How to Repair Credit With Credit Consolidation Debt Relief
Credit card consolidation for the purpose of debt relief is an increasingly common way for people to pay off their debts without ruining their credit score. A bankruptcy or debt settlement can affect a person's credit report for seven to ten years. Credit consolidation, on the other hand, can help build credit if the person keeps up with their consolidation program repayments and takes active steps to improve their credit report and not fall into debt again.
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Things You'll Need
- Credit card bills for the past 6 months
- Rent bills or mortgage statements for the past six months
- Tax returns for the past three years
- Copies of your credit report from each of the main reporting bureaus: Experian, Equifax and TransUnion
- A household budget
Instructions
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Add up all of your outstanding bills to arrive at a total credit consolidation figure.
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Go to a free credit counseling agency to review your financial papers. Compare the reputable credit consolidation debt relief companies they will discuss with you.
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Get a copy of your credit report from each of the main credit reporting agencies. Dispute any items you believe to be incorrect on your credit reports in writing or on the phone.
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Follow up with the individual credit card company in each instance. Make notes on everything that was discussed and agreed upon if you choose to discuss the matter over the phone. Note any follow-up steps you need to take to help repair your credit.
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Report any instances of identity theft to the police.
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Review all correspondence from your bank, credit card companies and credit consolidation plan carefully. Follow up if needed. File everything carefully for future reference.
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Create a household budget based on current income and expenses. Make careful note of any events which have caused particular financial hardship in the past six months.
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Review your financial information with the credit card consolidation companies to determine what kind of debt relief they can offer. Do not opt for settlements as this will affect your credit score negatively.
Compare the cost of the monthly credit consolation payment with the monthly payments you are currently making. Be sure to ask about any fees and the duration of the repayment plan.
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Decide which credit cards and other bills you wish to include in your credit consolidation plan. You may wish to keep one card active, which you can use to rebuild your credit history. Do not close any accounts since the amount of credit helps determine your overall credit to debit ratio, which you should keep low once you have undertaken credit consolidation.
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Check your statements to be certain all the creditors you included in the debt relief plan have all been paid.
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Repay your credit consolidation account on time every month.
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Tips & Warnings
Make sure you pay any credit card you may still have on time every month.
If you start encountering further financial difficulties, contact your credit consolidation company immediately to see if you can adjust the terms of your agreement.
Avoid making too many loan inquiries or accepting any new credit cards, since each inquiry will show up on your credit report.
Pay all parking tickets and overdue library fines as they are being handed over to credit collection agencies and are an instant black mark on your credit report. Be sure to pay your phone bill and insurance premiums on time for the same reason.
References
Resources
- Photo Credit three credit cards image by Aleksandr Ugorenkov from Fotolia.com
