Having bad credit can be a real headache. When your past unwise decisions haunt you, it can be very frustrating. It is time to deal with your debt and get back on the road to good credit. Keep reading for more helpful tips.
When you want to fix your credit, you need to start somewhere. Have a realistic plan and stay with it. However, if you are not prepared to alter bad habits regarding your spending, nothing will ever change. Only purchase something if you cannot live without it. Ask yourself if a certain purchase is both necessary and affordable. Buy the item if your answer to this question is “yes”.
If you want to avoid paying a lot, you can pay off debts that have a huge interest rate. There are legal limits set in place to control the amount of interest a creditor is allowed to charge you, plus your original debt is all the credit card company paid when you made the purchase. Remember you agreed to pay any interest that accrued over the life of the account. It is likely you can have exorbitant interest rates reduced if you sue the creditor.
Don’t attempt to fix your credit in a way that will result in you breaking any laws. There are less than honest entities that will show you how to make a brand new credit file. Needless to say, this is against the law and you are likely to get caught. They may seem like a small matter, but if you get caught, you could receive heavy fines and even jail time.
Call each of your charge card companies and ask them to lower the limit on them. You will not be able to spend too much and they will see that you are responsible.
Debt Settlement
Before you agree on an agreement for settling your debt settlement, you should determine what affect this will have on your credit score. Some debt settlement methods can hurt your credit even more, and you should be sure of how it will affect you. Some creditors have no concern over how your credit score can be affected by entering into certain agreements. These people just want your money.
If you and a creditor agree on a payment plan, make sure the agreement is committed to paper. You need to have a contract in writing so if the creditor goes belly up or they change your terms, you can catch them on it. Finally, when it is paid in full, get documentation thereof to submit to credit agencies.
Filing for bankruptcy is a bad idea. It can adversely affect your credit for up to 10 years. Though the idea of ridding yourself of debt can sound appealing, the long term consequences just aren’t worth it. By filing for bankruptcy, you might have a lot of trouble getting a credit card or qualifying for a loan in the future.
One of your main tasks in credit score improvement is paying off your cards as fast as you can. 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. Doing so shows your lenders that you are responsible.
Read every credit cart statement you receive in full. Errors are not as rare as you might think. You want to double check that all the charges are accurate, and that you are not paying for something you did not purchase. It is solely your responsibility to be sure that everything is correct.
If you want a higher credit rating, you will need to bring down the balance on any existing accounts. Just lowering your balances can raise your credit score. When balances are 20, 40, 60, 80 and 100 percent of the total credit available, the FICO system takes note of it.
Although they mean a lot to you, these statements are often set aside when lenders go over your credit history. It is possible that this can be detrimental by drawing closer scrutiny to your report.
Collection Agencies
Some of the worst stress you experience with bad credit is caused by debt collection agencies. Cease and desist instructions can be used to ward off debt collectors to a point, but only really to prevent harassment. You will still have to pay what you owe even if collection agencies stop calling you.
Be careful of paying for a service or a lawyer that advertises quick or instant credit score improvement, many of them are dishonest. There are a lot of scam lawyers out there who will charge you a lot of money for credit repair techniques that don’t really do much. Investigate a lawyer before hiring them to help you in repairing your credit.
Whenever you apply for and open a new credit account, your credit score may drop. As tempting as it can be, do not a new credit card. If you open all these new accounts, you could see a drop in your credit score.
Make a definite plan to pay past due and collection accounts. They will likely still appear on the credit bureau report but having them marked as paid is a lot better than having them appear as outstanding balances.
If you are threatened by a collection agency or debt collector, make a note of it, as what they are doing is illegal. Consumers have rights, and you need to be informed of what they are.
Eliminate your debt. Lenders are interested in how much money you owe compared to how much you make. If your debt-to-income ratio is too high, then your credit score will suffer. The average person can not pay off their debt immediately. A good payment plan is essential to get any debt paid off as soon as possible.
If you will follow the helpful advice offered, you can easily build the credit you want. Be consistent and be aware of your obligations. You can rebuild your credit; don’t spend your time worrying, spend it fixing your credit.
