How to Fix Your Credit Problems

If you are having problems with your credit you may be relieved to know that there are things that you can do to protect and repair your credit score.  After reading this article you’ll have the information that you need to get you on the road to fixing your credit problems.

Should You Declare Bankruptcy?

Recently a friend asked me if he should declare bankruptcy. Ironically, he has a very good credit score.  He has a house full of kids and he had made some bad investments and accrued a lot of debt.  He had not much money left out of his paycheck after paying off his bills and wanted to give himself a bit of breathing room.  My advice to him was that he should try credit consultation instead of declaring bankruptcy.

If you’re in a similar (or worse) situation you may need to swallow your pride and see a credit counselor.  Sometimes having a knowledgeable person help you sort your debt out, one who can make a viable plan for you to repay your debt, may be all that you need.  The best credit counselors can help you to avoid things as serious as foreclosures and bankruptcies.

Request a Higher Credit Limit

If you have been paying your bills on time and are not anywhere near your maximum limit on your credit card you may be able to improve your credit score by requesting a higher credit limit.

When your credit limit is increased, if you don’t charge any more than you usually would your debt to available credit ratio will decrease.  In turn, your credit score will increase.  However, you should not make too many requests to too many creditors in a short amount of time because it may seem that you desperately need more credit for one reason or another.  If that happens then this strategy would work against you rather than help you.

You should also keep a close eye on all of your credit cards because a lot of lenders have unexpectedly been lowering the limits on their cards.  If your limit is lowered the percentage of credit that you’re using will increase and your debt to available credit ratio will go up with it. This will negatively affect your credit score.

Follow Up on Collection Debts

People who have paid off collection debts have been unpleasantly surprised to find that their credit score has not increased.  The reason this often happens is that collection companies usually don’t contact the credit bureaus to have the debts removed from their clients’ credit histories, even though they list it as paid on their own books.

When you are paying off your debt part of your negotiations with your creditor should be that you’ll pay of your debt if they promise to have the debt deleted from your credit history once it’s been paid off.  Do not trust their word; get it in writing.  Then, once you’ve paid off this debt in full your credit score will increase after the debt has been deleted from the books on the credit bureaus.

If you are responsible you will be able to manage your money more wisely and repair poor credit.  If you follow the advice in this article you will also increase your credit score and be able to sleep better at night.