Nowadays, millions of people have bad credit scores due to a number of things, such as job losses and a higher cost of living. However, the following article gives you some helpful advice on different steps you can take to clear up your debt and improve your credit rating.
Financing a home can be difficult if you have bad credit. If possible, apply for an FHA loan; these loans are backed by the United States government. You may even qualify for an FHA loan if you don’t have enough money for a down payment or the closing costs.
The first step to repairing your ailing credit is to create a manageable, feasible financial plan. You need to make a commitment to changing your spending habits. Only buy the things that are absolutely necessary. Ensure that you can afford everything you buy and that you really need it.
Credit Card
When your credit is so bad that you can’t get a ‘regular’ credit card, a secured one will help you to repair your credit. This card is very easy to get, because you put money into an account ahead of time and then spend from that, so the bank doesn’t have to worry about not getting their money. Responsible use of any credit card can help your credit rating. However, never forget that irresponsible use will get you in trouble every time.
In order to start repairing your credit, you need to start paying your bills. More importantly, you need to start paying your bills in full and on time. When you pay off past due lines of credit your credit score will go up.
Working closely with the credit card companies can ensure proper credit restoration. When you work with company you are not working against anyone, including yourself. This will help prevent furthering yourself into debt. Do not be afraid to call your credit card company and ask if you can make changes to your due date or your minimum payment amounts.
Credit Counseling
Make sure you check out any credit counseling agency you consider using. Although some can be quite legitimate, others have motives that are less than kind. Some are just people trying to scam you. Smart consumers will always check to see that credit counseling agencies are, in fact, legitimate before working with them.
Don’t sign a debt settlement contract until you know what impact it is going to have on your credit score. Do some heavy researching before starting an agreement with any creditor; there are other options that may not damage your credit score as heavily. They are just out to get their money and do not care how that effects your credit score.
You should look over all negative reports thoroughly when attempting to fix your credit. Even if the negative report is true, if you can locate an error in the report, it may be possible to get it removed.
If you notice credit reporting errors, always file a dispute. Create a dispute letter for agencies that have the error, and submit additional supporting documents along with it. Mail the materials and ask the postal service for proof of delivery in order to build a record to show that the agency did indeed get the letter.
Carefully check all charges on your monthly credit card statement for errors. If there are mistakes, call the company. If the errors are not fixed, they could get reported to the major credit rating agencies.
If you are able to negotiate a repayment plan with your creditor, be sure to get it in writing. Having documentation is important for your records but also protects you in case a creditor changes their mind. Every time you get a debt paid off, ask the company to notify the credit bureaus.
Do not carry high balances on any of your credit accounts. Your credit score can be raised just by reducing your balances. The FICO system makes a note to your credit report every time your account balance reaches a new 20% increment of your total available credit.
Now that you better understand different credit improvement methods, it’s time to develop a plan and put it into action. Before your low credit score begins to adversely affect your life, use the information from this article to gradually increase your overall credit rating.
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