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Juggling With Debt To Rebuild A Damaged Credit Score

By Faye Mergel
Published: Thursday, February 25th, 2010

A high number of consumers are dealing with bad credit scores right now. A lot of them got surprised by the economic crisis and overextended their credit. A few were irresponsible borrowers to begin with. Some may have had to take out loans and lean on their credit cards due to some emergency such as serious health problems. Whatever the case, consumers with bad credit scores need to rebuild their credit as quick as they can considering the importance of credit scores these days.

Juggling With Debt To Rebuild A Damaged Credit ScoreBy far, the best way to repair a damaged credit score is to pay off any debts. These debts are not limited to loans or credit card debts only. Any debt such as phone bills or doctor bills should be paid off as soon as possible. Although the faster a consumer can pay off their debts, the lesser negative effect it will have in the future, consumers who are having financial problems need not worry. Paying off a debt slowly, month by month will still help credit score recovery. Also, as long as the consumer is consistent in their debt payments, they can build up good faith among their creditors even if they are not able to pay off their debts immediately.

Once all debts are paid, it does not mean that a consumer should now see their credit scores improve. A credit report can only go up if the consumer is able to consistently prove that he or she is a good borrower and can pay off any loans or debts in a timely fashion. Thus, the next step a consumer should take once all his or her debts are paid off is to take out a loan or get a credit card. However, he or she should make sure that the loan and the resulting credit card debts can be paid off fully and on time. If he or she is unable to do so, this will end up damaging his or her credit score.

In general, unsecured loans build up a credit score faster than a secured loan. An unsecured loan is a loan that does not have any collateral such as a traditional credit card. Thus, consumers who are trying to build up their credit scores should get an unsecured loan.

In this day and age, a good credit score is priceless. With a good credit score, a consumer can get access to a loan or to credit cards even though banks and financial institutions are tightening up load and credit approvals. The loans and the credit that a consumer gets also comes with more relaxed terms if he or she has a good credit score.

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