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Thousands of people are losing their jobs. They have defaulted on their mortgages, bank loans, and credit cards. Their credit score rating has suffered, which now requires years of repair work. If you have lost your source of income, then you need to take quick action to improve credit score and to make sure you don’t default on your loans.
If you have lost your job or are faced with a decrease in wages, you will have a hard time paying your bills. In fact, some of your bills and obligations will fall in arrears, causing your credit score rating to fall. It is for this reason that in these special times, you will need to take some protective credit steps. Here are some important steps in maintaining your credit to improve credit score.
If you are not well informed on credit repair and analysis, then you should work with a credit counselor. There are two things to do before you contact a counselor. Review copies of your credit reports so you can discuss them with your counselor. Apply for new credit cards, if you have old credit cards with a high interest rate.
If your credit is good at this point, you will be able to get low interest credit cards and you can use them to transfer balances from old credit cards, which have a high interest rate. This will reduce your monthly credit card payments and help with your new financial condition. Do not use these new credit cards for new purchases, since this will hurt and not improve credit score.
If you have old credit cards that have high interest, call these companies and negotiate a lower interest rate. If you lost your income, inform them that you will now have a difficult time making payments on time. Remind them that you want to maintain a good credit score rating and improve credit score. Tell them you don’t want to default on your loan and need their help.
Some credit card companies will not work with you, since they don’t have anything to lose at that moment. They will try to keep your payments and interest rate as they are. If this is the case, then you have two options. You can go to a Consumer Credit Consultant Company to help you organize your finances and talk with your creditors. Or you can decide that you are not able to pay your bills any longer and this will decrease your credit score rating.
Despite all of your efforts to stop degradation of your credit score, you may not be able to improve credit score. If you cannot keep up with your payments, you will not only lower your credit score but you will be charged with late payment fee, which will increase your debt. After six months of none payment, you loan balance is normally sold to a collection agency.
If it goes to a collection agency, you will have to learn some defensive tactics to survive their continual harassment. First they will tell you that you need to pay the account in full to improve credit score. Don’t believe many of the things these collectors say. The best way to handle them is to tell them to send you a letter, which identifies them and the amount that you owe. Tell them you have no idea who they are and need this letter as proof that you owe them money.
Collections agencies buy your account from credit card companies pennies on the dollar. They have no legal standing to force you to pay the account they have purchased. Their only hope is that you do not understand the law. These agencies will not sue you in court since they have no legal agreement with you to pay their purchased account. Since the collection agency has your account, it has already been “Charged Off’ by the credit card company and this will appear on your credit report. This will not improve credit score or credit score rating.
Once you lose your job and have a major change in your income, your first priority is to protect, preserve, and improve credit score. This you do by calling the credit cards that have a balance and try working with these companies to reduce interest or monthly payments. If, for some reason you cannot pay a credit card, and it goes to a collection agency, then your main option then is simple not pay the agency, since they cannot legally force you to pay. Your payment history has already been compromised, just go on and work on preventing other cards from going into default. |
