses you currently have. From this budget, you can decide how serious your credit problem may be. It might be a temporary problem that can be worked out within a short period of time, or it could be as severe as bankruptcy being your only option. In many cases, bankruptcy is not necessary if you are willing to stop unnecessary spending and work with creditors to fulfill your current and/or past credit obligations.

2) Contact creditors to let them know of your current financial situation. Some may be willing to set up a payment plan or make other payment arrangements. If your creditors are willing to work with you, be sure to hold up your end of the agreement. Be realistic if making arrangements, don't promise to repay if it is impossible. If your payment is due on a certain day, make sure you have it to them on time, not a day later. Depending on the severity of your credit problems, you may need outside assistance in dealing with your creditors. Try contacting a reputable credit counseling service if you need professional help with credit management.

3) Some credit problems may be due to mistakes on your credit report. You should regularly check the accuracy of your credit report with the three major credit bureaus. If you discover inaccuracies, contact the credit bureau immediately. Take the necessary steps to correct inaccuracies. Be sure to provide the correct information and keep copies of all mail correspondence.

4) Be cautious of companies that promise credit repair. If in doubt, contact the Better Business Bureau for your area.

5) Set your priorities and focus on your needs vs. wants. If you have to sacrifice eating out or going on vacations to be able to fulfill you credit obligations, do so. Find alternative ways to have fun and relax...rent movies, go to the park, etc. Remember your goal of re-establishing your credit!

6) By being a frugal shopper, you will be able to save money on the necessities and use the money saved to pay off credit obligations. Shop at discount stores, use coupons, go to garage sales, etc.

7) Keep track of all spending. If you use debit/credit cards, keep all receipts and record them daily. Also, keep track of all cash spend, even if it is just a few cents. Many consumers don't realize just how much they spend on everyday items, such as a cup of coffee, a candy bar, soft drinks, etc.

8) Bankruptcy is a last resort. If you are so deep into debt that you cannot fulfill your credit obligations, bankruptcy many be your last option. Be sure to explore all options before bankruptcy, as there are definitely disadvantages to this decision: bankruptcies remain on your credit report for up to 10 years, obtaining credit or employment may be difficult, and some debts (taxes, child support, etc.) are not dissolved with bankruptcy. If you do seek bankruptcy, seek a knowledgeable attorney.