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Good credit gone bad?

Forget credit repair clinics. You already have the tools to get out of the red and fix your credit rating.

Credit is a necessity for the good life--or any kind of life--in America today. Just ask NEA member Eula Burnett, who teaches emotionally disturbed children in Sheperdsville, Kentucky.

For the past 14 years, Burnett has been paying college expenses for up to four family members each year.

"If we hadn't had our credit cards, we wouldn't have made it," she says. "Frequently there's some kind of household emergency and we have to take out a loan."

Besides teaching, Burnett works 20 hours a week at a clothing store. Her husband, Robert, holds down a good job at General Electric. Yet their income hasn't always covered the costs of Burnett's doctorate courses and helping out their three sons who are in graduate school and law school.

Still, the Burnetts have worked hard not to impair their credit rating.

"We have a lot of outstanding debt at this time," Burnett says. "But we're very careful to keep current on our payments."

Some families, like the Burnetts, manage to stay on top of their debt even when they're stretched. Others fall behind--sometimes due to illness, a job loss, or a divorce--and may mar their credit ratings. That calls for action.

"First you need to understand how credit works, and then you need a plan," says Gerri Detweiler, a credit expert.

What you do not need are so-called credit repair clinics. They offer to help you clean up your credit by using loopholes in the law that only they know about.

These clinics may also promise to remove negative information from your file or to get you a major credit card--false promises, according to attorney John Ventura, author of The Credit Repair Kit (Dearborn Financial Publishing, $19.95).

Some repair clinics may even get you into legal trouble by encouraging you to distort the information in your credit file or by helping you to initiate a new file with a new address and federal identification number.

"There are no special tricks that these credit repair clinics know," says Ruth Susswein, executive director of Bankcard Holders of America. "You can clean up your credit report yourself."

Here are five steps to credit repair:

Lock your cards away.

Don't close your accounts yet. If your credit rating has been damaged, you may have trouble getting new cards. But stop using them. Your immediate goal is to repair your credit rating and to get out of debt.

Figure out where you stand.

It's painful to focus on budgets and net worth statements if you suspect that you make less than you spend and that your net worth is in minus territory. Still, it's a necessary first step.

Devise a plan.

If you are to clear up your credit rating, you must begin paying your bills on time. That means you pay at least the minimum balance on each bill within 30 days. Determine whether you can do that. If you aren't even close, consider credit counseling.

Negotiate with creditors.

Nine out of ten creditors will renegotiate terms with you if you are having trouble paying bills, Detweiler says.

Add pertinent information to your credit file.

Your credit report may be damaged as much by the information that's omitted from it as by the negative information that's found there.

Creditors are not required to report information to a credit bureau. But you are entitled to add information that you feel will help your credit rating.
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Title Annotation:proper credit repair techniques
Author:Rowland, Mary
Publication:NEA Today
Date:Jan 1, 1998
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