The most annoying thing you may experience in life is having bad credit, because it leads to hardships. It can leave you with less financial options and worse opportunities. You can, however, fix your credit problems and have a brighter future.
Getting a traditional home loan can be difficult, if not impossible, with imperfect credit. FHA loans might be a good option to consider in these circumstances, as they are backed by our federal government. You may even qualify for an FHA loan if you don’t have enough money for a down payment or the closing costs.
Secured Credit Card
If your credit history has put you in the position where you are not able to obtain a regular credit card, you should try to get a secured credit card to begin rebuilding your credit. Most likely, a secured credit card will be easy for you to get, but you have to fund the credit account before you purchase so the bank knows that you won’t miss any payments. If you use a credit card responsibly, you will go a long way in repairing your credit.
Pay down any credit cards with a balance in excess of 50%, preferably getting them down to 30%. Any time you exceed 50% of your credit limit, your credit rating is affected. Pay off credit cards as fast as you can, or spread the debt out further.
Having a good record allow you to qualify for things like a home mortgage. Fulfilling your mortgage obligation in a timely fashion does a great deal of good for your credit rating. Owning your own home gives you a significant asset to use in securing your finances, and your credit score will reflect that asset. This will be useful in case you need to borrow money.
Many credit card companies are willing to help customers by eliminated late fees or lowering monthly payment amounts. By keeping the lines of communication open, you will avoid getting into more debt, making your credit score even worse. You can do this by speaking with them and asking to change the monthly charges or due date.
Before consulting a counselor for credit restoration, do your research. While some counselors are legitimate, offering genuinely helpful services, others have ulterior motives. Other counselors are nothing more than scam artists. Before you conduct any business with a credit counselor, check into their legitimacy.
Don’t do anything illegal. Creating a new credit score or using a different identity seem like easy solutions but bad credit is not worth taking this kind of risks. Do not attempt this because it’s illegal; you will not be able to avoid getting caught. The legal consequences are expensive, and you might be sentenced to jail.
If you are doing hardcore credit restoration, you need to scrutinize your report for negative entries. Although a certain credit item may not have any error, finding a mistake corresponding to a date or an amount can have the same item taken out of your report.
Dispute any errors that are on your credit report so they are removed. Write a dispute letter to any agencies with recorded errors, and include supporting documents. Make sure when you send the dispute package that you request proof by signature that it was received.
A first step in fixing your credit is to close all credit card accounts that are unnecessary. Aim to only have one account. Transfer credit card balances to one card for loan consolidation. You will be able to pay one bill instead of a plethora of small ones.
If you and a creditor agree on a payment plan, make sure the agreement is committed to paper. If the creditor tries to change the agreement or if it the company is sold to someone else, you will have documentation to support your case. You also want it in writing if it gets paid off so you can go ahead and send it to credit reporting agencies.
Making your payments on time shows lenders that you are serious about maintaining good credit. Paying late is placed on your credit report which can hurt your chances of getting a loan.
Don’t use credit cards a lot. Cash payments are preferable. If a credit card is used for a purchase, pay the entire balance when the bill arrives.
Overwhelming issues occur when you have multiple debts you can’t pay. Make the minimum payment on each of your debts and use any leftover money to concentrate on paying off the highest interest debt. A small part payment is always going to be preferable to those you owe money to than no payments at all. By making regular contributions to your debts, you should be able to keep the collection agencies at bay.
The only way to repair credit is to be more responsible with your credit accounts. Prepaid credit cards help you re-establish credit without the risk of falling into an even deeper hole due to delinquent payments. Doing so indicates to the person lending that you are a responsible person.
The tips you just read are just a few simple strategies you can employ to rebuild your credit and keep it squeaky clean going forward. Having a high credit score is essential in many ways, so it is important to be well-informed about credit score improvement.