Solving Credit Problems
Think all hope for ever getting a mortgage loan to buy your dream house has gone up in smoke if you have a questionable credit report? Lenders want to make loans; it’s how they make their living. Each situation is different and the corrective action that each person will take is dependent on their own credit history and their problems. Here are some of the most common fixes to most credit problems and some of the fixes that may work for you. Prepare A Realistic Spending Plan If you have not done so already, prepare a realistic spending plan and attempt to control your spending. Start a habit of paying your bills on time and stop the late payments. Determine what your income and your necessary expenses are and make sure you are sending full payments to your creditors on time every month. Use this spending plan to tell your money where to go and how to make it work for you in the best way possible. Once you have created this plan, you may realize that you need to increase your monthly income and decrease your monthly expenses. Through the creation of this plan you will determine where your more wasteful spending is occurring and you can begin taking the steps to correct those actions. Contact Your Creditors Contact your creditors as soon as possible if you know you are going to miss a payment or if you have missed payments because of illness, unemployment or some other hardship. You can attempt to work out a modified payment plan that reduces your payments to a more manageable level. Contact them as early on in the process as possible; don’t wait until it is too late to get help. If you contact them early on, when the problem is still small, your creditors may be more likely to offer you easier, more manageable solutions. Seek Professional Help There are many non profit financial counseling services available throughout the country. Credit counselors will look at your whole financial picture, work with you on your specific problems and work to find the corrective solutions that fit your individual situation. Credit counselors will explain the most common types of credit problems and will explain your credit report to you and help you through the process of getting help to address your problems. Negotiate Discounted Payoffs Sometimes creditors are willing to take less money than you owe if they can actually get the cash now rather than waiting months and years to collect. This saves them money on legal and collection fees and it saves you money as well. Make sure you get any verbal agreements in writing before you send the payment. Also be aware that the IRS may count the debt settled by your creditor as taxable income if the creditor waives more than $600 of the debt principal. Write An Explanation Letter If you missed payments on a debt because you were unemployed or sick or another unusual one time reason, write an explanation letter. In this letter tell why you missed or were late with the payment. Then ask the creditors involved, as well as the credit bureaus to put the explanation letter in your credit file. All of this shows that you care about your credit record and paying your bills. If you have a history of paying your bills on time before that incident and since that incident, most lenders will not hold against you late payments made as a result of a hardship beyond your control. Carl Schmidt shares his money management skills as a freelance writer. Specializing in helping others find ways to increase their income, he keeps his copy clean with help from the world's best grammar checker.
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