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Rebuilding Credit After Debt
After large debts have built up, resulting in missed payments, collections, or even charge-offs, it can be difficult to rebuild your credit. It doesn’t have to be as huge of a challenge to improve your credit score, though, when you go about it in the right way. Follow these tips for rebuilding credit after debt.
- Dispute any wrongly reported charge-offs and collections. Sometimes unpaid collection accounts change hands several times before being charged off. Unfortunately, this can lead to credit double jeopardy, where a single debt can appear multiple times on your credit report. Other debts may simply be totally wrong, so make sure to check all the information associated with each debt. You need to get these off your report by talking to the credit bureau as soon as possible.
- Check your credit report for changes at least once a month. You are in an especially vulnerable position now, so you don’t want inaccurate debts to make things worse. Not only does this protect you from false accounts, but it also can be motivating. You will see your credit improve as you start to get back on track. Make sure to mark down when any debts should be removed and check that they disappear from a credit report within 30 to 60 days.
- Slowly get your debt balance down to $0. It isn’t something that most people can do overnight, but paying down the debt helps to mend your credit. This gives you a better debt to credit ratio, and it shows that you are a responsible debtor.
- Make sure to use your credit. Even though it may be tempting to stop using credit cards entirely after accumulating a lot of debt, you must use credit to build it. Pay off for certain bills with a credit card every month and then pay it off in full.
- Don’t max out your new cards. This actually harms your credit. Ideally, you should only be using 10 to 25 percent of your available credit if you want your score to improve.
- Negotiate with your creditors. If you have not paid off a debt, you can write a “pay for delete” letter offering to pay the balance in full in exchange for having the item removed from your credit report. You can also offer to settle the debt for less if you can’t afford the whole balance. If you have already paid of a balance, send a goodwill letter asking for them to delete the mark against you on your credit score. They may refuse your request, but it never hurts to ask.
- Always pay on time. Your credit history has a huge impact on your credit score, and they rank recent behavior as the most important. On time payments now will help outweigh your poor history.
- Be patient and give it time to improve. Your credit score isn’t going to get better overnight. It takes time. Just be patient.
When you do these things, your credit will recover. Get comfortable with the idea that your credit score will improve, no matter how slowly. If these steps alone aren’t enough to rebuild your credit, sometimes it helps to get legal assistance in dealing with your creditors. If you are struggling with debts and trying to rebuild your credit in Ohio, you do have options. Call the Ohio consumer lawyers at Luftman, Heck & Associates at (888) 726-3181 for a free consultation on your unique situation.