Hi, my name is Maria Anamoto from Consumer Credit Counseling Service, and today we are going to learn how to fix bad credit.
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The best thing that you need to do – the first thing that you need to do – to try to fix your credit report will be to pull your credit report. Know what information you have there. Some people are scared about that; it’s totally understandable, but the only way to fix something is to know how much the damage is. So, you need to pull your credit report first to see what are the things that are marked as a negative item for your credit report. Usually negative items are things that are not paid so you still are carrying a balance, or that you have been behind on the payments, or you have missed some payments, and that’s also reported there.
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So, the first thing that any of you are able to do is pay off any balances that you may have that are delinquent and that includes having gone to collections. If you know that some of your accounts have gone into collections, you will probably prefer to pay them first because the best thing that you can do when you have a collection showing on your credit report is to pay off the balance. You need to have a zero balance there to improve your score – to improve your credit history.
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If you are not able to pay it off, then you can probably contact the collection agency and work out a hardship program or to try to settle the account. That means that you are going to be paying less that the balance but it’s going to be something that you agree with the collection agency; of course, have everything in writing.
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Another thing that you can do is limit the time that you ask for credit.Every time that we ask for credit, we are giving them our authorization for them to pull it and it’s going to be shown on the credit report that you have applied for something. So many obligations, so many requests of your credit report, not by yourself but by a third party, can affect your credit report and score too.
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Another thing that you will need to consider is to work out a budget to know how much money you will have available to work on this collections or past due amounts that you have on your credit report.
If you are delinquent with one particular creditor, but this account’s not in collection yet, you can probably contact the credit card company, if it is a credit card, or any company that you are delinquent with, and try to work something out with them, trying to pay this under different circumstances, under a different term, but something that you have agreed with them will help you improve your score because they are going to start reporting you that you are paying as agreed again.
Ref: http://www.youtube.com/watch?v=t3zO3Amflhc
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