Having negative credit can bring negative reactions from companies that you might encounter in the future. Poor credit impacts your ability to move forward with your life. You can take measures to fix your credit, which will open up more possibilities in the future. Read the following tips if you have bad credit and want to repair your reputation.
Financing a home can be difficult if you have bad credit. FHA loans are good options in these circumstances, because the federal government guarantees them. You may even qualify for an FHA loan if you don’t have enough money for a down payment or the closing costs.
Planning is the first step to repairing your credit. You must be dedicated to making some significant changes in the way you spend your money. Don’t buy the things that aren’t needs. Consider if a purchase is both essential and affordable, and only purchase it if you can answer “yes” on both counts.
Any company or credit counselor that claims they can erase all negative reports from your credit history should be viewed with some skepticism. It seems unfair, but accurate negative information will stick around for seven years. You should know that mistakes and anything incorrect can be removed from your credit report.
Take a look at your credit report if you have a bad score. The debt itself may be legitimate, but if you find errors in its metadata (e.g. the date, amount, creditor name), you might be able to get the whole entry deleted.
Always examine your monthly credit card bill to make sure everything is accurate. You don’t want them reporting these to the credit reporting companies, so you’ll need to contact them immediately if there are.
Any time you establish any payment plan with any creditor, make sure you get it in writing. 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. Once you finish making all your payments, be sure to send that information to the credit agencies in writing.
Interest Rate
If you need to repair your credit score, you should pay your credit card balances as fast as possible. Sort your credit cards by balance and interest rate with the highest first. Then determine which credit card is the highest either in balance or interest rate and start to pay it off first. Beginning to pay your credit card balances off will show creditors that you are making a valiant effort and are credit worthy.
Reducing the outstanding balances on some of your credit cards can improve your credit rating. Your credit score can be raised if you lower your balances. When your available credit passes 20, 40, 60, 80 or 100 percent, it gets noticed by the FICO system.
Look for a credit score repair company that has good reviews online and is legitimate. Too many of these services will use your desperation to make money. Slimy operators are quite common, so beware of credit score improvement scams. Check online reviews about the company, the Better Business Bureau, and even the State Attorney General’s office to find out what their reputation is before signing anything or giving them any money or account numbers.
Debt Collection
One of the most stressful aspects of handling bad credit is dealing with debt collection agencies. If a debt collection agency is harassing you, writing a cease and desist letter can stop the harassment. The consumer still has to pay disputed debts even though these letters stop agencies from calling.
When you need to repair your credit score, be wary of lawyers and law offices that advertise instant credit fixes. Due to the huge amount of people with credit problems, lawyers have emerged and offer to repair credit for a huge fee, and most of the “repair” is illegal or useless. Check the reviews and reputation of any lawyer or credit restoration firm thoroughly before you contact them and certainly before you give them any money.
Build your credit back up to repair it. Because it does not carry the risk of late payments that would hurt your credit score, getting a credit card that is prepaid will give you a very safe way to employ credit. Doing this shows lenders that you can be trusted with credit.
Devise a plan for paying off any collection accounts or past due debts. Your debt will show up as paid once you have taken care of it.
Credit Counseling
If you are unable to make minimum payments, contact the better business bureau for information on a trustworthy credit counseling service. Agents at these organizations can negotiate with creditors to set up payment plans for your debt, and they will teach you how to dig out and stay out of debt over time. Credit counseling can help you get back on your feet again financially, and teach you how to better manage your financial situation.
Keep opening doors one by one by repairing bad credit. You can fix your credit, free of charge. You will be on the right road to find credit score improvement success if you heed these tips.
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