With this downward economy, it is no surprise that millions have poor credit scores. Thankfully, these hints will give you some valuable insight into how you can proceed to build better credit ratings.
For some it may hard to finance their home due to having less than ideal credit. 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 offer lower down payments and help with closing costs.
If you need to repair your credit, the first step is to come up with a workable plan and stick to it. You can’t just make up a plan and not change how you spend your money. Just buy what you need, and forget unnecessary purchases. Ask yourself how necessary each purchase is, and how affordable it is too. If you can’t answer “yes” to each of the questions above, you need to reconsider the purchase.
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. With a secured card, you have to fund your account before you use the card so that the bank will be assured that you will pay off your debts. A responsibly used new credit card will begin healing your credit score.
If you have credit cards where the balance is more than half of your credit limit, pay these down right away. If your credit card balances exceed 50% of their limits, it will lower your credit score, so spread your debt over multiple cards, or better, pay down the balances.
You can dispute inflated interest rates if you are being charged more than you should be. An interest rate that is shockingly high can possibly be ruled as illegal in certain cases. However, the contract you signed ensured that you agreed to pay off your interest. If you decide to sue your creditors, you should be able to have the interest rates recognized as too high.
When you are trying to fix your credit record, call your creditors and make payment arrangements that will benefit both of you. This will help you stabilize your situation and start working towards a better financial situation. Call them and see if you can change the payment terms. They may be willing to change the actual payment or move the due date.
Make sure you do your research before deciding to go with a particular credit counselor. Although some can be quite legitimate, others have motives that are less than kind. Other options are clearly scams. It is smart to verify the legitimacy of credit counselors prior to getting involved with them.
Before you agree to any sort of repayment plan to settle your debts, consider how this will affect your credit score. Certain methods of settling your debts have less detrimental effects on your credit history. The creditor does not care what happens to your credit score, as long as they get their money.
Take a look at your credit report if you have a bad score. The debt itself may be legitimate, but if you find errors in its metadata (e.g. the date, amount, creditor name), you might be able to get the whole entry deleted.
Dispute every error you identify on your credit report. Create a dispute letter for agencies that have the error, and submit additional supporting documents along with it. Make sure when you send the dispute package that you request proof by signature that it was received.
Make sure a credit score improvement agency is legitimate before choosing to work with them. There are many scams that happen in the industry of credit restoration. Some people have turned over all of their financial information to people who turned out to be scam artists, and they wound up in worse shape than before they started. See if the company in question has a reputation on any of the user review sites before you commence business with them.
Credit cards should be avoided. Pay with cash whenever possible. When you do use a credit card, pay off the balance in full each month.
Debt collectors can be like sharks. You can get a collection agency to cease and desist from harassing you but this does not discharge the debt. Although these letters make collection agencies cease contacting people, they are still expected to pay their debts.
Avoid using a law office that claims they can fix your credit. The state of the economy has caused many lawyers to practice unethical methods by promising credit restoration for a steep fee and not delivering. Investigate a lawyer before hiring them to help you in repairing your credit.
It goes without saying that if your credit is poor and needs repairing, you need to start from the bottom and build. Prepaid credit cards can help you to break bad spending and repayment habits. This approach will indicate to others that you are serious about taking responsibility for your financial future.
Be aware that opening a new credit card account can affect your credit score in a negative way. Fight the overwhelming urge to say yes to a new credit card when it is offered to you at store checkouts, even if there is a large discount offered. Once you open a new credit card, your credit score will become lower.
Make out a plan or program to pay off past due accounts and collection agencies. Even after you pay them off, they will still be present on your credit rating, but at least they will show up as paid and will not continue to harm your rating.
If you are experiencing difficulties paying your monthly expenses, you should get in touch with your creditors right away to develop other payment plans. Often, a creditor will work with you to devise a repayment plan that is not reported to credit bureaus if you are proactive about contacting them. Another benefit of being proactive is that you can alleviate your financial burden and open up your ability to pay the bills on time that will not work with you on payments.
Use these tips to establish a plan of action for your credit score. Act now to start on the road to improving your life by improving your credit.