There are millions of bad credit scores out there today. It’s no surprise, not with a poor economy, rising living costs, stagnant wages, and a nasty employment market. However, the following article gives you some helpful advice on different steps you can take to clear up your debt and improve your credit rating.
Getting money for a home loan can be difficult, particularly when your credit is less than perfect. You should consider getting a FHA loan they are backed by the government. You might be able to get an FHA loan even if you cannot afford closing costs or down payments.
Secured Credit Card
If you want to repair your credit but do not qualify for a regular credit card, consider a secured credit card. Secured credit card applications have a high rate of approval because you must fund a security deposit against your credit limit. Limited spending and regular payments can turn a new credit account into a valuable credit repair tool.
You can get better interest rates on credit cards and loans when you have a good credit score. By lowering your monthly payments, you’ll be able to reduce your debt more quickly. Obtaining lower interest rates will make it easier for you to manage your credit, which in turn will improve your credit rating.
Always do research before contracting a credit counselor. While many counselors are reputable and exist to offer real help, some do have ulterior motives. Others are outright scams. Before you conduct any business with a credit counselor, check into their legitimacy.
Before agreeing on settling a debt, find out how if the process will raise or lower your credit score. There are methods that are going to be less damaging than another, and all should be researched before you enter an agreement with a creditor. Debt settlers are more interested in their money than your credit rating.
Do not spend more than you can afford. You will have to change your thought patterns in order to get your debt under control. In the not too distant past, credit was easy and people could stretch themselves too far, but now the economy is paying the price of those days. Take a hard look at your financial situation to come up with a realistic spending plan.
Close all your credit cards except for one as a means of repairing your credit. Make necessary arrangements to set up payments, or transfer the balance to your remaining account. This can help you avoid paying down smaller balances and focus on paying one card off.
Avoid bankruptcy at all costs. Bankruptcy can make getting credit almost impossible for many years. It can be tempting to just go ahead and file bankruptcy to get out from under the debt, but the detrimental effects can be long lasting. If you have filed for bankruptcy in the past, it can be near impossible to obtain a loan.
To show that you are serious about improving your credit, start systematically lowering all of your account balances. It is a toss up as far as which cards are best to pay off first – some choose ones with the highest interest rate, others choose the card with the lowest balance. This helps creditors realize that you are using credit cards wisely.
If you are late with your payment, your credit status will suffer. Every late payment appears on a credit report, and could potentially hurt your chances at a loan.
When working with a credit repair agency, it is imperative to find one that is legitimate. You have to watch out for credit improvement agencies that promise more than they can deliver or are simply fraudulent. Many people have fallen for scams involving credit score repair. Reading unbiased customer reviews will help you decide what company you want to work with.
It is obviously somewhat difficult to let derogatory marks stand undefended, but the evidence suggests most lenders don’t use those statements in determining creditworthiness. Inclusion of the defending statement could actually have the opposite effect as it brings more attention to the fact that you have a negative mark on your report.
Now that you are armed with the information you need to repair your credit, don’t postpone implementing your plan. Low credit scores can adversely affect the actions you take in life so start now to begin increasing your credit rating.