No matter what your current situation, you have probably damaged your credit by opening one too many credit cards or being affected by the economic downturn. You are in luck, though. These tips will help you get your credit score to that mythical 850.
If you are buying a home it will not always be easy, and even more difficult if your credit is bad. Federally guaranteed loans (FHA loans) may be an option. FHA loans offer lower down payments and help with closing costs.
If you have credit cards with a utilization level over 50%, then pay them down until they are below 50% utilization. Carrying a balance of more than half your credit limit negatively impacts your credit score. Either pay this balance down or spread it out over multiple cards.
Interest Rates
You may be able to reduce interest rates by maintaining a favorable credit rating. Lower interest rates will reduce the amount of your monthly payment, and can also make it easier to repay your debt faster. Getting a good offer and competitive credit rates is the key to credit that can easily be paid off and give you a good credit score.
You can get a house mortgaged at the snap of a finger if you have a high credit score. You will get a better credit score by paying your mortgage payment on time. Once you own a home, you will have financial stability secured by your assets, thus a good credit score. This will be very helpful if the time comes where you need to take out a loan.
Interest Rate
If you want to avoid paying a lot, you can pay off debts that have a huge interest rate. Creditors are skirting aspects of the law when they hit you with high interest rates. Remember you agreed to pay any interest that accrued over the life of the account. It is possible that you can sue a creditor and claim that the interest rate charged is unreasonably high.
Work closely with all of your creditors if you are aiming towards repairing your credit. If you do this you’ll find that your debt doesn’t increase and your credit is improved. It is perfectly appropriate to call and request an adjustment to your interest rate or to push back a payment date if needed.
When attempting to improve your credit, you should go over any negative marks with a fine tooth comb. While the credit item itself may not be in error, if you can find a mistake in the date, amount, or any other factor, you may be able to have the whole item removed from your report.
Credit Unions
Credit unions are an option for those who have run out of options. Credit unions can often offer better rates and more alternatives than larger banks, because they base their decisions on the local economy instead of the national situation.
To rebuild bad credit, it can be a good idea to get rid of your extra credit cards. You should only have one. You will want to either transfer your balances onto the one remaining card or set up payment arrangements, but close the account to new charges. Doing so will allow you to pay off one individual debt rather than a multitude of lesser balances.
Take the time to ensure each month’s credit card bill is correct. Contact the credit card company right away if there are incorrect fees, so that they won’t be on your credit report.
Many times you and your creditor can work together to come up with a prepayment plan. If so, be sure you get a written agreement stating the terms. You want documentation to back yourself up so there will be no problems in the future, and if the company owner changes you will have more of a chance of keeping your plan. Once it is paid off, you should get that in writing to send to the credit reporting agencies.
Doing so can help to keep good credit. Late payments are reported to all credit report companies and will greatly decrease your chances of being eligible for a loan.
Try lowering the balance of any revolving accounts you have. Reducing the amount of debt you’re carrying is one of the best ways to improve your credit score. When balances are 20, 40, 60, 80 and 100 percent of the total credit available, the FICO system takes note of it.
Don’t use credit cards a lot. Pay for things with cash whenever possible. If you must use your credit card, pay it back in full.
Credit Score Improvement
Do not assume that a lawyer is being honest when he or she claims that they can fix your credit instantly. There are a lot of scam lawyers out there who will charge you a lot of money for credit score improvement techniques that don’t really do much. Do your homework and check out any attorney before you hire one to help with credit score improvement.
Be aware that threats made by a bill collector are illegal. As a consumer, you are protected by certain laws, and you need to be aware of them.
Reduce the amount of your debt. When deciding how risky you are, lenders compare the whole amount of debt you owe to the amount of money you earn. If you spend more than your income allows, you can be easily viewed as a poor credit risk. A lot of people do not have the capacity to completely pay off debt. That is why it is good to have a payment plan you can afford to stick to.
Look over your credit report very carefully, looking for errors and discrepancies. Sometimes errors occur because of a mistake, or there could have been an error in the creation of your file. Errors can be fixed by disputing it with the credit reporting agency. This takes time but if a mistake has been made, it will be taken off your report.
Repairing a poor credit score can seem like a daunting task, but improving your score is possible with guidance and knowledge. Use what you have read here to get back on track with your credit.
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