Poor credit is a terrible thing for you to deal with as you journey through life. It can leave you with less financial options and worse opportunities. You can, however, fix your credit problems and have a brighter future.
An imperfect credit rating can make financing a home even more difficult than normal. There is, however, alternative types of funding available that are offered by the banks. FHA and USDA are two such agencies who offer finance to those with lower credit scores, sometimes with low down payment and closing cost clauses. FHA loans are also great when a borrower doesn’t have the money to make a down payment or pay closing costs.
Creating a payment plan and sticking with it is just the first step to getting your credit on the road to repair. However, if you are not prepared to alter bad habits regarding your spending, nothing will ever change. Only buy the things that are absolutely necessary. Before making any purchase, determine if it is within your means and if it is indispensable. Don’t buy the item unless you answer “yes” to both of these questions.
Credit Card
When your credit is so bad that you can’t get a ‘regular’ credit card, a secured one will help you to repair your credit. When you open a secured credit card account, you place money on deposit to cover any charges you may make. This ensures in advance that you will have enough money to pay for your debt. If you use a credit card responsibly, you will go a long way in repairing your credit.
Look at the credit card accounts you have with a balance over 50% of the credit limit. Pay those off until they fall under this number. Your credit score can be negatively impacted if you are carrying a large balance compared to the available credit you have. While you are paying off these cards, reduce the balance to a small percentage of your available limit.
If your creditors try to jack up your interest rates, do not pay them. Creditors are skirting aspects of the law when they hit you with high interest rates. Although, in reality, you did agree in advance to pay any interest charges incurred. If you decide to sue your creditors, you should be able to have the interest rates recognized as too high.
When you’re looking to fix your credit, be cautious of credit improvement companies. They may tell you they can remove negative information, but if it’s correct, it can not be removed. These bad marks stay on your record for seven years or more. You should know that mistakes and anything incorrect can be removed from your credit report.
Work with the companies to whom you owe money to get your debt back under control. When you work with company you are not working against anyone, including yourself. This will help prevent furthering yourself into debt. Talk to the company and see if you can change your due date or monthly fees.
Credit Counselors
You need to carefully scrutinize credit counselors before you consult them for help with repairing your credit. The industry is rife with fraud and people with ulterior motives, so finding a legitimate credit counselor can be challenging. Others are outright scams. It is smart to verify the legitimacy of credit counselors prior to getting involved with them.
Credit unions are an option for those who have run out of options. They have opportunities that other banks can’t match since they are local, and don’t have to follow some of the same regulations.
If you and a creditor agree on a payment plan, make sure the agreement is committed to paper. Having documentation is important for your records but also protects you in case a creditor changes their mind. After you have paid off your debt, send proof of this to the major credit agencies.
Try lowering the balance of any revolving accounts you have. You can improve your score by lowering your balances. The FICO system makes a note when your balances are at 20, 40, 60, 80, and 100 percent of your available credit.
When lenders are looking at your credit, an explanation that goes with the report generally will not even be looked at. It might actually make things worse by making the negative mark stand out.
Credit cards should be avoided. Using cash will ensure that you stick to your budget and don’t overspend. If you do pull out the credit card, pay off the debt in full each month.
This simple advice can aid you in repairing your credit issues and help you keep your credit in good shape. Since having a solid credit rating is vital for various transactions, time spent learning how to repair your credit is not wasted.
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