CREDIT » CREDIT REPAIR & REPORTS

For better or for worse, much of modern American life takes place thanks to credit. It's how millions of people go on memorable trips and vacations. It's how young families put down roots, in the form of mortgage loans for their new dream-house. It's how people go to college, with the help of student loans.

Any sum of money which is lent to you in the expectation that it will be paid back is credit, and we need it many times in our lives in order to get to where we want to go, and do what we want to do. This is why a bad credit report can literally bring all your dreams crashing down, because if no one lends you money when you need it, you're on your own.

A bad credit report can ruin your life in so many ways. If you've got a bad credit report, and you need a credit card in order to get by, you're going to be refused every time you apply for a new credit card. If you do finally get one, it's going to be on terms so severe that you might not even think it's worth it - interest rates are sky-high these days, and for every dollar you borrow you could end up paying so much more for it that you're in even more trouble than when you started.

A bad credit report could also sink your hopes for an affordable mortgage loan, and without that mortgage loan you could end up living in a less desirable home, and a less desirable - maybe even crime-ridden - neighborhood. Instead of putting your kids to sleep to the sound of birds chirping, it could be to gun fire. As extreme as that might sound, the truth is, a bad credit report will have a seriously negative impact on your request for a mortgage loan. With no loan, or a measly one, you're going to have to live where you can.

While a bad credit report can ruin your life, the good news is that it doesn't have to ruin your life forever. There are organizations out there devoted to helping people clean up their credit reports so that they can start receiving better terms on the loans they need to make their dreams come true.

Get your free credit report today.

A charge off is the bane of any credit report. A charge off, the credit industry's term for a delinquent account that will not be repaid, gets sent to the big credit reporting bureaus and lowers a person's credit score by a significant amount.

Any lender will see a credit report with a charge off on it and be extremely averse to approving any loan or line of credit for the person responsible for the charge off. If you've got charge offs on your credit report, and you want to buy a new home, then you can expect problems. There are ways to avoid charge offs, however, which are good to know before they happen.

How to Avoid Chargeoffs

The best, easiest, fastest, smartest way to avoid a charge off is to live within your means.

Many charge offs are credit cards that someone used to indulge every single purchasing whim, and then woke up to a mountain of debt that they couldn't get out from under.

Buying dinners out and stylish new clothes at the mall was amazingly easy, paying the $1,000 a month credit card payment that they resulted in, not so much. So tactic #1 in avoiding a charge off would be no charges in the first place.

Have you Already Gotten a Chargeoff?

If you're past the preventive phase, and are now dealing with a potential charge off crisis, a critical tactic to avoid a charge off is to stay in touch with the lender and seek to re-negotiate the terms of your repayment plan.

No lender wants to lose the money they loaned you, and if the best you can do is make lower payments every month, the fact that they're still getting money -- albeit not as much as they'd like -- could very well motivate them to work with you. It goes without saying that some money is better than no money at all.

To learn more about how to avoid a charge off, be sure to consult with a debt counselor. There are many of them out there, as well as consumer advocacy groups that seek to advise people in tough financial positions.

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