Understanding credit can help you go from bad to good
California (OPENPRESS) March 19, 2012 - Everyone strives to have good credit - but unfortunately, there are those whose credit is less than stellar. What is bad credit? If you've got it, how do you go about fixing it?
Before you can understand bad credit, you must first understand credit overall. Your credit is basically a snapshot of how you manage your finances. When a creditor views your credit report, he's checking to see if you are trustworthy enough to be given additional credit. So credit, therefore, is basically information about your borrowing history.
So if credit is essentially information about you, what is bad credit? Bad credit is when your credit report shows a lower credit score because of negative marks against you. If you have failed to repay loans or have been late with your payments, you will be seen as someone who has bad credit. It's even worse if you have maxed out your credit cards or have declared bankruptcy.
Is bad credit really bad? Of course it is. It means that you'll get higher interest rates on loans, if you can get a loan at all. It may even affect your job status and your ability to find a home.
If you have bad credit, how do you improve things? First of all, you must come to an understanding of what you did that got you in this predicament. You have to be willing to own your mistakes and make the necessary lifestyle changes. There is no way to change your credit score or your financial picture overall until you are willing to address what you are doing incorrectly.
You must come up with a financial recovery plan. The highest priority in this plan must be the paying off of your current debt. Next, you have to re-establish credit, so that you can earn good credit standing. You can do this by obtaining a credit card, even if it is a high interest one, and properly managing it.
You will also need to get a copy of your credit report, and check it thoroughly for errors and negative marks. Contact each creditor that you have an issue with or who has an issue with you. Make a request with each creditor to work with them to pay off the balance due, and ask them to remove the negatives from your credit report. This will go a long way toward raising your credit score and cleaning up your report.
Remember, all of this will take time. You didn't get into debt overnight - and you're not going to get out of it overnight either.
