What to do if You Have Bad Credit

Times have been so hard lately you can almost hear the sound of credit scores screeching downward. Millions of Americans are having doors slammed in their face daily because they suffer from bad credit. Requests for mortgages and other loans are turned down, landlords turn away applicants they consider credit risks, and 40% of employers include credit checks as part of their hiring process.

If you are one of the multitudes of people whose credit score is standing between you and your dreams, you may feel like you’re in a hopeless position. Don’t give up, though. There are some steps you can take to raise your credit score.

Read Your Credit Reports

First, you need to know where you stand. Ask for a copy of your credit report from each of the three major credit-reporting agencies, Equifax, TransUnion, and Experian. Thanks to a federal law passed in 2004, you can get a free copy from each of these agencies once a year. It’s important that you contact all of the agencies, because each report can contain different information.

Once you have the reports, look them over carefully. See anything inaccurate or that should have already been deleted? If so, notify the agency of the information you believe to be erroneous or outdated.

Improve Your Credit Habits

Of course, a major step in credit repair is to practice better credit habits. Make strong efforts to pay your bills on time. Try to make more than the minimum payment on your credit cards, stop spending until you lower your debt-to-income ratio, and do some research on money management strategies.

If you are not in a position to meet your payments, talk to your creditors and see if you can work out a new plan that you are better able to maintain. This may help you avoid paying late fees and extra interest and, in general, just making the problem worse.

Consider Debt Consolidation and Debt Management Programs

Two other options available to people struggling with debt include debt consolidation and debt management programs. Debt consolidation is basically just what it sounds like: you merge a number of bills into one by taking out a debt consolidation loan, a home equity loan, or acquiring a second mortgage on your house. The risk in this is that you will be opening another line of credit and that can hurt your already ailing credit score.

Debt management programs are offered by credit counseling organizations. These services evaluate your income, your budget, and strategies for helping you get out of the hole. They will negotiate with your creditors for you. You, the client, pay the organization each month and they pay your creditors for you.

You must proceed with caution if you are considering a debt management program. Make sure you are working with a reputable company and that you thoroughly understand the terms of the agreement.

Raising your credit score isn’t easy, but it is possible. Remember, the past is past and you can’t change it but you can begin building a brighter financial future.

About the Author: Dee Baugher is a full-time writer with a passion for credit repair and finance. She enjoys focusing on methods for repairing one’s credit, maintaining a good credit score, and finding unsecured bad credit loans for those who are struggling.

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