By having credit, you are using someone else’s money as payment for your purchases. In addition, it also indicates that you are swearing to repay the money to the agency or person that loaned you the amount.
If you are applying for a loan, credit card, or mortgage, it is normal for the agency to check your credit worthiness. This is essentially based on the assessment of your credit history, thus helping them determine the possible risks of the deal and decide the terms of the loan. Positive assessment means good financial background, which increases your chances of applying for credit.
The Credit Repair
The process wherein consumers with poor credit histories try to reestablish their worthiness is called credit repair. It involves procuring the credit report from agencies and taking careful and appropriate steps in addressing apparent issues, including omissions, misreporting, misinterpretation, or other inaccuracies.
If any discrepancies are found in the credit report, the consumer is entitled to dispute the errors that unjustly harm their financial health and credit worthiness. Several laws and regulations are designed to guarantee the fair and legal undertaking of the credit report process. These laws can be used to legally and formally start the process of credit repair.
Every consumer is entitled to one copy of the credit report each year from each credit reporting agency. Investigations with regards to the fundamental nature of the inaccuracies and errors are possible and necessary for a successful credit repair.
What influences your purchasing power and eligibility for availing of any credit facilities in the future is your credit record. You should keep in mind that a good credit score can help for several purposes, such as: mortgaging a home, buying a car, or applying for a job. On the other hand, a bad credit score can make you vulnerable to exorbitant interest rates and unnecessary loan terms from several companies. These two facts are important in helping you understand why maintaining a good credit score is vital.
How to Repair Your Credit
The process of credit repair can be achieved through hard work and discipline. Easy methods, which can help you get out of poor credit history, can be quite tempting. However, these easy way-outs can only lead to further difficulties in the future especially if they are done illegally.
In case your poor credit history is caused by circumstances beyond your control, you can always request an upgrade in your credit rating from your creditor. However, this can only be done if you were able to make amends to your credit records after the circumstances.
Creditors do not normally trust consumers who default on their payments. This can pose a difficulty to you in obtaining new credit. However, once you can demonstrate enduring stability in your income and prompt patterns in your payments, the situation can improve in the span of two to three years. This way, even though there is a case of bankruptcy, you are likely to be eligible for credit cards within two years if the steady income is maintained.
Keep in mind that there are no quick fixes to repairing your credit. Contacting credit bureaus, creating your corrections, budgeting, and consolidating your debts can improve your score.