Debt Management

Credit repair – Is it really needed?

Credit repair can mean rebuilding your credibility in the eyes of the lenders. While doing this is no overnight activity, it is not an impossible one too.

As you know, credit score is the most important thing in individual’s life as by people’s credit score lenders decide weather to lend money or not, to qualify for home loan, business loans, auto loan everything depends on the credit score. Even the rates given on insurance also depend on the credit score of a person. There are firms which give you ways to repair your credit score quickly but most of them are scams so here are some techniques which are not recommended by us for credit repair.

1. Selecting and taking the services of a credit restoration agency

There are many companies who promise to repair your credit report. If you are thinking to hire such companies then wait for a while and go through this article further to know about it more.

According to Ken Lin, CEO of credit karma, there are many companies who give advertisement to repair credit report to lure poor customers and basically they don’t help you out of it rather than they will help you to file bankruptcy which is not a part of credit repair. If you have decided to hire any of these companies for repairing of credit report then make sure that you go to a genuine company. You can judge which company is genuine by few points 1) if a company wants fees to be paid before service is provided then understand that company is not genuine. 2) If the company is not telling you your legal rights then assume that company is not genuine. 3) If the company says you not to contact the credit reporting agencies directly then assume that the company is not genuine at prlog.

You cannot get your credit report by throwing money on credit reporting agencies. All you can do is look for genuine ways which can help you to clear negative remarks from your credit report. It is best that you should keep a look on your credit report every 3 months so that you can get your credit report rectified if there is any sort of mistake done by credit reporting agencies.

2. File Segregation – Right or wrong

File segregation means creation of new credit file by making an application for employer identification number from IRS. Once you get your EIN then you can apply for credit from your EIN number rather than social security number. This thing is considered as fraud and some of the credit repair companies use this technique to repair your credit report.

3. Consolidating debts 

Usually credit reporting agencies derive your credit score by looking on the total credit used by you from the available credit. They even look at the time since your credit account is opened. So because of this consolidating your account can spoil your credit score because it will increase the amount of credit and can decrease the length of your credit account from time since it is open. Even if you consolidate all your account then also it will put a negative impact on your credit score because 10% of credit score is based on the new credit account which you open.

4. Getting the discrepancies removed from your credit report 

Some credit repair companies claim that they can get your entire negative remark remove from your credit report. They tend to say that the credit reporting agencies will clear all the negative remarks from your credit report for 30 days while they will investigate the problem but actually it is not true, while even at the time of investigation the negative remark remains on your credit report until and unless problem is found.

5. No credit – An oath 

There is no compulsion that you should use your credit, you can avoid using them buy not buying home, car, shopping, booking tickets, hotel rooms, and shop online. All these things are difficult to do online but you can manage to book all this offline by paying cash. All these things are fine which you can forget to do but don’t forget to clear off all your debts because your lenders will not forget you.

These are just few of the options or the steps which you can take in case you are looking to repair your credit report. However, there are a lot of people who take multiple loans without even being aware of their credit report and the scores. This mostly happens in the cases when you have a really good credit score and whatever loans you apply for gets approved by the lenders without any queries regarding your financial credibility. However, things are fine till the time they are. Once you get stuck in any kind of financial issues, repayment of multiple loans can pose a lot of problems for you.

Looking at the current economic situation dealing with the perennial issues of recession are in no ways easy. The financial meltdown which basically dates back to 2008, has its affects felt even today. There are a lot of people who have suffered losses in business or have lost their jobs due to recession and for them loan repayments have become a tough commitment to meet. They are looking out for ways to maintain their credit rating from falling and at the same time keep up with their payments.

One of the best ways to deal with your finances in such situations is to keep your spendings to the minimum.

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