Gotten Some Bad Credit On Your Permanent Record?
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If you've had a little bit of trouble financially lately, you're not alone. And of course, this little bit of trouble might have affected your credit rating. If so, not to worry.
People obtain bad credit ratings for many reasons, and in half of the cases, it's not their fault. For example, you could get a bad credit score simply because someone in the credit bureau made an error in entering the data. Or someone with the same name as yours defaulted on a loan and then registered that default under your name. Or else you moved to a new house and last month's credit card bill got lost during the shuffle and you forgot to pay it. An expensive mistake, for sure, but an honest one. Failing to make minimum payments on a credit card consistently is definitely bad news, but forgetting once or twice to make a payment does not merit condemnation.
If you have a bad credit rating, this does not mean that your reputation or access to financial services is damaged forever. Indeed, you can fix this situation almost immediately, but you have to do some work to do that. However, if you are consistently behind on financial payments, or have other financial struggles that are "permanent," this is not a quick fix situation and credit counseling may be the best bet for you.
As evidence that bad credit is prevalent and common, the US Trustee Program of the Department of Justice has approved credit counseling agencies to help people with bad credit problems. You can go to their web site at: www.usdoj.gov/ust/eo/bapcpa/ccde/cc_approved.htm. In the box where it says "approved agencies by state", you enter the state or district you live in and click "go." You get a list of credit counseling agencies that are available in your area.
Why Does Bad Credit Exist? In many cases, of course, the reasons you have bad credit are completely under your control. Among them are compulsive shopping, overspending, living beyond your means, et cetera. However, in many cases, you cannot control the reasons bad credit have happened to you, such as when personnel at the credit bureaus incorrectly enter your personal information. If you correct errors made in these types of situations, your credit rating will be restored quite easily and quickly.
Of course, other reasons you have bad credit include being laid off from your job, which is becoming increasingly common in today's job environment. This in turn will affect how and when you can pay your bills, so if you've been responsible previously, suddenly having substantially reduced or no income can greatly affect just how responsible you can be with your bills.
A second reason this may occur for you is if you are suddenly facing foreclosure for your home. Even people with steady jobs face this situation, since many bought overpriced homes in the previously inflated market through lenders who were willing to cut corners to help them buy homes they really couldn't afford. Many of these homes also had such risky elements as adjustable-rate mortgages, where the rate starts out at a very reasonable level and which the homeowner can pay easily. Then, however, rates can suddenly spike and this can increase the mortgage payment by hundreds or even a thousand or more dollars a month. Facing these types of situations, even homeowners who have previously been responsible about making mortgage payments are suddenly faced with a mortgage they cannot pay. In this case, foreclosure is often the only way the situation can rectify itself.
Divorce is another popular reason for credit problems - credit counselors say that this is one of the more common reasons for earning a bad credit rating. When assets have to be divided up between husband and wife and there are alimony and child support payments looming in the horizon, money becomes scarce; failing health can ruin a lot of credit ratings - people who fall ill unexpectedly or are suddenly suffering from a disability will not be able to continue working.
Finally, over-stretching one's credit limits can do the most damage- it amazes us how people's wallets are overflowing with plastic. Instead of keeping one or two credit cards, they have 10! In addition to the usual cards like MasterCard, Visa, Diner's and American Express, they also have credit cards from department stores, gas stations, and other retailers. When one card is maxed out, they simply use the next one.
How Can You Avoid Bad Credit? Before you make any major purchases, make sure you visit the site annualcreditreport.com. This site is government-regulated and allows consumers one free credit report from each major reporting bureau annually. If you are someone who needs to keep track of your credit report more often than once year, it may be a good idea to sign up with one of the monitoring services that offer "free" credit reports along with a myriad of other services, usually for a monthly fee. If you find any inaccuracies in your report, make sure you report them to the bureau in question in writing. They must respond to your challenge and either verify the information or remove it if it is inaccurate. Be aware that unfortunately, the information may reappear again later, so be prepared to do this one or more times before it is fully cleared from your report.
Article Source: Credit Card Bad Credit People
About the Author
Steven J. Talrechi has been writing about credit agencies and credit reporting practices for over 10 years. He specializes in helping people obtain a second chance checking account and second chance bank account when they have been turned down by banks.
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