As America’s recession and the resultant private property ownership disaster bites deeper, the impact of bad credit records on otherwise impeccably correct citizens looms.

The theory behind America’s credit reporting systems is that people only get into trouble if they are dishonest or incompetent, and that the nation needs to be protected from these types. But what if a delinquent debtor was not responsible for the mess?

Americans who are behind on their mortgage payments are advised to check the damage on their credit report that may be accessed free. Anybody sharing the dubious honor of being a delinquent mortgage payer can at least take comfort in the fact that they share the stage with many otherwise impeccable people, including those who previously qualified for a sub-prime mortgage.

The latest report from the U.S. Comptroller of the Currency reveals that it’s not just the sub-prime borrowers who hold center stage – they’ve been joined in 2009 by nearly one million prime mortgage holders who entered severe delinquency despite having borrowed money against the best interests and terms. According to the Comptroller, who defines severe delinquency as 60 days past due, this represents a staggering 76% increase over 2008.

This puts to bed forever the image of a delinquent debtor as an irresponsible anti-social drop-out in the minds of more fortunate and better-heeled Americans. Defaulting on a mortgage loan can cause chaos with an otherwise impeccable credit record. I spoke to an insider close to a leading bank the other day who mentioned two very important points:

Monitor your Credit Carefully

It’s bad enough to get a bad credit record, but a disaster to lose your home. Foreclosures can cost you 300 points and will stain your record for 7 years. That makes it even harder to claw your way back as your record will stand in the way of every car loan, new credit card, personal loan or mortgage application that you may make. As the very least you need to know your standing when you apply for credit – managing it is a whole lot smarter than pretending the problem simply doesn’t exist.

Don’t Pay for Information that is Yours Already

Walk away from less upfront operators that require applicants to pay to join the service before providing the “free” report. Federal law entitles you to a free annual report from credit bureaus TransUnion, Experian and Equifax and you’re guaranteed them free from http://annualcreditreport.com which is run by these same bureaus.

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