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How to Rebuild Your Credit

Okay, your credit is bad, no company will extend credit to you, what do you do? Give up? Never. Belive it or not, the percentage of Americans in debt is high and increasing everyday. Granted, bad credit will remain on your credit report for 7 years, it will not necessary take that long to get back in the good graces of money lenders.

It is possible within 6 to 12 months to reverse your bad credit image. If you show creditors that you are making timely, substantial payments on your outstanding debts, you can possibly prove to them that you possess credit worthiness.

First things, first: Get rid of your present credit debt:

• In a "perfect" world, no more than 1/3 of your net income should be exhausted by monthly liabilities, sush as personal , student & car loans, credit cards, home mortgages, etc.

Make arrangements with present creditors to reduce monthly payments:

• consolidate all debt into one loan
• have monthly payments reduced by creditors
• seek a credit counselor

Lower credit card interest rates:

• higher interest rates take longer to pay off
• transfer balances to creditors with lower interest rates

Keep finance charges down:

• the lower your finance charge, the more of your minimum payment will go towards the balance and not interest
• speed up payoff by adding several extra dollars each month to minimum payment due

Avoid late fees, pay your bills on time:

• pay your bill promptly, within 10 days before the due date
• do not wait a couple of days before - allow mail delivery time
• automatic check debits from your checking account is an alternative

Your bad crediting rating can improve with perseverance and diligence. Make positive changes in the way you handle your finances and stay on a well-defined budget. Avoid using credit to suppliment your income, do not charge more than you can pay off in a month, and only have one credit card at a time. Avoid impulse buying, and reusing recently paid off credit lines.

Obtain a copy of your credit report and make sure there are no errors on it. The three major credit reporting bureaus are: Equifax, TransUnion, and Experian.

*NOTE: You do not have to be harassed by debt collection agencies. You can send them a letter requesting them to cease and desist.

Next Article: Debt Warning Signs, Detect It Early

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