What is Credit?
Credit means that you are using someone else's money to
pay for things. It also means that you are making a promise
to repay the money to the person or company that loaned you
Whenever a person applies for a loan, mortgage, a credit
card or for any other purpose for which he needs to borrow
funds from a lending agency, the agency will check the
financial credit-worthiness of the person and based upon
its assessment of the financial risk involved in the deal,
the agency will decide upon the terms and conditions of
granting credit. A positive assessment necessitates a sound
financial background and a credit history with no bad
What is Credit Repair?
'Credit repair' is a process in which consumers with
unfavorable credit histories attempt to re-establish their
credit-worthiness. The process usually involves procuring a
credit report from the rating agencies and then taking
appropriate steps to address any apparent issues such as
errors, omissions, misinformation, misreporting or
misinterpretation. A consumer can then formally dispute
those errors or issues which unjustly distort their financial
healthiness and credit-worthiness. Various laws and
regulations designed to ensure legal and fair undertaking
of the credit repair process can then be utilized to
formally and legally start the credit repair process.
Consumers are entitled to a copy of their credit report
legally, if they have been denied a credit card or loan and
if the information provided on the report is inaccurate, an
investigation relating to true facts is necessary for a
Why Repair Credit?
A consumer's credit record significantly influences his
future purchasing power and his eligibility of availing any
credit facilities in the future. A good rating, or score,
can insure a low interest rate and loans for longer term
for various purposes like credit card balances, car or home
loans. A poor rating makes a consumer vulnerable to finance
companies charging exorbitant interest rates and imposing
various unnecessary repayment and loan terms. Considering
the stakes and the consequences involved, it is absolutely
imperative for consumers to understand the importance of
repairing their bad or low credit ratings.
The Safe and Legitimate Way to Repair Credit
Credit repair can only be achieved through financial
discipline and hard work. Any easy way out of a poor credit
history is undoubtedly tempting, but it may lead to further
financial difficulties in the future.
If a poor credit history is due to circumstances beyond a
consumer's control, and they are able to somewhat make amends
to their credit records after that time, then a creditor can
be requested to upgrade credit rating because of a sense of
Most creditors don't trust the customers defaulting on
their debts, so it may be very difficult to obtain new
credit. But once a person is able to demonstrate continuing
income stability and prompt payment patterns, his situation
can improve in a period of two to three years. This way,
even in the case of bankruptcy, a consumer is likely to be
offered charge and credit cards within a year or two if
maintaining a steady income.
What is most important is evaluating the financial
situation. If one finds that they are unable to make at least
the minimum payment on outstanding accounts, a contact
should be made with the creditors. Many creditors will
appreciate the willingness to pay and are most likely to
help set up plans for repayment. Avoid making promises
which cannot be kept as a small payment is preferable to a
large payment that never arrives. Sometimes a small contact
can be enough to reduce payments and forestall more severe
The next step is consulting a credit counseling agency.
These organizations are staffed with trained individuals
experienced in the credit field. A distinction needs to be
made between these and the commercial "credit repair"
companies who claim that, for a fee, they will undertake
No one can legally remove accurate and timely negative
information from a credit report. But the law does allow
one to request a reinvestigation of information in their file
that may be inaccurate or incomplete. There is no charge
for this. Everything a credit repair clinic will do can be
done by a consumer themselves at little or no cost.
The most important factor in credit repair is recognizing
the legitimate and viable options available, recognizing
what the scams are, and differentiating between the two. A
poor credit history can make it difficult to obtain
additional lines of credit making consumers fall prey to
many unethical programs that target consumers with less-
than-perfect credit. There are no quick fixes in credit
repair. Common sense tells you that a third party doesn't
know your credit history better than you. Through
contacting credit bureaus, making your own corrections,
consolidating your debts and budgeting, you can improve
your own score. You don't need to pay someone to fix it for
you. It's better to apply that money towards discharging
Understanding the basics of credit repair and knowing what exactly is needed in order to rebuild your credit history goes a long way to getting it resolved. However, you must be disciplined, find the right credit repair solution for you and not be tempted to fall back into debt.
Claire Bowes is a successful freelance writer and owner of http://www.uk-secured-loans-centre.co.uk where you will find further advice and information on all aspects of secured loans for debt consolidation, car loans and home improvement loans.