Bad credit is one of the most irritating potential detours you can encounter on your journey through life. Instead of getting that house or that job, you are left sitting with a refusal and a copy of your credit report. There are a few steps you can take to start repairing your credit now.
If you are unable to get a new card because of your bad credit, try to apply for secured cards. Most people are able to get this type of card, but you will have to load it up with a prepaid amount of money, as a guarantee that you can pay any charges that you make. If you use it correctly, a new card can help you fix your credit.
Credit Cards
Any credit cards that have balances over 50% of your limit should be paid off until they are less than 50% of your limit. Your credit score can diminish with balances over 50%, so spread out the debt or pay off the credit cards.
If your credit is good, it’s easy to get a mortgage on a new home. You will get a better credit score by paying your mortgage payment on time. Once you own a home, you will have financial stability secured by your assets, thus a good credit score. This will be beneficial when you apply for loans.
Try an installment account to get a better credit score and make some money. With an installment account there is a monthly minimum you need to keep, so only open an affordable account. You might see a big improvement in your credit score, if you can handle an installment account responsibly.
Interest Rates
In order to make sure that you do not overpay, know that you can dispute your really high interest rates. In most cases, creditors are somewhat limited in the amount of interest they can charge. You did sign a contract saying that you would pay off the debt. If you plan on suing your creditors, you may be capable of having the interest rates viewed as being too high.
Make sure to have as low as possible of a credit line available to you. Doing this keeps you from overtaxing yourself. It also shows the lending company that you are responsible.
Before you agree to any sort of repayment plan to settle your debts, consider how this will affect your credit score. Some methods are less damaging than others; research them all before making an agreement with your creditor. Many collectors just want to get paid and don’t care about credit consequences.
The first step in repairing your credit involves a thorough and careful check to ensure your credit report doesn’t contain erroneous information. Even if the negative report is true, if you can locate an error in the report, it may be possible to get it removed.
Officially dispute any errors you find on your credit reports. Contact the credit agency in writing, with documentation to support the errors that you are disputing. Sending your letter by certified mail provides you with proof that the letter was received.
You cannot live a life that is beyond your means. You will need to change the way you think about spending money. In the not too distant past, credit was easy and people could stretch themselves too far, but now the economy is paying the price of those days. It is important to look closely at your finances and see what you can actually afford and what you can not.
The first step in credit score repair is to close all but one of your credit accounts as soon as possible. Then, try to arrange payments or transfer your balances to the one account you left open. This way you can work on paying one credit card balance off, instead of a bunch of smaller ones.
Simple tips like these will help you fix your credit problems and keep your credit healthy. Having a good credit score is crucial to getting the best interest rates possible and is definitely worth the effort.
