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Bad Credit Repair Services: Hope For Erasing Your Debt Problem |
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If you intend to go in for bad credit repair, you might well want to know as to how it will affect your credit score and the ability to buy a home or a car. Instead of worrying about the same, you should concentrate on paying off the enormous debt that you might have accumulated. It is possible that during the process of building up your debt you must have missed or been late with some bill payments and this information must have been reported to the three credit bureaus, thereby damaging your credit already. So, your first task should be to stop any further damage to your credit and start
paying off your debts. If you approach a legitimate bad credit repair company, their certified counselor will examine your income and expenses, review your debts and advise you on your options. You will also be advised whether a credit-counseling program will be best for you. However, if any pressure is exerted on you to sign up immediately, you should simply avoid that organization. Although your creditors have to agree to your induction in the bad credit repair counseling firm's debt management program, they will most likely report to the credit bureaus that your account is being repaid through enrollment in a credit-counseling program. Your enrollment in such a program has no direct effect on your credit score, according to the creator of the FICO credit score, Fair, Isaac & Company. Your credit score, on the other hand, can get damaged by a history of late and missed payments, charge-offs, bankruptcies and court judgments filed against you. Since the lending process is largely subjective, it depends on the lender as to how it views your participation in a bad credit repair-counseling program. Some lenders may consider you as too risky for a loan while others might consider you to be taking responsibility for your actions and approve your loan. Information about your debts, particularly late payments, remain on your credit report for a minimum of seven years irrespective of whether you have received help from credit counseling. However, if you are successful with your debt management program, any notation about bad credit repair counseling should be removed from your credit report. Some debt settlement companies adopt a completely different approach towards your bad credit repair and advise you to stop paying your creditors completely. Their representatives then negotiate a settlement with your creditors, encouraging them to accept 50%-70% of the total debt. If this is accepted, they ask you to pay the settlement company until the company's fee and the accepted settlement amount is covered, which could take years. Meanwhile the creditors will report to the credit bureaus about non-payment and some of them might even take legal action. This will bring your credit score to the lowest level and damage your bad credit repair efforts. Accordingly, your ability to obtain a loan will vanish into thin air. If you follow such a debt settlement program in which you stop making payments altogether to provide leverage in negotiating a settlement, irreparable damage will be done to your credit score and history. On the other hand, bad credit repair programs should help you by rehabilitating a damaged credit history and by making it easier for you to pay back your debts with lower monthly payments. Even if you are enrolled in bad credit repair counseling, there are some mortgage lenders, such as Wells Fargo, that are willing to review and qualify you for a home loan, if you have made 12 consecutive on-time monthly payments to a debt management program. The above facts make bad credit repair counseling option a worthwhile choice for those who are under a huge debt burden but would still like to buy a home. The one simple solution to improve your damaged credit is to start making on-time payments as soon as possible and for as long as you can, before you apply for new credit. |
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