In the dictionary, the word “credit” is defined as “approval, trust, reputation for financial solvency and integrity, time allowed for payment of something sold on trust”. What the dictionary doesn’t tell us though is how necessary having good credit is. In today’s society you can’t buy a house, buy or lease a car, or even reserve a hotel room without credit. And, it doesn’t take much to ruin your credit either. A few late payments are like strikes against you in the bottom of the ninth inning.

Is your credit rating less than perfect? Have there been times when you’ve been late on payments? Or, perhaps you have encountered some unfortunate and unforeseeable circumstances that have prevented you from being able to make your payments. Illness. Injury. Termination of employment. These are things that can and sometimes will happen. When bad things happen to good people there are steps you can take to protect and repair your credit rating.

1. Obtain a copy of your credit report. Make sure the report is current as reporting and items contained therein change frequently. Review it thoroughly. Carefully check dates, amounts owed, payment history and any comments regarding particular accounts that may be included. If you find any inaccuracies or have any questions regarding any of the information contact the reporting agency immediately. Clearly present your case and substantiate any arguments you have with any proof or evidence available to you. A telephone call is sufficient in most cases but I recommend you always follow up with a letter. Put things in writing. Be direct, polite and professional. And, always include the date on any correspondence you may have with the company. Keep in mind that in most cases credit reporting agencies are willing to work with you. They are not in business to make you look bad but rather to provide accurate and concise information about you to potential lenders.

2. If possible, consolidate. By consolidating your monthly expenses into fewer or even one payment you can reduce the number of high interest payments you are making. This will thus reduce the amount paid out of your own pocket toward interest and start paying down your principle amount owed. There are numerous lenders and not-for-profit organizations that offer debt consolidation. But, be sure to do your research. Find out what their fees are up front. Thoroughly examine, study and compare the company as well as the company’s reputation and affiliations along with whatever plans and programs they offer.

3. If you find yourself unable to reconcile inaccuracies within your credit report on your own you may want to contact an attorney. In some instances companies are much more likely to be cooperative and timely when dealing with a lawyer. And, the lawyers fee may very well be worth having a good credit rating. If you have been successful in repairing your credit and are looking to re-establish yourself by starting to build a good, solid credit foundation or if you are new to the credit process and just starting out there are some other pointers you may want to keep in mind.

4. Do not overextend yourself. Whether you’re just getting your feet wet or are trying to rebuild be sure to use common sense. Before you start charging, buying and shopping carefully review your current expenses. How much can you afford to put toward a new monthly bill? Remember, not only are you paying for your purchases, you are also paying interest.

5. Can you afford to pay cash rather than charge? If there is an item you’ve been wanting to purchase always try to use the cash option. You’ll be saving money in the long run by not making payments toward interest.

6. Keep your spending limit down. If a credit card company offers to increase your spending limit decline the increase. For many, just having the availability of a higher spending limit is too much temptation. You could end up in trouble.

7. Keep as few credit cards as possible. You should not need more than one or two. Keep one for emergencies only, such as car repair, medical expenses, etc.

8. Be careful, be frugal, beware of the revolving world of credit.