A poor credit score can put you in a bad position. Hard circumstances in life or simple mistakes, can sometimes cause credit to go awry. Looking at your credit can bring back these bad memories, making moving forward difficult to do. There are many options open to you that can help in recovering your credit score.
Financing a home is not always an easy task, especially when you have less than perfect credit. An FHA loan can be helpful in such a case since the federal government backs these loans. FHA loans are a good option regardless of your down payment amount or funds available for closing costs.
When attempting to make your credit right once more, it is imperative that you present a solution to all those that you owe money to, and don’t deviate from anything you commit to once it is in place. Be totally committed to changing your spending habits. Pay cash for things, and cut out unnecessary expenses. Ask yourself how necessary each purchase is, and how affordable it is too. If you can’t answer “yes” to each of the questions above, you need to reconsider the purchase.
If your credit card has a balance of over 50% of your limit, it should be your number one priority to pay it off until the balance is under 50%. When your debt is over 50%, credit ratings usually go down. With that said, try to spread out the debt that you have or try paying it off.
The higher your credit score, the lower the interest rate that you can obtain will be. Lower interest rates mean lower payments, which allows you to pay off debt faster. The key to paid off credit is to find a great offer and a competitive rate so that you can pay off your debt and get a better credit score.
Credit Score
When you have a good credit rating, you will be able to easily get a mortgage loan. Timely mortgage payments augment your credit score. Owning a home shows financial stability, which is great for your credit. Having a good credit score is important if you need to take out a loan.
If you make a decent income, consider an installment account when you want to give your credit score a boost. An installment account requires a monthly payment, make sure you can afford it. You might see a big improvement in your credit score, if you can handle an installment account responsibly.
Interest Rates
If you find that you have a credit card and the interest rate has gotten to high, you do have the option to not pay the debt, though there will be consequences. There are laws that protect you from creditors that charge exorbitant interest rates. However, you have entered into a legal agreement that requires you to pay accrued interest. You can consider suing your creditors if the interest rates are outrageously high.
If a company promises that they can remove all negative marks from a credit report, they are lying. All information remains on your credit report for a period of seven years or more. However, information that is not correct can be removed.
Make sure you review all of the negative marks against you on your credit report. Even if the negative credit item itself is not erroneous, if any of the data pertaining to it is, then you may be possible to have it removed from your credit report.
Credit Card
In order to start repairing your credit, you should close all but one of your credit card accounts. Call your credit card company and try to work out a repayment plan, or transfer the balances of multiple cards to one lower interest card. In this manner, you can take care of all your credit card debt by paying down a single balance.
Make sure you will get a plan in writing if you decide a payment plan is the best option for you with your creditor. This is for your protection. It allows you to have valid documentation of the terms in the event that a creditor reneges on its offer or changes owners. If you have finished paying it off, you should request a confirmation so you can send it to the credit reporting agencies.
Begin the process of credit improvement by trying to pay down your credit card balances as fast as you can. Pay off accounts with the highest interest rates first. This will show future creditors that you take your debts seriously.
When you pay your bills on time, you are keeping your credit score high. Late payments to credit cards are reported to the major credit agencies and can hurt your chances for securing a new loan.
Avoid using your credit cards whenever possible. Try to use cash instead for all of your purchases and bills. When you do use a credit card, pay off the balance in full each month.
Having to deal with debt collectors is often very stressful and distressing. If a debt collection agency is harassing you, writing a cease and desist letter can stop the harassment. This will stop the calls from collection agencies, but that doesn’t mean consumers can keep ignoring the debt.
Bad credit can really get you down in the dumps. If you use these tips, you can change your attitude about your finances and improve your credit score.