Bad Credit - Made Mistakes? That's OK, You Can Repair Your Credit

Consumers today are feeling pressure from all sides, with the interest rate increases associated with adjustable rate mortgages and the rising cost of fuel and other day-to-day necessities, such as food. In the midst of such economic circumstances, it can be all too easy to slide into a position in which the credit score has been damaged, resulting in a bad credit rating. Fortunately, you can repair your credit. It may take a little time, but it can be done. If repairing bad credit is a current goal, it is important not to allow yourself to be taken in by one of the many credit repair scams that are luring those that are less informed or inexperienced. Getting caught up in one of those scams will only make your situation much worse.

Beware Of Bad Credit Repair Scams

Once mistakes have been made and the damage done, it is only natural to want to make that bad credit rating go away as quickly as possible. In fact, that desire to set things right and the worry about how bad credit can affect your overall financial life and future borrowing potential is exactly what scammers are counting on to make you more vulnerable to their schemes. It is important to know right from the start that there is no quick fix to your situation.

Knowing that upfront will make you immune to the hard sell tactics that some scam artists use as they try to convince you that they can remove negative information from your credit history, and can give you a clean, fresh credit start in just a few short weeks. That is, of course, right after you pay them a hefty advance fee. A claim to be able to remove negative information should be a red flag, as if the information is correct and true, then it cannot be removed by legal means.

If illegal means are used to create a fresh credit report, such as in a slightly different name or by applying for and using an EIN, an employer identification number, you can bet that it will be only a matter of time before the deception is discovered. And, when that time comes - and it will eventually - your credit problems will be much worse and you may even find yourself in trouble with the law or the IRS.

The odds are, however, that the average scammer is not going to bother going to all the trouble of actually doing anything much for you, legal or illegal. The most likely scenario is that after performing a couple routine tasks that you could easily handled for yourself - such as getting a free copy of your credit report and checking for inaccuracies and mistakes - if they even do those simple things, the scam artists will just disappear with the advance fee money they collected from their current victims and set up shop elsewhere to do the same thing.

While there are legitimate services out there that can help repair your bad credit through legitimate means, often they just do things that you can do for yourself. Illegitimate services will make promises that are too good to be true, often request that you do not contact or respond to your creditors, and require that you pay upfront for their services.

Save The Fee and Do It Yourself

A recent article in the El Paso Times offered simple, yet effective, advice for repairing bad credit. The November 12, 2007, article pointed out that just paying your bills on time from here on out can make a positive impact on your credit score, as that accounts for about a third of your credit score. As you do that, and time goes by, you'll be adding good information to your overall credit report, pushing the negative information further into the past.

That doesn't mean that you can ignore past mistakes and wait for them to go away. Working towards paying off prior debt is an important part of your bad credit repair strategy. However, don't let the enormity of those debts overwhelm you. Approach the matter in a step-by-step common sense manner.

You'll want to review your credit reports from the three major credit reporting agencies. If there are mistakes, contact the reporting agency and begin the process of correcting your credit report. Once you have accurately determined the amount that you owe and to whom you owe it, your next step is to contact your creditors and see what kind of arrangements you can make. Some may be willing to reduce or even eliminate the interest associated with the debt, and some may be willing to negotiate on the principal, figuring that getting back a good portion of the money is better than getting none. Most will, at the very least, be willing to set up a repayment schedule that is more manageable for you.

For those who are struggling primarily with credit card debt, a surprising amount of progress can be made by simply making sure that you do not pay just the minimum amount possible per month. In many circumstances, that minimum payment just pays the interest, not even touching the principal of the debt in any meaningful way. By paying double the minimum, you can often start making a dent in the principal, which in turn will reduce the accumulation of interest charges.

It's a wonderful thing to decide that now is the time to start to bring your finances under control and repair bad credit. Just making the plan, setting up the budget and putting it in action can help you to feel better about your situation and more in control of your financial life. Don't let your progress towards recovering your financial health be derailed by a fix bad credit quick type of credit repair scam. The bottom line on credit repair is that it is going to take time, and trying to avoid that reality will only leave you worse off in the end and discourage you from making the positive changes in your financial life that you are capable of achieving.