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Tips to Rebuild Credit After Debt Settlement

Debt settlement companies negotiate with creditors on your behalf and allow you to pay off debt for an amount that is less than you actually owe. While this type of debt help may seem like a fast and easy solution, using these programs can leave your credit in shambles.

The best way to convince credit institutions that you are a safe bet again is to demonstrate that you can manage credit wisely. Here are some ways to prove yourself and help raise your credit score:

1. Create a budget and stick to it. This is the most important step in reestablishing your credit because you are likely to fail without a realistic budget. Take a close look at your monthly income and bills so that you can get an accurate picture of your financial situation, which will prevent you from overextending yourself again.

2. Focus on remaining debts. Get serious about paying off any debts that weren’t eliminated during the debt settlement process. Pay more than the minimum amount required if at all possible so that you can get rid of the debt quickly and have a positive addition to your credit report.

3. Scrutinize your credit report. Make sure that everything is accurate and that none of the debts you settled are still listed as outstanding. Contact the credit reporting agencies directly if you see any discrepancies. They will investigate and make all necessary corrections.

4. Start a rainy day fund. Instead of spending all of your extra cash, start sticking some aside so that you can cover unexpected expenses that may arise without being forced to rely on a line of credit. You may want to consider ways of adding extra income if you find that there’s no money left at the end of the month.

5. Apply for a secured credit card. These allow you to add funds to an account that you can then use just like you would any other credit or debit card. Make sure that the card you choose reports to the credit bureau regularly so that your positive progress will be reflected.

Rebuilding your credit after using a debt settlement program is a slow process, but it can be done. Get serious about managing your money and credit more responsibly so that you can replace the negative entries on your credit report and eliminate the need for debt help in the future.