I’ve lived in alot of economic climates  and one thing I have learned is that the economic structure of our society is about supply and demand. Look at your own life, the mindless things you do and consider how the theory of supply and demand affects you.

Take milk for instance . If your local grocery store is out of milk , you will drive to a smaller store if it is convenient. Local neighborhood markets are normally higher priced for items , but they rely on convenience and this is what many people desire .

The same is true with other aspects of economics , including money and credit. If money is rolling freely , then it will cost less. Interest rates will stay low when money is abundant and because of the demand for money, prices for things like the cost of a home  will be higher.

Credit operates in the same manner. If everybody wants credit, the lenders will recognize this and in an attempt to move product, aka loans, money will be easy to get and it will be cheaper .  It wasn’t that long ago when money was easy to get. Anybody, including my seven year old son , was getting offers for low interest rate credit cards . Banks were reaping huge rewards with fee hikes and late fees . This is before Congress handcuffed them in with the Credit Card Act.

When the shift happens , when supply and demand is out of balance , this is the time to regroup. This is the time to get real about your finances  . Time to tuck away money and to let go of assets that are not preforming  . This is also the time to work on credit report repair. If you want to take advantage of the next economic boom, you have to be quick  with good credit report scores.

How To Repair Bad Credit

A bad credit file will preclude you from buying a house and it will cost you some serious money in terms of higher interest rates. To make matters worse, if you are financing your lifestyle with credit cards, consider that the charges you are incurring are amortized on a daily basis. Unlike a payment you make on your house or  car , credit card balances have interest charged to the balance every day .

You have to get rid of credit card debt and this may mean that you have to settle, a lump sum payment to the lender. This idea of credit card forgiveness  is nothing new and it does carry with it some serious side effects .

You will be required to pay taxes on any forgiven amount. The beginning of the year expect  to receive a 1099 listing the forgiven amount you received as a gift. The IRS will want to see this as income and will want from you income tax  you normally pay.

Your credit is going to take a hit , but eliminating this debt will also increase my credit score. This is because the outstanding balance will no longer be noted on your credit report . This is both good and bad. Make sure you get copies of your credit report and follow up to see that the account is being reported the right way, as settled.