Whether you fell prey to the guys handing out credit cards like candy on campus, got carried away on one too many shopping sprees or got hit hard by the recent economic downturn, you probably did some damage to your credit. The good news is that there are some things that you can do to repair it.
If you have a poor credit history and can’t qualify for a credit card, get a secured card. 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. Even though this card will be secured by your own money, you will make payments and manage it as if it were unsecured. This will improve your credit as you show yourself able to make the payments on time.
Credit Cards
Start by paying off credit cards with accounts 50% over your limit. You can concentrate on another card once these accounts are lowered to under half of your limit. You should keep your balances under fifty percent; anything over this and you can lower your credit rating, so spread out the money you own and pay down your credit cards.
You can reduce your interest rate by maintaining a high credit score. This will help you afford your payments, and get out of debt quickly. Asking for a better deal from your debtors can help you get out of debt and back to achieving a better credit score.
When you have a good credit rating, you will be able to easily get a mortgage loan. You will get a better credit score by paying your mortgage payment on time. When you are a home owner you will be financially stable based on what you own. This will be very helpful if the time comes where you need to take out a loan.
Installment Account
If you make a decent income, consider an installment account when you want to give your credit score a boost. You need to review the terms of an installment account carefully, because you’ll be required to maintain a certain monthly minimum. Keeping an installment account will help your credit score.
Repairing your credit is actually pretty simple. The first step is to focus on paying your late bills. Your bills must be paid completely and on time. As soon as you have cleared those old debts, you will see an immediate improvement in your credit score.
Work with the companies to whom you owe money to get your debt back under control. Doing so will help you to ensure that you do not go further into debt and make your credit worse. Talk to your credit card company about changing the terms of your monthly payment.
Make sure you check out any credit counseling agency you consider using. While many counselors are reputable and exist to offer real help, some do have ulterior motives. Some will try to cheat you. Smart consumers make sure that a credit counselor is legit before starting to exchange any money or sensitive information.
Don’t get involved in anything that could get you arrested. Creating a new credit score or using a different identity seem like easy solutions but bad credit is not worth taking this kind of risks. That is illegal and you are going to be caught. The legal consequences are expensive, and you might be sentenced to jail.
Before you agree to any sort of repayment plan to settle your debts, consider how this will affect your credit score. There are ways that are less damaging than others, that is why it is important to research about it before starting an agreement with creditors. Many collectors just want to get paid and don’t care about credit consequences.
Take a look at your credit report if you have a bad score. You could find mistakes in dates and other factors which can cause the whole item to be removed from the report.
Start living within your means. You will need to change the way you think about spending money. In past years, people used good credit ratings to buy the items that they normally couldn’t afford, and they are now currently paying big payments. Spend some significant time studying your finances, and set a realistic budget to which you can stick.
Take the time to carefully go over all your credit card statements. Take a second look to make sure that you are being charged only for what you actually purchased. You are the person responsible for checking that there are no errors.
Credit Score
Lowering the balances on any currently revolving accounts will increase your credit score. Having a lower balance will boost your credit score. Your FICO credit score notes what your balances are on your revolving accounts based on the credit you have available.
Debt collection agencies can be the most stressful part of a bad credit crisis. Debtors can stop harassment by collection agencies with cease and desist notices, but know that this is all they do. Sending the letter does not mean you no longer have to pay the bill, it only stops the collection agency from calling.
New lines of credit either long-term loans or a new credit card will initially lower your credit score. It may be tempting to get a new account when there are bonuses offered at the check out, but you should stop and think about it first. If you fall for the temptation, your credit score will drop when opening that new card.
Devise a repayment plan that will satisfy your collection account and any other accounts that are in arrears. While these items will still appear on your report, you will no longer be penalized by having so much unpaid debt.
At first, it may seem impossible to repair your damaged credit. However, with some effort and the right advice, you can start to improve your credit rating and eventually regain a credit score that will instill faith in any lender. Put the information you just learned into practice and start repairing your credit today.