Check out this article, Fix My Finances: How can I turn around my credit after two repossessions?
We are not immune to disaster. Emergencies can strike at any moment, and those emergencies can take their toll on our finances. Just ask me what myself and my wife had to deal with (twice) earlier this year…
When disaster strikes, our finances can take a major hit, especially if there is no way to protect ourselves. When our finances take a major hit, our personal credit can be compromised. A single car repossession can cause your FICO credit score to drop by as much as 100 points! Other credit report remarks can cause similar damage to your credit score. What is worse is that such damaging remarks can stay on our credit reports for up to seven years!
Take a moment to think. Has your personal credit ever taken a hit? If not, you likely know someone who has had such an experience.
Actually, I personally dealt with it myself. Back when I was in college, I had taken out a department store credit card in order to take advantage of a 10 percent discount (something that I would never ever do today). Unfortunately, the department store took the address that was on my driver’s license (as opposed to my new address). The bills never made it to my new address, I forgot about the payment, and I became delinquent before they called to collect. The late remark hit my credit report and was on for about 7 years. In fact, the remark just recently dropped from my credit report.
Side Note: These days, I advise against signing up for department store credit cards at the point of purchase. Sure, you may get a 10 percent discount. However, the finance charges you pay will likely exceed the discount.
Credit remarks can take their toll on your credibility, your credit score, and your ability to obtain new credit or even a rental. It is very important that we take the necessary precautions to prevent financial ruin. However, there are times where despite our best efforts, a disaster still occurs.
Time Heals All Wounds
If your credit report shows “derogatory remarks” that are true, then there is one thing you must know.
“Derogatory remarks” are remarks on your credit report that are negative and may harm your credibility and your credit score. Example: 60 days late, 90 days late, collection, judgment, bankruptcy, and charge off.
“Derogatory remarks” can harm your credibility, and your credit score. So much so that you may feel that it is unfair, especially if it is an old remark. However, remarks that are true will remain on your credit report and legally cannot be removed (even if they are negative). Unless you lie to the credit bureau (which is fraud), those true remarks will stay on your credit for up to 7 years (Chapter 7 bankruptcy will stay on for 10 years).
This is why “time heals all wounds.” If you want to fix your credit after a financial disaster, and after negative true remarks have been posted, then time will be your best friend.
Going forward, all you can really do is make payments on time, honor your debts, and do not fall behind. Set money aside for emergencies (so you do not need to rely on credit), pay off debts, do not borrow more, and be diligent. Over the course of time, your credit will heal as negative remarks will be overshadowed by positive remarks, and old negative remarks expire.
There is no such thing as credit repair tools!
A lot of con-artists sell products and books that teach you how to fix your credit “quickly and easily.” The reality is there is no such thing as a quick and easy fix. Sorry to burst your bubble!
A lot of these products and books teach you to lie to creditors and the credit bureaus about the legitimacy of negative remarks. They will tell you to repeatedly lie about the legitimacy of these remarks over and over again, until eventually the remark gets removed.
What these con-artists will not tell you is that this is fraud. It is criminal fraud and if you are caught, you will be prosecuted. Please do not fall for this!
“Time heals all wounds.” When it is all said and done, “time” is your wallet’s best friend!