Top Five Credit Repair Mistakes
For many, the path to credit repair is laden with uncertainty and anxiety. You may be asking yourself, “How can I fix my credit? Are there pitfalls to avoid?” The answer is a resounding “yes.” Fixing credit does not happen overnight, and there are several avenues to avoid along the way. Stop and consider your actions carefully before making these common credit repair mistakes:
Playing the “shell game.” Shuffling debt from one place to another will not help you contain it. Many people think transferring a balance from one credit card to another will lower their monthly payments by reducing the amount of bills they pay. While this may be the case, examine the fine print on your credit card. Are there fees attached to balance transfers? Will your interest rate increase? Also consider the 25 percent rule: a credit card with a balance exceeding 25 percent of its limit will likely lower your credit score.
Another tactic to avoid is payment flip-flopping, i.e., paying bills on and off in concordance with other accounts. Skipping payments in favor of others will most definitely hurt your score. Even if you pay off and on, the damage to your score is done. Bottom line: you cannot fix credit without paying your bills.
Closing your accounts. It seems logical to minimize your credit exposure to improve your score, but closing existing accounts is not the answer. Old accounts establish a lengthier credit history; by closing them, you are eliminating a valuable credit repair tool. Think twice about cancelling your credit cards, even if you don’t intend to use them.
Avoiding communication. If you have outstanding debt, the last person you want to talk to is your creditor. However, you shouldn’t ignore their attempts to contact you. While the process is stressful, get in touch and try to view them in a positive light. Ask if they can restructure your payments or place you into a financial hardship program. They may be willing to help you.
Filing for bankruptcy. Bankruptcy is a last resort and should never be considered as a credit repair option. In fact, this avenue can damage your credit score for years to come. Bankruptcy citations remain on your credit report for 7-10 years, and can haunt you even after they disappear. Many lenders are hesitant to work with a borrower who has bankruptcy in their past, possibly preventing you from obtaining loans in the future. While it may be difficult to avoid panic, exhaust all your options before going down the long road of bankruptcy.
Inaction. Ignoring your financial troubles is arguably the worst thing you can do. True, facing the music of credit repair is daunting, but delaying the inevitable will have far greater consequences in the long run. Get a copy of your credit report and start looking for ways to improve your financial situation. Your efforts may take time, but they will pay off in the end.
Article from articlesbase.com
