Credit makes the modern world go round, and bad credit can keep people from taking advantage of opportunities that should be within their reach. In the most severe cases, it can prevent someone from acquiring housing or getting a car loan. Many of the measures that can and should be taken to repair bad credit are intuitively obvious; they just take time to work. However, there may be things that impede the utilization of sound financial strategies, and most consumers are uninformed of the laws surrounding credit and how they can use that information to their advantage. With a bit of knowledge, the credit bogeyman can be chased into the shadows where it belongs.
Correcting Bad Information
The Fair Credit Reporting Act is one of the best things that the US government has ever done for its citizens. It mandates transparency from the companies that monitor people’s credit scores, and it gives consumers the right to see everything that every company has on them. It also enables them to see who has requested to see their credit report within the last year, and it gives people the information they need to correct inaccuracies within their records.
Despite what the free credit report commercials on TV imply, there’s no fee for requesting a credit report from the major credit agencies. Every citizen is entitled to a free report once per year, and attaining reports from each company is as simple as visiting annualcreditreport.com.
If there is any inaccurate information within a credit report, the proper procedure is to report it to each credit bureau in writing. The complaint should contain all of the relevant information, including the petitioner’s name and address. If possible, it should include proof that fraudulent charges were made along with a request that the offending entries be altered or deleted from the record. If all goes well, the petitioner’s credit score will be slightly improved.
This is the longest part of the process, but it is also the most important. The primary cause of bad credit is missed payments and defaulted loans. Simply getting back on track with monthly debt and bill payments will fix someone’s credit score over time, but there are a few things that can expedite the process. One is paying more than what’s owed. That’s a no-brainer with credit cards, since it takes a long time to pay them off with just minimum payments. Another method is to take out small personal loans. It’s possible for someone with poor credit to get a small loan if they have enough money in the bank to cover the amount he’s asking for. If he takes out a loan that he know he can repay and he pays it back on the day it’s due, that becomes a bright spot on his record.
Bankruptcy and PPI
Some people are in so far over their heads that there’s no way out for them short of erasing their debt. The good news is that bankruptcy isn’t the end; it’s a fresh start for people who need a clean slate. Yes, it makes it difficult to acquire credit and to navigate the world for a while, but it also means that a family doesn’t have to choose between paying the utility bill and the credit card bill. It’s not an optimal solution, but it is the best option for a lot of people, and it’s the only way out for others.
PPI, or payment protection insurance, can be used to sidestep bankruptcy altogether if someone has the foresight to purchase a policy before things go bad. The long and short of PPI is that it covers monthly debt or loan payments when the policyholder is unable to work. It helps a person that’s unemployed as long as he didn’t get fired for bad behavior, and it ensures that someone who has sustained a major injury doesn’t get behind on his debt payments while he’s healing up. Anyone who wants to avoid bankruptcy would be wise to consider PPI.
Bad credit is not the end of the world; life goes on and people recover. So long as someone cultivates sound money habits after suffering financial fallout, he’ll generally be back on creditors’ good sides within half a decade.
David Garcia writes about how to repair your credit score, including using PPI to maintain a good score. You can find out more about PPI at www.ppiclaims.uk.com .
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