Having a bad credit rating can seriously delay your goals in life. A bad credit report closes doors to financial options and opportunities. However, it is possible to fix your current credit problems and take steps to protect your future credit rating.
Financing a new home can be a challenge, especially if you have a history of bad credit. If this is the case, try to get an FHA loan, which are loans backed by federal government. Even when the resources for making down payments or paying closing costs are lacking, FHA loans can help.
If your credit does not allow you to obtain new credit, getting a secured one is much easier and will help fix your credit. The account is funded in advance, which provides the lender with a level of insurance against unpaid debts. This is why secured cards are often easier to get. By using a new card responsibly, your credit rating will start to increase.
Credit Card
Pay down the balance on any credit card that is 50% or more of the credit limit. Any balances that are over half your limit drag your credit rating down. So be sure to pay your credit card down or, if you can not, try to use another credit card.
A good credit report means you are more likely to get financing for a home. When your mortgage is paid in full, you will be rewarded with increased scores on your credit file. Credit rating companies will judge you a reliable risk when you have verifiable assets such as a home. This will be beneficial when you apply for loans.
Opening up an installment account will help you get a better credit score and make it easier for you to live. You are required to meet a monthly minimum, so be sure that you can make the payments. You can improve your credit rating quicker using this type of account.
If someone promises you to improve your score by changing your factual history, this is a scam. This information can stay on your record for about seven years. You should know that mistakes and anything incorrect can be removed from your credit report.
Don’t get involved in anything that could get you arrested. There are plenty of credit scams that purport to erase your existing credit file and create a new one. Do not think that you can get away with illegal actions. The legal consequences are expensive, and you might be sentenced to jail.
Shut off all but one credit card if you want to fix your credit. Make necessary arrangements to set up payments, or transfer the balance to your remaining account. You will be able to pay one bill instead of a plethora of small ones.
Go over your monthly credit card statements to check for mistakes. If you spot any late fees, immediately contact your credit card company. This can save you from having late payments reported to the credit reporting agencies.
If you are able to successfully negotiate a payment schedule for a debt, it is important to request a copy of the agreement in writing. The documentation you gain from the creditor is important in case the company changes ownership or the creditor is no longer interested in the deal. When the debt is eventually paid or settled in full, you should request documentation of this and forward copies to the primary credit reporting companies.
Do everything you can to avoid bankruptcy. Bankruptcies appear on credit reports for ten years. Although it sounds like an easy way to get rid of debt, it will affect your life for a significant amount of time. Filing for bankruptcy will make it very difficult for you to qualify for credit in the future.
Credit Cards
Make sure that you pay more than the minimum balance owed on all of your credit cards to improve your credit. You should first work on paying down the credit cards with the highest balance or interest rates. Beginning to pay your credit card balances off will show creditors that you are making a valiant effort and are credit worthy.
Lowering the balances on revolving accounts can help you to get a better credit score. Reducing the amount of debt you’re carrying is one of the best ways to improve your credit score. FICO will base your score on what percent of your available balance is in use, so keep that in mind.
Start using credit again in order to repair damage caused by previous negative activity. Prepaid credit cards are one way in which you can repair your credit. These cards are used like a normal credit card and are reported to the credit bureaus; however, you can only use the amount of money you deposit into your account. This will make you appear responsible to future potential lenders.
The tips within this article will help you repair your credit score and continue to have control over your debts. It is always worth your time learning how to fix and maintain good credit, since it has a major impact on most of the larger financial deals you will make.
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