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Rebuilding Your Credit Rating

Most small business and private account holders face the possibility of bankruptcy right now. The credit crisis is no longer just a term but now a phenomena. Many people are advised to file for bankruptcy as that is the easiest option out of a sticky situation. This without realizing that filing for bankruptcy would mean a black mark on the credit report for the next ten years. No amount of remedial action would be able to rectify that out.

Filing for bankruptcy in many ways seems the simpler option out as responsibilities would no longer be a burden till due course. However as with everything else the simpler choice is not necessarily the right choice. To survive in these economically trying conditions one has to adapt even if that means reducing the number of credit cards with reasonable credit limits.

Not all cases tend towards bankruptcy but even any slip ups in paying taxes are reflected on the credit report. It comes for a stipulated period of seven years where every further financial calculation would be based on one slip up. These seem like easy mistakes to make but difficult to come out of. Bankruptcy and tax evasion are the two extreme cases of a bad credit report. But there are many smaller simpler ways of slipping up that can affect a larger spread of people and far more easily as well.

As simple as it may sound, paying all the bills on time is the simplest and most sensible way to stay out of trouble. Even in repairing a bad credit report by paying the bills regularly goes a long way in regaining favor with the creditors.

The above suggestions assume a slip up and dictate the subsequent action to be taken. There are also those instances where the system itself could have got it wrong. The best way to stay on top of such things and not let it happen would be by ordering the annual credit report from the federal agency. All the entries in the report could be verified with the personal records. If any discrepancy is found in a written letter, stating the same along with supporting documents should be mailed to the federal agency demanding immediate action.

These are some guidelines to try to repair a bad credit report. With these guidelines borne in mind, you will surely go a long way in improving and sustaining a good credit score. After all is said and done, paying your minimum on time is the number one way to improve your credit score. This takes a lot of time and will not happen over night. The more consistent you are, the better your score will be. For many this can happen in a year’s time but for others it could take 3-5 years before there is a dramatic increase in their credit score. Take your time and be faithful and eventually your credit score will raise. Hope and determination are your greatest strengths in the journey of improving your score so stay encouraged.

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