It doesn’t matter whether you fell victim to people giving out free credit cards, spent too much money or was hit very hard with the recession. Chances are that your credit has been damaged. Luckily, there here are some steps that you can take to turn things around.
Financing a new home can be a challenge, especially if you have a history of bad credit. See about getting an FHA loan, which are loans that the federal government guarantees. FHA loans are ideal for those who cannot afford the high down payment that most banks require.
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. Be sure to buy only the things that you need. If the thing you’re looking at is not both necessary and within your budget, then put it back on the shelf and walk away.
Credit Limit
Look at the credit card accounts you have with a balance over 50% of the credit limit. Pay those off until they fall under this number. Carrying a balance of more than half your credit limit negatively impacts your credit score. Either pay this balance down or spread it out over multiple cards.
Opening an installment account is one way to improve your credit score. Make sure you can afford to make the payments and try to maintain a minimum monthly balance. You can quickly improve your score by successfully managing these accounts.
A good tip is to work with the credit card company when you are in the process of repairing your credit. When you work with company you are not working against anyone, including yourself. This will help prevent furthering yourself into debt. Talk to your credit card company about changing the terms of your monthly payment.
If you find any errors in your credit reports, you should dispute them. A dispute letter should be sent to any of the agencies that are reporting the error. Be sure to include supporting documents. Make sure that you send the letter via recorded delivery, so that you can prove that the credit agency receives it.
This is to keep your credit in good standing. Anytime you don’t make a payment on time it can damage your credit and it can be hard to get a loan anywhere.
If you want a higher credit rating, you will need to bring down the balance on any existing accounts. Lowering your balances is one way to get a better credit score. The FICO system notates when a balance on a card is at 20,40,60,80, and 100 percent of the total available credit.
Try not to use your cards at all. Try to make purchases using cash only. If the purchase you’re buying is more than you can currently afford you can use a credit card, but pay it back as soon as possible.
Collection Agencies
The worst part of a credit crisis may be the collection agencies. Remember that when dealing with harassing collection agencies, consumers have the option to issue a cease and desist letter to stop the harassment. A letter like this may stop a collection agency from harassing you, but you are still on the hook to pay your debts.
In order to rebuild your credit, take baby steps to start improving your score. Because it does not carry the risk of late payments that would hurt your credit score, getting a credit card that is prepaid will give you a very safe way to employ credit. This will show potential lenders that you are responsible and credit worthy.
Your credit score suffers each and every time you make the choice to get a new credit card or line of credit. Fight the temptation to get that credit card at the checkout when they offer you big discounts if you do it. As soon as you open your new credit card, your credit score will drop.
Work out a plan of attack where you can pay off collectors and any other accounts that are past due. These accounts will still appear on the credit report, but will be showed as paid. This shows future creditors that you made good on your debt.
Paying your bills in a timely manner is an important aspect of anyone’s credit score. Setting up payment reminders can help you avoid missing a payment. You can do this in a number of ways. You can set up email reminders through your online banking or have text messages sent to you.
Create a plan to begin paying your debt down. If you have delinquent debt, your credit score will be affected until you pay it off or seven years pass, whichever comes first. Develop a budget that realistically reflects your situation and try to devote as much of it as you can to paying down your debts. Being free from debt will enable you to raise your current credit score.
If you are determined and ready to learn, you can fix your credit in no time. With the tips above, you are better prepared to take action and get your credit situation back where it should be.
