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People have need for money during various occasions of their life. Whether it is for a business gamble or to buy a home taking a loan is something nearly everyone does. Although all of us may plan to pay back the loan, there may be unforeseen emergencies and exigencies that can result in default on payment. Particularly with the recession, many people lost their jobs and found it difficult to pay their loans. This resulted in many being defaulters and making mistakes due to lack of funds and end up with a bad credit history.

Once you do have a bad credit history, getting a loan sanctioned to get that car you have always wanted, or on a mortgage for your home or even a new business idea will be next to none. But there is no need to give up. It is still possible to obtain better scores with some careful planning and saving.

Fixing your credit history is not an overnight job; neither can it be done easily. It takes time and some sacrifices will have to be made. You have to make a conscious choice to not splurge like you have been doing and to also save to pay off the debts and outstanding amounts.

Although credit history can create a huge gamble for creditors in deciding, there can be occasions when through stable payments and proper management of finances people manage to get back on track with their scores. Missing payments on cards is a clear indication to lenders that the client is not trustworthy. Another way your credit scores get damaged is based on how you run it every month. There is another factor called debit to credit ratio which affects the credit scores. So it is important to manage your payments efficiently and bring down the balance on your credit card using your financial resources. If your cards are constantly maxed out then it shows reckless spending and poor money management.

Another equally bad mark on the credit history of an individual is bankruptcy. Declaring bankruptcy can be the final blow to a bad credit record and there are three main categories-Chapter11 bankruptcy, chapter 7 bankruptcies and chapter 13 bankruptcies. In case of Chapter 11 and chapter 13 bankruptcies it is still possible through refinancing and reworking their debts to get out of it and still have some amount of credit worthiness. However a chapter 7 bankruptcy does not offer any recourse in managing the debt. When one declares this type of bankruptcy, it has a lasting damage on credit reports as well as credit scores for 7 years or more.

It is important as a part of maintaining good records of credit to keep abreast of the credit reports and work out possible debt management strategies. Refinancing is also an option, but it is suggested only if you are well versed in the offers and options so as to not be duped by money hungry lenders. Also if you can first work off some of your debt and improve your credit history then you can strike a much better deal in refinancing your business.