Overcoming Destroyed Credit History Focus of Consumers

The consumer credit market all but came to a standstill for months over the last year. But even worse is the fact that many consumers watched their credit histories destroyed after years of timely payments. Rising foreclosures, and credit card and loan delinquencies, have created many black marks on credit reports that will haunt consumers for many years.

Non mortgage consumer credit has been falling at a steady rate. As of September 2009 revolving consumer credit was still falling and had hit a 13.3 percent decline when calculated at an annualized rate. Though it is good that consumers are reducing their debt load, it also indicates less spending and spending is what spurs the economy.

But the fact is that millions of consumers are now wondering if those black marks on their credit history will prevent them from borrowing money in the future. The answer is: maybe. But that should not stop consumers from working on restoring their credit. The economy will not be in a recession forever, and at some point people will want to start buying houses again and taking out loans. The consumer credit market is bound to loosen up in 2010 and beyond and now is the time to begin credit repair.

Unfortunately the credit rating companies really don’t care why consumers fell behind in their payments. They can seem a bit ruthless to consumers, but they are also trying to keep credit ratings unbiased. The fact is that credit repair can be accomplished, but it can take years. That means the sooner you start…the better.

There are a number of ways to restore credit over time.

Ask to have a statement added to delinquent accounts providing additional explanation that might be helpful to anyone looking at the report
Payoff any small balances as soon as possible and begin clearing up your credit report
Get a secured credit card if you have had credit cards cancelled in the past due to late payments or bankruptcy
Get credit through a retailer when purchasing something you can afford and re-establish a good account payment history
Accept department store or other credit cards but don’t use them except once a year to keep them active to create to create a positive “extended credit versus credit used” score (but don’t get too much credit either )

You will notice that the only way to re-establish credit is to create credit lines. It would seem that consumers with poor credit histories would not want to open credit lines. The difference is that consumers who once borrowed money they could not repay now need to create credit lines but not actually borrow the money (except for small charges to prove repayment reliability).

There is nothing quick about restoring credit and millions of Americans are now faced with doing just that. The good news is that it can be done and one day banks and financial institutions will want their business again.

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