Bad credit is a particularly troublesome life problem that can haunt you for years. Your financial options will diminish, fewer options will be open to you and you will not be able to take advantage of new credit line offers. It’s not difficult to get back on track to good credit, so read the rest of this article to learn what you need to do it right.
If your credit is not perfect, getting a mortgage can be tricky. 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 even apply for someone who doesn’t have closing costs or the funds that are needed for down payment.
Credit Cards
Pay down any credit cards with a balance in excess of 50%, preferably getting them down to 30%. You should keep your balances under fifty percent; anything over this and you can lower your credit rating, so spread out the money you own and pay down your credit cards.
If you want to avoid giving too much to your creditor, simply refuse to pay towards unfairly huge interest rates. In many situations, exorbitant fees and penalties can be challenged. Keep in mind that you did sign a contract agreeing that interest rates were acceptable. You need to be able to prove the interest rates are too high if you want to sue your lenders.
When trying to repair your credit, research any credit counselors you consider using very thoroughly. The industry is rife with fraud and people with ulterior motives, so finding a legitimate credit counselor can be challenging. Other options are clearly scams. Before you conduct any business with a credit counselor, check into their legitimacy.
Give the credit card companies a call and find out if they will lower your credit limit. This helps you from overspending and shows that you want to borrow responsibly and it will help you get credit easier in the future.
You should examine any negative entries on your credit report thoroughly if you want to fix your credit problems. The item may be essentially correct, but there may be an error someplace. If the date or amount, or some other thing is incorrect it may be possible to get the entire item removed.
Dispute every error you identify on your credit report. Gather your support documents, make a list of the errors, and compose a letter to pertinent agencies. Mail your dispute documents to the agency using certified mail and a return receipt so that you can prove the agency received them.
Any time you establish any payment plan with any creditor, make sure you get it in writing. This way you have documentation of the agreement in case the creditor decides to change their mind or ownership of the company changes. Finally, when it is paid in full, get documentation thereof to submit to credit agencies.
To show that you are serious about improving your credit, start systematically lowering all of your account balances. Pay down your cards that have the highest interest and largest balances first. Beginning to pay your credit card balances off will show creditors that you are making a valiant effort and are credit worthy.
Doing so can help to keep good credit. Late payments to credit cards are reported to the major credit agencies and can hurt your chances for securing a new loan.
Revolving Accounts
To keep your credit in good standing and get a better score, maintain a low balance on revolving accounts. You could increase your credit score just by paying down some balances. Your FICO credit score notes what your balances are on your revolving accounts based on the credit you have available.
It is difficult to just forget about negative reports, but writing a statement is useless. It can actually backfire. It brings attention to a part of your report you would rather a lender not look at very closely.
One of the most stressful aspects of handling bad credit is dealing with debt collection agencies. 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. A letter like this may stop a collection agency from harassing you, but you are still on the hook to pay your debts.
Building your credit back up is the number one way to fix a bad credit score. Prepaid credit cards help you re-establish credit without the risk of falling into an even deeper hole due to delinquent payments. This approach will indicate to others that you are serious about taking responsibility for your financial future.
When you create a new credit source, your score decreases. Opening new lines of credit can hurt your score greatly, even if you get approved. As soon as you open a new credit line, your credit score drops.
Collection Agency
If you are threatened by a collection agency or debt collector, make a note of it, as what they are doing is illegal. There are consumer laws which limit the things that a collection agency can do to you.
Easy tips, like the ones in this article, will help you repair your credit and keep it healthy in the future. 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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