Consumer Credit Repair

There are any number of approaches a consumer can take when a poor credit rating is wreaking havoc on a household budget. Some of them are highly beneficial and have helped consumers overcome financial woes of all sorts. Others are not so successful and some of them are downright shady.

Thorough research is the key to finding the best approach to meet your own consumer credit repair needs and will help you avoid wasting time and money on those services and providers best avoided. The internet is an invaluable research tool, providing a multitude of options for repairing bad credit ratings and restoring financial health.

Begin by contacting credit reporting agencies - TransUnion, Experian, and Equifax - to obtain a free copy of your credit report. Federal law says every American consumer is entitled to a free credit report once every 12 months. Credit scores aren't free but they're important for every consumer credit repair regimen.

Look for consumer credit repair software. Programs vary but look for sample letters to creditors and credit reporting bureaus, budget assistance, amortization schedules, and any other options that offer solutions to the problems you face.

Explore the merits of a debt management plan (DMP) or snowballing your debt payments. A DMP requires the involvement of a consumer credit counseling service that will work as a go-between for you and your creditors. They'll negotiate a new repayment plan and terms with your creditors and you'll make just one lump-sum payment each month to the counseling service. They'll then divide your payment accordingly between all creditors enrolled in the plan. Look for a non-profit consumer credit counseling service. They provide education and debt management services free to consumers and you won't want to pay for services elsewhere you can get free with these non-profits.

Snowballing your debts can be done without outside assistance. It simply involves allocating a fixed amount each month to pay all non-secured debts such as gasoline, credit card, and department store accounts and student loans. You'll want to add some additional funds to this fixed amount so you're actually paying more than you owe. Start with the account with the smallest monthly balance. Add the additional funds to this account and pay this extra amount every month until the account reaches a zero balance. Maintain payments with all other accounts in the meantime. Once the first account is zeroed out, continue paying the same fixed amount every month, just apply all extra funds to the next smallest monthly payment. When it's paid off in full, apply the ever-accumulating extra money each month to the next account with the lowest payment and continue to spend the same amount of money each month, paying off those with the smallest monthly payments until all accounts are paid in full.

Consumer credit repair requires time and patience. Be very wary of any entity that advertises quick or speedy credit repair. It takes time to renegotiate payments, make them in a timely manner over a specified period of time, and then get those impressive payments acknowledged by the credit reporting bureaus. The consumer credit industry is a very complex one. There are no shortcuts no matter how enticing the sales pitch, no matter how much money you fork over.