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Is it too late to still do credit history repair?

The way people usually play the credit game is that they get credit cards as a young adults, they max them out, they get more cards, they borrow on one to pay the minimum payments on the others and finally they can’t make the payments anymore.

Even if you’ve passed that point, you still have options. The major credit history repair options are bankruptcy, debt settlement, debt consolidation, credit counseling or simply changing your spending habits.

The first concern many people have is how any particular option will affect your credit. The bigger issue is a overwhelming amount of debt. Massive debt ruins your credit AND your cash flow. Keeping negative marks off your credit doesn’t do much for you if you’re drowning in debt.

Bankruptcy is good for people who have few assets and way more debt than they can pay back. It does cost a little bit of money and it will stay on your credit for up to 10 years.

Debt settlement is a good option for most people. Yes, it will hurt your credit in the short run because you have to go delinquent before creditors will work with you. You save up the money you’d be paying in minimum payments and then offer your creditors around 40% in a lump settlement. Make sure all your legal bases are covered such as getting it in writing and avoid having your wages garnished.

To do debt consolidation you get one big loan and to pay off your other loans. It’s typically at a lower interest rate and often a secured loan such as a home equity loan. The trap many people fall in to is that they spend on the accounts they just paid off and end up in twice as much debt as they started with. If your house is collateral, you could end up losing it.

Credit counseling is a complete waste in my opinion. They take a monthly fee from you and negotiate a lower interest rate for you. Then the credit card companies pay them for keeping you making your payments so there’s usually a conflict of interest. You can negotiate your own rates and avoid the mark that would go on your credit with a third party intervention.

The best option is to manage your money better. Obviously if you’re already too far behind, you need to do something more than just pay down your debt. If you can pay down your debt, pay the highest rates first. Negotiate your rates down and make your creditors bid against each other for your business. Once you pay off one, apply that payment to another. Keep that up until you’re where you want to be.

While your current situation may look dismal, there are always options. Figure out what you really want to accomplish and get started.

Find out how to do your own credit history repair without an agency. Visit www.creditrepairsecrets.org for free credit advice.

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