Tuesday, December 12

Credit Repair: Surefire Solution

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Credit Repair: Surefire Solution

brotee mukhopadhyay

Performance of most of the countries in the field of economics has not been satisfactory for some years. This slowdown has raised the rate of unemployment to any new high. Parallel to this, unprecedented rise in the market price of essential and other commodities have forced the people to secure finance from several sources. A section of them has failed to reimburse the borrowed amount within the agreed time, and many of them have been stained with less payment, late payment, arrears, defaults, bankruptcies etc. Naturally, they have messed up their credit report, and their credit score has gone down. Credit repairing, hence, has drawn everyone’s attraction.

Credit repairing is possible if the affected persons consider the following suggestions.

·         Credit score of the debtors is generated from their credit report. Equifax, Experian and Trans Union are financial bureaus which independently prepare the credit report. The debtors can get their credit report from the financial bureaus once in twelve months. Credit reports are available free of cost. The Fair Credit Reporting Act has given a right to the debtors to obtain a free copy of the credit report.

·         Sometime, credit report of some debtor is found to have mistakes. Mistakes are found in his name, address of contact, date of birth and in more personal details. Small mistakes of any such item can put more burden of outstanding on the debtor’s shoulder. It also happens that his credit report contains some accounts which have been closed or written of earlier. In this way, his credit status looks sick.

It is the task of the borrower to study the credit report seriously and check if there is any mistake. He should draw attention of the financial bureaus to the mistakes noticed in the credit report. He must not leave the bureaus staff till the necessary corrections are made. His creditors of the last six months must receive a fresh copy of the credit report duly corrected by the financial bureaus. He has the right to write the dispute letters if the bureaus do not duly rectify the errors. The bureaus must verify the mistakes within thirty days after the complaint is lodged.

·         Sincerity and commitment are expected from the debtors. They should repay the borrowed amount within the scheduled time. It is important to note that 35 percent strength of the credit report is directly dependent on the payment history.  Late payment of 30 days can be managed, sometimes. Late payment of 90 days is sure to lower the credit score.

·         The debtors may face difficult time when they may find it hard to repay. The first thing that they should do is to meet the respective creditors and discuss the problem with them. Extension in the repayment duration may be granted by the creditors. The debtors can be back with good amount and make an overdue payment. As their intention is praiseworthy, their credit status will not be affected to that extent.

·         The debtors should have an idea about utilization ratio. When total debt is divided by the total available credit, one can find the utilization ratio. People, sometimes, close operation of the idle credit cards without paying off their dues in full. They do not note that their utilization ratio is wounded due to such an operation. Credit score goes down when gap between the credit utilized and the credit available is narrowed. Moreover, the debtors should maintain low balance. Better utilization ratio ensures better credit status. It is good to restrict the below 30% credit card balance, as unpaid dues amount to 30% of the credit score.

·         The debtors should not do anything which can make the creditors suspicious about their design. Transferring of debts to any lower interest card will definitely weaken the credit status. Some debtors do it slyly to reduce their debt.

·         The debtors should learn how to use the credit cards so that credit status is least affected. Credit report should not be allowed to be checked when there is no need. It is better to have a credit card which is older than two years. This ensures 15% credit score. Another example: Somebody likes to purchase a home. He should try to submit application for the loans within one two-week duration. If his loan procedure is kept within one two-week duration, all the questions he has made will be taken as only one request.

·         People can avail services from credit repairing companies. The persons, who will decide to get their help, must be cautious. It is difficult to depend on their high-sounding assurances. These services are expensive, no doubt.

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