Strategies to Repair your Credit Report

Are you having problems with your credit accounts? Have you slipped behind in paying credit card bills and begun receiving phone calls and letters from creditors? If so, here's some information that will help you stop the damage and start to repair your credit one step at a time.

Sometimes people that find themselves deep financial debt immediately run to file for bankruptcy. But, this should be the last resort, not the first. That's because in 2005 the bankruptcy laws changed dramatically. One of the new requirements is that you must receive credit counseling from a government-approved organization within six months before filing for bankruptcy. Another reason, though not new, is that for the next ten years your credit report will show that you filed for bankruptcy, which will decrease your chances of approval when applying for a loan, obtaining future credit cards or purchasing a vehicle or home.

However, if you do choose the above option, you can still begin the process of repairing your credit by obtaining a secured credit card from one of the many lenders that now offer them. They'll give you a card with a maximum credit line of $300 to $500 when you open an account with them and deposit the corresponding amount as security (hence the name). You can then use the card as you would any other credit card because, other than the 'secured' feature, it is identical to any other credit card. Your payment performance will be reported by the card issuer to the credit agencies. If you develop a good track record of timely payments, you'll have added a trade line with an excellent rating to your credit report. In this manner you can begin to repair your credit file one step at a time. If you continue to handle the account responsibly, after a year or two the card issuer may even consent to refunding your deposit, making the card completely unsecured.

For those who choose not to file for bankruptcy, there is another alternative. You can seek credit repair services from organizations that are reputable in the industry. But be very careful here. If you decide to use a credit repair organization, research and interview a number of them thoroughly to ensure that they are who and what they claim to be, and that their counselors are certified and trained. If they are, they can help you develop a budget by discussing your financial history and current situation, and give you the tools and resources to help you pay down your credit without having to resort to bankruptcy.

Finally, it's very important that you check your credit report periodically. Current legislation gives you the legal right to obtain one free credit report annually from each of the three major credit reporting agencies. You can conveniently order all three from one website: Once you receive these reports, check them thoroughly to ensure that every item is factual and correct. If you dispute any items or information, you can write to each of the agencies and note the inaccuracies or incomplete information, and the changes you request will be noted on each agency's credit file and/or investigating in a timely manner. If the information is indeed found to be inaccurate or cannot be verified, it must be changed or deleted immediately.


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