Credit Repair Tips

The most crucial factor that influences the process of obtaining a loan for your home, vehicle or any other need, is the credit history. A bad credit score is the main obstacle in securing the loan from lenders. Thus, there is a need to repair the bad credit rating to impress the financers with your credibility.

Achieving the Perfect Score
There are many popular approaches to carry out the bad credit repair. Let’s take a look at them:

• Debt Consolidation: This is the approach of consolidating all the debts as a single monthly installment. By following this process, the rate of interest is reduced and that facilitates you to lessen the amount to be paid as monthly installment.

• Paying a fractional settlement payment: It is the scheme recommended by several banks. In this you can propose to pay a fixed percent of your balance. The credit bureaus revise the status of your credit after they receive the documents from the creditors. The documents include a settlement form obtained from the creditor side.

However, these banks advise not to approach the finance companies that provide counseling on bad credit repair. Declaring yourself bankrupt is also not suggested because it restricts the chances of getting a loan in the future.

• Limiting the number of credit cards: It is advisable to keep a check on the number of credit cards you can afford. You can close the idle credit accounts after settling the bills and keep the regularly used cards alive. On the other hand, the less number of credit cards are also not advised.

• On time Payments of Small Purchases: There are cases, where people prefer to add their accounts of a departmental store or gas agency to their credit cards. Thus, the on time payments of small purchases will improve the credit score.

Credit Rating agencies
There are a number of dedicated bodies that keep record of credit rating of individual as well as business units. These agencies, known as credit rating agencies, may be companies or non-profit bodies that provide debt security in a number of ways. These agencies prepare the credit ratings on the basis of status reports submitted by the financers, from whom a person or a business body has obtained the loans.

These status reports consist of information regarding payment history, on time payments, debt balance, limits of credit etc. Thus, on the basis of this information a credit report in prepared and maintained.

The process of repairing the bad credit history is not a trouble-free task. The main causes that results in a bad credit score are delayed repayment of various loans and thus, the accumulation of an enormous amount of debt. One could not achieve the improvement in credit score in one night. This process if carried out in a slow pace, following the suitable steps with uniformity, will no doubt lay a strong foundation for your future.