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SOLVING CREDIT PROBLEMS
If you are having problems getting credit or paying your
monthly bills, you may be tempted to turn to businesses that
advertise quick and easy solutions to credit problems. But do
not be misled. There are no instant solutions. Although some
credit counseling businesses "guarantee results or your money
back," you may find that there are hidden strings attached or
that the company is gone when you want your money back.
There are steps you can take to help solve your credit
problems. However, solving them takes time, patience, and some
understanding of the law. This brochure may help you. It
explains why your credit history is important, how to build a
credit history and establish credit, and what can be done to
improve a bad credit history. It also suggests ways to help
deal with debts you may have, possibly by using a nonprofit
Consumer Credit Counseling Service.
Why Your Credit History is Important
Although creditors usually consider a number of factors in
deciding whether to grant credit, most creditors rely heavily
on your credit history. To learn how you have handled credit in
the past, most creditors obtain a report from your local credit
bureau. Credit bureaus gather and sell credit information about
consumers and are a principal source of information about your
credit history. Your credit bureau report is based on
information supplied over time by your creditors. It also
provides information on where you live and work and may note
other matters of public record such as judgments or
bankruptcies. Your report records payments you have made on
credit cards, installment loans, and other credit accounts and
helps creditors predict whether you are likely to be a good
credit risk. A history of timely credit payments helps you get
additional credit.
Some creditors are reluctant to grant credit to
consumers-who have not established a "track record" with other
creditors first. In addition, many creditors will not extend
credit to consumers with a history of delinquent payments,
repossession, judgments, or bankruptcy. If you are in either
situation, be wary of ads that promise you "instant credit" or
"a major credit card regardless of your lack of credit history
or your past credit record." The fact is that all legitimate
creditors want to know whether you are likely to be a good
credit risk. Whether you get credit will depend on whether your
qualifications meet the creditor's criteria. No one can
guarantee you credit in advance.
How to Build A Credit History and Establish Credit
Building a good credit history is important. If you have no
reported credit history, it may take time to establish your
first credit account. This problem affects young people just
beginning careers as well as older people who have never used
credit. It also affects divorced or widowed women who shared
credit accounts that were reported only in the husband's name.
If you do not know what is in your credit file, check with your
local credit bureaus. Most cities have two or three credit
bureaus, which are listed under "Credit" or "Credit Reporting
Agencies" in the Yellow Pages. For a small fee, they will tell
you what information is in your file and may give you a copy of
your credit report.
If you have had credit before under a different name or in
a different location and it is not reported in your file, a
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