A bad credit record can be a serious handicap for the consumer in today’s world, because it places such severe limits on a person’s financial options. Almost everyone requires some kind of credit at one time or another, usually in the form of personal loans or credit card purchase, but a bad credit rating can preclude the financial transactions that most people take for granted. A bad credit score may make it almost impossible to negotiate a mortgage or a business loan, for example, and it may mean that major purchases have to be cash-only deals.
It is quite possible to repair a bad credit record, though there are no quick-fix solutions, and promises of instant credit repair should be viewed with suspicion. Such promises usually come from finance companies looking for new business. Refinancing may well be part of the solution, but the first step towards clearing a bad credit record is to repay all outstanding debts, and to take charge of one’s own financial situation. It is essential to understand the credit rating system and consumers need to be clear about what information remains on record, even when bad debts have been repaid.
Credit details remain on a person’s file for a period of seven years and even longer in the case of bankruptcy. Inaccurate or outdated information can sometimes creep into the record, however, and it is important to be aware of the contents so that corrections can be made. If the information is correct, no finance company or bank can remove it until the seven-year period has elapsed. A number of finance companies offer credit repair services, but it should be remembered that they are bound by law to provide accurate information to their clients. Debtors have legal rights as well as legal obligations, and they have a right to know what can and cannot be done.
Some finance companies claim to be able to create a second credit file for new clients so that their bad credit record will not be a factor in future financial transactions. This cannot be done legally. Any attempt to create a new social security number or tax identification number is illegal, and clients must be aware of this, as ultimately they will be held responsible for any unlawful changes.
Once a suitable consolidation and repayment plan has been set up, the credit rating and payment record should be re-examined and corrected if necessary. A lawyer could help with this, but there is no need to go to this expense, as a credit check and update are quite straight forward. Anyone can obtain a copy of his or her credit report for a small fee, but if credit has recently been denied on application, there is usually no charge at all.
There is also no cost to point out discrepancies or to question and dispute any part of it. If changes are called for, they can be made through one of the major credit bureaus either in person, by mail, or on-line. Explanations for non-payment can be attached, and details of recently-paid debts can be provided.
Finally, if handling credit is an on-going problem, counseling is available from a consumer credit counseling office. These are usually available locally, but if not, they can be contacted by telephone or online. Anyone who is serious about improving a personal credit rating should consider this course of action. Patience is required, of course, but eventually, a respectable credit score can be reclaimed, and it will be well worth the time and effort.