Fix Your Credit the Right Way

While the economy improves, wages are still stagnant, and Americans are relying on their credit cards more than ever. They’re not just used to finance things like big screens and other luxury items, but basic budget items like groceries and clothing. American households accrued $51.7 billion in new debt,  with Pew Charitable Trust finding in a recent survey that 56 percent of households worried about their financial security in the last year.

Even if you’re paying on time, you might notice that your credit card limits have been lowered, and that you can’t get new credit. You’re in the double bind of having credit and needing credit, even if you haven’t maxed out. Or you may get your credit report and find out there’s a whole lot of stuff on there that you never knew about. Or you may have undergone a huge financial catastrophe and are just not able to get out from under. There are ways to fix your credit, and while they take some time and effort, they will get you where you’re going.

The Big Don’t

You’ve seen the credit repair advertisements for “erasing bad credit”, and even that they can create “a new credit identity” for you. I can’t emphasize enough – DON’T DO IT. I’m not normally an allcaps kind of guy, but again – DON’T DO IT. These scams prey on desperate people who are in way over their heads. They charge a huge amount of money to do very simple things, sometimes illegal things, and sometimes they do nothing at all. The Federal Trade Commission notes that their attorneys have never seen a legitimate company make those claims.

Some Big Dos

This is not going to be easy, but it will work. You need to work up a realistic repayment plan for your debt, learn how to become financially literate, and to consider the possibility of filing for bankruptcy if your debts are overwhelming. Here are some tips and tricks for crash and recovery that can help.

• If you have to default, try to default on only one account. Your credit score takes into account a term called “prevalence,” meaning that it’s better to have just one default and collection than to have a half dozen.
• Get your hands on your three credit reports from TransUnion, Equifax, and Experian. It’s free! You’ll need to go to AnnualCreditReport.com – this is the only site directed by federal law to provide them to you. From there, you can make sure that your reports are accurate, and that you have not been the victim of identity theft.
• Get credit counseling. It’s not a shameful thing to admit that you need help, or even that you need to file for a chapter 7 or 11 bankruptcy. It means that you got in over your head.

Lastly, do call us at the Van Horn Law Group. We have a staff that’s experienced in helping people right their ship and get back to smooth sailing. We’ll consult with you, let you know your options, and work with you to get your best resolution that’s in your best interests.