If you knew how much you owed and who you owed it to, you may have been able to avoided bad debt entirely. So now it is time to exercise crisis management and to repair your credit score. The following information is quick, simple and can help repair your credit if followed correctly.
If you are buying a home it will not always be easy, and even more difficult if your credit is bad. If you are in this situation you should look into FHA loans before speaking with a bank. Even if the applicant does not have money for closing costs or a down payment, an FHA loan is workable.
Credit Card
If you have a poor credit history and can’t qualify for a credit card, get a secured card. Most likely, you will not have a problem obtaining this type of card, but you must add funds to the account before you make any purchases to assure the bank that you will pay. A responsibly used new credit card will begin healing your credit score.
A lower credit score can get you a lower interest rate. This should make your monthly payments easier and allow you to pay off your debt much quicker. Quickly paying off your debts is a good way to improve your credit score. This will give you access to more competitive rates in the future.
To improve your credit rating, set up an installment account. When opening an installment account, you need to make a monthly payment, so get something you can afford. Paying on time and maintaining a balance will help improve your credit score.
Excessive interest rates can be contested. However, it is best not to sign contracts containing them in the first place. The incredibly high interest rates can get challenged and reduced in some situations. However, you signed a contract agreeing to pay off interests. It is likely you can have exorbitant interest rates reduced if you sue the creditor.
If you want to fix your credit avoid companies claiming they can remove all of your issues, even those properly reported. Unfortunately, negative marks will stay on your record for seven years. However, information that is not correct can be removed.
Contact the credit card company and ask to get your card limit lowered. It will keep you from overextending yourself financially, it sends a great signal to the credit card companies that you are a responsible borrower, and you will have an easier time getting credit in the future.
Before you sign any debt settlement, research what effects it will have on your credit score. Research all of your options, make an informed decision about the method you chose, and only then should you agree to the settlement. Most of the time they want their money and don’t care about your credit score.
Try joining a credit score if you’re still struggling to boost your credit rating by opening new lines of credit. They might be able to provide you with several more options at better rates than banks, since they work locally as opposed to nationally.
As part of your credit improvement process, it is a good idea to terminate all of your credit cards except one. You may be able to transfer balances to your remaining account. It will be easier for you to make payments on a single credit card account, as opposed to several.
Avoid bankruptcy at all costs. Bankruptcy does not drop from your credit report until ten years have passed, so you will deal with the fallout for a significant period of time. You may think that bankruptcy is your only option to rid yourself from debt, however look at your long term financial goals before deciding to file for it. Filing bankruptcy makes it difficult if not impossible to get anything involving credit, like credit cards and loans, in the future.
Credit Restoration
In truth, as you will see, credit restoration is mostly about common sense. Following these simple steps and credit restoration will no longer be a distant dream.