Credit Repair

Credit Repair: Bankruptcy is Not the Only Option

When you think of credit repair, do you think of bankruptcy? Whether you have researched Chapter 7 or Chapter 13 Bankruptcy procedures, you should know there are other options. There are many times when bankruptcy is likely to be the fastest and most practical option for those drowning in debt and unable to obtain new credit. Taking this route is a personal decision based on individual circumstances, and in most cases, there are other, less drastic options such as credit repair.

Joining a debt management program is a popular choice for many who are having trouble making ends meet. Financial trouble usually means late payments and collections, which lead to damaged credit. Debt programs will contact your credit card companies, lower your interest rate, and set you up on a repayment program. The catch is that you can no longer use those cards for the length of the program, a small price to pay for fixing your credit.

Debt consolidation loans are often confused with debt management programs, but they are not the same. Loans are money used to pay off multiple accounts, which reduces the total payments to one big sum that is paid off over a longer period. The downside to this is that with interest, you’ll usually pay more in the end; however, if you can get a good interest rate through a second mortgage or other loan, you will free up your other credit for emergencies.

Making changes to your credit report is the easiest way to improve your credit and FICO score. Approximately 70% of all reports contain some type of error, and even something as simple as an incorrectly reported address can affect your ability to receive credit. Credit repair only takes a little time, and is worth the effort when you see your FICO score rise and your ability to obtain new credit has returned.