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How to Improve an Ailing Credit Report

By Ruth Racey
Published: Sunday, September 20th, 2009

Any American who has had a bad credit report knows just how much problems they can cause. While these reports may provide lenders and card issuers with crucial information about the financial stability of consumers, they can also ruin the chances of getting better credit.

Credit reports are a convenient way to provide important data about a cardholder’s financial strength. Banks, credit card companies, and lenders, need to know everything about a particular consumer’s spending habits as well as his or her ability to settle debts. Because of this, credit reports have gained a reputation for being a crucial barometer of an American’s chances to receive credit and avail of other important benefits.

Many cardholders who have poor credit histories, however, can find it difficult to look for banks willing to extend credit to them. Car loans and mortgages will become even more difficult to get. In a society where credit often determines how much financial assistance a consumer can avail, excellent credit records are a must.

Unfortunately, there are consumers who neglect to take care of their records and ignore the importance of credit reports. This would often lead to more problems down the road if they decide to get a car loan or a second mortgage. Even getting a new credit card would be next to impossible with an ailing credit report to show.

There are, however, some things that cardholders can do to repair and even improve their less than perfect credit reports. These practices will not cost anything and are practically the best defenses against a poor credit history.

Most Americans with bad credit reports think that getting rid of unused credit cards can help improve their situation. Disposing credit cards improperly actually does the opposite. Getting rid of an unused card means getting rid of all the credit records a consumer has gained with it. This can spell bad news for cardholders who are looking for ways to regain better financial standings.

Some cardholders also think that opening new accounts can give them new leases on their financial lives. In fact, getting new cards can send the wrong message. By availing of new cards without settling debts or repairing poor credit histories, consumers can suffer even more. Adding new cards to the list means that that cardholder does not know how to be a responsible consumer.

Repairing bad credit reports often take at least three months. Improving credit ratings does not only take a few days or weeks. Americans planning to apply for a loan should keep in mind that they need to plan well in advance.

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