One of the best tools for repairing credit is to stop, think, and listen. If you are in debt, you need to stop and think about your situation and stay alert to the activities on your credit report.

We are going to examine disadvantages and advantages available to you as the debtor. Let’s take a look at what can happen when you have bad credit as well as what you can do to protect your self from the creditors and collection agencies. If you are obligated to pay child support, college tuitions, income tax, the IRS can take your money. This means each year that you miss payments are at default the IRS will deduct your entire tax refund to repay the debt.

The IRS is obligated to contact you before deducting any fees from your tax refunds. If you miss payments on Insurance Policies and you have conditions stipulated on that policy you may be at risk of loosing your property. If you have late bills on utilities, under law, (in most states) the utility providers cannot cut your heat during particular months stated in the law regardless of nonpayment’s. Most states are required to give you a written notice before they can disconnect your service.

This will give you time to find the funds to pay toward your utilities. Likewise, some insurance policies will allow you a grace period toward your insurance. Anytime you are allowed time it is time to stop, think and listen. If you take the time to review your bills and funds and come to the conclusion you do not have enough to pay the entire amount of the bill, you might get away with minimal balance temporarily.

Paying something toward your bill is better than avoiding your obligations. Another point you want to keep in mind is that when creditors write off a debt you may be required to pay taxes on the bill. Once a creditor writes off a debt it is sent to the IRS for review and if they choose to do so, you will still pay on that bill at the end of the year.

So the best bet is when you get the first letter in the mail asking you to pay your bill is to write the lender or creditor and explain your situation politely and ask for an extension on payments. The truth is most creditors that lend or extend you credit hope that you are a returning customer and only suffering temporarily.

If you can keep the creditors on your side this is your best solution for avoiding complications. Another suggestion is to send in minimal payments on current bills that are overdue. Your next bill will be steep but if you keep sending minimal payments until you are caught up, your name will not go in a credit bureau. If creditors recommend that you send payment immediately to avoid hassles, disregard the creditor.

The creditor is doing nothing more but adding more expense to your debt. If you have a bill and have money to make payment tell the creditor that you will send the money through regular mail immediately. Do not waste money on services that will charge you to send a bill.

If you contact the creditors and they simply deny you the opportunity to extend your debt or ask for proof of your situation, it is time to make contact with a Debt Counselor. The Debt Counselor will work on your behalf to resolve the issue.

Do not argue or use foul language when you are addressing your debts, since this will only add more problems. If you have a bill, more than the time allowed for pay it is important that you DO NOT contact the creditors or collection agencies.

This is only letting the agencies know that you realize you owe the debt. By acknowledging, the debt will open up a new debt. Collection agencies and creditors pose a threat to millions of people each day, so the key to solving the problem is finding a solution to the problem. Stop, think and listen before you act.

Don’t let bad credit ruin your life. We all have difficulties and sometimes we can’t avoid obstacles that get in our way. It is important that you know your credit report status first before taking steps to repair your credit. Building credit is important, but if you do not know the basics, it is almost impossible to get out of debt.

Sure, you get bills in the mail everyday that tell you what you owe. You might even get annoying phone calls regularly to remind you of the mistakes made. Having your credit report on hand can save despair since some charges against individuals are mistakes. If you know what you owe, you are in the heading in the right direction to repairing your credit.

Credit reports can be obtained at any of the three credit bureaus including Equifax, TransUnion, and Experian. Some people will tell you to apply for a loan so that you can get a copy of your report free. This is ludicrous since each time you apply for a loan or credit card it goes against your score.

Why not pay $60 dollars now and save a fortune in the long run?

Most credit reports cost around $20 or more, but if you think about it, it will cost less later on. If you are building credit, you need to consider both long and short-term obstacles. There is nothing in life that is free, and that includes making the right decisions. Prepaid cards are a great start in the right direction for building your credit, but for the most part the cards offer nothing in line of restoring ultimate credit results.

The prepaid cards are treated like credit cards in one way, but it slowly builds or restores credit, so the process of credit repairing is only delayed yet obtainable. There are other types of credit cards available that claim to help restore your credit rating and score. Some of the card providers offer a lump sum of credit, but you have to pay around $200 or $300 upfront. The disadvantage is that some of these companies are fraudulent and work hard at taking your money, at the same time providing you no results.

Consumers such as Trust Benefit have taking money from consumers promising them a repair solution on their credit report. Once the company takes the money, they may or may not send you a credit card. Be careful! It pays to check with the Better Business Bureau (BBB) before you apply for a credit card to make sure the provider is not out to take you for a ride.