Avoiding/Resolving Credit Problems

When dealing with your credit, the best approach is to head off problems before they occur.  If you are having problems paying your bills, contact your creditors immediately and try to work out a modified payment plan with them that reduces your payments to a more manageable level.  Don’t wait until your account has been turned over to a debt collector.

If you have already incurred credit problems, here are some tips for resolving those problems:

  • Be skeptical of businesses that offer instant solutions to credit problems -- there aren’t any.
  • While you have the right to perform many, if not all, of the same approaches to resolving credit issues as credit repair companies, understand that it will take time and diligence to fix credit reporting errors.
  • Be sure to keep all your original documents, especially receipts, sales slips, and billing statements.  You will need them if you dispute a credit bill or report.  Send copies only -- never send the original receipt.  It often takes more than one letter to correct a problem.
  • In order to dispute a credit report, bill or credit denial, write to the appropriate company and send your letter “Return Receipt Requested”.
  • If you are disputing a billing error, include your name, account number, the dollar amount in question, and the reason you believe the bill is wrong.
  • If you are in doubt about the validity of a charge, in writing, request written verification of the debt. .

You should try to create a workable budget and stick to it, work out a repayment plan with your creditors, and keep track of mounting bills.  If it’s apparent you can’t handle your bills on your own, consider contacting a credit counseling organization.  Many such organizations are nonprofit and work with you to help resolve your financial problems.  Unfortunately, not all are reputable.  For example, just because an organization claims “nonprofit” status, there’s no guarantee that its services are free, affordable, or even legitimate.  In fact, some credit counseling organizations charge extremely high fees, or hide their fees by pressuring consumers to make “voluntary” contributions that can cause even more debt and credit issues.

Most credit counselors offer services through local offices, the Internet, or on the telephone.  If possible, find an organization that offers in-person counseling.  Many universities, military bases, credit unions, housing authorities, and branches of the U.S. Cooperative Extension System (https://www.csrees.usda.gov/financialsecurity.cfm) operate nonprofit credit counseling programs.  Your financial institution, local consumer protection agency, and friends and family also may be good sources of information and referrals.

Reputable credit counseling organizations can advise you on managing your money and debts, help you develop a budget, and offer free educational materials and workshops.  Their counselors are certified and trained in the areas of consumer credit, money and debt management, and budgeting.  Counselors discuss your entire financial situation with you, and can help you develop a personalized plan to help resolve your money problems.  An initial counseling session typically lasts an hour, with an offer of follow-up sessions.