Repairing Bad Credit
There are some things you can do to repair bad credit. While working with a debt consolidation program is one option, you can use many of the same tactics yourself when dealing with your creditors.
Attempt a Payoff
Ask each creditor if they are willing to accept a lump sum payoff. The amount you offer should be significantly less than the balance owed. You should offer about the same amount as you actually borrowed, minus all the exorbitant interest and bogus fees, usually about half of the balance due. Offer about $600 for every $1000 owed. You will need to have money available to make this payment in a timely manner, so only use this approach if the money is accessible, perhaps after you receive a vacation check from work or an income tax refund. It may even prove wise to borrow money at a lower rate to pay off high interest debt.
Next, ask for a statement, in writing, that spells out the arrangement. The agreement should include the fact that your account will be reported as paid in full on your credit report once the agreed upon amount has been paid, and that you will not be responsible for any further payments. This notation on your credit report will help repair bad credit. Do not send the money until you receive this written notice.
Seek Lower Rates or Fee Exclusion
Creditors often award lower interest rates and promise to exclude fees when approached by debt consolidation companies. Armed with this knowledge, you should be able to approach your creditors in an effort to garner similar savings. Let the creditor know that you don’t want bad credit, and that you intend to pay your bills, but that you simply cannot keep up with the current demands. Some creditors will work with you, since they would rather get something than nothing.
Dealing with Collection Agents
If you realize that most collection agents receive commissions for every dollar they are able to collect from you, it makes it easier to understand why they put so much pressure on you. Now, you don’t have to take their intimidating, insulting actions personally. You know it’s all about the money. Don’t hesitate to let the collection agent know that you know. Ask to speak to a supervisor if the agent refuses to work out something reasonable with you or becomes overtly rude. If all else fails, contact the company in writing.
You don’t have to continue suffering from bad credit. You can find creative ways to decrease your debt and keep your sanity.