Having bad credit can create a feeling that you are victimized by your own personal finances. You may have gone through bad life experiences or made simple mistakes, and a poor credit score can remind you of that bad time, making it hard to move forward. Fortunately for you, bad credit is not something you have to live with. Here are some effective steps you can take to remedy the situation.
If you don’t have very good credit, financing your home may not be easy. You should consider getting a FHA loan they are backed by the government. FHA loans are a good option regardless of your down payment amount or funds available for closing costs.
Credit Score
Good credit scores mean you can easily qualify for a home or car loan. Staying current with your mortgage payments is a way to raise your credit score even more. Owning your own home also improves your credit score in the form of having large assets to borrow against. This will be very helpful if the time comes where you need to take out a loan.
Opening an installment account is one way to improve your credit score. All installment accounts must stay above the set monthly minimum, so only open one if you can afford it. Your FICO score will rise over time, if you responsibly manage this type of account.
Interest Rates
You can lower your debt by refusing to acknowledge the part of your debt that has been accrued by significantly high interest rates. It is bordering on illegal for credit card companies to charge you skyrocketed interest rates. However, the contract you signed ensured that you agreed to pay off your interest. Should you sue any creditors, it is important to push the fact that the interest rates are outrageously high.
Paying your bills is a straightforward, but truly vital prerequisite for credit score improvement. More importantly, you need to start paying your bills in full and on time. After you have paid off some old bills, you will see an immediate improvement in your credit rating.
Don’t risk prison. There are various online scams that involve creating a fresh credit file. Creating a new credit file is very illegal and you can be easily caught. Think of the legal costs and the possibility of doing hard time.
Learn what affect a debt settlement plan will have on your credit rating before you sign up. Some debt settlements are better than others. Do your homework and find out how your score will be impacted before agreeing to anything. The credit companies are looking at their own bottom line and are not concerned with your credit score.
You should examine any negative entries on your credit report thoroughly if you want to fix your credit problems. Even if a charge held against you is legitimate, any problems with its details, like the date or the amount owed, could make the entire entry invalid and eligible for removal.
If you find any errors on your credit reports, dispute them. Send a letter to all agencies involved. Include the errors you noted along with supporting documents that prove that the information on file is erroneous. Make sure that you send the letter via recorded delivery, so that you can prove that the credit agency receives it.
The first step in credit improvement is to close all but one of your credit accounts as soon as possible. Try to make a payment or transfer your balance to your open credit account. Instead of paying several smaller credit card bills, you can work to pay off one credit card.
To show that you are serious about improving your credit, start systematically lowering all of your account balances. It is a toss up as far as which cards are best to pay off first – some choose ones with the highest interest rate, others choose the card with the lowest balance. Doing so shows your creditors that you are taking your debt problem seriously.
Timely payments will keep your credit status in good standing. Credit card companies are one of the few businesses that report on a regular basis. Paying late can severely hurt your credit score.
Find a legitimate credit score improvement agency to work with. Too many of these services will use your desperation to make money. Slimy operators are quite common, so beware of credit score repair scams. Read all the reviews that you can find and you should be able to make a decision about who you can trust.
If you have bad credit it can make your life more difficult. Following these tips to improve your credit score will help you take charge and have a more positive attitude.
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