Grab Your Credit Report and Tackle Your Financial Woes
UPDATED: July 5, 2018
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A high amount of debt and a poor credit rating force many people into deep financial trouble. While lost in the stress and uncertainty over how to pay next month's bills, it's easy to forget that there is a way out of your financial hole. Improving your credit is a great place to start, and sticking to a personal debt repayment plan and communicating with creditors before payment problems become negative marks on your credit report will set you on the right track toward financial success.
Start With Your Credit Report
One of the easiest ways to improve your credit rating is to clear incorrect information from your credit report. While accurate information in your credit report is not removable, if there are debts you don’t owe or debts that should have dropped off your report by the passage of time you can dispute these debts by sending a letter to the consumer reporting agency. If you do it yourself, you can avoid fees from a credit repair clinic.
Request Free Copies of Your Credit Report
First, get copies of your credit report from all three consumer reporting agencies, TransUnion, Equifax, and Experian. Under the Fair Credit Reporting Act, you are entitled to a free copy of your credit report from all three reporting agencies once a year. Be leery of online companies that promise “free credit reports,” since most require that you purchase something or sign up for a service before you gain access to your credit report. See Credit Report and Repair Resources below for more information about how to get your yearly free credit report from each agency.
Once you review your credit reports, submit disputes to the credit reporting agencies in writing about any information you believe is incorrect. Explain why you believe the information is incorrect or incomplete and request that it be removed or corrected. For more help on how to do this, see Credit Report and Credit Repair Resources below.
Communicate With Lenders Before Unpaid Debts Hit Your Credit Report
Communicate with your creditors and lenders. Contact your creditors immediately if you’re having trouble making ends meet. Explain why you are having trouble and try to work out a modified payment plan. In the case of a mortgage, you may be able to refinance or extend the terms of the loan. Don’t allow payments to become delinquent, or turned over to a debt collector. At that point, the problem becomes a negative entry on your credit report that can affect your credit for years. With a clear view of your situation and a plan, it is possible to take control of your financial future.
Develop a Budget, and Stick to It
Developing a budget is another way to take control of your financial situation. The first step is to do a realistic assessment of how much money you take in and how much money you spend. Your public library is a great resource for books and information about budgeting and money management techniques. The goal is to make sure you can make ends meet on the basics: housing, food, health care, insurance, and education. That way, you can prioritize the rest towards debt repayment.
Credit Report and Credit Repair Resources
For information on how to get free copies of your credit reports, see Federal Trade Commission - Your Access to Free Credit Reports. Also, see AnnualCreditReport.com.
For information about how to dispute inaccuracies on your credit report, see Federal Trade Commission - Credit Repair.