There are many reasons why you may have a poor credit history. Credit cards could have been your primary means of support while you were gaining an education, a passion for shopping may have gotten the best of you or the decline in the economy might have left you jobless for a time. You are in luck, though. These tips will help you get your credit score to that mythical 850.
Fha Loan
An imperfect credit rating can make financing a home even more difficult than normal. In this situation, it is a good idea to try to obtain an FHA loan, because these loans are guaranteed by the federal government. You might be able to get an FHA loan even if you cannot afford closing costs or down payments.
If you credit score is good, you should have no problem purchasing a house and obtaining a mortgage. Keeping up with all of your mortgage payments will help pull your credit score even higher. When you are a home owner you will be financially stable based on what you own. If the need arrives to obtain a loan for any reason, this will be a valuable asset for you.
Installment Account
Opening an installment account is one way to improve your credit score. Choose an installment account you can afford, since you will have to leave a certain amount of money on it at all times. If you use one of these types of accounts, your score will quickly improve.
Excessive interest rates can be contested. However, it is best not to sign contracts containing them in the first place. If you are being charged a distressingly high interest rate, you may be able to talk to your creditor. However, you agreed to pay the interests off when you signed the contract. It is possible that you can sue a creditor and claim that the interest rate charged is unreasonably high.
Contact your creditors to request a reduction in your credit line. Doing this keeps you from overtaxing yourself. It also shows the lending company that you are responsible.
Credit Score
Know how debt settlements will influence your credit score prior to making a decision. 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. Some creditors have no concern over how your credit score can be affected by entering into certain agreements. These people just want your money.
Avoid filing for bankruptcy. This will have damaging consequences to your credit score for ten years. Bankruptcy may sound great because your debt goes away but there are consequences. Once you have filed for bankruptcy, it may become very difficult to secure a loan or open a new credit account.
Go through all the statements you receive. You are looking to see that every charge is correct and determining whether or not you are being charged for an item you didn’t buy. Take the reigns, and go over your monthly credit card statements. No one else will do it, it is your responsibility.
To accomplish getting a better rating on your credit, pay down the balances of your current accounts. Your credit score can go up if you just bring your balances down. The FICO system notates when a balance on a card is at 20,40,60,80, and 100 percent of the total available credit.
Make sure the credit score improvement agency is reputable. The credit improvement industry does have its fair share of agencies that do not live up to their promises. A fair number of people have been scammed by these unethical credit restoration companies. Always read reviews online first to find a good agency.
Collection Agencies
Collection agencies are stressful to deal with. A consumer had the option of making use of cease and desist statements to persuade collection agencies, but remember that C&D statements only prevent them from harassing you. Sending the letter does not mean you no longer have to pay the bill, it only stops the collection agency from calling.
If you need to rebuild your credit, you need to start establishing a history of responsible borrowing. 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. Potential lenders will be sure to see that you can be relied upon and are worthy of credit.
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.