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Settled debts can haunt your credit report

If you have settled debt through credit card companies, you may know that the actions you take with your lenders will show up on your credit report. Even though you eventually settled the debt, however, your credit history could still show a mark for 120-day delinquency. Experts in the field of debt relief say that while you cannot expunge these credit history problems for seven years, there are a variety of steps you can take to start rebuilding your score.

According to many experts, Murphy’s Law seems to apply during financial crises; that is, if something can go wrong, it is bound to. Even if the closed account was paid off and is well behind you at this point, you may still be haunted by the specter of debts past. Instead of looking back at what your credit score was, start thinking about what your credit score could become.

First, everyone should work toward setting aside six to 12 months’ income in an emergency fund. Your financial problems could be absorbed easier if you had several thousand dollars in savings. Having the money deducted directly from your account can make saving even easier than you thought! Furthermore, you should be adding half of all bonuses and windfalls to the savings account.

The most important action you can take to rebuild your credit is to pay current debts on time. This will add positive information to your credit report on a monthly basis. Seek new credit only as absolutely necessary and be sure to include those payments in your monthly budget plan.

You, too, can begin rebuilding your credit score after a bankruptcy or other significant financial upset. Consider enlisting the services of a qualified bankruptcy attorney and financial planner if you are unsure whether you can manage your current debt load. Acknowledging your financial shortcomings can be the first step to completely eliminating your money woes.

Source:  foxbusiness.com, "Why a settled debt is still ???past due???" Steve Bucci, Apr. 22, 2013

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