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Credit Repair Education     |      Personal Loans Education      |      Debt Reduction Education



Debt Reduction Education

1 - Your Debt2 - Your Budget3 - Reducing Your Debt4 - Debt Consolidation5 - Federal Student Loans6 - Avoiding Debt7 - Resources




Credit Repair

If your credit history is a complete disaster, you have set yourself up for a miserable financial life.  It’s vital that you get this back on track as soon as possible.  So how do you start to rebuild your credit?  First you must stop the bleeding.  You must create a budget, get all your debt paid off and complete bankruptcy (if this applies to you).

Rebuilding your credit isn’t difficult.  It’s not rocket science.  It just takes discipline and time.  Your ultimate goal is to add positive information to your credit history with small new credit from reputable creditors, paying it off per the terms of your credit agreement and then repeating the process with new additional credit.  Your goal here is to prove that you have the character and capacity to pay off your debt.  As this improves, your credit score will increase.  But this takes time.  It’s not an overnight process.  The years of poor credit can’t be solved quickly.

Keep in mind that this is a slow process, so don’t sabotage your credit rebuilding efforts by applying for numerous loans / credit cards.  The process should be gradual over time.

As you are adding positive information to your credit history, negative information on your credit history will start to fall off.  Per federal law, negative information can only be on your credit history for no more than 7.5 years.  However, bankruptcy can stay on your credit history for 10 years and student loan defaults or failure to pay child support can remain on your credit history until the debt is paid.  Also, federal tax liens will stay on your credit history until it’s paid and the lien released.

The Psychological Effect

If you are trying to rebuild your credit you maybe fighting a losing battle if you have underlying reasons to your financial problems.  If you are an impulse buyer, buy when you are depressed or lonely, spend money on alcohol or drugs because you are addicted, addicted to gambling, etc., you need to first fix these problems first.   Rebuilding your credit before dealing with your psychological issues will be a waste of time.  You maybe successful short-term, but long-term you will fall back into the same trap.

Laying the Groundwork
Before starting the credit rebuilding process you must order a copy of your credit report from each of the 3 national credit reporting agencies (Equifax, TransUnion, Experian), then carefully review for any errors.  If errors are found, correct them immediately.   You don’t want to rebuild your credit, only to find out months or years later than errors were on your credit report.

Once per year you are entitled to a free copy of your credit history (per federal law) from each of the 3 credit agencies.  To order your free credit report visit or call 1-877-FACT-ACT.  If you already received your free credit report within the past year, you will have to pay which costs about $10.

Why Your Credit Report is Important?

It is extremely important that you get your credit report because it is the same information that your current and potentially future creditors will review to make decisions about loaning you money.  Your credit report gives lenders a good indication whether or not you will pay off your debt.  The more negative information on your credit report, such as accounts in collection, past-due account, accounts charged off as uncollectible, etc., the lower your credit score.

Your existing creditors may also use your credit information to determine if your interest rates should be increased, lower your credit limits or even cancel your credit.  Whenever, you apply for new credit, your credit history is used to determine if you should be approved or denied, your interest rate and your credit limit.

Employers, landlords and insurance companies also use your credit history to make decisions about you.  If there is a long list of negative information on your credit history insurance companies may not insure you or charge you a higher rate, landlords will not rent to your and employers will not hire you.

Most negative information stays on your credit report for 7.5 years unless you resolve it.  Tax liens will stay on your credit report permanently until you pay it and bankruptcy (Chapter 7 Liquation and Chapter 13 Reorganization) stays on your credit report for 10 years.


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