It is likely you have done something to damage your credit rating at some point in your life, whether it was a shopping spree, a predatory loan or just being a victim of bad economic luck. Luckily, there here are some steps that you can take to turn things around.
The first step to repairing your ailing credit is to create a manageable, feasible financial plan. You must be committed to making real changes in the way you spend money. If you don’t need something, don’t buy it. You should only make a purchase if it is necessary and it fits in your budget.
Try to keep a balance of less than 50% of your available credit on all of your cards. 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.
Credit Score
Having a good record allow you to qualify for things like a home mortgage. By paying off your mortgage on time, you will even improve your credit score further. Credit rating companies will judge you a reliable risk when you have verifiable assets such as a home. A good credit score is necessary when you need to take out a loan.
Repairing your credit is actually pretty simple. The first step is to focus on paying your late bills. More specifically, pay them on time and in full. Your FICO score will begin to increase immediately after you pay the bills that are past due.
Some sound advice to follow, is to be sure to take the time to contact your credit card company and work with them. If you do this you’ll find that your debt doesn’t increase and your credit is improved. You can accomplish this by simply calling and asking them to change payment terms, like your interest rate or your billing date.
Before you hire a credit counselor, make sure that you have done your research. While many counselors are reputable and exist to offer real help, some do have ulterior motives. Many others are nothing more than scams. A wise consumer will find out if the credit counselors they deal with are legitimate or not.
Don’t attempt to fix your credit in a way that will result in you breaking any laws. There are various online scams that involve creating a fresh credit file. That is illegal and you are going to be caught. They may seem like a small matter, but if you get caught, you could receive heavy fines and even jail time.
Call and request lower limits on your cards from the credit card companies. It will pay off in lowering the risk of excessive borrowing and reflecting good financial decision making on your behalf.
Joining a credit union is a great way to build your credit if you are having a difficult time doing so elsewhere. Credit unions often offer better interest and more options than chain banks do.
Dispute any errors that you find on any of your credit reports. Draft a dispute letter that will go to each credit rating agency that shows an error, and prepare any supporting documents. Include a request for a return receipt with the dispute package so that you can prove it was received by the appropriate agency.
Make sure you will get a plan in writing if you decide a payment plan is the best option for you with your creditor. If there is a change of heart, this paper will protect you. Every time you get a debt paid off, ask the company to notify the credit bureaus.
Bankruptcy should be filed only if absolutely necessary. Filing bankruptcy negative effects your credit score for 10 years. While getting rid of your debts all in one go seems like an excellent idea, your credit will be affected by it for a long time to come. 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 improvement is paying off your cards as fast as you can. Pay down your cards that have the highest interest and largest balances first. This will show creditors that you are responsible with the cards.
Repairing a poor credit score can seem like a daunting task, but improving your score is possible with guidance and knowledge. With the advice you were given in the above article, you can get to work on improving your credit score today.
