A bad credit report is a summary of a borrower’s timely and responsible repayment of various debts. A “bad” credit report may include late or missed payments, defaults, arrears, charge offs, and other similar negative marks on a person’s report. Bad credit is often caused by a variety of factors, including divorce, loss of job, medical expenses, or excessive credit card debt. In order to rebuild a good credit report, consumers need to start to plan and implement a strategy for credit repair.
Many people think that bad credit can never be improved upon. This couldn’t be further from the truth. Today’s market offers many options for repairing a bad credit report. Even those with a poor credit history can get positive results by taking steps to clean up their credit. To start, the consumer needs to create a budget and ensure that every expense is tracked.
Credit lenders are becoming increasingly strict about bad credit scores. As a result, many lenders are lowering borrowing limits and making it more difficult to obtain loans. For some borrowers, the best option may be to work directly with the lender to fix past issues, or seek professional help to improve a score or repairing an overall debt situation.
Another way for a person to improve a bad credit score is to work with the major business credit reporting agencies. The Fair Credit Reporting Act (FCRA) gives consumers the power to dispute inaccurate or outdated information directly with the reporting agency. By disputing information directly with the lender, the consumer can ensure that the correct information has been provided. The major business credit reporting agencies, such as Equifax, Experian, and TransUnion, have very specific guidelines when it comes to disputing items on one’s credit report.
For many people, improving their bad business credit scores will involve a combination of methods. Because bad credit profiles carry a greater weight in terms of overall borrowing costs, improving scores will often require working to pay bills on time. Paying bills on time ensures that a borrower will remain in good standing with the major lenders. Other methods for improving bad business credit scores include paying down debt, closing accounts, and avoiding making any large purchases during times of financial distress. By keeping outstanding balances low, a borrower can ensure that a credit profile reflects low debt levels, which makes lenders more likely to lend.
While bad credit score difficulties are not entirely avoidable, they do represent a serious threat to future borrowing success. Fortunately, several options exist for improving a bad credit score, including working directly with the lender and the major credit reporting agencies to repair past issues, or seeking professional help. Regardless of the choice, the best approach to improving a bad score is to simply get started managing existing debt better and to continue to do so in the future.
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