Consumers who are in a position where they have faced a reduction in their credit or may be in a position where they simply want to improve their credit so that future purchases, like mortgages or car loans, may be made available at a more affordable interest rate, but there are aspects of the bad credit repair process and even some bad credit repair programs in which consumers happen to participate that overlook aspects of the credit repair process that takes up a major portion of a consumer’s credit rating. Primarily, consumers need to look at their payment history and the overall amount of debt and they have before even beginning the bad credit repair process or else they may simply be working to improve their credit rating while these aspects of their credit score are working against them.
Many advisers have called for consumers to look at their finances and take stock of their position here in June and July, but it needs to be understood that simply beginning the bad credit repair process does take some planning. For starters, a consumer’s payment history takes up a large percentage of their FICO score and their payment history and the amount of debt they currently over make up well over half of the factors that determines their credit score.
The fact that a consumer’s payment history may have been marred or could have seen problems recently, due to aspects of a consumer’s financial life like foreclosure, unemployment, or a simple reduction in wages, is not something that a consumer needs to feel will ruin their overall credit life, as reestablishing a credit score can be accomplished without a great deal of financial distress or strain particularly if a consumer has a long credit history that is, overall, positive. Yet, any adviser will tell you that it is never too late to begin practicing smart financial habits and establishing a more positive payment history on debts, but also, consumers must remember that the amount of debts that are owed will also not only factor into their score but must be dealt with before the bad credit repair process begins.
There are consumers who will attempt to access a free credit report or may purchase a credit report and their credit score, but this is only helpful so that they can make sure that they have not become victims of identity theft. While a consumer should look at their credit history to make sure that there are no mistakes which could be dragging down their score, after this is done a consumer needs to focus on paying off their debts and getting into the habit of meeting payment obligations in a timely manner.
Debt relief is vital to the bad credit repair process, as credit card debt or personal loans are going to be a drag on the bad credit repair process since consumers usually will want to use methods like taking credit card purchases and paying down what they owe, but again, consumers do need to remember that the types of credit they have used or may have available will also factor into credit scores well. Yet, no matter if a consumer takes out loans, uses a credit card, or may pay off other financial obligations, this will be more easily accomplished once they have checked their history to make sure that no fraudulent items is bringing down their credit score, and consumers must budget and save in a way that will allow them to get out from under burdensome debt obligations, as acquiring debts through credit cards or loans, easily managing money so that prompt repayment can be made, and simply establishing a budget so that consumers will keep other lines of credit low and paid off on time will all lead to a more successful bad credit repair process for consumers.