Restoring a damaged credit rating is not unlike putting out a forest fire. When the fire was initially starting it could have been easy. Once a credit rating is destroyed it's like putting out a raging forest fire. Where you start? There are disasters everywhere. On top of that interest rates and charges continue on their relentless march resulting in further unpaid bills and further red marks to one's credit rating that only add further to the damage and onslaught.

In these days of financial disasters how does one restore their credit rating? Can a credit rating be restored – if at all and ever?

A person's reputation and honor can be said to be the most valuable asset a person has. Without ethics and honor you have nothing. So is it if you lose your credit rating. People will go to great lengths to protect their name and honor so it should be with their credit rating, ranking and reputation.

Still you may be in a position where you have strung up many credit cards. It's as if you are robbing Peter to pay Paul – or at least long enough to keep creditors away. It has been said that many Americans are living off their credit cards. Many have “maxed out” up to 20 credit cards. It's an impossible situation as debts and interest charges increase and add up. On top of that many people are facing uncertainty in their jobs and employment, their home most likely has decreased in value and their once unlimited source of funds – a never ending “piggy bank” through readily available “household loans” has dried up. Many had even found that their retirement nest egg – their “401 K” is nowhere as valuable as it used to be. Thus many Americans are now in deep financial trouble.

What to do?

First of al is the obvious – try not to panic as bad as things are. It's the people who hold their heads that gets out of most crisis's intact and alive. The economy and finance always goes up and down always in the end coming around at some point.

Next of course is tried to reduce and limit your costs and spending as much as you can do in a reasonable manner.

Next make up a budget plan. You can find budget books at most stationary stores or if you wish there are many computer programs to do this on your pc. Just make sure to make backups of your financial budget data. Everyone likes to think that they have unlimited funds. In this case you certainly don't. Most people never get around to making a home or family spending budget. They just spend on a regular basis within their means. That is fine. However in this case you are in a crisis situation. On top of shepherding limited funds, you have to restrict any charges to your charge cards and bills.

On top of that you will have to start making payments on your debts rather than allowing them to escalate – that is unless you want to declare bankruptcy. Bankruptcy is not wise choice as a simple and easy way out of your mess. However it has great costs – not only to your credit rating and ranking, but to other financial plans and dreams you may have.

In addition there are specific accounting and legal costs and charges. Bankruptcy is available as an option. However it's very aggressive and personally expensive and is very aggressive and drastic surgery for what may be otherwise attained by less costly and, damaging and substantial means.

Lastly if there is one major point that should be stressed is do not play smart and avoid any creditors – either by mail, phone or in direct contact. Nothing makes a creditor more angry and willing to take direct action against those that owe them money than being ignored. Act responsibly. Contact creditors up front. Explain the situation.

Explain that you understand that you have obligations to the creditor. You will do your best to work with them to pay off any charges and debts. If possible even work with the creditor to develop a payment plan. Who knows that when approached in this manner the most hard headed business or finance person will not only appreciate your candor, honestly and attempt to make amends and work with them but even be more reasonable or even reduce some services fees and interest charges?