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A bad credit report can adversely affect your ability to get loans, credit cards and the like. If you have bad credit, you can clean up your bad credit and rebuild your credit record.
Your credit report contains information about you, your job and how you pay your bills. Credit bureaus compile and maintain information on millions of consumers. They receive your personal information from retailers, banks and others with whom you do business.
If you are armed with the correct information, there are many things that you can do to rebuild your credit report within the law.
One way to remove negative information from your credit file is to contact the credit bureau and dispute the information. Each item item on your report must be proven or it must be deleted. If the credit bureau cannot verify the item when investigated, it cannot remain in the report - it must be deleted.
The credit bureaus delete negative notations from credit reports every day. By law they are required to do so whenever a particular item reaches a certain age. If you dispute an item on your report, they must investigate and delete information that cannot be reverified.
You need to know what's in your credit report. Order a copy of your report. When you get your report, review it and note all the errors you find. Then send a written request for an investigation to the credit bureau.
When you dispute an item on your report, the credit bureau must reinvestigate and if the item cannot be verified within a reasonable period of time, it must be deleted.
Another way to smash negative information that appears on your credit report is by adding a "100-Word Consumer Statement" to your file. The law allows you to tell everyone who obtains your report the reasons for the derogatory status of the account.
After removing the damaging entries, the next step is to add positive credit information to your file.
Getting a secured credit card is one of the important ways to help you build or rebuild your credit record.
To obtain a secured card, you are required to open and maintain a security deposit account at the bank that issues the card.
You can also apply for a charge card at a local department store. Once your application is approved, a charge account will be opened for you.
Another proven way to build positive credit is to take out a secured loan from a bank and pay it back promptly. In other words, the loan is backed by money you deposit and keep in a bank account.
If you ever wanted to erase your bad credit and establish a good credit record, now you can. Thousands of people have rebuilt their bad credit record and are enjoying the good life. And so can you.
Once you solve your credit problems, you can start enjoying the benefits good credit has to offer.
1. Face the problem
When you suffer from a bad credit situation, don't hide the truth from yourself. If you have to juggle five or six credit cards to avoid overdrafts, if you postpone paying your existing loans off or if you can't get any new loans anymore, you're in trouble and you have to face it. Bad credit problems will only get worse every month unless you stop ignoring them. You can get out of them easily, if only you follow these simple steps.
2. Don't punish yourself
If you have a bad credit, it is usually your own fault, but it is done so just move forward and stop looking back. You can't change anything by beating yourself over your credit problems. It happens to people all the time! Instead of punishing yourself because of making some mistakes in the past, it will be much better if you just fix them. Bad credit isn't a life sentence - there's a lot you can do to repair your credit.
3. Learn about your situation
Find out as much information as you can about your current credit situation. Find out what your real credit score is as well as what it means. Talk to your creditors to find out how big your problems are - you will find them much more helpful than you expected. Learn about your rights and the most popular loan scams (www.ftc.gov is a good place to start) - as it is quite easy to become lured into one of these scams.
4. Tell your family
Most people in a bad credit situation are too ashamed to let anyone know that they are in trouble. As the result they try to hide it and still spend more money than they should. Tell your family - you will gain a lot of emotional support and you'll need it before everything will be over. One rule you must not break: never borrow money from them, even if they insist. This won't help you a bit and if you refuse you will gain a lot of respect in their eyes.
5. Learn how to fix bad credits
Talk to your creditors about your financial situation. They are professionals and they do their best to help you (that's their job, anyway). Contact one of the government-approved bad credit counseling organizations (you can find their list at www.usdoj.gov/ust and ask for advice. This way you will learn exactly how much money you need to get out of trouble and what tools you can use to make your situation better.
6. Create a plan...
Then, with the help of your friends, family, creditors and counseling organization professionals, write your spending plan. A balanced budget is the only way to get you out of debt for good. Check how much you spend on needs (food, rent, gasoline etc.) and how much on wants (clothes, jewelry or eating out) and reduce the latter. Don't resign from anything (that won't work anyway), just find the cheaper alternatives. Don't stop cutting back until you see that you will have some money left to pay your debts.
7....and follow it
The easiest and the hardest thing at the same time are to keep your budget in check. If you have made it right, that'll be easy. If your budget isn't correct or made the budget too tight, you will soon need to redo it or everything will fall apart. The whole process of fixing bad credit problems typically takes from two to four years, depending on how serious your debts are, but typically you'll see some initial positive changes within a year.
Part 2 of this article will include important tips on how to repair your poor credit.