Your Debt Relief Action Plan

Do You Have a Debt Relief Action Plan

Once you have your credit report and your credit score, you will be able to tell where you stand and where many of your problems lie. If you have a poor score, try to see in your credit report what could be causing the problem:

  • Do you have too much debt?
  • Too many unpaid bills?
  • Have you recently faced a major financial upset; maybe bankruptcy?
  • Have you not had time to establish good credit?
  • Have you defaulted on a loan, failed to pay taxes, or recently been reported to a collection agency?

The problems that contribute to your credit problems should dictate how you decide to boost your credit score. When you seek professional credit counseling or credit help, counselors will generally work with you to help you develop a personalized strategy that expressly addresses your credit problems and financial history.

In order to develop your debt relief action plan, you need to know where most of your credit score is coming from:

1) Your credit history
Whether or not you have been a good credit risk in the past is considered the best indicator of how you will react to debt in the future. For this reason, late payment, loan defaults, unpaid taxes, bankruptcies, and other unmet debt responsibilities will count against you the most. You can't do much about your financial past now, but starting to pay your bills on time - starting today - can help boost your credit score in the future.

2) Your current debts
If you have lots of current debt, it could indicate you are stretching yourself financially thin and will possibly have trouble paying debts in the future. If you owe a lot of money, particularly if you have borrowed a great deal recently, your credit score will generally drop. You can boost your credit score by paying down your debts as far as you can.

3) How long you have had credit
If you have not had credit accounts for very long, you may not have enough of a history to let lenders know whether you make a good credit risk. Not having had credit for a long time can affect your credit score. You can counter this by keeping your accounts open rather than closing them off as you pay them off.

4)Types of credit
Lenders like to see a mix of financial responsibilities that you handle well. Having bills that you pay as well as one or two types of loans can actually improve your credit score. Having at least one credit card that you manage well can also help your credit score.

Keeping these five areas of your financial situation in mind and making sure that each is addressed in your personalized plan will go a long way in making sure that your personalized credit repair plan is comprehensive enough to boost your credit effectively.

How Can I Get Out of Debt