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Which Credit Problems Can I Fix on My Own?

Repairing your credit can be a tough and often frustrating situation. While there are a number of services available to help you, there are some situations that don’t require outside help. Here are three credit situations that you can probably resolve on your own.

To solve any credit/debt problem, you need to

  • Identify the cause of the problem and resolve to fix it.

  • Know how much money you have to work with.

  • Act quickly.

Credit cards

If you can’t make this month’s credit card payment, or if you’ve missed a payment already, you need to take action. As long as you know what you can afford and you don’t mind explaining your situation over the phone, you can get quick results. Here’s what to do: Call the toll-free customer service number and explain who you are, what happened, and how you’d like to handle the situation.

If you need a break from making payments, say so. If you can make up the missed payments over the next month or two, make an offer. Just make sure that you can make good on your offer.

Be sure to ask the customer service representative not to report your account as late to the bureaus. This decision is up to the credit card company; often, the company is willing to go along with the request as long as you keep your end of the bargain.

If you’re polite and proactive and you contact the credit card company before the company contacts you, this approach establishes you as a good customer who needs and deserves special consideration — much better than a customer who is behind in payments, doesn’t call, and may be a collection risk.

Be careful about asking that a payment be stretched out for more than a month or two. If you need three months to catch up, you may get it — or even qualify for a longer hardship program — but the creditor may close your account, which hurts your credit. Also, don’t be surprised if the company asks you to pay more than you think you can.

The company doesn’t know the details of your situation. Do not agree to anything you don’t think you can deliver. Saying that something isn’t possible and explaining why is much better than caving in but not being able to follow through. Ask to talk to a supervisor — he or she may have more authority to bend the rules.

Mortgages

If you’re behind on your mortgage payment, but you’re within the grace period allowed in your mortgage loan documents (typically 10 to 15 days from your contractual due date) and you have the money to make up the shortfall, send it in. If you’re past the grace period, what you need to do to catch up depends on the state in which you live.

Say you haven’t yet made your payment of $1,000 from last month. This month you can send in only $500 extra with your $1,000 payment. So you’re short $500, right? Wrong. You may be behind the full $2,000 if the bank doesn’t accept either payment because you didn’t catch up in full.

Or the bank may apply the extra $500 to this month’s principal payment rather than to last month’s deficit. The gist is, if you aren’t far behind and you can catch up in one shot, do it. Otherwise, don’t delay.

Mortgage lenders count delinquency occurrences differently than credit card issuers. As soon as you’re one day beyond the grace period, mortgage lenders consider you late, back to the original, contractual, non-grace due date. After you’re 90 days late from the contractual due date, you’re in serious danger of a foreclosure! Also, be mindful that some banks have shorter grace periods for mortgage holders who don’t have bank accounts with them.

Student loans

Getting some breathing room on a student loan isn’t difficult if you have a qualifying reason for being unable to pay. Unemployment, a low-paying job, illness, a return to school — any of these reasons may qualify you for a short-term waiver, but only if you call the lender before you get into a default situation. Student loan people usually cooperate as long as they think you’re playing it straight.

If you don’t think that you have enough money to catch up on your payments, you may have an alternative: The money may be hidden in your financial budget clutter. The first step in addressing a financial problem is to maximize your income and minimize your expenses.

A spending plan (or budget) helps you with that. Only a real spending plan that accounts for at least 90 percent of your income and expenses will help; rough guesses don’t yield the results you need.

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