Bad credit is a very frustrating thing to deal with. Bad credit makes it difficult to take advantage of any financial opportunities that arise. There are a few things you can do to improve and protect your credit.
Financing a home is not always an easy task, especially when you have less than perfect credit. If you are in this situation you should look into FHA loans before speaking with a bank. It might be possible to get an FHA loan even if you don’t have the money for a down payment or the closing costs involved.
If you’re credit needs some work, first you should make a plan you can stick with, and then follow through. Be totally committed to changing your spending habits. Only buy the things that are absolutely necessary. Ask yourself if a certain purchase is both necessary and affordable. Buy the item if your answer to this question is “yes”.
Secured credit cards are an effective way for you to start rebuilding your credit. Anyone can get one, but you must load money onto the card as a type of “collateral”. Responsible use of a credit card can help rebuild your credit.
Try to keep a balance of less than 50% of your available credit on all of your cards. 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.
Credit Report
No credit restoration company can remove factual information, no matter how damaging, from your credit report. If the information is correct, it will remain as part of your report, in most cases, for seven years. If the information is an error, the credit report can be corrected.
To start fixing your credit, you will have to pay your bills. You should always make an effort to pay your bills on time and in full. As soon as you have cleared those old debts, you will see an immediate improvement in your credit score.
When trying to repair your credit, research any credit counselors you consider using very thoroughly. Some credit counselors offer real help while others have more dubious things in mind. Some are just people trying to scam you. It is smart to verify the legitimacy of credit counselors prior to getting involved with them.
Credit File
Do not try something that you do not know is legal or illegal. There are plenty of credit scams that purport to erase your existing credit file and create a new one. Creating a new credit file is very illegal and you can be easily caught. They may seem like a small matter, but if you get caught, you could receive heavy fines and even jail time.
If you come across a mistake on your credit report, don’t hesitate to dispute it. Send a dispute letter along with supporting documents to the credit agency that recorded the errors. Send any correspondence by recorded mail to ensure proof of receipt by the agency.
If your credit is poor, take the first step to repairing it by closing out the majority of your cards, leaving yourself just one to use. It is important to make small payments or transfer a balance to the open account. In this manner, you can take care of all your credit card debt by paying down a single balance.
If you and your creditor decided to set up a payment plan, you should first get the details of the plan in written form. If there is a change of heart, this paper will protect you. As soon as you get it paid off, have that in writing so you are able to inform the credit reporting agencies.
To increase your credit score lower the amount owed on revolving accounts. You can up your credit rating just by paying down your balances. When balances are and increments of twenty percent of your total available balance on that account, the FICO system will take note.
Credit Repair
There are many credit score repair agencies advertised; you must check with places like the Better Business Bureau to make sure that you deal with a reputable one. As with most industries nowadays, there are a number of shady companies offering credit repair. Indeed, some people have fallen prey to credit repair scams. You can separate the scam artists from the good agencies by relying on user reviews found online.
Attempts to defend negligence or bad credit will not succeed, even if they are justifiable. The creditors are only worried about results and numbers. The action of making a statement about your negative history will work against you as it highlight your mistakes rather than downplaying them.
When you are having trouble paying your bills, debt collection agencies will start contacting you demanding payment. If a debt collection agency is harassing you, writing a cease and desist letter can stop the harassment. While such letters stop collection agencies from calling, the consumer is still obligated to pay the debts being disputed.
The only way to repair credit is to be more responsible with your credit accounts. Using a prepaid credit card will help to build your credit score, without the worry of late payments, and bad marks on your credit report. A potential lender will see this as a responsible move on your part, showing that you are credit worthy.
It is not legal for collectors to threaten you, so always report them if they get too aggressive. Laws such as the FDCPA exist to stop debt collectors from harassing debtors.
Put these ideas to use so you can repair your credit and stay on top of good credit practices. The time you invest learning about ways to repair credit can be fruitful in improving your credit rating.
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