Dealing with creditors with regards to your outstanding debts is essential for improving credit because your creditors decide whether to report or not to report your non-payment to credit bureaus. It’s in our interest to do everything in our power to convince the creditor not to report your non-payment to credit reporting agencies.
But is contacting creditors worth your efforts? Many people feel a sense of embarrassment and avoid contacting their creditors. But the behavior is contra-productive and will result in long-term credit difficulties. For this reason, this article suggests you take an opposite approach, if you’ve fallen behind on payments.
Reasons to Contact Your Creditors
If you get into trouble with your credit, you may miss some minimum payments on your credit cards, or let a loan go into default. When this happens your creditor will report it to a credit reporting agency, who will then add it to your credit history.
Once your credit is blemished, it can be difficult to repair. Most things will stay on your credit history for 7 years before they are removed. This means you’ll deal with many previously unknown problems: you won’t be able to rent cars or purchase things online; landlords will hesitate to rent property to you; or a mortgage may be difficult or impossible to get.
For that reason, as soon as you run into trouble with a debt consider contacting your creditor. Remember that the key to credit repair lies with your credit report, and the report depends on whether or not your creditor reports you to the credit reporting agency.
Steps to Dealing with Creditors
Consider contacting and negotiating with creditors to make sure faster credit repair. In most cases your creditor will be open to discussing alternate payment plans and solutions. Keep in mind that it is not in the creditor’s interest to push you away, as that could mean they get no payment at all. Instead, the creditor is likely to be open to discussing terms.
You can propose a repayment plan that is realistic and affordable for you so you can stick to it and make your monthly payments on time. This way can help you avoid default on these payments because if you do so the creditors will consider you as stalling to avoid payment.
Overall, when talking with your lenders always remember that their report of your non-payment to the major credit bureaus will affect you greatly, and it’s in your interest to convince them not to do this. By dealing with creditors early and proposing a realistic payment plan, you actually take the step to reduce debts and increase credit as well.