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. Fortunately, there are quite a few ways that you can remedy your credit situation.
When you want to fix your credit, you need to start somewhere. Have a realistic plan and stay with it. You need to change your past habits and build new, better approaches to credit. Avoid buying what you don’t need. See if each purchase is necessary and affordable and only purchase something if the answers are “yes”.
Interest Rate
Your interest rate will be lower if you have a good credit score. This can help lower your monthly payments, and help you pay them off quicker. Obtaining the best possible interest rate saves you money, and helps you maintain your credit score.
If you want to boost your credit score and earn a decent living, open an installment account. With an installment account there is a monthly minimum you need to keep, so only open an affordable account. Your FICO score will rise over time, if you responsibly manage this type of account.
Start paying on bills to help your credit. However, it’s not enough to just pay your bills; you need to make your payments on time and in full. You will notice how quickly your credit score increases when you start paying off those overdue bills.
Read your negative reports carefully when attempting to rebuild your credit. Even if the negative report is true, if you can locate an error in the report, it may be possible to get it removed.
You cannot live a life that is beyond your means. This takes time and a change in attitude to accomplish. Many people have acquired debts they can’t pay off, which has affected the amount others will pay to have credit. You should look at what you can afford to spend, before using credit for purchases.
Though it is hard to make this step, consider paring down the number of credit lines to just one; this will sometimes improve your credit score. Make necessary arrangements to set up payments, or transfer the balance to your remaining account. This allows you to pay off one credit card bill rather than many smaller ones.
It is important to get any payment plan that you agreed to with a creditor in writing. Having the plan in writing will protect you if the creditor reneges on the plan or if your debt is transferred to another creditor. Once it is paid off, you should get that in writing to send to the credit reporting agencies.
Try not to file for bankruptcy. This will show up on your credit for around 10 years. It may sound like a good idea at the time to rid yourself of all your debt, but it will affect you later on. Once bankruptcy has been filed, it could permanently halt your chances of ever obtaining credit again in the future.
If you are late with your payment, your credit status will suffer. Anytime you don’t make a payment on time it can damage your credit and it can be hard to get a loan anywhere.
If you want a higher credit rating, you will need to bring down the balance on any existing accounts. You can raise your score by lowering your balances. The FICO system notates when a balance on a card is at 20,40,60,80, and 100 percent of the total available credit.
Put your credit cards on lock down and don’t use them at all, if possible. Use cash for purchases instead while you are building back your credit. Pay off any credit card purchases immediately.
Having to deal with a collection agency can be extremely stressful. Make sure you know that cease and desists of any type can only stop you from being harassed, you’re still going to be in debt. Even when the phone calls from collection agencies have stopped, the associated debts must still be paid.
Create a plan to settle all of your unpaid and past-due accounts. These things will still appear on a credit report, but they will be marked paid, which is better for your credit.
Contact your creditors directly to work out alternate payment plans if you are having difficulty making your monthly payments. Many times, a creditor will let you pay in installments and not report the debt to credit reporting agencies if you just ask. This can also help to relieve some of the financial strain that you have been facing.
Credit Score
A crucial part of credit improvement is developing a realistic plan to pay off your debts. It can be difficult to have existing debt as it hurts your credit score. Create a budget that is reasonable for you, and try to allocate as much money as possible toward your debt. If you have no debt, your credit score will improve.
Look into debt consolidation to help you get a handle on your credit situation. Consolidation of your debts in many cases could be the best chance you have of reducing your debt and therefore repairing your credit faster. With this, your debts are all combined into one easy payment. In order to be certain that consolidation is the right choice, it is important to understand how it works, and know what its benefits are.
Although it can seem daunting, you can get your credit on the mend by learning about it and taking the proper steps. Use what you’ve learned in this article to start fixing your credit and improve your credit score.