Bad credit can affect your self-esteem in a negative way. The circumstances that lead to bad credit are rarely ones you want to look back on fondly, but a low credit score provides a constant, irritating reminder. 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.
An imperfect credit rating can make financing a home even more difficult than normal. If you do have poor credit, try to get a FHA loan because there is a guarantee that it will be given to you. FHA loans offer lower down payments and help with closing costs.
Pay down any credit cards with a balance in excess of 50%, preferably getting them down to 30%. If your credit card balances exceed 50% of their limits, it will lower your credit score, so spread your debt over multiple cards, or better, pay down the balances.
Credit Score
It is easy to get a mortgage for a house if your credit score is good. You will get a better credit score by paying your mortgage payment on time. As a homeowner, you will have a major asset that can have positive effects on your credit profile. This will be beneficial when you apply for loans.
If you don’t want to pay too much at a time, you can avoid paying higher interest rates than you started with. The incredibly high interest rates can get challenged and reduced in some situations. You did however sign a contract that agrees you will pay off all interests as well as the debt. You need to be able to prove the interest rates are too high if you want to sue your lenders.
You must pay your bills consistently if you want to repair your credit. Your bills must be paid completely and on time. After you have paid off some old bills, you will see an immediate improvement in your credit rating.
Credit Counselors
Make sure you check out any credit counseling agency you consider using. Although some credit counselors are truthful and legitimately helpful, other credit counselors are not honest and upfront with their motives. There are many scams out there. A wise consumer will find out if the credit counselors they deal with are legitimate or not.
Contact the credit card company and ask to get your card limit lowered. It will keep you from overextending yourself financially, it sends a great signal to the credit card companies that you are a responsible borrower, and you will have an easier time getting credit in the future.
Before you agree on an agreement for settling your debt settlement, you should determine what affect this will have on your credit score. Some methods of credit settlement can be a blow to your credit score, so it’s important to check into your options and find one that won’t hurt you in the long term. Remember creditors want their money. They really don’t care about your credit scores. That is up to you to protect.
If you come across a mistake on your credit report, don’t hesitate to dispute it. 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. Include a request for a return receipt with the dispute package so that you can prove it was received by the appropriate agency.
Avoid spending more money than you make. This takes a real mindset change. Unfortunately, credit has been easier to get than ever. Many people are buying things that are unaffordable and end up paying more than they should for any item. Take a hard honest look at your budget, and figure out what you can honestly afford to spend.
If you work out a payment plan with a creditor, you should make sure to get the plan in writing. You need to have a contract in writing so if the creditor goes belly up or they change your terms, you can catch them on it. Once the debt is fully paid, you need to get a statement verifying this from the creditor and send it to each of the major credit bureaus.
Avoid bankruptcy at all costs. Bankruptcy does not drop from your credit report until ten years have passed, so you will deal with the fallout for a significant period of time. It sounds very appealing to clear out your debt but in the long run you’re just hurting yourself. You may never get a line of credit for any purchases you might need to make if you go ahead, give up on repairing your credit and file for bankruptcy.
This will make sure that you maintain a good credit status. Late payments are added to credit reports and they can damage your chances of getting loans or a home in the future.
Having bad credit can lead to feelings of hopelessness, and these negative sentiments can pervade your thoughts. If you use these tips, you can change your attitude about your finances and improve your credit score.
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