Recently, the media has given a lot of attention to how important your credit rating is. The system of FICO, which stands for (Fair Isaac and Co.), was developed to help creditors determine how much of a credit risk you may be. These scores are determined by factoring in such things as amount of credit owed, length of time the credit was established and if any late payments were made.



Even just inquiring about a loan can count negatively on a score. For people who have always managed to pay their debts on time, but suddenly find themselves in a position where they are no longer able to do so, this is devastating. Your credit rating determines if you will be able to buy a house, secure a credit card or even a job. Employers have taken to running credit reports on prospective employees, because they feel that it will indicate how responsible a person is. Even some insurer's have started to run reports, and may base your acceptance on how high your credit rating is.

If you are suddenly unable to repay your debts and have suffered from lowered FICO scores, it is imperative to begin to repair your credit. Before you can start the repair process, you must seek a solution to being unable to pay your debts. Aside from trying to lower your expenses by trimming away unnecessary things such eating out or other forms of entertainment, you may also be able to get another job to make additional income to help you to pay off your debts. This isn't possible for everyone, particularly if they have been out of work due to an illness, or lost their jobs and went for a prolonged period of time before finding another one. Now their debts have gotten so out of hand that a second job will not be enough to cover the growing balances.

Bankruptcy is an option that some people consider to help them out of their situation. The problem with bankruptcy is that it will appear on your credit report for 7 to 10 years, making it very difficult to restore your credit rating. There are also income limits and credit counseling classes that have to be taken, as well as costly attorney fees. In addition the government has recently taken steps to restrict the bankruptcy process.

In an effort to help people with their debt problems, many creditors will now try to work with you to help you resolve the debt, by offering lower payments that you may be better able to afford. There are also organizations such as the United Way who has partnered up with Credit Unions, to help people find a way to repay their debts by consolidating them. If find yourself in this type of situation, contact the United Way to get the help you need to resolve your debts.