Do Not Use Credit Counseling to Rebuild Credit

You need to know your credit rating before you can rebuild or improve your credit score or credit rating. Credit scores today are used to show the propensity of a creditor to pay back his debt. Your credit score needs to be in the upper 600s to lower 700s to be considered a good credit score. This score is called the FICO score and lets creditors know if you are trustworthy when it comes to paying them back what you borrowed. Credit reports are offered free from the three major reporting credit companies, Experian, Equifax and TransUnion. You need to get copies of all three by Googling online to get websites some of which are offered as external links in How to Rebuild Your Credit Rating.

If you apply for credit and is turned down, these companies will offer you a free credit report within thirty days. If you have bad credit it is best that you do not get a credit report by applying for credit. Why? Because even a request for credit will lower your credit score if your credit is not good. After you receive the credit reports, then you can began to repair and rebuild your credit score or rating. Dispute any entry that you do not agree with as you have that right. It should be noted that loan officers review of your credit files does not lower your credit score and that is the only exception. You are a wise person if you stop appying for credit if you have been turned down once. Unless you have done some major credit repair, your credit status is the same and there is no need to keep applying and with each application see a lowered credit score.

Credit card debt does not just go away. Also it is not a good idea to get a credit card to rebuild credit. However the credit cards can become chargeoff and after seven years and can be eradicated from your credit report. Do not accept settlement letters in the mail telling you that the balance has been reduced if you make one low payment. More often than not, the inquirer is a third party credit adjustment company trying to get funds from dried up accounts that have been charged off of your account. Do not throw your money away thinking that these credit companies are in a rush to help you out of your debt. These credit adjustment companies are in business to make a profit and to make money from your chargedoff dried up loans and not to help you.

Your local consumer credit counseling company however is in business to help you. The only problem is that they have to get paid too. These credit counseling companies will call your credit card companies, reduce the annual interest rate and then consolidate all of your bills.

Great, but the fallacy is that these companies did not reeducate you about how to handle your credit problems. They blanketed the problems with reduced rates and one bill for all of the smaller bills but you guessed it, the consumer credit counseling company's readjustment bill becomes another bill. If these companies held workshops and taught you money management, the benefits would be so much better. But these companies do not tell or teach you how to manage your money. You are to bring all the paperwork in concerning your bills and they do the administrative work of calling to reduce credit card interests rates but your money spending and late bill paying habits stay unless you make the change. By the way you can do the same as the credit counseling companies and call to ask for a lower interest rate.

These credit counseling companies are of no help so it is best to not use one to rebuild your credit. You may want to throw all those bills into that kind of office and these companies will kindly accept but you end of making them another bill. The huge consolidated bill that was to save you money by only making one bill payment a month, becomes a separate bill as you continue to have basic family needs and have to drum up credit again.

Rebuilding your credit is just like going on a diet. You must have your mind set to lose the weight and you must have you mind set to rebuild your credit. Do you know what makes the bills go away? You must pay your bills to make them go away. You have to make the call to your credit card companies yourself and asked for reduced interest rates. You have to ignore the so called bill settlement letters from third party credit adjustment companies. You must not add another bill by going to so called credit counseling companies. You must make a concerted effort to cut out the nonsense spending and do with what you have so that you can pay your credit card bills on time.

You must somehow teach yourself the value in saving instead of spending. No one else is going to teach you to save money except Mommy and Daddy and you probably like the rest of American young people, never listened. You must come down off the designer jeans and settle for preused at a reduced price and on a need to purchase basis only.

After you have changed your ways of managing money by reading money management books during your leisure time, pay off the credit card debt with the highest interest rated card first. Create a domino effect by paying the higher interest cards down to the lowest interest card. Make the same large payment that you made on the higher interest cards and your credit card debt will start decreasing. Call the credit card companies and let them know that you are serious about paying off your debt and request a lower interest rate. Follow the steps in How to Rebuild Your Credit and you will be will on your way to a higher FICO score and rebuilding your credit rating.