Maintaining A Good Credit Standing During A Crisis
The sinking of the US economy into recession has resulted in layoffs and tightening of incomes in most household
. There is enough reason to assume that many individuals may find it difficult in maintaining good credit scores nowadays. Falling income levels might prevent some people to religiously service their debts.
However, it is important to emphasize the need of people to take care of their ratings because these largely influence their ability in engaging with commercial transactions.
Credit scores, assigned by credit report companies on consumers, are a reflection of people's credit worthiness. Those who have poor grades have more difficulty than others in getting bank loans, purchasing insurance, finding a place to rent, and availing of utility services, etc.
In maintaining a good image, one should keep track of the evaluations made on them by the companies doing the assessments. The law mandates these companies to provide free copies of the evaluation reports once a year.
To get free copies of the reports, one can log on to its website and provide the required information, such as full name, gender, age, birth date, address, social security number, and credit card number, among others.
An individual may also opt to get other services, besides a one-time release of his assessment report. These services, which entail payment of fees, may include sending alerts every time an entity requests for a copy of an individual's financial background, and notifications of changes in the ratings.
Knowledge of one's grades allows an individual to take action in case his standing deteriorates.
Given the impact of one's financial background on the ability to transact business, it is essential to keep ratings favorable. improving credit scores entails settlement of financial obligations and promptly paying bills.
During a crisis, however, it is difficult to settle liabilities. Nonetheless, there are ways to do so.
One is to refinance debts. It is done by borrowing loans with lower interest rates and using the proceeds to pay for liabilities that carry higher interest rates. This will result in a reduction of the person's expenses on loan payments.
Another way is by requesting for restructuring in one's debts. This means asking banks for more relaxed payment terms, which will allow the borrower to settle his obligations within his affordability.
Discussing payment options with lenders, rather than defaulting on loans and turning away from financial obligations, is a responsible way of handling problems related with debts. It is also a good way to keep one's credit scores from deteriorating sharply.
by: Leo Chu
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