Following Difficult Financial Times You Can Rebuild Your Credit


After the experience of difficult financial times such as bankruptcies, repossessions and other financial hardships many people have credit reports that have a lot of problems. However you should not let the stress of the past that is still showing on the credit report overshadow the bright financial future that you are now heading towards. Problems on the credit report can become a thing of the past.

Many consumers harbor unnecessary fears that the credit difficulties will follow them around forever and that they may unwittingly fall back into the same poor spending habits and credit issues that got them into the financial trouble in the first place. But with a little conscientious planning these former difficulties can be avoided.

To start the process of rebuilding credit should be attempted as if there had never been any credit problems and the person is starting out with a clean slate. Understanding how credit works is the next step to successfully rebuilding your financial life.

Until you have control of your finances it will be virtually impossible to rebuild your credit. Whether it was a lack of understanding, some bad luck or just overextended spending habits that caused the problems in the first place, gaining control and being responsible is crucial at this times. You may want to consider establishing a budget that you can stick to. You can enlist the assistance of a qualified credit counselor to help you with a budget or you can do it on your own.

When establishing a budget every single expense must be noted. Many people are unaware of all of the different expenses that they incur so the best way to make sure that every expense is accounted for it to record all of the outgoing monies daily for a period of 2 weeks to a month. You may find that you are already overextended on your budget and you may need to consider cutting any unnecessary expenses at this point.

After making up the budget with all necessary expenses accounted for the next step is to create a responsible spending plan that you can live with. You will need to include a category for saving money and using any extra funds to eliminate or reduce the remaining debt. If you have a tendency to shop on impulse you may want to put away your credit cards or checkbook to help you resist that temptation. You should plan any shopping you do and make lists that you can stick with as you take advantage of sales.

You may also have some inaccuracies or inconsistencies on your credit report. The FCRA or rather the Fair Credit Reporting Act makes it possible for a consumer to dispute inaccurate information on their credit report. After you issue a dispute the party reporting the inaccurate credit must verify the truthfulness of the report within a certain time period or it must be removed from your credit. You need to take the steps to delete the inaccuracies on your report to avoid future problems.

Many people face financial challenges in life, few of us escape those problems completely. But regardless of how or why the difficulty happened times and situations can and do change and you can take the steps to rebuild your financial life.