because they feel defeated by the amount of consumer debt that they have piled up over the years.
If you feel numbed out about finances, thinking the whole idea of revamping your financial life as hopeless, you have to realize that you are not alone. Many people have found themselves in your situation.
Still, not everyone remains stuck with a bad credit score. Many have found hope and pulled themselves out of their situation with the help of experienced credit repair companies.
How Credit Repair Services Work
When you sign up with a reputable credit repair service, the first thing they do is pull up your credit report and use this as the basis to develop a plan on where to focus their efforts. They then assign experts to talk directly with credit companies on your behalf. Since these experts know the rules, they understand how to negotiate and protect your interests, they will help you find the best credit repair solutions for you.
5 Common Credit Mistakes
While getting a credit repair service to help you out is one solution to getting your credit back on track, it’s still important to understand why you got into debt in the first place. This understanding will help you steer clear of digging yourself into debt again.
Let’s take a look at the kinds of things that go into a bad credit score so you know how to avoid them:
- A poor payment history.
Your credit card score is calculated on a number of factors, with 35% of your score based on your payment history. There are three ways, you can mess this up. First, not paying your debt by the due date; second, consistently paying late; and third, not paying at all.
- Getting your account charged off.
Since it costs creditors to pursue delinquent accounts, they have a cut-off point when they decide to simply charge off the account. They do this when they have concluded that you are not going to pay at all. However, before they give up, they send your account to a collections agency. These third-party debt collectors will do their best to collect from you. Many people in debt stop responding to collectors because they say that agents harass them with regular telephone calls and escalating letters of demand.
- Loan defaults.
If you fail to pay a loan, it’s considered a failure to fulfill your part in a contract, this is why sometimes surety bonds get used, bесаuѕе they рrоvіdе the financial guarantee tо thе obligee that the principal will fulfіll thеіr оblіgаtіоnѕ outlined in a contract аgrееmеnt.
While bankruptcy will relieve the pressure arising from collection agencies, it should be considered as a last resort because it ruins your credit score. If you don’t have the money to pay back debts, it’s advisable to first talk to a consumer credit counseling agency to see what other options you have available.