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What Is Bad Credit Exactly?
Posted By Ron On April 6, 2011 @ 1:00 AM In Credit,Personal Finance | Comments Disabled
Like it or not, and despite the financial guru’s claims, credit plays a critical role in your financial life. Maintaining good credit is essential if you’ve already worked hard to establish it and is vital if your credit history has become tainted or “bad.” But what IS “bad credit” exactly? The first step to getting your credit back on track to know what causes bad credit in the first place.
Every entry in your credit file can be either positive or negative. A positive entry reassures a creditor that you’re likely to pay back money loaned to you. A negative entry indicates that you may not pay back the debts you owe.
A single negative entry can cause your credit score  to fall but won’t always hurt your credit score  enough to give you “bad” credit. But a pattern of negative entries will definitely result in bad credit. What does a pattern look like?
Though a single missed payment on your credit file won’t destroy your credit, certain financial difficulties and credit events are so serious that the appearance of just one will have a major negative effect on your credit.
There are two main cures for bad credit:
Credit scoring models are more interested in the recent than in the distant past and if you have bad credit from more than 5 years ago, there isn’t a lot you can do about changing it. Time will eventually remove it from consideration.
Timely payments can do a great deal to improve your credit ratings. Making on time payments is the BEST way to dig yourself out of a bad credit hole. Sometimes, however, we need help. I personally used a credit counseling service back 16 years ago and it was the best decision I ever made.
If you’ve realized that you’re in over your head and need some help sorting things out, consider trying GoLookOnline.com . There you can get a free credit repair consultation and get coaching to help you learn how to raise your credit score. Some people have reported a 100 point gain. Though your results may not match those, getting help is sometimes the best first step in turning things around.
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