Repair your Bad Credit

Repair your Bad Credit

Repair your Bad Credit

A limitless use of credit cards usually leads to heavy credit balances on your credit cards that are beyond your capacity to pay. Ever wondered how you reached this position? The temptation to buy stuff you otherwise cannot afford, job layoff, recession, or lack of funds may be the reason for ending in huge payment balances and a bad credit record.

The Federal Credit Rating Act (FCRA) along with the Fair Debt Collection Practices Act (FDCPA) forms the base of consumer credit rights in our country. The FCRA is enforced by the Federal Trade Commission (FTC) and private litigants. The FCRA was passed in 1970 to promote accuracy, justice, and the privacy of personal information collected by Credit Reporting Agencies (CRA). There are three national CRAs in America. These agencies collect information about your credit. There are some small reporting agencies that concentrate on individuals living in a particular area.

Difficult though it may seem, you should take action to repair your bad credit. If you start contemplating on bankruptcy, ponder how you got into this sticky situation. Is it not time for you to take a stand about your credit history by conditioning yourself to repay what you spent. The first step you can consider in initiating credit repair is to reduce the number of credit cards you have. Each step you take in this process should be informed to the CRAs. To control overspending, write to credit card companies to reduce the credit limit. Credit limit is taken into account by CRAs even if you do not spend. Get secured credit cards and start making payments on time.

Credit reports should always be checked for errors. If you find any errors, report to the CRAs immediately in writing. The next step you have to ensure is to clear outstanding debts as soon as possible. Mortgage installments, rent and utility bill payments are also taken into account to calculate your credit history. If you have paid these on time, you are on the path of repairing your bad credit.

Once you repair bad credit, you may opt for new credit cards with a fixed or a very low annual percentage rate (APR) or low introductory rate of interest. Alternatively, you may take a savings loan from a bank and get a good credit rating by paying installments on this loan on time. You may also co apply a credit card with a close relative or friend. But if you default a payment on this card, even the co applicant's credit record might be ruined.

Whatever, the method you choose, a good credit history and rating are very important in our country to obtain new credit cards or loans. A bad credit history also means high interest rates on loans. Since you are responsible to repay, it would be better to keep a track of what is happening to your credit history and rating by getting knowledge of all entries that go into your credit report.

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