Repair Your Bad Credit With These Helpful Tips

| June 2, 2015 | 0 Comments

A poor credit score can put you in a bad position. 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. There are some excellent ways to repair your credit, a few of which are shared here.

Getting home financing is no small feat, especially if your credit score is less than perfect. If you do have poor credit, try to get a FHA loan because there is a guarantee that it will be given to you. Even when the resources for making down payments or paying closing costs are lacking, FHA loans can help.

TIP! The first step to repairing your ailing credit is to create a manageable, feasible financial plan. You must make a commitment to making changes on how you spend money.

Creating a payment plan and sticking with it is just the first step to getting your credit on the road to repair. Real changes come from commitment to healthy spending habits. Stick to the essentials, and avoid frivolous purchases at all costs. Look at your purchases closely. If you cannot afford something, and you do not need it, do not buy it.

Credit Card

If you want to repair your credit but do not qualify for a regular credit card, consider a secured credit card. You will most likely be approved for this type of card, but you will have to add money to the card before you can use it so the bank will know that you can pay for all of your purchases. Responsible use of any credit card can help your credit rating. However, never forget that irresponsible use will get you in trouble every time.

TIP! Any credit cards that have balances over 50% of your limit should be paid off until they are less than 50% of your limit. Creditors like to see you using your accounts, but still keeping your balances under 50% of your allotted credit.

If your debt includes large amounts for interest charges contact the debt collector and see whether you can pay the original debt and avoid some of the additional interest charges. An interest rate that is shockingly high can possibly be ruled as illegal in certain cases. Your initial agreement likely included a commitment to pay interest. You need to be able to prove the interest rates are too high if you want to sue your lenders.

Credit Counseling Agency

Before you choose a credit counseling agency, find out more about them. Many companies are legitimate and hold your best interests as a priority, but some are outright scams. Some credit services are nothing more than fly-by-night scams. Intelligent customers will make sure to determine the legitimacy of a credit counseling agency before acquiring their services.

TIP! When you have better credit, you will be offered lower interest rates on loans and credit cards. This will help you afford your payments, and get out of debt quickly.

Put the spending brakes on yourself by lowering your credit limit on all of your cards. This will prevent overextending yourself and lets the company know about your responsible borrowing habits. You could get credit easier in the future.

Joining a credit union is a great way to build your credit if you are having a difficult time doing so elsewhere. Due to their focus on community finances rather than national ones, credit unions may provide better interest rates and more credit services than typical banks.

If you find a mistake on your credit report, be sure to dispute it! Report any errors to the three credit reporting agencies. Be sure to include any documents to support your case. Make sure when you send the dispute package that you request proof by signature that it was received.

TIP! If you find that you have a credit card and the interest rate has gotten to high, you do have the option to not pay the debt, though there will be consequences. Some companies that charge high interest rates are running the risk of having those rates challenged by consumers.

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. This is a great way to have documentation of the plan if the creditor changes their mind or the company ownership gets changed. As soon as you get it paid off, have that in writing so you are able to inform the credit reporting agencies.

Try not to file for bankruptcy. The record of the bankruptcy appears on your report and affects your credit rating for up to 10 years. It may seem like the right things to do, but your future will be affected. It could be near impossible to receive a credit card or loan if you have filed for bankruptcy.

Don’t use credit cards a lot. Cash payments are preferable. If you have to make a purchase with your card, pay it off right away.

TIP! You can work with the credit card companies to start repairing your credit. Avoid collection to improve your credit score.

Unfortunately, sometimes you have more debts than you have money to pay them off. Take the money you have for bills, and allocate a small amount to several creditors so you can make a little progress with each. This will keep your account in good standing while you are paying down your debt.

One way you can fix your credit is by taking small steps to build good credit. A secured credit card, one that is prepaid, will help you improve your credit score. By doing this you will be proving to potential lenders you are credit worthy and capable of paying money when you are required.

Past Due

TIP! Do not try something that you do not know is legal or illegal. You should steer clear of internet programs that show you how to clear your credit.

Make a definite plan to pay past due and collection accounts. They are still going to show up on your credit report but they are going to be marked as paid so you will not have to deal with the ill effects of having unpaid debt that is past due.

Contact a reputable credit counseling organization if you are experiencing difficulties developing a budget or sticking with one. These organizations are designed to help you and your creditors work together to design payment plans. They will also help you take care of your finances moving forward. Good credit counseling can help you understand the best, easiest ways to oversee your finances and pay your financial obligations.

When you are in a bad situation financially with poor credit, it’s only natural to feel that life will not got better. Following these credit score improvement tips can inspire you to think differently and to take charge of improving your credit.

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Category: Finance

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