Understanding How Credit Repair Really Works is Crucial to Your Financial Battle

What is Credit?

Credit means that you are using someone else’s money to pay for things. It also means that you are making a promise to repay the money to the person or company that loaned you the money.

Whenever a person applies for a loan, mortgage, a credit card or for any other purpose for which he needs to borrow funds from a lending agency, the agency will check the financial credit-worthiness of the person and based upon its assessment of the financial risk involved in the deal, the agency will decide upon the terms and conditions of granting credit. A positive assessment necessitates a sound financial background and a credit history with no bad remarks.

What is Credit Repair?

‘Credit repair’ is a process in which consumers with unfavorable credit histories attempt to re-establish their credit-worthiness. The process usually involves procuring a credit report from the rating agencies and then taking appropriate steps to address any apparent issues such as errors, omissions, misinformation, misreporting or misinterpretation. A consumer can then formally dispute those errors or issues which unjustly distort their financial healthiness and credit-worthiness. Various laws and regulations designed to ensure legal and fair undertaking of the credit repair process can then be utilized to formally and legally start the credit repair process.

Consumers are entitled to a copy of their credit report legally, if they have been denied a credit card or loan and if the information provided on the report is inaccurate, an investigation relating to true facts is necessary for a credit repair.

Why Repair Credit?

A consumer’s credit record significantly influences his future purchasing power and his eligibility of availing any credit facilities in the future. A good rating, or score, can insure a low interest rate and loans for longer term for various purposes like credit card balances, car or home loans. A poor rating makes a consumer vulnerable to finance companies charging exorbitant interest rates and imposing various unnecessary repayment and loan terms. Considering the stakes and the consequences involved, it is absolutely imperative for consumers to understand the importance of repairing their bad or low credit ratings.

The Safe and Legitimate Way to Repair Credit

Credit repair can only be achieved through financial discipline and hard work. Any easy way out of a poor credit history is undoubtedly tempting, but it may lead to further financial difficulties in the future.

If a poor credit history is due to circumstances beyond a consumer’s control, and they are able to somewhat make amends to their credit records after that time, then a creditor can be requested to upgrade credit rating because of a sense of customer loyalty.

Most creditors don’t trust the customers defaulting on their debts, so it may be very difficult to obtain new credit. But once a person is able to demonstrate continuing income stability and prompt payment patterns, his situation can improve in a period of two to three years. This way, even in the case of bankruptcy, a consumer is likely to be offered charge and credit cards within a year or two if maintaining a steady income.

What is most important is evaluating the financial situation. If one finds that they are unable to make at least the minimum payment on outstanding accounts, a contact should be made with the creditors. Many creditors will appreciate the willingness to pay and are most likely to help set up plans for repayment. Avoid making promises which cannot be kept as a small payment is preferable to a large payment that never arrives. Sometimes a small contact can be enough to reduce payments and forestall more severe measures.

The next step is consulting a credit counseling agency. These organizations are staffed with trained individuals experienced in the credit field. A distinction needs to be made between these and the commercial “credit repair” companies who claim that, for a fee, they will undertake credit repair.

No one can legally remove accurate and timely negative information from a credit report. But the law does allow one to request a reinvestigation of information in their file that may be inaccurate or incomplete. There is no charge for this. Everything a credit repair clinic will do can be done by a consumer themselves at little or no cost.

The most important factor in credit repair is recognizing the legitimate and viable options available, recognizing what the scams are, and differentiating between the two. A poor credit history can make it difficult to obtain additional lines of credit making consumers fall prey to many unethical programs that target consumers with less- than-perfect credit. There are no quick fixes in credit repair. Common sense tells you that a third party doesn’t know your credit history better than you. Through contacting credit bureaus, making your own corrections, consolidating your debts and budgeting, you can improve your own score. You don’t need to pay someone to fix it for you. It’s better to apply that money towards discharging your debt.

Summary

Understanding the basics of credit repair and knowing what exactly is needed in order to rebuild your credit history goes a long way to getting it resolved. However, you must be disciplined, find the right credit repair solution for you and not be tempted to fall back into debt.

Payday Loans For Bad Credit – A Solution For Good People With Urgent Financial Matters

Most people have run into a financial situation that requires urgent attention at one time or another. It might be an emergency car repair or a past due electric bill. Many of these people do not have a savings to draw from and do not have a favorable credit, making the options available to resolve financial emergencies very slim. Payday loans for bad credit can be a practical consideration for people facing this predicament.

The advertising slogan “Bad Credit? No Problem!” is plastered on almost every cash advance site on the web. The reason for that is… its true! “No credit check” is one thing that makes payday loans so tempting to so many people. You can put some much needed cash in your pocket and your creditors will never know, unless you default on the loan. Most cash advance lenders don’t even pull a credit report during the approval process. They consider stable employment and a verifiable income your credit.

A payday loan is a “cash advance” on your next paycheck, so in a sense it eliminates the need for a credit check to verify that you pay your bills on time. You’re obviously experiencing some form of financial difficulty or you would not be considering this type of short term loan. So, the difficult financial background that would be reflected on your credit report does not become a factor. Many lenders require payroll direct deposit for approval because it allows them to electronically retrieve their loan payment with more certainty and less chance of default.

The best part about getting a payday loan with no credit check is that you will not be punished for having financial issues in the past. That is, the same two people applying for the same loan amount will be charged the same rate regardless of their credit history. At some point in our lives, most of us have heard, “if your credit score was higher we could offer you a lower rate on your loan”. Those words will never be spoken when applying for an advance in your pay. Since a cash advance is meant for emergency money situations as opposed to long term loan payments, some of the factors that come into play for other types of loans are not even considered during the payday loan approval process.

Although your credit report is not usually taken into consideration during the approval stage of your cash advance, it may be factor if you default on your payday loan. Many payday loan companies report delinquencies to the credit bureaus. This reporting may lead to negative consequences on the accounts you have that take your credit score into consideration. The delinquent payday loan will usually be reported as “in collections,” or as an unrecoverable amount, and can stay on your credit report for seven years.

It’s important to be smart and responsible when obtaining a cash advance. Only borrow what you absolutely need and budget your money so repayment will not put you further behind. Try to leave a cushion for your daily expenses on the week your loan comes due. Many people are already facing dire straits when applying for a payday loan, but you cannot get caught up in the ease of getting the loan. Taking out multiple payday loans or borrowing a higher amount than you actually need simply because it is available to you is unwise. You must be conscientious about your budget and do your best to make good use of your cash advance without putting yourself in a worse financial position.

Most people encounter a financial emergency at one time or another and many of these people have had a difficult financial history. That much is understood in the short term lending business. A good person can have bad credit and still have the need for a payday loan to help them pay an overdue electricity bill. That is why short term lending companies offer you a quick and easy cash advance with no credit checks. In return for that convenience, you agree to pay the loan on your next pay date. It really is that simple if you borrow only what you can afford to payback.